In 2012, William H. Gross, the founder and co-chief investment officer of the Pacific Investment Management Company, known as Pimco, called Mohamed A. El-Erian his “heir apparent.†But on Tuesday, Mr. El-Erian, Pimco’s chief executive and co-chief investment officer, unexpectedly announced that he would step down from his position in March, Nathaniel Popper and Matthew Goldstein write in DealBook. The news shattered any hope that Mr. El-Erian would be the firm’s next leader and called into question who would become the public face of the asset manager.
Pimco, based in Newport Beach, Calif., released a statement on Tuesday announcing a new leadership team, which did not include Mr. El-Erian. The firm did not comment further on Mr. El-Erian’s resignation other than to state he would retain some leadership roles with Pimco’s parent company, Allianz.
Last year, investors in the firm’s Total Return Fund, which was the world’s largest mutual fund, pulled out $40 billion, contributing to the firm’s first year on record of net annual outflows.
WALL STREET COMES TO PUERTO RICO’S RESCUE  | Back in the throes of the financial crisis, Wall Street was the beneficiary of more than a little outside support. Now, it seems, at least one bank may be trying to return the favor, if only to keep Puerto Rico and its municipal bond market afloat, Michael Corkery writes in DealBook.
Morgan Stanley bankers have been gauging the interest of large investors like hedge funds and private equity firms to provide up to $2 billion in financing to Puerto Rico, with yields as high as 10 percent. The debt deal would be among the largest wagers on Puerto Rico, and perhaps the municipal debt market, by alternative investment firms. If the island’s financial problems do not improve, its municipal bonds could be downgraded further to junk with significant consequences to the financial markets.
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LATEST DEALS SPUR FEARS OF A SILICON VALLEY BUBBLE  | Google’s acquisition last week of Nest Labs for $3.2 billion was a “party for Silicon Valley insiders,†Steven M. Davidoff writes in the Deal Professor column.
While Nest is seen as cool, its profit is nonexistent and its revenue is only estimated to be $300 million. But, as was the case more than a decade ago when technology giants like Yahoo paid exorbitant sums for now-defunct online companies, Google’s deal was driven by the consuming desire to “find the next big thing.†As in the past, these inflated purchase prices will drive prices for other start-ups ever higher, as the venture industry’s players look to acquire add-on products in their dogged desire to lead the pack.
“In Silicon Valley, no one wants to be known as a company that can’t keep up,†Mr. Davidoff writes. “Silicon Valley has no incentive to stop the valuation madness.â€
DOCTOR IN SAC TRIAL LIED TO F.B.I.  | Dr. Sidney Gilman, the government’s star witness in the insider trading trial against Mathew Martoma, a former hedge fund manager at SAC Capital Advisors, took the witness stand for a second day on Tuesday, testifying that he lied to F.B.I. agents and regulators about relaying inside information to Mr. Martoma. The admission could severely weaken the defense’s strategy to discredit the 81-year-old doctor, Alexandra Stevenson writes in DealBook.
Ms. Stevenson reports: “When asked whether he had admitted to F.B.I. agents during an interview on Sept. 1, 2011, that he had provided inside information to Mr. Martoma, Dr. Gilman said that while he recalled providing inside information, he told agents that he had not.â€
Dr. Gilman’s testimony follows that of Dr. Joel S. Ross, another doctor who the government claims passed inside information to Mr. Martoma. Dr. Ross testified last week that he had indeed passed inside information to Mr. Martoma and that he was surprised by Mr. Martoma’s level of knowledge pertaining to unreleased results of a confidential drug trial.
“The two doctors received nonprosecution agreements from the government, but undermining their credibility can be difficult when each offers a similar story about disclosing information to Mr. Martoma,†Peter J. Henning writes in the White Collar Watch column.
ON THE AGENDA Â |Â The World Economic Forum in Davos, Switzerland, begins today. Ray Dalio, the founder of the hedge fund Bridgewater, is on CNBC at 7 a.m. James P. Gorman, the chief executive of Morgan Stanley, is on Bloomberg TV at 10 a.m. David M. Rubenstein, co-founder and co-chief executive of the Carlyle Group, is on Bloomberg TV at 10:15 a.m. Arne M. Sorenson, president and chief executive of Marriott International, is on Fox Business Network at 3:15 p.m.
WINTER WONDERLAND Â |Â Snow blanketed New York and its surrounding regions all day Tuesday and into early Wednesday, disrupting traffic and cutting the school day short in New York City. Pedestrians braced against the snowflakes, bearing umbrellas that were more wishful than effective. The usual evening rush of delivery men on bicycles slowed to a trickle. As of Wednesday morning, 11 inches of snow had fallen in Central Park, and 13 inches in parts of New Jersey and Long Island.
POPE’S MESSAGE OPENS DAVOS  | Though Pope Francis I was not present on Tuesday at the World Economic Forum in Davos, Switzerland, his message of economic inequality was. Amid Switzerland’s snowy mountains, Cardinal Peter Turkson, president of the Pontifical Council for Justice and Peace, delivered the pope’s words in the forum’s opening address, setting a cautious note to kick off the annual get-together of the world’s financial elite, Michael J. de la Merced writes in DealBook.
The pope wrote: “The successes which have been achieved, even if they have reduced poverty for a great number of people, often have led to a widespread social exclusion.†Today is the first official day of the forum.
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G.E. to Buy Health Care Analytics Firm  | General Electric announced on Tuesday that it had agreed to purchase API Healthcare, a software and analytics firm that helps medical companies manage their work force. DealBook »
Discovery Takes Controlling Stake in Eurosport  | Eurosport, which is vying to become the European version of American sports behemoth ESPN, reaches 133 million homes, and the company is growing as it acquires additional rights to more games. DealBook »
India Selling Position in Axis Bank  | India has chosen JPMorgan Chase, Citigroup and JM Financial to help the government sell half of its stake in Mumbai-based Axis Bank, Reuters reports, citing unidentified people familiar with the situation. The position is valued at $925 million. REUTERS
Vivendi Said to Consider Sale of SFR to Numericable  | Vivendi, the French conglomerate that once owned Universal Studios, is said to be considering selling its mobile and Internet unit to the cable operator Numericable. DealBook »
Verizon to Buy Intel’s TV Unit  | Verizon Communications announced on Tuesday that it would acquire assets of Intel’s digital TV division, a deal that would move it deeper into the television business. NEW YORK TIMES
Fiat Completes Acquisition of Chrysler  | The Italian automaker Fiat announced it had completed its deal to purchase the 41 percent it did not already own of Chrysler, the once-troubled American car company. DealBook »
Deal Makers Hope for Merger Magic  | For a lot of executives, the World Economic Forum is a place for the kind of social networking that could lead to a renaissance in mergers and acquisitions this year. DealBook »
@GSElevator Gets Book Deal  | The anonymous author behind the Twitter account, @GSElevator, which claims to report gossip from within the Goldman Sachs elevators, has signed a book deal with Simon & Schuster, The Financial Times reports. FINANCIAL TIMES
Bank of America Traders Profitable in Fourth Quarter  | Brian T. Moynihan, the chief executive of Bank of America, said the bank’s traders made a profit on almost every day of the fourth quarter, Bloomberg News reports. “I think we made money on every trading day except for two or three,†Mr. Moynihan said during an interview from Davos on Bloomberg Television. BLOOMBERG NEWS
Guidelines Curtail Risky Deals  | Many banks, including Bank of America, Citigroup and JPMorgan Chase, have passed on financing some corporate takeovers in the last few months, fearing that the deals would not comply with new regulatory guidelines, The Wall Street Journal writes. The shift could influence private equity firms, who rely on financing from banks for many of their deals. WALL STREET JOURNAL
JPMorgan Veteran Banker to Retire  | Klaus Diederichs, the chief of JPMorgan Chase’s European investment banking division and one of the bank’s longest-serving deal makers, said he would retire in April, The Financial Times writes. FINANCIAL TIMES
Apax Partners to Acquire Online Auto Sales Company  | Funds advised by the private equity firm Apax Partners are acquiring all of the Trader Media Group, which operates the automobile website AutoTrader in Britain and other online auto sales brands. DealBook »
Affinity Closes Fourth Fund  | The private equity firm Affinity Equity Partners said it had closed its fourth fund at $3.8 billion, The Wall Street Journal reports. The announcement came on the heels of the firm’s sale of Oriental Brewery to Anheuser-Busch InBev. WALL STREET JOURNAL
Activist Investor Rewards Streamlining at Dow Chemical by Taking Big Stake  | Daniel S. Loeb took a stake of about $1.3 billion in Dow Chemical, which has pre-empted activist ambushes by getting ahead of them. DealBook »
A Welcome Formula for Dow Chemical  | A rough calculation suggests that breaking up Dow Chemical could increase its value, so investors reacted favorably to a suggestion that the company split off its petrochemicals business, Kevin Allison writes in Reuters Breakingviews. DealBook »
Funds Created to Offload Credit Risk From Big Projects  | UniCredit, the large Italian bank, is the first to take advantage of the funds from the Mariner Investment Group, which will help European banks and other financial institutions free up capital. DealBook »
Hedge Fund Nominates 2 to Jos. A Bank Board  | The hedge fund Eminence Capital nominated Norman S. Matthews, the former president of Federated Department Stores, and Bruce J. Klatsky, the former chairman of the PVH Corporation, to Jos. A Bank’s board in the latest development in the takeover war between Jos. A Bank and Men’s Wearhouse, The Wall Street Journal writes. WALL STREET JOURNAL
Activist Investor Joins Mondelez International Board  | Mondelez International, the snack company that Kraft Foods spun off in 2012, announced on Tuesday that it had added the activist investor Nelson Peltz to its board. DealBook »
Third Point Takes Large Position in Ally Financial  | The hedge fund Third Point has taken a 9.5 percent stake over the last six months in Ally Financial, becoming one of Ally’s largest shareholders as the United States government looks to unwind its stake in Ally, Bloomberg News reports. BLOOMBERG NEWS
JPMorgan Is Said to Drop Out of Another Offering in China  | JPMorgan Chase withdrew as a potential underwriter of a stock offering for Tianhe Chemicals. The bank once employed the daughter of Tianhe’s chairman. DealBook » |Â
Goldman Sachs Optimistic on South African I.P.O.’s  | Goldman Sachs is predicting that initial public offerings of South African companies will rise in 2014 as private equity firms look to exit their investments, Bloomberg News reports. BLOOMBERG NEWS
Chinese Pork Producer Considering Dual-Currency I.P.O.  | WH Group, the Chinese pork producer that acquired Smithfield Foods last year, is said to be weighing the possibility of denominating its upcoming $5 billion Hong Kong initial public offering in two currencies â€" renminbi and the Hong Kong dollar, The Wall Street Journal reports, citing unidentified people familiar with the situation. The dual-currency I.P.O. would be Hong Kong’s first. WALL STREET JOURNAL
A Start-Up Run by Friends Takes on Shaving Giants  | Harry’s is nine months old but trying to compete with Gillette and Schick.
DealBook »
$1 Billion for a Perfect N.C.A.A. Bracket, Courtesy of Buffett  | Don’t bet on anyone winning the $1 billion being offered by Quicken Loans, the Detroit-based mortgage lender, with the backing of Warren E. Buffett’s Berkshire Hathaway, to anyone who fills out a perfect 2014 tournament bracket. DealBook »
Activists Campaign Against Silicon Valley Buses  | Disgruntled San Francisco activists have focused their attention on buses that transport some 18,000 commuters, many who are technology workers, from San Francisco to Silicon Valley, saying the private buses are inconveniencing the community by illegally using city bus stops, the Bits blog reports. NEW YORK TIMES BITS
Bitcoin Attracts Tech Start-Ups  | Technology start-ups are looking to build a Bitcoin infrastructure, including maintaining and tracking the virtual currency, The Wall Street Journal writes. WALL STREET JOURNAL
Why Bitcoin Matters  | Bitcoin is the first practical solution to a longstanding problem in computer science, Marc Andreessen writes in Another View.
DealBook »
S.&P.’s Account of an Irate Treasury Secretary  | Standard & Poor’s is using an account of a conversation between Timothy F. Geithner, a former Treasury secretary, and Harold W. McGraw III, the chairman of S.&P.’s parent company, to bolster its argument that a government lawsuit amounted to retaliation. DealBook »
Apple Wins Temporary Stay on Court Monitor  | Apple won a small victory in its attempt to oust a court-appointed monitor. The court ruling sets the stage for more legal battles to come. DealBook »
Kashkari to Run for Governor of California  | Neel Kashkari, who took control of the Treasury Department’s Troubled Asset Relief Program during the financial crisis and is a former Goldman Sachs executive, announced on Tuesday that he will run for governor of California in November as a Republican. WALL STREET JOURNAL
U.S. Delegation to Press Issues Like Climate Change and Syria  | The World Economic Forum’s participants are saying that with the new confidence about the American economy, issues like climate change and the Syrian conflict are likely to get more attention. DEALBOOK
