Opening Bell: 10.30.20

Surges and slumps; Susan Collins’ reward; bring on the revolution; bring on the revolution; and more!

Author:
Dealbreaker
Publish date:
Oct 30, 2020

Surges and slumps; Susan Collins’ reward; bring on the revolution; bring on the revolution; and more!

Dow on Track to Wrap Up Worst Month Since March [WSJ]
The Dow dropped 0.4%, a 95-point decline. It had already shed 5.9% this week, putting it on track for its worst weekly performance since the height of the market tumult…. “Markets are concerned that we are replaying February and March,” said Chris Beauchamp, chief market analyst at IG Group. “It probably still isn’t in that category yet, but it is heading in the wrong direction.”

KKR's third-quarter earnings rise on capital market strength [Reuters]
After-tax distributable earnings – the cash available for paying dividends to shareholders – rose to $410.4 million, up from $388.8 million a year earlier…. KKR said the value of its private equity portfolio appreciated by 16% during the quarter, while real estate and infrastructure funds rose 6% and 10% respectively. Its leveraged credit funds rose by 5%.

Susan Collins backed down from a fight with private equity. Now they’re underwriting her reelection. [Politico]
She offered an amendment to make the legislation, which lavished tax cuts on corporations and the wealthy, more equitable. It expanded a tax credit to make child care more affordable. To pay for it, she took aim at a tax break cherished by the private equity industry…. Then Collins backed down. The day after she introduced it, as the Senate voted on the bill, a Republican Senate aide told a Treasury Department official that Collins was “no longer offering her amendment….”
Nearly three years later, Collins is facing a tough reelection battle and the private equity industry has become her most reliable source of donations. She has gotten more than half a million dollars in campaign contributions from the private equity industry this cycle, more than any other senator, according to the Center for Responsive Politics….

Democratic Senators Prepare to ‘Fundamentally Reform’ Capitalism [DealBook]
“Short-term financial pressure often pushes corporations to forgo necessary long-term investments, ignore the threat of climate change and concentrate opportunity in ways that exclude too many of our communities,” the senators said in a statement. “We will work together on ways we can fundamentally reform corporate governance in America.”

E-cigarette maker Juul cuts valuation to $10 billion – memo [Reuters]
Juul was valued at $38 billion in December 2018, when Marlboro maker Altria Group Inc took a 35% stake in the company.
The company’s new valuation was influenced by recent decisions to exit certain markets and related restructuring costs, according to the memo sent to Juul employees by chief executive officer K.C. Crosthwaite.

New York Banks Need to Brace for Climate Change, Regulator Says [WSJ]
Ms. Lacewell pointed to two dangers that analysts say banks and other financial companies face from climate change: physical risks and transition risks. Physical risks are damages from severe weather caused by climate change, while transition risks arise when banks are too reliant on fossil-fuel financing jeopardized by government policies and changing energy habits. Transition risks include so-called stranded assets—like coal and oil—that turn out to be worth less than expected due to the world’s shift to cleaner energy…. She recommended banks take steps across their governance, risk management and business strategies to better prepare for climate change though these approaches should be based on the size and complexity of the bank.

Two Americans Can Be Extradited to Japan in Carlos Ghosn Escape Case, State Department Rules [WSJ]
A federal judge in Boston quickly ordered a stay on the extradition proceedings, however, after lawyers for Michael L. Taylor, 60 years old, and Peter M. Taylor, 27, filed an emergency petition Thursday morning, citing a report that the two were to be put on a plane to Japan at 1 p.m. Eastern time Thursday…. The Taylors’ lawyers haven’t denied that the pair took part in the escape, but argued that the father-and-son duo didn’t commit a crime in Japan. Bail-jumping isn’t illegal in the country and the Japanese law against harboring criminals under which the Taylors were charged doesn’t apply, they argued.

Susquehanna Will Take Your Election Bets, Up to $100 Million [Bloomberg Businessweek]
The firm runs its own blog on gaming and poker strategy tips and has been building up a sports-betting operation in Ireland. It’s recently gauged funds’ interest in bets on election outcomes. Although few have gotten involved, Susquehanna is willing to take the other side of wagers on the presidential race for up to $100 million per bet… Susquehanna isn’t offering a betting service or product: Funds would place wagers at licensed betting platforms in the U.K., which would look for a counterparty to take them up. Susquehanna’s Dublin affiliate could then step in, essentially acting as a behind-the-scenes market maker for the bets.

Opening Bell

Temporary surges; cultural revolutions; déjà WeWork; and more!

Opening Bell

Bears! Crypto crises! Seventy-five basis point surges! And more!

Opening Bell

SEC Said To Depose SAC’s Cohen In Insider-Trading Probe (Bloomberg) Cohen, 56, was recently deposed by Securities and Exchange Commission investigators in New York about trades made close to news such as mergers and earnings that generated profits at his hedge fund, said one of the people, who asked not to be identified because the investigation isn’t public. Neither Cohen nor SAC Capital, which oversees about $14 billion, has been accused of wrongdoing. Four-Week Jobless Claims Average Reaches 2012 High (Reuters) Initial claims for state unemployment benefits slipped 2,000 to a seasonally adjusted 387,000, the Labor Department said. The prior week's figure was revised up to 389,000 from the previously reported 386,000. Lawmakers Call For IPO Overhaul (WSJ) A bipartisan group of lawmakers called on regulators to overhaul the way initial public offerings are conducted, concerned that last month's flubbed stock sale by Facebook shows the current system unfairly punishes small investors. In a letter to Securities and Exchange Commission Chairman Mary Schapiro, Rep. Darrell Issa (R., Calif.) prodded the agency to revamp rules for pricing and disclosure in IPOs. Mr. Issa, who wrote the letter on behalf of the House Oversight and Government Reform Committee, said the social-networking company's steep share-price decline since its May 18 offering is a sign that investment banks are able to "dictate pricing while only indirectly considering market supply-and-demand." Separately, the Democratic chairman of a subcommittee of the Senate Banking Committee said regulatory changes are needed to bolster investor confidence sapped by Facebook's botched debut. Facebook’s 22% Rally Helps Stock Avoid Worst IPO Return In U.S. (Bloomberg) So that's something! Riskier Bets Pitched To Asia's Rising Rich (WSJ) In Japan, brokers are dangling what they claim is a tasty product in front of wealthy investors: a "triple-decker" that uses options to squeeze higher returns from stocks, "junk" bonds or other assets. If a triple-decker doesn't suit an investor's fancy, there is the increasingly popular—and slightly less complex—"double-decker." Elsewhere in Asia, so-called hybrid bonds and other high-yield varieties can be had. Investors in Singapore recently could buy so-called perpetual bonds through ATMs. Across Asia, brokers are pushing to sell increasingly complex products to the region's expanding ranks of investors, especially wealthy ones. These types of products appeal to those hungry for yield who normally focus on stocks and real estate but are worried about falling equity markets and the sudden shortage of initial public offerings. BlueMountain Said To Help Unwind JPMorgan’s Whale Trades (Bloomberg) A hedge fund run by a former JPMorgan Chase executive who helped create the credit- derivatives market is aiding the lender as it unwinds trades in an index at the heart of a loss of more than $2 billion. BlueMountain Capital Management LLC, co-founded by Andrew Feldstein, has been compiling trades in Series 9 of the Markit CDX North America Investment Grade Index in recent weeks, then selling the positions to the New York-based bank, according to three people outside the firms who are familiar with the strategy. JPMorgan tapped BlueMountain as a middleman after trades in its London chief investment office grew so large that the bank was creating price distortions that hedge funds sought to exploit, said the market participants, who asked not to be identified because they weren’t authorized to discuss the trades. BlueMountain was one of the funds that benefited from the price dislocations, the people said. US Olympic committee send cease and desist letter to knitting Olympics (TNT) The US Olympic committee has sent a cease and desist letter to the social networking group Ravelry, who had organised a Ravelympics in which contestants would compete in events such as ‘scarf hockey’ while watching the actual Games on TV...The US Olympic Committee has said that “the athletes of Team USA have spent the better part of the entire lives training for the opportunity to compete at the Olympic Games and represent their country in a sport that means everything to them” and that “using the name ‘Ravelympics’ for a competition that involves an afghan marathon and sweater triathlon tends to denigrate the true nature of the Olympic Games”. Romney Campaign Said To Ask Scott To Downplay Job Gains (Bloomberg) Mitt Romney’s presidential campaign asked Florida Governor Rick Scott to tone down his statements heralding improvements in the state’s economy because they clash with the presumptive Republican nominee’s message that the nation is suffering under President Barack Obama, according to two people familiar with the matter. Scott, a Republican, was asked to say that the state’s jobless rate could improve faster under a Romney presidency, according to the people, who asked not to be named. Lonely Hedge Fund Bullish On Greece Tries To Woo Investors (Bloomberg) In March, Elliott met with the investment chief of a family office in London who said within seconds of sitting down that the firm had no interest in giving money to a hedge fund wagering on Greece. The executive merely wanted to hear his story, Elliott, the founder of Naftilia Asset Management Ltd., said in a telephone interview from his office in Athens. Elliott, 39, responded by asking a few questions of his own, including whether the executive had invested in Russia after its 1998 currency crisis, in Argentina 10 years ago after the nation defaulted on its debt or in the Standard & Poor’s 500 Index (SPX) in March 2009, when the benchmark plunged to its lowest point in 13 years. Finally, Elliott questioned whether the family office’s investment chief had ever bought shares of Apple. In all cases, the answer was no. “Then you are not qualified to be discussing Greece with me because you have missed the best investment opportunities over the past 20 years,” Elliott retorted. National Bank Of Greece To Sell Luxury Resort As Slump Bites (Bloomberg) If you know anyone who's interested: The 3.3 million-square-foot (307,000 square-meter) Astir Palace complex has already drawn investors’ interest, according to Aristotelis Karytinos, general manager of real estate at the lender. The Athens-based bank and Greece’s privatization fund, which owns part of the property, will put out a public tender in coming months, he said. Fed Warns Of Risk To Economy (WSJ) Fed Chairman Ben Bernanke made clear in a news conference after the policy makers' meeting that he is prepared to take further action if he doesn't see progress on bringing down unemployment, which was 8.2% in May. "I wouldn't accept the proposition though that the Fed has no more ammunition," Mr. Bernanke said. He added, "if we don't see continued improvement in the labor market we'll be prepared to take additional steps." Australian mega-brothel gets go-ahead (AP) A Sydney brothel has received the green light for a multi-million-dollar expansion which will see it become Australia's largest sex premises, with rooms featuring multiple beds and pool tables. Plans to double the number of rooms at inner Sydney's "Stiletto" into a mega-brothel complex were knocked back late last year by the city council on the grounds that it was too big. But the owners won an appeal to the Land and Environment Court this week, with Commissioner Susan O'Neill ruling the Aus$12 million ($12.2 million) development, including a wing for group bookings, should go ahead...Stiletto promotes itself as "the world's finest short-stay boutique hotel and Sydney brothel". Its standard hourly rate of Aus$370 includes room, lady of choice and beverages.

Opening Bell

Bets on Fed move this summer surge; N.Y. Mets owners reach revised deal with Madoff trustee; Divorced dad tries paying child support in pizza, court is cool with it; and more.

Opening Bell

Deal reached on Greek debt; BofA tipster gets to keep his reward; Motorist throws golf balls in romantic rejection road rage attack; and more.