Opening Bell: 9.11.20

Bellwether blues; Tesla victimized by own success; Ken Griffin wins (again); Century 21 not so much; and more!

Author:
Dealbreaker
Publish date:
Sep 11, 2020

Denise Gould / Public domain

Bellwether blues; Tesla victimized by own success; Ken Griffin wins (again); Century 21 not so much; and more!

An Economic Bellwether Shows Recovery Losing Steam [WSJ]
“As long as the major economies do not need to get into generalized lockdown, the economy should continue to mend, but cannot sustain the spectacular rebound seen upon reopening businesses a few months ago,” said Gilles Moëc, chief economist at the Axa insurance company. “The hard part starts now….” There were signs of fragility as fresh outbreaks of the virus prompted new restrictions and additional caution among consumers, with declines in activity recorded in Japan, India, Australia, Kazakhstan, Spain and Italy.

Billionaire Michael Hintze’s CQS Hedge Fund Is Down 42.5% [Bloomberg]
The CQS Directional Opportunities Fund, which manages about $1.8 billion, was up 1.3% in August for a third straight month of gains, according to letters to investors seen by Bloomberg. But that wasn’t enough to make much of a dent in the fund’s 48% loss it suffered in the four months through May…. “We are working hard to capture the opportunities, protect the portfolio and rebuild returns for our investors,” Hintze wrote to his investors last month.

Echo Street to Return Hedge Fund Cash, Focus on Other Strategies [Bloomberg]
The firm will continue its long-only fund, which holds about $6 billion and is likely to close to new investors in the coming months…. Echo Street is shifting away from the market-neutral strategy amid the chaos fueled by the Covid-19 pandemic…. The fund Echo Street plans to close is down about 9% this year, according to the person.

Elon Musk’s Payday Could Cost Tesla Shareholders Dearly [WSJ]
In 2018, Tesla awarded Mr. Musk a pay package which includes stock options for more than 20 million shares that vest in 12 tranches, based on a combination of operational and market-value milestones…. Tesla stock has doubled since then, and it is highly likely that other tranches will vest this quarter, which would net Mr. Musk billions more…. That new expense… could harm Tesla’s chances of index inclusion, which was widely anticipated but failed to materialize last week. While the selection committee could opt to include a new company at any time and make exceptions to its rules, the rules call for a GAAP profit in the most recent quarter and cumulative profitability over the previous four.

U.S. Drops Bid for 48-Hour Delay in Big Swap Trade Reporting [Bloomberg]
Ken Griffin’s Citadel and T. Rowe Price Group Inc. were among companies that criticized the 48-hour delay, arguing it would hamper price discovery. Wall Street banks, which act as swap dealers, and fund managers such as Pacific Investment Management Co. have historically been on the other side of the debate, contending that rapid disclosure can hurt firms that are trying to buy or sell large positions because it causes markets to move against them….
Despite scrapping the 48-hour delay, the CFTC is on track to approve many key provisions in its February plan to revamp swaps disclosure rules…. The requirements that the regulator proposed in February would adjust criteria for block trades in a way that would make it harder for transactions to qualify for special treatment. The plan would keep market participants’ identities secret, but require businesses that collect trading data to do so in a more uniform way.

EBay Founder Pierre Omidyar Steps Down From Board [WSJ]
EBay Inc. founder Pierre Omidyar stepped down from the company’s board as part of a broader overhaul that also has Elliott Management Corp. partner Jesse Cohn leaving the board…. The departures aren’t related to any disagreement with the company, eBay said.

Century 21 files for bankruptcy and will close all of its stores [CNN Business]
Century 21 said the final straw was the fact that it did not get $175 million it had filed for under its business interruption insurance for the revenue it lost when pandemic forced store closures. It said similar insurance payments saved it 19 years ago in the wake of the September 11 terrorist attacks -- it had a store directly across the street from the World Trade Center, which was destroyed….
"We now have no viable alternative but to begin the closure of our beloved family business because our insurers, to whom we have paid significant premiums every year for protection against unforeseen circumstances like we are experiencing today, have turned their backs on us at this most critical time," said Century 21 co-CEO Raymond Gindi.

Opening Bell

Stocks win; Apple wins; Tesla loses; Robinhood users really lose; and more!

Opening Bell

Passivity beats activity again; Dimon deals for more fintech; Ken Griffin eyes a kick-around; and more!

Opening Bell

Waiting on the call; Coop’s comedown; London lockdown; Ken Griffin needs a spot by the Seine; and more!

Opening Bell

Obama Address to Focus on Economy, Social Issues (WSJ) President Obama's chief spokesman, Jay Carney, said Monday the core emphasis in the president's big speeches remains the same: "The need to make the economy work for the middle class, because the middle class is the engine that drives this country forward and which will, if it's given the right tools and the right opportunities, will drive us forward in the 21st century." Republicans welcome the president's expected focus on the economy, but also say he hasn't done enough. "The White House says they're talking about jobs and the economy. I welcome that engagement," House Majority Leader Eric Cantor (R., Va.) said in an interview Sunday. "It seems as if the president is constantly trying to pivot back to jobs and the economy. The reason you see that happening is he's never pursued it." Mr. Obama will also address a series of automatic spending cuts set to kick in March 1—the so-called sequester—which could threaten economic growth, national—security preparation and the jobs of thousands of federal employees. Mr. Obama has called on Congress to pass a temporary measure of spending reductions and new taxes to replace the across-the-board cuts. Barclays to Cut 3,700 Jobs After Full-Year Loss (Bloomberg) Barclays Plc will cut 3,700 jobs to reduce annual costs by 1.7 billion pounds ($2.6 billion) as Chief Executive Officer Antony Jenkins revamps the lender following its first full-year loss in two decades. About 1,800 positions will go this year at the firm’s investment bank and 1,900 in its loss-making European consumer and business banking unit, Jenkins said in a statement today. The lender posted a net loss of 1.04 billion pounds for 2012, wider than the 307 million-pound estimate of nine analysts surveyed by Bloomberg, as it set aside an additional 1 billion pounds in the fourth quarter for compensating clients wrongly sold interest-rate swaps and loan-repayment insurance. BNY Mellon loses U.S. tax case, to take $850 million profit hit (Reuters) BNY Mellon Corp said on Monday it will take an $850 million charge against first-quarter profit after losing a high-stakes tax case to the U.S. Internal Revenue Service, a move that will also erode some of its capital. The BNY Mellon case was the first to go to trial since the IRS accused several U.S. banks of generating artificial foreign tax credits through loans with London-based Barclays. The IRS challenged a $900 million tax benefit claimed by BNY Mellon that stemmed from a $1.5 billion loan from Barclays. The funding was so cheap that at one point Barclays actually paid BNY Mellon to take Barclays' money, according to court papers. Nasdaq Steps Up Pursuit Of A Partner (WSJ) Nasdaq, long on the hunt for a partner, has ramped up its conversations about strategic options ranging from joint ventures to a sale, according to people familiar with the talks, as rival NYSE Euronext moves ahead with a merger that will form an even-bigger competitor. Twinkie Brand Heads For Sale (WSJ) Judge Robert Drain of the U.S. Bankruptcy Court in White Plains, N.Y., cleared Hostess on Monday to proceed with several of the sale processes it has unveiled during the past several weeks. Private-equity firms Apollo Global Management LLC and Metropoulos & Co. are now officially set to kick off the contest for most of the Hostess cakes business, with a $410 million offer for brands such as Twinkie, Dolly Madison, Ho Hos and Ding Dongs. That so-called "stalking horse," or lead, bid also covers five bakeries and certain equipment. McKee Foods Corp., the maker of Little Debbie snack cakes, is the stalking-horse bidder for Hostess's Drake's brand. The $27.5 million offer from McKee, based in Collegedale, Tenn., doesn't include the Drake's plant in New Jersey. Tesla CEO Clashes With New York Times Over Model S Review (Bloomberg) Elon Musk, the billionaire chief executive officer of Tesla Motors Inc. said a range test of the Model S electric sedan by the New York Times was “fake” as the reporter didn’t disclose all the details of his drive. “NYTimes article about Tesla range in cold is fake,” Musk said in a Twitter post yesterday. “Vehicle logs tell true story that he didn’t actually charge to max & took a long detour.” The Times on Feb. 8 published a story by John M. Broder on its website detailing how the Model S he drove failed to meet the electric sedan’s 300-mile (483-kilometer) range “under ideal conditions” while driving in temperatures as low as 10 degrees Fahrenheit (minus-12 Celsius). The Times also published a blog post by Broder about the test-drive on the same day, detailing his plan to use Tesla’s new “supercharger” stations. Broder followed instructions he was given in “multiple conversations with Tesla personnel,” Eileen Murphy, a spokeswoman for the Times, said in an e-mail message. The story was “completely factual, describing the trip in detail exactly as it occurred,” Murphy said. “Any suggestion that the account was ‘fake’ is, of course, flatly untrue.” Dispute over mashed potatoes turns dangerous (TBN) A disagreement over mashed potatoes turned dangerous over the weekend when a victim said tempers escalated and a woman came at her with box cutters. Shaquina S. Hill, 23, of Fourth Street was charged with second-degree menacing and second-degree harassment as a result, city police said. An 18-year-old woman told police she and Hill argued about mashed potatoes just before 9 p.m. Sunday at a Fourth Street address, and things escalated from there. The younger woman told police Hill grabbed box cutters and waved them at her, then dropped the knife and started throwing things at her, including a heavy ceramic vase and coffee table. She told police Hill also punched her in the chest. U.K. Regulator to Investigate Autonomy (WSJ) The Financial Reporting Council, the regulator tasked with promoting good corporate governance and financial reporting in the U.K., announced the investigation Monday on its website. It said the probe will look at Autonomy accounts published between Jan. 1, 2009, and June 30, 2011. New York fund manager arrested on Ponzi scheme charges (Reuters) Federal prosecutors charged Jason Konior, 39, with defrauding investors by promising to match their investments in his fund, Absolute Fund LP, many times over. Prosecutors said he used $2 million of the money he collected from three hedge funds to pay his own expenses and cover redemption requests from prior investors, according to the criminal complaint dated February 7. Treasury’s Brainard Says G-20 Must Refrain From Devaluation (Bloomberg) “The G-20 needs to deliver on the commitment to move to market-determined exchange rates and refrain from competitive devaluation,” Lael Brainard, the Treasury’s undersecretary for international affairs, said at a news conference in Washington today. Brainard said “global growth is weak and vulnerable to the downside,” and strengthening demand must be a top priority for G-20 finance ministers and central bankers meeting in Moscow Feb. 15-16. Ex-Fund Manager Avoids Jail Time (WSJ) The cooperation of Ali Far, co-founder of Spherix Capital LLC, led to the convictions of at least five people, including Galleon Group founder Raj Rajaratnam, prosecutors said. Mr. Rajaratnam, who was convicted on conspiracy and securities-fraud charges, is serving an 11-year prison sentence, one of the longest terms ever imposed for insider trading. Mr. Far secretly agreed to cooperate with the government's probe shortly after he was approached by federal agents in April 2009, prosecutors said. Mr. Far, a former Galleon employee, recorded about 244 calls, including calls with Mr. Rajaratnam, prosecutors said. He also was prepared to testify at Mr. Rajaratnam's trial as a government witness in 2011 but was never called, they said. "I am truly sorry for my mistakes and I am ashamed," Mr. Far said at a hearing in Manhattan federal court Monday. U.S. District Judge Robert Patterson sentenced Mr. Far to one year's probation. He also imposed a $100,000 fine. The Perils of Being A Dog Show Judge (WSJ) Cindy Vogels had a litter of options for Best in Show at last year's Westminster Kennel Club Dog Show. As the final judge, she could have chosen a German Shepherd, a Doberman pinscher or even a Dalmatian. Instead she picked a Pekingese named Malachy—and everyone else judged her. One person, Vogels said, called the Pekingese "that awful dog." Vogels recalled another saying: "Why would you give Best in Show to the dog that couldn't walk?" "The American public was horrified," Vogels said. "The public has no appreciation for a Pekingese." It is the ultimate honor for a show judge to name the Best in Show winner at Westminster, the year's glitziest dog show, which concludes Tuesday at Madison Square Garden. But it also can bring out the worst in people. The math behind this logic is basic: There are 187 breeds, only seven will win their groups and just one will win the opinion of Michael Dougherty, the Best in Show judge on Tuesday. "You go in there alone," said Elliott Weiss, the 2010 Best in Show judge, "and you come out alone."

Opening Bell

Goldman Sachs is going crypto (maybe); Tesla shorts are finally seeing blue skies; the Mooch has no idea what he's doing, still; George Foreman wants to fight Steven Seagal; and more.