Frontrunning: September 10
- Obama Shrinking Second-Term Hastened by Syria Opposition (BBG)
- Obama says Russian proposal on Syria a potential 'breakthrough' (Reuters)
- Poll Finds Support Fading for Syria Attack (WSJ)
- France to Introduce Resolution Aimed at Dismantling Syria's Chemical Arsenal (WSJ)
- China Factory Output Rises (WSJ)
- Apple to Unveil IPhones Seeking End to Year of Struggles (BBG)
- Verizon Plans Largest Debt Sale Ever: Proceeds From Deal, Expected to Raise $20 Billion, Would Fund Venture Buyout (WSJ)
- Shipping Rates Seen at 2010 High on Record Ore to China (BBG)
- Europe Financial Transactions Tax Hits Legal Wall (FT)
- Japan Readies Stimulus to Cushion Blow of Sales-Tax Increase (BBG)
- Ads coming to Twitter: Twitter makes its largest acquisition, a mobile ad company (FT)
- Houses on fire as fighting erupts in southern Philippines (Reuters)
- Banks Seen at Risk Five Years After Lehman Collapse (BBG)
- Poll shows healthy young adults may keep Obamacare afloat (Reuters)
- Russia to Brazil Intervention Adds to U.S. Debt Distress (BBG)
Overnight Media Digest
* President Barack Obama's campaign for an attack on Syria took an unexpected turn as his administration inadvertently gave the Assad regime a potential way out that spawned second thoughts on Capitol Hill and enthusiasm among international opponents of a military strike.
* Carl Icahn tried with all his might, but couldn't break the $24.8 billion buyout of Dell Inc. On Monday, the activist investor announced he wouldn't take further actions to block the buyout, moving the deal on the edge of passing at a scheduled shareholder vote on Thursday.
* Koch Industries Inc known for concentrating on such unglamorous industries as oil refining, chemicals and fertilizer, has a new role: supplying electronic parts to Apple Inc. The Wichita, Kansas-based conglomerate, owned by billionaire brothers Charles and David Koch, on Monday announced an agreement to pay $7.2 billion, or $38.50 a share, for Molex Inc.
* Neiman Marcus Inc's private-equity owners got the outcome they desired when they found a buyer to pay $6 billion for the luxury retail chain. They just wish it had come a few years earlier. Under terms of the deal announced Monday, TPG and Warburg Pincus LLC are poised to more than double the amount of cash they put in when they bought Neiman in 2005, people familiar with the matter said.
* A federal judge in California ruled last week that clothing retailer Abercrombie & Fitch Co discriminated against a Muslim employee on religious grounds, the U.S. Equal Employment Opportunity Commission said Monday. The lawsuit was filed by the EEOC in 2011 on behalf of Umme-Hani Khan, a Muslim who was fired in February 2010 because her head scarf didn't conform to the company's dress code called its "Look Policy."
* The battle over hydraulic fracturing is heating up in California - and broadening to include what California regulators contend has been undisclosed oil-well fracking off the Pacific Coast. The California Coastal Commission, which is charged with overseeing development along the state's coastline and in its waters, said it found out only recently offshore fracking had occurred from oil platforms overseen by the federal government. The state agency has launched a probe into the practice.
* In a development that is sending ripples throughout the corporate-bond market, Verizon Communications Inc is expected to raise $20 billion or more on Wednesday in what would be the largest-ever debt sale by a company. The New York telecommunications company will sell debt ranging in maturity from three to 30 years, the banks backing the deal said Monday.
* Brazil's OGX Petróleo e Gás Participações SA has tapped lawyers at Davis Polk & Wardwell LLP to represent it in talks with creditors, according to people familiar with the situation. The hire comes as Brazilian businessman Eike Batista tries to manage a split that is pitting him, a controlling shareholder, against the oil firm's managers.
* Google Inc offered to make further concessions to European Union regulators to settle a nearly three-year antitrust probe and avert a possible multibillion-dollar fine. The European Commission, the EU's competition watchdog, was analyzing the proposals and if they are satisfactory, a deal could be reached in the coming months, an EU spokesman said on Monday. Google's proposal wasn't made public.
* Chinese authorities said that social-media users who post comments considered to be slanderous could face prison if the posts attract wide attention - a ruling free-speech advocates criticized as an attempt to give legal backing to the suppression of online dissent.
* UK cable operator Virgin Media Inc said it will make Netflix Inc available to some of its subscribers through their set-top boxes, making Virgin the first major pay-TV operator to integrate the streaming-video outlet into its service.
Deutsche Bank AG is under scrutiny from Japan's securities market watchdog over concerns that its employees breached Japan's anti-bribery regulations by providing corporate entertainment to pension fund executives.
ICAP is nearing a settlement with U.S and British regulators over allegations that it manipulated the Libor benchmark interest rates that would see the UK interdealer broker pay a fraction of the fines given to banks over the scandal.
Verizon plans to sell a combination of fixed and floating-rate debt across maturities ranging from three to 30 years as part of its $130 billion acquisition of Verizon Wireless, according to a company filing with regulators.
Spanish energy company Repsol has consulted Citigroup and Deutsche Bank on the possible sale of its $6 billion stake in utility Gas Natural.
Twitter has bought mobile advertising company MoPub in its largest acquisition to date, in a deal worth 16 million shares in Twitter.
* A Russian plan to have international monitors take control of the Syrian government's chemical weapons appeared to offer an exit strategy for President Obama, who had been reluctant to order a military strike.
* Documents released Monday detail the largely secretive process that lets the U.S. government detain an individual at a border crossing and confiscate or copy any electronic devices that person is carrying.
* Yahoo and Facebook each filed suit in the secret Foreign Intelligence Surveillance Court to ask the government for permission to reveal information about the number and types of national security requests for user data that the companies receive. Meanwhile, Google and Microsoft, which filed suit in June to ask for this permission, amended their petitions Monday to compel the government to publish even more detail about the requests.
* Google said it made a second attempt to settle an antitrust inquiry it faces in Europe over accusations that it abuses its dominance in Internet search and advertising.
* On Monday, the Koch Brothers' conglomerate made a big move into a very different business by offering to buy Molex , a relatively obscure maker of electronics plugs for the likes of Apple - for $7.2 billion.
* The U.S. government is selling $2.4 billion in bonds issued by Citigroup during the financial crisis in exchange for federal guarantees against the bank's possible losses. The sale by the Federal Deposit Insurance Corp ends the government's holdings in the third-largest U.S. bank.
* In a barb-filled letter to shareholders on Monday, billionaire Carl Icahn wrote that he could not overcome a series of defeats, including changes to the voting rules that make it easier for Michael Dell and the investment firm Silver Lake to prevail in their bid to buy Dell Inc.
* Comcast's NBCUniversal put Jeff Shell, a television executive, in charge of its film studio, Universal Studios, on Monday, leading to the promotion of one longtime movie manager and the ouster of another.
* Robert Allbritton, the publisher of the Washington news publication Politico, said on Monday that he had acquired the three-year-old news website Capital New York and that he intended to turn it into a version of Politico for the Empire State.
* The owners of the Neiman Marcus luxury retail chain agreed on Monday to sell it to a group led by Ares Management and a Canadian pension plan in a deal worth $6 billion.
THE GLOBE AND MAIL
* A former Conservative campaign staffer charged in connection with the "Pierre Poutine" robo-calls told multiple acquaintances that he'd played a part in the 2011 effort to send opposition voters to the wrong polling station in a Southern Ontario riding, an Elections Canada investigator alleges.
* A grassroots movement from within British Columbia's dejected New Democratic Party launched an effort on Monday to rebuild the political party and place modern-thinking people in positions of power at the NDP's November convention in Vancouver.
Reports in the business section:
* The long-delayed Keystone XL pipeline has been tangled up in environmentalist opposition and political wrangling. Now some energy experts say the oil market is moving on without it. A combination of growing oil-by-rail capacity and other new pipelines is increasingly providing alternatives to Keystone XL, just as Ottawa redoubles efforts to persuade President Barack Obama to green-light the project.
* Fairfax Financial Holdings Ltd, the largest shareholder of BlackBerry Ltd , is courting some of Canada's largest pension plans to join it in a buyout consortium as one of the options for the embattled smartphone maker. Fairfax is also talking to potential buyers for its 9.9-per-cent stake.
* Canada's Finance Minister Jim Flaherty said a deal is near that could see Canadian authorities begin collecting financial information on Americans living in Canada and remit it to the U.S. Internal Revenue Service. Flaherty said on Monday that he expects to reach an agreement "before too long" with the U.S. government.
* Progressive Conservative Leader Tim Hudak insisted on Monday that he didn't approve a controversial housing allowance claimed by his ousted finance critic. Peter Shurman has said that Hudak approved his claim for C$20,719 (about $20,000) last year to subsidize his Toronto apartment after moving to Niagara-on-the-Lake. But Hudak denied it.
* Nova Scotia Premier Darrell Dexter returned Saturday to the scene of what his New Democrats see as an economic triumph to call a provincial election for Oct. 8, reminding voters that his party has directly intervened in the economy when jobs were on the line. Dexter kicked off his bid for re-election in the Cape Breton town of Port Hawkesbury, where his government helped keep a paper mill running with a C$124.5 million aid package in 2012.
* In another visit to the United States to promote the proposed Keystone XL oil sands pipeline, Canada's Natural Resources Minister Joe Oliver met Monday with his United States counterpart, Energy Secretary Ernest Moniz, to propose a joint approach to greenhouse gas emissions and other technology initiatives in energy.
* The Canada Pension Plan Investment Board secured its first large private deal in more than a year on Monday with partner Ares Management LLC to purchase U.S. luxury retailer Neiman Marcus Group Ltd for $6 billion.
* Richardson GMP Ltd, a retail brokerage arm that caters to high net worth individuals, is set to double in size. The firm that grew out of the 2009 merger between the retail brokerage units of GMP Capital and Richardson Capital, has signed a definitive agreement to purchase Macquarie Private Wealth Inc, the local unit of the Australian-based Macquarie Group, that came to Canada in late 2009.
CHINA SECURITIES JOURNAL
- The Chinese government plans to roll out a new set of policies to promote the use of new energy vehicles. Various government agencies are currently studying rules to promote the use of hybrid and electric vehicles, according to sources.
SHANGHAI SECURITIES NEWS
- Ping An Insurance (Group) Co of China Ltd and China Pacific Insurance (Group) Co Ltd plan to set up branches in the Shanghai free trade zone, according to sources.
- China's judicial interpretations about handling online crimes will protect against online rumours, fraud, libel and blackmail, according to an editorial in the state-owned paper. But this crackdown should not have an impact on the freedom of speech, it added.
- China's leaders are focused on the importance of education involving stricter measures, requirements and discipline to ensure that cadres are ideologically trained, said an editorial from the paper which is a mouthpiece for the Chinese communist party.
Fly On The Wall 7:00 AM Market Snapshot
BioMed Realty (BMR) upgraded to Overweight from Equal Weight at Morgan Stanley
E-Trade (ETFC) upgraded to Outperform from Neutral at Macquarie
Endesa Chile (EOC) upgraded to Buy from Neutral at Citigroup
Fusion-io (FIO) upgraded to Overweight from Neutral at Piper Jaffray
M.D.C. Holdings (MDC) upgraded to Outperform from Neutral at Credit Suisse
Marvell (MRVL) upgraded to Overweight from Neutral at JPMorgan
National Oilwell (NOV) upgraded to Outperform from Neutral at Credit Suisse
TIBCO (TIBX) upgraded to Buy from Neutral at Janney Capital
Beazer Homes (BZH) downgraded to Neutral from Outperform at Credit Suisse
D.R. Horton (DHI) downgraded to Neutral from Outperform at Credit Suisse
Dollar General (DG) downgraded to Equal Weight from Overweight at Barclays
First Horizon (FHN) downgraded to Hold from Buy at Wunderlich
Hercules Technology (HTGC) downgraded to Market Perform at Wells Fargo
Marathon Petroleum (MPC) downgraded to Neutral from Outperform at Credit Suisse
Model N (MODN) downgraded to Hold from Buy at Stifel
Model N (MODN) downgraded to Neutral from Overweight at JPMorgan
NVR Inc. (NVR) downgraded to Underperform from Neutral at Credit Suisse
NuStar GP Holdings (NSH) downgraded to Underperform from Neutral at Credit Suisse
Red Robin (RRGB) downgraded to Hold from Buy at Wunderlich
Blackstone Mortgage (BXMT) initiated with an Outperform at JMP Securities
C&J Energy (CJES) initiated with an Overweight at Barclays
Cimarex Energy (XEC) initiated with a Buy at Canaccord
Concho Resources (CXO) initiated with a Hold at Canaccord
CubeSmart (CUBE) initiated with an Underperform at Macquarie
Illumina (ILMN) initiated with an Outperform at Wells Fargo
Konami Corp (KNM) initiated with an Underperform at Jefferies
Nationstar (NSM) initiated with an Outperform at Oppenheimer
Ocwen Financial (OCN) initiated with an Outperform at Oppenheimer
PHH Corp. (PHH) initiated with a Perform at Oppenheimer
Sophiris Bio (SPHS) initiated with a Buy at Stifel
Sprouts Farmers Markets (SFM) initiated with a Neutral at Credit Suisse
Sprouts Farmers Markets (SFM) initiated with a Neutral at Goldman
Sprouts Farmers Markets (SFM) initiated with a Neutral at UBS
Sprouts Farmers Markets (SFM) initiated with an Underperform at BofA/Merrill
TCP Capital (TCPC) initiated with an Outperform at Wells Fargo
Walter Investment (WAC) initiated with a Perform at Oppenheimer
iRobot (IRBT) initiated with a Positive at Susquehanna
Wal-Mart (WMT) to launch smartphone trade-in program in U.S.
Baxter (BAX) ratings affirmed by Fitch, negative outlook assigned
PVH Corp. (PVH) expects consumer environment to remain soft
Toshiba (TOSYY) to acquire T&D business from Vijai Electricals for $200M
Emerald Oil (EOX) sold substantially all non-operated Williston Basin assets
Companies that beat consensus earnings expectations last night and today include:
Triangle Petroleum (TPLM), Conatus Pharmaceuticals (CNAT), PVH Corp. (PVH), Five Below (FIVE), Limoneira (LMNR), Casey's General Stores (CASY)
Companies that missed consensus earnings expectations include:
HD Supply (HDS), Pep Boys (PBY), Majesco (COOL)
Companies that matched consensus earnings expectations include:
Palo Alto (PANW), Peregrine (PPHM)
On Sept. 23 the SEC will lift an 80-year ban preventing privately held businesses from advertising for investments, helping usher private businesses into the world of "crowdfunding" that has largely been limited to donations. Less excited are some state regulators who fear the relaxed rules could stoke scams and losses as businesses court individual investors to raise money, the Wall Street Journal reports
Federal regulators' attempts to enforce "net neutrality" rules (VZ) may have just hit a tough snag. In oral arguments, a federal appeals court signaled it had deep concerns about the legal underpinnings of the FCC's 2011 rules requiring equal treatment for all traffic on the Internet, the Wall Street Journal reports
At least three of the top 20 investors in Microsoft (MSFT) want a turnaround expert to succeed CEO Ballmer and urged the board to consider Ford (F) CEO Mulally and Computer Science CEO Lawrie (CSC) for the job, sources say, Reuters reports
The European car market (VLKAY, FIATY, PEUGY, NSANY, DDAIF) is bottoming out after five years of falling demand, but high unemployment and weak bank lending suggest its recovery will be long and slow, executives at the Frankfurt car show say, Reuters reports
IBM (IBM), which is moving benefits for Medicare-eligible retirees to a private health exchange, said in a letter that its contribution to their health care would be “consistent” with previous years, As long as retirees enroll with the private insurance exchange, Bloomberg reports
Goldman Sachs Group (GS) is moving brokerage accounts for some current and former employees with less than $1M in assets to Fidelity Investments, sources say, providing more investment choices and services for employees who don’t fit the firm’s wealth-management focus on high-net worth clients, Bloomberg reports
Armstrong World (AWI) files to sell 10.06M shares of common stock for holders
Enbridge Energy Management (EEQ) files to sell 8M shares of common stock
Enbridge Energy (EEP) files to sell 8M shares of comon stock
Fiduciary/Claymore MLP (FMO) files to sell 3.52M shares of common stock
Inergy Midstream (NRGM) files to sell 11M units for limited partners
Kennedy Wilson (KW) files to sell 6M shares of common stock
MagnaChip (MX) files to sell 1.7M shares for stockholders
Marketo (MKTO) files to sell 6M shares of common stock
Rhino Resources (RNO) files to sell 1.1M units for limited partners
Starwood Property (STWD) files to sell 25M shares of common stock
Stratasys (SSYS) files to sell 4M shares of common stock
Textura (TXTR) files to sell 4M shares of common stock
TriMas (TRS) files to sell 3.75M shares of common stock
UMB Financial (UMBF) files to sell 3.9M shares of common stock
Virtus Investment Partners (VRTS) files to sell $175M in common stock
Xoom (XOOM) files to sell 3.733M shares of common stock