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Holiday Bell: 12.23.22

Holiday Bell: 12.23.22

M&A to rally into new year; inflation, too; judge hurts Hertz creditors; Dan Loeb’s feelings are hurt; and more!

Daniel Dimitrov, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons

M&A to rally into new year; inflation, too; judge hurts Hertz creditors; Dan Loeb’s feelings are hurt; and more!

M&A Likely to Remain Strong in 2022 as Covid-19 Looms Over Business Plans [WSJ]
Many of the factors that propelled deal making in 2021 are expected to continue into next year, M&A lawyers and advisers said. But policy changes on the horizon could damp the pace of corporate tie-ups, including interest-rate increases from the Federal Reserve—which could increase companies’ financing costs—as well as increased scrutiny from antitrust regulators…. Looking ahead to 2022, a host of economic factors suggest deal making will remain strong, including growing U.S. gross domestic product, strong corporate earnings and large corporate cash balances, said Colin Wittmer, U.S. deals leader at accounting and consulting firm PricewaterhouseCoopers.

Inflation is red hot, soaring to 6.8% in November, the highest in nearly four decades [NPR]
The jump in inflation reflects a mismatch between strong consumer demand and supply which is still hampered by transportation bottlenecks and a shortage of available workers…. A survey by the National Federation of Independent Businesses found 57% of firms are raising prices, while just 6% are cutting prices. That's the most lopsided ratio since the early 1980s, when inflation was in the double digits….
"There's a strong tendency to feel, 'I better buy it now because it's going to be more expensive if I buy it later,' " [Label Shopper CEO Peter] Elitzer says. "It's fundamentally unhealthy for the economy. It's really unfair for the consumer. But as a retailer, it isn't necessarily a big negative."

Judge Trims Hertz Bondholders’ Bankruptcy Claims [WSJ]
Judge Mary Walrath of the U.S. Bankruptcy Court in Wilmington, Del., said Hertz’s unsecured bondholders weren’t entitled to collect interest payments at the contractual rate following the rental-car company’s bankruptcy filing last year. The judge also absolved Hertz of any obligation to make premium payments on bonds that were scheduled to come due in 2022 and 2024 to compensate for the early retirement of those debts…. Wells Fargo sued on behalf of bondholders as Hertz emerged from chapter 11, backed by enough investment to cover the company’s debts in full and provide a recovery to equity holders. The trustee said it wouldn’t be fair to deny bondholders $147 million in premiums and $125 million in interest payments when there was enough value in Hertz to pay its shareholders….

'Juvenile antics': Third Point boss lashes out at 'inexperienced' activist investors as hedge fund's chair is forced to step down [This is Money]
New York-based Third Point's Steve Bates was subjected to 'personal threats' and attacks, which raised 'a business conflict' for the chairman and therefore forced him to resign, the investment firm said….
Loeb said in a statement that the resignation 'is loss for all shareholders', describing the alleged behaviour as 'a stain on institutional investors who attempt to engage constructively with boards and management teams'.
He said: 'Being a successful activist requires moving on when shareholders reject your plans rather than resorting to underhanded tactics. These juvenile antics smack of desperation and inexperience.'

These wild market forecasts have a 50% chance of coming true in 2022, says hedge-fund investor [MarketWatch]
“Like Diogenes with his lantern, I am, again in 2022, a cynic looking for truth — as I engage in my annual assault on the consensus and ‘Group Stink,'” writes [Seabreeze Partners Management president Doug] Kass…. Both President Joe Biden and former President Donald Trump fall into ill health, with both out of the current and future White House picture…. The stock market rolls over after rallying to new high in early 2022. So-called innovations stocks that “performed poorly in 2021, all but collapse in 2022,” with the ARK Innovation ETF trading under $70 a share…. Elsewhere the bear market forces a Robinhood sale to JPMorgan for just $2 a share, the same price paid for Bear Stearns in the 2008-09 financial crisis. As for the winners, value shares materially outperform growth stocks and silver becomes a new meme stock. Cannabis names surge as two major players merge and a third gets bought by a U.S. packaging company.

Jack Dorsey and venture capitalists clash over the future of cryptocurrency. [NYT]
The fight is over Web3, the industry name for a blockchain-based internet that runs on crypto tokens. Supporters say it will democratize and decentralize commerce, finance, gaming and more. But Mr. Dorsey warned that Web3 was really owned by the venture capitalists who are pouring billions into cryptoventures: “It will never escape their incentives,” he tweeted…. At stake is the shape of the future of the crypto economy. This fight is pitting Bitcoin maximalists like Mr. Dorsey, who believe the original crypto is the only way forward, against supporters of the Ethereum blockchain network, which runs on the popular Ether token, and ventures based on other tokens. Chris Dixon, an A16Z partner, tweeted that he hoped Mr. Dorsey would abandon his hard-line stance: Bitcoin, Mr. Dixon wrote, “is great as digital gold but there are other important applications that require other chains.”

We'll be hunkering down and trying to avoid Omicron for the next couple of weeks, emerging sporadically to update you on what's going on in our plague-choked world until Jan. 3. We recommend you do the same, enjoying the holidays as best you can, and we'll hopefully see you as happy and healthy as possible in the new year.

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Opening Bell

Holiday Bell: 11.23.12

FBI Tried To Flip Trader Against Cohen (WSJ) A year before the government charged Mathew Martoma with insider trading, it tried to get him to turn against his former boss, Steven A. Cohen. Federal agents, including Federal Bureau of Investigation case agent Matthew T. Callahan, turned up at the Boca Raton, Fla., home of Mr. Martoma, a former portfolio manager at an affiliate of SAC Capital Advisors L.P. Agents tried and failed to persuade him to be a cooperating witness in the government's effort to build a criminal case against Mr. Cohen, the founder of SAC and one of the biggest names in the hedge-fund world, said people close to the case...The government's attempt to engage Mr. Martoma as a cooperating witness shows the high level of focus placed on Mr. Cohen, whose $14 billion fund has posted some of the best returns on Wall Street. It also demonstrates how the government has been unable so far to implicate Mr. Cohen in Mr. Martoma's alleged wrongdoing...Each of the two securities fraud charges against Mr. Martoma carry a maximum of 20 years in prison; federal sentencing guidelines, based on the amount of the alleged illegal profits, recommend a sentence of 15 to 19 years. By contrast, most people who have pleaded guilty to insider trading and cooperated with the government have been sentenced to little or no jail time. Mr. Martoma is married with children. "Twenty years is a very long time in prison," said Thomas Gorman, a partner at Dorsey & Whitney LLP in Washington, referring to the sentence Mr. Martoma could serve if convicted. "There will be an enormous amount of pressure to earn a cooperation credit to try to mitigate that." Cohen’s ’Elan Guy’ Martoma Dropped Ethics for Hedge Fund (Bloomberg) Martoma got his undergraduate degree at Duke University in Durham, North Carolina, according to the university registrar. During his first year, he was inducted into Phi Eta Sigma, an honors society for freshmen who attain at least a 3.5 grade point average, according to the university registrar. He graduated in December 1995. Less than two years later, he went off to Harvard Law School in Cambridge, Massachusetts. He wrote two medical-ethics papers, one of which identifies him as a member of Harvard Law’s class of 2000 and as the former deputy director of the National Human Genome Research Institute’s Office of Genome Ethics. He left Harvard in December 1998 without attaining a degree, according to the school’s registrar, and attended Stanford Business School, where he joined three alumni groups including MBA Class of 2003, according to university records. In 2001, he changed his name from Ajai Mathew Mariamdani Thomas...Former colleagues, who asked not to be named because the fund is private, said the Martoma, who stood almost six feet tall, had a quiet demeanor and left little impression except for an outsized trade that earned him the name “the Elan guy.” Trading Case Casts a Deeper Shadow on a Hedge Fund Mogul (NYT) Thus far, any potential evidence against Mr. Cohen is entirely circumstantial. The government's complaint includes e-mails about secretly selling the Elan and Wyeth shares through esoteric methods like algorithms and dark pools. But that is common practice among large, sophisticated funds that do not want to alert competitors or move the stock too much. Moreover, while SAC dumped its large positions in the two stocks quickly - raising the question of what prompted it to do so - Mr. Cohen is known for a rapid-fire trading style. He frequently moves aggressively in and out of stocks while processing gobs of information fed to him by his underlings. It would be difficult for a jury to infer anything incriminating just from the way these trades were executed. The government in this case also lacks the powerful wiretap evidence that it has used to convict dozens others, including Raj Rajaratnam, the head of the Galleon Group. Greek Bond Buyback In Doubt (WSJ) The rally in outstanding Greek bonds has made any buyback plan more expensive, eroding the impact it would have on Greece's debt. It raises the challenge for euro-zone finance ministers to seal a deal at their next meeting on Monday that would both plug holes in Greece's €246 billion ($316.95 billion) bailouts and bring the country's debt load to a more manageable level. S&P Confirms France's AA-Plus Rating (WSJ) The decision removes the immediate threat of another downgrade of France, though S&P kept a negative outlook on the country's debt. That indicates a one-in-three chance of a cut in France's credit rating during 2013. Diamond, Dimon’s Early Risks Made Them Better: Adoboli (Bloomberg) Adoboli, who was jailed Nov. 20 for causing the largest unauthorized trading loss in British history, said in an e-mail exchange with Bloomberg News that Jamie Dimon, Bob Diamond and Yassine Bouhara, the former co-head of global equities at UBS, all lost large amounts of money at some point in their careers. The more senior you are the easier it is to avoid getting slammed to the wall,” Adoboli wrote in a Nov. 14 e-mail. “Funny thing is though, losing money seems to make you better at making money. Perhaps that’s why traders who lose money always get rehired, as long as they still have their risk appetite.” Canada Police Arrest Man Who Told Kids Santa Isn't Real (Star) As Christmas-themed floats slowly rolled down Princess St. during Kingston’s annual Santa Claus parade, an intoxicated man shouted blasphemous lies to shocked children: Santa doesn’t exist. The man, whose gelled hair “looked like a set of devil horns protruding from his head,” was reported to Kingston police, Const. Steve Koopman said. Police arrested a 24-year-old man around 6 p.m. “It was pretty despicable that someone, during this time of the year, would tell kids Santa isn’t real — which of course we would argue,” Koopman said. Higher Gas-Tax Idea Joins Fiscal-Cliff Talks (WSJ) Other industries also are moving to have initiatives attached to a budget deal—as part of either a short-term agreement this year or a longer-term plan reached next year to overhaul spending and taxes. Casinos are pushing a measure to legalize Internet poker games nationally. Small banks are pressing to extend a program that gives unlimited federal guarantees to certain bank deposits. Governors want additional aid to cover destruction wrought by Hurricane Sandy. The financial industry is pushing to loosen regulations on complex financial derivatives. "Basically, you've got a bunch of people waiting in the wings to stick the collection plate out and grab whatever they can grab," said Dan Kish, senior vice president for policy at the Institute for Energy Research, which advocates for free-market energy policies. Jain Gets Silent Treatment as Bankers Eat Humble Pie (Bloomberg) Deutsche Bank co-Chief Executive Anshu Jain says telling people he works in banking is a conversation-killer at parties, as the industry fails to convince the general public that it’s changing. “If you go to a party these days, you’re asked what you do and you say you’re a banker, people go all quiet,” Jain said before a conference on Europe’s finance industry began in Frankfurt. “We’re still the subject of anger.” Judge Rules For Singer (Reuters) A federal judge has ordered Argentina to pay holders of defaulted bonds, including Paul Singer’s Elliott Management, immediately, a blow to the country’s efforts to overcome a 2002 debt crisis that has raised fears of another default. In a ruling Wednesday, Judge Thomas Griesa lifted a previous order stalling payments to so-called holdout investors who refused to take part in two swaps of defaulted debt. Argentina’s president, Cristina Fernandez, has said her government will not pay “one dollar,” and Griesa’s ruling cited threats by Argentina’s leaders to defy his rulings in the decade-old dispute. Germany Halts Swiss Tax Deal (WSJ) The bilateral treaty was vetoed by the left-leaning Social Democrat and Green opposition parties in the Bundesrat, which represents Germany's 16 states. The treaty's opponents argue that it is too lenient on tax evaders. We want a treaty that is "more painful to Swiss banks and German tax evaders," Norbert Walter-Borjans, the Social Democrat finance minister of the German state North Rhine-Westphalia said in a debate in the upper house preceding the vote Friday. A ‘Whale’ of a Chase is on (NYP) JPMorgan Chase turned its chief investment office into a proprietary-trading unit that caused more than $6.2 billion in losses, pension funds said in a revised complaint in their suit against the bank. JPMorgan contended the unit’s primary role was managing risk when in fact it was engaging in trades to generate profit for the bank, the funds said in an amended complaint filed in Manhattan federal court. CEO Jamie Dimon “secretly transformed the CIO from a risk management unit into a proprietary-trading desk,” the plaintiffs said. The pension funds allege they incurred losses in their holdings because of trades by the chief investment office and Bruno Iksil, known as “the London Whale.” Porn star vows night of passion if Barcelona wins (NYDN) Colombian-born Janeira Ventura said she would give "any Barca fan who dares" the "night of their lives" if Lionel Messi, Andres Iniesta and co. fire them to the top of La Liga by the end of the season. The adult actress told Mundo Deportivo, "If we win the league this year, I pledge publicly to spend a night of passion with any Barcelona member or supporter who dares. "How can they prove they support the team? It's easy, by showing me the membership card or photos and tickets to a game. They just have to contact me on my website." The 27-year-old was born in Barranquilla, moved to Spain when she was a baby and now lives in Toronto. She added, "I've been a Barcelona fan since I was little, I love the team, the way they play, and above all I love the players. The most sexy ones? Messi, Xavi and Puyol." Her obsession extends to having two cats, who are called Leo and Messi, and plans to tattoo the Argentine striker's name "in a secret place" when she returns to Spain in 2013. She also wants to convince Barcelona bosses to let her be their "official club porn star."

ice cube
Opening Bell

Holiday Bell: 4.2.21

Coinbase to list; Hertz worth more than Hertz thinks; an immaterial currency en route to an unreachable planet; and more things that only sound like April Fools jokes!

By D J Shin (Own work) [CC BY-SA 3.0 or GFDL], via Wikimedia Commons
Opening Bell

Holiday Bell: 12.30.20

Humans power piddling hedge fund returns; Dan Loeb keeps busy right ‘til the ball drops; Congress set to shatter SEC’s Supreme shackles; and more!

liberty bell
Opening Bell

Holiday Bell: 7.2.21

Jobs jobs jobs!; Hertz back on the market and in court; a tale of two cities; an ETF in the ether; and more!

icahn-hulk
Opening Bell

Holiday Bell: 5.27.22

The wages of SPAC; Icahn ground to hamburger; inflation eases; digital dollar talk; and more!

Opening Bell

Holiday Bell: 12.30.15

Warren Buffett's no good very bad year; Biotech stocks are back; "Hot pink hoverboard takes down Mike Tyson"; and more.

Opening Bell

Holiday Bell: 12.27.12

Debt Ceiling Nears As Talks Stymied (WSJ) The Treasury Department said Wednesday the government would hit its legal borrowing limit by Monday, setting in motion emergency measures to keep the government operating for several more weeks and serving as a reminder that the nation's budget wrangling could continue well into 2013. The Treasury's financial maneuvering is designed to put off until February or March the prospect of a full-blown debt crisis. Treasury Secretary Timothy Geithner's two-paragraph letter to Congress didn't specify when the emergency measures might be exhausted, blaming the "significant uncertainty that now exists with regard to unresolved tax and spending policies for 2013." The White House and congressional leaders have shown no signs of progress toward crafting an agreement to avoid the year-end tax increases and spending cuts known as the fiscal cliff. Rajaratnam Pays $1.45 Million Over Gupta Insider Tips (WSJ) As part of a consent agreement signed by Mr. Rajaratnam earlier this month and approved by a federal judge on Monday, he agreed to disgorge more than $1.29 million, representing his profits or losses avoided as a result of his alleged trading on Mr. Gupta's tips, and to pay prejudgment interest of $147,738. SeaWorld Files For IPO (WSJ) Though the number of shares and the price range for offering haven't been determined, the filing pegged it at up to $100 million. IBM Insider Net Expands (Reuters) Federal prosecutors charged Trent Martin, a research analyst at a Connecticut brokerage firm, with trading and tipping others before computer giant IBM’s $1.2 billion acquisition of SPSS in 2009, expanding a related insider-trading case filed last month. Martin was also charged with passing the information to others, including two stockbrokers and his roommate. The group allegedly netted more than $1 million. Shark Tank Explodes In Shanghai Mall (NYDN) Security video inside a Shanghai shopping mall captured the terrifying moment an aquarium with live sharks burst open, injuring at least 15 people and leading to the death of dozens of animals. The chaotic scene on Dec. 18 inside the Shanghai Oriental Shopping Center left many of the victims with cuts from the broken glass, while one of them suffered a broken ankle, according to the China Daily. Many of those hurt were mall employees. In addition, three lemon sharks and dozens of smaller fish and turtles were killed when the 33-ton tank exploded, sending water and glass cascading through part of the shopping center, the BBC reported. At least four people were standing right in front of the display at the time. “It was horrible, like a bomb explosion,” one mall vendor told the China Daily. “Some pedestrians were pushed (6-1/2 feet) away by the force of the water.” Officials were investigating whether low temperatures in Shanghai combined with shoddy building materials to make the shark tank — built just two years ago — suddenly rupture. This isn't the first time the display has been damaged: A broken water pipe in June led to the death of three sharks, according to reports. Mall officials have apparently had enough and told local media they don't plan to rebuild. Jobless Claims Drop as U.S. States Tally Data After Break (Bloomberg) Applications for jobless benefits decreased 12,000 to 350,000 in the week ended Dec. 22, Labor Department figures showed today. Economists forecast 360,000, according to the median estimate in a Bloomberg survey. Claims in 19 states and territories were estimated because government office closures on Dec. 24 prevented a complete count, a Labor Department spokesman said as the figures were released. France, Italy See Economic Bright Spots (WSJ) So that's nice. Gross Doubles New York Bet as California Loses Lead (Bloomberg) The $285 billion Total Return Fund, which Gross runs at Pacific Investment Management Co., boosted its New York state allocation to about a $3 billion market value in the quarter ending Sept. 30, from $1.4 billion as of June 30, according to a semiannual filing the firm released this month. It was the largest increase by amount among U.S. states. Zuckerberg's Sister Can't Keep Privacy Rules Straight (NYP) Facebook chief Mark Zuckerberg’s older sister, Randi, complained yesterday when one of her Twitter followers publicly posted a photo of the family, including her famous brother, standing in the kitchen reacting to the company’s new Poke app. “Not sure where you got this photo,” Randi tweeted in response @cschweitz. “I posted it only to friends on FB. You reposting it on Twitter is way uncool.” It turns out that not even Randi — Facebook’s former marketing director — is up to speed on the site’s often-confusing privacy settings. Her gaffe provided fodder for critics of the site, which in the past has changed its policies with little warning and to the dismay of users. “We’ve all been dealing with loss of privacy in Facebook, now she feels what we all do everyday,” one Twitter user responded. Apple CEO Cook Gets $4.17 Million Compensation, No Stock (Bloomberg) The total includes $1.36 million salary and $2.8 million in incentive plan compensation, Cupertino, California-based Apple said today in a regulatory filing. Cook’s 2011 compensation of $378 million, one of the biggest pay packages on record, was boosted by $376.2 million in stock awards that he’ll get over a decade. McDonald’s trips cost high school secretary $9,000 in fines (NYDN) Kappry Vera of the Urban Assembly School for Construction and Design in Hell’s Kitchen made more than $3,000 in personal purchases on the school credit card from August 2009 through May 2011, investigators charge. The administrator, who lives in Williamsburg, spent most of the money on fast food — including $765 on dozens of visits to McDonald’s between October 2009 and May 2011, charging the city for purchases there up to four times each day. Vera, 33, also dropped $342 at Subway and spent another $190 on Burger King in illegal uses of her city-funded credit card that was only meant for official school purchases, investigators said. Vera only halted her runaway junk-food spending after her principal noticed “questionable purchases” in the school budget and confronted her about it, investigators said. Under questioning, Vera admitted that she bought food for herself on the school card on five occasions, but she wouldn’t give investigators receipts to explain the bulk of her purchases. Programming Note: We’re on an abbreviated, vacation-esque schedule this week (opening news roundups and limited updates whenever the urge to reach out and touch you moves us). We still want to hear from you, though, so if anything happens that you think might tickle our fancy, do not hesitate to let us know.

By World Economic Forum (Flickr: The Global Financial Context: James Dimon) [CC BY-SA 2.0], via Wikimedia Commons
Opening Bell

Holiday Bell: 12.28.20

Stimulus signed; Boris’ non-existent blueprint; more bad news for Marianne Lake; bitcoin bull begs Biden’s indulgence; judge tries restraining Bill Gross; and more!