Frontrunning: September 5
- BOE Leaves Policy Unchanged as Carney’s Guidance Assessed (BBG)
- Surprise or not, U.S. strikes can still hurt Assad (Reuters)
- Samsung Gear: A Smartwatch in Search of a Purpose (BusinessWeek)
- 'Jumbo' Mortgage Rates Fall Below Traditional Ones (WSJ)
- Capital Unease Again Bites Deutsche Bank (WSJ)
- Technical snafus confuse charges for Obamacare plans (Reuters)
- JPMorgan subject of obstruction probe in energy case (Reuters)
- U.S. Car Sales Soar to Pre-Slump Level (WSJ) - i.e., to just when the market crashed
- BoJ lifts assessment of Japan’s economic health (FT)
- Dead Dog in Reservoir Helps Drive Venezuelans to Bottled Water (BBG)
- Russia Boosts Mediterranean Force as U.S. Mulls Syria Strike (BBG)
Overnight Media Digest
* Interest rates on mortgages for pricey homes have dropped below those on smaller mortgages, an event that lending executives say has never happened before. Borrowing rates for so-called jumbo mortgages, which are too big for government backing, historically have been set higher than rates on what are known as conforming loans, which are backed by Fannie Mae , Freddie Mac or government agencies.
* The U.S. auto industry has shifted into high gear with new-car buyers snapping up vehicles last month at a pace not seen since before the financial crisis. Low interest rates and slow-but-steady job growth are encouraging consumers to trade in cars and trucks that average about 11 years old, say auto makers, which are adding production capacity and overnight shifts to satisfy demand.
* Just ahead of a meeting Wednesday to discuss last month's unprecedented three-hour trading outage, Nasdaq officials got another unexpected jolt: The main data feed for Nasdaq Stock Market-listed stocks went down again. While the hiccup was far less severe than the Aug. 22 outage the latest issue with the system again spotlighted exchanges' reliance on just a handful of data feeds to disseminate securities prices and quotations.
* Bond investors could get their first taste of Verizon Communications Inc's new debt to fund its $130 billion wireless acquisition as early as next week, according to people familiar with the matter.
* The Madison Square Garden Co said it was paying $125 million to create a new joint venture with music mogul Irving Azoff that would manage artists, own music-publishing rights and dabble in marketing and television production.
* Beleaguered BlackBerry Ltd intends to run a fast auction process that could be wrapped up by November, according to people familiar with the matter.
* Delta Air Lines Inc placed an order for 40 Airbus jetliners in a deal valued at up to $5.6 billion at list prices, a victory for the European plane maker because the airline has mainly bought planes from rival Boeing Co in the past.
* Green Mountain Coffee Roasters Inc is betting consumers want to get soup from the same machine that brews their morning joe. The company Wednesday announced a deal with Campbell Soup Co to sell K-Cups for Green Mountain's Keurig machines that will brew a cup of chicken broth.
* Ministry of Sound Group Ltd, a U.K. record label, is suing Spotify AB for using playlists from some of its dance music compilation albums, posing new questions for online streaming services as they look to gain a bigger role in the music industry.
Samsung Electronics Co Ltd unveiled a smartwatch on Wednesday, leaping ahead of rivals Apple Inc, Google Inc and Microsoft Corp in the "wearable technology" market. Galaxy Gear, with a small screen, offers basic functions like photos, hands-free calls and instant messaging.
Apple Inc has invited Chinese media to an event in Beijing next week, just hours after it is widely expected to unveil its newest iPhone models in the United States, sparking hopes among investors for a long-awaited iPhone partnership with China Mobile.
The 1.5 billion pound ($2.34 billion) redevelopment of Royal Dutch Shell's new British headquarters in London has been thrown into doubt after the government ministers decided to review plans already approved by local officials.
Shares in Europe's biggest budget airline Ryanair Holdings Plc closed down 11 percent on Wednesday after it warned it could miss its annual profit target as it cut fares in response to increasing competition and weakening demand.
India's new central bank chief, Raghuram Rajan, kicked-off his term by announcing a spate of measures to support the embattled rupee and unveiling moves to liberalise banking and spread services across the country.
Investment manager Hargreaves Lansdown Plc posted record full-year profits on Wednesday as more Britons turn to DIY investing to bolster their savings and pensions.
* Administration officials said that while they expected the full Senate to vote next week on the resolution granting President Obama authority for a strike, they were girding for a prolonged debate in the House.
* Sprint Nextel on Wednesday sold $6.5 billion worth of high-yield bonds, breaking the record for the single biggest noninvestment-grade offering ever sold directly to investors. The sale comes only days after Verizon said it had taken out $61 billion in financing to support its mammoth deal to buy full control of its wireless unit.
* Common Sense Investment Management, a $2.9 billion fund of funds based in Oregon, sought to distance itself from a prostitution scandal involving its chief executive. The firm said Bisenius's "recent personal transgressions bear no reflection on this outstanding team of professionals or the quality of the portfolio management."
* A federal judge dismissed a lawsuit brought by Bank of America against two former Bear Stearns executives that accused the two men of lying about the health of their hedge funds, which had invested heavily in subprime mortgages.
* General Motors, Ford and Chrysler all had strong months as lower lease payments helped dealers move the inventory of new cars and trucks.
* The Federal Trade Commission said TRENDnet, which makes digitally connected devices, had advertised its webcams as secure, but last year some users found out otherwise.
* Jeffrey Bezos assured editors and reporters of his commitment to preserving quality journalism at Washington Post, which he is buying for $250 million.
* Microsoft said on Wednesday that a jury in federal court had decided in its favor in a dispute over Motorola Mobility's licensing of so-called standard, essential patents used in Microsoft products.
* Researchers at Toshiba's European research laboratory in Cambridge, England, have figured out a way to allow a group of users to exchange encryption keys through an experimental technique known as quantum key distribution. The new technique is believed to be more practical and less expensive than existing technologies.
* Aboutthedata.com, a website introduced on Wednesday by a leading marketing technology firm called the Acxiom Corp , is offering individual consumers a glimpse of some of the details the company has collected about them.
THE GLOBE AND MAIL
* Federal officials have revoked a pardon that was granted years ago to Raed Jaser, who now stands accused of an "al-Qaeda-inspired" plot to kill train passengers crossing the Canada-U.S. border. Jaser, who had arrived in Toronto as an asylum seeker, has been jailed on terrorism charges since April in connection with an alleged plot to derail a train traveling from New York. (http://link.reuters.com/ceh82v)
* Ontario Transportation Minister Glen Murray said he wants to end the "unrelenting squabbling" over rapid transit in Toronto and build a subway to Scarborough in Ontario. After three years of shifting proposals and endless point scoring over what sort of transit to build and where to build it, we can all go along with that. (http://link.reuters.com/feh82v)
Reports in the business section:
* Canada's merchandise trade deficit widened to almost C$1 billion ($954 million) in July on an unexpectedly sharp drop in exports, Statistics Canada reported on Wednesday. The central bank left its key overnight rate unchanged on Wednesday at 1 percent - the same level it has been at since September 2010. (http://link.reuters.com/zeh82v)
* DDB Canada announced on Wednesday that it would lead Nordstrom Inc's marketing push in Canada. Two other agencies also pitched to become the agency of record for Nordstrom Canada. The agency will be in charge of helping Seattle-based Nordstrom to build its brand among Canadian shoppers. (http://link.reuters.com/buh82v)
* An Indianapolis-based hedge fund is turning up the volume in its campaign to shake things up at Barrick Gold Corp , and has sent the company 78 pages of ideas it says will help boost the stock price of the world's largest gold miner. (http://link.reuters.com/duh82v)
* In a blistering performance on the roof of a Scarborough parking garage on Wednesday, Ontario's transport minister Glen Murray sought to position his Liberal government as the sole savior of rapid transit in the city's east end. He vowed to extend the Bloor-Danforth subway two stops to the Scarborough Town Centre. (http://link.reuters.com/cuh82v)
* The President of Porter Airlines stressed on Wednesday that the company isn't pushing for a longer than previously requested runway extension at the island airport, and that either expansion plan suits its needs.(http://link.reuters.com/fuh82v)
* Although Canada's global competitive ranking remains unchanged from last year, the country is languishing behind in innovation due to too little being spent on research and development, says a Conference Board report released on Wednesday. (http://link.reuters.com/huh82v)
* British Columbia's government has staked its future on natural gas exports, banking on a revenue windfall of at least C$100 billion ($95 billion). The province says it is on track to have three export facilities up and running on its northwest coast by 2020. (http://link.reuters.com/guh82v)
* After years of delays and political turbulence, Gabriel Resources Ltd may finally be on the cusp of building Europe's biggest gold mine. The Whitehorse-based company has been trying to develop the Rosia Montana gold project in Romania since the 1990s, but has faced vicious opposition from anti-mining activists, which spread rhetoric against the project. (http://link.reuters.com/muh82v)
CHINA SECURITIES JOURNAL
- The China Securities Regulatory Commission has published guidelines for the upcoming government bond futures. The commission said fund companies should use the futures contract solely for hedging purposes and has set out an investment ratio for funds to curb speculation.
- The conditions and timing for China to accelerate the liberalisation of its capital account is ripe. The move is necessary for China to integrate into the world economy, said Sheng Song, head of statistics research department, the People's Bank of China.
- Vanke, the biggest property company in China, said its total sales reached 15.3 billion yuan ($2.50 billion) in August, up 9.4 percent from month ago.
- China will encourage members of the Association of Southeast Asian Nations (ASEAN) to invest in the Chinese bond market, said Yi Gang, Vice President of the People's Bank of China.
SHANGHAI SECURITIES NEWS
- Small and medium-sized enterprises registered on the National Share Transfer system will soon have more financing options, such as equity financing and the ability to issue bonds, said an official from the Naitonal Equities Exchange and Quotation Centre.
- The China Securities Regulatory Commission will issue new rules on refinancing for property developers in the next two to three weeks, the paper said, citing unidentified sources.
- Chinese President Xi Jinping met his Mexican counterpart Enrique Pena Nieto ahead of the Group of 20 (G20) summit to be held on Sept. 5-6. During the meeting, Xi said the two countries should take solid steps to advance their cooperation in various fields to enrich the comprehensive strategic partnership between them.
Fly On The Wall 7:00 AM Market Snapshot
Banco Bilbao (BBVA) upgraded to Outperform from Neutral at Credit Suisse
Extra Space Storage (EXR) upgraded to Buy from Hold at Jefferies
Groupon (GRPN) upgraded to Overweight from Equal Weight at Morgan Stanley
HSN, Inc. (HSNI) upgraded to Buy from Neutral at Citigroup
Intercontinental Hotels (IHG) upgraded to Buy from Neutral at UBS
Louisiana-Pacific (LPX) upgraded to Buy from Hold at Deutsche Bank
RRsat Global (RRST) upgraded to Outperform from Perform at Oppenheimer
Siemens (SI) upgraded to Overweight from Equal Weight at Barclays
Transocean (RIG) upgraded to Outperform from Neutral at Credit Suisse
Lockheed Martin (LMT) downgraded to Sector Perform from Outperform at RBC Capital
Newmont Mining (NEM) downgraded to Equal Weight from Overweight at Barclays
OpenTable (OPEN) downgraded to Underweight from Equal Weight at Morgan Stanley
Viacom (VIAB) downgraded to Neutral from Buy at B. Riley
Zillow (Z) downgraded to Underweight from Equal Weight at Morgan Stanley
AGCO (AGCO) initiated with an Overweight at Morgan Stanley
Advanced Energy (AEIS) initiated with an Outperform at Raymond James
Allscripts (MDRX) initiated with a Hold at KeyBanc
Caterpillar (CAT) initiated with an Equal Weight at Morgan Stanley
Deere (DE) initiated with an Underweight at Morgan Stanley
Greenway Medical (GWAY) initiated with a Buy at KeyBanc
Jones Energy (JONE) initiated with a Buy at Jefferies
Jones Energy (JONE) initiated with a Buy at SunTrust
Joy Global (JOY) initiated with an Equal Weight at Morgan Stanley
Manitowoc (MTW) initiated with an Equal Weight at Morgan Stanley
Parker-Hannifin (PH) initiated with an Underweight at Morgan Stanley
Starbucks (SBUX) initiated with an Outperform at Wedbush
Stock Building Supply (STCK) initiated with an Overweight at Barclays
Terex (TEX) initiated with an Overweight at Morgan Stanley
Trimble Navigation (TRMB) initiated with an Outperform at RW Baird
United Rentals (URI) initiated with an Equal Weight at Morgan Stanley
Universal Truckload (UACL) initiated with a Buy at Citigroup
SKF (SKFRY) will acquire Kaydon (KDN) in an all-cash transaction valued at about $1.25B, including $95M of net debt
Louisiana-Pacific (LPX) acquired Ainsworth Lumber in a deal valued at about $1.1B
Astex (ASTX) to be acquired by Otsuka Pharmaceutical for $8.50 per share or $886M cash
Sanofi (SNY), POZEN (POZN) signed commercialization agreement
Assurant (AIZ) acquired Lifestyle Services Group from 4u Finance for about $160M cash
Tenneco (TEN) closes, decomplexes plants in Europe, eliminates 480 jobs
Boeing (BA) sees China's fleet tripling over next 20 years
Companies that beat consensus earnings expectations last night and today include:
Bazaarvoice (BV), NCI Building Systems (NCS)
Companies that missed consensus earnings expectations include:
Descartes Systems (DSGX), JoS. A. Bank (JOSB), Greif (GEF)
Companies that matched consensus earnings expectations include:
FuelCell (FCEL), Exa Corp. (EXA)
- The U.S. auto industry (GM, F, NSANY, HMC, TM) moved into high gear with new-car buyers snapping up vehicles last month at a pace not seen since before the financial crisis. Buyers purchased 1.5M vehicles, up 17% from a year ago, with nearly all major automakers reporting double-digit sales gains, the Wall Street Journal reports
- Bond investors could get their first taste of Verizon Communications (VZ) new debt to fund its $130B wireless acquisition as early as next week, sources say, the Wall Street Journal reports
- San Francisco Fed President John Williams said he was open-minded about reducing stimulus this month, as investors largely expect the central bank to do, while Narayana Kocherlakota, his counterpart in Minneapolis, said the U.S. central bank should actually do more for the economy, Reuters reports
- Canadian Imperial Bank of Commerce (CM) said it was seeking acquisitions valued at more than C$1B, mostly from the U.S., as it tries to boost the amount of profit it generates from wealth management, Reuters reports
- Apple (AAPL) is used to dictating terms to carriers for its iPhone. As it seeks a deal with China Mobile (CHL) to sell the handsets, it’s the operator that’s in command, and Apple needs an agreement with them, Bloomberg reports
- Privacy groups asked the FTC to prevent Facebook (FB) from changing its data use policies on concern with how the social network operator handles user information for advertising, Bloomberg reports
Jarden (JAH) 15M share Secondary priced at $47.00
LinkedIn (LNKD) 5.38M share Secondary priced at $223.00
Matador (MTDR) 8.5M share Secondary priced at $15.25
Timberline Resources (TLR) files to sell common stock