Frontrunning: September 6
- Summers Faces Key 'No' Votes if Picked for Fed (WSJ)
- NYT Editorial Board Says Summers Would Be Wrong Fed Choice (NYT)
- Russia says it's compiled 100-page report blaming Syrian rebels for a chemical weapons attack (McClatchy)
- China says Syria crisis can't be resolved with military strike (Reuters)
- G-20 Faces Growth Threats as Syria Adds to QE Exit Risks (Bloomberg)
- Apple Supplier Fire Spurs Biggest Chip Price Rise in 3 Years (BBG)
- U.S. Decided Not to Horse-Trade With Russia on Assad (WSJ)
- Financial Crisis: For Corporations and Investors, Debt Makes a Comeback (WSJ
- Gorman Says Chance of Another Financial Crisis ‘Close to Zero’ (BBG) and in other news, "no risk of a Us downgrade" - Tim Geithner
- A Biotech King, Dethroned (NYT)
- ICAP in Talks to Settle U.S., U.K. Rate Probe (WSJ)
- Japan's Abe shakes hands with China's Xi at G20 (Reuters)
- Rich Norwegians Turn Down Labor as Welfare Loses Its Allure (BBG)
- Microsoft's emerging market conundrum (Reuters)
- Looming ‘sea level crisis’ faces US east coast, study finds (FT)
Overnight Media Digest
* The market for student loans suffered another blow on Thursday when J.P. Morgan Chase & Co, the nation's largest lender by assets, said it is getting out of the business.
* A prominent New Jersey doctor who has conducted Alzheimer's drug trials for major pharmaceutical companies is a key player in federal law-enforcement officials' probe into allegations of insider trading involving Steven A. Cohen's SAC Capital Advisors LP.
* An experimental cancer vaccine failed to help skin-cancer patients in a GlaxoSmithKline clinical trial, a setback for a hot area of medicine that seeks to harness the body's immune system to fight tumors.
* Regulators are set to finalize long-delayed rules to rein in advisers who help states and localities raise cash in the $3.7 trillion municipal bond market, a move aimed at protecting taxpayers from the types of complex transactions that soured during the financial crisis.
* Challenges persisted for apparel retailers in August as shoppers continued to stay away from malls, though consumers appeared to be opening their wallets for bigger-ticket items, such as furniture, automobiles and building supplies. A bright spot was Costco Wholesale Corp, which reported a 5 percent rise in August same-store sales, excluding gasoline, compared with the last year's August, beating expectations for 3.5 percent growth.
* At least three bidders are finalists in the bidding for Shapell Homes, a 58-year-old Southern California home building company that is expected to sell for about $1.5 billion. Toll Brothers Inc, Standard Pacific Corp and Brookfield Homes Corp are finalists for the company, which owns one of the largest portfolios of residential land currently for sale in California, according to four people familiar with the bidding process.
* United Continental Holdings Inc said Thursday that it intends to recall nearly 600 furloughed United pilots to address the airline's future staffing needs. The callbacks echo those made by other large airlines, including AMR Corp American Airlines and Delta Air Lines Inc, as carriers have returned to financial health and are coping with a wave of retirements.
* Alliant Techsystems Inc, one of the world's largest ammunition manufacturers, agreed to buy gun-accessory maker Bushnell Group Holdings Inc for $985 million in cash, a move that marks the culmination of an auction of the closely held company.
* Apple Inc has begun evaluating a plan to offer iPhones with screens ranging from 4.8 inches to as high as 6 inches, people familiar with the matter say. That would be a sizable leap from the 4-inch screen of the iPhone 5 released last year, and, at the upper end, would be one of the largest on the market.
* Toyota Motor Corp is rebooting its strategy in North America, giving local executives more say over product and production decisions after more than three years of losing market share in the U.S. to rivals.
Japan's Suntory Beverage & Food is in advanced talks to buy GlaxoSmithKline's Lucozade and Ribena drinks for more than 1 billion pounds ($1.6 billion), three people with knowledge of the discussions said.
Apple Inc is probing new allegations of poor working conditions at Jabil Circuit's factory in Wuxi, China after a New York-based campaign group, China Labor Watch, said in a report that it found employees working more than a 60-hour maximum working week and that they were forced to work overtime.
Russian internet firm Mail.Ru, partly owned by billionaire Alisher Usmanov, has sold its remaining shares in social network group Facebook Inc for $525 million.
Dixons Retail, Europe's second-biggest electrical goods retailer, will pay a dowry of 69 million euros ($91 million) to Germany's Mutares to take its loss-making online business Pixmania off its shoulders.
Ford Motor Co's president and chief executive, Alan Mulally, predicted that car sales in the United States will reach 17 million in the next few years, boosted by rising employment and consumer confidence.
Brazilian tycoon Eike Batista and executives at his flagship oil and gas company OGX Petróleo e Gás Participações SA are facing a formal investigation by the country's market regulator CVM as angry investors continue to threaten lawsuits against the former billionaire over the near collapse of the company.
* The Group of 20 summit meeting is expected to enact laws that would tighten rules for multinational companies that use subsidiaries in certain countries to legally avoid paying taxes.
* David Blech, who was once hailed as the king of biotechnology and was worth about $300 million, is about to begin a four-year prison term, having pleaded guilty to stock manipulation.
* Activist investors scored another victory on Thursday when the board of Timken Co agreed to spin off its steel business from its industrial bearings operations amid pressure from two big shareholders.
* The publisher and editor of The Las Vegas Sun, Brian Greenspun, is suing to block a deal that could force the newspaper to close.
* Russian Internet company Mail.ru has sold its remaining stake in Facebook for about $525 million, benefiting from a strong rebound in its share price.
* The National Security Agency has secretly circumvented or cracked much of the digital scrambling that protects global commerce, e-mails, phone calls, medical records and Web searches.
* Bangkok-based trader Badin Rungruangnavarat has agreed to pay $5.2 million to settle charges that he traded on insider information tied to Smithfield Foods' proposed $4.7 billion sale to a Chinese food processor, the Securities and Exchange Commission announced on Thursday.
* Anchor BanCorp Wisconsin, a small bank holding company in Wisconsin, plans to use Chapter 11 to recapitalize, not to liquidate as typically happens. The company hopes to use the bankruptcy to save its bank, AnchorBank.
* Brazil's securities and exchange commission says it has opened a new formal investigation into the business dealings of onetime billionaire Eike Batista and five other executives of the petroleum company OGX.
* Alliant Techsystems agreed on Thursday to buy Bushnell Group Holdings, a top maker of gun accessories like rifle scopes, for $985 million in cash. The deal is one of the first since the Newtown, Connecticut school shooting, an incident that has put pressure on some owners of gun manufacturers and related products to sell their holdings.
* Line, which has hundreds of millions of users in Asia and parts of Europe and Latin America, is beginning a push into the United States.
THE GLOBE AND MAIL
* The proposed subway extension in Scarborough, Ontario, does not mesh with the city's broader transit picture and risks stranding local residents by not having enough stops, Toronto's chief planner has warned. (http://link.reuters.com/beq82v)
* Older Canadians who can't find higher paying jobs are pushing out students in the low-wage part-time workforce, says a new CIBC World Markets Inc report. (http://link.reuters.com/ceq82v)
Reports in the business section:
* Bombardier Inc is selling its Flexjet fractional jet ownership division to a private investor group in a deal that includes the sale to the buyer of 85 business aircraft valued at $1.8 billion. Including options to buy an additional 160 jets, the total value of the business-aircraft transaction could rise to $5.2-billion.(http://link.reuters.com/deq82v)
* Canadian regulators have approved Glencore Xstrata Plc's sale of some Viterra farm retail stores to Canadian fertilizer company Agrium Inc in a deal that will make Agrium the dominant farm retailer in Canada. Agrium, already the biggest U.S. retail seller of fertilizer, chemicals and seed, will get 210 stores across Western Canada from Glencore in the deal approved by Canada's Competition Bureau, Agrium said on Thursday. (http://link.reuters.com/geq82v)
* The process of selling the bankrupt railway whose runaway train killed 47 people in Quebec is under way and the company's trustee hopes to complete a deal by year's end. Maine & Atlantic Railway has said that the railway's sale will be necessary to repay creditors and victims following the July 6 disaster in Lac-Mégantic, Quebec. (http://link.reuters.com/heq82v)
* Progressive Conservative Leader Tim Hudak won't say if he approved a move by his party's finance critic to bill taxpayers over C$20,000 ($19,000) last year for a second residence in Niagara-on-the-Lake. (http://link.reuters.com/jeq82v)
* Dozens of suspects accused of corruption at Quebec's municipal and provincial levels have also been involved in national politics, giving more than C$2 million ($1.9 million) in donations to federal parties, an investigation by The Canadian Press has revealed. (http://link.reuters.com/keq82v)
* Petrolia has finally shed light on the agreement it signed in 2008 with Hydro-Quebec to explore for oil on Anticosti Island. Although the provincial Liberal government wanted to reveal the details in 2011, Petrolia had refused, citing confidentiality clauses in the sale of permits. (http://link.reuters.com/neq82v)
* New financial rules laid out by international regulators in Switzerland are hurting banks and, by extension, the entire global economy, according to Bank of Nova Scotia chief executive Rick Waugh. (http://link.reuters.com/peq82v
CHINA SECURITIES JOURNAL
-- Raising the ceiling on deposit interest rates should be the last step in China's interest rate liberalization, said Wu Xiaoling, finance committee assistant of the National People's Congress. China is unlikely to raise the ceiling on deposit interest rates over the next two years, he added.
-- Egg futures could be launched this year, but crude oil futures still require further supporting policies, said Jiang Yang, vice president of China's securities regulator.
SHANGHAI SECURITIES NEWS
-- China will remember Sept. 5, 2013 as "king land" day after land deals, including a 21.8 billion yuan ($3.56 billion) plot in Shanghai's Xuhui district, hit successive record high prices.
-- Up to one-third of China's population, around 400 million people, cannot speak the official Mandarin language, the Ministry of Education said on Thursday.
-- Airbus SAS and China's Air Traffic Management Bureau have signed a memorandum of understanding to cooperate on modernizing the country's air traffic management system. U.S. plane maker Boeing said on Thursday that China's aircraft fleet was set to triple over the next two decades.
-- The growth in total spending on advertising in China is likely to slow this year against 2012, according to media investment firm GroupM. Total spending is estimated to grow 10.7 percent, down from 11.7 percent last year.
-- Top cosmetic brands, including Olay, L'Oreal and Nivea were found to have used excessive packaging in Chinese supermarkets, Shanghai's quality watchdog said on Thursday.
-- The issuing of government bond futures will help improve spot market liquidity, the newspaper said in a commentary. China's banking regulator is considering allowing commercial banks to actively participate in the government bond futures market as long as risks are properly controlled.
Constellation Brands (STZ) upgraded to Buy from Neutral at BofA/Merrill
Diageo (DEO) upgraded to Buy from Neutral at Citigroup
E-Trade (ETFC) upgraded to Buy from Neutral at Goldman
Ericsson (ERIC) upgraded to Outperform from Neutral at Credit Suisse
Five Below (FIVE) upgraded to Buy from Neutral at UBS
KeyCorp (KEY) upgraded to Outperform from Neutral at Credit Suisse
Meta Financial (CASH) upgraded to Strong Buy from Outperform at Raymond James
Oasis Petroleum (OAS) upgraded to Buy from Hold at Deutsche Bank
Oasis Petroleum (OAS) upgraded to Buy from Neutral at SunTrust
Siemens (SI) upgraded to Buy from Hold at Societe Generale
Stryker (SYK) upgraded to Outperform from Neutral at Credit Suisse
SunTrust (STI) upgraded to Buy from Hold at Deutsche Bank
T-Mobile (TMUS) upgraded to Outperform from Market Perform at William Blair
eBay (EBAY) upgraded to Outperform from Neutral at RW Baird
Andersons (ANDE) downgraded to Hold from Buy at BB&T
M&T Bank (MTB) downgraded to Neutral from Outperform at Credit Suisse
MannKind (MNKD) downgraded to Underperform from Neutral at BofA/Merrill
Beacon Roofing (BECN) initiated with a Neutral at Longbow
Carlisle (CSL) initiated with a Buy at Longbow
Clovis (CLVS) initiated with a Hold at Stifel
Datawatch (DWCH) initiated with a Buy at Canaccord
H&E Equipment (HEES) initiated with a Neutral at Longbow
Jones Energy (JONE) initiated with an Overweight at Barclays
Jones Energy (JONE) initiated with an Overweight at JPMorgan
Marlin Midstream (FISH) initiated with a Buy at Janney Capital
MaxLinear (MXL) initiated with a Buy at Benchmark Co.
Mettler-Toledo (MTD) initiated with an Overweight at Morgan Stanley
QEP Midstream Partners (QEPM) initiated with a Buy at Janney Capital
QIAGEN (QGEN) initiated with an Equal Weight at Morgan Stanley
Ritchie Bros. (RBA) initiated with a Neutral at Longbow
Rush Enterprises (RUSHA) initiated with a Buy at Longbow
ServiceNow (NOW) initiated with a Buy at Canaccord
Splunk (SPLK) initiated with a Buy at Canaccord
Superior Energy (SPN) initiated with an Overweight at Morgan Stanley
Under Armour (UA) initiated with a Hold at Jefferies
United Rentals (URI) initiated with a Buy at Longbow
Yelp (YELP) initiated with a Buy at Deutsche Bank
Zillow (Z) initiated with a Hold at Deutsche Bank
21st Century Fox (FOXA) recommended holders reject mini-tender from TRC Capital
Office Depot (ODP) canceled presentation at Goldman Sachs (GS) conference, Bloomberg reports
Timken (TKR) to split into two publicly-traded companies; CEO James Griffith to retire after separation
Constellation Energy (CEP) said allegations in PostRock (PSTR) subsidiary lawsuit are meritless
Companies that beat consensus earnings expectations last night and today include:
Piedmont Natural Gas (PNY), Rally Software (RALY), Smith & Wesson (SWHC), Korn/Ferry (KFY), Ambarella (AMBA), SeaChange (SEAC), Infoblox (BLOX), Quiksilver (ZQK), VeriFone (PAY), Cooper Companies (COO)
Companies that missed consensus earnings expectations include:
Mattress Firm (MFRM)
Companies that matched consensus earnings expectations include:
- The conventional wisdom has been that Americans learned an important lesson from the financial crisis--that you shouldn't take a loan just because one is available. Now some experts say the deleveraging is over and releveraging is well under way, with corporate borrowers taking new loans hand over fist from investors hungry for higher returns, the Wall Street Journal reports
- A U.S. District Court for D.C ordered the shutdown of FilmOn X's broadcast streaming services, delivering a legal victory to TV broadcasters (FOXA) that say the website violates their copyrights. The ruling also creates uncertainty about the expansion plans of rival Internet service Aereo Inc., the Wall Street Journal reports
- Ford Motor (F) CEO Mulally, 68, may step down sooner than planned. Ford's board is now open to letting him step down earlier as he explores other roles, sources say, Reuters reports
- Microsoft’s (MSFT) acquisition of Nokia's (NOK) handset business gives them control of its main Windows smartphone partner, but leaves a question mark over the bigger business it has bought: Nokia's cheap and basic phones that still dominate emerging markets like India, Reuters reports
- Home Depot (HD) CEO Blake said rising home prices this year will spur renovation spending, helping the retailer even as increasing mortgage rates put pressure on the U.S. housing recovery, Bloomberg reports
- Prices for memory chips used in smartphones and personal computers soared 19%, the most in three years, as an Apple (AAPL) supplier, SK Hynix, suspended operations in China after a factory fire two days ago. The firm makes almost one-third of the world’s DRAM chips, Bloomberg reports
America First Tax Exempt Investors (ATAX) files to sell $225M of shares
NewLink Genetics (NLNK) files $60M at-the-market offering
Pacific Mercantile Bancorp (PMBC) files to sell 2.2M shares for holders