Frontrunning: August 16
- Critics Decry Risks Posed by Link Between China's Banks and Bonds (WSJ)
- U.S. retailers say uneven recovery keeps consumers cautious (Reuters) - er, what recovery?
- Easy Credit Dries Up, Choking Growth in China (NYT)
- Fed's Bullard Floats Idea of Small Cuts to Bond Buying (WSJ)
- EU wants one definition of bad loans for bank tests (Reuters) - because in Europe they can't even agree what an NPL is...
- Nagasaki Bomb Maker Offers Lessons for Fukushima Cleanup (BBG)
- With Gmail Overhaul, Not All Mail Is Equal (WSJ)
- Snowden downloaded NSA secrets while working for Dell, sources say (Reuters)
- Apollo co-founder buys into New Jersey Devils (FT)
- Republicans to vote on debate boycott because of Clinton programs (Reuters)
- J.C. Penney Heads for Ninth Quarter of Plunging Sales (BBG)
Overnight Media Digest
* Hundreds of Muslim Brotherhood supporters gathered at a Cairo mosque in defiance of a national curfew even as the regime gave its forces live ammunition and the authorization to use it-setting up a showdown two days after Egypt's worst violence in memory left more than 600 dead.
* Individual investors are pouring tens of billions of dollars into a new generation of complex investment products, and regulators are raising concerns that not all buyers understand the costs and risks.
* The Federal Reserve could hedge its bets by making small moves rather than large, aggressive ones when it starts pulling back on its $85 billion-a-month bond-buying program, said James Bullard, president of the Federal Reserve Bank of St. Louis.
* Ford Motor said it would cut the fuel-economy rating for its C-Max hybrid, following an investigation by the U.S. Environmental Protection Agency that triggered a broader review of the mileage claims for gas-electric hybrid vehicles. Ford, which is facing lawsuits over the C-Max's mileage from some disappointed customers, said it will send refund checks to customers. It isn't clear how much the refund will cost the company.
* Sony took the lead in the race to build an online version of pay TV, with a preliminary deal to carry Viacom channels on the service it hopes to launch next year.
* The private-equity owner of IMG Worldwide Inc has begun formally soliciting buyers for the talent and marketing agency, distributing financial information to potential suitors within the last week, according to people familiar with the matter.
* Some retailers aren't happy with Gmail's recent changes, which siphon off the flow of promotional offers to a separate inbox that also includes ads from Google. Marketers complain that the ads sold by Google threaten to draw attention away from the coupons and pitch emails they want their targets to read first.
* Rio Tinto plans to cut as many as 1,700 jobs at its newly built Oyu Tolgoi mine after halting a more than $5 billion underground expansion of the Mongolian operation amid a dispute with the government.
* At a time when politicians in Washington struggle to agree on anything, their Mexican counterparts - who spent the past dozen years locked in bruising battles - sit down almost daily to talk about thorny issues.
* Boeing Co says it has traced the improperly assembled engine-fire extinguishers on 787 Dreamliners to the manufacturing of bottles at a supplier's facility. Dreamliner operators have been conducting inspections recommended by Boeing of engine fire-extinguishing systems after three All Nippon Airways jets were found to be improperly configured.
Equity and bond markets fell on Thursday over fears of an early intervention by the U.S. Federal Reserve to slow its support to the U.S. economy after data showed a strengthening labour market and higher inflation.
PC maker Dell announced its second-quarter results almost a week earlier than scheduled and just one day before a court will hear arguments over opposition to a deal proposal to take the company private.
Paulson & Co, the hedge fund run by John Paulson, one of the world's highest-profile gold bulls, more than halved its stake in SPDR Gold Trust GLD when the bullion price lost nearly a quarter of its value.
L'Oreal, the world's largest cosmetics group, has offered to buy a Chinese facial mask specialist for $840 million.
Chinese copper premiums, the cost of physical copper over and above the benchmark futures prices, have more than tripled since the start of 2013 to a high of more than $200 a tonne, in a further sign that China's appetite for commodities is picking up again.
* China's growth has slowed, causing an increase in defaults on unconventional loans, chronic overcapacity in many industries and other problems.
* Dow Chemical's chief executive, Andrew Liveris is spearheading a public campaign against increased exports of natural gas, which he sees as a threat to a manufacturing renaissance in the United States.
* Despite signs of a reviving economy, several big retail chains said consumers were still limiting their spending to the essentials. As the back-to-school season reaches its peak, some retailers are not optimistic that they could see a big revival among shoppers. Job-market growth has been decent, but the jobs added have not. Retailers also singled out the payroll-tax increase as one reason consumers were feeling thrifty.
* In a deal that may signal the start of a new era of competition for entrenched cable and satellite providers, Viacom has tentatively agreed to let its popular cable channels - like Nickelodeon and MTV - be carried by an Internet TV service that Sony is creating.
* India's upper house of Parliament passed the Companies Bill, 2012 this month, sweeping legislation meant to overhaul auditing, impose stiffer penalties for fraud and create more government oversight of businesses. The new legislation will affect all companies doing business in India, regardless of their size, structure or ownership, including the estimated 8,000 corporations listed on three national stock exchanges.
* Private equity has struck another deal for yet another professional sports team, as two prominent leveraged buyout investors, Apollo Global Management's Joshua Harris and Blackstone Group's David Blitzer, agreed on Thursday to buy the New Jersey Devils for about $320 million. Part of the selling point for bringing in private equity owners - other than their big bank accounts - is their expertise in turning around troubled enterprises.
THE GLOBE AND MAIL
* Two Canadian Conservative MPs who hosted fundraising events featuring Senator Pamela Wallin say they didn't know she had billed taxpayers for travel costs. Wallin attended events for Harold Albrecht and Kellie Leitch that were flagged by auditors in a report released this week. All told, the report found Wallin claimed C$121,000 ($117,200) in improper expenses, some of it for partisan work.
* Canada has so weakened its environmental laws that it is "in violation" of its obligations under the North American free trade agreement, the West Coast Environmental Law association says. The non-profit legal foundation asked the Commission for Environmental Cooperation to take a hard look at Canada's actions, saying the government has exposed the environment to undue risk to give Canadian industry an edge over the U.S. and Mexico.
Reports in the business section:
* Verizon Communications Inc is putting off the potential acquisition of two small wireless companies, Wind Mobile SA and Mobilicity, a shift that may signal the U.S. carrier is cooling on the idea of entering Canada despite moves by Ottawa to entice foreign players into the market.
* The deadly oil-by-rail disaster in Quebec has done little to quell plans to move more crude on trains in Canada, with the third announcement of a new loading terminal unveiled in as many weeks. Proposals to ratchet up capacity to move oil to market on rails, the latest being a C$100 million terminal planned for Saskatchewan, are coming as major pipeline projects, including TransCanada Corp's Keystone XL conduit to Texas refineries from Alberta.
* Ongoing hostilities are likely to flare up as new defense minister Rob Nicholson is forced to make some unpalatable decisions on resource allocation, including the possibility of reducing the size of Canada's 68,000 regular forces by chopping one or more of its nine infantry battalions.
* Concerns are rising about several government proposals for flood recovery, chief among them, a plan to brand homes that take disaster recovery program money from the government. Homeowners who take the cash and fail to adhere to the government's pricey flood mitigation standards will have it noted on their property titles. Those properties will never again be allowed to access disaster recovery funds. The regulatory changes could affect hundreds of Calgary homes on flood fringes.
* Canadian home prices rose in July from June to an all-time high, but the modest monthly gain suggests the robust housing market may be cooling again, according to data from the Teranet-National Bank Composite House Price Index on Wednesday. The report echoes data on both sales activity and prices that suggest Canada's housing market has recovered well after the government tightened mortgage rules in July 2012, causing a sharp slowdown in demand in the second half of 2012.
* Toronto's thunderstorm last month set a record for the most expensive natural disaster in Ontario's history, with insured property damage estimated at more than C$850 million, in what has been one of the worst summers
SHANGHAI SECURITIES NEWS
- Guotai Junan Securities has been approved by the People's Bank of China to become the first non-bank institution to join the central bank's payment clearing system.
21ST CENTURY BUSINESS HERALD
- Shanghai police are investigating the unauthorized sale of fixed income-based wealth management agreements by Shanghai Fanxin Insurance Agency.
CHINA BUSINESS NEWS
- Tianjin's Municipal Bureau of Land Resources and Housing is investigating Beijing Shougang Real Estate Development for alleged rigging of land auctions in collusion with Tianjin government officials in 2010.
Fly On The Wall 7:00 AM Market Snapshot
Anadarko (APC) upgraded to Strong Buy from Buy at ISI Group
JetBlue (JBLU) upgraded to Market Perform from Underperform at Raymond James
Pandora (P) upgraded to Buy from Neutral at Goldman
Xilinx (XLNX) upgraded to Overweight from Equal Weight at Morgan Stanley
Alcoa (AA) downgraded to Underperform from Neutral at BofA/Merrill
Aviva (AV) downgraded to Neutral from Outperform at Exane BNP Paribas
General Mills (GIS) downgraded to Underperform from Hold at Jefferies
Noble Energy (NBL) downgraded to Buy from Strong Buy at ISI Group
Noranda Aluminum (NOR) downgraded to Underperform from Neutral at BofA/Merrill
Nordstrom (JWN) downgraded to Neutral from Buy at Sterne Agee
Portugal Telecom (PT) downgraded to Neutral from Buy at Goldman
Red Robin (RRGB) downgraded to Neutral from Buy at B. Riley
STMicroelectronics (STM) downgraded to Underweight from Neutral at HSBC
Aircastle (AYR) initiated with a Sector Perform at RBC Capital
Atmel (ATML) initiated with an Overweight at Morgan Stanley
Fairchild Semiconductor (FCS) initiated with an Overweight at Morgan Stanley
Fly Leasing (FLY) initiated with an Outperform at RBC Capital
Freescale (FSL) initiated with an Underweight at Morgan Stanley
Glu Mobile (GLUU) initiated with a Hold at Benchmark Co.
Mazor Robotics (MZOR) initiated with an Outperform at JMP Securities
Movado (MOV) initiated with a Buy at Brean Capital
ON Semiconductor (ONNN) initiated with an Underweight at Morgan Stanley
Semtech (SMTC) initiated with an Outperform at RBC Capital
Tronox (TROX) initiated with an Outperform at RBC Capital
Xcel Energy (XEL) initiated with a Neutral at UBS
Dell (DELL) declined to provide outlook
AllianceBernstein (AB) agreed to acquire W.P. Stewart (WPSL)
Jumptap to be acquired by Millennial Media (MM) for $225M
Kodak (EKDKQ) creditors support reorganization plan
Applied Materials (AMAT) sees 2014 wafer fab equipment investments up 10% to 20%
National Technical (NTSC) to be acquired by Aurora Capital Group
Companies that beat consensus earnings expectations last night and today include:
E-House (EJ), Aspen Technology (AZPN), Nordstrom (JWN), Bally Technologies (BYI), Dell (DELL)
Companies that missed consensus earnings expectations include:
DTS, Inc. (DTSI), First Marblehead (FMD), Applied Materials (AMAT)
- Individual investors are pouring billions of dollars into a new generation of complex investment products, and regulators are raising concerns that not all buyers understand the costs and risks. Outside scrutiny is intensifying on securities firms' sales practices and whether so-called alternative products are suitable for all of the Americans flocking to them, the Wall Street Journal reports
- In the technology industry's race to build an online version of pay TV, Sony (SNE) just took the lead as it reached a preliminary deal with Viacom (VIAB) to carry its channels, such as MTV, Comedy Central and Nickelodeon, on its planned pay-TV service, sources say, the Wall Street Journal reports
- From Wal-Mart Stores (WMT) and Gap (GPS) to Macy’s (M) and McDonalds (MCD) chains that cater to middle- and lower-income Americans say they are feeling the pinch of an uneven economic recovery, Reuters reports
- China's Ministry of Public Security and a cabinet-level research center are preparing to investigate IBM (IBM), Oracle (ORCL) and EMC (EMC) over security issues, the official Shanghai Securities News said today, Reuters reports
- AMR Corp. (AAMRQ) urged U.S. Bankruptcy Judge Sean Lane in Manhattan to approve its plan to exit bankruptcy protection by merging its American Airlines with US Airways Group (LCC) two days after the U.S. sued to block the combination as a threat to consumers, Bloomberg reports
- Exxon Mobil (XOM) and Royal Dutch Shell (RDS.A) are among bidders for Asian oil and natural gas fields that may get about $3B for Hess (HES) and Newfield Exploration (NFX), sources say. Talisman Energy (TLM) also made an offer for the assets, which Hess and Newfield are selling separately, sources added, Bloomberg reports
AngioDynamics (ANGO) files to sell 9.43M shares for holders
InnerWorkings (INWK) files to sell 766,670 shares for holders
Mandalay Digital (MNDL) files to sell common stock
Pixelworks (PXLW) files prospectus to sell common stock
PowerSecure (POWR) files to sell $44M in common stock
Universal Truckload (UACL) files to sell 1M shares of common stock