Gold jumps 1.5 percent on euro zone debt fears (Reuters)

Payrolls Grow in 42 States Including New York, Texas as Job Market Revives (Bloomberg)

Greece hit by Fitch debt downgrade (FT)

IMF approves 26 billion euro funding for Portugal (Reuters)

Former IMF Chief to Stay in Temporary Housing in Lower Manhattan

Dervis rules himself out of IMF race (FT)

IMF Aborted Strauss-Kahn Probe in 2008 (Bloomberg)

Emerging market equity funds see $1.6 bln outflows (MarketWatch)

Soros sharpens gold bubble debate (FT)

Analysts’ Rare ‘Sell’ Ratings are Rarely Right (Bloomberg)

Mayor Bloomberg says if Apocalypse happens, alternate side parking suspended (NYDN)

JPMorgan Traders’ Market-Share Inroads Growing, Deutsche Bank Analyst Says (Bloomberg)

Goldman Sachs Names Sorrell, Gutman as Co-Heads of U.K. Investment Banking (Bloomberg)

UBS Loses Two Top Investment Bankers (CNBC)

Who shot bin Laden? Former SEALs fill in the blanks (WaPo)

Article courtesy of Dealbreaker

From the mailbag:

“I think I have a solution for the housing problem. All we need to do is hire the people who appraised Bin Laden’s hideout at $1 million. Seriously, it’s an odd shaped lot, with uneven fences, no phone lines or internet connection, crumbling walls, cheap plastic garden furniture, in a country with a per capita GDP of $2,700. Unless the place comes with a cone of silence or room of invisibility, I don’t see how that could be worth $1 million.

And if it is, either the dollar is more worthless than I thought or my home might actually be worth more than I paid for it. I’m sure the mock-up the government built for training cost more than a million, but that’s more a function of our government’s great ability to overpay for anything they do. I find it hard to believe that hideout was worth that much, and don’t really understand why every news report likes to focus on that largely meaningless number.”

Article courtesy of Dealbreaker

Catch Andrew Ross Sorkin’s column about Goldman Sachs this morning? Charlie Gasparino did and he didn’t like it. Noting Goldman Sachs’ desire not to make a big deal about the money it made correctly predicting the housing market crash, perhaps in an attempt not to attract anymore attention from Senator Carl “Goldman Sachs is a financial snake pit rife with greed, conflicts of interest, and wrongdoing” Levin, Sorkin encouraged the Masters of the Universe to stop denying their success. Rather, ARS would like to see them “take a bow,” as their housing call is something they should be proud of and which shareholders and taxpayers alike should be happy about, since it meant the latter didn’t have to bail the firm out to the extent it did Citi and AIG.  And that pissed Gasparino off something fierce.

Normally he wouldn’t say anything (“‘I’m not and never have been in the Goldman is the root-of-all-evil-camp,” CG prefaces) but after last month’s antics wherein the firm dared to deny his report Lloyd Blankfein’s friends claim he’s thinking of retiring, Chaz can no longer bite his tongue. Not to get too off-topic, but it still baffles CG as to how GS spokesman Lucas vP “can deny someone’s impression from a private conversation.” Sorry, he just had to get that out there. But back to the suggestion that Goldman should be taking any bows– bull shit, Gasparino says. Bull, shit.

“The last thing Goldman should be doing right now is taking a bow and telling the world it’s a great firm, because when it comes down to it, Goldman isn’t really a great firm.

“What is it then,” CG asks fuming. Not being here to simply raise questions without providing answers, Gasparino goes on, attributing a well-known saying to a guy he gets drunk with.

“Well, in the words of a drinking buddy who is a frequent consumer of financial news, ‘Goldman is like the tallest midget in the room.’”

How did Goldman become the tallest among short people?

Standing the tallest among these little men is Goldman, the firm most adept at exploiting the corrupt system that puts the government in bed with the big banks. Just today, Goldman announced that it earned $1.64 billion in the first quarter of 2011 even after repaying Warren Buffett the $5 billion he lent them in 2008 when the firm was teetering with the rest of Wall Street. Seems like a pretty amazing feat until you consider how Goldman earned all that cash. Low interest rates from the Fed over the past two-plus years means Goldman can basically borrow at next to nothing to place its market bets.

Those bets, it turns out, really aren’t bets at all. Firms like Goldman began buying depressed mortgage bonds in 2009 because they knew prices would rise. How did they know something like that? The Fed instituted a program to buy these bonds in the open market as a way to support the housing market. Like most things tried by the Obama administration to jump-start the economy, the plan didn’t work for Main Street. But not long after the buy-back program commenced, Wall Street — and Goldman in particular — began announcing record profits and bonuses to its bankers and traders. All of which transpired as Blankfein and his team tried to convince the world that Goldman really didn’t need all that bailout money in late 2008 and that they accepted the $10 billion in cash from then Treasury Secretary Hank Paulson because they were forced to do so by a government more worried about the health of entire financial system than the financial condition of Goldman Sachs. Sounds like a very modest gesture until you calculate how the taxpayer bailout of the giant insurer AIG was in actuality a back-door bailout of Goldman Sachs.

It didn’t have to come to this, Gasparino says, this being his exposing GS, and it wouldn’t have, if everyone had just listened to Uncle Charles way back when.

As all this came to light back in late 2009, I wrote a column here on HuffPost saying Blankfein should just resign and save the world the trouble of holding him accountable for explaining why Goldman is such a large midget.

Goldman Sachs: The Tallest Midget In The Room [HuffPo]

Article courtesy of Dealbreaker

$$$ Goldman Sachs Charges Up to Justice Department, Levin Says [Bloomberg]

$$$ Gorman Tops Blankfein [FINS]

$$$ The Magnetar Trade: How One Hedge Fund Helped Keep the Bubble Going [ProPublica]

$$$ Man Catches Fire In San Francisco Porn Shop [CBS]

$$$ Congress Approves Spending Bill With $38.5 Billion Cut [Bloomberg]

$$$ El-Elarian: Economic Growth Still Weak Due to Housing [CNBC]

$$$ Wall Street veteran Joseph Battipaglia, a widely quoted stock-market strategist who made his name during the dot-com boom, died on Friday, a spokeswoman for the firm said. [CNBC]

Article courtesy of Dealbreaker

Senator Levin: Goldman Sachs Misled Congress After Duping Clients (Bloomberg)
Goldman Sachs misled clients and Congress about the firm’s bets on securities tied to the housing market, the chairman of the U.S. Senate panel that investigated the causes of the financial crisis said. Senator Carl Levin, releasing the findings of a two-year inquiry yesterday, said he wants the Justice Department and the Securities and Exchange Commission to examine whether Goldman Sachs violated the law by misleading clients who bought the complex securities known as collateralized debt obligations without knowing the firm would benefit if they fell in value….Much of the blame for the 2008 market collapse belongs to banks that earned billions of dollars in profits creating and selling financial products that imploded along with the housing market, according to the report. The Levin-Coburn panel levied its harshest criticism at investment banks, in particular accusing Goldman Sachs and Deutsche Bank AG of peddling collateralized debt obligations backed by risky loans that the banks’ own traders believed were likely to lose value.

Senate Report Lays Bare Mortgage Mess (WSJ)
“I think I found white elephant, flying pig and unicorn all at once.” –Goldman Sachs email describing an Australian client that invested in a souring mortgage structure 4/26/2007

Moody’s, S&P Caved to Goldman, UBS Mortgage Pressure, Levin Says (Bloomberg)
“Investment bankers who complained about rating methodologies, criteria, or decisions were often able to obtain exceptions or other favorable treatment,” according to the Levin report. The decisions appeared to be “concessions made to prevent the loss of business.”

US Probes Libor Dealings (WSJ)
For the past year, law-enforcement officials have been investigating whether the U.S. and European banks understated their own borrowing costs, which are used to calculate the London interbank offered rate, or Libor. The investigators are now looking into whether the banks effectively formed a global cartel and coordinated how to report borrowing costs between 2006 and 2008.

Geithner: We Must Raise Taxes (PBS)
Appearing on the PBS NewsHour Wednesday evening, U.S. Treasury Secretary Timothy Geithner said there is “no plausible way” to cut the deficit without raising taxes. “Unless you’re going to cut deeply into commitments we have made to seniors and to the disabled and to the poor, or ask the country to go borrow the money, you can’t solve this,” he said.

Raj Keeps Chin Up (NYP)
One reason Rajaratnam has to smile might be the ebullient praise he received yesterday from prominent educator and social activist Geoffrey Canada. Canada, who was called as a character witness, called Rajaratnam a “dear friend” with “a genuine concern for children.”
“Raj and I hit it off right away,” said Canada, the CEO of charitable group the Harlem Children’s Zone. Canada said he approached Rajaratnam earlier this decade to donate to the group and found him eager to help “level the playing field for kids.” “I never had to convince Raj” to be a donor, Canada said when asked to respond to the prosecution’s allegations that Rajaratnam committed his alleged crimes out of greed. “He’s a very generous person,” he added.

Deutsche Bank Sold Mortgage-Linked ‘Pigs’ as Market Buckled, Lawmakers Say (Bloomberg)
“Keep your fingers crossed but I think we will price this just before the market falls off a cliff,” Michael Lamont, the group’s co-head, said in a Feb. 8, 2007, e-mail about Deutsche Bank’s Gemstone CDO VII Ltd., according to a report released yesterday by the Permanent Subcommittee on Investigations. The Frankfurt-based firm sold $700 million of the instruments, which lost most of their value within 17 months.

IMF: Banks Face $3.6 Trillion ‘Wall’ of Maturing Debt (Reuters)
Many European banks need bigger capital cushions to restore market confidence and assure they can borrow, and some weak players will need to be closed, the International Monetary Fund said in its Global Financial Stability Report.

Obama Challenges Republicans With Deadline For Deficit Deal (Bloomberg)
The timeline Obama proposed for coming up with an agreement — beginning talks in early May and completing them by late June — sets up a negotiation over the nation’s long-term fiscal challenges in parallel with a congressional debate over raising the $14.29 trillion legal debt limit.

Glenore Aims For $8.8 Billion In IPO (WSJ)
The company said it plans to list a 15% to 20% stake, through an offer to raise around $6.8 billion to $8.8 billion in new capital and up to $2.2 billion in existing shares. At the upper level, that would make it London’s largest-ever initial public offering, topping Rosneft’s $10.6 billion offer in July 2006.

London Retains Lure For Hedge Funds As Banks Demure (Reuters)
Throgmorton’s Rubio points to the “Harvey Nicks effect” — referring to upmarket London department store Harvey Nichols, a magnet for big spenders — and said he had seen one manager relocate to Barcelona, only to move back to London.

Article courtesy of Dealbreaker

Last month T2 Partners’ fund declined 2.8 percent in January, with declines of 4.3% (net) in the last five months, which managing partners Whitney Tilson and Glenn Tongue noted “in isolation, isn’t a terrible number.” Having said that, “given that the S&P has surged 23.5% over the last five months, this has been, by far, our worst relative performance in history.” So, some thoughts are necessary.

On strengths vs weaknesses: “Over time we’ve been quite successful shorting fads, frauds, promotions, declining businesses, and bad balance sheets. Where we have had much less success, however, especially in recent months, is shorting good businesses that are growing rapidly, even when their valuations appear extreme. Such open-ended situations, regardless of valuation, are very dangerous, so going forward we will avoid them entirely unless we have a high degree of conviction about a specific, near-term catalyst.”

On ‘deemphasizing’ shorting: “A far bigger mistake we made was maintaining a large short book even after the crisis had passed. Allow us to explain why this occurred by starting with some background: From 2003 through 2007, our typical portfolio positioning was 80-100% long and roughly 20% short. In early 2008, when we became convinced that the housing market would collapse, we tripled our short book to around 60%, with an emphasis on highly leveraged housing, real estate, and financial companies that were most exposed to the subprime bubble. Needless to say, this worked out spectacularly well – so well, in fact, that we became accustomed to running a short book in the 50-70% range and – we’re embarrassed to admit – we pushed to the back of our minds two facts that have always been true: 1) shorting is a terrible business (as we highlighted in our book), and 2) we’re much better long investors than short investors. Said another way, long investing is a massively better business than shorting, plus our experience, skill set and temperament is much better suited to it. We will not forget this again.

In summary, we are redoubling our focus on what we do best – buying cheap stocks – and are deemphasizing short selling – both in terms of time and capital. Still, we are always keeping a close eye out for the occasional big bubble that might give us the opportunity to make a lot of money on the short side.”

On Netflix: “Since we first wrote to you in December about our Netflix short position, we have received quite a bit of new information including results from our survey, input from investors, and the company’s recent earnings release.  We are still digesting this information, which has both bullish and bearish implications, and will write to you about our conclusions in the near future. “

T2 January Letter To Investors [PDF]

Related: Netflix CEO Applauds Hedge Fund Manager’s Call, Balls To Short Company, Would Still Appreciate If He’d Refrain From Doing So

Article courtesy of Dealbreaker

Angelo Mozilo Predicted US Housing Collapse As Fed Overlooked Risk (Bloomberg)
“Not only at Countrywide, but also with other lenders, there is a clear deterioration in the credit quality of loans being originated,” he wrote to company executives on Sept. 1, 2004. “The type of loans currently being originated combined with the unprecedented stretching of all aspects of credit standards could cause a bump in the road that could bring with it catastrophic consequences.”

Citigroup Ignored 2005 Bond Warning After Shedding `Handcuffs’ (Bloomberg)
Should they not have done that?

Small Trader Makes Big Waves (WSJ)
Thanks to the nature of futures trading, Daniel Shak’s $10 million hedge fund held gold contracts valued at more than $850 million, more than 10% of the main U.S. futures market, and the equivalent of South Africa’s annual gold production. But as gold prices started falling this year, the trade, which was a combination of being long and short gold contracts—bets that prices will both rise and fall—started going bad. Monday, he liquidated his position, and is returning money to clients. As a result, the number of gold contracts on CME Group Inc.’s Comex division plunged more than 81,000, to about 500,000, the biggest single reduction ever. While his trade didn’t account for all of the contracts, an average daily move is about 3,000 to 5,000 contracts.

Secret To Bank’s Big Comeback: A Rich Uncle Named Sam (WSJ)
Before BankUnited FSB collapsed in May 2009, employees lit candles and prayed that Florida’s biggest bank would survive the bad loans it made before the housing bubble burst. he miracle came in the form of Uncle Sam, or more precisely, the Federal Deposit Insurance Corp., which sold the failed BankUnited to a group of Wall Street financiers led by a longtime New York banker. The FDIC agreed to reimburse as much as $10.5 billion in future loan losses—and gave the new owners $2.2 billion in cash. The buyers paid $945 million. Since then, BankUnited has become one of the most profitable, highly capitalized financial institutions in the U.S.

Facebook Overvalued In Global Poll Of Investors (Bloomberg)
Sixty-nine percent of investors say Facebook is overvalued after Goldman Sachs invested $450 million in a deal that put the company’s worth at $50 billion, according to the quarterly poll of 1,000 Bloomberg customers who are investors, traders or analysts. Only 10 percent of respondents say Facebook’s valuation is appropriate; 4 percent say it’s worth more.

Geithner: US Recover On Sustainable Path (Reuters)
“I think we are at a beginning, I still think at a very early stage of what’s gonna be a long period of exceptional growth in emerging markets around the world,” he said.

Report: Arizona fugitive planned suicide by bear (J&C)
A convicted killer who escaped from an Arizona prison said after his capture that he had planned to overdose on heroin at Yellowstone National Park and let bears eat him to end the fear and panic he was experiencing while on the lam. Tracy Province told Mohave County sheriff’s Detective Larry Matthews that he had wanted to go up on a mountain, shoot up a gram of heroin and “be bear food.” As he was preparing the drug, a voice told him not to go through with the plan, and he changed course in favor of trying to hitchhike to Indiana to see family.

Moynihan: BofA Doesn’t Need New Capital (CNBC)
“We have the capital to run our company … we have a clear path to follow the new rules and not have to raise capital,” he said.

Ford Posts Lower Profit (Reuters)
Excluding one-time items, Ford posted an operating profit of 30 cents per share for the fourth quarter, well below the 48 cents per share analysts had forecast on that basis.

Moody’s Says Time Running Out for U.S. as S&P Cuts Japan (Bloomberg)
The extension of tax cuts enacted under President George W. Bush, the chance that Congress won’t reduce spending and the outcome of the November elections have increased Moody’s uncertainty over the willingness and ability of the U.S. to reduce its debt, the credit-ratings company said yesterday.

Article courtesy of Dealbreaker

Wall Street Partying In Davos As Bankers Overcome Crisis (Bloomberg)
Dimon, Pandit, Moynihan, Diamond– the gangs all here (except for Blankfein, who is sending Gary Cohn).

Bank Of America’s Countrywide Accused In Suit Of ‘Massive Fraud’ (Bloomberg)
The investors claim they bought hundreds of millions of dollars of Countrywide mortgage-backed securities from 2005 to 2007 because they wanted conservative, low-risk investments. They said they relied on term sheets, prospectuses and other materials provided by the firm that were recklessly or knowingly false.

At Santander, Succession In The Spotlight (WSJ)
Alfredo Sáenz, who has been chief executive of the bank since 2002, is expected to be banned from running banks in coming weeks by Spain’s Supreme Court after he was found guilty of making false criminal accusations in a 17-year-old case during his tenure at the helm of Banco Español de Crédito SA, known as Banesto…One possible takeover candidate is Ana Patricia Botín, 50, daughter of the bank’s chairman, Emilio Botín. The 76-year-old Mr. Botín, credited with transforming Santander from a sleepy domestic bank into one of the largest in the world, is expected to eventually be succeeded by his daughter, said people close to the bank, perhaps after she does a stint as CEO. At Santander, the chairman, not the CEO, has traditionally held the most power and influence.

Price Drop Points To Likely Double Dip In Housing Market (Reuters)
“Everything in this report is unfortunately still sagging and still pointing downward,” David Blitzer, S&P 500 Index Committee chairman, said in a CNBC interview just after the report was released. “The recent news across the board on housing except for existing home sales has been very, very disappointing. We still seem to be at best scraping along the bottom.”

Mendev Blames Airport Lapses For Bombing (WSJ)
“What happened demonstrates that there were clear security breaches,” Mr. Medvedev said Tuesday in televised remarks. “Someone had to try very hard to carry or bring through such a vast amount of explosives. “Everyone linked to the company that makes decisions there, and the management of the airport itself, has to answer for everything,” the president added.

Fed Likely To Press On With QE Even As Business Lending Rises (Bloomberg)
“The Fed is not ready to let up on its accelerator,” said Gramley, senior economic adviser for Potomac Research Group in Washington. “They are going to be impressed with the fact the economy has gained some momentum, but there are still strong headwinds to growth, and bank lending is quite modest.”

UK couple causes 27K worth of damage to church after following GPS directions (Herald Sun)
The couple, who cannot be named under German data protection laws, were traveling Friday from Austria to France guided by their GPS system. The 76-year-old husband, who was driving, followed instructions to “turn right” but ended up hitting the chapel near Freundpolz, Bavaria.

UK Economy May Be Headed For A Double-Dip (CNBC)
Britain’s “awful” gross domestic product figure for the fourth quarter is pushing the country closer to a double-dip and limits the central bank’s ability to fight rising inflation, analysts and business leaders said Tuesday.

BlackRock Profit More Than Doubles (WSJ)
BlackRock reported a profit of $657 million, or $3.35 a share, up from $256 million, or $1.62 a share, a year earlier. Excluding transactions costs and other items, earnings rose to $3.42 from $2.39. Revenue surged 61% to $2.49 billion.

Investors Weigh In On For-Profit College Regulation (WSJ)
“Hello, my name is Steven Eisman,” began an email to an Education Department official in May. “I wanted to bring to your attention many of the unsaid or unknown aspects of this industry.”

Apple Plans Service That Lets Users Pay With iPhone (Bloomberg)
The services are based on “Near-Field Communication,” a technology that can beam and receive information at a distance of up to 4 inches, due to be embedded in the next iteration of the iPhone for AT&T Inc. and the iPad 2.

Article courtesy of Dealbreaker

September 28, 2010: “If you don’t own a home buy one,” Paulson recommended. “If you own one home,* buy another one, and if you own two homes** buy a third and lend your relatives the money to buy a home.”

November 19, 2010: “John Paulson…just dropped $2.85 million on a two-bedroom spread at 641 Fifth Avenue’s Olympic Tower. ”

Like he’s going to live in some 2-bedroom shithole. Congratulations, long-lost cousin of John Paulson!

Hedge funder John Paulson picks up $3M Olympic Tower pad [The Real Deal]

*Which he does
**Ditto on that one.

Article courtesy of Dealbreaker

Wells Fargo Earnings Rise On Mortgage Originations (MarketWatch)
The bank earned $3.3 billion, or 60 cents a share for the third quarter. Like other banks nationwide, improving credit boosted its earnings; the San Francisco lender released $650 million it had previously set aside to cover potential loan losses, up from $500 million in the second quarter.

Dimon Best By Bad WaMu Loans (Bloomberg)
Dimon, like his counterparts at other banks, is waiting impatiently for the housing crisis to ease so the bank can rid itself of its huge portfolio of bad loans. In addition to the WaMu writedowns, the bank faces an avalanche of litigation over allegedly predatory and fraudulent WaMu mortgages and has set aside a total of $3.5 billion in reserves to cover the cost of mounting lawsuits.

Financial Leaders Expect Shift Of Power After Elections (NYT)
Analysts and lobbyists say a Republican-controlled Congress may be less likely to investigate industry practices or hold oversight hearings that may embarrass the industry. While that won’t affect hearings like ones set for later this month in the Senate that will examine the foreclosure mess, it makes them much less likely in the next Congress. “It changes the tone in Washington,” one industry lobbyist said. “If a regulator knows they’re going to get yelled at on Capitol Hill, that influences their decisions.”

GM’s New Sticker Price: $50 Billion (WSJ)
The new projections by GM say the company could have a stock-market value at the start of trading of $50 billion—about the same as the solidly profitable Ford Motor Co.—and that it could be as high as $60 billion, said people familiar with the plan. But for the U.S. to break even through sales of the rest of its stake, the share price may need to rise more than 60% from its initial level, to about $50. The initial public offering plan envisions the shares would be priced at $26 to $29 each, these people said. The actual price of the stock to be sold in the IPO would be set about Nov. 17, and the sale would take place the following day.

A Hedge Fund Manager’s New Groove (WSJ)
After years of “long-short” investing, Mr. von Mueffling and his analysts and traders no longer short stocks at all. Instead, like a typical stock mutual fund, they stick to buying company shares they expect will rise. Mr. von Mueffling said the strategy is “the right long-term decision.” “I’m not saying there aren’t overvalued stocks out there,” he said in an interview. “There are, but trying to short them when the government is printing money is a very, very challenging game,” he said, referring to, among other things, Federal Reserve programs to buy government bonds, which the Fed is widely expected to announce this week. The remade Cantillon pulls in much lower fees than a hedge fund with similar returns would…the majority of Cantillon investors pay just a management fee of 1.25% or less, according to fund documents.

Brooklyn Rabbi Blackmailed SAC Capital Because Founder Was “Rich” And “Jewish” (NYP)
A Brooklyn rabbi ran an unholy scam on a $16 billion hedge fund — because he knew that its founder was “Jewish and . . . rich,” a prosecutor told jurors yesterday. Rabbi Milton Balkany demanded $4 million from SAC Capital Advisors founder Steven Cohen by threatening that a prison inmate he was counseling would go to the feds with insider-trading allegations against the firm, Manhattan federal prosecutor Jesse Furman said. Balkany — whose “statements were lies, pure and simple,” according to Furman — was videotaped pocketing checks from an SAC lawyer and saying “that Mr. Cohen and SAC were in the clear,” Furman said in the extortion trial’s opening statement.

Roubini Says Advanced Economies Show Anemic Growth (Bloomberg)
“Economic recovery will be U-shaped,” Roubini said. “The next year is going to see a painful process of deleveraging, both in the private and public sector, lower consumption, lower spending, lower budget deficits, more savings, reduction of debt. That implies an anemic economic recovery.”

Fed Will Probably Start $500 Billion Of Bond Buys, Survey Shows (Bloomberg)
“There’s no silver bullet right now” and central bankers have “very few options left in terms of lowering interest rates,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, North Carolina. He predicted $500 billion of Treasury and mortgage-backed securities purchases in the next six months.

Despite Oil Spill Charge, BP Returns To Profitability (NPR)
The cost to BP PLC of dealing with the Gulf of Mexico oil spill was more than offset in the third quarter by revenues driven in part by higher oil prices, with the British giant posting a $1.79 billion profit, the company reported Tuesday.

Article courtesy of Dealbreaker