Frontrunning: October 7
- A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall (BBG)
- Software, Design Defects Cripple Health-Care Website (WSJ)
- Gunmen kill 5 Egyptian soldiers near Suez Canal, 2 people die in blast (Reuters); Egypt death toll rises to 53, streets now calm (Reuters)
- Three retailers sell Apple iPhone 5C for $50 or less (Sun Sentinel)
- New American Economy Leaves Behind World Consumer (BBG)
- Dow's Exiles Often Have Last Laugh (WSJ)
- Macy's Puts China Online-Expansion Effort on Hold Amid Economic Slowdown (WSJ)
- Gold Befuddles Bernanke as Central Banks’ Losses at $545 Billion (BBG) - just ask the BIS gold selling team: they are unbefuffdled
- Markit Group Said to Avoid U.S. Antitrust Claims as EU Proceeds (BBG) - being owned by the banks has benefits
- Paulson leads charge into Greek banks (FT) - and scene for the Greek banking sector
- Workers Stay Put, Curbing Jobs Engine (WSJ)
- Is Obamacare's First Enrollee Bogus? (BBG)
- Airbus seals landmark deal with JAL (FT)
Overnight Media Digest
* The government shutdown enters its second week with the two parties still bitterly divided and Republicans increasingly tying the fight to a fast-approaching deadline to avoid a default on U.S. debt. House Speaker John Boehner said he wouldn't bring up bills to fully reopen the government or raise the debt limit unless Democrats agree to broader talks aimed at trimming the deficit.
* Ireland's voters delivered a surprise rebuff to Prime Minister Enda Kenny in rejecting his proposal to close the upper house of the legislature, potentially weakening his ability to push through another round of tough spending cuts and tax increases when the government presents its 2014 budget this month.
* Warren Buffett tossed lifelines to a handful of bluechip companies during the financial crisis. Five years later the payoff on those deals is becoming clear: $10 billion and counting.
* With the government shutdown heading toward a second week, economists say it could hold back economic growth, business confidence and corporate earnings, but probably won't cause a recession. Many money managers doubt the damage will be lasting. Any stock selloff, they say, would be a great buying opportunity.
* In its IPO filing, Twitter Inc disclosed how much the microblogging platform earned from a lesser-known side business: $47.5 million came from selling off its data to a fast-growing group of companies that analyze the data for insights into news events and trends.
* Six days into the launch of insurance marketplaces created by the new healthcare law, the federal government acknowledged for the first time Sunday it needed to fix design and software problems that have kept customers from applying online for coverage.
* Star mutual-fund manager Bruce Berkowitz is opening up his nascent hedge fund to institutional investors. Berkowitz, the president of Fairholme Capital Management LLC, launched the fund on Jan. 1 and it has grown to $140 million. He is now seeking outside institutional investors and hopes the fund will grow to $1 billion in assets in a year.
* Dish Network Corp has again come under fire over its takeover bid for a telecommunications firm, a potential deal that could be personally lucrative for Dish Chairman Charlie Ergen.
* Wal-Mart Stores Inc's top executive for Asia said the company has revamped its practices and legal compliance in the region and is considering acquisitions in China, as the retailer faces headwinds in a cornerstone of its global expansion plans.
* Macy's Inc has shelved an online-expansion plan in China, the latest retailer to do so as economic growth slows in the world's second-largest economy. The company had planned to begin online sales of a private-label brand in China in the spring, after buying a minority stake last year in Chinese retail company VIPStore Co.
UK Chancellor George Osborne sought clearance from EU officials for a possible split of Royal Bank of Scotland in order to avoid strict EU regulations on state supported banks.
Temasek and Sinopec have separately expressed interest in buying Repsol's 4.7 billion euro ($6.39 billion) domestic gas distributor business, Gas Natural
Hedge fund billionaire John Paulson's Paulson & Co and a number of other U.S. hedge funds are investing aggressively into Greece's struggling banking sector expecting it to turn a corner.
Shell's outgoing CEO Peter Voster said he was disappointed that the company's huge investment in Alaskan shale resources did not pan out as planned.
Jan Hommen the outgoing CEO of Dutch bancassurer ING has criticized the model combining insurance and banking, saying that his company had been "too big to manage"
France is stepping up efforts to trace the illegally funded French assets of foreign leaders after Syrian president, Bashir al-Assad's uncle was accused of having properties amassed through illegal means in France.
* Speaker John Boehner stood his ground on Sunday alongside the most conservative Republicans in Congress, insisting that the House would not vote to finance and reopen the government or raise the nation's borrowing limit without concessions from President Obama on the healthcare law.
* The Federal Reserve will begin circulating a new $100 bill on Tuesday with some modern and colorful anti-counterfeiting features, after overcoming problems that postponed its debut for more than two and a half years.
* On Monday Nielsen Holdings NV is introducing Twitter TV Ratings, a product announced last year that professes to measure all the activity and reach of Twitter conversation about shows, even if it has yet to be embraced by television executives and gain a broad client base.
* Ahead of its initial public offering, Twitter must prove it can fend off a younger generation of nimble social services that offer clever new ways for people to connect and share. Among these up-and-comers are Snapchat, WhatsApp, Line, Tumblr, Instagram, Pinterest, Kakao and Reddit.
* Michael Kors Holdings Ltd had extraordinary success with an initial public offering of his brand nearly two years ago, leading other designers to consider the same. On Wednesday, Marc Jacobs announced his departure from Louis Vuitton to focus on an initial public offering of his own brand.
* The largest banks on Wall Street are teaming up to join a network that could challenge an important part of Bloomberg's terminal business. The banks have all signed up for a messaging service that will be introduced on Monday and will allow finance industry employees to find and chat with one another quickly.
* The auction house Sotheby's announced on Friday that its board had adopted a shareholder rights plan, known as a poison pill, that is set off whenever an outsider acquires ownership of 10 percent or more of the company's stock. The company said that the rights will not prevent a takeover, but should encourage anyone seeking to acquire the company to negotiate with the board prior to attempting a takeover.
* Activist investor Carl Icahn is finally abandoning his battle against Dell Inc's sale to its founder Michael Dell. The billionaire investor disclosed on Friday that he is forgoing his right to have the Delaware Court of Chancery appraise the value of his shares in the computer company.
THE GLOBE AND MAIL
* More Canadians are joining the ranks of the self-employed, reflecting a reluctance among employers to make permanent hires, as well as the desire for some older workers to be their own bosses. The number of self-employed people grew by 95,600 between August and the same month last year - accounting for almost 40 per cent of new jobs created in that time.
* Canada has become an attractive pole for immigrants from around the world who are looking for a host country that will give them good opportunities. According to the Organization for Economic Co-operation and Development, Canada's annual immigration flow is now proportionately one of the highest among OECD members, at 0.7 percent of its population.
Reports in the business section:
* It has been half a decade since the crash of 2008, but only a minority of Canadian executives say their companies have fully recovered from the deep downturn that shocked the world. The latest C-Suite Survey of business executives shows that while the vast majority are optimistic about their company's prospects, the scars of 2008-2009 still remain.
* Tensions between new entrant carriers and some incumbent players are heating up as the federal telecom regulator scrutinizes domestic roaming rates. Wind Mobile is criticizing BCE Inc and Telus Corp for challenging the Canadian Radio-television and Telecommunications Commission's authority to regulate the wholesale fees that carriers pay each other for domestic roaming services, arguing those incumbents are being "disingenuous" and "absurd".
* Malaysia's state-owned energy giant, Petronas, is to make a "gargantuan" investment of C$36 billion ($34.94 billion) in Canada to build a liquefied natural gas plant, and a pipeline from the plant that would be built by a Canadian company, Malaysian Prime Minister Najib Razak said on Sunday.
SOUTH CHINA MORNING POST
-- The Hong Kong government is studying the feasibility of selling confiscated goods such as cars at "electronic auctions". Two mainland provinces already sell such items on the Taobao site and at least one police force in Britain is using eBay to sell goods seized from criminals. The government Logistics Department said the study was at a preliminary stage and it had not decided what platform to use. (link.reuters.com/fuj63v)
-- Mainland Chinese companies and individuals are ramping up purchases of property in California, accounting for an increasingly significant share of real estate deals in the Golden State. Property agents in San Francisco and Los Angeles fly in groups of Chinese investors to buy property, said Robert Pearce, a director of Blackfish, a company that markets United States real estate. (link.reuters.com/guj63v)
-- Hong Kong mattress maker Sinomax, which has some 500 shops and points of sale in Shenzhen, Guangzhou, Shanghai, and Beijing, is planning to raise HK$1.17 billion ($150.9 million) in an initial public offering on the local bourse, according to sources. Herbal tea chain operator Hung Fook Tong Holdings, which operates 120 shops in Hong Kong and the mainland, is also considering a listing on the Hong Kong stock exchange. (link.reuters.com/kuj63v)
-- Sun Hung Kai Properties is offering cash rebates ranging from HK$385,200 ($49,700) to several million dollars at luxury project The Cullinan, in yet another sign of a sluggish market. (link.reuters.com/muj63v)
HONG KONG ECONOMIC JOURNAL
-- At least 12 companies, including Chongqing Bank and Power Assets' Hongkong Electric, are aiming to seek a listing in the city before the end of 2013, raising up to an estimated HK$72.1 billion ($9.30 billion), according to market estimates.
MING PAO DAILY NEWS
-- Cruise ship leasing firm Success Universe Group Ltd plans to develop high end shopping mall in Macau in a bid to capture growth as the city further develops, according to deputy chairman Hoffman Ma.
Fly On The Wall 7:00 AM Market Snapshot
Apple (AAPL) upgraded to Buy from Hold at Jefferies
AuRico Gold (AUQ) upgraded to Outperform from Neutral at Credit Suisse
BlackBerry (BBRY) upgraded to Neutral from Underperform at Macquarie
Citrix Systems (CTXS) upgraded to Overweight from Equal Weight at Barclays
Hain Celestial (HAIN) upgraded to Overweight from Neutral at Piper Jaffray
Lazard (LAZ) upgraded to Conviction Buy from Neutral at Goldman
MarineMax (HZO) upgraded to Buy from Neutral at B. Riley
MaxLinear (MXL) upgraded to Outperform from Market Perform at JMP Securities
Realogy (RLGY) upgraded to Buy from Neutral at Goldman
Signet Jewelers (SIG) upgraded to Buy from Hold at Deutsche Bank
Team (TISI) upgraded to Buy from Hold at BB&T
Umpqua Holdings (UMPQ) upgraded to Buy from Neutral at Sterne Agee
XL Group (XL) upgraded to Overweight from Equal Weight at Evercore
C.H. Robinson (CHRW) downgraded to Underperform from Neutral at Macquarie
EQT Corporation (EQT) downgraded to Equal Weight from Overweight at Morgan Stanley
Evercore Partners (EVR) downgraded to Neutral from Buy at Goldman
HollyFrontier (HFC) downgraded to In-Line from Outperform at Imperial Capital
IBM (IBM) downgraded to Equal Weight from Overweight at Barclays
Informatica (INFA) downgraded to Equal Weight from Overweight at Barclays
Liquidity Services (LQDT) downgraded to Underperform from Buy at BofA/Merrill
Qualcomm (QCOM) downgraded to Neutral from Buy at BofA/Merrill
Toll Brothers (TOL) downgraded to Neutral from Buy at Goldman
Antero Resources (AR) initiated with a Buy at SunTrust
B2Gold (BTG) initiated with a Buy at BofA/Merrill
Facebook (FB) initiated with an Overweight at Atlantic Equities
Galectin Therapeutics (GALT) initiated with a Buy at Ascendiant
Garmin (GRMN) initiated with an Overweight at Atlantic Equities
General Electric (GE) coverage resumed with a Neutral at Goldman
ITC Holdings (ITC) initiated with an Overweight at Morgan Stanley
Spectrum (SPPI) initiated with a Buy at H.C. Wainwright
Tri-County Financial (TCFC) initiated with an Outperform at Keefe Bruyette
EADS (EADSY) announced first Airbus order from Japan Airlines
Jana Partners to hold talks with Outerwall (OUTR) regarding strategic alternatives
Apollo Tyres said a reduction in price in Cooper Tire (CTB) deal is warranted
FMC Corp. (FMC) acquired CAEB from RTI International (RTI), terms not disclosed
- Some money managers think the mess in Washington could be a blessing, at least for their investments. They doubt the damage will be lasting. Any stock sell off, they say, would be a great buying opportunity, the Wall Street Journal reports
- Warren Buffett (BRK.A) gave lifelines to a handful of blue-chip companies during the financial crisis. Now the payoff on those deals is becoming clear: $10B and counting, the Wall Street Journal reports
- Wal-Mart Stores (WMT) retail plans with India partner Bharti Enterprises are "not tenable" and both sides are looking for the best way to move forward, Reuters reports
- Apollo Tyres' $2.5B acquisition of Cooper Tire & Rubber (CTB) become a war of words as the two companies fight over the price of the deal plagued by labor issues in the U.S., where Cooper is based, and in China, Reuters reports
- Moody’s Investors Service (MCO) said it sees a “very low” chance the U.S. will default on its debt payments as a stalemate between President Obama and House Republicans showed little sign of changing, Bloomberg reports
- Beneath the bad news in Blackberry’s (BBRY) latest quarterly results was a 32% increase in companies installing its servers. That gain may hold the key to the company’s survival, whether or not a tentative $4.7B offer to take the smartphone maker private succeeds, Bloomberg reports
Amazon.com (AMZN) shares look pricey
Penn National (PENN) split could bring 30% more value
LATAM Airlines (LFL) could climb 20% or more
PICO Holdings (PICO) could rise 50% or more
Weatherford (WFT) could gain 25% or more
Twitter looks pricey but investors will probably overlook it
Acorn Energy (ACFN) files to sell $15M in common stock
American DG Energy (ADGE) files to sell $50M of common stock, warrants
DryShips (DRYS) announces $200M ATM equity offering
Gaiam (GAIA) files to sell 5M shares of Class A common stock
Gigamon (GIMO) files to sell 5.1M shares of common stock
Oxygen Biotherapeutics (OXBT) files to sell 630,000 common shares for holders
Jana Partners reports 13.5% stake in Outerwall (OUTR), pushes for strategic alternatives
RA Capital reports 14.96% passive stake in Achillion (ACHN)