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Opening Bell: 8.16.21

Opening Bell: 8.16.21

Aramco to India; State Street quits East 51st Street; SOFR not enough; Hindenburg short-seller hotter than, well, the Hindenburg; and more!

Paul Hudson from United Kingdom, CC BY 2.0 <https://creativecommons.org/licenses/by/2.0>, via Wikimedia Commons

Aramco to India; State Street quits East 51st Street; SOFR not enough; Hindenburg short-seller hotter than, well, the Hindenburg; and more!

Aramco Is in Advanced Talks on Up to $25 Billion Reliance Deal [Bloomberg]
The Saudi Arabian firm is discussing the purchase of a roughly 20% stake in the Reliance unit for about $20 billion to $25 billion-worth of Aramco shares, the people said, asking not to be identified because the information is private. Reliance, which is backed by Indian billionaire Mukesh Ambani, could reach an agreement with Aramco as soon as the coming weeks, the people said…. It would seal more than two years of negotiations and mark Aramco’s first all-stock deal since its initial public offering in 2019.

State Street, Firm Behind Wall Street’s ‘Fearless Girl’ Statue, Is Vacating New York City Offices [WSJ]
Executives at the Boston firm told New York staffers they won’t be returning to its Midtown Manhattan offices, according to people familiar with the matter. It expects to sublease the two offices near Rockefeller Center to other companies…. State Street is giving New York-based employees the option to work in other offices in New Jersey and Stamford, Conn. But the firm isn’t directing New York-based staffers to spend time in those offices, letting different groups across State Street determine the mix of in-person and remote work that suits them. State Street also secured some co-working space in Manhattan for those who want to use it.

Perella Weinberg bumps salaries for London analysts to £80,000 [FN]
The US-headquartered bank has increased salaries to £70,000 for first-year analysts in London and £80,000 for those in their second year, according to people with knowledge of the rises.
This brings it in line with Goldman Sachs, which increased pay for its junior bankers in August after its main Wall Street and European rivals, but hiked salaries beyond most of its peers.

Banks Weigh Alternatives to Libor Replacement as Companies Seek Longer-Term Rates [WSJ]
SOFR may not cover all companies’ needs, banks and corporate advisers say, because the benchmark lacks rates that are weeks or months in the future, making it hard for companies to plan around future interest-rate risk…. Lenders are considering making index rates such as the American Interbank Offered Rate (Ameribor) or the Bloomberg Short Term Bank Yield Index (BSBY) available as alternatives.…
Banks can’t issue new financial contracts using Libor after Dec. 31, but may continue to reference it for many existing debts through June 2023.

Weak Oversight Plagues Audits of Billions in Private Assets [WSJ]
Firms that audit private entities essentially police each other, often with no public disclosure. A Wall Street Journal analysis of the system shows that auditors give top grades to one another, hardly ever find fault with the biggest accounting firms and often don’t disclose failures among smaller auditors…. A significant number of the audits covered by self-regulation are flawed, industry data suggests. More than one in four audits reviewed last year fell short of professional standards, according to the American Institute of Certified Public Accountants. The AICPA said it was “likely that [recently introduced] highly complex accounting standards” contributed to this high failure rate.

Bitcoin Fans Are Suddenly a Political Force [WSJ]
While the crypto industry wasn’t able to change the Senate legislation, the unified effort vividly illustrated the young industry’s growing influence in Washington and finance—and gave enthusiasts a playbook for future fights…. “If there’s one thing that explains what’s different now and the last seven years, a lot of firms, after a lot of false starts, have hired people in D.C.,” said Jerry Brito, executive director of Coin Center, a nonprofit cryptocurrency policy group founded in 2014. “We now have counterparts that we can coordinate with.”

A Skeptical Stock Analyst Wins Big by Seeking Out Frauds [NYT]
[Nathan] Anderson’s five-person firm… takes its name from the German airship that blew up in 1937…. “I’m glad we’re starting to make a real-world dent,” he added. “If the only impact was stock prices moving around, the work would be far less satisfying….”
The boom in SPAC deals — such companies have raised nearly $200 billion since the beginning of 2020 — has provided rich material for Hindenburg to investigate….
“Nate’s killing it right now,” said [Carson] Block of Muddy Waters. He added that Hindenburg found issues with Nikola that his own firm had looked for and missed….
“There are just so many outrageous companies,” Mr. Anderson said. “Some of these companies we have looked at, they don’t have any revenues at all.”

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Opening Bell

Opening Bell: 08.29.12

Occupy Sets Wall Street Tie-Up As Protesters Face Burnout (Bloomberg) Occupy Wall Street, the global movement against inequality that ignited in Manhattan last year, will mark its first anniversary by trying to block traffic in the financial district and encircle the New York Stock Exchange. Planning for the Sept. 17 protest, dubbed S17, follows months of internal debate and flagging interest, according to interviews with organizers. The morning action may include attempts to make citizens’ arrests of bankers, and some activists intend to bring handcuffs, they said. “We are here to bring you to justice,” said Sean McKeown, a 32-year-old chemist and New York University graduate who’s helping organize the demonstration. “We’re offering you the chance to repent for your sins.” HSBC Marks Plaza For Eviction Of Hong Kong Occupy Protest (Bloomberg) HSBC is marking out the area in its Hong Kong ground floor plaza that has been occupied by protesters for more than 10 months ahead of their eviction by court-authorized officers. Hong Kong’s High Court has issued a writ of possession empowering a bailiff to re-possess the site, according to an internal HSBC memo obtained by Bloomberg News. Gareth Hewett, a HSBC spokesman, confirmed the content of the memo. “The process by which the bank takes back the plaza has reached a new stage and is now in the hands of the bailiff, whose job is to execute the writ,” according to the memo. The Occupy Central protest in Hong Kong, one of the longest-running demonstrations sparked by the Occupy Wall Street movement, numbered about 50 at the peak. They were ordered by the court to evacuate by 9 p.m. on Aug. 27. Stamford salts aim salvo at hedgie’s hq (NYP) Ray Dalio, founder of $130 billion asset manager Bridgewater Associates, is not making friends in his company’s new hometown of Stamford, Conn. Residents and officials of the coastal city are up in arms after early development of a piece of an 80-acre plot of land — now Bridgewater’s proposed waterfront home — resulted in the surprise demolition of part of a historic 14-acre boat yard. The demolition was specifically prohibited by Stamford officials...“To me, this is the latest outrage by Governor Malloy — giving a water view to a hedge-fund operator and taking away a boat yard that serviced well over 1,000 boats and boaters each year,” said Randy Dinter, a boat owner and member of the group Save Our Boatyard, founded by Maureen Boylan after the boat yard demolition. As Europe's Banks Stall, Companies Look Afar (WSJ) The increased search for alternative sources of funding is yet another indication that Europe's debt crisis is far from over. That could intensify in the fall, when the European Commission, European Central Bank and International Monetary Fund assess whether Greece has done enough to cut its debts. At the same time, some economists expect Spain to seek a rescue package to cut its own debt. Argentines Plan to Shoot Gulls to Save the Whales (NYT) What began as bizarre bird behavior has turned into something out of a horror film for threatened whales in Argentina, where seagulls have learned that pecking at the whales' backs can get them a regular seafood dinner. Seagull attacks on southern right whales have become so common now that authorities are planning to shoot the gulls in hopes of reducing their population...Seagulls around the city of Puerto Madryn discovered about a decade ago that by pecking at the whales as they come up for air, they can create open wounds. Then, each time the whales surface, it's dinner time: Gulls swoop down and dig in, cutting away skin and blubber with their beaks and claws. Marcelo Bertellotti's answer: Shoot the gulls that display this behavior with air rifles and hunting guns, and recover each downed bird before they are eaten along with the ammunition, causing still more damage to marine life. His "100-day Whale-Gull Action Plan" was approved by the government of Chubut, and provincial officials came out Tuesday in defense of it. Ackman: $900M Penney markdown (NYP) Activist investor Bill Ackman has been beating the drums for a sale of mall owner General Growth Properties in recent days, but it’s his stake in JCPenney that’s really causing him grief. The hedge-fund manager confessed to investors that his 18 percent stake in Penney had lowered returns by about $900 million this year. In the latest quarterly investor letter of his $10.5 billion Pershing Square firm, he said Penney “has cost us more than nine percentage points of gross return this year.” The hedge fund lost 6.4 percent in the quarter, after the retailer’s shares slid from their high of $43 in February. Asia's Tide Of Cash Hems Policy Makers (WSJ) Foreign investors are pumping money into several Asian economies, pushing up currencies, stocks and property prices, but threatening to complicate efforts by the region's policy makers to soften an economic slowdown. Investment flows to Southeast Asia and South Korea have swelled in recent months, and overseas money has even crept back into India, as global markets calmed and risky assets became popular again. Analysts expect such markets to get a further boost if central banks in the U.S. and Europe step in with additional measures to bolster their economies. Burglary Suspect Blamed for Thousands of Chicken Deaths (WBOC) Authorities say a Delmar man is facing burglary and related charges following allegations that he got drunk and turned off the power to three poultry houses, which led to the deaths of nearly 70,000 chickens. The Wicomico County Sheriff's Office reports that shortly after 9 a.m., Saturday, Aug. 25, a deputy responded to a reported incident at a poultry farm on the 32000 block of East Line Road in Delmar, Md. The deputy met with the property owner who stated that the electric power had been turned off to his three chicken houses on his property during the night. According to the property owner, this deprived the flock of food, water and cooling fans. As a result, nearly the entire flock was found deceased. Police said that when the property owner entered the control shed that controlled the power, he located an unknown man passed out on the floor of the shed, clad only in a T-shirt and boxer shorts. The man was also lying in a pool of his own urine and had a strong odor of alcohol coming from him, investigators said.

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Opening Bell

Opening Bell: 7.5.22

The “jobful” recession; short sellers scale back; banks brace for deal dry-up; and more!

Opening Bell

Opening Bell: 6.23.15

Ben Bernanke says keep Hamilton on 10 dollar bill; Ackman launches $1B bond; Short sellers are lonely; P. Diddy beats son's coach with a kettlebell; and more.

Opening Bell

Opening Bell: 08.20.12

Diamond Censured Over Evidence in Barclays Libor Probe (Bloomberg) Barclays ex-Chief Executive Officer Robert Diamond was criticized for giving “unforthcoming and highly selective” evidence by a U.K. parliamentary report that faulted the bank for letting traders rig interest rates. The “candor and frankness” of Diamond’s testimony to lawmakers on July 4 “fell well short of the standard that Parliament expects,” the House of Commons Treasury Committee said in a 122-page report today following its inquiry into the bank’s attempts to manipulate the London interbank offered rate. “The Barclays board has presided over a deeply flawed culture,” the panel of British lawmakers said. “Senior management should have known earlier and acted earlier.” Bob Diamond Hits Bank In Rate-Rigging Row (Telegraph) In a statement Mr Diamond hit back at the report. "I am disappointed by, and strongly disagree with, several statements by the Treasury Select Committee,” Diamond said. Deutsche Bank’s Business With Sanctioned Nations Under Scrutiny (NYT) Federal and state prosecutors are investigating Deutsche Bank and several other global banks over accusations that they funneled billions of dollars through their American branches for Iran, Sudan and other sanctioned nations, according to law enforcement officials with knowledge of the cases. JPMorgan Picks Leader For 'Whale' Probe (WSJ) JPMorgan directors have named Lee Raymond chairman of a board committee investigating the bank's multibillion-dollar trading blunder, said people close to the probe. Some Groupon Investors Give Up (WSJ) Some of the early backers of Groupon, including Silicon Valley veteran Marc Andreessen, are heading for the exits, joining investors who have lost faith in companies that had been expected to drive a new Internet boom. At least four Groupon investors who held stock in the daily-deals company before it went public have sold or significantly pared back their holdings in recent months. Since its initial public offering in November, Groupon has shed more than three-quarters of its stock-market value, or about $10 billion...Mr. Andreessen, who rode the 1990s dot-com frenzy to riches at Netscape Communications Corp., was among the investors who helped fuel Groupon's rapid ascent. His firm, Andreessen Horowitz, was responsible for $40 million of the $950 million investors put into Groupon just months before the company's IPO. Andreessen Horowitz sold its 5.1 million Groupon shares shortly after restrictions on selling the stock expired June 1, according to people with knowledge of the transaction. Facebook Investors Brace For More Shares Coming To Market (Bloomberg) While Facebook Chief Executive Officer Mark Zuckerberg operates the world’s largest social-networking service, he’s facing investor concerns about how it can generate more revenue from its growing user base. That, plus the end of the first lock-up, drove the shares to half the offering price of $38, wiping out almost $46 billion in market value. Queen's corgis 'attack' Princess Beatrice's terrier Max (Telegraph) They may be among the Queen's favourite subjects but her corgis are in the doghouse after getting into a fight with one of Princess Beatrice's pets. Max, an 11–year–old Norfolk terrier, is said to have been badly injured after a "nasty" encounter at Balmoral castle last week. The Princess's pet nearly lost an ear and suffered several bloody bite injuries that had to be treated by a vet, in the latest in a series of scraps between royal dogs..."The Queen's dog boy was taking the corgis for a walk and they were joined by the Norfolk terriers, which came with Prince Andrew," one insider told a Sunday newspaper. "They were being taken along the long corridor leading to the Tower Door before being let into the grounds for a walk, and they all became overexcited. They began fighting among themselves and unfortunately the dog boy lost control. "The next thing we knew there were horrific yelps and screams...there was blood everywhere." EU Leaders Plan Shuttle Talks To Bolster Greece, Sovereign Bonds (Bloomberg) The sovereign-debt crisis mustn’t become a “bottomless pit” for Germany, even though Europe’s biggest economy would pay the highest price in a breakup of the euro region, German Finance Minister Wolfgang Schaeuble said on Aug. 18 during his ministry’s open day in Berlin. “There are limits,” he said, as he ruled out another aid program for Greece. Hedge 'A-Listers' Include Ackman, Loeb, Chanos (NYP) Influential adviser Cliffwater LLC — which monitors some 1,500 hedge funds and ranks them with an A, B or C grade — keeps a closely guarded list of 90 or so top-rated funds...Cliffwater advises large pension funds in New Jersey, Wisconsin and Massachusetts, among others, and has become one of the industry’s hottest gatekeepers as more big institutions invest directly in hedge funds rather than through funds of funds...An August copy of Cliffwater’s “500 top-rated A or B” funds shows that the company gives high marks to activist funds such as Ackman’s Pershing Square and also to tail risk funds, which aim to protect against disasters. Tucked inside the protected internal document, which compares five-year historical returns to risk, is Cliffwater’s “Select List,” which appears to be the 95 funds deemed worthy of A ratings. Along with Ackman, Dan Loeb of Third Point, the hedgie who recently rattled Yahoo!, famed short-seller Jim Chanos of Kynikos Associates and gold hound James Melcher of Balestra Capital, made the short list as well. Spitzer Defends Wall Street Legacy (FT) Last week it emerged that Goldman Sachs had brought the curtains down on its Hudson Street platform, one of the most high-profile independent research projects started by an investment bank involved in the settlement. Other settlement banks, such as UBS and Bank of America Merrill Lynch, are said to have closed or scaled down their own independent analysis projects. Mr. Spitzer was quick to defend the legacy of the global settlement in an interview with the Financial Times. “I think we accomplished something,” Mr. Spitzer said. “There are a lot of independent research firms out there, some doing well and others not. Goldman has other business models and other priorities.” Shia LaBeouf To Have Sex "For Real" While Filming Scenes For Lars Von Trier's "Nymphomaniac" (Complex) "It is what you think it is. There's a disclaimer at the top of the script that basically says, we're doing [the sex] for real. And anything that is 'illegal' will be shot in blurred images. But other than that, everything is happening," LaBeouf said during an interview.

Opening Bell

Opening Bell: 06.28.12

Interest Rate Probe Escalates (WSJ) Investigators in the U.S., Europe and Asia have been probing alleged wrongdoing in the interest-rate-setting process for about two years. The Barclays settlement marks their biggest win yet. A series of Wall Street Journal articles in 2008 raised questions about whether global banks were manipulating the process by low-balling a key interest rate to avoid looking desperate for cash amid the financial crisis. Emails and instant messages disclosed in the bank's settlement show how Barclays's traders tried to manipulate rates to benefit their own trading positions. "This is the way you pull off deals like this chicken," one trader told another trader in March 2007, according to the U.K. regulator. "Don't tell ANYBODY." Other banks that have disclosed they are under investigation include Citigroup, JPMorgan, Lloyds Banking Group, and RBS. None of these banks have been charged with any wrongdoing in the matter by U.S. or U.K. regulators. Calls for Diamond’s Exit After Barclays ‘Moral Failure’ (CNBC) Lord Oakeshott, a high-profile Liberal Democrat politician, said: "If Bob Diamond had a scintilla of shame he would resign. If Barclays' board had an inch of backbone between them they would sack him." Barclays admitted Wednesday that the actions "fell well short of standards.” Madoff's Brother To Plead Guilty (WSJ) Peter Madoff, 66 years old, is expected to plead guilty to two charges at a hearing Friday in Manhattan federal court, including falsifying the records of an investment adviser and a broad conspiracy count to commit securities fraud and other crimes, according to a letter sent to U.S. District Judge Laura Taylor Swain and filed in court on Wednesday. However, Peter Madoff, the firm's chief compliance officer, isn't expected to admit to knowing about the fraud itself. Instead, he is expected to admit to conduct that enabled the fraud to continue, even if he didn't know new investor money was being used to pay older investors or that no trading was being conducted at the investment firm. JPMorgan Trading Loss May Reach $9 Billion (WSJ) The bank’s exit from its money-losing trade is happening faster than many expected. JPMorgan previously said it hoped to clear its position by early next year; now it is already out of more than half of the trade and may be completely free this year. As JPMorgan has moved rapidly to unwind the position — its most volatile assets in particular — internal models at the bank have recently projected losses of as much as $9 billion. In April, the bank generated an internal report that showed that the losses, assuming worst-case conditions, could reach $8 billion to $9 billion, according to a person who reviewed the report. With much of the most volatile slice of the position sold, however, regulators are unsure how deep the reported losses will eventually be. Some expect that the red ink will not exceed $6 billion to $7 billion. Kerviel ‘Love’ May Not Be Enough To Overturn SocGen Verdict (Bloomberg) Jerome Kerviel’s statement last week that he “loved” Societe Generale may have come too late to help him win a reduced sentence for causing the bank’s 4.9 billion-euro ($6.1 billion) trading loss. Kerviel lawyer David Koubbi may use his client’s remarks during closing arguments in Paris today to offset his own frequent clashes with Judge Mireille Filippini, who threatened to notify the bar about his treatment of witnesses. With Time Running Out California Gorging Itself On Foie Gras (WSJ) California will ban foie gras sales starting Sunday. Meanwhile, goose-liver lovers still have time to enjoy foie gras jelly doughnuts at Umamicatessen in Los Angeles. Chefs there and around the state are counting down their foie gras days by putting it anywhere they can. Some plan foie gras finale feasts on Saturday night. Others offer foie gras in cotton candy, cheesecake, waffles and toffee. "It's a very difficult thing to say goodbye to," says Michael Cimarusti, co-owner and chef at Providence, a celebrated Los Angeles restaurant. He plans to leave a gap on his menu in memory of the dearly departed, with the notation: "formerly a foie gras dish."...At Craftsman & Wolves, a San Francisco bakery, Chef William Werner covers a chunk of foie-gras torchon with a chocolate cremeux that he inserts into chocolate cake batter to create his Devil Inside cake. Some chefs accept the inevitable. Celebrity chef Thomas Keller at Bouchon in Los Angeles recently replaced his foie gras dog biscuits with ones made from chicken livers. Others are looking for ways to duck the ban. Daniel Scherotter, who owns Palio D'Asti in San Francisco, is checking with his lawyer to see whether he can legally give away—rather than sell—a serving of foie gras with a $20 salad. Mr. Scherotter and others expect some restaurants to turn into "duckeasies," where diners can order foie gras using certain code words. They take inspiration from chefs such as Didier Durand, who says that, during a Chicago foie gras ban from 2006 to 2008, he served it at his Cyrano's Bistrot by listing it as potatoes. "People understood that roasted potatoes wouldn't cost $21," he says, but that's what he charged. After two years the ban was rescinded. Merkel Stands Ground Ahead Of Euro Summit (Reuters) EU leaders arrived for a Brussels summit on Thursday more openly divided than at any time since the euro crisis began, with Germany's Chancellor Angela Merkel showing no sign of relenting in her refusal to back other countries' debts. Merkel is being urged at home to hang tough and reject all efforts to make Germany underwrite European partners' borrowing or banks, while her European Union partners say that may be the only way to save the single currency. "Nein! No! Non!" shouted a headline splashed across the front page of the normally sober German business daily Handelsblatt, with a commentary by its editor-in-chief saying Merkel must remain firm at the two-day summit. Lenny Dykstra Takes Plea Deal On Fraud Charges (LAT) Former New York Mets star and self-styled financial guru Lenny Dykstra, already sentenced to three years in state prison for a car scam, has agreed to a plea deal on federal bankruptcy fraud charges after allegedly looting his mansion of valuables as he struggled to battle numerous creditors...According to federal prosecutors, Dykstra sold sports memorabilia and items from his Ventura County mansion, including a $50,000 sink, that were frozen as part of the bankruptcy case. Typically, a person in bankruptcy can't touch assets that are part of the case so that they are available to repay creditors. Dykstra allegedly had dozens of items, including chandeliers, mirrors, artwork, a stove and a grandfather clock delivered to a consignment store, Uniques, on South Barrington Avenue in West Los Angeles. The owner of the store paid him cash for a U-Haul truckload of goods, according to the agent. Manhattan philanthropist behind alleged madam's $250K bond post (NYP) Bonnie Lunt is the mystery hero who put up $250,000 collateral to spring the accused hockey mom madam from Rikers last night, court records show. The 65-year-old Lunt -- a top New York headhunter who has been dubbed the “Jerry Maguire of the communications industry”-- posted her own Upper East Side home to help Gristina make bail, according to bail documents. Lunt’s East 76th street pad is just around the corner from the tiny East 78th Street apartment prosecutors claim Gristina used as headquarters for an alleged multi-million dollar prostitution operation. Miami attacker who chewed man's face was not high on 'bath salts,' officials say (DJ) The Miami "cannibal" who chewed off half of another man's face last month had no drugs in his system other than marijuana, officials said Wednesday, defying suspicions that he was high on "bath salts" during the grisly attack. Rudy Eugene, 31, was shot and killed by police on May 26 after he was found naked and biting into a homeless man's face and eyes beside Miami's MacArthur Causeway. Authorities had suspected Eugene was under the influence of synthetic drugs sold as "bath salts," which have been known to make some users aggressive and behave bizarrely. Witnesses said he had taken off his clothes and was swinging on a light pole before the attack.

Opening Bell

Opening Bell: 03.12.13

Apple To Announce Plans For Cash Hoard (WSJ) Apple will outline what it plans to do with a growing pile of cash by next month, according to Howard Ward, chief investment officer at Gamco Investors Inc. Apple, which has been grappling with investor criticism over the handling of its $137.1 billion in cash and investments, will add $42 billion in earnings to that sum in 2013, Ward said. Greenlight Capital Inc.’s David Einhorn has been urging Cupertino, California-based Apple to issue high-yielding preferred shares to spread the funds among investors. Investors are also urging Apple to consider a higher dividend payout. “We’re going to get an announcement from the company as to how they intend to reallocate some of their cash,” Ward said in an interview today on Bloomberg Radio’s “Surveillance” with Tom Keene. “They will put a floor under their stock at a higher price than it is today.” AIG shareholders win class-action status in lawsuit versus U.S. (Reuters) Two groups of American International Group shareholders won class-action status from a federal judge on Monday in a $25 billion lawsuit by former Chief Executive Maurice "Hank" Greenberg over alleged losses caused by the U.S. government's bailout of the insurer. U.S. Court of Federal Claims Judge Thomas Wheeler also appointed Greenberg's lawyer, David Boies, of Boies, Schiller & Flexner LLP, as lead counsel for the classes. Greenberg's Starr International Co, once AIG's largest shareholder with a 12 percent stake, sued the United States in 2011 over what eventually became a $182.3 billion bailout for the New York-based insurer. It said that by taking a 79.9 percent AIG stake and then conducting a reverse stock split without letting existing shareholders vote, the government conducted an illegal taking that violated the 5th Amendment of the U.S. Constitution. Citing Boies' estimate that "tens of thousands" of shareholders might be affected, Wheeler said "class certification is by far the most efficient method of adjudicating these claims." Both Sides Of SEC Nominee Face Heat (WSJ) In one version, Ms. White is a no-holds-barred crime fighter known for stretching the law to jail mob bosses and international terrorists. In another, Ms. White is a friend of Wall Street who worked for the past decade for the law firm Debevoise & Plimpton LLP, where she represented giant banks such as J.P. Morgan Chase. Blackstone: We're Betting Big On Residential Real Estate (CNBC) "Blackstone is now the largest owner of individual houses in the United States," Schwarzman told CNBC's "Squawk on the Street" Monday, pointing to his company's $3 billion portfolio of residential real estate. But given the nascent recovery in the housing market, they're not buying and selling them quickly but rather renting them out. "It's a good business for us. It's a new thing, but it's also good for America," he said. Icahn Gets Confidential Look At Feds Books (Reuters) Dell Inc has agreed to give Carl Icahn a closer look at its books, less than a week after the activist investor joined a growing chorus of opposition to founder Michael Dell's plan to take the world's No. 3 personal computer maker private...A source with knowledge of the situation said Icahn's and Dell's confidentiality agreement does not have a contractual "standstill" obligation - meaning he is not obligated to stop trading stock in the company. But the activist investor would not be able to trade the stock while he is privy to non-public information in any case, the source added. Phoenix society gives gator happier life with prosthesis (AZC) The alligator is Mr. Stubbs, who is part science project, part human endeavor, and much more. He’s also half-gator, half-rubber. The 11-year-old crocodilian now sports a 3-foot-long prosthetic tail, attached firmly with nylon straps. It replaces the original, which was bitten off more than eight years ago. As far as anyone at the Phoenix Herpetological Society knows, Mr. Stubbs is the first alligator to tolerate, if not sport, a prosthesis. It will take months, however, before Mr. Stubbs learns how to properly use the tail. For now, handlers are happy with smaller milestones. “The fact he doesn’t try to bite it (the tail) is a good sign,” said Russ Johnson, president of the Phoenix Herpetological Society. “Learning how to use it is going to take a lot of training.” The months-long project was overseen by someone well-versed in anatomy. Marc Jacofsky is executive vice president of research and development at the CORE Institute in Phoenix, which specializes in orthopedic care — for humans. While visiting the Herpetological Society, Jacofsky was asked if it would be possible to make an artificial tail for Mr. Stubbs. “I looked and saw there was enough there that we could probably do something that wouldn’t involve surgery,” Jacofsky said. “I also liked the idea because it would improve his life. Our motto at the CORE Institute is ‘Keep life in motion,’ and this certainly fit in with that. I was on board.” Jacofsky estimated the project has cost the Core Institute about $6,000 in donated labor and materials. Mr. Stubbs had been a project since shortly after arriving at the center in May 2005. The then-3-year-old gator was one of 32 confiscated from the back of a truck pulled over near Casa Grande, Johnson said. Officers called in the Arizona Game and Fish Department as soon as the cargo made its presence known. “Scared the heck out of the officer,” Johnson said. “No one expects to find alligators when you look into the back of a truck.” Greece Faces 150,000 Job-Cut Hurdle to Aid Payment (Bloomberg) Greece is locked in talks with international creditors in Athens about shrinking the government workforce by enough to keep bailout payments flowing. Identifying redundant positions and putting in place a system that will lead to mandatory exits for about 150,000 civil servants by 2015 is a so-called milestone that will determine whether the country gets a 2.8 billion-euro ($3.6 billion) aid instalment due this month. More than a week of talks on that has so far failed to clinch an agreement. Failed Sale Of Gleacher Is A Warning For Directors (WSJ) The Dell drama is still unfolding, but for a cautionary tale of how boards, even when they may be well-intentioned, can harm investors of a takeover target, take Gleacher. Shares in the small investment bank have lost more than 60% in the past year as the prospects for a deal evaporated, business dwindled and star traders left. Ironically for a firm that bears the name of Eric Gleacher, who made his name advising on big deals in the 1980s, the company failed to sell itself. At least as some critics see it, its independent directors are to blame. SEC Says Illinois Hid Pension Troubles (WSJ) For years, Illinois officials misled investors and shortchanged the state pension system, leaving future generations of taxpayers to foot the bill, U.S. securities regulators allege. The Securities and Exchange Commission on Monday charged Illinois with securities fraud, marking only the second time the agency has filed civil-fraud charges against a state. Bernanke Provokes Mystery Over Fed Stimulus Exit (Bloomberg) When Ben S. Bernanke asserted last month that the Federal Reserve doesn’t ever have to sell assets, he raised questions about how the central bank can withdraw its record monetary stimulus without stoking inflation. The Fed may decide to hold the bonds on its balance sheet to maturity as part of a review of the exit strategy Bernanke expects will be done “sometime soon,” he told lawmakers in Washington on Feb. 27. This would help address concerns that dumping assets on the market will lead to a rapid rise in borrowing costs. It also allows the Fed to avoid realizing losses on its bond holdings as interest rates climb. Man shot in buttocks at Calle Ocho Festival unaware he was wounded (Miami Herald) The shooting occurred around 4:30 p.m. as the man walked along Southwest Eighth Street and 11th Avenue, part of the throng of revelers who gather annually at the street festival in Little Havana. It’s unclear if something sparked the violence between the two men, or if the shooting was unprovoked. At first the victim did not realize he had been shot and kept strolling along the festival route. “He discovered later that he was bleeding and then passed out,” said Miami police spokesman Sgt. Freddie Cruz. The victim, who was hit in the left buttocks, was taken to Jackson Memorial Hospital, where he is in stable condition and expected to recover.

Opening Bell

Opening Bell: 06.12.13

Pimco Sees 60% Chance of Global Recession in Five Years (Bloomberg) Pacific Investment Management Co., the world’s largest active bond manager, said investors should cut risk amid a more than 60 percent chance of a global recession in the next three to five years. Global growth will slow, keeping inflation in check, and “economic volatility” will increase, Saumil Parikh, a portfolio manager at Newport Beach, California-based Pimco, said in a report being posted on the firm’s website today. Investors shouldn’t add risk in the search for yield, he said. “The global economy experiences a recession every six years or so, and the frequency of global recessions tends to increase when global indebtedness is high and falling as opposed to when indebtedness is low and rising,” Parikh, who focuses on asset allocation, multisector fixed income and absolute-return portfolios, said in the report. The last global recession was four years ago, he said. Banks Get Reprieve on New Swaps Rule (WSJ) Some of biggest banks on Wall Street will get an additional two years to comply with a post-financial crisis rule requiring they move risky swap activities into separate affiliates. The Office of the Comptroller of the Currency said it granted extensions to seven banks, giving them until July 2015 to comply with so-called "swaps push-out" rules required by the 2010 Dodd-Frank law. ... The OCC notified Bank of America Corp., J.P. Morgan Chase & Co., Citigroup Inc., Wells Fargo & Co., HSBC Holdings PLC, Morgan Stanley and U.S. Bancorp that they were granted a 24-month extension in response to their requests for a longer transition period. The move comes less than a week after the Federal Reserve said foreign banks also will be eligible for the two-year delay in complying with the rule, which is slated to take effect July 16. Emerging market assets suffer in fierce sell-off (FT) Emerging economies have been among the prime beneficiaries of ultra-loose global monetary policy as central banks led by the Fed have flooded financial markets with more than $12tn of extra liquidity since the financial crisis. But signs of an economic slowdown spreading from China and indications that the Fed could reduce the pace of its $85bn-a-month bond purchases have triggered a sharp correction in emerging markets. The South African rand and the Brazilian real touched four-year lows against the US dollar on Tuesday, and the Indian rupee fell to a record low. Even relatively robust countries like the Philippines and Mexico – long favourites of investors – have been hit by a spate of selling. Some central banks have begun to intervene to stem the currency slides. Is U.S. stock trading safer? Fewer erroneous trades seen (Reuters) More than three years after the "flash crash" terrified many by temporarily wiping out almost $1 trillion of U.S. stock market value in a few minutes, there are signs that the number of erroneous and aberrant trades is dropping. The use of circuit breakers for individual securities in the wake of the May 6, 2010 plunge, and the introduction of tougher risk-management controls for broker-dealers in November 2010 appear to have helped stabilize trading, market experts and regulators said. The Financial Industry Regulatory Authority, the security industry's watchdog, said the number of reports of "clearly erroneous" trades it received was down 84 percent in the last six months of 2012 compared with the first six months of 2009. Facebook Investors Press Zuckerberg on Stock Price at Annual Meeting (CNBC) Facebook CEO Mark Zuckerberg tried to tackle concerns about its stock head-on at the first annual shareholder meeting Tuesday, but investors pressed for answers about why the price is still down a year after the company went public. "The answer is we understand that a lot of people are disappointed with the performance of the stock, and we really are, too," Zuckerberg said in his opening remarks before taking questions. ... The stock, priced at $38 when the company went public in May 2012, hit $17 a few months ago and was trading at about $24 in afternoon trading Friday. Facebook can't control the stock price but is focused on developing the best products to create more shareholder value, Zuckerberg said. NJ Mayor Apologizes for Calling Residents "Annoying" (NBC) The mayor of Toms River apologized Tuesday night for comments he made about an area battered by Sandy, but not all residents were satisfied. Last week, Mayor Thomas Kelaher told Bloomberg News that he thought residents of Ortley Beach, where many are still without homes, were "annoying." "I certainly never intended to be disrespectful to the people who live in Ortley beach," Kelaher said at a meeting Tuesday. Marketfield Poet-Philosopher Pair Bet Europe for Top Fund (Bloomberg) Michael Aronstein, a poet, and Michael Shaoul, a doctor of philosophy, have made their MainStay Marketfield Fund the world’s fastest-growing by anticipating recoveries in the most-hated assets. Marketfield grew more than five-fold to $9.5 billion in the past year, the biggest increase of a fund with more than $5 billion in assets, after betting on a rebound in U.S. housing stocks and European shares. Now, their success relies on Irish and Italian stocks rallying and equities in China , Brazil and India tumbling. The New York-based fund has advanced 70 percent since July 2007, more than triple the return of the Standard & Poor’s 500 Index, data compiled by Bloomberg show. “I don’t know where the level is,” Aronstein, a former Merrill Lynch strategist who writes poetry in his spare time, said of the potential for further declines in developing nations’ stocks in an interview April 4. “But if we are right, it’s going to get to the point where people cannot stand it anymore.” Metacapital in Worst Slide as Bloodbath Roils Funds (Bloomberg) Deepak Narula rose to fame as manager of the best-performing hedge fund last year by navigating the government’s stimulus efforts. He’s having a far harder time as the Federal Reserve moves closer to an exit. Metacapital Management LP’s flagship $1.5 billion fund lost an estimated 6.4 percent last month, the worst decline since it started in 2008, according to a letter to investors obtained by Bloomberg News. That followed drops of 0.5 percent in April and 0.1 percent in March, after 17 months of consecutive gains including a 41 percent return last year. ... “It’s been a bloodbath the last four to six weeks,” said Troy Gayeski, a senior portfolio manager who helps invest client money in hedge funds at SkyBridge Capital, which manages about $7.7 billion. “It was a confluence of just about everything” from investors’ concerns that refinancing would pick up among some borrowers who’ve had trouble qualifying to the slump in the mortgage debt that the Fed is buying, he said. SoftBank's Son Felt Time Pressure to Push Sprint Deal Forward (WSJ) In the end, SoftBank Corp. Chief Executive Masayoshi Son concluded that time was money. After a weekend of wheeling and dealing, he was willing to sweeten the Japanese company's bid for Sprint Nextel Corp. that Mr. Son for weeks had been saying already was high enough. His hope with the new bid is to keep the acquisition on track for midsummer completion and resolve complications raised by a rival offer. Mr. Son agreed for SoftBank to throw another $1.5 billion on top of the $20.1 billion already offered to achieve the "certainty of timing" for closing the deal in early July, a person familiar with the new proposal said. Pattern of negative correlation between HY bonds and treasuries has been broken (Sober Look) Since the financial crisis, the correlation between treasuries and many credit assets such as high yield bonds (HY) has been strongly negative. ... Recent events however broke that pattern. We've had a number of days with both the longer dated treasuries and HY selling off. That means the HY asset class is now responding to rate moves (not just spread). The 3-month correlation between prices of longer dated treasuries and HY bonds is nearing zero. This move toward a "less negative" correlation with treasuries is also visible in other credit assets as well. Sub-investment-grade credit investors are all of a sudden paying much closer attention to rates. US warns EU against exempting film industry from trade talks (FT) The US government has warned Brussels that EU efforts to placate French demands to exempt its film industry from high-profile transatlantic trade talks could unleash a torrent of demands in Washington for similar reciprocal carve-outs that would imperil a comprehensive deal. ... José Manuel Barroso, the European Commission president, met European filmmakers on Tuesday, including “The Artist” star Bérénice Bejo, to reassure them the trade deal will not jeopardise their protections. “Let me state loud and clear: the cultural exception is not negotiable,” Mr Barroso said after the meeting. Most Americans Aren’t Excited About Their Jobs (WSJ) FYI. State Dept. officials deny prostitution cover-up allegations (CBS) The allegations were first brought to light by CBS News' John Miller, who reported that according to an internal State Department Inspector General's memo, several recent investigations were influenced, manipulated, or simply called off. One specific example mentioned in the memo refers to the 2011 investigation into an ambassador who "routinely ditched ... his protective security detail," and inspectors suspect this was in order to "solicit sexual favors from prostitutes." ... In response to the allegation, Gutman said on Tuesday: "I am angered and saddened by the baseless allegations that have appeared in the press and to watch the four years I have proudly served in Belgium smeared is devastating. I live on a beautiful park in Brussels that you walk through to get to many locations and at no point have I ever engaged in any improper activity."

Opening Bell

Opening Bell: 11.08.12

On Wall Street, Time To Mend Fences With Obama (NYT) Few industries have made such a one-sided bet as Wall Street did in opposing President Obama and supporting his Republican rival. The top five sources of contributions to Mr. Romney, a former top private equity executive, were big banks like Goldman Sachs and JPMorgan Chase, according to the Center for Responsive Politics. Wealthy financiers — led by hedge fund investors — were the biggest group of givers to the main “super PAC” backing Mr. Romney, providing almost $33 million, and gave generously to outside groups in races around the country. On Wednesday, Dan Loeb, who had supported Mr. Obama in 2008, was sanguine. “You win some, you lose some,” he said in an interview. “We can all disagree. I have friends and we have spirited discussions. Sure, I am not getting invited to the White House anytime soon, but as citizens of the country we are all friendly.” [...] “Wall Street is now going to have to figure out how to make this relationship work,” said Glenn Schorr, an analyst who follows the big banks for the investment bank Nomura. “It’s not impossible, but it’s not the starting point they had hoped for.” Morgan Stanley Reassures Its Bankers (WSJ) The New York bank said Monday that investment-banking chief Paul Taubman would leave the firm at year-end. Mr. Taubman was passed over for a new job overseeing both the trading and investment-banking operations, people involved in the process said. The position went to Colm Kelleher, who has overseen sales and trading. To calm nerves and soothe egos among the firms' bankers, Morgan Stanley gathered its new team of investment-banking leaders in New York this week. Mr. Kelleher and one of his new banking lieutenants, Franck Petitgas, traveled from their London office, and Mr. Petitgas spent much of the week meeting with managers in the investment-banking division and senior bankers, people familiar with the discussions said. Top executives reassured senior bankers Monday that the investment-banking business was a priority for Morgan Stanley. In a memo to employees, Chief Executive James Gorman said Morgan Stanley would "continue to build on our leadership position in investment banking and capital markets." The messages came as some rank-and-file bankers at Morgan Stanley privately expressed surprise and dismay at the news from Mr. Taubman, who announced his departure to colleagues in an emotional meeting Monday with Messrs. Kelleher and Gorman in attendance. Some Morgan Stanley bankers said they worried that the new chiefs of investment banking didn't have the stature of Mr. Taubman, who spent a significant amount of time as a mergers banker and was known internally for his staunch support of the firm's investment-banking franchise. "People are upset," one senior person inside the company said. Wall Street Trades Foiled Romney Dreams For Bowles Hopes (Bloomberg) Wall Street executives who lost a bet that Republican Mitt Romney would defeat President Barack Obama are bracing for tougher regulation and hoping a deal can be struck with Congress to cut the deficit. Obama’s choice to succeed Treasury Secretary Timothy F. Geithner will be watched closely for signs about the administration’s approach to business and the deficit, industry executives said. Erskine Bowles, who served as chief of staff under former President Bill Clinton, would be a sign that Obama is willing to endorse a bipartisan debt-reduction plan supported by many business leaders, they said. “With the appointment of the Treasury secretary, Obama will be sending an important message to the public and to the foreign governments who own a lot of Treasuries,” Curtis Arledge, chief executive officer of Bank of New York Mellon Corp.’s investment-management arm, which oversees $1.4 trillion, told journalists in New York yesterday. “If he goes with somebody like Erskine Bowles, then the message will be that he cares about the deficit and is serious about cutting it.” Focus Shifts To Fiscal Cliff (WSJ) Barry Knapp, head of U.S. equity portfolio strategy at Barclays, turned more bearish after seeing the election results, arguing that the risk of fiscal-cliff disaster increased to more than half, from about 30% before. "When I look at what happened, I see a government that grew farther apart, which might be worse than the status quo," Mr. Knapp said. "The risk of going off the cliff has just gotten huge." Jobless Claims Fall (WSJ) Initial jobless claims, which are a measure of layoffs, decreased by 8,000 to a seasonally adjusted 355,000 in the week ended Nov. 3, the Labor Department said Thursday. Economists surveyed by Dow Jones Newswires expected 365,000 new applications for jobless benefits. Greek Jobless Rate Hits New High (WSJ) Elstat, the Greek statistical agency, Thursday said the seasonally adjusted rate of unemployment increased to 25.4% from 24.8% in July and 18.4% in August 2011. That was just below the 25.5% unemployment rate recorded by Spain in the same month, the highest in the European Union. Herd of elephants go on drunken rampage after mammoth booze up (Metro) The trunk and disorderly mammals ransacked a shop, three houses and ruined crops in the eastern village of Dumurkota, India. Police say the gang of over-the-limit tuskers downed more than 500litres of moonshine alcohol, managing to drink the place dry in a matter of minutes. The unruly mob demolished dozens of houses in their desperate hunt for more booze after hoovering up the hard stuff in record time. Local police officer Asish Samanat said the drunken elephants were more 'aggressive' than usual after their mammoth drinking session. 'Unfortunately these animals live in close proximity to man and they recognised the smell of the drink,' he explained. 'They were like any other drunk - aggressive and unreasonable but much, much bigger.' ECB Stands Ready to Buy Bonds as Economy Weakens (Bloomberg) “We are ready to undertake” Outright Monetary Transactions, “which will help to avoid extreme scenarios,” Draghi said today at a press conference in Frankfurt after policy makers left the benchmark interest rate at a historic low of 0.75 percent. “The risks surrounding the economic outlook remain on the downside” and underlying inflation pressures “should remain moderate,” he said. SocGen CEO Blames ‘Stupid’ Accounting for Profit Drop (CNBC) “Exceptional items are related in particular to this stupid accounting thing which means that when you have a credit that is improving, your CDS is going down and you have to recognise negative revenues,” Frederic Oudea told CNBC in Paris. SocGen’s third-quarter net profit was 85 million euros, down by 86 percent on the same period in 2011, after losses on asset sales. That was lower than analysts’ mean estimate of 139.1 million euros. Blackstone Leads Hedge Funds Attracting Bond-Rally Bears (Bloomberg) Funds that bet on both gains and losses in credit attracted $12.6 billion of deposits in the three months ended Sept. 30, the most since the period ended Dec. 31, 2007, according to HFR. Blackstone Group LP raised $4.05 billion during the period for its debt unit, which includes so-called long-short funds. Panning Capital Management, which was founded by Kieran Goodwin this year, started such a fund on Nov. 1 with $500 million. Two-Tier Global Housing Market Could Lead to Bubble: Goldman (CNBC) In a report titled: “Just don’t look down some house markets are flying again” Goldman argues easy money policies by the world’s major central banks has had a ripple effect on countries which have avoided the worst of the global financial crisis, boosting their house prices. According to Goldman, there now exist housing “high-flyers” - countries that have experienced real house price increases and “low-lyers” - countries where the housing market downturn appears to be more protracted. “High flyers” include Germany, Finland, Norway, France, Switzerland and Israel as well as Canada and Australia. The “low lyers” include the U.S., and the euro zone periphery of Spain, Greece, Italy and Ireland- but also those places where prices fell in the post-crisis period but have since stabilized such as the U.K., Japan and Denmark. Judge throws Dallas attorney back in jail after his Design District office trashed, vandalized with obscene drawings (DN) Attorney Tom Corea was charged earlier this year with four felonies alleging he stole from his clients. He was arrested, posted bond and was released. Weeks later, he was evicted for not paying rent for his upscale office in the 2000 block of Farrington Street near Interstate 35E and Market Center Boulevard, according to testimony before state District Judge Mike Snipes. Corea was ordered out by Oct. 31. When the president of the real estate company that represents the building, Doug Molny, showed up the next day to check out the property, he found “complete destruction,” including “penis graffiti on every single wall throughout the building,” Molny said. Written next to some of the penises was the name Doug. Molny said it appeared someone took a sledgehammer to granite counters. Additionally, doors, light fixtures, cabinets and appliances were destroyed or removed.