Opening Bell: 1.5.21

The good and bad for banks; Icahn agonistes; Ackman and Andurand not so much; Slack sucks; and more!

Author:
Dealbreaker
Publish date:
Jan 5, 2021

The good and bad for banks; Icahn agonistes; Ackman and Andurand not so much; Slack sucks; and more!

Biden Administration Could Unsettle Banks in More Than One Way [WSJ]
There are other ideas that could further enable a new kind of banking ecosystem to evolve. One that has been making its way into potential legislation is to create accounts for individuals with the help of the Federal Reserve. Some propose this in conjunction with postal banking. Additionally, the Fed is in the early stages of developing its own real-time payments system. Depending on how it is fleshed out, that could compete with some existing forms of bank payments…. The Federal Deposit Insurance Corp. has adopted new rules around industrial loan companies that might open a path for more nonbanks to offer certain banking services….
The bottom line is that investors in banks have more to think about than, say, higher capital requirements.

2020 SPAC Boom Lifted Wall Street’s Biggest Banks [WSJ]
U.S.-listed special-purpose acquisition companies, or SPACs, raised $82 billion in 2020, a more-than-sixfold increase from the year before and a figure greater than all of the money previously raised…. Morgan Stanley, JPMorgan Chase & Co. and Bank of America Corp. rose into the top 10 underwriters last year. Meanwhile, larger firms Credit Suisse, Citigroup and Goldman wrested the lead in SPAC underwriting from Cantor Fitzgerald & Co., which topped Wall Street in the category the previous two years and fell to fourth in 2020.

Commerzbank to update strategy in first quarter - CEO to staff [Reuters]
“Commerzbank needs to undergo a fundamental transformation,” Manfred Knof wrote in the memo…. The German lender late last month said it would book 610 million euros ($744.99 million) in restructuring charges in the fourth quarter after reaching an agreement with staff on previously announced headcount reductions.

Hedge funds raise mining shorts as COVID vaccines seen tamping gold gains [Reuters]
Short trades as a percentage of total traded volume for Barrick Gold rose to 24.8% for the second half of last month, from approximately 14.9% for the first half of December, according to filings reviewed by Reuters.
Newmont Corp saw an increase to 11.4%, from 8.8%, over the same period, while trades in Kinross Gold rose to 20.6%, from 18.2%, according to the data….
Tougher lockdown restrictions to combat a new variant of the virus and huge government debt, nonetheless, could propel gold higher.

Carl Icahn warns that the market rally could end in a painful correction and is hedging accordingly [CNBC]
“In my day I’ve seen a lot of wild rallies with a lot of mispriced stocks, but there is one thing they all have in common. Eventually they hit a wall and go into a major painful correction. Nobody can predict when it will happen, but when that does happen, look out below,” Icahn said. “Another thing they have in common is it’s always said, it’s different this time. But it never turns out to be the truth.”

Bill Ackman’s Billion-Dollar Year [II]
The 54-year-old hedge fund manager declined to comment on his spectacular year, saying he did not want to “gloat.”
“Happy New Year,” he added, on the record….
Pershing Square’s publicly-traded fund, now its largest, gained a net 70.2 percent in 2020…. It gained 86 percent, including dividends, for the year.

Andurand Hedge Fund Soared 154% in 2020 as Covid Roiled Oil [Bloomberg]
His main Andurand Commodities Fund, which mostly bets on rises and falls in oil prices, was up 68.6% for the year, according to a person with knowledge of the matter. The Discretionary Enhanced Fund, a vehicle he started in 2019 that has no set risk limits, surged 154%.... Most of the funds’ gains came in March and April when the first coronavirus wave shut economies, leading to a collapse in energy prices…. The returns, the best since Andurand’s main fund made 38% in 2014, mark a turnaround for the oil trader who is known for his bullish wagers. His fund suffered back-to-back losses in 2018 and 2019 of 20% and 7.1%, respectively.

Slack starts 2021 with a massive outage [The Verge]
Users began reporting issues around 10AM ET…. At first, Slack was reporting issues with connecting to the service and messaging. An update on its status page at 11:20AM ET upgraded the situation to a full-blown outage, with all aspects of Slack— including log-ins, messaging, calls, and connections— showing as unavailable…. An update at 3:12PM ET indicated that most of the problems were resolved and the platform was functioning normally, but that some Google and Outlook calendar integrations and email notifications were still not working as expected…. Slack hasn’t yet said what may have caused the outage.

By Heisenberg Media (Flickr: Elon Musk - The Summit 2013) [CC BY 2.0], via Wikimedia Commons

Opening Bell

So we guess this is happening; bad news for Donald Trump all around; central banks have no guts; and more!

Opening Bell

So much for the recovery (unless you’re a bank); the future of WeWork is not in China; Steve Cohen hires an old friend; and more!

Opening Bell

If you don’t want to go back to the office at Tesla: good news; the uselessness of bank net income (and new deposits); ex-Bridgewater CEO doesn’t sound so much like Trump now; and more!

Opening Bell

Ackman regrets not cutting Valeant, Canadian Pacific; Deutsche Bank, RBS earnings will be bleak; AIG tells Icahn to mind his own biz; 112-year-old woman smokes 30 cigarettes a day; and more.

Opening Bell

Goldman gains; Petershill less so; irate Icahn; endowments enlarge; bank on Broadway; and more!

Opening Bell

Citigroup Profit Beats Analysts’ Estimates On Investment Bank (Bloomberg) Citi reported a 12 percent drop in second-quarter profit that beat analysts’ estimates on revenue from advising on mergers and underwriting stocks and bonds. Net income declined to $2.95 billion, or 95 cents a share, from $3.34 billion, or $1.09, a year earlier, the New York-based bank said today in a statement. Excluding accounting adjustments and a loss from the sale of a stake in a Turkish bank, earnings were $1 a share, compared with the average estimate of 89 cents in a Bloomberg survey of 18 analysts. HSBC Seeks To Evict Occupiers In Hong Kong (WSJ) HSBC said Monday it is seeking the right to evict an encampment of protesters that has been occupying the ground floor of the bank's Hong Kong headquarters since October, drawing inspiration from the Occupy Wall Street protests in New York last year. Libor Flaws Allowed Banks To Rig Rates Without Conspiracy (Bloomberg) FYI: “It is far easier to manipulate Libor than it may appear,” Andrew Verstein, a lecturer at Yale Law School, said in a paper to be published in the Winter 2013 issue of the Yale Journal on Regulation. “No conspiracy is required.” States Join Libor Probe (WSJ) Prosecutors in New York and Connecticut are investigating whether their states incurred losses as a result of interest-rate manipulation by banks, a probe that could lead to a wider multistate enforcement action, according to New York officials. The joint probe by New York Attorney General Eric Schneiderman and Connecticut Attorney General George Jepsen could lead to civil enforcement action, including possible breaches of antitrust and fraud laws, the officials said. Libor Probe May Yield Criminal Charges By September (Bloomberg) Barclays traders involved in allegedly manipulating Libor rates between 2005 and 2007 may be charged by U.S. prosecutors before the Labor Day holiday on Sept. 3, said a person familiar with the Justice Department investigation in Washington. Zuckerberg’s Loan Gives New Meaning To The 1% (Bloomberg) The Facebook founder refinanced a $5.95 million mortgage on his Palo Alto, California, home with a 30-year adjustable-rate loan starting at 1.05 percent, according to public records for the property. Missteps Doomed Barclays Leaders (WSJ) Mr. Diamond's downfall may have been hastened because the U.S.-born investment banker, who became chief executive at the start of 2011, had never won acceptance by Britain's political and financial establishment. When the rate-fixing scandal erupted, Mr. Diamond had few allies. It wasn't for lack of trying. Mr. Diamond enthusiastically embraced British culture and tried to overcome his reputation as a brash American. Mr. Diamond, a native of Concord, Mass., supported the Chelsea Football Club, handing out trophies himself when the team won England's premier soccer league in 2010. A month before the Libor settlement, Mr. Diamond hosted British aristocrats and Barclays' clients at the annual Chelsea Flower Show, providing Champagne and canapés as his guests inspected elaborate gardens and floral arrangements...But Mr. Diamond, age 60, was criticized for his lofty pay packages, as well as perceived risks in the investment-banking business he built. He sometimes appeared tone deaf in a country still angry about the role of banks in the financial crisis. "There was a period of remorse and apology," he told Parliament last year. "That period needs to be over." Activists Go After Big Game (WSJ) William Ackman's $2 billion bet that he can boost the value of consumer-products giant Procter & Gamble Co. reflects a new era of activist investing, in which no company is too big a target and restless institutional investors are more willing to rock the boat. Mr. Ackman's Pershing Square Capital Management LP owns a little more than 1% of P&G's shares. A few years ago, that would have been considered too small a stake in too big a company to exert much influence on management, the board or other investors. Tax Cuts Perpetuate Inequality, Should End: Summers (CNBC) The United States should not extend Bush-era tax cuts for the wealthiest Americans even as the so-called ‘fiscal cliff’ looms because it will perpetuate income inequality, says Larry Summers, former U.S. Treasury Secretary. Instead, these revenues should go towards strengthening public education and ensuring that low-income students are presented with equal opportunities as their wealthy counterparts so that they can participate in the economy. Tax breaks for the wealthy cannot continue to exist because it leads to a “perpetuation of privilege”, Summers said in the editorial in the Financial Times on Sunday. Unless steps were taken to “responsibly” increase the burden on those with high income and redistribute the proceeds, the trend toward inequality will continue, he said. Devils On The (B)rink (NYP) New Jersey Devils owner Jeff Vanderbeek is talking to private-equity firms and hedge funds about buying into his financially strapped team, according to sources close to the situation Vanderbeek is looking to sell a majority stake, but keep operating control, sources said. The talks, coming three weeks after the 55-year old former Wall Street executive seemed close to inking a deal with an investor to save the team, are leading some in the financial world to believe the deal has fallen apart. If that’s so, it would be a terrible break for Vanderbeek, who is facing an Aug. 14 deadline to get the Devils’ financing in order...Creditors are owed $80 million. Downgrade Anniversary Shows Investors Gained Buying U.S. (Bloomberg) When Standard & Poor’s downgraded the U.S. government’s credit rating in August, predictions of serious fallout soon followed. Republican presidential candidate Mitt Romney described it as a “meltdown” reminiscent of the economic crises of Jimmy Carter’s presidency. He warned of higher long-term interest rates and damage to foreign investors’ confidence in the U.S. U.S. House Budget Committee Chairman Paul Ryan said the government’s loss of its AAA rating would raise the cost of mortgages and car loans. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said over time the standing of the dollar and U.S. financial markets would erode and credit costs rise “for virtually all American borrowers.” They were wrong. Almost a year later, mortgage rates have dropped to record lows, the government’s borrowing costs have eased, the dollar and the benchmark S&P stock index are up, and global investors’ enthusiasm for Treasury debt has strengthened. Woman tells police man sucked her toe at Grovetown Walmart (AC) The 18-year-old said she was shopping when a man, who looked to be in his late 30s or early 40s, walked up and asked if her toenails were painted, according to a Columbia County Sheriff’s Office incident report. After replying yes and questioning why he wanted to know, the woman was asked if she’d watched America’s Funniest Home Videos. The man told her he was with the TV show and if she complied with his requests, everything she purchased that day would be free. She said she reluctantly agreed to let him take a photo of her foot. He asked if he could kiss her foot as part of the prank and she agreed. The man guided her to an area behind a clothing rack, dropped to the floor, grabbed her ankle and told her, “Don’t worry. I don’t bite.” He then started sucking on her big toe. The woman said she screamed at him to stop. Before the man ran from the store, he told her, “It tasted so good, though.”