Opening Bell: 10.7.21

Deal on default; inflation spreads to Blighty; Cathie Wood moving to… St. Petersburg? And more!

Author:
Dealbreaker
Publish date:
Oct 7, 2021

John O'Neill, CC BY-SA 3.0 <https://creativecommons.org/licenses/by-sa/3.0>, via Wikimedia Commons

Deal on default; inflation spreads to Blighty; Cathie Wood moving to… St. Petersburg? And more!

Senate Nears Agreement to Stave Off Debt Crisis Until December [NYT]
With the threat of a default as little as 12 days off, Senator Mitch McConnell of Kentucky, the minority leader, made a tactical retreat on Wednesday and announced that Republicans would allow Democrats to vote on a short-term extension…. “We are willing to take this offer in order to stave off fiscal ruin,” Senator Christopher S. Murphy, Democrat of Connecticut, said. “But we are all beside ourselves that the only thing Republicans are willing to do is prevent disaster for three months and put us right back in this position.”

US jobless claims fall to 326,000, first drop in four weeks [AP]
After hitting a pandemic low of 312,000 in early September, claims had risen three straight weeks, suggesting that the highly contagious delta variant was at least temporarily disrupting a recovery in jobs…. Companies are now complaining that they can’t find workers fast enough to fill their job openings, a record 10.9 million in July.

Inflation Worries Hit U.K. Markets as Energy Prices Soar [WSJ]
“It’s extreme, I’ve never seen anything quite like it,” said Bethany Payne, a global bonds portfolio manager at Janus Henderson. “What you’re seeing in the U.K. is a broad rise in inflation expectations….”
The rate on one-year inflation swaps surged to 6.27% earlier this week, up from 5.77% last week, the highest level since at least 2005 and hovered close by on Thursday.

Elliott Pushes for Sale of Healthcare Trust of America [Bloomberg]
Shares in Healthcare Trust of America rose as much as 6.4% after the close of regular trading…. Lead director Bradley Blair has taken over the role of chairman, while fellow board member, Peter Foss has assumed role of interim president and CEO. Both men, as well as fellow director Warren Fix, are approaching or have exceeded the company’s own retirement deadline of 78 years of age for its directors. That could prove a challenge if Elliott were to launch a proxy fight at Healthcare Trust of America because it would make three of the six-member board vulnerable.

Cathie Wood's Ark Invest is quitting Wall Street and moving to Florida [CNN]
Ark Investment Management is permanently closing its New York office and relocating to St. Petersburg, Florida, the company announced Wednesday…. "Ark is not a traditional Wall Street asset management firm, and we are looking forward to breaking the mold further by relocating to St. Petersburg, a city investing in technology, science, and innovation," added Wood….
This year hasn't been nearly as kind to Wood as the last. The Innovation ETF is down 3.5% heading into the fourth quarter, despite a red-hot market for tech with the Nasdaq up more than 14% so far in 2021.

First trial in college admissions bribe scandal heads to jury [NBC News]
“These parents were not willing to take ‘no’ for an answer and to get to ‘yes,’ they crossed a line,” Frank said. “And in crossing that line, they broke the law….”
“[Private equity executive] John [Wilson] is not part of Singer’s con. There is no evidence, not even a hint, that John figured out Singer’s scam. The truth is simple: John is Singer’s victim, not once but twice,” Wilson’s attorney, Michael Kendall, told jurors.

Opening Bell

Got a rare disease drug? Amgen’s buying; Microsoft buys into the LSE; investors aren’t buying inflation forecasts or Cathie Wood’s shtick; and more!

Opening Bell

Rueful Robinhood; China trouble; Cathie Wood’s latest catastrophe; and more!

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

Opening Bell

Nice while it lasted; Elon gets investors; Cathie Wood thinks more people should be losing money with her; and more!

Opening Bell

Fed number two, take two; HSBC hiring; Peloton putsch; cackling at Cathie Wood; and more!

Opening Bell

Softbank loses and wins (barely); KKR kills it; Cathie Wood cuts Twitter; Manafort’s banker follows him to prison; and more!

Opening Bell

Chinese Premier Blasts Banks (WSJ) In an evening broadcast on state-run China National Radio, Mr. Wen told an audience of business leaders that China's tightly controlled banking system needs to change. "Let me be frank. Our banks earn profit too easily. Why? Because a small number of large banks have a monopoly," said Mr. Wen, according to the transcript of the program on the broadcaster's website. "To break the monopoly, we must allow private capital to flow into the finance sector." Regulators Expected to Penalize JPMorgan Over Lehman Collapse (NYT) The Commodity Futures Trading Commission is expected this week to file a civil case against JPMorgan. The bank is expected to settle the Lehman matter and pay a fine of approximately $20 million...The Lehman action stems from the questionable treatment of customer money — an issue that has been at the forefront of the recent outcry over MF Global. JPMorgan was also intimately involved in the final days of that brokerage firm. The trading commission is expected to accuse JPMorgan of overextending credit to Lehman for two years leading up to its bankruptcy in 2008, the people briefed on the matter said. Fitch Ditched in Bond Dispute (WSJ) Fitch Group's new chief executive said Credit Suisse Group AG CSGN.VX -1.61% dropped the firm's rating from a mortgage-backed security because Fitch took a harsher view than two rivals that assigned triple-A ratings to the deal. "It was an 11th-hour thing when they decided which agency it would be to publicly rate it," said Paul Taylor, who took over this week as chief executive of Fitch Group, in an interview. "We had a materially different take." Mr. Taylor said Fitch Group, which includes credit-rating firm Fitch Ratings, had been compensated for its rating on the mortgage-backed deal. Fitch shared its differing view with investors after the deal closed Friday, publishing a report critical of Standard & Poor's Ratings Services and DBRS Ltd. for issuing triple-A ratings on the residential-mortgage-backed security issued by Credit Suisse. Fed Signals No Need for More Easing Unless Growth Falters (Bloomberg) “A couple of members indicated that the initiation of additional stimulus could become necessary if the economy lost momentum or if inflation seemed likely to remain below” 2 percent, according to minutes of their March 13 meeting released today in Washington. That contrasts with the assessment at the FOMC’s January meeting in which some Fed officials saw current conditions warranting additional action “before long.” Spanish Bond Sale Fizzles (WSJ) Spain sold a total of €2.589 billion ($3.43 billion) of the 4.4% January 2015, 4.25% October 2016 and 4.85% October 2020 bonds, against its €2.5 billion to €3.5 billion target. Wednesday's sale, brought forward by one day due to a national holiday on Thursday, brought Spain's 2012 bond issuance completion to almost 46% of the €86 billion gross bond issuance target. ‘Apple Fever’ Prompts Predictions of $1 Trillion Value (Bloomberg) “Apple fever is spreading like a wildfire around the world,” Brian White, the Topeka analyst, said in a report that initiated coverage of the company with a buy recommendation. White’s new 12-month target of $1,001 is the highest among the 45 analysts tracked by Bloomberg and represents a 59 percent increase over today’s closing price. He said Apple’s market value will eventually top $1 trillion. £200,000 bar bill trader, arrested in FSA probe (CityAM) Alex Hope, the 23 year-old trader who hit the headlines after spending £125,000 on a single bottle of champagne, has been arrested on suspicion of being involved in an unauthorised foreign exchange trading scheme. Hope, who claims to be a self made foreign exchange trader, became infamous when he ran up a £125,000 bar bill in one evening at a Liverpool nightclub. Most of this was spent on a single 99lb bottle of champagne...Hope's publicist last night confirmed that he had been arrested but said that he denies all allegations. His personal website describes him as “a name to watch out for in the city” and “an expert in the UK economy” who regularly "trades millions." It calls him a “talented, charismatic and thoroughly likeable man." SEC Puts Exchanges on Notice Over Computer-Driven Trades (Bloomberg) “The consequences of a big failure are so severe that the SEC should be paying close attention to these issues,” James Angel, a finance professor at Georgetown University’s business school in Washington, said in an e-mail. “No human system is perfect and eventually something will happen, so they also want policies and procedures in place for catching problems quickly and cleaning up the mess afterwards.” Ready for a rumble: Falcone vs. Icahn (NYP) Falcone, who has funneled a whopping $2.9 billion into LightSquared, is desperate to salvage his shaky investment amid a battle with federal regulators over building out the wireless network. Falcone has said both publicly and privately that bankruptcy is not an option. However, some LightSquared creditors, including Icahn, would rather put the company into bankruptcy as part of a plan that would give them equity stakes in the company and greater control over its future, sources said. The deadline for creditors to decide is fast approaching. Icahn and other owners of LightSquared’s $1.6 billion loan due 2014 have given the company until the end of April before they decide whether to put LightSquared into default for breaching some loan covenants tied to its customer contracts. ADP: 209,000 Jobs Added (WSJ) Private businesses hired at a modest rate in March close to what economists expected, according to a report released Wednesday. Private-sector jobs in the U.S. increased 209,000 last month, according to a national employment report published by payroll processor Automatic Data Processing Inc. and consultancy Macroeconomic Advisers. The gain was just above economists' median expectation of 200,000 contained in a survey done by Dow Jones Newswires. Occupy London Hinders Burrito Sales More Than Banker Bonuses (Bloomberg) The protesters were evicted from St. Paul’s on Feb. 28 and at least one restaurant found its bookings jump back to pre- occupied levels. Sales were down 40 percent to 50 percent while the camp was at St. Paul’s, resulting in two or three staff members losing their jobs, said Pollie Hall, events manager at the Paternoster Chop House. “This isn’t the corporate fat cats they were affecting, it was average working Joes,” said Hall, who said her customers were verbally abused by protesters and she was called a “devil- worshipping mason.” A wedding scheduled at the restaurant on the first day of the protest had to be moved. Mega ‘winner’: $105M tix stashed in this McDonald's (NYP) The Baltimore woman who claims to have one of three winning Mega Millions tickets now says it’s hidden somewhere in the McDonald’s restaurant where she works. Marlinde Wilson, 37, coyly wouldn’t reveal whether she had stashed the slip of paper behind the McFlurry machine or under the all-beef patties. “I’m waiting for things to calm down so I can go back to McDonald’s and get it. The people [at McDonald’s] are too excited. I want their heads to cool down before I go back,” she said.