Frontrunning: July 9
- ICE's NYSE to determine the rate used by key competitor CME: NYSE Euronext to Take Over Libor (WSJ)
- Japan slams China over maritime disputes (FT)
- The Twinkie Returns, With Less Baggage (WSJ)
- Pentagon Workers From Pennsylvania to Ghana Hit by Cuts (BBG)
- Why Prostitutes Aren't Enough to Deprive the World of Eliot Spitzer (BBG)
- Groups gather in Turkish protest park after night of clashes (Reuters)
- Apartment Rents Rise, But the Pace Is Slowing (WSJ)
- Asiana Seen Saving Millions With Tactic to Bar U.S. Suits (BBG)
- Bin Laden's life on the run revealed by Pakistani inquiry (Reuters)
- Fracking Firms Face New Crop of Competitors (WSJ)
- What’s Good for U.S.-China-Japan Leaves Emerging Markets Losers (BBG)
- Egypt seeks end to crisis with quick elections (Reuters)
- FDIC to Tighten Screws on Banks, Require 5% Leverage (CNBC)
- Bangladesh garment sales soar despite deadly incidents (Reuters)
Overnight Media Digest
* Egypt's Muslim Brotherhood accused the country's military of massacring dozens of its supporters during dawntime prayers, as Egypt's deadliest clashes in years between the army and Islamists pushed the country toward armed conflict.
* Apartment landlords are continuing to raise rents, but there are signs that the pace is slowing. Analysts say the next few months will be key in determining whether landlords are losing the upper hand in the rental market, which they gained after the housing bust and recession prompted a wave of homeowners to become renters.
* The UK Treasury said Monday in a report on its efforts to overhaul the nation's banking industry that it is proposing a criminal law to punish "reckless" misconduct by senior bankers. The Treasury also said it was working with regulators to ensure bonuses can be deferred for up to 10 years, and clawed back when a bank is bailed out by the government.
* A U.S. district judge said he would tentatively allow the Justice Department's lawsuit against Standard & Poor's Ratings Services to move forward, a boost to one of the U.S. government's biggest financial-crisis-era cases.
* China saw an upturn in consumer inflation in June, but it wasn't enough to alarm policy makers grappling with sluggish economic growth and trying to push ahead with longer-term economic overhauls. Chinese officials have shown little inclination to use their once-favored policy tool of heavy government spending in response to the rising consumer price inflation.
* Two weeks ago Barnes & Noble Inc scratched its big ambitions to become a player in the tablet hardware business. On Monday, the retailer's CEO, William Lynch, was out the door. He resigned in the wake of last month's news that losses at the bookseller's Nook digital business had more than doubled for the quarter ended April 27.
* Michael Dell's controversial plan to take Dell Inc private won key endorsements on Monday that, if the momentum continues, would put the founder on a track to tackle his next big task: pulling off a revival of the troubled computer maker.
* Video site Hulu attracted binding bids from DirecTV , a partnership of AT&T Inc and Chernin Group, and a partnership of Guggenheim Digital Media and private equity firm KKR.
* Wynn Resorts said the SEC wouldn't recommend a civil enforcement action following an informal investigation into the company's pledge to donate $135 million to a university in Macau.
* India is reviewing a policy that mandated electronic goods purchased by the government contain a certain proportion of locally made hardware.
The leader of Britain's opposition party Ed Miliband has offered to end the system of millions of trade union members automatically giving money to the Labour party.
Two influential shareholder advisory firms, Institutional Shareholder Services and Glass Lewis, have backed Dell Inc founder Michael Dell's $24.4 billion offer to buy back control of the PC maker.
Some of the world's top financial data providers are facing a probe from the New York Attorney General over the early release of market-moving data to investors willing to pay for it.
Finance Minister George Osborne has lent his support to sweeping reforms that aim to raise standards at banks, including introducing criminal sanctions against reckless behaviour.
The British government is set to spell out more details of its plans to float Royal Mail this week.
British American Tobacco will spend about $50 million on a factory in Myanmar, making its return to the Asian country a decade after it was forced out by campaigners.
* William Lynch, the chief executive of Barnes & Noble Inc , resigned on Monday, two weeks after a devastating earnings report that accentuated the bookseller's losing battle against powerful rivals like Amazon.
* The financial industry is bracing for new scrutiny of services that give trading firms an advance look at market-moving data and news. The New York attorney general's office has been taking a broad look at the common practice.
* Orrin Hatch of Utah, the senior Republican on the Senate Finance Committee, has devised a way for states and cities to exit the pension business while still giving public workers the type of benefits they want. It involves a tax-law change that would enable governments to turn their pension plans over to life insurers.
* A lawsuit brought by investors who lost a combined $60 million in the Ponzi scheme perpetuated by Bernard Madoff seeks to show that Westport National Bank failed at its job as the custodial bank in charge of their money. The trial serves as a cautionary tale for any investor on the role and duties of such banks.
* Billionaire deal maker Ronald Perelman has begun a legal battle against Michael Milken, a man who helped put him on map. Perelman's company Harland Clarke Holdings Corp filed a little-noticed lawsuit last month accusing Milken of fraud.
* Michael Dell received a strong endorsement on Monday after shareholder advisory firm ISS backed his $24.4 billion takeover bid for the company he founded, a move that could end the months-long fight over control of Dell Inc.
* Negotiations over a trade deal encompassing nearly half the global economy formally kicked off on Monday, despite concerns that the United States has been spying on its European allies.
* LVMH Moët Hennessy Louis Vuitton, the French luxury goods giant, agreed on Monday to pay 2 billion euros, or about $2.6 billion, for an 80 percent stake in Loro Piana, adding a famous name to its portfolio of brands.
* A report from Ernst & Young released on Monday proposes that the deal making slump may be more than just a passing phase.
* Prosecutors have only a few weeks before the statute of limitations expires on bringing securities fraud charges against Steven Cohen and SAC Capital Advisors. The government's bigger problem could be obtaining information that shows a continuing conspiracy to trade on inside information.
* Warren Buffett distributed 17.5 million Class B shares of Berkshire Hathaway Inc on Monday to the Bill and Melinda Gates Foundation, a gift valued at about $2 billion, based on Friday's closing price.
THE GLOBE AND MAIL
* Toronto's subway lines, as well as numerous traffic lights and street lights went out across the city during a massive thunderstorm. Environment Canada said some parts of the greater Toronto area had been drenched with more than 100 millimeters of rain.
* Hundreds of passengers were stranded on a flooded GO Transit train for nearly seven hours after heavy rains dumped a record level of rainfall on the city Monday evening.
* Edward Burkhardt, the chairman of Montreal, Maine and Atlantic Railway, the company at the center of a devastating blast, is accusing firefighters of shutting down the locomotive hours before it rolled into Lac-Mégantic, Quebec.
Reports in the business section:
* Canada's oil industry faces the risk of tightened regulations on fuel shipments following Saturday's Lac-Mégantic rail disaster, just as companies are relying on rails to get rising production volumes to market.
* The horrific explosion and widespread destruction of the small Quebec town of Lac-Mégantic, caused by a runaway train carrying 72 cars of crude oil early Saturday morning, has suddenly put Edward Burkhardt and his holding company, Rail World Inc, under intense glare.
* Real estate firm Royal LePage expects Canadian house prices to remain soft for almost another year. But the bottom line in a new survey is that they'll continue to rise. Just at a slower pace.
* Death toll in the Lac-Mégantic train disaster rose to 13 after the provincial police announced that eight more bodies had been found on Monday. About 50 people have been declared missing after the explosions and fire that devastated much of the downtown.
* Toronto was hit with heavy rains, flooding and power outages Monday afternoon as a sudden storm drenched the city and brought transit to a standstill.
* The opposition New Democrats called on Prime Minister Stephen Harper to clean house on Monday after allegations in a court document that key advisers and a Conservative senator were aware of a plan for Harper's right-hand man to personally help Senator Mike Duffy repay C$90,000 ($85,200) in improper expense claims.
* Chicago-based businessman Edward Burkhardt and the staff at one of his companies, little-known Montreal, Maine & Atlantic Railway (MMA), are being vilified after one of the deadliest train accidents Canada has ever seen.
* Investors and analysts will likely have some tough questions for BlackBerry's new chief executive Thorsten Heins and the board regarding the company's strategy at its annual general meeting on Tuesday. Investors will also be looking for some insight into whether the Q5 smartphone will come to North America, and what the company's device pipeline looks like for the rest of 2013 and beyond. (
* Companies are pulling back on their investment plans and keeping hiring modest amid growing uncertainty over the economic recovery, a Bank of Canada survey of business intentions suggests.
CHINA SECURITIES JOURNAL
- The China Securities Regulatory Commission will hand over the accounting working papers for an overseas-listed Chinese company to the U.S. Securities and Exchange Commission in the first exchange of this kind, following the SEC's probe into the Big Four's accounting practices in China.
- A rising number of milk powder makers retailing in China, such as Zhejiang Beingmate Scientific Technology Industry and Trade Co Ltd and Royal FrieslandCampina, are cutting their prices after the National Development and Reform Commission started anti-monopoly investigations earlier this month.
- In preparation for the upcoming two-day fifth strategic and economic dialogue between China and the United States, Washington should discard its outdated perception that a head-on conflict between the two countries is inevitable and that Beijing is a rival and target for containment, according to an editorial.
- China's first subordinated bond issued by brokerages was listed on the Shanghai Stock Exchange on Monday.
Fly On The Wall 7:00 AM Market Snapshot
American Residential Properties (ARPI) upgraded to Strong Buy at Raymond James
Convergys (CVG) upgraded to Neutral from Sell at Goldman
Freescale (FSL) upgraded to Overweight from Neutral at Piper Jaffray
Hewlett-Packard (HPQ) upgraded to Buy from Hold at Brean Capital
International Rectifier (IRF) upgraded to Strong Buy at Raymond James
Prosperity Bancshares (PB) upgraded to Perform from Underperform at Oppenheimer
Rosetta Resources (ROSE) upgraded to Outperform from Neutral at Macquarie
Siemens (SI) upgraded to Hold from Sell at Deutsche Bank
Signature Bank (SBNY) upgraded to Outperform from Perform at Oppenheimer
YY Inc. (YY) upgraded to Overweight from Neutral at Piper Jaffray
Acuity Brands (AYI) downgraded to Hold from Buy at Canaccord
Allegiant Travel (ALGT) downgraded to Market Perform from Outperform at Raymond James
DuPont (DD) downgraded to Neutral from Outperform at Macquarie
Gentex (GNTX) downgraded to Neutral from Outperform at RW Baird
Glatfelter (GLT) downgraded to Hold from Buy at Deutsche Bank
Helmerich & Payne (HP) downgraded to Hold from Buy at Jefferies
Hill-Rom (HRC) downgraded to Neutral from Conviction Buy at Goldman
IBM (IBM) downgraded to Neutral from Buy at Goldman
Intuitive Surgical (ISRG) downgraded to Hold from Buy at Canaccord
Intuitive Surgical (ISRG) downgraded to Market Perform at Raymond James
Intuitive Surgical (ISRG) downgraded to Neutral from Buy at Goldman
Ixia (XXIA) downgraded to Hold from Buy at Deutsche Bank
KapStone (KS) downgraded to Sell from Hold at Deutsche Bank
PDC Energy (PDCE) downgraded to Neutral from Buy at SunTrust
PharMerica (PMC) downgraded to Underweight from Equal Weight at Barclays
Pioneer Energy (PES) downgraded to Hold from Buy at Jefferies
Quest Diagnostics (DGX) downgraded to Underweight from Equal Weight at Morgan Stanley
Ritchie Bros. (RBA) downgraded to Hold from Buy at Canaccord
Ryder (R) downgraded to Hold from Buy at BB&T
Synchronoss (SNCR) downgraded to Sell from Neutral at Goldman
Zions Bancorp (ZION) downgraded to Sector Perform from Outperform at RBC Capital
Atlas Resource Partners (ARP) initiated with a Neutral at JPMorgan
CyrusOne (CONE) initiated with a Buy at Jefferies
Encore Capital (ECPG) initiated with an Outperform at Raymond James
Franklin Electric (FELE) initiated with an Outperform at Wedbush
Graphic Packaging (GPK) initiated with a Buy at Longbow
Legacy Reserves (LGCY) initiated with a Neutral at JPMorgan
Ply Gem (PGEM) initiated with a Hold at Deutsche Bank
Prestige Brands (PBH) initiated with a Buy at B. Riley
Seagate (STX) initiated with a Neutral at Piper Jaffray
UBIC, Inc. (UBIC) initiated with a Buy at Benchmark Co.
Vantiv (VNTV) initiated with a Buy at Janney Capital
Verastem (VSTM) initiated with a Buy at Cantor
Western Digital (WDC) initiated with an Overweight at Piper Jaffray
Barnes & Noble (BKS) said CEO William Lynch resigned
Said company reviewing current strategic plan
Glass Lewis, Egan-Jones both recommended Dell (DELL) shareholders vote for sale
Ambac Financial (AMBC) said Detroit liabilities are obligations of general account
Alcoa (AA) reaffirmed 2013 global aluminum demand growth forecast of 7%
CEO Kleinfeld told CNBC focused on cost cutting, not concerned about slowdown in China
Cisco (CSCO) to accelerate Microsoft-based (MSFT) private cloud deployments
Companies that beat consensus earnings expectations last night and today include:
Magnum Hunter (MHR), Alcoa (AA), WD-40 (WDFC)
Intuitive Surgical (ISRG) announces preliminary Q2 results below expectations
- SodaStream (SODA) is struggling to attract takeover interest, New York Post reports
- So many companies are now in the hydraulic-fracturing business that the price of performing the key part of the oil- and gas-drilling technique has plunged in recent years, forcing fracking's pioneers like Schlumberger (SLB) and Halliburton (HAL) to play up new technologies to stand out, the Wall Street Journal reports
- At least half a dozen so-called merchant banks--straddling private-equity-style investing and advisory work--have cropped up since the 2008 financial crisis, touting themselves as practitioners of old-fashioned relationship banking when others on Wall Street are increasingly wary of potential conflicts, the Wall Street Journal reports
- The private equity arm of Lloyds Banking Group (LYG) is targeting a record $603M worth of deals this year, extending one of the last bank-owned buyout firm's reach into the U.K. market, Reuters reports
- Freeport McMoRan Copper and Gold (FCX) received Indonesian government permission today to resume underground operations at the huge Grasberg copper mine, about two months after a tunnel cave-in killed 28 people, Reuters reports
- A three-year fight over the international reach of U.S. rules is coming to a head this week as the Commodity Futures Trading Commission attempts to complete final guidelines for their oversight of overseas derivatives trades by JPMorgan Chase (JPM), Goldman Sachs (GS) and other banks, Bloomberg reports
Amarin (AMRN) to offer 21.7M American Depository Shares
Empresas ICA refiles to sell 60M OMA Airports (OMAB) series B shares and ADSs
Home Properties (HME) files to sell 3.5M shares of common stock
Ignite Restaurant (IRG) files to sell common stock for holders
NGL Energy Partners (NGL) to offer 9M common units