Frontrunning: October 11
- Dot Com part deux: Investors are showing increasing hunger for initial public offerings of unprofitable technology companies (WSJ)
- Poll Finds GOP Blamed More for Shutdown (WSJ)
- House, Senate Republicans Offer Competing Plans on Debt-Limit, Government Shutdown (WAPO)
- Obama, Republicans aim to end crisis after meeting, hurdles remain (Reuters)
- US Rethinks How to Release Sensitive Economic Data (WSJ)
- Chinese East Oil Fuels Fresh China-US Tensions (WSJ)
- ECB Agrees on Swap Line With PBOC as Trade Increases (BBG)
- China September Auto Sales Surge 21% on Japanese Rebound (BBG)
- JPMorgan Taps Taxpayer-Backed Banks for Basel Rules (BBG)
- Malala, survivor of Taliban, resented in Pakistan hometown (Reuters)
- Twitter Said to Pay 3.25% Bankers’ Fee for Market Debut (BBG)
- Brevan Howard unchanged YTD (Reuters), Said to Start Fund With Ex-Deutsche Bankers (BBG)
Overnight Media Digest
* President Obama held talks with House Republicans on a GOP proposal to extend the nation's borrowing authority for six weeks, marking a new opening in the stalemate. Until now, Obama had refused to negotiate until the government was reopened and the debt ceiling raised. Republicans, in turn, said those steps must be paired with a deficit-reduction plan and changes to the 2010 health care law that they knew Obama wouldn't accept.
* China is overtaking the United States as a buyer of Middle East oil, adding fuel to diplomatic tension between the nations over security in the region.
* Federal officials are discussing changes to how the government releases sensitive economic data, seeking to bring the system in line with fast-moving financial markets.
* A Tesoro Logistics crude pipeline spilled about 20,000 barrels of oil in a rural field in northwest North Dakota, in what appears to be the largest spill in the Bakken shale formation to date.
* Clothing exports from Bangladesh soared over the summer because global retailers expanded orders despite a string of deadly industrial accidents.
* Auction house Christie's is branching out to attract less wealthy customers, while Sotheby's has targeted millionaires. The differences also show up in Sotheby's lagging sales. The divergent results have prompted investors and collectors to look more closely at the auctioneers' game plans.
* BlackBerry Ltd co-founder Mike Lazaridis has hired bankers to explore a joint bid for the smartphone company that forced him out as co-chief executive less than two years ago.
* Alibaba Group Holding Ltd has led a $206 million investment in a rival to Amazon.com Inc one of its biggest U.S. moves as the Chinese e-commerce giant considers an initial public offering here.
* Teva Pharmaceutical Industries Ltd plans to reduce its global workforce by 10 percent, or 5,000 employees, underscoring growing competitive pressures in the generic-drug industry.
The United States seems to have staved off a debt default after the White House and Republicans moved towards a temporary agreement on a short-term extension of the U.S. debt limit.
Google saved billions in tax last year by channeling royalty payments to Bermuda, which helped it reduce its overseas tax rate by 5 percent.
CEO of energy company SSE, Alistair Phillips-Davies, has blamed the rising cost of green policies for the price rise and has called for a government rethink on the green policy.
British politicians are close to agreement with the British press over an revised royal charter over the press regulation.
Royal Mail has turned back people who bid for more than 10,000 pounds of shares in its over-subscribed IPO leading to institutional allocations having been severely scaled back.
A report says the peripheral eurozone's small- and medium-sized businesses are paying bank loan interest rates that are up to three times higher than German SMEs.
Aluminium smelters such as Alcoa and Rusal are up in arms against a proposal by the London Metals Exchange which will cause the price of aluminium to fall.
Chrysler Chief Executive Sergio Marchionne denied reports that he had warned off potential investors in the U.S. carmaker's forthcoming IPO as the battle over the future of Chrysler turned increasingly complex and bitter.
* President Obama and House Republicans failed to reach an agreement on a six-week extension of the nation's borrowing authority during a meeting on Thursday, but the two sides kept talking, and the offer from politically besieged Republicans was seen as an initial step toward ending the budget standoff.
* In the exchanges created by the Affordable Care Act, Blue Cross and Blue Shield plans offer name recognition and price advantages. Blue Cross and Blue Shield plans have typically been the largest insurers providing coverage primarily to individuals and small businesses, and they remain a staple on the new exchanges. What is not yet clear is whether the Blues plans are offering low prices to gain customers, only to raise prices in later years.
* With enthusiastic backing from state officials and an estimated seven million uninsured, California is a crucial testing ground for the success of President Obama's health care law. California is building the country's largest state-run health insurance exchange and has already expanded Medicaid coverage for the poor.
* A lawsuit accuses Warner Brothers of stealing the screenplay of its 2012 movie "Trouble With the Curve" and of manufacturing evidence in their defense. In an unusually sharp response to a lawsuit filed last week, the studio publicly called the accusations of script theft "reckless and false".
* Carmen Segarra, a former bank examiner for the New York Federal Reserve, claims in a suit that she was fired by the Fed for refusing to back down on a plan to downgrade Goldman Sachs Group Inc for its conflict-of-interest policy.
* Investors embraced signs of a political compromise that could avert a default on government debt, sending stocks surging on Thursday, but the air quickly went out of Wall Street's balloon after it remained clear that a deal was not yet at hand.
* The two men who founded the company that became BlackBerry Ltd may now try to save it. In a regulatory filing on Thursday, Mike Lazaridis and Douglas Fregin said that they were considering a bid for the 92 percent of the company that they do not own. They also said they had hired Goldman Sachs Group Inc and Centerview Partners as advisers.
* The Securities and Exchange Commission says that Rodrigo and Michel Terpins acted on inside information about the H.J. Heinz Co takeover to turn $90,000 into $1.8 million. After receiving a confidential tip that the Heinz deal was looming, Michel Terpins alerted his brother, who then served as the trader, the SEC said. The Terpins brothers routed their trades through a Goldman Sachs account in Zurich, where laws largely shield the account holder's identity.
* The Delaware Supreme Court on Thursday unanimously reversed a lower court ruling on Activision Blizzard Inc's move to buy back most of Vivendi SA stake in the video game maker for $8.2 billion, letting the transaction move forward. The deal is now expected to close next week.
* A jury in Los Angeles cleared Toyota Motor Corp of fault on Thursday in a fatal 2009 accident in which a 66-year-old woman crashed her Camry. The case is the first of about 85 personal injury and wrongful death lawsuits brought against Toyota in the California state court because of complaints related to sudden, unintended acceleration and the resulting wave of recalls in 2009 and 2010.
THE GLOBE AND MAIL
* The head of Ontario's horse racing regulator has stepped down on the eve of a major restructuring of the industry and the unveiling of a new formula for how public money is funneled to tracks. Ontario Premier Kathleen Wynne will release the new blueprint on Friday at the Grand River Raceway north of Guelph, Ontario.
* Rogers Communications Inc said a software glitch created a big spike in "signaling traffic" that caused one of the worst wireless network outages in the company's history. Canada's largest wireless carrier determined that root cause on Thursday roughly 18 hours after implementing a fix that restored voice and text services for customers across the country.
Reports in the business section:
* BlackBerry Ltd's co-founders say they may launch a takeover bid for the beleaguered smartphone maker, intensifying a battle over whether the company survives as a stand-alone entity or is carved into pieces.
* The days of Ontario bragging about being the largest auto-making jurisdiction in Canada and the United States are coming to an end. Michigan has roared into first place in vehicle manufacturing among states and provinces this year, knocking Ontario off the perch it has enjoyed since 2004.
* Canada's aerospace industry could lose about C$10.5 billion ($10.11 billion) worth of contracts over several decades if the federal government ultimately decides not to purchase the controversial F-35 Stealth Fighter, says a senior executive at Lockheed Martin Corp.
* Jana Partners, the New York activist hedge fund that waged a proxy fight against Agrium Inc, said on Thursday that it has reduced its stake in the fertilizer giant. Still, the fund will remain among Agrium's biggest shareholders with a 2.7 percent stake, down from its previous 7.6 percent position.
* Enbridge Inc is working to open a major new pathway to the U.S. Gulf Coast for Alberta bitumen, solidifying a commercial link between the world's No. 3 crude deposit and the Texas refining corridor that has so far eluded industry planners.
CHINA SECURITIES JOURNAL
- Pci-Suntek Technology Co Ltd plans to open a private bank in Guangzhou in a collaboration with other private enterprises. The company is currently soliciting opinion on the venture from collaborating firms.
21ST CENTURY BUSINESS HERALD
- Subsidiaries of Chinese funds are suffering amid a tighter regulatory environment, according to sources. Regulators asked Minsheng Royal Asset Management Co Ltd to suspend cash pooling activities, which it was engaged in on a large scale, they said.
- South China Sea disputes between China and members of ASEAN should not be dealt with during public forums, the paper said in an editorial. They should instead be resolved peacefully between the countries involved, it added.
- The Chinese government's crackdown on excessive spending was apparent during the National Day holiday, said an editorial.
7:00 AM Fly On The Wall Market Snapshot
Assurant (AIZ) upgraded to Neutral from Underperform at BofA/Merrill
BNP Paribas (BNPQY) upgraded to Outperform from Neutral at Macquarie
Citrix (CTXS) upgraded to Neutral from Underweight at JPMorgan
Digital Realty (DLR) upgraded to Buy from Hold at Cantor
J.B. Hunt (JBHT) upgraded to Buy from Neutral at BofA/Merrill
Johnson & Johnson (JNJ) upgraded to Neutral from Sell at Goldman
LG Display (LPL) upgraded to Buy from Neutral at Citigroup
Pharmacyclics (PCYC) upgraded to Buy from Neutral at Goldman
Philips (PHG) upgraded to Buy from Neutral at Goldman
Safeway (SWY) upgraded to Overweight from Neutral at JPMorgan
Spirit Airlines (SAVE) upgraded to Buy from Neutral at Citigroup
Texas Industries (TXI) upgraded to Buy from Neutral at Longbow
Annie's (BNNY) downgraded to Neutral from Buy at SunTrust
AstraZeneca (AZN) downgraded to Underperform from Hold at Jefferies
Corning (GLW) downgraded to Neutral from Overweight at Piper Jaffray
Deutsche Bank (DB) downgraded to Underperform from Neutral at Macquarie
Dr Pepper Snapple (DPS) downgraded to Market Perform from Outperform at Wells Fargo
Eli Lilly (LLY) downgraded to Underperform from Hold at Jefferies
Intel (INTC) downgraded to Neutral from Outperform at Macquarie
Iron Mountain (IRM) downgraded to Underweight from Equal Weight at Barclays
L Brands (LTD) downgraded to Neutral from Outperform at Credit Suisse
Merck (MRK) downgraded to Hold from Buy at Jefferies
Micron (MU) downgraded to Underperform from Market Perform at Wells Fargo
Sonoco Products (SON) downgraded to Sell from Neutral at Goldman
Synaptics (SYNA) downgraded to Neutral from Overweight at JPMorgan
Walter Investment (WAC) downgraded to Market Perform from Outperform at Wells Fargo
Apollo Global (APO) initiated with an Overweight at Evercore
Becton Dickinson (BDX) initiated with a Buy at SunTrust
Blackstone (BX) initiated with an Equal Weight at Evercore
Carlyle Group (CG) initiated with an Overweight at Evercore
Cepheid (CPHD) initiated with a Neutral at SunTrust
Crestwood Midstream (CMLP) initiated with an Outperform at Wells Fargo
Given Imaging (GIVN) initiated with a Buy at SunTrust
Hawaiian Electric (HE) initiated with an Outperform at Wells Fargo
KKR & Co. (KKR) initiated with an Equal Weight at Evercore
Manpower (MAN) initiated with a Buy at Jefferies
Myriad Genetics (MYGN) initiated with a Reduce at SunTrust
NGL Energy Partners (NGL) initiated with a Hold at Deutsche Bank
On Assignment (ASGN) initiated with a Buy at Jefferies
Robert Half (RHI) initiated with a Hold at Jefferies
Sinclair Broadcast (SBGI) initiated with an Outperform at Credit Suisse
UMB Financial (UMBF) initiated with a Buy at BofA/Merrill
Vantiv (VNTV) initiated with an Outperform at Oppenheimer
Western Gas Equity (WGP) initiated with an Outperform at Credit Suisse
Westpac (WBK) agreed to buy Lloyds (LYG) Australian assets for A$1.45B
Osiris (OSIR) sold stem cell business to Mesoblast (MBLTY) for up to $100M plus royalties
Federal Reserve Board said it reached accord with SunTrust (STI)
Safeway (SWY) to exit Chicago market
GenCorp (GY) filed to delay Form 10-Q
Chemtura (CHMT) to sell consumer products business to KIK Custom Products for $315M
USA Truck (USAK) filed breach of contract suit against Knight Transportation (KNX)
Companies that beat consensus earnings expectations last night and today include:
Bank of the Ozarks (OZRK), E2open (EOPN), Safeway (SWY), AngioDynamics (ANGO)
Companies that missed consensus earnings expectations include:
Silicon Graphics (SGI)
- Investors are showing increasing hunger for IPOs of unprofitable technology companies and the potential for big gains that they bring. Sixty-eight percent of U.S.-listed technology debuts this year, or 19 out of 28 deals, have been companies that lost money in the prior fiscal year or past 12 months, the Wall Street Journal reports
- Federal officials are discussing changes to how the government releases sensitive economic data, seeking to bring the system in line with fast-moving financial markets, the Wall Street Journal reports
- While officials of the Fed have disagreed over whether the U.S. central bank should continue full-bore with its massive bond-buying stimulus, two Fed presidents with differing policy views, San Francisco’s John Williams and St. Louis’s James Bullard, agreed that a national debt default could have devastating effects, Reuters reports
- The Pentagon said it would stop work on a second pilot helmet being developed for the F-35 fighter jet by Britain's BAE Systems (BAESY), and focus exclusively on the main helmet built by Rockwell Collins (COL) and Israel's Elbit Systems (ESLT), Reuters reports
- France’s constitutional court upheld a ban on hydraulic fracturing, the energy exploration technique known as fracking. The 2011 law “conforms to the constitution,” the court said, Bloomberg reports
- Toyota Motor (TM) has long held out hydrogen as the ultimate alternative to gasoline for powering autos. Soon, consumers will be able to kick the tires of its fuel cell-powered car and those of other automakers, Bloomberg reports
Apricus Biosciences (APRI) files to sell 395,018 shares of common stock for holders
Buckeye Partners (BPL) 7.5M share Secondary priced at $62.61
Envestnet (ENV) 5.045M share Secondary priced at $29.25
Lexington Realty (LXP) files to sell 10M shares of common stock
New Mountain Finance (NMFC) files to sell 6M shares of common stock
Seaspan (SSW) terminates public offerings of common shares and convertible notes