Opening Bell: 1.28.21

Opening Bell: 1.28.21

The still-anemic economy; rivals rise; Iron Man’s back nine; fade to Black? and more!
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U.S. Economy Shrank in 2020 Despite Fourth-Quarter Growth [WSJ]
U.S. gross domestic product—the value of all goods and services produced across the economy—rose at a 4.0% seasonally and inflation adjusted annual rate in the final quarter of last year, the Commerce Department said on Thursday, joining a record gain in the third quarter to further reduce losses from earlier in the pandemic…. For all of 2020 the U.S. contracted by 3.5%, measured year over year. That was the first decline since the financial crisis and the largest since 1946. Measured from the fourth quarter to the same quarter a year ago, the economy shrank 2.5%.

Fed stresses its commitment to low rates as economy stumbles [AP]
The Fed said in a statement after its latest policy meeting that hiring and economic growth had slowed, particularly in industries affected by the raging pandemic, notably restaurants, bars, hotels and others involving face-to-face public contact. The officials kept their benchmark short-term rate pegged near zero and said they would keep buying Treasury and mortgage bonds to restrain longer-term borrowing rates and support the economy…. Powell said… Fed policymakers see the pandemic increasingly as a short-term risk that will likely fade as vaccines are distributed more widely. But he also cautioned that the threat remains a serious one, particularly because of the potential harm from new strains of the virus.

Apple tops $100 billion in revenue for the first time as iPhone, iPad sales surge [MarketWatch]
Though Apple’s newest line of iPhones was only available for part of the holiday quarter, the company still grew the smartphone business sharply, recording $65.60 billion in sales for the category compared with $55.96 billion a year earlier. Analysts were modeling $59.53 billion in iPhone sales…. Roughly half of the customers who purchased Macs or iPads in the quarter were new to those products.

Facebook posts a 33 percent increase in revenue and a 53 percent jump in profit. [NYT]
The social network’s revenue in the fourth quarter grew to $28 billion, up 33 percent from a year earlier and beating Wall Street estimates. Profits totaled $11.2 billion, up 53 percent.
Facebook’s business rose even as it dealt with multiple controversies. It has been criticized for the proliferation of misinformation across its platform and the effects of those falsehoods on users, while regulators have grown increasingly concerned about its outsize power.

The Gores Group-backed SPAC looks to raise $300 mln in IPO [Reuters]
Gores Holdings VIII Inc, the eighth special purpose acquisition company (SPAC) launched by The Gores Group as part of this series, said it would sell 30 million units, comprising shares and warrants, priced at $10 apiece in the IPO…. United Wholesale Mortgage last year agreed to go public by merging with another Gores Group-backed SPAC, valuing the wholesale mortgage lender at $16.1 billion.

An Iron Man goes Green: Robert Downey Jr. launches ESG-focused venture capital funds [Fortune]
The actor and producer Robert Downey Jr., best known of late for his roles as Tony “Iron Man” Stark and Sherlock Holmes, announced on Wednesday that he is launching two ESG-focused venture capital funds, to persuade investors to get behind his futuristic vision for fighting climate change through bioplastics, aquaculture, A.I., and more….
“I was finishing my Marvel contract; we had an Age of A.I. series coming out on YouTube; I had started realizing that I’ve been steeped in A.I. and robotics and technology, just for the sake of making genre films more believable,” he says…. “This is going to be the back nine of my life.”

Amid Epstein Revelations, Leon Black Remains Chairman of MoMA [NYT]
The museum has yet to make any statement about Mr. Black, and its director, Glenn D. Lowry, declined a request for comment. Members of its board and staff have not publicly voiced any disapproval of Mr. Black.… In a brief email addressed to his “Fellow Trustees” at the museum that was sent on Monday, and which was obtained by The New York Times, Mr. Black wrote that he “wanted to continue my transparent communication with our MoMA family and share with you the letter I sent to Apollo’s limited partners today.” He signed off by saying that “I look forward to seeing you at our February board meeting….”
Inside MoMA, there are several women on the board who have privately expressed concern about Mr. Black, 69, remaining as chairman, according to two people who have spoken with them. But overall, the trustees seem to feel indebted to Mr. Black for his board service, his largess and the valuable artworks he may eventually give to MoMA from his extensive private collection.

Beijing’s Risky Assault on China’s Most Famous Billionaire [WSJ]
China has always been an uneasy place for the very wealthy because laws aren’t always applied impartially and so the consequences of political missteps can be grave…. But Jack Ma, the billionaire who controls Ant, is unlike many obvious candidates for censure. His criticism of Chinese financial regulation in October, which reportedly prompted Mr. Xi to personally order an investigation by Chinese regulators, isn’t new. As far back as 2013, Mr. Ma’s almost identical thoughts on excessive Chinese financial regulation were printed by the People’s Daily newspaper. He isn’t a particular critic of the government and the recent action against him suggests the room for even mild dissent has shrunk considerably.

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Opening Bell

Opening Bell: 05.17.12

White House Steps Up Push To Toughen Rules On Banks (WSJ) White House officials have intensified their talks with the Treasury Department in the days since J.P. Morgan's losses came to light, these people say—representing the first tangible political impact from a trading mess that has cost one of the nation's most prominent banks more than $2 billion...White House and Treasury officials are still determining whether the Volcker rule would have prevented the losses at J.P. Morgan, people familiar with the discussions said. Some of the president's political advisers are concerned that the J.P. Morgan trades, even if determined to violate the spirit of the rule, might slip through the regulatory net. From 'Caveman' To 'Whale' (WSJ) Even after Dynegy's holding company filed for bankruptcy protection on Nov. 7, the trade seemed like it still would be a loser for Mr. Iksil and J.P. Morgan. Only about six weeks remained until the trade was set to expire, and another company needed to default for J.P. Morgan to make money and the bullish hedge funds to lose out. Some traders took to calling Mr. Iksil a "caveman" for stubbornly pursing the trade. Mr. Iksil continued to bet against the index, however, and it soon weakened, causing a buzz among unhappy rivals, these traders say. "We called the trade the 'pain trade' and the 'widow maker'; it kept going down for no reason," said a trader at another firm, who called his broker and says he was told it was Mr. Iksil who was doing all the bearish trading. "It felt like Bruno was trying to wipe everyone out." Then on Nov. 29, in something of a shock, AMR Corp., American Airlines' parent company and one of the companies in the index, filed for bankruptcy protection. "People freaked out," recalls a hedge-fund trader. The index weakened significantly, allowing J.P. Morgan to rack up about $450 million in total profits from the trade, according to traders. Rival firms suffered similar-size losses. It capped a successful year for Mr. Iksil and his group, though the profits would be more than offset this year when they shifted to a more bullish tack on corporate credit, losing $2 billion-plus in the process. Goldman to Cash Out $1 Billion of Facebook Holding in IPO (Bloomberg) The investment bank and its funds will sell 28.7 million of the 65.9 million shares they own, more than twice the amount initially planned, Menlo Park, California-based Facebook said yesterday in a filing. The shares are being offered in a range of $34 to $38 apiece, meaning the stock being sold in this week’s IPO is valued between $975 million and $1.09 billion. SEC Probes Roles Of Hedge Fund In CDOs (WSJ) U.S. securities regulators are investigating hedge-fund firm Magnetar Capital LLC, which bet on several mortgage-bond deals that wound up imploding during the financial crisis, according to people familiar with the matter. While Magnetar has faced scrutiny over its role in various collateralized debt obligations, or CDOs, the Illinois firm itself now is a target of an investigation by the Securities and Exchange Commission, these people said. ECB Bars Access to Four Greek Banks (FT) The move raises the pressure on Greece to stick to its international bailout by highlighting the risk that eurozone central bankers could pull the plug on its financial system. It reflected ECB fears that a planned recapitalisation of Greece’s banks could be delayed. Greek Euro Exit Would Risk Asia Crisis-Style Rout, Zeti Says (Bloomberg) A Greek exit from the euro could cause contagion comparable to the Asian financial crisis, according to Malaysia’s central bank Governor Zeti Akhtar Aziz, who had first-hand experience of that turmoil. “The worst-case scenario is what we saw in Asia,” Zeti, 64, said in an interview with Bloomberg Television in Istanbul yesterday. “When one economy collapses, then the market usually moves on to focus on the next one, then there will be a contagion that will affect different countries that probably don’t deserve those kinds of consequences.” Strippers in Paris Go on Strike, Say Wages 'Miserable' (Reuters) The Crazy Horse, one of the most popular establishments of its kind in the world, said it was forced to cancel performances this week for the first time since the cabaret was created in 1951. The night club, which declined to give details on salary demands or current wages, said in a statement that it had always taken the wellbeing of its artists very seriously and that talks were continuing to resolve the dispute. "It's an exceptional place which has the specialty of presenting a fully naked show," Suzanne, one of the dancers, told RTL radio. "What's wrong is that we are asked to work 24 days per month for a pay that is worse than miserable," she said. JPMorgan’s Trading Loss Is Said to Rise at Least 50% (NYT) The trading losses suffered by JPMorgan Chase have surged in recent days, surpassing the bank’s initial $2 billion estimate by at least $1 billion, according to people with knowledge of the losses. When Jamie Dimon, JPMorgan’s chief executive, announced the losses last Thursday, he indicated they could double within the next few quarters. But that process has been compressed into four trading days as hedge funds and other investors take advantage of JPMorgan’s distress, fueling faster deterioration in the underlying credit market positions held by the bank. A spokeswoman for the bank declined to comment, although Mr. Dimon has said the total paper trading losses will be volatile depending on day-to-day market fluctuations. Several on FOMC Said Easing May Be Needed on Faltering (Bloomberg) The Federal Reserve signaled further monetary easing remains an option to protect the U.S. economy from the danger that lawmakers will fail to reach agreement on the budget or Europe’s debt woes worsen. Several members of the Federal Open Market Committee said new actions could be necessary if the economy loses momentum or “downside risks to the forecast became great enough,” according to minutes of the Federal Open Market Committee’s April meeting released yesterday in Washington. Judge Denies Gupta's Wiretap Motion (NYP) Ex-Goldman Sachs director Rajat Gupta lost his bid to get three key wiretaps tossed as evidence in his upcoming insider-trading trial. Manhattan federal judge Jed Rakoff gave tentative approval yesterday for the jury to hear the wiretaps, which are crucial to the government’s case against Gupta. A former head of McKinsey & Co., who also sat on Procter & Gamble’s board, Gupta is accused of feeding tips to ex-hedge funder Raj Rajaratnam, who began an 11-year prison term last October for insider trading. The taped conversations between Rajaratnam and his traders have him talking about tips from a unnamed leaker on Goldman’s board. Man protests restaurant's all-you-can-eat policy (TMJ4) A disturbance at a local restaurant when one man got upset that an all-you-can-eat fish fry didn't live up to its name. At 6'6" and 350 lbs, Bill Wisth admits he's a big guy who can pack it away more than most. And he wants one restaurant to make all-you-can-eat, all he can eat too. "It's false advertising," said Wisth to TODAY'S TMJ4. He was there Friday when the restaurant cut him off after he ate a dozen pieces. "Well, we asked for more fish and they refused to give us any more fish," recalled Wisth. The restaurant says it was running out of fish and patience; arguing Bill has been a problem customer before. They sent him on his way with another eight pieces, but that still wasn't enough. He was so fired up, he called the police. "I think that people have to stand up for consumers," said Wisth. Elizabeth Roeming is a waitress there and says they've tried to work with Bill over the years -- like letting him have a tab he still hasn't paid off. Bill isn't backing down, saying his fish fry fight isn't over. But in the end, even he had something nice to say. "They do have like some of the best pizza in town if you like deep dish pizza," said Wisth. He says he will picket every Sunday until the restaurant rethinks what happened.

Opening Bell

Opening Bell: 01.30.13

MF Global's Bankruptcy Nears Happy Conclusion (NYT) On Thursday, a bankruptcy court will review a proposal that would return 93 percent of the missing money to customers like Mr. Desai, who lost his $580,000 nest egg in the brokerage firm's chaotic final days. And the trustee who has submitted the proposal, James W. Giddens, has quietly identified a way that, if sent to the judge and approved, could plug the remaining shortfall for customers in the United States, according to people involved in the case. The broad push to make MF Global customers nearly whole, a goal now surprisingly within reach, is a remarkable turnaround from the firm's 2011 bankruptcy filing when such a recovery seemed impossible. "I'm surprised that, magically, the money has shown up," said Mr. Desai, a software account executive who, like most customers in the United States, has only 80 percent of his money. "I feel very relieved." Deutsche Bank Seen Missing Goldman-Led Gains on Cost Rise (Bloomberg) Europe’s biggest bank by assets may post a loss of 210 million euros ($282 million) compared with a profit of 147 million euros in the fourth quarter of 2011, when it reports earnings tomorrow, according to the average estimate of nine analysts surveyed by Bloomberg. Goldman Sachs and three other leading U.S. investment banks saw their combined net income jump 92 percent annually to $9.73 billion in the period. Co-Chief Executive Officers Juergen Fitschen and Anshu Jain are eliminating staff and bolstering capital levels, the lowest among Europe’s biggest investment banks, in their first year in charge to help meet stricter capital rules. The costs countered a surge in trading revenue, spurred by the European Central Bank’s measures to stem Europe’s sovereign debt crisis. “Deutsche Bank is trying to look forward and hoping no one can really blame fourth-quarter losses on the new management as they only took over mid-year,” Andreas Plaesier, an M.M. Warburg analyst who recommends investors buy the shares, said by telephone from Hamburg. “It would rather see its earnings wrecked in one quarter and show it’s making progress on building capital.” Chesapeake CEO To Exit (WSJ) Chesapeake Energy Corp. Chief Executive Aubrey K. McClendon is leaving the company he built into the country's second-biggest natural-gas producer, citing "philosophical differences" with a board of directors largely installed by shareholders to curb his risk-taking and free-spending ways. Paul Singer Is a Backer of 'Les Miserables' (CNBC) Singer writes in his investor note: "December marked the end of the 'Beverly Boulevard II' film slate submission period. We accepted the final two additional film submissions during the quarter, bringing our remaining funding commitment to seven films set for release in 2013 and 2014. One film in the slate, 'Les Miserables,' was released during the quarter. It will be several more weeks before we begin to have any reliable idea of the ultimate economic performance and value of the big-screen version of this huge stage hit, but early indications are promising and the film just garnered three major awards at this year's Golden Globe Awards." "Beverly Boulevard II" is run by Relativity Media and Elliott Management appears to be a large investor in the company, at least according to this 2010 article from Institutional Investor. JPMorgan Bet Against Itself In 'Whale' Trade (Reuters) It was widely known that a group of about eight credit-focused hedge funds, such as BlueMountain Capital Management and Saba Capital Management, were on the other side of the trades that JPMorgan's London-based Whale team made on an index tied to corporate default rates. But the role JPMorgan's own investment bank may have played in the messy unwinding of the derivatives trade has not come out until now. One of the three people familiar with the matter claimed that JPMorgan managers discussed merging the two sets of trades in an attempt to offset some of the CIO's losses. Those talks ended about a month before Bloomberg News first reported the CIO trades on April 5 last year, the source said. JPMorgan's Kristin Lemkau said that this "never came up in our exhaustive internal investigation." Police Say Man Steals Ambulance, Then Tries to Steal Horses (WHNT) Police say it all began when Todd was arrested for DUI after a car crash. He was taken to Marshall Medical Center South for treatment. Police say while at the hospital, he walked out, got into a running ambulance and drove away. They say he later got the ambulance stuck on Barnard Street, but that was just the beginning. “He walked across a pasture and got into a barn where he tried to saddle up two horses,” says Boaz Assistant Chief Todd Adams. “One was two wild for him and the other he appeared to be too intoxicated to properly saddle the horse.” Police say Anderson then stole a car, which he crashed. They say he then stole another car and got away. However, on Saturday police say Anderson started bleeding from his original injuries. He sought treatment back at the hospital, was recognized and then arrested. Fed Risks Losses From Bonds (WSJ) The Federal Reserve could be charting a course that leaves the highly profitable central bank with no extra income to hand over to the U.S. Treasury for several years. That is the conclusion of five Fed staff economists who examined how the central bank's bond-buying programs will affect its profitability over the long run. Right now the Fed is earning large returns on its bond portfolio and sending most of its profits to the Treasury. Several years from now, when the economy is stronger, the Fed is expected to sell bonds and raise short-term interest rates to tighten credit and restrain inflation. The group found the Fed might have to sell bonds at a loss and incur higher expenses on interest it pays to banks on the reserves they hold at the Fed. Italy Scours Deals Abroad for Elusive Tax Revenue (WSJ) Italy, which has one of the biggest tax-cheating problems in the developed world, is cracking down on suspect offshore investments as part of an unprecedented drive to find new sources of tax revenue and ease concerns about its €2 trillion ($2.69 trillion) in debt. The country just added a new property tax and is boosting its sales taxes to narrow its fiscal gap. In an effort to claw back an estimated €120 billion a year in unpaid taxes, it has limited cash payments to €1,000 so that untaxed money can't slosh around the economy without leaving a paper trail and is hunting down people who buy luxury yachts yet report little income. One of the brightest spotlights is on companies suspected of earning money or shifting it abroad to avoid paying Italian taxes. Italy netted €600 million in additional taxes last year after prosecutors pursued two cases involving money stored illicitly to Switzerland. NBA Union Chief Hunter Fires Family After Nepotism Report (Bloomberg) Billy Hunter purged family members from roles in the National Basketball Association players union that he runs after a report that criticized nepotism at the organization. The moves dismissing personnel including his daughter and daughter-in-law were disclosed in a letter from Hunter to members of a special committee of players established prior to the investigation by the law firm Paul, Weiss, Rifkind, Wharton & Garrison. A copy of the letter, dated Jan. 23, was obtained by Bloomberg News. No Twinkies 'Til September? (NYP) While bankrupt Hostess Brands is expected to select a preferred bidder for its snacks business today, regulatory approval, time needed to close the deal and then the firing up of the Twinkies manufacturing process means it’ll be early September before the spongecake treats are available at retailers, experts said. Leon Black’s Apollo Global Management and co-bidder C. Dean Metropoulos, a veteran food exec, are expected to be named the preferred bidder for Twinkies, Ding Dongs, Donettes and other Hostess snacks. Zimbabwe has $217 in the bank: finance minister (AFP) After paying public workers’ salaries last week, the balance in cash-strapped Zimbabwe’s government public account stood at just $217, Finance Minister Tendai Biti said Tuesday. “Last week when we paid civil servants there was $217 (left) in government coffers,” Biti told journalists in the capital Harare, claiming some of them had healthier bank balances than the state. “The government finances are in paralysis state at the present moment. We are failing to meet our targets.” Biti said that left no choice but to ask the donors for cash. “We will be approaching the international community,” he said.

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Opening Bell

Opening Bell: 10.15.20

The economy sucks and no one’s coming to help; Morgan Stanley doesn’t suck but Jim Gorman still doesn’t care; hedge funds suck and nobody cares; and more!

ackman-gorton3
Opening Bell

Opening Bell 8.4.17

The Ack Man is back, man; Don Jr. is the weakest link; More Uber dipshittery; A pot paradise is coming; and more!

Opening Bell

Opening Bell: 01.07.13

Regulators Give Ground To Banks (WSJ) Global banking regulators watered down a key element of their plan for creating a safer financial system, giving ground to banks that argued the rules were unworkable and financially risky. The Basel Committee on Banking Supervision, a group of the world's top regulators and central bankers, said Sunday that it agreed to relax a rule designed to ensure that big banks are able to weather financial crises without running short of cash. Bowing to two years of intense pressure from the banking industry, the regulators made it easier for banks to meet the rule, known as the "liquidity coverage ratio," and delayed its full implementation until 2019. It is the latest instance of regulators chipping away at their landmark 2010 response to the global financial crisis. The regulators argue that the changes make banking rules much stronger than they were before the crisis. Herbalifers Stay Resolute (WSJ) When hedge-fund manager William Ackman unveiled his 334-slide presentation alleging that Herbalife is a pyramid scheme, it did nothing to shake Joanne Clare. The 38-year-old Staten Island mother of three has been selling the company's weight-loss products and supplements since 2004, when she says they helped her drop from 210 to 160 pounds in four months. She now sells as much as $3,500 a month of Herbalife products to her 30 clients and the two distributors in her "down line." "People have always said it's a pyramid scheme, but it's not," Ms. Clare said, adding that the bulk of her earnings come from sales to clients, not her cut of her recruits' take. Mr. Ackman's declaration that he had bet more than $1 billion against Herbalife caused many investors to flee, sending the stock down 38% in four days in late December. But some of the company's 3.1-million-strong army of distributors were unmoved. Eliot Spitzer Ends His Show On Current TV (NYT) The announcement comes a few days after Al Jazeera said it was acquiring Current TV. Later this year, the Qatar-owned broadcaster plans to turn the channel into an Americanized version of the international news channel Al Jazeera English. Mr. Spitzer said he had a “wonderful time” at Current, but emphasized that his relationship was with Al Gore and Joel Hyatt, Current’s co-founders, not with Al Jazeera. “Moving forward, their mission will be different,” he said — more international newscasts, less liberal talk about the news. Citi's Corbat builds bridges (Reuters) Citigroup Inc's Michael Corbat has been meeting with bank regulators in his first months as CEO, as he looks to bolster relationships and finalize the bank's plan to return capital to shareholders, sources familiar with the matter said. Corbat also expects to name his team of top managers within the next week or so, one of the sources said on Sunday. Corbat is expected to play it safe when Citigroup asks the U.S. Federal Reserve for permission for moves such as buying back shares or increasing dividends, analysts and investors said. His predecessor, Vikram Pandit, lost his job in October in part because the bank's request for returning capital was denied in March. The bank, which is due to submit its plan to the Fed on Monday, has not yet done so, the source said. The third-largest U.S. bank will only seek approval to buy back shares and not raise dividends, the Wall Street Journal reported on Friday. Last year, the bank wanted permission to return more than $8 billion to shareholders over two years, the paper said. For Newly Minted MBAs, A Small Paycheck (WSJ) For graduates with minimal experience—three years or less—median pay was $53,900 in 2012, down 4.6% from 2007-08, according to an analysis conducted for The Wall Street Journal by PayScale.com. Pay fell at 62% of the 186 schools examined. Even for more seasoned grads the trend is similar, says Katie Bardaro, lead economist for PayScale.com. "In general, it seems that M.B.A. pay is either stagnant or falling," she says...It is all a far cry from the late 1980s and early 1990s heyday for M.B.A.s, when some companies would hire 100 or more M.B.A.s. It wasn't uncommon to recruit first, and fill actual jobs later. DOJ pledges to respect Swiss law in tax probe (Reuters) Swiss chief finance diplomat Michael Ambuehl was given a verbal pledge from the U.S. Department of Justice to respect Swiss law when asking for bank client data of potential tax dodgers, a newspaper reported on Sunday. Switzerland is in negotiations with U.S. authorities to find a deal that would end tax probes into at least ten Swiss banks suspected of helping clients dodge taxes, including Credit Suisse and Julius Baer. The Alpine country is trying to preserve what is left of its cherished banking secrecy that suffered a severe blow in 2009 when UBS, the first Swiss bank that came under scrutiny in the U.S., was required to disclose client data. Brazilian prison gaurds catch cat that slipped through the gate with escape tools taped to its body (NYDN) Guards at a Brazilian prison nabbed a white cat that slipped through the gate with a cell phone, drills, small saws and other contraband taped to its body. Alagoas prison spokeswoman Cinthya Moreno says the cat was caught New Year’s Eve at the medium-security prison in the city of Arapiraca. The O Estado de S. Paulo newspaper reported Saturday that all of the prison’s 263 inmates are suspects in the smuggling attempt, though a spokesperson said, “It will be hard to discover who is responsible since the cat does not speak.” Loeb, Cooperman Stand Out in Horrid Year for Hedge Funds (CNBC) Third Point was the clear hedge fund standout in a horrible year for the industry as almost nine out of 10 managers underperformed the S&P 500. Omega Advisors' Leon Cooperman also scored big. Loeb — once better known for his acerbic letters to CEOs — used an activist position in Yahoo and the contrarian buying of Greek bonds to drive the firm's flagship fund to a 21 percent gain in 2012. The firm's more-leveraged Ultra fund posted an even bigger 34 percent return...Cooperman's fund had a net return of 26 percent in 2012. Banks Zero In On Foreclosure Pact (WSJ) Banks were closing in on a $10 billion foreclosure-abuse settlement with regulators that could be announced as soon as Monday, according to people familiar with the talks. The settlement was nearly complete Sunday afternoon, the people said, after the Federal Reserve backed down on a demand for more compensation for consumers and other changes to the pact. Bankers threatened to walk away from the deal if the Fed's demand for an additional $300 million was included, a person briefed on the talks said. Junk Bonds' Fire Is Poised to Fade (WSJ) Junk bonds started 2013 much like they finished 2012—on fire. In just three trading days this year, bonds of low-rated companies delivered returns of almost three-quarters of a percent, even as most other types of bonds lost value. And junk bonds continued to clock new milestones: Average prices soared to their highest since 2004 and average yields, which decline as prices rise, dropped below 6% for the first time ever, according to Barclays. But the rapid march is making fund managers and analysts wary. Prices are now so high—averaging more than 105 cents on the dollar—that there is little room for them to climb much further, some investors say. These are lofty prices for bonds that usually trade below 100 cents, reflecting the higher default risk for such companies. At the very least, returns will pale in comparison with the 15% achieved in 2012, analysts and investors say. NHL, Players Settle Labor Dispute (AP) On the 113th day of a management lockout and five days before the league's deadline for a deal, the bleary-eyed sides held a 6 a.m. news conference to announce there will be a season, after all. NHL Commissioner Gary Bettman and union head Donald Fehr both appeared drained, wearing sweaters and not neckties, when they stood side by side at the hotel and announced labor peace. "We have reached an agreement on the framework of a new collective bargaining agreement, the details of which need to be put to paper," Bettman said. "We've got to dot a lot of Is, cross a lot of Ts. There's still a lot of work to be done, but the basic framework of the deal has been agreed upon." Hostess in Talks to Sell Off Bread Brands (WSJ) Hostess could disclose Flowers, Grupo Bimbo or others as opening bidders in a looming bankruptcy-court auction for the assets as soon as this week, said people familiar with the matter. Hostess, whose bread brands include Wonder Bread, Nature's Pride, Home Pride, Merita and Butternut, is still determining how to split up assets and package them for buyers, one of the people said. Gérard Depardieu gives up French citizenship after bitter tax fight (GM) In a fit of pique, French movie star Gérard Depardieu announced during the weekend that he would give up his citizenship after politicians and the media took him to task for moving to Belgium and avoiding an impending tax hike for the rich. Mr. Depardieu is not France’s first fiscal refugee but his high-profile door-slamming so monopolized public debate that Prime Minister Jean-Marc Ayrault had on Monday to parse whether or not he had insulted the actor. “I did not call Mr. Depardieu a loser, I said that it was loser-like [to move to Belgium to avoid taxes],” Mr. Ayrault told reporters...The “loser” comment seemed to have been the jab that stung Mr. Depardieu the most. “Loser, did you say loser?” the 63-year–old actor began an open letter to Mr. Ayrault that appeared Sunday in Le Journal du dimanche. Mr. Depardieu wrote that he had paid a total of €145-million in income tax in the last four decades and kept 80 people employed. He added that he had been taxed at a marginal rate of 85 per cent this year. “I am giving you back my passport and my social insurance, which I had never used. We no longer have the same fatherland. I am a true European, a citizen of the world.”

Opening Bell

Opening Bell: 08.01.12

Hope For MF Global Clients (WSJ) A bankruptcy trustee sifting through the remains of MF Global Holdings Ltd. expressed confidence that the failed securities firm's U.S. customers will get all their money back. In written testimony submitted to the Senate Agriculture Committee for a hearing Wednesday, trustee Louis J. Freeh said farmers, ranchers, traders and other investors still owed an estimated $1.6 billion "eventually will be made whole," according to a copy of the testimony reviewed by The Wall Street Journal. UBS Facing Battle On Facebook After Nasdaq Set Aside Cash (Bloomberg) Nasdaq OMX’s creation of a $62 million pool to pay brokers that lost money in Facebook’s public debut shows how far apart the exchange owner is from UBS on who is to blame for losses in the botched deal. Switzerland’s biggest bank said yesterday that its second- quarter profit fell 58 percent in part because of losses that exceeded $350 million in the May 18 initial public offering. UBS is among brokers including Knight Capital Group that have said they’ll seek compensation after a design flaw in Nasdaq’s computers delayed orders and confirmations just as the shares were about to start changing hands. UBS promised legal action to get back more than five times as much money as Nasdaq has set aside. Greeks Can No Longer Afford Paying Expensive Bribes (Reuters) Greeks, whose country is facing bankruptcy, can no longer afford the expensive customary cash-filled "fakelaki" or "little envelope" bribes paid to public sector workers, according to an official. Greece, dependent on international aid to remain solvent, has struggled for years with rampant corruption that has hampered efforts to raise taxes and reform its stricken economy. The health sector and the tax authorities topped the country's corruption rankings for 2011, said a report by Leandros Rakintzis, tasked with uncovering wrongdoing in the public sector...As the crisis deepens, more and more Greeks find themselves no longer able to pay expensive bribes, Rakintzis said. "There are no longer serious corruption offences. There is no money for major wrongdoings," he was quoted as saying by Proto Thema newspaper. Oakland Leaders Enter Battle With Goldman Sachs (Reuters) Oakland is trying to get out of a Goldman-brokered interest rate swap that is costing the cash-starved city some $4 million a year. The swap, entered into 15 years ago as part of a bond sale to hedge against rising interest rates, has turned sour for Oakland now that interest rates are near zero. "I hope that other cities will follow our lead," said Oakland city council member Desley Brooks, addressing about 30 protesters outside Goldman's San Francisco offices. Société Générale Profit Hit by Write-Downs (WSJ) Revenue fell 3.6% to €6.27 billion from €6.50 billion a year earlier. Weak capital markets weighed on corporate and investment bank revenue, which dropped 33% to €1.22 billion in the quarter. French retail bank operations were flat at €2.04 billion while international retail bank revenue fell 1.7% to €1.24 billion. ADP: Private Hiring Jumps (WSJ) Private-sector jobs in the U.S. increased 163,000 last month, according to a national employment report calculated by payroll processor Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. The gain was far above economists' median expectation of 108,000 contained in a survey done by Dow Jones Newswires. The June data were revised to show an advance of 172,000 instead of the 176,000 increase reported earlier. Olympics badminton: Eight players disqualified (BBC) The Badminton World Federation has disqualified eight players after accusing them of "not using one's best efforts to win." Four pairs of players - two from South Korea and one each from China and Indonesia - are out of the Olympics after their matches on Tuesday. The eight were charged after a stream of basic errors during the match. All four pairs were accused of wanting to lose in an attempt to manipulate the draw for the knockout stage. The federation met on Wednesday morning to discuss the case. As well as the "not using best efforts" charge, the players were also accused of "conducting oneself in a manner that is clearly abusive or detrimental to the sport." Speaking before the verdict, Korea's coach Sung Han-kook said: "The Chinese started this. They did it first." Regulate, Don't Split Up, Huge Banks (NYT) Steven Rattner: "We need a Dodd-Frank do-over to create the right oversight apparatus for huge banks. Regulators will always be outnumbered by bankers, and they will never find every problem. But, like prison guards, regulators are essential, even if they are outnumbered. In a world of behemoth banks, it is wrong to think we can shrink ours to a size that eliminates the “too big to fail” problem without emasculating one of our most successful industries." Poker Site Pays $731 Million Fine (WSJ) PokerStars agreed to pay $731 million to end a Justice Department lawsuit alleging bank fraud, money laundering and violations of gambling regulations against it and a another poker website. Under the terms, PokerStars, based in the Isle of Man, will pay $547 million to the Justice Department and $184 million to poker players overseas owed money by it and rival website, Full Tilt Poker. As part of the arrangement, Pokerstars will acquire the assets of Full Tilt, once a fierce rival. Stocks Perform Better If Women Are On Company Boards (Bloomberg) Shares of companies with a market capitalization of more than $10 billion and with women board members outperformed comparable businesses with all-male boards by 26 percent worldwide over a period of six years, according to a report by the Credit Suisse Research Institute, created in 2008 to analyze trends expected to affect global markets. “Companies with women on boards really outperformed when the downturn came through in 2008,” Mary Curtis, director of thematic equity research at Credit Suisse in Johannesburg and an author of the report, said in a telephone interview. “Stocks of companies with women on boards tend to be a little more risk averse and have on average a little less debt, which seems to be one of the key reasons why they’ve outperformed so strongly in this particular period.” ‘High’-end LI coke shuttle (NYP) A Bronx-based drug crew used secret car compartments activated by air conditioning and wiper buttons to deliver up to four kilograms of cocaine to the East End of Long Island each week, Suffolk County authorities said yesterday. Two Bronx men and a Riverhead distributor were busted after a seven-month investigation into the coke operation that flooded the Hamptons with $60 one-gram bags of the white powder. Suffolk DA Thomas Spota said the crew transported the product in cars with secret stash areas that opened when basic car-function buttons were pressed in sequence.

Opening Bell

Opening Bell: 09.13.12

Ray Dalio: US Economy Out Of Intensive Care (Reuters) Hedge fund titan Ray Dalio said the U.S economy had come out of the "intensive care unit," but he warned against any quick move to "austerity" budget measures. "We were in the intensive care unit," Dalio, who runs the $120 billion hedge fund Bridgewater Associates, told more than 200 guests at the Council of Foreign Relations in New York on Wednesday. "We are largely healed and largely operating in a manner that is sustainable if we don't hit an air pocket." Dalio said a major challenge for U.S. politicians will be dealing with the so-called "fiscal cliff," the year-end expiration of the Bush-era tax cuts and previously agreed-upon cuts in defense spending and social programs, a combination which some economists say could lead to a recession. Dalio sided with economists who worry that a sharp reduction in government spending could lead the United States back into recession. "We can't just worry about too much debt," Dalio said. "We have to worry about too much austerity." German Court Clears Rescue Fund (WSJ) Germany's highest court cautiously approved the creation of the euro zone's permanent bailout facility, but insisted that the country keep its effective veto on all of the vehicle's decisions, a ruling that removes a question mark over two crucial elements of the euro zone's plans for mastering its debt crisis. Treasury Backs Plan For Standard Chartered Settlement (NYT) The lawyers approved a potential prepayment amount this week, a crucial step to a final agreement, though it will be much smaller than the $340 million the bank had to pay to New York State’s top banking regulator in a related case, according to three officials with direct knowledge of the settlement talks. The differing penalties stem from determinations by federal authorities and Manhattan prosecutors that the bank’s suspected wrongdoing was much less extensive than the state banking regulator’s claims that Standard Chartered had schemed with Iran to hide from regulators 60,000 transactions worth $250 billion over a decade. Insiders Get Post IPO Pass (WSJ) Wall Street underwriters increasingly are allowing corporate insiders to sidestep agreements that prevent them from quickly selling shares after initial public offerings. In the latest instance, several Wall Street banks on Wednesday allowed early investors and management of ExactTarget Inc. to sell more than seven million shares of the online marketing company a week ahead of the planned end of a "lockup" agreement. Under lockup pacts, underwriters bar company insiders from selling their shares, usually for 180 days after an IPO. The lockup restricts the supply of shares, helping buoy IPO prices; releasing more shares on the market can keep a lid on stock prices. Anna Gristina sits down with TV shrink Dr. Phil, says she won't talk to prosecutors about associate (NYDN) The Soccer Mom Madam's little black book has been whittled down to a single name. In her first major interview since being released from Rikers Island in June, Anna Gristina dishes to TV talk show shrink Dr. Phil about how prosecutors have hounded her for dirt on a just one associate. “They have an agenda to get me to talk about a certain person,” she told the daytime doc. Gristina refused to reveal the mystery man, or woman. Oprah's former head-shrink sidekick, who sat down at the kitchen table in Gristina's Monroe, N.Y. farmhouse, asked why the accused flesh-peddler didn't just save herself and give prosecutors the information they want. “I have a deep sense of loyalty and I'm Scottish." Gristina denied the criminal allegations during the teary interview, maintaining she was developing an online dating site where married men could meet single women. Whistleblower Key To Buyout Probe (WSJ) New York state Attorney General Eric Schneiderman's probe of tax practices at private-equity firms is based on information from a whistleblower, according to a person familiar with the matter. The information came from someone who approached Mr. Schneiderman's office between roughly nine months and a year ago, this person said. Under the state's False Claims Act, the attorney general can investigate alleged fraud against the state basedon a whistleblower's allegations. The ongoing probe is examining whether partners at private-equity firms changed management fees into investment income to delay tax payment and pay less—or avoid taxes altogether. Some private-equity firms use so-called management-fee conversions, while other firms avoid them. Wall Street Hopes for Romney, but Expects Obama to Win (CNBC) In an unscientific poll, 46 percent of respondents to the September CNBC Fed Survey said they expect President Obama to win reelection. Only 24 percent believe Republican Presidential Nominee Mitt Romney will get the job. Longtime Madoff Employee To Plead Guilty (Reuters) Irwin Lipkin, a former controller of Bernard L. Madoff Investment Securities LLC, will appear in Manhattan federal court on Th ursday, prosecutors said in a letter to the judge. He will plead guilty to charges of conspiracy to commit securities fraud and falsifying documents, prosecutors told U.S. District Judge Laura Taylor Swain in the letter. Suspect pulls gun on victim while having sex in a moving car (WNN) The incident began Sep. 2 when the victim and his two friends went to the Paddy Wagon Irish Pub in Port Charlotte. When the bar closed early Monday morning they invited two girls they met to one of the friend’s home on Atlas Street. One of the women and the victim went into a bedroom to have sex. The girl said she needed $250, which he said he didn’t have. She asked how much he had and he gave her $120. The victim then went to the bathroom and when he returned, found the two women had left the home. The victim had obtained the woman’s cell phone number earlier at the bar and called her; they agreed to meet at the Pick N Run store on Peachland Boulevard. When he got there he expected to meet the woman who took the $120. Instead, Linscott walked up to his Nissan Sentra and said the other girl ditched her. Linscott got into his car and as they drove off, he said she began touching him and having sex while he was driving. The victim told detectives she also said she needed money and he told her he already gave her friend $120 earlier. The victim said Linscott then put a .357 Taurus revolver to his head and demanded money. The victim grabbed the gun and a fight ensued in the moving car; he said he punched her in the head so she would release the gun. He told detectives he was in fear of his life and lost control of his car, struck a palm tree, went airborne and then ran across two front yards in the 1200 block of Dewhurst Street.

Opening Bell

Opening Bell: 04.02.12

Greece Faces Bond-Swap Holdouts (WSJ) The majority of investors holding foreign law Greek bonds haven't yet been included in the country's debt-swap deal as they have rejected or failed to agree to the exchange, said the country's debt agency Monday, setting a new deadline for the offer. Financiers and Sex Trafficking (NYT) "THE biggest forum for sex trafficking of under-age girls in the United States appears to be a Web site called Backpage.com. This emporium for girls and women — some under age or forced into prostitution — is in turn owned by an opaque private company called Village Voice Media. Until now it has been unclear who the ultimate owners are. That mystery is solved. The owners turn out to include private equity financiers, including Goldman Sachs with a 16 percent stake. Goldman Sachs was mortified when I began inquiring last week about its stake in America’s leading Web site for prostitution ads. It began working frantically to unload its shares, and on Friday afternoon it called to say that it had just signed an agreement to sell its stake to management. 'We had no influence over operations,' Andrea Raphael, a Goldman Sachs spokeswoman, told me." Bond King's Trade Pays Off (WSJ) After suffering one of his worst performances ever in 2011, over the past three months, Bill Gross, manager of Pacific Investment Management Co.'s Total Return Fund, rode an aggressive bet on mortgage bonds to beat most of the fund's rivals and the index against which bond-fund managers measure themselves. Mr. Gross's fund, the world's biggest bond fund with $252 billion in assets, recorded a 2.88% return in the three months through March. The performance beat the benchmark Barclays Capital Aggregate Bond Index by 2.58 percentage points, ranking in the top 11% of all bond mutual funds for the quarter, according to investment-research firm Morningstar Inc. In Wake of Groupon Issues, Critics Wary of JOBS Act (WSJ) A little-noticed provision in the new JOBS Act would allow companies to iron out disagreements with regulators behind closed doors before they go public—a provision that might have prevented investors from finding out about Groupon Inc.'s early accounting questions until after they had been resolved...Critics say that measure would allow a company like Groupon, which had well-publicized disagreements with the SEC over its accounting last year, to resolve such issues under the radar, without investors learning of them until later although still before any IPO. Goldman Eyes $3 Billion Property Debt Fund (Reuters) A private equity arm of Goldman Sachs is looking to launch a $3 billion property debt fund in a bid to take advantage of a growing shortage of real estate financing across the UK and Europe...Real Estate Principal Investment Area (REPIA) is exploring options to create a fund that would provide senior and mezzanine loans to property investors, and will target property lending that is riskier but which would offer higher potential returns. Md. woman won't share $105M lotto jackpot with McD's co-workers (NYP) Workers at the fast-food joint who pooled their cash for tickets are furious at a colleague who claims she won with a ticket she bought for herself and has no intention of sharing. “We had a group plan, but I went and played by myself. [The ‘winning’ ticket] wasn’t on the group plan,” McDonald’s “winner’’ Mirlande Wilson 37, told The Post yesterday, insisting she alone bought one of the three tickets nationwide that will split a record $656 million payout...[On Saturday], a delirious Wilson had called co-workers to break the news — tellingly used the first-person singular. “I won! I won!” she cried, Allen said. Another colleague, Davon Wilson, no relation, said he was there when Mirlande Wilson called. “She said, ‘Turn on the news.’ She said she had won. I thought it was a joke or something. She doesn’t seem like a person who’d do this,” he said. Allan said he and Layla went to Wilson’s home and pounded on the door for 20 minutes until she finally came out. “These people are going to kill you. It’s not worth your life!” Allen said he told her. “All right! All right! I’ll share, but I can’t find the ticket right now,” she finally said, according to Allen. Resistance to austerity stirs in southern Europe (Reuters) An unexpectedly broad general strike in Spain on Thursday and mounting opposition to Prime Minister Mario Monti in Italy are among indicators that resistance is growing in a region at the center of concerns about a resurgence of the euro zone debt crisis. Biggest Bond Traders See Worst Over for Treasuries (Bloomberg) Signs of strength in the economy, which caused a 5.56 percent loss in bonds maturing in 10 years or more last quarter, may fade in the second half of 2012, the dealers say. Tax cuts are expiring, $1 trillion of mandatory federal budget cuts are due to kick in and $100-a-barrel oil is eating into consumer spending. With inflation in check, Fed Chairman Ben S. Bernanke said last week that the central bank will consider further stimulus, even after upgrading its economic outlook March 13. Marc Faber: "Massive Wealth Destruction Is About To Hit Investors" (CNBC) FYI. Twitter takes Connecticut official's April Fools' Day joke to the public (NHR) It all started with a tweet at 5:30 a.m. Sunday, from state government official Mike Lawlor: “Rep. Dargan in hospital following accident.” By 11 a.m., news organizations statewide, including the NewHaven Register, were retweeting the “news” and calling officials to confirm details of the accident. After all, it was assumed, it must be accurate if the tweet came from the highly respected Lawlor, a former longtime state representative and now the state’s undersecretary for Criminal Justice Policy and Planning. But no... Dargan was reached by phone and confirmed he was fine and did not have an accident. “I am fine. Lawlor must have tweeted it.