Opening Bell: 8.29.17

Gary Cohn pulls a Leona Helmsley; hedge funds are gorging on bespoke data; Yale owns a forest; millennials are taking their toll on doorbells; and more.
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Two Bankers Are Selling Trump’s Tax Plan. Is Congress Buying? (NYT)
Mr. Cohn has also rankled lawmakers in both parties with comments that they suggest betray a lack of understanding about the political process and the intricate policy trade-offs that undergird a large tax rewrite. In a meeting with a group of Senate Democrats this year, according to people who were present, Mr. Cohn jokingly dismissed concerns about the wisdom and cost of repealing the estate tax, remarking, “Only morons pay the estate tax.”

Hedge funds see a gold rush in data mining (FT)
Speaking at a conference, Matthew Granade, Point72’s chief market intelligence officer, bragged that they scrutinise 80m credit card transactions every day. Coupled with satellite images that can scan car parks and geolocation data from mobile phones to show how many people are visiting various stores, the investment group can get a real-time idea of how companies are doing, long before their results are released. One student asked how all this data could help Point72 if everyone had access to the same information. The answer was exclusivity agreements, Mr Granade said: “The great thing about this area is you can arrange deals where you are the only ones who get it.”

BlackRock Finds $5 Trillion Industry Poses More Risk Than in '08 (BBG)
The world’s largest money manager mined regulatory filings of more than 500 insurance companies and modeled their portfolios in a similar downturn. Their stockpiles -- underpinning obligations to policyholders across the nation -- would drop by 11 percent on average, according to its calculations. That’s significantly steeper, BlackRock estimates, than the group’s “mark-to-market” losses during the depths of the crisis.

Why Yale Owns a Forest (Businessweek)
For at least two decades, Yale and its celebrated endowment manager, David Swensen, have led a land rush by the richest colleges. Funds snapped up forests as a way to hedge against inflation and the risks of stocks and bonds, and to take advantage of endowments’ unusual ability to make investments that might not be easy to sell quickly. It paid off handsomely until recently, when returns slumped and exposed more of the downsides of investments that literally grow. One is reputation risk: Some residents of Coos County and a Canadian First Nations tribe are angry that a company hired to manage Yale’s land has signed a lease for a power line that will run through about 24 miles of the university’s forests.

Because penny-stock promoters won’t miss out on a good bubble… (FT Alphaville)
The SEC warning about crypto-related “pump and dump” schemes in the stock market is like a firefighter arriving at a house fire and rushing to warn the neighbors about sparks. Like, sure, maybe the firefighter isn’t 100 per cent confident the house is on his side of the county line, but he should still try to fight the fire. Or at least alert someone who can.

That Totally Fake Shark Photo Isn't From Hurricane Harvey (or Any Other Hurricane) (Gizmodo)
As Snopes pointed out years ago, the great white shark, which appears to be casually swimming down a flooded city street, originates from a 2005 magazine spread in Africa Geographic. It was later photoshopped by hoaxers to make it look like the shark has found its way to an urban setting. Despite being fake, the shark previously went viral during Hurricane Irene in 2011, Hurricane Sandy in 2012, Hurricane Matthew in 2016, and during flash floods in Texas in 2015. BUT SEE: Alligator Sanctuary On Alert As Floodwaters Threaten To Unleash Hundreds Of Gators

Critics of Controversial Insurer Dogged by Mysterious Strangers (WSJ)
Chris Irons, an analyst at research firm GeoInvesting LLC, which has published several reports critical of AmTrust, said he was contacted in July by a woman who identified herself as a London-based consultant to a European software multimillionaire seeking contributors to a new investment website. He agreed to meet at a Philadelphia-area restaurant. At the dinner, Mr. Irons said, the woman, whom he described as gorgeous, plied him with drinks and slipped in several questions about critiques of AmTrust. “It was the second or third follow-up question on AmTrust that gave me a lot of pause,” he said, adding that she “laughed at many things I said that probably weren’t that funny.” But the name the woman gave — Diana Ilic —appears to be a pseudonym.

I’m Buying Gold (Michael Batnick)
Going back to 1970, the average monthly return for gold following a close above the 12-month moving average is 1.47%. The average monthly return following a close below the 12-month moving average is -0.15%. If you used the simplest of trend-following methods, investing in gold when it was above its 12-month moving average, and going to cash when it is below, the results would have been far better than just buying and holding gold.

Ask Not for Whom the Doorbell Tolls. They Won’t Answer It. (WSJ)
There’s no published research about doorbell phobia, but it’s a real thing. In a poll by a Twitter user earlier this month that got more than 11,000 votes, 54% of respondents said “doorbells are scary weird.” Some millennials and Gen Zers say they won’t even consider answering a ring at the door until they’ve checked the security camera.

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Opening Bell: 01.25.13

Ex-Barclays CEO Diamond Is Named on Latest Libor-Lawsuit List (Bloomberg) Ex-Barclays Chief Executive Officer Robert Diamond and Former Chief Operating Officer Jerry Del Missier were among 25 bank employees anonymously referred to by regulators when the lender was fined for attempted interest rate rigging. Diamond and Del Missier were included on a second list released in a London court case linking Barclays staff to the London interbank offered rate. Judge Julian Flaux refused a request by some employees to prevent their names being published in connection to the case. Deutsche Bank Trader Fired Over Rate-Rigging Loses $53 Million (Bloomberg) Deutsche Bank's Christian Bittar, one of the firm’s best-paid traders, lost about 40 million euros ($53 million) in bonuses after he was fired for trying to rig interest rates, three people with knowledge of the move said. The lender dismissed Bittar in December 2011, claiming he colluded with a Barclays Plc (BARC) trader to manipulate rates and boost the value of his trades in 2006 and 2007, said the people, who requested anonymity because they weren’t authorized to speak publicly. His attempts to rig the euro interbank offered rate and similar efforts by derivatives trader Guillaume Adolph over yen Libor are the focus of the bank’s probe, the people said. Both traders declined to comment for this story. “Upon discovering that a limited number of employees acted inappropriately, we sanctioned or dismissed those involved and clawed back all of their unvested compensation,” Deutsche Bank spokesman Michael Golden said in a statement. “To date we have found no link between the inappropriate conduct of a limited number of employees and the profits generated by these trades.” Aleksey Vayner may have died of drug overdose (DM) The Yale student who catapulted to Internet infamy with a disastrous video resume he sent to a prospective employer died at his home in Queens, New York. Vayner passed away at the age of 29, according to the New York City Medical Examiner - and reports from relatives suggest that he may have experienced a drug overdose...In the video, titled 'Impossible is Nothing,' a gravely serious Vayner attempts to prove his mental and physical fitness by talking about the meaning of success while lifting 495-pound weights, smacking tennis balls faster than 140 miles per hour, ball-dancing with a scantily-clad woman and breaking seven bricks with his hand. 'Ignore the losers, bring your A-game, your determination and your drive to the field, and the success will follow you,' he says in the video. JPMorgan to Block Shareholder Vote on Bank Break-Up (Reuters) A federation of U.S. labor unions is looking to force JPMorgan Chase's board to consider breaking up the company after the disastrous "London Whale" affair, but the bank is trying to ensure that its shareholders do not get to vote on the union's proposal. The largest U.S. bank is seeking permission from the U.S. Securities and Exchange Commission to omit the proposal from the measures that shareholders vote on this spring,according to a letter sent to the agency on January 14. The proposal, from the AFL-CIO's Reserve Fund, a union fund that owns JPMorgan shares, calls on bank directors to form a committee that would explore "extraordinary transactions that could enhance stockholder value," including breaking off one or more of the company's businesses. As Cohen parties in Davos, legal eagles circle at home (NYP) Hedge-fund titan Steve Cohen took a break from battlinginvestor redemptions to hob-knob with other heavyweights at the World Economic Forum in Davos Switzerland. But Cohen, who runs $14 billion Stamford, Conn., hedge-fund giant SAC Capital, could be facing more trouble when he gets home. At least one class-action law firm is trying to rustle up investors to sue SAC for its ties to an alleged insider-trading scheme that led to the arrest of a former portfolio manager. Wilmington, Del.-based Chimicles & Tikellis posted a notice on its website saying it is seeking SAC investors and limited partners and is “actively investigating a proposed investor lawsuit against SAC Capital.” Any resulting lawsuit would be pegged to SAC’s “mismanagement of the limited partnership and certain hedge funds.” Wisconsin Man Wearing "Breathalyzer" T-Shirt Arrested For Sixth Time For Drunk Driving (TSG) The 30-year-old was arrested early Saturday morning for drunk driving after he was found passed out at the wheel of a Chevrolet Cavalier that was parked with its engine running in the middle of a Wisconsin road. Wendler, who reeked of intoxicants, failed a series of field sobriety tests and appeared “dazed and confused,” according to a Marathon County Sheriff’s Department report, which noted that a deputy spotted an unopened six-pack of beer on the vehicle’s passenger seat. A breath sample recorded Wendler’s blood alcohol content as .19, more than twice the legal limit. As a result, he was charged with operating a motor vehicle while intoxicated--the sixth time he has been busted for drunk driving. Wendler’s extensive DWI history, of course, makes his t-shirt choice a strange one. As seen in his mug shot, Wandler was nabbed while wearing a shirt referencing drinking and a “free Breathalyzer test.” The shirt also includes an arrow (beneath the words “blow here”) pointing downward toward Wendler’s crotch. Financial Job Losses Near Four-Year High as Europe Leads (Bloomberg) Financial-services firms are on track to cut the most jobs in January since the start of 2009 as Europe struggles to emerge from the debt crisis and regulators impose tougher capital rules. The 16,040 announced and expected reductions in the past three weeks are just short of the 16,389 cuts made in the industry during January 2009 after Lehman Brothers Holdings Inc. collapsed, according to data compiled by Bloomberg. Bankers and consultants expect the cuts to accelerate in coming months even as financial stocks gained 26 percent last year. Credit Bubble Seen in Davos as Cohn Warns of Repricing (Bloomberg) Goldman Sachs President Gary Cohn warned of a potential drop in fixed-income prices as bankers and policy makers in Davos celebrated surging demand for financial assets. Debt markets that have seen junk-bond yields drop to record lows may face a “substantial repricing” if interest rates spike or investors begin pulling money out of fixed income, Cohn, 52, said in an interview yesterday with Bloomberg Television’s Erik Schatzker at the World Economic Forum in Davos, Switzerland. Morgan Stanley CEO To Take Pay Cut (WSJ) Morgan Stanley disclosed Thursday that Mr. Gorman would receive about $2.6 million in stock options for 2012. All told, he will receive $6 million in salary, cash and stock for the year, said a person familiar with the company's compensation plans, plus participation in an incentive plan whose value wasn't disclosed. His full pay package won't be disclosed until this spring's proxy statement. Thousands of crocodiles on loose after floods hit South African farm (The Guardian) Around 15,000 crocodiles made the great escape from the Rakwena crocodile farm near the border with Botswana on Sunday, according to the newspaper Beeld. Although "a few thousand" have since been recaptured, including one at a school rugby ground 75 miles away, more than half of the reptiles are still at large.

(Getty Images)

Opening Bell: 6.13.17

Inside Gary Cohn's unenviable White House job; Tim Cook dishes on Apple's autonomous car project; a thing called "potcoin" sent Dennis Rodman to North Korea; and more.

Opening Bell: 03.07.13

Fed's Fisher Pins Slow Growth on Politicians (WSJ) Federal Reserve Bank of Dallas President Richard Fisher on Wednesday blamed both major U.S. political parties for a "horrid" political climate in Washington, and said monetary policy alone can't drive the economy. "We provided the fuel for economic recovery," Mr. Fisher said of the central bank, describing the Fed's stimulus as "very high-octane, dirt-cheap gasoline." But he said that neither Republican nor Democratic politicians in Washington have done their part by putting policies in place that spur the private sector "to take the cheap fuel that we have provided and step on the accelerator." Banks Said to Weigh Defying Fed With Dividend Disclosures (Bloomberg) The largest U.S. banks are weighing whether to disregard a Federal Reserve request and announce their dividend plans shortly after the central bank’s stress tests are released, people with knowledge of the process said. The Fed has asked 18 firms, including JPMorgan and Goldman Sachs, to wait until next week, even though the lenders will get preliminary word today about whether their capital plans were approved. Bank executives are concerned that investors could be confused and are considering whether securities laws may require prompt disclosure of their plans for dividends and share repurchases, the people said. Paulson Gold Fund Down 18% as Metal’s Slump Foils Rebound (Bloomberg) John Paulson posted an 18 percent decline in his Gold Fund last month as a slump in the metal, after more than a decade of gains, undermined efforts by the billionaire hedge-fund manager to rebound from two years of losses in some strategies. The $900 million Gold Fund, which invests in bullion- related equities and derivatives, is down 26 percent this year, Paulson & Co. said yesterday in a client update obtained by Bloomberg News. The firm’s Advantage funds also fell in February after the metal and related stocks weakened as signs of economic optimism curbed gold demand. “Despite the volatility and drawdown of our gold equity positions, we believe in the long-term outlook for these positions as quantitative easing programs continue around the world, credit expands in the United States, and gold equities continue to trade at a significant discount” to historical average valuations, the hedge fund said in a letter sent yesterday to investors, which was obtained by Bloomberg News. Carl Icahn Rachets Up Dell Fight (WSJ) In a letter released by Dell Thursday, Mr. Icahn said he has a "substantial" position in the company, and asked Dell to pay a per-share dividend of $9 if the deal is voted down by shareholders. He said that by his calculations, that transaction would be superior to the current going-private offer, citing a "stub" value of $13.81 a share which, combined with the special dividend, represents a 67% premium to the current $13.65 per-share offer price. Dell 'Welcomes' Carl Icahn to Go-Shop Process (CNBC) Dell on Thursday said it welcomed Carl Icahn, who has built up a 100 million share stake in the company, and other interested parties as the computer maker seeks to go private. The special committee appointed by the board said it was conducting a "robust go-shop process" and was looking at other alternatives after a $24.4 billion buyout led by founder Michael Dell faced opposition from some shareholders. Bad-News Bears Crash The Party (WSJ) For all their conviction, the bears realize it may be awhile before their dark predictions come true. "Unfortunately, I am bearish and I have been wrong," said Samer Nsouli, chief investment officer at Lyford Group International, a hedge fund, who argues that recent weakness in copper and oil is a portent of a global slowdown. "Make no mistake, it will end in tears. The eternal question is when." Lions Maul Two To Death In Kariba (Herald) Two people were yesterday mauled to death by lions in Mahombekombe suburb in the resort town of Kariba. Sources say the man only identified as Musinje and the woman Sharai Mawera, were attacked while spending time in a bushy area with the man managing to escape, leaving the woman behind. The man went on to report the case to police who, with the assistance of officers from the Zimbabwe Parks and Wildlife Management Authority, went in search of the lions. During the search they found an arm belonging to a man with investigations pointing to the lions having made a kill the previous night. That, the sources say, could have been the reason the lions did not completely eat the woman. BofA Times An Options Trade Well (WSJ) Bank of America's trading desk last June purchased options to buy 150,000 shares of Constellation Brands, an aggressive wager that the wine-and-beer seller's shares would rise, according to a Wall Street Journal analysis of options-market data and of quarterly regulatory filings made by institutional investors. The trade helped push the volume in thinly traded Constellation options that day to more than 13 times the previous 30 days' daily average, the options data show. A week later, Constellation announced a pact to buy a Mexican beer maker out of a joint venture that imports Corona Extra and other beers into the U.S. market. Bank of America led a duo of banks that financed the $1.85 billion deal. Constellation shares soared 24% on June 29, the day the deal was made public, and Bank of America generated an estimated paper profit of more than $1 million from the options trading, the options-market data indicate. China Imitates Singer (NYP) Paul Singer’s battle with Argentina over defaulted debt is beginning to ripple through the bond world. Creditors looking to force deadbeat countries to pay up are turning to the controversial legal argument Singer used to press his case against the South American country in the US courts. On Monday, China’s Ex-Im Bank, which has an unpaid judgment worth $32 million against Grenada, sued the tiny Caribbean country in New York federal court to get its money back. China wheeled out the same “equal treatment” argument that Singer’s Elliott Management used against Argentina, and which was recently upheld at the appeals level for the first time in the US. China’s move marks the first time a creditor other than Singer and his cohorts have tested the maneuver in the US. Obama Tries Charm Offensive to Woo Republicans on Deficit (Bloomberg) The president broke bread last night with a dozen Republican senators, hosting a dinner at a luxury Washington hotel near the White House. Next week, he’ll visit Capitol Hill to meet separately with Republicans and Democrats in the Senate. Obama has also spoken by telephone with at least a half- dozen Republican lawmakers over the past few days about the budget and other priorities of his second term, including a rewrite of immigration laws and controlling gun violence. “There have been some problems, but we’re all adults and you just have to put the country ahead of party and you’ll be fine,” Senator Lindsey Graham of South Carolina, who helped organize the dinner, said before the meal. The increased outreach marks a shift in strategy for the White House, amid signs the president’s poll numbers are falling after he and Republicans were unable to avert the across-the- board spending cuts that took effect March 1. Jobless Claims in U.S. Unexpectedly Fall to a Six-Week Low (Bloomberg) First-time jobless claims unexpectedly fell by 7,000 to 340,000 in the week ended March 2, the lowest since the period ended Jan. 19, according to data today from the Labor Department in Washington. The median forecast of 50 economists surveyed by Bloomberg called for an increase to 355,000. The four-week average dropped to a five-year low. JC Penney Board Can’t Be 'Delusional': Ex-CEO (CNBC) Former JC Penney CEO Allen Questrom told CNBC on Wednesday that the company's board of directors is wrong in thinking the struggling retailer can change its fortunes under current boss Ron Johnson. "The board has to take action. They can't be delusional like Ron Johnson is," Questrom said on "Fast Money Halftime Report." "This has been going on long enough. You can't say you're going to make your numbers for the year and then drop a billion dollars." Questrom, who has watched from afar as Penney's sales and stock have suffered, told CNBC that directors needed to act quickly. "If they think if it all of a sudden going to turn itself around, there is no way they can have reliable information – because Ron is not a source for that," he said. "The sooner they act, the better." 1 in 10 Yale students have engaged in prostitution, 3% have had sex with an animal (NYDN) Sexologist Dr. Jill McDevitt hosted the sex workshop session where around 55 students used their cellphones to answer questions about sex. The results were then published in real time on a screen. McDevitt, who also owns the Feminique sex store in West Chester, Pennsylvania, said the results showed "you can't have assumptions about people's backgrounds." Student Giuliana Berry, who hosted the event, told Campus Reform the workshop - part of Yale's Sex Weekend - aimed to increase understanding and compassion for people who indulged in "fringe sexual practices."

Opening Bell: 05.30.12

Anger Over Christine Lagarde's Tax-Free Salary (Independent) Lagarde was accused of hypocrisy yesterday after it emerged that she pays no income tax – just days after blaming the Greeks for causing their financial peril by dodging their own bills. The managing director of the International Monetary Fund is paid a salary of $467,940 (£298,675), automatically increased every year according to inflation. On top of that she receives an allowance of $83,760 – payable without "justification" – and additional expenses for entertainment, making her total package worth more than the amount received by US President Barack Obama according to reports last night. Unlike Mr Obama, however, she does not have to pay any tax on this substantial income because of her diplomatic status. EU Proposes 'Banking Union' (WSJ) The 17 countries that use the euro should consider setting up a "banking union" that allows them to share the burden of bank failures, the European Union's executive arm said Wednesday in a report on the currency union's crisis-fighting efforts. To further stop expensive bank bailouts from pulling down governments' own finances, allowing the euro zone's new rescue fund to directly boost the capital of banks "might be envisaged," the European Commission said. Greeks Flock To Germany Even As They Criticize It (CNBC) Germany, Europe's economic powerhouse and a country which has been criticized by many Greeks over its harsh demands for austerity cuts in return for bailout cash, has experienced an influx of young skilled immigrants. Der Spiegel magazine noted that while Greek newspapers "printed cartoons depicting the Germans as Nazis, concentration camp guards and euro zone imperialists who allow their debtors to bleed to death," the Greeks have kept arriving — bringing an "anything is better than Athens" attitude with them. Pissarides Says Euro Exit Would Aid Rich Greeks At Cost To Poor (Bloomberg) Nobel economics laureate Christopher Pissarides said wealthy Greeks would benefit at the expense of poorer citizens were the country to exit the euro. “A lot of Greeks” have withdrawn money and deposited it with banks elswhere in the 17-nation currency zone, Pissarides said in an interview in London today. If the country returned to the drachma, the new currency would be so devalued they could buy it cheaply on international markets with the cash they’d exported, enabling them to buy more assets in Greece. While poorer Greeks are equally able to appreciate the difficulties facing their country, they’re not as able to shield their funds from an exit from the common currency, Pissarides said. They need to preserve quick access to their savings, which isn’t as easy to do if it’s held at a foreign bank, and such lenders may not always accept small deposits. Zuckerberg Drops Off Billionaires Index As Facebook Falls (Bloomberg) The 28-year-old’s fortune fell to $14.7 billion yesterday from $16.2 billion on May 25, as shares of the world’s largest social-networking company dropped 9.6 percent to $28.84. Woman's Boyfriend Took Car Without Permission Before She Slammed It Into House (NYP, earlier) Dan Sajewski, 23, arrived at his family’s Huntington estate last weekend with Anderson, 21, his on-again, off-again waitress girlfriend. While his parents vacationed on Long Island’s North Fork, the duo helped themselves to his mother’s 2003 Mercedes-Benz CLK 320, a birthday gift from Sajewski’s anesthesiologist father, a source said. They took a joyride to the Hamptons, where they had a little too much fun. A field Breathalyzer test revealed that Anderson drove home with a .30 Blood-Alcohol Content — nearly four times the legal limit and the equivalent of about 15 drinks, prosecutors said at her arraignment yesterday. They drove back to Huntington and she was speeding along Southdown Road when she failed to turn at a T-instersection — ramming through the front of Indiere’s house, obliterating her kitchen, and exiting through the back wall, prosecutors said. “We can’t believe he just let this girl drive a car he wasn’t even supposed to have in the first place,” a Sajewski family member said. “He’s done this before; he took his sister’s Jeep and just took off. “He was trying to get the car home before the family got home from their own Memorial Day weekend. He’s not exactly the model son.’’ The relative added that Sajewski didn’t call his father about the accident until two hours later. In the police report, Anderson told cops “her power steering got stuck, causing her to crash,” and that she only drank “three beers.” Housing Market Crawls Back (WSJ) Housing prices across the U.S. fell in March, but not as much as in earlier months, according to a report Tuesday that offered fresh evidence of a real-estate market on the mend. Compared with February, prices fell just 0.03% in March, and after adjusting for seasonal factors, they rose 0.09%, according to the S&P/Case-Shiller 20-city home-price index. "This is the first flat report we've had in quite some time," said David M. Blitzer, chairman of the Index Committee at S&P Indices. Still, "while there has been improvement in some regions, housing prices have not turned" everywhere, he said. Bankers Hired By Blackberry Maker (NYP) Research In Motion said yesterday it hired investment banks JPMorgan and RBC to review its “options,” which most investors took to mean a potential sale, and warned of another quarterly loss. Gold Investors Rush For The Exits (WSJ) Investors in SPDR Gold Shares and iShares Gold Trust, two high-profile exchange-traded funds that hold physical bullion, also have pulled back recently. Through Friday, the two funds had reduced the number of tons of gold they're holding this month. As of May 15, hedge funds, pension funds and other money managers also had slashed their bets that gold prices will rise in the futures market, to the lowest level since January 20, 2009, according to weekly data released by the U.S. Commodity Futures Trading Commission. The bullish bets rose slightly last week, but remain near the low for the year. Police Find Another Human Body Part In Package In Ottawa (OC) Police found a human hand at the Ottawa Postal Terminal Tuesday night, hours after a bloody foot was delivered to the Conservative party's Ottawa headquarters just blocks from Parliament Hill. Ottawa police were still trying to understand what they were dealing with even as detectives in Montreal combed through a crime scene where a torso was found in a suitcase in that city's Snowdon district. Police discovered the second package, sent from the same place as the package sent to Tory headquarters, Tuesday evening. Officers carried it from the huge Riverside Drive terminal in a brown paper bag, which they X-rayed before they opened it to find the hand. The gruesome events began shortly before noon when access to the Conservative party's headquarters was restricted after the fire department's Hazmat team was called in to investigate a suspicious package. A party staffer had started to open a blood-stained box sent to the office at 130 Albert St. before police were called to investigate. At first, it was thought there was a human heart inside, but after the box was X-rayed, police confirmed that it contained a foot.

Opening Bell: 04.16.12

Downgrades Loom For European Banks (WSJ) Under pressure from banks, Moody's Investors Service said Friday that it is delaying until early May its highly anticipated decision on whether to downgrade the credit ratings of 114 banks in 16 European countries. Moody's announced the review in February, saying it was needed in light of the banks' weak conditions and the tough environment in which they're operating. It had planned to start unveiling the decisions this week. Obama Bid to End Too-Big-to Fail Undercut as Banks Grow (Bloomberg) Two years after President Barack Obama vowed to eliminate the danger of financial institutions becoming “too big to fail,” the nation’s largest banks are bigger than they were before the credit crisis. Five banks-- JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, and Goldman Sachs-- held $8.5 trillion in assets at the end of 2011, equal to 56 percent of the U.S. economy, according to the Federal Reserve. Five years earlier, before the financial crisis, the largest banks’ assets amounted to 43 percent of U.S. output. The Big Five today are about twice as large as they were a decade ago relative to the economy, sparking concern that trouble at a major bank would rock the financial system and force the government to step in as it did during the 2008 crunch. “Market participants believe that nothing has changed, that too-big-to-fail is fully intact,” said Gary Stern, former president of the Federal Reserve Bank of Minneapolis. Carlyle Takes Cautious Approach in IPO Price (WSJ) Carlyle Group plans to sell 30.5 million shares priced between $23 and $25 in its initial public offering, which could come before the end of the month, according to people familiar with the matter. Those shares would represent about 10% of the Washington, D.C., private-equity firm, in a deal that would value Carlyle at more than $7 billion, these people said. That value is toward the lower end of what earlier had been expected...Carlyle is putting less emphasis on pricing shares high at the IPO, instead hoping they rise in value once they are traded, according to people familiar with the matter. Bond Recipes Use Fresh Ingredients (WSJ) With risk-taking in vogue again, Wall Street is betting on the revival of a market for bonds made out of everything from "The English Patient" to fried chicken. The amount of so-called esoteric bonds backed by unusual assets has nearly doubled this year compared with the same period a year ago, according to Credit Suisse. Thus far this year, there have been $5.6 billion in deals done, more than twice the $2 billion in the same period last year. Over the past several months investors have bought bonds backed by revenue from Domino's Pizza DPZ +0.34% franchises, Miramax films, patents for drugs like Clarinex and Flumist and loans to buyers of Wyndham vacation time-shares. The deals show investors are becoming comfortable again with Wall Street's engineering skills, after many were hammered during the financial crisis by losses on bonds backed by subprime home loans and complex debt pools known as collateralized-debt obligations. The esoteric sales also mark a rare growth area for giant banks that have been hit hard by a slowdown in deal-making and trading. Four-year-old Heidi Hankins joins Mensa with 159 IQ (BBC) A four-year-old girl from Hampshire has been accepted into Mensa with an IQ just one point below Albert Einstein and Stephen Hawking. Heidi Hankins from Winchester has a 159 IQ. She taught herself to read and was able to count to 40 at two years old. British Mensa chief executive John Stevenage said Heidi's parents "correctly identified that she shows great potential." According to Mensa, the average adult IQ score is 100. Geithner Rebuts Romney on Women and Jobs (WSJ) As the fight for women voters intensified in recent days, Mr. Romney took a swipe at Mr. Obama by saying women had borne the vast majority of job losses over the past three years. Labor Department data show women do account for 92.3% of the workers who have lost jobs since Mr. Obama took office in January 2009. But men suffered deeper job losses than women in the year before Mr. Obama's inauguration and men have gained more jobs than women since the recovery began in 2009. "It's a ridiculous way to look at the problem," Mr. Geithner said of Mr. Romney's criticism. Mr. Geithner on Sunday also defended the Obama administration's efforts to reduce the federal budget deficit, and said there was "no risk" that the U.S. would go through a debt crisis in the next two years like the one Greece is experiencing. But he had a warning for Congress, when asked on NBC's "Meet the Press" about whether Congress would act to raise the government's debt ceiling again at the end of this year. "This is Congress's obligation to do as they have always done in the past," he said. "It would be good for the country this time if they did it with less drama." Barclays' Tax Deal Faces US Scrutiny (FT) Barclays’ controversial tax planning business will come under fresh scrutiny in a U.S. court this week over whether a transaction designed by the bank cost the U.S. government more than $1 billion in lost tax receipts. The U.S. Internal Revenue Service claims that complex, cross-border deals Barclays structured for several mid-tier banks in the last decade were an abusive tax shelter that exploited loopholes between U.S. and U.K. tax laws. Prime Brokerages Consolidate After 'Big Bang' (Reuters) Hedge funds are cutting back on the brokerage accounts they hold as the prime brokerage industry begins to consolidate more than four years after the Lehman Brothers bankruptcy blew the sector wide open. Goldman Sachs Said to Raise $2.5 Billion in ICBC Sale (Bloomberg) The Wall Street firm is selling $2.5 billion of shares at HK$5.05 each, according to two people with knowledge of the matter. It sold 3.55 billion shares, or 4 percent of ICBC’s Hong Kong-traded shares, to Temasek, the Singapore state-owned investment group said. Temasek, which is increasing stakes in China’s biggest banks, paid $2.3 billion for the stock, based on the per-share price and stake size. 'Hug Me' Coke Machine Asks for Hugs, Delivers Free Coke (MFDC) Coca-Cola's global marketing campaign dubbed "Open Happiness" takes on a new twist with a Coke vending machine that asks passers by to give it a hug. The big red and white machine, located at the National University in Singapore, has "Hug Me" written across its front side. And people are actually hugging it...and given free Cokes.

Opening Bell: 07.16.12

Citigroup Profit Beats Analysts’ Estimates On Investment Bank (Bloomberg) Citi reported a 12 percent drop in second-quarter profit that beat analysts’ estimates on revenue from advising on mergers and underwriting stocks and bonds. Net income declined to $2.95 billion, or 95 cents a share, from $3.34 billion, or $1.09, a year earlier, the New York-based bank said today in a statement. Excluding accounting adjustments and a loss from the sale of a stake in a Turkish bank, earnings were $1 a share, compared with the average estimate of 89 cents in a Bloomberg survey of 18 analysts. HSBC Seeks To Evict Occupiers In Hong Kong (WSJ) HSBC said Monday it is seeking the right to evict an encampment of protesters that has been occupying the ground floor of the bank's Hong Kong headquarters since October, drawing inspiration from the Occupy Wall Street protests in New York last year. Libor Flaws Allowed Banks To Rig Rates Without Conspiracy (Bloomberg) FYI: “It is far easier to manipulate Libor than it may appear,” Andrew Verstein, a lecturer at Yale Law School, said in a paper to be published in the Winter 2013 issue of the Yale Journal on Regulation. “No conspiracy is required.” States Join Libor Probe (WSJ) Prosecutors in New York and Connecticut are investigating whether their states incurred losses as a result of interest-rate manipulation by banks, a probe that could lead to a wider multistate enforcement action, according to New York officials. The joint probe by New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen could lead to civil enforcement action, including possible breaches of antitrust and fraud laws, the officials said. Libor Probe May Yield Criminal Charges By September (Bloomberg) Barclays traders involved in allegedly manipulating Libor rates between 2005 and 2007 may be charged by U.S. prosecutors before the Labor Day holiday on Sept. 3, said a person familiar with the Justice Department investigation in Washington. Zuckerberg’s Loan Gives New Meaning To The 1% (Bloomberg) The Facebook founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property. Missteps Doomed Barclays Leaders (WSJ) Mr. Diamond's downfall may have been hastened because the U.S.-born investment banker, who became chief executive at the start of 2011, had never won acceptance by Britain's political and financial establishment. When the rate-fixing scandal erupted, Mr. Diamond had few allies. It wasn't for lack of trying. Mr. Diamond enthusiastically embraced British culture and tried to overcome his reputation as a brash American. Mr. Diamond, a native of Concord, Mass., supported the Chelsea Football Club, handing out trophies himself when the team won England's premier soccer league in 2010. A month before the Libor settlement, Mr. Diamond hosted British aristocrats and Barclays' clients at the annual Chelsea Flower Show, providing Champagne and canapés as his guests inspected elaborate gardens and floral arrangements...But Mr. Diamond, age 60, was criticized for his lofty pay packages, as well as perceived risks in the investment-banking business he built. He sometimes appeared tone deaf in a country still angry about the role of banks in the financial crisis. "There was a period of remorse and apology," he told Parliament last year. "That period needs to be over." Activists Go After Big Game (WSJ) William Ackman's $2 billion bet that he can boost the value of consumer-products giant Procter & Gamble Co. reflects a new era of activist investing, in which no company is too big a target and restless institutional investors are more willing to rock the boat. Mr. Ackman's Pershing Square Capital Management LP owns a little more than 1% of P&G's shares. A few years ago, that would have been considered too small a stake in too big a company to exert much influence on management, the board or other investors. Tax Cuts Perpetuate Inequality, Should End: Summers (CNBC) The United States should not extend Bush-era tax cuts for the wealthiest Americans even as the so-called ‘fiscal cliff’ looms because it will perpetuate income inequality, says Larry Summers, former U.S. Treasury Secretary. Instead, these revenues should go towards strengthening public education and ensuring that low-income students are presented with equal opportunities as their wealthy counterparts so that they can participate in the economy. Tax breaks for the wealthy cannot continue to exist because it leads to a “perpetuation of privilege”, Summers said in the editorial in the Financial Times on Sunday. Unless steps were taken to “responsibly” increase the burden on those with high income and redistribute the proceeds, the trend toward inequality will continue, he said. Devils On The (B)rink (NYP) New Jersey Devils owner Jeff Vanderbeek is talking to private-equity firms and hedge funds about buying into his financially strapped team, according to sources close to the situation Vanderbeek is looking to sell a majority stake, but keep operating control, sources said. The talks, coming three weeks after the 55-year old former Wall Street executive seemed close to inking a deal with an investor to save the team, are leading some in the financial world to believe the deal has fallen apart. If that’s so, it would be a terrible break for Vanderbeek, who is facing an Aug. 14 deadline to get the Devils’ financing in order...Creditors are owed $80 million. Downgrade Anniversary Shows Investors Gained Buying U.S. (Bloomberg) When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened. Woman tells police man sucked her toe at Grovetown Walmart (AC) The 18-year-old said she was shopping when a man, who looked to be in his late 30s or early 40s, walked up and asked if her toenails were painted, according to a Columbia County Sheriff’s Office incident report. After replying yes and questioning why he wanted to know, the woman was asked if she’d watched America’s Funniest Home Videos. The man told her he was with the TV show and if she complied with his requests, everything she purchased that day would be free. She said she reluctantly agreed to let him take a photo of her foot. He asked if he could kiss her foot as part of the prank and she agreed. The man guided her to an area behind a clothing rack, dropped to the floor, grabbed her ankle and told her, “Don’t worry. I don’t bite.” He then started sucking on her big toe. The woman said she screamed at him to stop. Before the man ran from the store, he told her, “It tasted so good, though.”

Opening Bell: 01.07.13

Regulators Give Ground To Banks (WSJ) Global banking regulators watered down a key element of their plan for creating a safer financial system, giving ground to banks that argued the rules were unworkable and financially risky. The Basel Committee on Banking Supervision, a group of the world's top regulators and central bankers, said Sunday that it agreed to relax a rule designed to ensure that big banks are able to weather financial crises without running short of cash. Bowing to two years of intense pressure from the banking industry, the regulators made it easier for banks to meet the rule, known as the "liquidity coverage ratio," and delayed its full implementation until 2019. It is the latest instance of regulators chipping away at their landmark 2010 response to the global financial crisis. The regulators argue that the changes make banking rules much stronger than they were before the crisis. Herbalifers Stay Resolute (WSJ) When hedge-fund manager William Ackman unveiled his 334-slide presentation alleging that Herbalife is a pyramid scheme, it did nothing to shake Joanne Clare. The 38-year-old Staten Island mother of three has been selling the company's weight-loss products and supplements since 2004, when she says they helped her drop from 210 to 160 pounds in four months. She now sells as much as $3,500 a month of Herbalife products to her 30 clients and the two distributors in her "down line." "People have always said it's a pyramid scheme, but it's not," Ms. Clare said, adding that the bulk of her earnings come from sales to clients, not her cut of her recruits' take. Mr. Ackman's declaration that he had bet more than $1 billion against Herbalife caused many investors to flee, sending the stock down 38% in four days in late December. But some of the company's 3.1-million-strong army of distributors were unmoved. Eliot Spitzer Ends His Show On Current TV (NYT) The announcement comes a few days after Al Jazeera said it was acquiring Current TV. Later this year, the Qatar-owned broadcaster plans to turn the channel into an Americanized version of the international news channel Al Jazeera English. Mr. Spitzer said he had a “wonderful time” at Current, but emphasized that his relationship was with Al Gore and Joel Hyatt, Current’s co-founders, not with Al Jazeera. “Moving forward, their mission will be different,” he said — more international newscasts, less liberal talk about the news. Citi's Corbat builds bridges (Reuters) Citigroup Inc's Michael Corbat has been meeting with bank regulators in his first months as CEO, as he looks to bolster relationships and finalize the bank's plan to return capital to shareholders, sources familiar with the matter said. Corbat also expects to name his team of top managers within the next week or so, one of the sources said on Sunday. Corbat is expected to play it safe when Citigroup asks the U.S. Federal Reserve for permission for moves such as buying back shares or increasing dividends, analysts and investors said. His predecessor, Vikram Pandit, lost his job in October in part because the bank's request for returning capital was denied in March. The bank, which is due to submit its plan to the Fed on Monday, has not yet done so, the source said. The third-largest U.S. bank will only seek approval to buy back shares and not raise dividends, the Wall Street Journal reported on Friday. Last year, the bank wanted permission to return more than $8 billion to shareholders over two years, the paper said. For Newly Minted MBAs, A Small Paycheck (WSJ) For graduates with minimal experience—three years or less—median pay was $53,900 in 2012, down 4.6% from 2007-08, according to an analysis conducted for The Wall Street Journal by PayScale.com. Pay fell at 62% of the 186 schools examined. Even for more seasoned grads the trend is similar, says Katie Bardaro, lead economist for PayScale.com. "In general, it seems that M.B.A. pay is either stagnant or falling," she says...It is all a far cry from the late 1980s and early 1990s heyday for M.B.A.s, when some companies would hire 100 or more M.B.A.s. It wasn't uncommon to recruit first, and fill actual jobs later. DOJ pledges to respect Swiss law in tax probe (Reuters) Swiss chief finance diplomat Michael Ambuehl was given a verbal pledge from the U.S. Department of Justice to respect Swiss law when asking for bank client data of potential tax dodgers, a newspaper reported on Sunday. Switzerland is in negotiations with U.S. authorities to find a deal that would end tax probes into at least ten Swiss banks suspected of helping clients dodge taxes, including Credit Suisse and Julius Baer. The Alpine country is trying to preserve what is left of its cherished banking secrecy that suffered a severe blow in 2009 when UBS, the first Swiss bank that came under scrutiny in the U.S., was required to disclose client data. Brazilian prison gaurds catch cat that slipped through the gate with escape tools taped to its body (NYDN) Guards at a Brazilian prison nabbed a white cat that slipped through the gate with a cell phone, drills, small saws and other contraband taped to its body. Alagoas prison spokeswoman Cinthya Moreno says the cat was caught New Year’s Eve at the medium-security prison in the city of Arapiraca. The O Estado de S. Paulo newspaper reported Saturday that all of the prison’s 263 inmates are suspects in the smuggling attempt, though a spokesperson said, “It will be hard to discover who is responsible since the cat does not speak.” Loeb, Cooperman Stand Out in Horrid Year for Hedge Funds (CNBC) Third Point was the clear hedge fund standout in a horrible year for the industry as almost nine out of 10 managers underperformed the S&P 500. Omega Advisors' Leon Cooperman also scored big. Loeb — once better known for his acerbic letters to CEOs — used an activist position in Yahoo and the contrarian buying of Greek bonds to drive the firm's flagship fund to a 21 percent gain in 2012. The firm's more-leveraged Ultra fund posted an even bigger 34 percent return...Cooperman's fund had a net return of 26 percent in 2012. Banks Zero In On Foreclosure Pact (WSJ) Banks were closing in on a $10 billion foreclosure-abuse settlement with regulators that could be announced as soon as Monday, according to people familiar with the talks. The settlement was nearly complete Sunday afternoon, the people said, after the Federal Reserve backed down on a demand for more compensation for consumers and other changes to the pact. Bankers threatened to walk away from the deal if the Fed's demand for an additional $300 million was included, a person briefed on the talks said. Junk Bonds' Fire Is Poised to Fade (WSJ) Junk bonds started 2013 much like they finished 2012—on fire. In just three trading days this year, bonds of low-rated companies delivered returns of almost three-quarters of a percent, even as most other types of bonds lost value. And junk bonds continued to clock new milestones: Average prices soared to their highest since 2004 and average yields, which decline as prices rise, dropped below 6% for the first time ever, according to Barclays. But the rapid march is making fund managers and analysts wary. Prices are now so high—averaging more than 105 cents on the dollar—that there is little room for them to climb much further, some investors say. These are lofty prices for bonds that usually trade below 100 cents, reflecting the higher default risk for such companies. At the very least, returns will pale in comparison with the 15% achieved in 2012, analysts and investors say. NHL, Players Settle Labor Dispute (AP) On the 113th day of a management lockout and five days before the league's deadline for a deal, the bleary-eyed sides held a 6 a.m. news conference to announce there will be a season, after all. NHL Commissioner Gary Bettman and union head Donald Fehr both appeared drained, wearing sweaters and not neckties, when they stood side by side at the hotel and announced labor peace. "We have reached an agreement on the framework of a new collective bargaining agreement, the details of which need to be put to paper," Bettman said. "We've got to dot a lot of Is, cross a lot of Ts. There's still a lot of work to be done, but the basic framework of the deal has been agreed upon." Hostess in Talks to Sell Off Bread Brands (WSJ) Hostess could disclose Flowers, Grupo Bimbo or others as opening bidders in a looming bankruptcy-court auction for the assets as soon as this week, said people familiar with the matter. Hostess, whose bread brands include Wonder Bread, Nature's Pride, Home Pride, Merita and Butternut, is still determining how to split up assets and package them for buyers, one of the people said. Gérard Depardieu gives up French citizenship after bitter tax fight (GM) In a fit of pique, French movie star Gérard Depardieu announced during the weekend that he would give up his citizenship after politicians and the media took him to task for moving to Belgium and avoiding an impending tax hike for the rich. Mr. Depardieu is not France’s first fiscal refugee but his high-profile door-slamming so monopolized public debate that Prime Minister Jean-Marc Ayrault had on Monday to parse whether or not he had insulted the actor. “I did not call Mr. Depardieu a loser, I said that it was loser-like [to move to Belgium to avoid taxes],” Mr. Ayrault told reporters...The “loser” comment seemed to have been the jab that stung Mr. Depardieu the most. “Loser, did you say loser?” the 63-year–old actor began an open letter to Mr. Ayrault that appeared Sunday in Le Journal du dimanche. Mr. Depardieu wrote that he had paid a total of €145-million in income tax in the last four decades and kept 80 people employed. He added that he had been taxed at a marginal rate of 85 per cent this year. “I am giving you back my passport and my social insurance, which I had never used. We no longer have the same fatherland. I am a true European, a citizen of the world.”