Opening Bell: 7.31.20 - Dealbreaker
Opening Bell: 7.31.20

Opening Bell: 7.31.20

Hope you’re not counting on that stimulus next week; ‘give the prince whatever he demanded;’ and more!
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Stefan Flöper / Wikimedia Commons

Congress fails to agree on the next coronavirus stimulus deal as $600-a-week unemployment benefits expire [CNBC]
House Speaker Nancy Pelosi, D-Calif. held late-night talks with Schumer, Treasury Secretary Steve Mnuchin and White House chief of staff Mark Meadows…. The talks apparently were unsuccessful….
Schumer said the lack of a Republican consensus on pandemic aid has hindered progress toward a deal. Multiple GOP senators have said a large share of the caucus does not support the legislation Republicans released this week.

Eurozone Economy Contracts by Record 40% [WSJ]
Recent statistics suggest Europe is having a “much bigger snapback and there are some indicators that it may be getting ahead [of the U.S.],” said Holger Schmieding, chief economist at Berenberg Bank…. “The U.S. is paying with fiscal stimulus for its failure to tackle the pandemic decisively,” he said.

Affirm Prepares IPO That Could Value Fintech Firm at Up to $10 Billion [WSJ]
The point-of-sale lender is working with Goldman Sachs Group Inc. on a potential listing, the people said…. Affirm could also sell itself, potentially to a so-called blank-check company, they said….
Affirm was valued at $2.9 billion in April 2019, according to PitchBook, but its target has risen since then—to more than $5 billion and possibly as high as $10 billion, some of the people said.

Europe’s Markets Are Having a Moment [NYT]
The region’s benchmark index, the Stoxx 600, is set for a second straight month of gains greater than those of the S&P 500 index, in dollar terms…. This week, the euro climbed to more than $1.18, the highest since June 2018, as demand for the currency and other European assets increased amid expectations that normal economic activity would resume more quickly in the region.

BNP Paribas Outshines Rivals as Trading Prospers [WSJ]
Global markets revenue jumped almost 64% in the second quarter, with revenue at the bank’s fixed-income operations more than doubling from a year earlier to €2.01 billion ($2.38 billion)…. The Paris-based lender set aside €1.45 billion in the quarter to cover credit losses.

In Argentina’s Debt Negotiations, a Kinder, Gentler Capitalism Faces a Test [NYT]
[BlackRock CEO Larry] Fink has inserted himself into the negotiations, speaking twice with Argentina’s economy minister, according to three people familiar with the talks. The government and its creditors are only three pennies on the dollar apart on their proposed terms….
BlackRock’s stance has put it at odds with the International Monetary Fund, which gave Argentina a rescue package worth more than $50 billion two years ago, and has supported Argentina’s proposal as an Aug. 4 deadline approaches.

Unsealed documents show Epstein, Maxwell correspondence in 2015 [NBC News]
In another typo-filled email a few days later, dated Jan. 25, 2015, "jeffrey E." writes: "You have done nothing wrong and i woudl urge you to start acting like it. go outside, head high, not as an esacping convict. go to parties. deal with it…."
The unsealed documents released Thursday also contain allegations that Jane Doe 3 — whose allegations match those of Giuffre — was "forced" to have sexual relations with Prince Andrew on Epstein’s private island in what was described as "an orgy" with numerous other under-aged girls. It does not specify the year. The woman was allegedly instructed by Epstein to "give the Prince whatever he demanded" and "report back to him on the details of the sexual abuse."

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Opening Bell

Opening Bell: 06.05.12

Germany Pushes EU Bank Oversight (WSJ) Though Berlin has resisted a banking union, Ms. Merkel's initiative shows Germany is willing to talk about an overhaul and is trying to focus the debate on Europe's biggest banks. "We will discuss to what extent we need to put systemically relevant banks under a specific European supervisory authority so that national interests do not play such a large role," Ms. Merkel told reporters ahead of a meeting in Berlin with European Commission President José Manuel Barroso, referring to the June 28-29 summit. Citi Bets That Proof Leads To Profits (WSJ) Seeking a shot in the arm for the ailing banking business, Citigroup Inc. C -2.30% is expanding into a little-known but fast-growing field known as identity proofing—the tedious and time-consuming task of proving people are who they say they are. The third-biggest U.S. bank by assets later this month will begin issuing digital-identity badges to the employees of Defense Department contractors, ranging from makers of high-tech engineering parts to the janitors who clean the bathrooms. Citigroup is the only financial institution that has clearance to sell the identity cards and grab a piece of a market whose annual sales could reach into the billions of dollars. But the badge business is just the beginning. Citigroup's hope is that the contractors will eventually use the plastic on which the badges are issued for more than just identity verification. If companies adopt the technology, their employees will be able to collect paychecks and pay business expenses using the cards—enabling Citigroup to collect fees on all of those transactions. John Paulson Buys Saudi Prince’s $49 Million Aspen Palace (CNBC) The lavish ranch, sold by Saudi Prince Bandar bin Sultan, was once the most expensive estate ever listed in the U.S., with a price tag in 2006 of $135 million. The property includes a main house with 15-bedrooms, 16-baths, and 56,000-square-feet. It also includes several side buildings, as well as a water treatment plant, gas pumps and other high-tech features. Mr. Paulson’s $49 million purchase included two properties — the 90-acre main property as well as a 38-acre property nearby called Bear Ranch. Bear Ranch and Hala Ranch together might have once fetched more than $150 million in 2006 or 2007, according to Aspen real-estate experts. Blankfein: Nyet to Petersburg leaks (NYP) Goldman Sachs CEO Lloyd Blankfein yesterday squarely disputed his former director Rajat Gupta’s claim that Gupta was permitted to speak about details of a 2008 board meeting with his alleged co-conspirator, hedge-fund titan Raj Rajaratnam. “Did you authorize Mr. Gupta to reveal any of the confidential information discussed at the board meeting in St. Petersburg, Russia?” prosecutor Reed Brodsky asked the CEO. “No,” Blankfein said. The details included directors discussing the possibility of Goldman buying a commercial bank or insurance company, including AIG, in the early days of the mortgage crisis. MF Global Trustee Sees $3 Billion in Potential Claims (Reuters) MF Global Holdings could have more than $3 billion in claims against its former affiliates, Louis Freeh, the trustee overseeing the wind-down of the parent company of the collapsed broker-dealer, said in his first status report. The potential recoveries for the parent company's creditors will come primarily from such claims, Freeh said in his 119-page report that was submitted to the bankruptcy court. Former bath-salts addict: 'It felt so evil' (CNN) The man is strapped onto a gurney and restrained, yet he is singing, making faces and twitching. "You know where you're at?" a paramedic asks him, but Freddy Sharp can't answer. He was, he explained later, off in his own world after overdosing on the synthetic drug known as "bath salts." "I'd never experienced anything like that," Sharp told CNN's Don Lemon. "It really actually scared me pretty bad." He said he was hallucinating about being in a mental hospital and being possessed by Jason Voorhees, the character from the "Friday the 13th" movies. "I just felt all kinds of crazy," said Sharp, now 27, of Tennessee, who says he hasn't used bath salts in months. "It felt so evil. It felt like the darkest, evilest thing imaginable." The drug made national headlines recently after a horrific crime in Miami, where a naked man chewed the face off a homeless man in what has been called a zombie-like attack. Australia Central Bank Cuts Rates to Fight Global Gloom (Reuters) Australia's central bank cut interest rates for a second month running on Tuesday in a bid to shore up confidence at home, just as finance chiefs of advanced economies around the world prepare to hold emergency talks on the euro zone debt crisis. Citing a weaker outlook abroad and only modest domestic growth, the Reserve Bank of Australia cut its cash rate by 25 basis points to 3.5 percent. Burbank Bets On Global Recession With Subprime Conviction (Bloomberg) In the dozen years that John Burbank has run his $3.4 billion Passport Capital hedge fund, he’s never been as negative on global stocks as he is now. Burbank, 48, expects that the U.S. and much of the rest of the world will slide into a recession, and he’s setting up for that event with a big wager that global stocks will fall. Most of his peers are still betting that stocks, especially those in the U.S., are more likely to rise than decline. “You have a great contrarian outcome here that will be obvious in hindsight, just like subprime was,” Burbank said in an interview last month. “I have a lot of conviction about something that others don’t seem to see clearly.” In Facebook, Options Traders Shift to Post-Earnings Bets (WSJ) While June and July bets have been most active since Facebook options began trading last Tuesday—accounting for more than half of the total options outstanding—contracts expiring in August and September have been picking up steam. Downside options that expire after the company's first public earnings report—expected at the end of July, though no date has been set—were the most actively traded Monday. The most popular positions included bets Facebook would fall below $25 a share over the next two to three months. Real life Garfield eats his way to 40-pound frame (NYDN) A tubby tabby named Garfield was dropped off at the North Shore Animal League last week tipping the scales at nearly 40 pounds, and now the no-kill shelter is hoping to turn him into the biggest loser. “He needs to lose at least 20 pounds,” shelter spokeswoman Devera Lynn said. “He’s so big, he’s like a dog. He actually has his own room.” Garfield meanders slowly in smaller spaces. He’s being moved to a foster home Tuesday in hopes that a next of kin claims the orange-and-white kitty. But if that doesn’t happen, the North Shore Animal League has received several applications from folks willing to give him a permanent home. Lynn said they’ll work with an owner to put the cat on a healthier track. “He’s actually outgoing for a cat,” Lynn said. “Once he loses that weight, he’s going to be a rock star.”

Opening Bell

Opening Bell: 09.04.12

Moody's Gives EU Warning (WSJ) Moody's Investors Service has put the European Union's triple-A credit rating on a negative outlook in a move that reflects actions the ratings firm has taken on some of the euro-zone's largest members, including Germany and the Netherlands. "Moody's believes that it is reasonable to assume that the EU's credit-worthiness should move in line with the credit-worthiness of its strongest key member states considering the significant linkages between member states and the EU," Moody's said in a release. Fears Rising, Spaniards Pull Out Their Cash and Get Out of Spain (NYT) After working six years as a senior executive for a multinational payroll-processing company in Barcelona, Spain, Julio Vildosola is cutting his professional and financial ties with his troubled homeland. He has moved his family to a village near Cambridge, England, where he will take the reins at a small software company, and he has transferred his savings from Spanish banks to British banks. “The macro situation in Spain is getting worse and worse,” Mr. Vildosola, 38, said last week just hours before boarding a plane to London with his wife and two small children. “There is just too much risk. Spain is going to be next after Greece, and I just don’t want to end up holding devalued pesetas.” In July, Spaniards withdrew a record 75 billion euros, or $94 billion, from their banks — an amount equal to 7 percent of the country’s overall economic output — as doubts grew about the durability of Spain’s financial system. According to official statistics, 30,000 Spaniards registered to work in Britain in the last year, and analysts say that this figure would be many multiples higher if workers without documents were counted. That is a 25 percent increase from a year earlier. Europe Bank Chief Hints At Bond Purchases (WSJ) The comments by Mario Draghi in a closed hearing at the European Parliament on Monday came ahead of the ECB's monthly policy meeting Thursday. That meeting has been keenly awaited in the financial markets for further details of how the bank could help bring down the funding costs of countries such as Spain and Italy to prevent them from having to seek full euro-zone bailouts like Greece, Ireland and Portugal. Switzerland Flirts With Recession (WSJ) "Three months ago, the Swiss economy looked charmingly strong against the backdrop of the euro zone and now it is looking on the brink of recession," said Janwillem Acket, chief economist at Julius Bär in Zurich. Nigeria Uncovers Cocaine-Stuffed Roasted Chicken (AP) The roasted chickens had an unusual stuffing — $150,000 worth of cocaine, according to Nigerian police. A Nigerian mechanic who struggled in Brazil for more than six years had hoped the drugs would buy him a life of luxury in his native land, Nigerian authorities said Monday. "This was like a retirement plan for him," said Mitchell Ofoyeju, spokesman for the National Drug Law Enforcement Agency. The accused was arrested over the weekend at the airport in Lagos after he came in from Sao Paulo with 2.6 kilograms (5.7 pounds) of cocaine, Ofoyeju said. Photos from the agency showed egg-shaped packages wrapped in gold aluminum foil and tucked into the browned chickens. Citibank Hid Firm’s Financial Troubles, Ex-Partner at Dewey & LeBoeuf Says (NYT) In a recent court filing, the former partner, Steven P. Otillar, says Citibank conspired with Dewey's management to hide the law firm's true financial condition in the months before its collapse. Mr. Otillar made the claim in response to a lawsuit brought against him by Citibank seeking repayment of a $210,000 loan. The bank lent Mr. Otillar the money to pay for his capital contribution to Dewey when he joined the partnership in August 2011. (New partners typically must make a financial contribution to a law firm when they join.) The filing said that Citibank had extended Mr. Otillar the loan as part of a fraudulent scheme intended to benefit Citibank and Dewey's management. By recruiting him and other partners to join the financially troubled firm in the months leading up to its demise—and collecting millions of dollars from them—Dewey's partners enriched themselves and kept the firm afloat. Credit Suisse Exec Facing Arrest Order (Reuters) A judge in Argentina has ordered the arrest of Credit Suisse executive and former US Treasury Undersecretary David Mulford because he failed to testify over a 2001 Argentine debt swap, the state news agency reported today. Federal Judge Marcelo Martinez de Giorgi will ask Interpol to issue an international arrest warrant seeking Mulford’s extradition for questioning over the bond exchange carried out by the government in an unsuccessful bid to avoid default. Bernanke Channeling Hatzius Dismissing Gross New Normal (Bloomberg) Federal Reserve Chairman Ben S. Bernanke is betting the new U.S. economy is the same as the old one as he lays out arguments for more stimulus to revive it. He made that diagnosis last week in a rebuttal to those who blame an 8.3 percent unemployment rate on structural shifts in the economy wrought by the financial crisis and who contend joblessness is permanently elevated. “I see little evidence of substantial structural change in recent years,” Bernanke told fellow central bankers and economists at the annual monetary-policy symposium in Jackson Hole, Wyoming. “Following every previous U.S. recession since World War II, the unemployment rate has returned close to its pre-recession level.” Ice Picks Are Still Used As Weapons (NYT) Mann Rosa, 32, who lives on Perry Avenue about a block from the scene of the recent attack, said ice picks were back in vogue among street gangs all across the city. “The ice pick, from what I know, is the new thing,” Mr. Rosa said, noting how easy it was to buy and conceal. “It’s definitely the new wave.” Toward the end of the conversation, almost as if he had an afterthought, Mr. Rosa said he had been stabbed repeatedly with an ice pick about two years ago during a street fight. He rolled up the sleeve of his T-shirt to reveal two dime-size wounds, not unlike scars from a smallpox vaccination, on his shoulder and upper arm. “I was stabbed once in the chest, once in the back and twice in the arm,” Mr. Rosa said; it took 12 stitches to close the wounds. Asked if the police ever caught the perpetrator, Mr. Rosa laughed and shook his head. “We got this thing called street justice. We don’t go to the cops over something like that.”

Opening Bell

Opening Bell: 02.27.13

Bernanke Affirms Bond Buying (WSJ) In his semiannual report to Congress Tuesday, Mr. Bernanke said the bond buying is helping the economy by holding down long-term interest rates and ought to be sustained. "Keeping long-term interest rates low has helped spark a recovery in the housing market and has led to increased sales and production of automobiles and other durable goods," he said. The Fed has accumulated $2.8 trillion of Treasury and mortgage securities. Mr. Bernanke's remarks signaled little change in the central bank's plans to purchase $85 billion a month of long-term Treasury and mortgage debt. The Fed's next policy meeting is March 19-20. Regulators Hope For Libor Pacts (WSJ) Regulators investigating alleged interest-rate manipulation are hoping to reach settlements with at least three major financial institutions by the end of summer, according to a person familiar with the probes. It isn't clear if the companies will go along with any proposed settlements, and previous agreements with banks were delayed before being completed. So far, regulators have settled rate-rigging charges with Barclays, RBS, and UBS collecting about $2.5 billion in penalties. All three banks admitted that employees sought to rig rates. Barclays to Unveil Numbers Earning 1 Million (FT) Barclays is set to reveal the number of staff who earned above 1 million pounds ($1.5 million) last year, in a push for transparency that could turn the bank into a trailblazer for the sector. In its annual report next week, the British retail and investment bank will for the first time give an outline of the various pay brackets among its 140,000 staff, people close to the situation said. Analysts estimate that between 600 and 700 employees – mostly in the investment bank – will be revealed as having taken home more than 1 million pounds last year. JPMorgan To Cut 17,000 Jobs (WSJ) The move announced Tuesday by the New York company, the nation's most profitable bank in 2012 and the biggest U.S. lender by assets, will reduce its staff by 6.5% in one of the most aggressive reductions to date amid widespread financial-industry cutbacks. Bond brawl: Singer v. Argentina today (NYP) Lawyers Ted Olsen and David Boies will appear before a Manhattan US appeals court to argue over how $1.44 billion in Argentina debt should be paid. Olsen represents billionaire hedge fund magnate Paul Singer, who claims he and other bondholder holdouts should be paid alongside those holders who agreed to a steep haircut during a debt restructuring. Argentina President Cristina Kirchner has long insisted she will never pay “one dollar” to the Singer holdouts. Boies represents the bondholders who agreed to the restructuring — and they oppose Singer, believing that Argentina will never go along with a pro-holdout ruling, thus putting their bonds at risk of default. Cops: Florida Man, 36, Assaulted Teen Relative With Taco Bell Burrito (TSG) The victim told cops that he was having a “verbal altercation” with his mother and Brown, his brother-in-law, when Brown “asked his mother to bring him the burrito,” according to an arrest affidavit. Brown then allegedly threw the burrito “with force” at the victim, striking the boy in the face with the fast food item. While interviewing the teen, cops noted that he had “burrito cheese, sauce and meat all over his clothing and face.” Brown told police that the victim was disrespectful to his mother and had cursed at the woman. He also acknowledged that he had “delivered” the burrito. After being booked into the county jail, Brown warned that he would “take care” of the teen upon his release from custody, adding that the victim “was going to get knocked out.” Best Buy Takeover Attempt by Founder in Jeopardy (Reuters) Best Buy founder Richard Schulze's effort to take the company private is in trouble after attempts to secure financing faltered while an alternative strategy to line up minority investors may not pan out either, five sources familiar with the matter said. No longer pursuing a full takeover bid for the troubled electronics retailer, Schulze has focused discussions in recent weeks on a potential deal in which private equity firms would buy a non-controlling stake, the sources, who declined to be named because the discussions are private, said. 'Penta-Millionaires' Happier Than Merely Rich: Study (CNBC) Breaking: A survey from Spectrem Group found that individuals worth $5 million or more are far more satisfied with their jobs, relationships and work than those worth $100,000 or less. Dimon Says Banks Have More Capital Than They Can Use (Bloomberg) The biggest U.S. banks are lending the smallest portion of their deposits in five years as cash floods in from savers, a slow economy damps demand from borrowers and regulators push financial firms to bolster themselves against any future credit crisis. The average loan-to-deposit ratio for the top eight commercial banks fell to 84 percent in the fourth quarter from 87 percent a year earlier and 101 percent in 2007, according to data compiled by Credit Suisse Group AG. JPMorgan had the lowest ratio in the group at 61 percent. “I don’t want to say it’s anti-American” to be held to international standards, Dimon said, adding that the bank’s assets include highly rated securities. “That balance sheet is almost as liquid as you can get.” Budweiser Has Been Sued 3 Times for Watering Down All Those Watery Beers (Atlantic Wire) The plaintiffs — including one guy who bought a case of Michelob Ultra a month, for some reason — allege that the public doesn't know what all the beers under the Budweiser umbrella really taste like, and that they're not getting their money's worth. There is no science backing up the defendants' claims, and AB InBev has yet to respond in court. The krux of the evidence comes from "information from former workers" of Anheuser-Busch breweries who claim watering down the beer in post-production is a company policy.

powell
Opening Bell

Opening Bell: 8.28.20

Of deviations and shortfalls; Argentine hopes; exchange espionage; and more!

Opening Bell

Opening Bell: 12.14.12

UBS Unit Said to Be Close to Guilty Plea in Rate-Rigging Scandal (NYT) Federal prosecutors are close to securing a guilty plea from a UBS subsidiary at the center of a global investigation into interest rate manipulation, the first big bank to agree to criminal charges in more than a decade. UBS is in final negotiations with American, British and Swiss authorities to settle accusations that its employees reported false rates, a deal in which the bank's Japanese unit is expected to plead guilty to a criminal charge, according to people briefed on the matter who spoke of private discussions on the condition of anonymity. Along with the rare admission of criminal wrongdoing at the subsidiary, UBS could face about $1 billion in fines and regulatory sanctions, the people said. Meet Them In St. Louis: Bankers Move (WSJ) Smaller cities around the nation have emerged as unlikely hives of financial-services hiring, thanks to lower wages, municipal-tax incentives and the misfortunes of older hubs that are home to companies ravaged by the 2008-2009 financial crisis. The beneficiaries are spread across the U.S., according to an analysis of data by The Wall Street Journal. In St. Louis, the 19th-largest U.S. metropolitan area, securities-industry employment surged 85% between January 2007 and September 2012 to a recent 12,190, according to figures compiled by Moody's Analytics. New York lost 9% of its jobs in the securities, commodities, asset-management and fiduciary-trust areas over the same period, leaving it with 195,000. Counter-Terrorism Tools Used to Spot Staff Fraud (FT) JPMorgan Chase has turned to technology used for countering terrorism to spot fraud risk among its own employees and to tackle problems such as deciding how much to charge when selling property behind troubled mortgages. The technology involves crunching vast amounts of data to identify hard-to-detect patterns in markets or individual behavior that could reveal risks or openings to make money. Other banks are also turning to "big data", the name given to using large bodies of information, to identify potential rogue traders who might land them with massive losses, according to experts in the field...Guy Chiarello, JPMorgan's chief information officer, said the bank was mining massive bodies of data in "a couple of dozen projects" that promised to have a significant affect on its business, although he refused to give further details. According to three people familiar with its activities, JPMorgan has used Palantir Technologies, a Silicon Valley company whose technology was honed while working for the US intelligence services, for part of its effort. It first used the technology to spot fraudsters trying to hack into client accounts or ATMs, but has recently started to turn it on its own 250,000-strong staff. Obama Meets Boehner at White House for Budget Talks (Bloomberg) President Barack Obama and House Speaker John Boehner met for a third time at the White House to discuss averting spending cuts and tax increases before a year- end deadline. Boehner and Obama met for almost an hour yesterday, with no public announcement of progress. In January, more than $600 billion in spending cuts and tax increases, the so-called fiscal cliff, are scheduled to begin. “The president and speaker had a frank meeting in the Oval Office,” Boehner spokesman Brendan Buck said in an e-mailed statement, adding that the “lines of communication remain open.” Britain's Queen Quizzes Central Bank on Financial Crisis (CNBC) During a visit to the Bank of England on Thursday, the Queen was overheard asking whether a "lax" attitude to financial regulation had contributed to the financial crisis. After touring the vast vaults of gold bullion that lie beneath the central bank in London, Queen Elizabeth reportedly asked the central bank officials whether the Financial Services Authority (FSA) that was meant to regulate the banking system had not been aggressive enough - "did not have the teeth" - in its response to the crisis...The Queen was then told that officials in the room were charged with ensuring the crisis did not happen again. The Queen's husband, Prince Philip, then jokingly asked "There's not another one coming, is there?" before telling the officials present "Don't do it again." John McAfee Returns to US, Admits Playing 'Crazy Card' (ABC) After three weeks ducking authorities in Belize, by hiding in attics, in the jungle and in dingy hotels, he turned up in Guatemala Dec. 3. Barely a day later he was detained for entering the country illegally. As Guatemala officials grappled with how to handle his request for asylum and the Belize government's demand for his deportation, McAfee fell ill. The mysterious illness, described by his attorney alternately as a heart ailment or a nervous breakdown, led to a scene with reporters chasing his ambulance down the narrow streets of Guatemala City and right into the emergency room, where McAfee appeared unresponsive. He now says it was all a ruse: "It was a deception but who did it hurt? I look pretty healthy, don't I?" He says he faked the illness in order to buy some time for a judge to hear his case and stay his deportation to Belize, a government he believes wants him dead. When asked whether he believes Belize officials where inept, he didn't mince words. "I was on the run with a 20-year-old girl for three and a half weeks inside their borders and everyone was looking for me, and they did not catch me," he said. "I escaped, was captured and they tried to send me back. Now I'm sitting in Miami. There had to be some ineptness." [...] He denies any involvement in his neighbor's death but adds that he is not particularly concerned about clearing his name. He is focused on getting his 20-year-old and 17-year-old girlfriends out of Belize and says he has no idea what he'll do next, where he'll live or how he'll support himself. CNBC v. Buffett (NYP) The “Oracle of Omaha” sent a terse e-mail to editors at CNBC yesterday after a reporter for the cable news network railed against his recent repurchase of Berkshire Hathaway shares. Gary Kaminsky, CNBC’s capital markets editor, took Buffett to task for the $1.2 billion stock buyback, calling it “hypocritical to the maximum level.” Kaminsky claimed that Buffett’s purchase allowed the seller — described by Berkshire as the “estate of a long-time shareholder” — to avoid potentially higher capital gains taxes next year...In his rebuttal e-mail, Buffett said capital gains taxes don’t apply to estates. “Mr. Kaminsky also made the statement that the estate that was a seller was better off by selling in 2012 than 2013,” he wrote. “This, too, was incorrect.” He said capital gains are wiped out by stepped-up basis rules, with assets marked at their current fair-market value at the time of death. Buffett also blasted Kaminsky for saying his buyback was hypocritical on principal as Buffett is known to eschew buybacks. Buffett attached a copy of Berkshire’s 1984 annual report showing he has outlined conditions under which he would favor buybacks. CNBC anchor Melissa Lee read a correction late Tuesday that thanked the famed investor for “watching and setting us straight.” Fisher: Fed Risks 'Hotel California' Monetary Policy (CNBC) Dallas Fed President Richard Fisher told CNBC that he's worried the U.S. central bank is in a "Hotel California" type of monetary policy because of its "engorged balance sheet." Evoking lyrics from the famous song by The Eagles, he said he feared the Fed would be able to "check out anytime you like, but never leave." Fisher said on "Squawk Box" that he argued against revealing the new inflation and unemployment targets set by the Fed this week, saying he's worried that the markets will become "overly concerned" with the thresholds. Euro-Zone Downturn Eases (WSJ) Data company Markit said on Friday its preliminary purchasing managers' index, a gauge of activity among euro-zone factories and services companies, rose to 47.3 in December from 46.5 in November. A reading above 50.0 would signal an expansion. The national measure for Germany picked up to 50.5 from 49.2 in November, indicating that activity rose in the euro zone's largest member. "The euro-zone downturn showed further signs of easing in December, adding to hopes that the outlook for next year is brightening," said Chris Williamson, chief economist at Markit. Residents find neighbor at their door with machete (KS) A 38-year-old Bremerton man was arrested by police Monday night for allegedly confronting his neighbors with a machete in response to alleged vandalism at his residence, according to documents filed in Kitsap County District Court. Officers were called to a Nollwood Lane address shortly after 8 p.m. Monday. Two residents said when they answered a knock at their door, a man was standing in the doorway holding a machete. The man, a neighbor, reportedly said he was tired of vandalism to his home and blamed it on a family member of his neighbors, police said. The neighbors attempted to slam the door on the man, but he reportedly put his foot into the door holding it open, police said. The neighbors were ultimately able to close it, though the suspect denies he put his foot in the door. Police interviewed the man, 38, who admitted he'd retrieved the machete out of anger after another incident of vandalism.

Opening Bell

Opening Bell: 06.12.13

Pimco Sees 60% Chance of Global Recession in Five Years (Bloomberg) Pacific Investment Management Co., the world’s largest active bond manager, said investors should cut risk amid a more than 60 percent chance of a global recession in the next three to five years. Global growth will slow, keeping inflation in check, and “economic volatility” will increase, Saumil Parikh, a portfolio manager at Newport Beach, California-based Pimco, said in a report being posted on the firm’s website today. Investors shouldn’t add risk in the search for yield, he said. “The global economy experiences a recession every six years or so, and the frequency of global recessions tends to increase when global indebtedness is high and falling as opposed to when indebtedness is low and rising,” Parikh, who focuses on asset allocation, multisector fixed income and absolute-return portfolios, said in the report. The last global recession was four years ago, he said. Banks Get Reprieve on New Swaps Rule (WSJ) Some of biggest banks on Wall Street will get an additional two years to comply with a post-financial crisis rule requiring they move risky swap activities into separate affiliates. The Office of the Comptroller of the Currency said it granted extensions to seven banks, giving them until July 2015 to comply with so-called "swaps push-out" rules required by the 2010 Dodd-Frank law. ... The OCC notified Bank of America Corp., J.P. Morgan Chase & Co., Citigroup Inc., Wells Fargo & Co., HSBC Holdings PLC, Morgan Stanley and U.S. Bancorp that they were granted a 24-month extension in response to their requests for a longer transition period. The move comes less than a week after the Federal Reserve said foreign banks also will be eligible for the two-year delay in complying with the rule, which is slated to take effect July 16. Emerging market assets suffer in fierce sell-off (FT) Emerging economies have been among the prime beneficiaries of ultra-loose global monetary policy as central banks led by the Fed have flooded financial markets with more than $12tn of extra liquidity since the financial crisis. But signs of an economic slowdown spreading from China and indications that the Fed could reduce the pace of its $85bn-a-month bond purchases have triggered a sharp correction in emerging markets. The South African rand and the Brazilian real touched four-year lows against the US dollar on Tuesday, and the Indian rupee fell to a record low. Even relatively robust countries like the Philippines and Mexico – long favourites of investors – have been hit by a spate of selling. Some central banks have begun to intervene to stem the currency slides. Is U.S. stock trading safer? Fewer erroneous trades seen (Reuters) More than three years after the "flash crash" terrified many by temporarily wiping out almost $1 trillion of U.S. stock market value in a few minutes, there are signs that the number of erroneous and aberrant trades is dropping. The use of circuit breakers for individual securities in the wake of the May 6, 2010 plunge, and the introduction of tougher risk-management controls for broker-dealers in November 2010 appear to have helped stabilize trading, market experts and regulators said. The Financial Industry Regulatory Authority, the security industry's watchdog, said the number of reports of "clearly erroneous" trades it received was down 84 percent in the last six months of 2012 compared with the first six months of 2009. Facebook Investors Press Zuckerberg on Stock Price at Annual Meeting (CNBC) Facebook CEO Mark Zuckerberg tried to tackle concerns about its stock head-on at the first annual shareholder meeting Tuesday, but investors pressed for answers about why the price is still down a year after the company went public. "The answer is we understand that a lot of people are disappointed with the performance of the stock, and we really are, too," Zuckerberg said in his opening remarks before taking questions. ... The stock, priced at $38 when the company went public in May 2012, hit $17 a few months ago and was trading at about $24 in afternoon trading Friday. Facebook can't control the stock price but is focused on developing the best products to create more shareholder value, Zuckerberg said. NJ Mayor Apologizes for Calling Residents "Annoying" (NBC) The mayor of Toms River apologized Tuesday night for comments he made about an area battered by Sandy, but not all residents were satisfied. Last week, Mayor Thomas Kelaher told Bloomberg News that he thought residents of Ortley Beach, where many are still without homes, were "annoying." "I certainly never intended to be disrespectful to the people who live in Ortley beach," Kelaher said at a meeting Tuesday. Marketfield Poet-Philosopher Pair Bet Europe for Top Fund (Bloomberg) Michael Aronstein, a poet, and Michael Shaoul, a doctor of philosophy, have made their MainStay Marketfield Fund the world’s fastest-growing by anticipating recoveries in the most-hated assets. Marketfield grew more than five-fold to $9.5 billion in the past year, the biggest increase of a fund with more than $5 billion in assets, after betting on a rebound in U.S. housing stocks and European shares. Now, their success relies on Irish and Italian stocks rallying and equities in China , Brazil and India tumbling. The New York-based fund has advanced 70 percent since July 2007, more than triple the return of the Standard & Poor’s 500 Index, data compiled by Bloomberg show. “I don’t know where the level is,” Aronstein, a former Merrill Lynch strategist who writes poetry in his spare time, said of the potential for further declines in developing nations’ stocks in an interview April 4. “But if we are right, it’s going to get to the point where people cannot stand it anymore.” Metacapital in Worst Slide as Bloodbath Roils Funds (Bloomberg) Deepak Narula rose to fame as manager of the best-performing hedge fund last year by navigating the government’s stimulus efforts. He’s having a far harder time as the Federal Reserve moves closer to an exit. Metacapital Management LP’s flagship $1.5 billion fund lost an estimated 6.4 percent last month, the worst decline since it started in 2008, according to a letter to investors obtained by Bloomberg News. That followed drops of 0.5 percent in April and 0.1 percent in March, after 17 months of consecutive gains including a 41 percent return last year. ... “It’s been a bloodbath the last four to six weeks,” said Troy Gayeski, a senior portfolio manager who helps invest client money in hedge funds at SkyBridge Capital, which manages about $7.7 billion. “It was a confluence of just about everything” from investors’ concerns that refinancing would pick up among some borrowers who’ve had trouble qualifying to the slump in the mortgage debt that the Fed is buying, he said. SoftBank's Son Felt Time Pressure to Push Sprint Deal Forward (WSJ) In the end, SoftBank Corp. Chief Executive Masayoshi Son concluded that time was money. After a weekend of wheeling and dealing, he was willing to sweeten the Japanese company's bid for Sprint Nextel Corp. that Mr. Son for weeks had been saying already was high enough. His hope with the new bid is to keep the acquisition on track for midsummer completion and resolve complications raised by a rival offer. Mr. Son agreed for SoftBank to throw another $1.5 billion on top of the $20.1 billion already offered to achieve the "certainty of timing" for closing the deal in early July, a person familiar with the new proposal said. Pattern of negative correlation between HY bonds and treasuries has been broken (Sober Look) Since the financial crisis, the correlation between treasuries and many credit assets such as high yield bonds (HY) has been strongly negative. ... Recent events however broke that pattern. We've had a number of days with both the longer dated treasuries and HY selling off. That means the HY asset class is now responding to rate moves (not just spread). The 3-month correlation between prices of longer dated treasuries and HY bonds is nearing zero. This move toward a "less negative" correlation with treasuries is also visible in other credit assets as well. Sub-investment-grade credit investors are all of a sudden paying much closer attention to rates. US warns EU against exempting film industry from trade talks (FT) The US government has warned Brussels that EU efforts to placate French demands to exempt its film industry from high-profile transatlantic trade talks could unleash a torrent of demands in Washington for similar reciprocal carve-outs that would imperil a comprehensive deal. ... José Manuel Barroso, the European Commission president, met European filmmakers on Tuesday, including “The Artist” star Bérénice Bejo, to reassure them the trade deal will not jeopardise their protections. “Let me state loud and clear: the cultural exception is not negotiable,” Mr Barroso said after the meeting. Most Americans Aren’t Excited About Their Jobs (WSJ) FYI. State Dept. officials deny prostitution cover-up allegations (CBS) The allegations were first brought to light by CBS News' John Miller, who reported that according to an internal State Department Inspector General's memo, several recent investigations were influenced, manipulated, or simply called off. One specific example mentioned in the memo refers to the 2011 investigation into an ambassador who "routinely ditched ... his protective security detail," and inspectors suspect this was in order to "solicit sexual favors from prostitutes." ... In response to the allegation, Gutman said on Tuesday: "I am angered and saddened by the baseless allegations that have appeared in the press and to watch the four years I have proudly served in Belgium smeared is devastating. I live on a beautiful park in Brussels that you walk through to get to many locations and at no point have I ever engaged in any improper activity."

By Nordenfan (Own work) [CC BY-SA 4.0], via Wikimedia Commons
Opening Bell

Opening Bell: 1.31.17

Deutsche settles mirror mess; Buffet buys stocks, gives wife colander to puke in; Saudi prince fills plane with hawks; and more.

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Opening Bell

Opening Bell: 6.7.17

Santander gives in to Popular demand; Lloyd Blankfein's Twitter game is...odd; shareholder activism taken to its goriest limit; and more.