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Russian Attack on Ukraine Roils Markets [WSJ]
The Dow Jones Industrial Average fell about 547 points, or 1.7%, on course to close in correction territory. The S&P 500 dropped 0.8%; it reached correction territory earlier in the week…. The Cboe Volatility Index rose to the highest level in over 15 months….
“Who wants to be dealing with high inflation, prospects of interest rates hikes and war in Europe?” said Fiona Cincotta, senior financial markets analyst at City Index. “It just seems like it’s too much for investors to be able to swallow right now….”
Brent crude oil, the global benchmark, topped $100 a barrel for the first time since 2014…. Natural-gas futures in Europe surged 50% and benchmark prices for aluminum and nickel, two metals of which Russia is a major producer, rose to their highest levels in about a decade….

Ken Griffin’s Citadel Is Pulling Back Most of Its $2 Billion Melvin Capital Investment [Bloomberg via Yahoo!]
Citadel funds and firm partners asked for $500 million back last month after redeeming $1 billion last year, according to a person familiar with the matter. The January redemption will be paid out by the end of March.
The move comes after Melvin ended 2021 with a 39% loss and fell an additional 15% in January…. Point72 hasn’t redeemed its investment, a person familiar said.

Justice Dept. Sues to Block $13 Billion Deal by UnitedHealth Group [NYT]
The agency argued that a deal by UnitedHealth to buy the health tech firm Change Healthcare would give UnitedHealth sensitive data that it could wield against its competitors in the insurance business…. The deal is the latest transaction to run into opposition from the Biden administration, which has made countering corporate consolidation a central part of its economic agenda….
The companies have said that the acquisition will improve efficiency in the industry. They also explored selling the part of Change Healthcare that the Justice Department said would give UnitedHealth a new monopoly.

Biotech IPOs Slow After Record-Breaking 2021 [WSJ]
Seven biotech companies have gone public in the U.S. this year as of Feb. 22, compared with 21 as of the same date in 2021…. Investors have been inundated with biotech IPOs, and there haven’t been a significant number of standout clinical-trial successes recently, said Rahul Chaudhary, head of healthcare equity capital markets for investment bank SVB Securities LLC. With the shares of several biotechs trading down since they went public, investors don’t necessarily have to buy into IPOs when seeking attractive opportunities, he added.

Two top prosecutors investigating Trump Organization resign [NBC News]
Carey Dunne, who championed the legal fight to get the former president’s tax returns and tax related documents all the way to the Supreme Court, twice, and won, has left the office along with Mark Pomerantz, a former mafia prosecutor who was recruited from private practice to help lead the investigation…. The Times, citing two sources, reported that the resignations came after [new Manhattan District Attorney Alvin] Bragg began to back away from the investigation and had paused grand jury testimony.

Trump Organization and Finance Chief Seek Dismissal of Fraud Charges [NYT]
Mr. Trump’s lawyers, Susan R. Necheles, Alan S. Futerfas and Gedalia M. Stern, said that the prosecutors had “targeted Donald Trump’s associates and companies for investigation and prosecution based on their animus toward his speech and political views.” They listed statements Ms. James made about Mr. Trump while she was running for office in 2018 and said that the district attorney had embraced Ms. James’s investigation, despite knowing it was “motivated by illicit animus….”
Such “selective prosecution” arguments often fall flat with judges, but the lawyers for the Trump Organization and Mr. Weisselberg also argued that the district attorney’s office had failed to meet a legal deadline to file some of the charges and that prosecutors lacked sufficient evidence to support the case.

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Approx. size of the new pad.

Opening Bell: 5.28.20

The Dow rises with unemployment claims because people don’t have a choice, apparently; KKR and Blackstone healthcare companies on life support; Silver Lake is expensively trolling Dan Loeb; and more!

DeliciousCoffee

Opening Bell: 9.8.16

Wells Fargo is in trouble; ECB stands pat; Wall Street vs Trump; Felon named Coffee charged with coffee attack on fellow inmate; and more.

Opening Bell: 02.22.13

AIG Swings to Loss on Sandy Costs, Sale of Unit (WSJ) AIG posted a loss of $3.96 billion, or $2.68 a share, compared with profit of $21.5 billion, or $11.31, a year earlier. Its life-insurance and retirement-services business earned $1.09 billion, up 20% from a year earlier. The company also said it would take a loss of about $4.4 billion on the planned sale of a 90% stake in the plane unit, International Lease Finance Corp. AIG's full-year net income of $3.4 billion marked a sharp decline from the $20.6 billion profit the company posted for 2011, when it adjusted its balance sheet to reflect its expected use of more than $18 billion in tax benefits. CFTC Sues CME Group, Alleging Trade-Data Leaks (WSJ) U.S. regulators took aim at the world's largest futures-exchange operator, accusing CME Group Inc. and two former employees of allegedly sharing details on clients' trades with a commodities broker. The civil charges, leveled Thursday by the Commodity Futures Trading Commission, mark the first time the agency has sued CME in federal court. The case also highlights how regulators have responded to flagging confidence in the financial markets by scrutinizing more closely some of Wall Street's central pillars: the exchanges. The CFTC charged a unit of Chicago-based CME and two former employees with disclosing private information about trading in its big energy markets to an outside party between 2008 and 2010 in return for meals and entertainment. CME said Thursday it would contest the charges. "Markets are too important for this [type of allegation] to be taken lightly," Bart Chilton, a CFTC commissioner, said in an interview. Citigroup bows to shareholder pressure, overhauls pay (Reuters) Citigroup said on Thursday it has overhauled an executive pay plan that shareholders rejected last year as overly generous, revising it to tie bonus payments more closely to stock performance and profitability. The company also said it will pay new Chief Executive Mike Corbat $11.5 million for his work in 2012, in line with remuneration for his peers at other major banks. The new plan was crafted after board Chairman Michael O'Neill and other directors met with "nearly 20" shareholders representing more than 30 percent of Citigroup stock, Citi said in a filing. Watchdog Says LinkedIn paid no federal income tax over past three years (NYP) The Mountain View, Calif., social network for professionals escaped the tax man because of a rule that allows companies to deduct expenses from employee stock awards, the watchdog, the Center for Tax Justice, told The Post. It’s a longstanding accounting trick that has spared many tech firms — including Amazon and Yahoo from 2009 to 2011 — from sharing any of their profits with the IRS, the CTJ said. “On $160 million profits over the last three years, LinkedIn paid zero federal income taxes,” said the CTJ’s Rebecca Wilkins. “The stock option deduction was big enough to wipe out all their taxes.” Unemployment applications up 20,000 last week to 362,000 (AP) The Labor Department said Thursday that thefour-week average, a less volatile measure, rose 8,000 to 360,750, the highest in six weeks. Trump Twitter Mystery! Who Hacked the Donald? (CNBC) In what appears to be the latest in a minor wave of attacks on Twitter accounts belonging to out-sized corporate entities, an out-of-character tweet from Donald Trump's verified account set the Internet abuzz, and then disappeared, shortly before noon ET on Thursday. "These hoes think they classy, well that's the class I'm skippen," read the suspect remark issued from @realDonaldTrump. It was a glaring non sequitur following tweets such as "Republicans must be careful with immigration—don't give our country away," and "Wow, Macy's numbers just in-Trump is doing better than ever — thanks for your great support!" "Yes, obviously the account has been hacked and we are looking for the perpetrator," Rhona Graff, senior vice president, assistant to the president of the Trump Organization, told NBC News via email. This confirmation was quickly echoed by Trump himself, in a tweet that read, "My Twitter has been seriously hacked — and we are looking for the perpetrators." UBS to Trade Equity Swaps in China in Structured-Product Push (Bloomberg) Chinese regulators last month decided to allow UBS to trade total return swaps, Thomas Fang, the bank’s managing director for equities derivatives sales for Asia, said in a phone interview. The bank will use the derivatives to create structured products tied to local stocks, with plans to boost the size of its staff in the country for the business, Fang said. The China Securities Regulatory Commission’s press office didn’t immediately respond to a faxed request for confirmation. A Tax That May Change The Trading Game (NYT) The tax would be tiny for investors who buy and hold, but could prove to be significant for traders who place millions of orders a day. Under the proposal, a trade of shares worth 10,000 euros would face a tax of one-tenth of 1 percent, or 10 euros. A trade of a derivative would face a tax of one-hundredth of 1 percent. But that tax would be applied to the notional value, which can be very large relative to the cost of the derivative. So a credit-default swap on 1 million euros of debt would have a tax of 100 euros, or about 0.4 percent of the annual premium on such a swap. On Currencies, What's Fair Is Hard to Say (WSJ) What's the fair value of a euro? That depends on whether the answer comes from Berlin or Paris. German Chancellor Angela Merkel on Wednesday weighed in on what the currency should be worth, saying the euro's exchange rate is "normal in the historical context." French Finance Minister Pierre Moscovici had a different take earlier this month, calling the euro "perhaps too strong." Economists say Ms. Merkel is right—technically. The euro's buying power is roughly where it should be, according to the Peterson Institute for International Economics, which judges currencies based on countries' current-account balance. But others caution Germany's relatively robust economy props up the euro's value; if weaker countries like Spain or Italy still had their own currencies, they'd be worth much less. Singapore GDP Growth Beats Initial Estimate as Asia Recovers (Bloomberg) Gross domestic product rose an annualized 3.3 percent in the three months through December from the previous quarter, when it shrank a revised 4.6 percent, the Trade Ministry said in a statement today. That compares with a January estimate of 1.8 percent and the median in a Bloomberg News survey for a 2 percent expansion. KFC employee fired for making out with boob-shaped mashed potatoes (DD) A KFC employee in Tennessee is out of a job after photos of the culprit making out with a plate of mashed potatoes ended up on Facebook. The mashed potatoes, which were apparently not served to some unknowing customer, had been arranged into the shape of a woman's boob. In the photos, the former employee can be found licking what we'd have to consider the underboob of the mashed potato mammary before throwing it into an oven. The photo became public information when it showed up on the Facebook page for Johnson City, Tenn., news channel WJHL, where it was shared 2,000 times and received more than 700 comments. Once the news organization was able to determine its locational origin—the KFC on North Roan Street—the suspected employee was terminated. KFC spokesman Rick Maynard confirmed the firing but would not name the culprit because that "wouldn't be appropriate." He stressed that the employee who took the photos is no longer with the company. "Nothing is more important to KFC than food safety," he wrote to WJHL. "As soon as our franchisee became aware of the issue, immediate action was taken.

Opening Bell: 06.07.13

‘This Will be the Most Important Payroll Release in Years’ (WSJ MoneyBeat) Every payrolls day is a hype-fest, but particularly today. Today’s release will be the “most important payroll release in years”, wrote Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch. It follows “the seventh-worst month of returns for fixed income since ’85 and the largest week of bond fund redemptions since Oct ’08,” the bank says. So, no pressure. The consensus forecast gathered by Dow Jones Newswires is for a rise of 169,000 in the reading for May, with an unchanged employment rate of 7.5%. Draghi lauds ‘most successful’ ECB action (FT) A combative Mario Draghi, president of the European Central Bank, strongly defended one of his bank’s most unorthodox and controversial moves of the eurozone crisis as “probably the most successful monetary policy measure undertaken in recent times”. Pressure in Britain Over What to Do With Bailed-Out Banks (DealBook) “As we move closer to an election, the share prices of R.B.S. and Lloyds will become more scrutinized,” said Peter Hahn, a banking professor at the Cass Business School in London. “Whoever is in government, selling shares in these banks will be a top priority.” ... The British government’s quandary over the banks stands in contrast with the experience of the United States Treasury Department, which reduced the government’s stakes in the big banks more quickly. Criminal Cases Loom in Rate Rigging (WSJ) U.S. and British authorities are preparing to bring criminal charges against former employees of Barclays for their alleged roles trying to manipulate benchmark interest rates, according to people familiar with the plans, marking an escalation of a global investigation now entering its sixth year. The charges are likely to be filed this summer, these people said, roughly a year after the big British bank became the first institution to settle over allegations that it attempted to rig the London interbank offered rate, or Libor, and other widely used financial benchmarks. NSA taps in to user data of Facebook, Apple, Google and others, secret files reveal (Guardian) The files also reveal terrible PowerPoint skills. ‘Hey, gals – be a ho!’: Pimps’ lawyer hails great pay, benefits (NYP) “I’m trying to find a job myself that pays me 10 grand a week,” defense lawyer Howard Greenberg said as summations began in the Manhattan Criminal Court trial of Vincent George Sr. and Jr., admitted father-and-son pimps. “One wonders in this economy if a girl can make up to 10 grand a week . . . Why more women don’t do it, I don’t know,” the lawyer said, arguing that there is no proof that the Georges’ pampered staff of five hookers was forced to do anything. The Georges admit they’re pimps. But they insist that they’re really nice pimps and that their stable of five women commuted happily, six nights a week, from their employer-provided houses in Allentown, Pa., to the bars of fancy Midtown hotels, where they’d hand out “masseuse” cards to randy male tourists. “The girls wanted for nothing. There was maternity leave — can you imagine that? In short, the benefits package was great,” Greenberg said. S&P cuts outlook on Brazil sovereign rating (FT) S&P said slow economic growth, expansionary fiscal policy that was likely to lead to an increase in the government’s debt burden, and “ambiguous policy signals” in decision-making were among the factors behind the surprise move. “The negative outlook reflects the at least one-in-three probability that a rising government debt burden and erosion of macroeconomic stability could lead to a downgrade of Brazil over the next two years,” the agency said. Japan's Pension Fund to Buy More Stocks (WSJ) The Government Pension Investment Fund, at a joint news conference with Japan's welfare ministry, said it has raised its target portfolio allocation of domestic stocks to 12% from the current 11%. The fund also said it would increase its allocation of overseas assets and cut back on low-yielding Japanese bonds. The GPIF is the world's largest public pension with ¥112 trillion yen ($1.16 trillion) in assets. It is closely watched by many investors for hints about potential portfolio rebalancing, which could have broad implications for financial markets. Record outflows from US junk bond funds (FT) US high-yield funds saw a record $4.63bn in outflows for the week ending on Wednesday, according to Lipper. Interest rate volatility has surged in recent weeks since benchmark Treasury yields have risen sharply, with selling spilling over into other key areas of the bond market. As exchange traded fund providers and mutual funds face redemptions, they are forced to sell more of their holdings, putting further pressure on prices. “We are definitely worried that the market is in a cycle where selling of bonds begets more selling,” said Steven Boyd, principal at Halyard Asset Management. Pimco Defends $8.5 Billion BofA Mortgage Accord (Bloomberg) Bank of America Corp.’s $8.5 billion mortgage-bond settlement is “outstanding” for investors, said a Pacific Investment Management Co. executive, who defended the deal against opposition. The settlement was reached after an investor group that included Pimco and BlackRock Inc. (BLK) at first demanded $12 billion, eventually coming down to a “take or leave it” offer of $8.5 billion, Kent Smith, an executive vice president at Pimco who helped negotiate the agreement, testified yesterday. “It’s an outstanding deal, and it’s in the best interest of our clients to support it,” Smith said. Smith was the first witness to testify in a trial over the agreement, which is being considered by Justice Barbara Kapnick of New York State Supreme Court in Manhattan. Forest braces for third bout with Icahn (Reuters) Forest Laboratories Inc is trying to avert yet another bitter proxy battle with billionaire investor Carl Icahn ahead of its annual investor meeting this summer, according to two sources familiar with the situation. ... Last year's proxy battle, for example, ended with just one of Icahn's four nominees being elected to the board - Pierre Legault, the former chief financial officer of OSI Pharma. Legault has since distanced himself from Icahn, telling people that he didn't know the investor well and wasn't "his guy", one of the sources said. Bono Sings to Warren Buffett (CNBC) "Home on the Range"; there is video. Russia's Vladimir Putin and wife Lyudmiladivorce (BBC) "It was a joint decision: we hardly see each other, each of us has our own life", Mr Putin said. Mrs Putin had rarely been seen in public in recent months, prompting much speculation in Russian media. She is known to dislike publicity, and told the TV reporter that flying was difficult for her. "Vladimir Vladimirovich is completely drowned in work," she said.

Opening Bell: 02.05.13

Barclays CEO Vows To Improve Bank's Ethics (WSJ) Chief Executive Antony Jenkins said Tuesday he is "shredding" the legacy of the bank's self-serving culture by improving its ethics and moving beyond the misconduct issues that have cost it billions of pounds. Mr. Jenkins told a U.K. parliamentary group that his efforts so far include changing the way employee bonuses are calculated and abolishing commissions on financial-product sales. He said the changes would take time to produce results, but that ultimately he wants to eliminate a culture that at times has been "too short-term focused, too aggressive and on occasions, too self-serving." "Our resolve and intent behind this is absolute," Mr. Jenkins said. McGraw-Hill, S&P Sued by U.S. Over Mortgage-Bond Ratings (Bloomberg) The U.S. Justice Department filed a complaint Monday in federal court in Los Angeles, accusing McGraw-Hill and S&P of mail fraud, wire fraud and financial institutions fraud. Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989, the U.S. seeks civil penalties that can be as high as $1.1 million for each violation. Earlier today, the company’s shares tumbled the most in 25 years when it said it expected the lawsuit, the first federal case against a ratings firm for grades related to the credit crisis. “It’s a new use of this statute,” Claire Hill, a law professor at the University of Minnesota who has written about the ratings firms, said in a phone interview today from Minneapolis. “This is not a line to my knowledge that has been taken before.” Dell Nears $25 Billion Deal To Go Private (WSJ) Late Monday, Mr. Dell was in talks with Microsoft Corp and private-equity firm Silver Lake Partners to offer shareholders between $13.50 and $13.75 a share, said people familiar with the matter, about a 25% premium to Dell's stock price in January before the possibility of a deal became public. The buyout, if approved by shareholders, would be the largest such deal since the financial crisis. It also would be an admission by Mr. Dell that he wasn't able to pull off the changes needed to improve his company's revenue and profit under Wall Street's glare. The buyout would give Mr. Dell the largest stake in the company, ensuring that the 47-year-old is the one who gets to oversee any changes. Gross: Beware 'Credit Supernova' Looming Ahead (CNBC) The head of the Pacific Investment Management bond giant has issued an ominous forecast in which he worries that the global central bank-induced credit bubble "is running out of energy and time." As a result, investors will have to get used to an atmosphere of diminishing returns and portfolios that will hold more hard assets like commodities and fewer less-tangible financial assets like stocks. "Our credit-based financial markets and the economy it supports are levered, fragile and increasingly entropic," Gross said in his February newsletter. Obama to Meet With CEOs of Goldman, Yahoo, Other Firms (Reuters) President Barack Obama will meet with chief executives from 12 companies including Goldman Sachs Group's Lloyd Blankfein and Yahoo's Marissa Mayer on Tuesday to discuss immigration and deficit reduction, according to a White House official. "The president will continue his engagement with outside leaders on a number of issues, including immigration reform and how it fits into his broader economic agenda, and his efforts to achieve balanced deficit reduction," the official said Monday. Other chief executives include Arne Sorenson of Marriott International, Jeff Smisek of United Continental Holdings, and Klaus Kleinfeld of Alcoa. A Billion-Dollar Club And Not So Exclusive (NYT) an unprecedented number of high technology start-ups, easily 25 and possibly exceeding 40, are valued at $1 billion or more. Many employees are quietly getting rich, or at least building a big cushion against a crash, as they sell shares to outside investors. Airbnb, Pinterest, SurveyMonkey and Spotify are among the better-known privately held companies that have reached $1 billion. But many more with less familiar names, including Box, Violin Memory and Zscaler, are selling services to other companies. “A year from now that might be 100,” said Jim Goetz, a partner at Sequoia Capital, a venture capital business. Sequoia counts a dozen such companies in its portfolio. It is part of what he calls “a permanent change” in the way people are building their companies and financers are pushing up values. The owners of these companies say the valuations make them giddy, but also create unease. Once $1 billion was a milestone, now it is also a millstone. Bigger expectations must be managed and greater uncertainty looms. Donald Trump to sue Bill Maher after bet feud (Politico) Donald Trump filed a lawsuit Monday in California against liberal comic Bill Maher, suing him for $5 million after Trump says Maher did not follow through on a $5 million public bet he made on “The Tonight Show.” “I don’t know whether this case will be won or lost, but I felt a major obligation to bring it on behalf of the charities,” Trump said in a public statement first obtained by POLITICO. Last month, Maher said on NBC to Jay Leno that he would pay $5 million to Trump’s charity of choice if he provided a birth certificate proving that he’s not “spawn of his mother having sex with orangutan.” It was similar to an offer Trump made to President Barack Obama during the presidential campaign season, in which Trump wanted Obama to release his college records. Trump’s statement continued: “Bill Maher made an unconditional offer while offer while on The Jay Leno Show and I, without hesitation, accepted his offer and provided him with the appropriate documentation. Money-Market Funds Best By Excess Cash (WSJ) Money-market funds have a high-quality problem: investors are entrusting them with too much cash. The flood of money is prompting the funds, which buy short-term, top-rated debt, to seek higher returns in investments that until recently were seen as too risky, including French bank debt. Investors plowed $149 billion into U.S.-based money-market funds between the start of November and Jan. 30, bringing total assets under management to $2.695 trillion, close to the most since mid-2011, according to the Investment Company Institute. Knight Capital Group to Cut Workforce by 5 Percent (Reuters) Knight Capital, which recently agreed to be bought for $1.4 billion by Getco, will lay off 5 percent of its global workforce as part of efforts to restructure the automated trading firm, according to a regulatory filing released on Monday. FTC Corrects Language On Herbalife (NYP) The Federal Trade Commission yesterday corrected an earlier statement regarding a “law enforcement investigation” into Herbalife. In response to a Freedom of Information Act request by The Post, the FTC said some complaints against the company were withheld because the information was “obtained through a law enforcement investigation.” The agency said yesterday that the language in its letter accompanying the FOIA request was incorrect and it should have said that the exemption from disclosure was related to “foreign sources.” FTC spokesman Frank Dorman defined “foreign sources” as government entities, including law enforcement agencies, and the exemption relates to information-sharing between the FTC and these foreign government agencies. The FTC said that it “may not disclose any material reflecting a consumer complaint obtained from a foreign source if that foreign source has requested confidential information.” The agency said it could not confirm, or deny, an investigation into the nutritional supplements company. Hedge Fund Mogul, Swiss Villagers Clash Over Ski Slopes (Bloomberg) Since hotelier Tobias Zurbriggen can remember, the business of running Saas-Fee has been a local affair. Now, the Swiss ski resort neighboring the Matterhorn is feeling the heat from a New York-based financier. Edmond Offermann, a nuclear scientist turned millionaire working for hedge fund Renaissance Technologies LLC, invested 15 million Swiss francs ($16.4 million) in 2010 to revive Saas- Fee’s struggling ski-lift company. “It’s like a hobby, which completely got out of control,” Offermann, 53, said in an interview from Long Island, New York. He wants to shake things up by managing hotels and the ski-lift operator in one company controlled by a single chief executive. JPMorgan Joins Rental Rush For Wealthy Clients (Bloomberg) The firm’s unit that caters to individuals and families with more than $5 million, put client money in a partnership that bought more than 5,000 single family homes to rent in Florida, Arizona, Nevada and California, said David Lyon, a managing director and investment specialist at J.P. Morgan Private Bank. Investors can expect returns of as much as 8 percent annually from rental incomeas well as part of the profits when the homes are sold, he said. Man Allegedly Tries To Walk Out Of Costco With 24 Quarts Of Oil — Strapped To His Body (CBS) Jorge Sanchez, 35, was spotted about 4:30 p.m. trying to leave a Burbank Costco without paying for the oil. Store employees gave chase and officials said they lost Sanchez after he jumped a fence at the west side of the Costco parking lot. Burbank Police Sgt. Darin Ryburn told CBS2/KCAL9 reporter Andrea Fujii that nine of the 24 quarts were recovered during the foot chase. Authorities said Sanchez walked into the Costco and went straight to the oil aisle. He allegedly grabbed a couple of cases and emptied them. Said Ryburn, “He proceeded to hide the quarts of oil in his pants, socks, and in his shirt.” Sanchez was later apprehended near Beachwood Drive and Monterey Avenue, about eight blocks from the store. Officials said he was arrested on suspicion of burglary charges. Margo Martin was a witness to the apprehension. “All of a sudden, I hear ‘Get down on the ground’ and there is this man laying in our driveway.” Witnesses thought the man was running funny and weren’t sure why. Witness Manuel Atlas said, “He looked kind of heavy and out of shape.” Police said Sanchez was also running funny because he still had 15 quarts of oil strapped to him. Police said he used a bungee cord to strap the bottles down.

Opening Bell: 12.17.12

SAC E-Mails Show Steve Cohen Consulted on Key Dell Trade (Bloomberg) Two days before Dell Inc. was set to report second-quarter 2008 earnings, Jon Horvath, a technology analyst at SAC Capital Advisors LP, e-mailed his boss Michael S. Steinberg and another portfolio manager to warn that the computer maker would miss earnings estimates. “I have a 2nd hand read from someone at the company,” Horvath began the Aug. 26 message, which provided details on gross margins, expenditures and revenue. “Please keep to yourself as obviously not well known.” Steinberg, a 15-year veteran of the hedge fund founded by billionaire Steven A. Cohen, responded: “Yes normally we would never divulge data like this, so please be discreet. Thanks.” The e-mails indicate Steinberg, the longest-serving SAC employee linked to the U.S. insider-trading probe, discussed the Dell trade with Cohen. While neither has been accused of any wrongdoing, the messages were admitted as evidence at the New York insider-trading trial of two hedge-fund managers last week after a judge ruled they supported prosecutor claims that Steinberg should be considered an unindicted co-conspirator. AIG To Sell Life Insurer Stake (WSJ) AIG will sell its stake in Asian life insurer AIA Group Ltd., raising as much as $6.5 billion in what could be the second-largest deal in Asia this year. Completion of the sale will mark another step forward for AIG, which is shedding noncore assets, as it seeks to repay its debt to the U.S. government, which took over the company in a $182 billion bailout in 2008. A Shadow Over Banks As UBS Nears Libor Deal (WSJ) The Swiss bank is set to agree as soon as this week to pay roughly $1.5 billion to settle allegations of wrongdoing related to benchmarks such as the London interbank offered rate, or Libor, say people close to the talks. So far, UBS has agreed in principle with the U.S. Justice Department that a company unit in Japan will plead guilty to a criminal charge, according to a person familiar with the tentative deal. The Zurich-based parent will pay the fine in return for a deal that lets it avoid criminal prosecution. Criminal charges against individuals are expected to be filed in tandem with the settlement, according to U.S. officials briefed on the matter. The pursuit of criminal charges and the higher-than-expected fine are ominous signs for more than a dozen financial firms still under investigation. "There's no panic—yet," says someone close to one of the banks in the sprawling probe. Moody’s Gets No Respect as Bonds Shun 56% of Country Ratings (Bloomberg) The global bond market disagreed with Moody’s Investors Service and Standard & Poor’s more often than not this year when the companies told investors that governments were becoming safer or more risky. Yields on sovereign securities moved in the opposite direction from what ratings suggested in 53 percent of the 32 upgrades, downgrades and changes in credit outlook, according to data compiled by Bloomberg. That’s worse than the longer-term average of 47 percent, based on more than 300 changes since 1974. This year, investors ignored 56 percent of Moody’s rating and outlook changes and 50 percent of those by S&P. Economy Poised To Nudge Ahead In 2013 (WSJ) So that's nice. Boehner Opens the Door to Tax Hikes on the Wealthy (Reuters) U.S. House of Representatives Speaker John Boehner's offer to accept a tax rate increase for the wealthiest Americans knocks down a key Republican road block to a deal resolving the year-end "fiscal cliff." The question now boils down to what President Barack Obama offers in return. Such major questions, still unanswered so close to the end of the year suggest, however, that no spending and tax agreement is imminent. A source familiar with the Obama-Boehner talks confirmed that Boehner proposed extending low tax rates for everyone who has less than $1 million in net annual income, meaning tax rates would rise on all above that line. Actor Depardieu Hits Back at French PM Over Taxes (CNBC) Actor Gerard Depardieu, accused by French government leaders of trying to dodge taxes by buying a house over the border in Belgium, retorted that he was leaving because "success" was now being punished in his homeland. A popular and colourful figure in France, the 63-year-old Depardieu is the latest wealthy Frenchman to seek shelter outside his native country after tax increases by Socialist President Francois Hollande. Prime Minister Jean-Marc Ayrault described Depardieu's behaviour as "pathetic" and unpatriotic at a time when the French are being asked to pay higher taxes to reduce a bloated national debt. "Pathetic, you said pathetic? How pathetic is that?" Depardieu said in a letter distributed to the media. "I am leaving because you believe that success, creation, talent, anything different must be sanctioned," he said. [...] The "Cyrano de Bergerac" star recently bought a house in Nechin, a Belgian village a short walk from the border with France, where 27 percent of residents are French nationals, and put up his sumptuous Parisian home up for sale. Depardieu, who has also inquired about procedures for acquiring Belgian residency, said he was handing in his passport and social security card. Singapore Establishment Challenged by Carson Block on Olam (Bloomberg) When Carson Block likened Olam International Ltd. to fraud-ridden Enron Corp., he challenged more than the accounting of the Singapore-based commodities firm. He also took on Temasek Holdings Pte, the government-owned investment company whose money has helped build the city-state into a corporate dynamo known as Singapore Inc. Temasek is Olam’s second-largest shareholder, with a 16 percent stake that has lost more than $100 million in value since Nov. 19, when Block’s Muddy Waters LLC first questioned the validity of the company’s finances and said it was betting against the stock. Temasek is also the biggest shareholder in many of the country’s best-known companies, including DBS Group Holdings Ltd., Southeast Asia’s largest bank, Singapore Telecommunications Ltd. and Singapore Airlines Ltd. “Carson Block is putting his whole reputation on this one,” said Low Chee Keong, associate professor of corporate law at the Chinese University of Hong Kong. “He’s taking on the Singapore government, Singapore Inc. here.” UN court orders immediate release of Argentine ship seized by hedge funder Paul Singer over unpaid debt (AP) A United Nations court ordered the immediate release Saturday of an Argentine navy training ship held in Ghana two months ago at the request of an American hedge fund. The ARA Libertad was held Oct. 2 in the port of Tema as collateral for unpaid bonds dating from Argentina's economic crisis a decade ago. Argentina appealed to the UN's International Tribunal for the Law of the Sea for the ship's release, arguing that as a warship the Libertad is immune from being seized. In an expedited ruling, the court ordered that Ghana "forthwith and unconditionally release the frigate ARA Libertad" and ensure the ship and its crew can leave Ghanaian waters. It also ordered that the vessel should be resupplied as needed. Detaining the ship was "a source of conflict that may endanger friendly relations among states," the court said. The ruling leaves untouched the parties' rights to seek further international arbitration on the matter. Debt Loads Climb In Buyout Deals (WSJ) Private-equity firms are using almost as much debt to fund acquisitions as they did before the financial crisis, as return-hungry investors rush to buy bonds and loans backing those takeovers. The rise in borrowed money, or leverage, heralds the possibility of juicy returns for buyout groups. Ominously, the surge also brings back memories of the last credit binge around six years ago, which saddled dozens of companies with huge levels of debt. Berlusconi's Love Life Lost in Translation (CNBC) Global media reports that the former Italian prime minister Silvio Berlusconi announced his engagement to his 28-year-old girlfriend on one of his TV Channels on Sunday, have been dismissed by native Italians who say Berlusconi has been mis-translated. Various newspapers have reported that Berlusconi is to get married for the third time, when in fact he announced that he is in love and in a relationship...Professor of Modern Italian History at University College London (UCL), John Foot, told CNBC that Pascale is a"girlfriend, nothing more." "In Italy the phrase 'Mi sono fidanzato' usually means 'I have a girlfriend or boyfriend' and not 'I am engaged to be married'. This can cause confusion abroad but is pretty clear in the Italian context," he told CNBC. Twinkies again by spring? It could happen (NBC) It’s not even Christmas, but Twinkies fans may be able to start looking forward to an Easter present. Bankrupt Hostess Brands has received a number of bids from companies interested in buying the maker of Twinkies, Ho Hos, and Wonder bread, including retail heavyweights such as Wal-Mart Stores Inc. and Kroger Co, Bloomberg News reported Friday, quoting an unnamed person familiar with the matter...Anthony Michael Sabino, a bankruptcy attorney and a professor at St. John's University, said bankruptcy judge Robert Drain was motivated to move quickly. Bidding will likely take place by early January, since the assets — if not the treats themselves — could become stale. “I think this will move a at a fairly decent pace. He knows what’s at stake here.

Opening Bell: 11.07.12

Obama Wins Re-Election With Romney Defeated In Key States (Bloomberg) Obama defeated Republican Mitt Romney, winning at least 303 electoral votes in yesterday’s election with 270 needed for the victory. With one state -- Florida -- yet to be decided, Romney had 206 electoral votes...Obama won the battleground states of Ohio, Virginia, Iowa, New Hampshire, Wisconsin, Nevada and Colorado. He also carried Pennsylvania, where Romney made an 11th-hour bid for support to try to derail the president’s drive for re-election. North Carolina was the only battleground Romney won. Romney Campaigns To The End (WSJ) Hours before Mitt Romney lost his six-year quest to win the presidency, he said he had prepared only one speech—a victory speech...Until the final hour, Mr. Romney and his aides expressed confidence that he would win. The candidate, who prefers data and metrics to chitchat, appeared to be caught off guard by the loss even though he trailed in polls in crucial battlegrounds such as Ohio. Triumph Of The Nerds: Nate Silver Wins In 50 States (Mashable) The Fivethirtyeight.com analyst, despite being pilloried by the pundits, outdid even his 2008 prediction. In that year, his mathematical model correctly called 49 out of 50 states, missing only Indiana (which went to Obama by 0.1%.) This year, according to all projections, Silver’s model has correctly predicted 50 out of 50 states. A last-minute flip for Florida, which finally went blue in Silver’s prediction on Monday night, helped him to a perfect game. Loser Ryan Also A Winner (NYP) The Republican vice-presidential hopeful hedged his bet by running for re-election to his congressional seat in Wisconsin — where last night, he was declared the winner for an eighth straight time. Goldman Partners Pocket $22 Million (WSJ) More than 30 executives, including Chief Executive Officer Lloyd C. Blankfein, recently cashed in stock options awarded in the afterglow of the company's initial public offering in 1999. According to a securities filing, the executives, all Goldman partners, pocketed a total of $21.8 million by exercising options and selling the underlying shares in the three days after the firm reported third-quarter results in mid-October. The options expire at the end of November, and cashing in produced instant profits because Goldman's share price is more than 50% higher than when the options were awarded in 2002. "By exercising 10-year-old options before they expired later this year, executives captured some of the value we have built for shareholders over that period," said a spokesman for the securities firm. In contrast, many of the executives' remaining options are worthless, at least for now, because they were granted from 2005 to 2008. The stock peaked in October 2007 at about $239, or 89% higher than Tuesday's closing price of $126.25 in New York Stock Exchange composite trading at 4 p.m. The biggest gain went to Michael S. Sherwood, a Goldman vice chairman and the firm's top executive in Europe, who received $5.2 million from exercising options on 115,211 shares. Mr. Blankfein collected $3.1 million, while departing Chief Financial Officer David A. Viniar got $2.3 million, the filing shows. JPMorgan Nears SEC Settlement (WSJ) JPMorgan is close to a settlement with the Securities and Exchange Commission that would end one probe into how the company's Bear Stearns Cos. unit packaged and sold home loans to investors, according to people familiar with the case. A pact with the nation's largest bank by assets would be the first tangible victory in a wide-ranging SEC investigation into Wall Street's sale of mortgage-backed securities before the onset of the financial crisis. Since 2010, the SEC has issued more than 300 subpoenas or document requests related to the probe and collected more than 30 million pages of documents, enforcement chief Robert Khuzami said earlier this year. BNP Paribas Third Quarter Net Doubles On Trading Gains (Bloomberg) Pretax profit at BNP Paribas’s corporate- and investment- banking unit, or CIB, rose 7.3 percent to 732 million euros, beating analysts’ estimate of 686 million euros. Revenue from equity and advisory operations climbed 51 percent to 444 million euros, while fixed-income sales more than doubled to 1.13 billion euros. After Obama Victory, Donald Trump Rants On Twitter (ABC) “We can’t let this happen. We should march on Washington and stop this travesty,” Trump Tweeted. “Our nation is totally divided! Lets fight like hell and stop this great and disgusting injustice! The world is laughing at us. This election is a total sham and a travesty. We are not a democracy! And then: “Our country is now in serious and unprecedented trouble…like never before. Our nation is a once great nation divided! The electoral college is a disaster for a democracy. Hopefully the House of Representatives can hold our country together for four more years…stay strong and never give up! House of Representatives shouldn’t give anything to Obama unless he terminates Obamacare.” And finally: “This election is a total sham and a travesty. We are not a democracy!” Fitch: No Fiscal Honeymoon For President Obama (CNBC) President Barack Obama will need to quickly secure agreement on avoiding the "fiscal cliff" and raising the debt ceiling following Tuesday's elections, Fitch Ratings said. The economic policy challenge facing the president is to put in place a credible deficit-reduction plan necessary to underpin economic recovery and confidence in the full faith and credit of the U.S., according to Fitch. Resolution of these fiscal policy choices would likely result in the U.S. retaining its triple-A status from Fitch, the firm said. Failure to avoid the so-called fiscal cliff and raise the debt ceiling in a timely manner, as well as securing agreement on credible deficit reduction, would likely result in a rating downgrade in 2013, Fitch said. The New Haven For Investors (WSJ) Treasurys have a new rival for safe-haven status: U.S. companies. Bonds of Exxon Mobil and Johnson & Johnson are trading with yields below those of comparable Treasurys, a sign that investors perceive them as a safer bet. It is a rare phenomenon that some market observers said could be the beginning of a new era for debt markets. It could ultimately mean some companies will borrow at lower rates than the U.S. government. Swiss, Greeks Begin Talks On Tax Deal (WSJ) Switzerland has begun formal talks on a deal to tax assets stashed in secret Swiss bank accounts by Greek citizens, in line with similar agreements struck with other European countries, the Swiss government said Wednesday. Woman Wearing MIT Shirt Nearly Banned From Voting In Boca Raton (BNN) A woman attempting to vote in West Boca Raton yesterday was initially prohibited from entering the polling place because she was wearing a t-shirt with the letters MIT. BocaNewsNow.com heard from multiple sources that an election supervisor at the polling place ultimately realized that MIT stands for “Massachusetts Institute of Technology” — a school where students tend to know how to spell — and was not a campaign shirt for the Republican candidate, who spells his name MITT. Campaigning is not permitted within several yards of a polling place. The woman was ultimately allowed to vote.

Opening Bell: 07.30.12

New York Lender Files Libor Suit (WSJ) Berkshire Bank, with 11 branches in New York and New Jersey and about $881 million in assets, claims in a proposed class-action lawsuit in U.S. District Court in New York that "tens, if not hundreds, of billions of dollars" of loans made or sold in the state were affected by rigging the London interbank offered rate. Many adjustable-rate commercial and home loans are pegged to Libor, meaning that "misrepresentation…on the date on which a loan resets will generally reduce the amount of interest that a lender receives by an equivalent amount," the bank alleges..."Libor could well be the asbestos claims of this century," said James Cox, a law professor at Duke University in Durham, N.C. "Misreporting an index used around the world" has "ginormous" ramifications, he added. HSBC Hit By Provisions (WSJ) HSBC said Monday that net profit fell in the first half, as the bank was forced to put aside $2 billion to cover the fallout of a U.S. money-laundering probe and the improper selling of financial products. The series of provisions at the bank pushed up underlying costs by $1.9 billion and ate into the lender's bottom line, cutting net profit attributable to ordinary shareholders in the first six months by 9% to $8.15 billion. HSBC Apologizes For Compliance Failures (Bloomberg) “Regulatory and compliance events in the first six months of the year overshadowed financial performance,” Chairman Douglas Flint said in a statement today. “HSBC has made mistakes in the past, and for them I am very sorry.” Big Banks Are Getting Tough With Hedge-Fund Clients (Reuters) Major banks face growing pressure to extract more money from, or even sever ties with, unprofitable hedge-fund clients as they cut costs in the face of tough trading conditions and try to refocus on the biggest managers. Industry insiders say prime brokers are sifting through their client lists, in some cases demanding higher fees on trading or a greater share of a fund's business, and sometimes telling funds to look elsewhere. Investors eye wine, art funds for hedging (NYP) Rising fears that traditional investing has become a lose-lose proposition have a growing number of wealthy folks seeing dollar signs in niche funds that invest in art, wine, musical instruments and even classic cars. They’re known as “collectible” funds or “treasure” funds, and while they come with plenty of skeptics and potential pitfalls, they’re also promising returns reminiscent of the days before the Great Recession. Sergio Esposito, founder of Union Square’s wine shop Italian Wine Merchants, said the wine fund he helped start in 2010, The Bottled Asset Fund, has been doing so well he hopes to launch another next year. After selling its first batches of wine this year, the $8.2 million fund is now seeing profits upward of 30 percent, he said. Gymnast’s parents perform their own routine at London 2012 (The Score) Lynn and Rick Raisman have been watching their daughter Aly work towards the Olympics since they first brought her to a gym when she was two two years old. It’s no wonder then that watching her compete for an Olympic medal is a nail biting experience. Here they are with their eyes trained on Aly’s uneven bars routine in London. Her dad just about makes it through unscathed: Fed Weighs Cutting Interest On Banks’ Reserves After ECB Move (Bloomberg) “They’re reconsidering it,” said Ward McCarthy, a former Richmond Fed economist. A July 5 decision by the European Central Bank to cut its deposit rate to zero is prompting renewed interest in the strategy, said McCarthy, chief financial economist at Jefferies & Co. McCarthy said it’s unlikely the Fed will reduce the rate at a two-day meeting that starts tomorrow. Used Lamborghinis Linger On H.K. Lots Amid China Lull (Bloomberg) Dealers of such second-hand cars say job cuts and the worsening global economic outlook are creating uncertainty among the finance-industry and expatriate professionals who make up the bulk of their buyers. Morgan Stanley, Citigroup, and Deutsche Bank are among firms with Asian headquarters in Hong Kong that are cutting jobs worldwide. “The more expensive the car, the more dry the business,” said Tommy Siu at the Causeway Bay showroom of Vin’s Motors Co., the used-car dealership he founded two decades ago. Sales of ultra-luxury cars have halved in the past two or three months, he said. “A lot of bankers don’t want to spend too much money for a car now. At this moment, they don’t know if they’ll have a big bonus.” “In the car market, it’s not buying like watches,” said Booz & Co.’s Russo. “Here you are getting a true look at a category of product bought by Hong Kong buyers. It’s a pulse check on how Hong Kong residents view the stability of the financial system.” Sarbanes-Oxley's Jail-Time Threat Hasn't Been Applied in Crisis-Related Cases (WSJ) After the financial crisis, the certification rules seemed like a strong weapon against executives suspected of misleading investors. But prosecutors haven't brought any criminal cases for false certification related to the crisis. Regulators have brought only a handful of crisis-related civil allegations in that area...For example: Richard Fuld, former CEO of Lehman Brothers Holdings Inc. A bankruptcy examiner's report on Lehman's 2008 collapse said there was enough evidence to support claims that Mr. Fuld failed to ensure the firm's quarterly reports were accurate, because he knew or should have known Lehman had cut its balance sheet through questionable transactions. But the government hasn't charged Mr. Fuld with false certification or other wrongdoing. His attorney couldn't be reached for comment. There also haven't been any charges against James Cayne, Bear Stearns Cos.' ex-CEO, which spiraled into a liquidity crisis that led to a 2008 forced sale to J.P. Morgan. Mr. Cayne and other Bear executives recently agreed to a $275 million settlement of shareholder litigation accusing them of misleading investors about the firm's finances—including allegations that Mr. Cayne falsely certified Bear's financial reports. Fla. Man Who Lost Hand Charged With Feeding Gator (AP) A Florida airboat captain whose hand was bitten off by a 9-foot alligator faces charges of feeding of the animal. Collier County Jail records show 63-year-old Wallace Weatherholt was charged Friday with unlawful feeding of an alligator and later posted $1,000 bond. His next court date is Aug. 22. Weatherholt was attacked on June 12th as he was giving an Indiana family a tour of the Everglades. The family said Weatherholt hung a fish over the side of the boat and had his hand at the water's surface when the alligator attacked. Wildlife officers tracked and euthanized the gator. Weatherholt's hand was found but could not be reattached. A criminal investigation followed. Feeding alligators is a second-degree misdemeanor.