Opening Bell: 12.12.17

Hedge funds face an identity crisis; did Wilbur Ross insider-trade while at Bank of Ireland?; being gay on Wall Street; South Koreans are fueling bitcoin's ascent; AI-assisted fake porn is now a reality; and more.
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What Hedge Funds Will Do After the Hedge Fund Model Dies (BBG)
As long as the benign investment environment continues, with passive investing on the rise and the economy still growing, it pays to look in less traveled corners, said Marc Lasry, who runs the $9.8 billion Avenue Capital. “Right now, what the investing world offers you is niches.” RELATED: The Future Is Bumpy: High-Tech Hedge Fund Hits Limits of Robot Stock Picking

Marc-Lasry

The Force Behind Bitcoin’s Meteoric Rise: Millions of Asian Investors (WSJ)
Lee Sang-chul, 32, is one of the millions of South Koreans who have become besotted with bitcoin. “Before bitcoin, I’d be at my shop from morning to evening. Now, I close shop when I have an appointment or leave early,” said Mr. Lee. He has hired two people at his shop since he started investing in bitcoin, and bought his wife an expensive Chanel handbag for their wedding anniversary. “My goal is to accumulate as many bitcoin as I can,” Mr. Lee said, adding that he expects the virtual currency to replace standard currencies in the future.

The Hottest ICOs Are the Ones That Have Done the Least Amount of Work (BBG)
The data support this view. Of the 30 biggest digital tokens sold in ICOs this year, the ones without a working product backing their projects did the best in their first month of trading, data compiled by Bloomberg show. And the ICOs with actual products that could be tested? Almost two-thirds of those declined. RELATED: SEC halts virtual coin offering, issues investor warning

European Parliament Report Accuses Wilbur Ross of Insider Trading (Mother Jones)
Ross sold near the top of the market. Since the 2015 admissions that the Bank of Ireland relied on flawed accounting methods, the bank’s share prices have dropped significantly. Yet as a board member, Ross would have presumably been privy to the bank’s most sensitive financial information, including its bookkeeping practices. This raises the question of what Ross knew when he sold off his shares. Was he aware that the losses the bank was deferring using flawed accounting would inevitably reappear and that he could get out of the company before the true state of its finances became clear?

Gay on Wall Street (II)
If LGBT professionals navigate their lives carefully, it’s because they’ve learned to. “My introduction to Wall Street was not a positive one,” says Sears. “I entered investment banking in 1998, and I had a homophobic boss. On my second week on the job he called the analyst next to me a faggot. It sent the message to me immediately that this was not a company I wanted to stay with.

Both left and right could make big changes to how the Fed operates in the next recession (FT Alphaville)
“Like it or not, the central bank is a central planner, shaping both the character and the level of economic activity. It should embrace this role—and the democratic accountability that goes with it—and exercise its power toward the public good.”

Retail Investors Aren’t As Stupid As They Tell You (Mike Ashton)
It turns out that since the allocation to cash is, mathematically, CASH / (CASH+STOCKS), when the denominator declines due to stock market declines the overall cash ratio moves automatically! Thus, it seems that maybe what we’re looking at in the “scary” chart is just the natural implication of fluctuating markets and uninvolved, as opposed to returns-chasing, investors.

AI-Assisted Fake Porn Is Here and We’re All Fucked (Motherboard)
There’s a video of Gal Gadot having sex with her stepbrother on the internet. But it’s not really Gadot’s body, and it’s barely her own face. It’s an approximation, face-swapped to look like she’s performing in an existing incest-themed porn video. The video was created with a machine learning algorithm, using easily accessible materials and open-source code that anyone with a working knowledge of deep learning algorithms could put together.

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Opening Bell: 6.21.16

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Barney Frank cries foul in government's lawsuit against JPMorgan (Reuters) Democratic Congressman Barney Frank defended the largest U.S. bank on Monday, saying in a statement that the government was wrong to go after JPMorgan Chase & Co for the alleged misdeeds of Bear Stearns. Frank, who served as chairman of the House Financial Services Committee during the Bear Stearns acquisition, said federal and state officials should reconsider holding financial firms liable for the wrongdoing of institutions they absorbed at the government's urging. "The decision now to prosecute J.P. Morgan Chase because of activities undertaken by Bear Stearns before the takeover unfortunately fits the description of allowing no good deed to go unpunished," said Frank, who was also the co-author of the 2010 Dodd-Frank financial reform law. New York Attorney General Eric Schneiderman sued JPMorgan, the nation's largest bank by assets, on October 1 over mortgage-backed securities packaged and sold by Bear Stearns. Hedge Funds Hot For Ailing Greece's Debt (WSJ) Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed. Third Point LLC, based in New York, crowed about Greece in its investor letter earlier this month, citing the resilience of the bonds of fellow bailout-recipient Portugal. "We expected Greece to keep its head up and undergo a similar metamorphosis," the letter said. Ever since Greece completed a debt restructuring in March that turned €200 billion in bonds into about €60 billion, distressed-debt investors—many at U.S. hedge funds—have been picking them over. Hedge-fund analysts have flooded Greek finance officials with requests for information. Prices have climbed. Third Point LLC, based in New York, crowed about Greece in its investor letter earlier this month, citing the resilience of the bonds of fellow bailout-recipient Portugal. "We expected Greece to keep its head up and undergo a similar metamorphosis," the letter said. Billionaire Wilbur Ross Interested In Buying Spanish Bank Assets (Bloomberg) Ross’s WL Ross & Co., which holds about 10 percent of Bank of Ireland and teamed up with Richard Branson to buy part of Northern Rock Plc, is in talks “almost every week” with representatives of the large Spanish banks, he said in an interview in Abu Dhabi, without naming potential targets. “Maybe next year will be the year for Spain,” he said. “We’ve been doing a lot of work in Spain. We’ve put a lot of time and effort into Spain but haven’t put any money in yet.” Doom Heralded at Hayman by Widening Trade Deficit (Bloomberg) Japan’s worsening trade gap will make it harder to service the world’s largest debt, fulfilling part of the doomsday scenario that Hayman Capital Management LP is betting on. The nation’s 10-year note yield may rise toward 10 percent from the world’s third-lowest of 0.79 percent, while the yen weakens, said Richard Howard, who oversees Dallas, Texas-based Hayman’s Japan-focused fund with J. Kyle Bass. That would represent the developed world’s second-highest borrowing costs after Greece, and a surge to that level by the end of 2013 would cause losses of 42 percent for investors purchasing the securities now, data compiled by Bloomberg show. Regulators Crash Over Volcker Definitions (WSJ) The SEC and a trio of banking regulators are butting heads over how to define the buying and selling of securities on behalf of clients, known as market-making, as well as over banks' ability to invest in outside investment vehicles such as hedge funds, according to officials close to the discussions. Since brokers, which are overseen by the SEC, conduct market-making activities, the SEC is pushing for more influence over the issue, these people said. Police: Woman fakes her own kidnapping to get day off work (WOAI) An officer on patrol went to check out a car parked near Ray Ellison and Five Palms around 6:30 p.m. on October 10th. When the officer looked inside the car, he spotted 48-year-old Sheila Bailey Eubank bound with rope. An arrest warrant affidavit states Eubank told police a man jumped into her car around 6:15 a.m. while she was at a Security Service Federal Credit Union ATM near Loop 1604 and Bandera Road. Eubank said the man held her an knife point and forced her to drive him to various locations for what she believed were drug deals. She told officers he then assaulted her, tried to choke her with a rope, and then tied her up and left her in her car. However, officers discovered a lottery ticket in Eubank's purse that was purchased that day during the hours she claimed she was being held. Investigators reviewed surveillance video from the store where the lottery ticket was purchased and found out she had entered the store by herself and appeared "healthy, unhurried, and pleasant with the clerk." Investigators then reviewed video from the Security Service Federal Credit Union where Eubank claimed she was abducted. The video showed withdrawing money from the motor ATM, but there were no signs that anyone else was with her. Police say when Eubank was confronted by investigators, she eventually admitted her story was false and that she simply wanted a day off from work and wanted attention. BofA CEO Moynihan Declares Victory Over Capital Doubters (Bloomberg) Bank of America now has the “top capital” among peers and is capable of paying a bigger dividend, said Chief Executive Officer Brian T. Moynihan. The bank has fulfilled a goal Moynihan drilled into subordinates since his first day on the job: building a “fortress balance sheet,” he said in an Oct. 17 staff meeting at the company’s Charlotte, North Carolina headquarters. “We’re going to officially declare victory on one of those operating principles,” Moynihan said in the town-hall style meeting. “The reason why is, we have the top capital in the industry, the top liquidity in the industry.” People have stopped asking if the bank needs more funds to absorb losses and now want to know when investors will get the excess, he said. Word-Smith: Greg's Book Has 0 Sachs Appeal (NYP) Among the mistakes in the book, sources noted, was Smith’s description of a town-hall meeting last year hosted by Goldman’s co-heads of investment banking — South African Richard Gnodde and Michael “Woody” Sherwood...Smith said one question from a Goldman employee during the 2011 meeting was: “What is the firm doing to address the fact that the culture is dying and our reputation is deteriorating?” According to Goldman, a female referenced in Smith’s book as a “power-hungry” managing director — identified as “Georgette” — was the individual who posed the question about culture. Georgette presented the question as: How is the firm addressing “the perception of the deteriorating culture,” according to a recording of the event, reviewed yesterday by The Post. Smith also writes about a follow-up question demanding “what specifically” the bank was doing — and that it was followed with uncomfortable laughter before some fumbling about over which executive should field the query. There was no follow-up question in the recording of the meeting. Smith embellished that aspect of the book and omitted that “Georgette” — a woman whom Smith worked with and dubbed the “Black Widow” for her cutthroat manner — was the source of the question about values because it undermined his narrative, a source inside the company said. Low Rates Pummel Bank Profits (WSJ) "The longer the Fed stays down at these levels the more it will hurt banks," said Scott Lied, the chief financial officer of ENB Financial Corp, an Ephrata, Pa., institution that has eight branches and 225 employees. "It's painful." Gupta Sentencing Set For Tomorrow (NYP) Prosecutors say Gupta, convicted by a jury in June, deserves as long as 10 years in prison. Gupta seeks probation. Gary Naftalis, a lawyer for Gupta, argued his client’s crime was an “aberrational” event in a “lifetime of good works” that merited a punishment for a man who has suffered an extraordinary fall from grace. He asked Rakoff to impose a term of community service, suggesting Gupta work with troubled youth in New York or with the poor in Rwanda. Theater Thief Costs Movie-Goers Tens of Thousands In Credit Card Fraud (Courant) A man who may have stolen as much as $70,000 a week by slithering beneath theater seats while movies were playing and lifting credit cards from women's' pocketbooks was convicted Monday of fraud and identity theft crimes. Anthony Johnson, 49, and a string of accomplices used the stolen cards to collect thousands of dollars in cash advances from Connecticut's gambling casinos and to make tens of thousands of dollars more in retail purchases in Connecticut and elsewhere, authorities said. On a "good" weekend, Johnson collected $50,000 to $70,000 from the scheme, one of his accomplices testified last week at his trial at U.S. District Court in Hartford. He had to settle for $30,000 or $40,000 on a bad weekend, the accomplice said. The accomplice, who agreed to cooperate with authorities, said Johnson, of Philadelphia, typically worked with women accomplices. They bought tickets to motion pictures likely to be popular with female audiences and chose seats from which they could watch how women in the audience stored their pocketbooks. "Once the movie started, Johnson crawled on the floor, removed credit cards from the stored purses, and returned the wallet to the purses," according to an FBI affidavit. "Johnson crawled in this manner around the theater until he was done…"

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Opening Bell: 11.16.17

Nelson Peltz wins recount (maybe); Wilbur Ross sued by former partners; Stephen Feinberg is gunning for Deutsche Bank; hot cop-on-cop action in Detroit; and more.

Coming soon to a Bridgewater office near you.

Opening Bell: 11.7.17

Ray Dalio's number-two is reportedly kinda handsy; Forbes says Wilbur Ross lied to them about being a billionaire for years; Dick Fuld is back, baby; Bjork wants to give you cryptocurrency; and more.