Opening Bell: 08.01.13

Opening Bell: 08.01.13

Fresh Squeeze? Ackman Questions Soros’ Buy of Herbalife (FBN)
Are some investors manufacturing a “short squeeze” in shares of Herbalife in order to force activist investor William Ackman to capitulate on his massive bet against the health-product manufacturer? Those representing Ackman think so, and they’re pressing officials in the New York office of the Securities and Exchange Commission to investigate, people with knowledge of the matter tell the FOX Business Network. … Soros’ investment represents less than 5% of outstanding shares of Herbalife or securities rules would have forced his fund to disclose the size of the position with the regulators. However, if his fund purchased shares in concert with other investors, or as a “common group,” that could also prompt a filing of a shared position, securities lawyers say.

Investment Banking Spurs Profit Surge at Societe Generale (DealBook)
The French bank Société Générale reported better-than-expected second-quarter earnings on Thursday, buoyed by a strong performance in its investment and corporate banking division. The bank, France’s second-largest behind BNP Paribas, said net income in the three months ended June 30 more than doubled, to 955 million euros ($ 1.26 billion), from the period a year earlier, while revenue fell slightly, to 6.2 billion euros. Société Générale’s strong earnings, which beat analysts’ estimates, come after the announcement of a restructuring drive that aims for cost savings of 900 million euros by 2015. The bank said on Thursday that it had already achieved 170 million euros of those savings by the end of the second quarter.

Lloyds to Start Dividend Talks After Swinging Into Profit (Bloomberg)
Lloyds Banking Group Plc said it will seek to resume dividends, five years after receiving a taxpayer bailout, as the government prepares to cut its stake in the British lender. The stock hit a two-and-a-half-year high. Net income rose to 1.56 billion pounds ($ 2.4 billion) in the first half from a 697 million-pound loss in the year-earlier period, Britain’s biggest mortgage lender said in a statement today. Loan impairments fell 43 percent to 1.8 billion pounds.

Obama Defends Summers in Meetings With Lawmakers (WSJ)
In separate closed-door meetings with House and Senate Democrats, the president made clear he hasn’t decided on a nominee to succeed Ben Bernanke as central bank chairman, according to lawmakers at the meetings. He told them he had interviewed several people, indicating he is considering candidates beyond the two viewed as his most likely picks, Mr. Summers and Janet Yellen, the vice chairwoman of the Fed’s Board of Governors. In the meeting with House Democrats, Mr. Obama added a fresh name to the top tier of candidates: Donald Kohn, a former Fed vice chairman and a longtime Fed staff economist and adviser. Mr. Kohn is now a senior fellow at the Brookings Institution and serves on the Bank of England’s Financial Policy Committee.

Drunk US tourist who insisted on singing with band in Thailand bar stabbed to death by one of the musicians (AP)
Bobby Ray Carter Jr., 51, died at a hospital of a stab wound in his chest after a brawl broke out early Wednesday at the bar at Ao Nang beach in Krabi province, police Lt. Col. Jongrak Pimthong said. He said Carter, a Texas native, was intoxicated, began singing with the band and refused to leave the stage to let other customers sing. “Witnesses said Carter got angry when the band played ‘Hotel California’ instead of the song he requested, and he refused to step down,” Krabi city police chief Col. Taksin Pochakorn said. Police said the band then stopped playing and Carter and his 27-year-old son got into a furious argument with the musicians. Jongrak said Carter was stabbed in his chest with an iron rod during the fight outside the bar and his son was injured in the head.

SAC Seen Avoiding $ 14 Billion Death Penalty From U.S. (Bloomberg)
John Coffee, a securities-law professor at Columbia Law School, said Bharara’s view that the government is entitled not only to ill-gotten gains but also to a share of any funds with which those gains have been commingled is flawed. “They are pushing the commingling theory to the limits of its logic and beyond” he said. “The government is stretching the envelope further than it is entitled to. It’s like taking an eyedropper full of tainted chemicals, dropping it into Lake Superior and saying you have to forfeit everything in the lake.”

Banks Find S.&P. More Favorable in Bond Ratings (NYT)
S.& P. has been giving higher grades than its big rivals to certain mortgage-backed securities just as Wall Street is eagerly trying to revive the market for these investments, according to an analysis conducted for The New York Times by Commercial Mortgage Alert, which collects data on the industry. S.& P.’s chase for business is notable because it is fighting a government lawsuit accusing it of similar action before the financial crisis. As the company battles those accusations, industry participants say it has once again been moving to capture business by offering Wall Street underwriters higher ratings than other agencies will offer. And it has apparently worked. Banks have shown a new willingness to hire S.& P. to rate their bonds, tripling its market share in the first half of 2013. Its biggest rivals have been much less likely to give higher ratings.

Merchants Notch Win in Feud Over Debit-Card Fees (WSJ)
Every mom-and-pop shop, Starbucks and 7-Eleven won a potential victory Wednesday when a federal judge tossed out a Federal Reserve rule on fees banks can charge merchants when they swipe customers’ debit cards, saying the Fed didn’t do enough to limit the levies. The decision likely will force the Fed to slash those fees, further crimping a once-lucrative business for banks and card giants like Visa Inc. V and MasterCard Inc. … The 2010 Dodd-Frank financial law required the Fed to ensure these “interchange fees” reflect the actual cost of processing debit-card transactions. The Fed initially proposed capping fees at 12 cents a transaction, but ultimately set the cap at 21 cents—plus the potential of a few cents more to cover costs such as fraud. Before the rule went into effect, banks charged an average of 44 cents a transaction.

Shell’s Profit Falls on Shale Write-Down (WSJ)
The company warned that its North American exploration and production division was likely to remain at a loss during at least the second half of the year, and announced a strategic review of its North American portfolio with a view to selling some assets. “Higher costs, exploration charges, adverse currency exchange-rate effects and challenges in Nigeria have hit our bottom line,” said Shell Chief Executive Peter Voser in a statement. “These results…were clearly disappointing for Shell.”

Uruguay votes to legalise marijuana (FT)
Uruguay’s lower house of Congress has passed a groundbreaking bill to legalise marijuana, despite high public disapproval of the plan. Deputies approved the law by 50 votes to 46 after a day-long debate whose outcome had hung in the balance amid criticism from some within the ruling leftist coalition. … As in Colorado, Uruguayans will be allowed to grow up to six cannabis plants for personal use. But only the Uruguayan government will be allowed to sell the drug, and only to users aged over 18 on a federal registry. The state would control and regulate the marijuana trade, harvest, sales, storage and distribution.

Dungeon Guide for Administrative Assistant Quest (McSweeney’s)
Return the key to Sherryl by placing it on her desk while she’s at lunch. Otherwise, she will ask what you are doing this weekend and you will have to play the Weekend Work Social Obligations side quest which will cost you $ 60 and force you to attend a baby shower on a Saturday morning. (This will decrease your charisma by 3.) Play the Assemble the Reports mini-game. If you get more than 5 paper cuts you will bleed on the reports, lose the game and have to start over. Complete the mini-game by 2:45 and bring the reports to Conference Room A. There you will find Your Superior who will tell you that the meeting has moved upstairs to Conference Room C but no one knows the room has changed. Make two signs for the room change and make sure to put the second one on the back door that attaches to the administrative office suite or The Boss will blame you for missing the meeting.

Social climbers are clamoring to get into the Southampton Bathing Corp., the most exclusive beach club in town — despite its dismal amenities, $ 30,000 initiation fee and high rejection rate (NYP)
“The most popular dish is just mayonnaise,” quips the anonymous guest, who adds that if she and her husband were ever to join a club in Southampton, they’d join a Jewish one, even though they’re not members of the tribe. “They know what good food is. They know what amenities are, and they know how to take care of their properties.”

Belarus leader beats Putin’s pike with man-sized catfish (Reuters)
Just days after Russian President Vladimir Putin landed a giant pike on a fishing trip, his Belarussian counterpart Alexander Lukashenko has boasted about catching a man-sized catfish. Putin’s office said last week he had caught a 21 kg (46 lb) pike while fishing in Siberia, describing it as a “gigantic animal”. The latest in a long string of macho exploits by the Kremlin leader drew skepticism and mockery on social media. On Wednesday, Belarussian state television showed Lukashenko telling a government meeting about his own catch, including a 57 kg (126 lb) catfish hauled out of the Pripyat river. He did not mention Putin or say exactly when he had landed the monster. “It was as long as I am tall,” said Deputy Prime Minister Mikhail Rusiy.



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