Frontrunning: October 1
- Government Shuts Down as Congress Misses Deadline (WSJ); Shutdown starts, 1 million workers on unpaid leave (Reuters); Government Shutdown Begins as Deadlocked Congress Flails (BBG)
- This is not The Onion: Stocks Rise on U.S. Government Shutdown (BBG)
- Pentagon chief says shutdown hurts U.S. credibility with allies (Reuters)
- In historic step, Japan PM hikes tax; will cushion blow to economy (Reuters)
- Obama Says He Won’t Give Into ‘Ideological’ Budget Demand (BBG)
- More part-time warehouse workers: Amazon to Hire 70,000 Workers for the Holidays (WSJ)
- Less full-time legitimate workers: Merck to fire 8,500 workers (BBG)
- Education cuts hit America’s poor (FT)
- Euro-Zone Factory Growth Slows (WSJ)
- Watchdog Warns EU Not to Water Down Insurance Rules (Reuters)
- Gibraltar Seen as Europe-Beater for Finance Professional (BBG)
- Stock Investors See Slimmer Pickings (WSJ)
- Australian Economic Data Fuels Turnaround Hopes (WSJ)
- Banks Dwarfing Sweden Told High-Growth Goals Are Misplaced (BBG)
Overnight Media Digest
* Time Warner Inc's Warner Bros Pictures has a new financial partner that will help fund most of its movie production for several years. The entity, RatPac-Dune Entertainment LLC, will pour $450 million into as many as 75 movies over four to five years, with a few high-profile exceptions.
* Cooper Tire & Rubber Co shareholders approved a $2.5 billion sale of the Ohio company to Apollo Tyres Ltd on Monday, clearing the way for what could become the largest U.S. acquisition by an Indian industrial firm.
* Yahoo Inc has agreed to pay unspecified damages and legal costs to settle a lawsuit filed by Singapore Press Holdings Ltd over copyright infringement, the two companies said Monday.
* Chevron Corp moved Monday to avoid a jury trial in its suit against a lawyer it accuses of fraud in a high-stakes legal battle over pollution in Ecuador's jungles. The firm said that if a federal judge tries the case, it will drop its claims for monetary damages against Steven Donziger, a lawyer who sued Chevron on behalf of an Ecuadorian plaintiff.
* U.S. private-equity firm KKR & Co LP is making its biggest ever bet on China, with an agreement to take a 10 percent stake in Qingdao Haier Co Ltd, to gain exposure to China's home appliances market.
* Britain's biggest drugmaker GlaxoSmithKline PLC is selling its thrombosis brands, together with the Notre-Dame de Bondeville manufacturing site in France, to South Africa-based Aspen Pharmacare Holdings Ltd for 700 million pounds($1.13 billion).
* IKEA, already a major purchaser of renewable-energy equipment to power its own facilities, plans to sell solar panels to customers at 17 stores in the U.K. as the world's biggest furniture retailer tries to meet a growing customer demand for sustainable products.
* A trust representing "old" General Motors Co unsecured creditors agreed to stop trying to reclaim funds that GM had paid to a group of hedge funds, among them Paul Singer's Elliott Management and John Paulson's Paulson Partners, in return for the hedge funds reducing their claims against the trust.
Hopes of reaching a last-minute deal to avoid a partial shutdown of the US government on Monday night were fading even as President Barack Obama warned that an impasse will throw a 'wrench' into U.S. recovery.
Finance minister George Osborne vowed to squeeze welfare and other public spending to wipe out Britain's budget deficit if the Conservatives won the 2015 election.
BP was not prepared to deal with the 2010 Deepwater Horizon disaster, despite decades of warnings that an underwater well blowout was possible, lawyers for plaintiffs seeking damages over the spill have alleged.
Hedge funds' bets on falling share prices have dropped to their lowest level in years as traders predict equities will rise over the coming months.
Newmont Mining Corp, the biggest U.S. gold miner, has joined the race for Glencore Xstrata's Peruvian copper mining project Las Bambas, as it tries to diversify its business.
Investment company KKR & Co LP bought a 10 percent stake in Qingdao Haier Co Ltd, gaining exposure to China's home appliances market with its biggest investment in the country to date.
* Airline passengers should be allowed to use their personal electronic devices to read, play games or enjoy movies and music, even when planes are on the ground or flying below 10,000 feet, according to recommendations an advisory panel sent to the Federal Aviation Administration on Monday.
* NBC and CNN networks said they were abandoning their projects of a documentary and a mini-series on the life of Hillary Clinton, bringing to an end two initiatives that were announced with much fanfare over the summer.
* A flurry of last-minute moves by the House, Senate and White House late Monday failed to break a bitter budget standoff over President Obama's health care law, setting in motion the first government shutdown in nearly two decades.
* President Obama expressed confidence on Monday that he was right to defy House Republicans' demands as the hours ticked away toward a government shutdown. Yet offsetting the bravado at the White House was fear of what October's unfolding events could mean for the economy.
* David Meister is waging legal battles against some of the biggest names in finance. Meister is poised to step down from his role as head of the Commodity Futures Trading Commission's enforcement unit, a move that may put the future of those cases in question.
* Ford Motor Co has started mailing checks to owners of the C-Max Hybrid to compensate them after lowering its fuel economy rating. The company said it previously used its Fusion Hybrid as a standard measurement for the fuel economy of all of its hybrids but will now test and label the C-Max Hybrid separately.
* Individual investors are increasingly demanding transparency in performance track records, but pension funds - the biggest slice of the investment world - have conspicuously turned a blind eye to demanding track records from their most influential advisers, investment consultants.
THE GLOBE AND MAIL
* An increasingly competitive market and a wave of consolidation are forcing major grocers to look for more ways to cut costs, moves that are causing tension with employees who are feeling the squeeze. In the latest flare-up, unionized workers at Loblaw Co Ltd have set a strike deadline in Alberta and Saskatchewan.
* Canadian members of Parliament are spending less on travel but office budgets nonetheless continue to increase - due largely to the ballooning costs of staff salaries, taxpayer-funded advertising and constituency mail campaigns. Financial documents released on Monday reveal MPs' yearly spending in further detail than ever before.
Reports in the business section:
* Brookfield Property Partners LP is making a bid to absorb Brookfield Office Properties Inc in a deal that's not likely to face competition and would form one of the world's biggest commercial real estate companies. A merged Brookfield Property entity would boast $45 billion worth of office, retail and apartment properties if it succeeds in buying the 49 percent of Brookfield Office it does not own.
* Telus Corp will launch a high-speed "push-to-talk" wireless service in mid-October as it prepares for the eventual shutdown of its legacy network over the coming years. The new Telus Link service, to be announced on Tuesday, is the long-awaited replacement to the carrier's existing Mike service, which is based on out-of-date technology.
* Canadian Prime Minister Stephen Harper has nominated Justice Marc Nadon of the Federal Court of Appeal to fill a vacancy on the Supreme Court of Canada. The vacancy was created by the mandatory retirement of former justice Morris Fish this August.
* Financially troubled Mobilicity said on Monday that it has filed for creditor protection while it awaits government review of a new transaction with an unidentified buyer, four months after Ottawa killed its plans to sell to Telus Corp.
* The Competition Bureau says it will not appeal a tribunal decision to dismiss a bureau complaint that accused Visa Inc and MasterCard Inc of exerting too much power in forcing merchants to accept credit cards that carry higher fees.
* Canada's economy rebounded in July, growing at the fastest monthly pace in two years, as the impact of the Alberta floods and construction strikes in Quebec in June receded. Gross domestic product grew 0.6 percent in July, matching the pace for the same month in 2011, Statistics Canada said on Monday. The recovery was led by the construction, manufacturing and energy sectors
Fly On The Wall 7:00 AM Market Snapshot
1-800-Flowers.com (FLWS) upgraded to Buy from Hold at Brean Capital
Aflac (AFL) upgraded to Outperform from Market Perform at FBR Capital
BB&T (BBT) upgraded to Outperform from Perform at Oppenheimer
Brookfield Office (BPO) upgraded to Neutral from Sell at Citigroup
Carter's (CRI) upgraded to Buy from Neutral at Goldman
Computer Task Group (CTG) upgraded to Buy from Neutral at B. Riley
Cree (CREE) upgraded to Buy from Hold at Canaccord
Deckers Outdoor (DECK) upgraded to Buy from Hold at Canaccord
Duke Energy (DUK) upgraded to Buy from Hold at Deutsche Bank
FirstEnergy (FE) upgraded to Hold from Underperform at Jefferies
H&R Block (HRB) upgraded to Overweight from Equal Weight at Morgan Stanley
LKQ Corp. (LKQ) upgraded to Outperform from Neutral at RW Baird
PSEG (PEG) upgraded to Buy from Hold at Deutsche Bank
Portland General Electric (POR) upgraded to Buy from Hold at Deutsche Bank
Stanley Black & Decker (SWK) upgraded to Buy from Neutral at Longbow
Under Armour (UA) upgraded to Neutral from Underweight at JPMorgan
Westlake Chemical (WLK) upgraded to Outperform from Market Perform at Wells Fargo
Aixtron (AIXG) downgraded to Sell from Hold at Canaccord
Beacon Roofing (BECN) downgraded to Neutral from Outperform at RW Baird
Black Hills (BKH) downgraded to Neutral from Overweight at JPMorgan
Buffalo Wild Wings (BWLD) downgraded to Outperform from Strong Buy at Raymond James
Carrols Restaurant (TAST) downgraded to Outperform from Strong Buy at Raymond James
Cepheid (CPHD) downgraded at BofA/Merrill
Cepheid (CPHD) downgraded to Neutral from Buy at BofA/Merrill
Del Frisco's (DFRG) downgraded to Outperform from Strong Buy at Raymond James
Fiesta Restaurant (FRGI) downgraded to Outperform from Strong Buy at Raymond James
Finish Line (FINL) downgraded to Sell from Neutral at Goldman
Genomic Health (GHDX) downgraded at BofA/Merrill
Genomic Health (GHDX) downgraded to Underperform from Neutral at BofA/Merrill
H&E Equipment (HEES) downgraded to Neutral from Buy at UBS
Hospitality Properties (HPT) downgraded to Neutral from Outperform at RW Baird
Park Electrochemical (PKE) downgraded to Hold from Buy at Needham
PetroQuest Energy (PQ) downgraded to Neutral from Overweight at JPMorgan
Red Robin (RRGB) downgraded to Outperform from Strong Buy at Raymond James
Rubicon (RBCN) downgraded to Underperform from Perform at Oppenheimer
Torchmark (TMK) downgraded to Underperform from Outperform at FBR Capital
Universal Display (OLED) downgraded to Sell from Hold at Canaccord
Abiomed (ABMD) initiated with a Speculative Buy at Benchmark Co.
Apogee Enterprises (APOG) initiated with a Conviction Buy at Goldman
Approach Resources (AREX) initiated with a Buy at Brean Capital
Haynes (HAYN) initiated with a Buy at BofA/Merrill
Hub Group (HUBG) initiated with a Market Perform at BMO Capital
J.B. Hunt (JBHT) initiated with an Outperform at BMO Capital
Liberty Global (LBTYA) initiated with a Buy at Jefferies
Orbitz (OWW) initiated with a Sector Perform at RBC Capital
PC Connection (PCCC) initiated with a Buy at Canaccord
SAIC (SAIC) initiated with an Overweight at JPMorgan
Sunshine Heart (SSH) initiated with a Speculative Buy at Benchmark Co.
Telecom Italia (TI) re-initiated with a Buy at Goldman
Amazon.com (AMZN) to create 70,000 full-time seasonal jobs in U.S.
Wells Fargo (WFC) to pay Freddie Mac (FMCC) $780M in loan settlement
Chevron (CVX), Tohoku Electric signed Wheatstone LNG agreement (APA, RDS.A, RDS.B)
DISH (DISH), Disney (DIS) continued talks, extended contract, details not announced
J.C. Penney (JCP) recognized $786.24M in proceeds from stock offering
Palo Alto (PANW) filed patent suit infringement against Juniper (JNPR)
Companies that beat consensus earnings expectations last night and today include:
Palatin Tech (PTN), Diamond Foods (DMND), Paychex (PAYX)
Companies that missed consensus earnings expectations include:
Implant Sciences (IMsc)
- The U.S. bull market's momentum has slowed lately, as rising valuations have prompted more investors to start taking some chips off the table. In recent weeks, both Warren Buffett and Carl Icahn warned stocks aren't cheap. Others are urging investors to move cautiously, the Wall Street Journal reports
- Amazon.com (AMZN) plans to hire 70,000 seasonal workers for its U.S. warehouse network this year, a 40% increase, and the online retailer expects another 15,000 temporary hires in the U.K., a 50% increase over the prior year, the Wall Street Journal reports
- The first U.S. government shutdown in 17-years weakened the dollar today, sending it to an eight-month low against the euro, but met a subdued response from investors in equity and fixed income markets, Reuters reports
- Google's (GOOG) latest offer to modify its Internet search engine offers the prospect of ending a long-running EU competition probe, according to the bloc's top antitrust official. Joaquin Almunia told lawmakers in the European Parliament he believed the new offer made it easier to see Google's rivals when making an internet search, Reuters reports
- Activision Blizzard (ATVI) will seek shareholder approval of a management-led proposal to buy $8.17B of its stock from controlling shareholder Vivendi (VIVHY) if its appeal of a court injunction fails. The preliminary plan was outlined in a filing yesterday with the SEC, Bloomberg reports
- Large acquisitions pushed mergers up 42% in Q3 to $671B, Bloomberg data shows. But that belies stagnation in takeovers below $5B, the heart of dealmaking, where volumes fell about 2%, Bloomberg reports
First Internet Bancorp (INBK) files to sell $28.75M of common stock
QIWI (QIWI) 8.2M share Secondary priced at $30.50