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Opening Bell: 9.1.20

Opening Bell: 9.1.20

J.C. Penney has 10 days to live; Telsa splittin’ and sellin’ stock; models ‘can be and have been wrong;’ judge politely asks Steve Bannon to STFU; and more!

Jarle H. Moe / Nordiske Mediedager / CC BY-SA (https://creativecommons.org/licenses/by-sa/2.0)

J.C. Penney has 10 days to live; Telsa splittin’ and sellin’ stock; models ‘can be and have been wrong;’ judge politely asks Steve Bannon to STFU; and more!

J.C. Penney sale talks stall, pushing retailer to brink [Reuters]
Discussions between the Plano, Texas-based retailer and a duo of mall owners Simon Property Group Inc and Brookfield Property Partners LP stalled over the weekend, Joshua Sussberg, a J.C. Penney lawyer at Kirkland & Ellis LLP, said during a Monday court hearing…. Sussberg said lenders were still prepared to rescue the 118-year-old company and more than 70,000 jobs depending on negotiations over the next 10 days….
“I hope everyone realizes how serious I am about this. I know where this is headed,” Jones said during Monday’s hearing. He told a shareholder that declining to allow J.C. Penney to continue talks with lenders would result in all the company’s stores closing and “the death of an entity.”

Zoom Again Lifts Full-Year Outlook as Sales Surge During Pandemic [WSJ]
Zoom on Monday reported sales of $663.5 million in the July quarter, up from $145.8 million a year earlier, as it posted a profit of $185.7 million…. Zoom lifted its full-year outlook for sales to a range of $2.37 billion to $2.39 billion, with an adjusted operating profit of between $730 million and $750 million…. It began the year projecting less than $1 billion in sales.

Tesla to sell up to $5 billion in stock amid its incredible rally [CNBC]
“We intend to use the net proceeds, if any, from this offering to further strengthen our balance sheet, as well as for general corporate purposes,” Tesla said…. Through Monday’s close, the electric car maker has gained nearly 500% in 2020. In the last year, shares have gained 1,004% compared with the S&P 500′s 20% rise.

Anthem-Cigna Fight Over Failed Merger Ends in a Draw [WSJ]
Cigna, he said, had breached its obligation to try to consummate the deal: “Rather than seeking to complete the Merger, Cigna sought to derail it,” [Delaware Vice Chancellor J. Travis Laster] wrote…. Cigna proved that it was likely that the deal would have been blocked regardless of its actions, he wrote. In the end, “each party must bear the losses it suffered as a result of their star-crossed venture.”

Top Fed Official Says New Framework Provides More Humble Approach to Setting Rates [WSJ]
The change “reflects the reality that economic models of maximum employment, while essential inputs to monetary policy, can be and have been wrong,” he said. “A decision to tighten monetary policy based solely on a model without any other evidence of excessive cost-push pressure…is difficult to justify given the significant cost to the economy if the model turns out to be wrong….”
Mr. Clarida said Fed officials believed two tools—forward guidance and asset purchases, which the central bank deployed last decade—would be best suited to provide stimulus after the Fed lowered rates to zero.

California corporations would be required to diversify their boards under bill sent to Newsom [L.A. Times]
The Assembly approved a measure that would require publicly held corporations headquartered in California to have at least one director from an underrepresented community by the close of 2021…. Lawmakers cited a 2018 study by Deloitte and Alliance for Board Diversity that found that out of 1,222 new board members of Fortune 100 companies, 77% were white. In addition, the Latino Corporate Directors Assn. released a survey last month that said 87% of boards for California corporations lack Latino representation.

Judge Warns Steve Bannon, Co-Defendants About Public Statements in Wall-Fundraising Case [WSJ]
During a Skype hearing, U.S. District Judge Analisa Torres told the defendants to avoid certain types of statements but stopped short of issuing a formal gag order.
“Do you understand, Mr. Bannon?” said Judge Torres.
“Yes, your honor,” Mr. Bannon replied….
In a recent radio interview, Mr. Bannon called the indictment a “total political hit job” and “completely nonsense.”

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Wall Street Damps Pay Expectations After 2011 Bonus Shock (Bloomberg) Almost 20 percent of employees won’t get year-end bonuses, according to Options Group, an executive-search company that advises banks on pay. Those collecting awards may see payouts unchanged from last year or boosted by as much as 10 percent, compensation consultant Johnson Associates Inc. estimates. Decisions are being made as banks cut costs and firms including UBS AG (UBSN) and Nomura Holdings Inc. (8604) fire investment-bank staff. Some employees were surprised as companies chopped average 2011 bonuses by as much as 30 percent and capped how much could be paid in cash. That experience, along with public statements from top executives, low trading volumes in the first half and a dearth of hiring has employees bracing for another lackluster year, consultants and recruiters said. “A lot of senior managers won’t have to pay up because they’re saying, ‘Where are these guys going to go?’” said Michael Karp, chief executive officer of New York-based Options Group. “We’re in an environment where a lot of people are just happy to have a job. Expectations have been managed so low that people will be happy with what they get.” Goldman Pares Back Partner Picks (WSJ) The New York company is expected to announce this week the promotion of about 70 employees to partner, said people familiar with the situation. The likely total is roughly one-third smaller than the 110 employees named partner by Goldman in 2010...As of Monday, the Goldman partnership committee hadn't finished the list of new partners, said people familiar with the matter. Greece Avoids Defaults (WSJ) Cash-strapped Greece on Tuesday raised the money it needs to avoid default when a Treasury bill matures later this week, but investor nerves are unlikely to be calmed as negotiations for the next slice of much-needed aid continue. The rift among Greece's official lenders over how to pare the country's growing debt pile spilled into the open late Monday, complicating efforts for an agreement that will free up a long-delayed aid payment to the country. The European Central Bank's reluctance to provide additional money to Greek banks poses a risk to the government, which in order to keep afloat has depended on support from local banks to sell its debt. Greece Needs Another 80 Billion Euros: Goldman Sachs (CNBC) The authors of the report, economists Themistoklis Fiotakis, Lasse Holboell Nielsen and Antoine Demongeot, note that the IMF’s target is “unlikely” without such a “drastic debt stock reduction.” “To increase the likelihood that the Greek debt-to-GDP ratio approaches its 120 percent by 2020 target under realistic assumptions, a much more drastic debt stock reduction (possibly north of 80 billion euros in total) will be required,” the report states. Japan Lawmakers Agree To Avert 'Fiscal Cliff' (Reuters) Japan's ruling and opposition parties agreed on Tuesday to quickly pass a deficit funding bill in parliament, in a move that will keep the country from falling off its version of a 'fiscal cliff' as the prime minister eyes elections as early as next month. The bill is needed to borrow some $480 billion and fund roughly 40 percent of this fiscal year's budget. Without it, the government could run out of money by the end of this month and would have to stop debt auctions next month, just as the economy teeters on the brink of a recession. Marc Faber: Prepare For A Massive Market Meltdown (CNBC) “I don’t think markets are going down because of Greece, I don’t think markets are going down because of the “fiscal cliff” – because there won’t be a “fiscal cliff,” Faber told CNBC’s “Squawk Box.” “The market is going down because corporate profits will begin to disappoint, the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20 percent, in my view.” FBI Agent in Petraeus Case Under Scrutiny (WSJ) A federal agent who launched the investigation that ultimately led to the resignation of Central Intelligence Agency chief David Petraeus was barred from taking part in the case over the summer due to superiors' concerns that he was personally involved in the case, according to officials familiar with the probe. After being blocked from the case, the agent continued to press the matter, relaying his concerns to a member of Congress, the officials said. New details about how the Federal Bureau of Investigation handled the case suggest that even as the bureau delved into Mr. Petraeus's personal life, the agency had to address conduct by its own agent—who allegedly sent shirtless photos of himself to a woman involved in the case prior to the investigation. Trial to Open in $68 Million Insider Trading Case (Dealbook) On Tuesday, Mr. Chiasson, 39, a co-founder of the now-defunct Level Global Investors, and Mr. Newman, 47, a former portfolio manager at Diamondback Capital Management, are set to stand trial in Federal District Court in Manhattan. Prosecutors say they were part of a conspiracy that made about $68 million illegally trading the computer company Dell and the chip maker Nvidia. MF Report Coming (Reuters) A US House of Representatives panel will release a long-awaited report that will dissect the collapse of failed commodities brokerage MF Global. The House Financial Services Committee said its Subcommittee on Oversight and Investigations will post the report online Thursday. A Dose of Realism for the Chief of J.C. Penney (NYT) Andrew Ross Sorkin: "You should know you have a problem when sales at your stores fall 26.1 percent in one quarter. That was the surprising decline J.C. Penney reported last week, when it disclosed that it had lost $123 million in the previous three months...Here's the good news: In the stores that have been transformed, J.C. Penney is making $269 in sales a square foot, versus $134 in sales a square foot in the older stores. So the model itself is working. And Mr. Johnson has the support of the company's largest shareholder, Pershing Square's Bill Ackman, who personally recruited Mr. Johnson. If Mr. Johnson were starting with a blank slate, it might be a great business." China Banker Sees Lower Bar for Yuan Globalization (WSJ) "Renminbi internationalization can be realized based on a partial opening of the capital-account and partial convertibility of the currency," said Mr. Li, a delegate to the 18th Communist Party Congress and longtime advocate of a greater global role for the yuan. The Eximbank is a major arm of the Chinese government for financing trade and investment overseas. Finally, a Place in Brazil Where Dogs Can Go for Discreet Sex (NYT) Heart-shaped ceiling mirror: check. Curtains drawn against the bright day: check. Red mattress: check. The establishment that opened here this year has features that demanding clients naturally expect from a love motel. 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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. 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"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. 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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

Opening Bell: 5.27.16

Judge tells accused Libor manipulator to STFU; Short sellers circle Alibaba; Man proposes to girlfriend using custom Mario level; and more.