Frontrunning: July 30
- "Ooops": Barclays reveals £12.8bn balance sheet hole (FT), Barclays Bows to Pressure With Share Sale (WSJ)
- Bank of Italy Inspecting Top Lenders' Books (WSJ)
- Obama to propose 'grand bargain' on corporate tax rate, infrastructure (Reuters)
- China injects funds into money markets, quelling fears (FT)
- Berlusconi faces verdict that could endanger Italian government (Reuters)
- Shale Threatens Saudi Economy, Warns Prince Alwaleed (WSJ)
- Qatar Finds Revolution Abroad Not as Easy as Stock Picks (BBG)
- Cities Begin Hiring Again (WSJ) - not to mention filing for bankruptcy
- Big Question Hangs Over Small-Caps (WSJ)
- Japan finmin Aso: CPI shows gradual shift to inflation from deflation (Reuters)
- China Politburo Pledges to Press On With Restructuring Economy (BBG)
- Australia’s RBA Sets Stage for Another Rate Cut (WSJ)
- Bank Revenues Surge on Trading Over What Fed Will Do (BBG)
- Community Health to buy Health Management for $3.9 billion (Reuters)
- Breastfeeding Boosts Smarts as Babies Grow, Study Finds (BBG)
Overnight Media Digest
* Pope Francis opened the door to greater acceptance of gay priests inside the ranks of Roman Catholicism as he flew to the Vatican. The pontiff was traveling aboard an overnight flight to Rome from his first overseas trip when he broached the delicate issue of how the Catholic hierarchy should respond to clerics who are gay, though not sexually active.
* Anthony Weiner has dropped to fourth place among Democrats seeking to be New York City mayor, with 53 percent of likely voters saying he should withdraw from the race, a poll showed.
* Small-company stocks have produced large returns this year, but some investors say the sector is about to get cut down to size. Some money managers say any sign that hard-hit emerging-markets shares are about to bounce back could send the small-cap sector reeling, as investors seek out less-pricey growth plays.
* BMW unveiled its first mass-production electric car and said it would need to sharply boost sales of plug-in and battery electric vehicles by 2025 to meet regulatory requirements.
* Federal energy regulators laid out their first formal accusations that traders at JPMorgan Chase manipulated electricity markets.
* Spirit Airlines said its chairman, William Franke, who helped design the carrier's successful low-cost strategy, is selling his investment firm's stake in the low-cost carrier and resigning from its board next month.
* Pfizer plans to reorganize its commercial operations into three business segments to help it focus on the evolving needs of its various markets. The changes will take effect starting in January.
* The market for previously owned iPhones and Androids is booming, producing high and predictable resale values that carriers are starting to exploit.
* Activist investor Daniel Loeb says low-cost U.S. natural gas offers a "sustainable advantage" for CF Industries and calls on the agricultural supplier to significantly increase its stockholder dividend.
* CBS and Time Warner Cable said they extended their blackout deadline till 8 p.m. Monday, from 5 p.m., as they "continue to negotiate" terms to carry the network's programming on the cable system.
Barclays Plc is planning to launch a rights issue on Tuesday to raise more than 5 billion pounds (about $7.7 billion) as part of efforts to plug a capital shortfall triggered by new UK regulatory demands on leverage, two people briefed on the transaction said.
U.S. drugmaker Perrigo Co agreed to buy Elan Corp Plc for $8.6 billion in cash and shares that will provide it a more tax-efficient corporate structure and royalties from blockbuster multiple sclerosis drug Tysabri.
The liquidators of a major Irish insurance company sued PricewaterhouseCoopers for 1 billion euros (about $1.3 billion) on Monday, accusing it of negligent auditing, in one of the biggest commercial cases to come before Irish courts.
Dutch telecom group KPN's biggest shareholder, billionaire Carlos Slim's America Movil, has ended its relationship agreement to keep its holding below 30 percent, which will allow the Mexican operator to bid for the whole company.
Saudi billionaire Prince Alwaleed bin Talal warned that the Gulf Arab kingdom's oil-dependent economy was facing increasing threat from rising U.S. shale energy supplies and that it needed to diversify its revenues, setting him at odds with his country's oil ministry and officials of the Organization of the Petroleum Exporting Countries (OPEC).
Barcelona-based infrastructure firm Abertis is close to announcing the sale of its majority stake in Luton airport to Spanish airport operator and minority stakeholder Aena, people close to the talks said on Monday.
* The costs and methods for repairing the carbon-composite jet are unclear, and the Dreamliner damaged by fire at Heathrow will be the first test of major work.
* Scarcely touched by the nation's housing recovery and tired of waiting for federal help, Richmond is about to become the first city in the nation to try eminent domain as a way to stop foreclosures.
* Lawyers for Fabrice Tourre, the former Goldman Sachs trader accused of defrauding investors, began their case at about 11:47 a.m. One minute later, they rested without calling any witnesses. The decision to rest, after more than two weeks of testimony and 11 witnesses called by the Securities and Exchange Commission, highlighted the confidence that Tourre's lawyers have in their fight against the lawsuit by the government.
* The performance of the economy in the second quarter is one of many guides to when the Fed will taper off its bond-buying. ()
* A range of start-ups and big companies like Google are working on what is known as predictive search - new tools that act as robotic personal assistants, anticipating what you need before you ask for it.
* The Federal Energy Regulatory Commission formally accused JPMorgan Chase of manipulating energy markets, foreshadowing a settlement expected as early as this week.
* Reza Aslan, the author of "Zealot," a provocative new biography of Jesus, has found an inadvertent ally in generating book publicity. A Fox News interviewer awkwardly questioned the Muslim author on why he had written about Jesus. Random House, Aslan's publisher, said the interview had clearly helped the book: in two days, sales increased 35 percent.
* Taking out his well-known acerbic pen, hedge fund tycoon Daniel Loeb writes of Sony, "keeping entertainment underexposed, undervalued and underperforming is not a strategy for success."
* The lawsuit brought by hedge fund Perry Capital against the federal government over the Fannie Mae and Freddie Mac bailout may be the case that finally subjects the government's bailout practices to closer outside scrutiny.
THE GLOBE AND MAIL
* Canadian companies will be asked to disclose the proportion of women they have on their boards and in senior management as part of a new policy being proposed by the country's securities market regulator -- The Ontario Securities Commission.
* Canada's mayors want a say in new federal rail-safety rules in light of the destruction caused by the Lac-Megantic disaster. A small group of mayors from across the country held their first conference call on Monday as part of a new working group on rail safety.
Reports in the business section:
* Telecoms company Telus Corp is taking the federal government to court over its wireless policy, arguing Ottawa has unfairly disrupted investment plans by changing the rules governing the transfer of spectrum licenses between carriers.
* The financial noose tightened on Monday around companies connected to the deadly Quebec derailment, with a hint that the Montreal, Maine & Atlantic Railway could close shop.
The Quebec government issued a lawyer's letter demanding that the railway involved in the Lac-Megantic crash and two petroleum logistics companies foot the entire bill to clean up the environmental mess, the latest in a series of legal threats since the disaster.
* Authorities are beginning to piece together the events that led to an early morning crash that killed six teenagers on a rural Saskatchewan backroad, but it will be months before toxicology and accident reports bring their families definitive answers.
* U.S. President Barack Obama's latest smug comments on the Keystone XL oil sands pipeline suggest the Canadian project's odds of being approved under his watch are waning. Thankfully, Canada hasn't stood still while the U.S. President dithered. So many new pipeline options have emerged that Keystone XL's relevance is diminishing as each one gains momentum.
* The government has set its course on wireless telecom policy and is unlikely to waver despite an aggressive and coordinated public campaign for change by Canada's big three cellular providers, observers say.
- China's state-owned enterprises (SOE) are likely to see their growth falter from the third quarter amid the continued slowdown of the global economy. However, Liu Nanchang, director-general of the Performance Evaluation Bureau of the State-owned Assets Supervision and Administration Commission, has predicted half of SOE profits will be made abroad in future, compared with 38 percent at present.
- China Central Television has alleged plastic wrap used by Chinese supermarkets to wrap meat and vegetables contains illegal plasticizers that are toxic and could harm male reproductive function and accelerate female sexual maturity.
SHANGHAI SECURITIES NEWS
- China's recent focus on local government debt may raise concerns among build-transfer project companies, as lending by municipalities to such companies has been labeled as high interest and high risk loans by the National Audit Office.
- A report released by Taobao on Monday showed that in 2012 30 million people purchased goods from the company's online site, spending 179 billion yuan ($29.19 billion), an increase of 87 percent from the previous year, with spending per capita at 5,628 yuan.
21ST CENTURY BUSINESS HERALD
- The Shanghai Banking Regulatory Bureau said to the paper on Monday it has not halted cooperation between municipal authorities and trust companies.
Fly On The Wall 7:00 AM Market Snapshot
Bankrate (RATE) upgraded to Buy from Neutral at BofA/Merrill
Perrigo (PRGO) upgraded to Neutral from Sell at Goldman
PulteGroup (PHM) upgraded to Buy from Neutral at UBS
Ryland Group (RYL) upgraded to Buy from Neutral at UBS
CBIZ, Inc. (CBZ) downgraded to Equal Weight from Overweight at First Analysis
Cabot Oil & Gas (COG) downgraded to Market Perform from Outperform at Bernstein
China Lodging Group (HTHT) downgraded to Neutral from Buy at Goldman
Choice Hotels (CHH) downgraded to Underperform from Market Perform at Wells Fargo
Corporate Office Properties (OFC) downgraded to Neutral from Outperform at RW Baird
D.R. Horton (DHI) downgraded to Underperform from Market Perform at Raymond James
Deere (DE) downgraded to Neutral from Buy at Longbow
Denny's (DENN) downgraded to Neutral from Buy at Roth Capital
First Long Island (FLIC) downgraded to Market Perform from Outperform at Raymond James
Franco-Nevada (FNV) downgraded to Neutral from Buy at UBS
Hatteras (HTS) downgraded to Market Perform from Outperform at JMP Securities
Luminex (LMNX) downgraded to Neutral from Buy at UBS
Magellan Health (MGLN) downgraded to Sell from Neutral at Citigroup
MidWestOne (MOFG) downgraded to Market Perform from Outperform at Raymond James
NASDAQ (NDAQ) downgraded to Sell from Neutral at Goldman
PulteGroup (PHM) downgraded to Market Perform from Outperform at Raymond James
SanDisk (SNDK) downgraded to Neutral from Buy at Goldman
Spirit Airlines (SAVE) downgraded to Neutral from Buy at Citigroup
Tenneco (TEN) downgraded to Equal Weight from Overweight at Barclays
Teva (TEVA) downgraded to Sell from Neutral at Goldman
American Vanguard (AVD) initiated with a Neutral at SunTrust
PGT, Inc. (PGTI) initiated with a Neutral at Credit Suisse
Stemline (STML) initiated with a Buy at Roth Capital
Tumi (TUMI) initiated with a Hold at KeyBanc
Barclays (BCS) to raise $8.9B in rights offering
Alcatel-Lucent (ALU) CEO said Qualcomm (QCOM) to take small stake in company
JPMorgan (JPM) accused of energy market manipulation by FERC
Cousins Properties (CUZ) acquired Texas office portfolio for $1.1B
U.S. Steel (X) sees Q3 flat-rolled, tubular segments improving
Saint Joe (JOE) exploring opportunities to sell timber/rural land, timber rights
Highwoods Properties (HIW) rating upgraded by Standard & Poor's to BBB from BBB-
Companies that beat consensus earnings expectations last night and today include:
Aetna (AET), Pfizer (PFE), Ensco (ESV), American Financial Group (AFG), U.S. Steel (X), Masco (MAS), Manitowoc (MTW), Sonus Networks (SONS), Luminex (LMNX, Kaman (KAMN), Herbalife (HLF), Celadon Group (CGI), R.R. Donnelley (RRD), Anadarko (APC), Express Scripts (ESRX)
Companies that missed consensus earnings expectations include:
BP (BP), Alcatel-Lucent (ALU), Sprint (S), Superior Energy (SPN), Hartford Financial (HIG), Comstock Resources (CRK), Enbridge Energy (EEP), Erickson Air-Crane (EAC), Caesar's Entertainment (CZR)
Companies that matched consensus earnings expectations include:
Owens & Minor (OMI), Wausau Paper (WPP), FMC Corporation (FMC), Denny's (DENN)
- Small-company stocks have produced large returns this year, but some money managers are paring their holdings. They say any sign that hard-hit emerging-markets shares are about to bounce back could send the small-cap sector reeling, as investors seek out less-pricey growth plays, the Wall Street Journal reports
- The mega-merger between Publicis (PUBGY) and Omnicom (OMC) could spark a new consolidation wave in advertising. The most obvious target, analysts say, is Interpublic (IPG), the fourth largest ad-holding company behind WPP (WPPGY), Omnicom, and Publicis, the Wall Street Journal reports
- BP (BP) will keep its U.S. wind farm business after four months in which it failed to attract a bid the company could accept, Reuters reports
- The CEOs of Publicis (PUBGY) and Omnicom (OMC) said they spoke to major clients about their planned merger and didn’t anticipate major problems with big advertisers defecting to rivals in the transition period, Reuters reports
- House Budget Committee Chairman Paul Ryan (R-WI) said TransCanada’s (TRP) Keystone XL oil pipeline may be part of budget negotiations as his Republican colleagues criticized President Obama for saying the project wouldn’t create many jobs, Bloomberg reports
- AIG (AIG) will return funds to customers of its banking unit and close their accounts as the Dodd-Frank Act places limits on insurers with deposit-taking units, Bloomberg reports
Cousins Properties (CUZ) files to sell 60M shares of common stock
Spirit Airlines (SAVE) to sell 12.07M shares for affiliates of Indigo Partners
Superconductor Technologies (SCON) files to sell $12M in stock and warrants
Targa Resources Partners (NGLS) files to sell $800M in common units & debt securities