Frontrunning: October 22
- Despite budget win, Obama has weak hand with Congress (Reuters)
- Carney Brings In McKinsey for Bank of England Strategy Rethink (BBG)
- Bill Gates Buys Stake in Spanish Construction Company FCC (WSJ)
- Jerusalem Mayor Barkat Seeks New Term in Race Arabs Sitting Out (BBG)
- J.P. Morgan Aimed to Limit Damage (WSJ)
- EU Lawmakers Reject Draghi Call for Bank Bondholder Clemency (BBG)
- Wall Street Profits May Halve in Second Half (WSJ)
- Petrobras-led group wins Brazil oil auction with minimum bid (Reuters)
- Apple to Refresh IPads Amid Challenges for Tablet Share (BBG)
- Italy plans to offer guarantees on govt bond derivatives (Reuters)
- Berkshire Beats Apple as Favorite Stock of Tiger 21 Group (BBG)
- Why Data Artisans Are The New Data Scientists (FC)
Overnight Media Digest
* President Barack Obama acknowledged Monday that widespread technical problems have prevented many Americans from using the federal government's new online health-insurance marketplaces, and he pledged to resolve the issues. He said that the law's overall potential shouldn't be measured by the website's rocky start.
* Saudi Arabia's intelligence chief told European diplomats that he plans to scale back cooperating with the U.S. to arm and train Syrian rebels in protest of Washington's policy in the region.
* JPMorgan is willing to pay a steep price to settle with the Justice Department over soured mortgage securities, but it is getting one thing it wanted: It won't have to pay heavy penalties for the sins of two companies it bought during the crisis. JP Morgan will pay roughly $2 billion in penalties that apply to its own conduct during the years before the financial crisis, and not any for problems it inherited from Bear Stearns Cos or Washington Mutual Inc.
* The CFTC has asked Deutsche Bank, Citigroup and others to trawl through their records as part of a global probe into possible currency-market manipulation and hand over any evidence of wrongdoing.
* A UK judge said he wouldn't renew a court order that prevented the Journal from publishing names of individuals the government planned to implicate in the Libor interest-rate manipulation case.
* RadioShack Corp is getting a financial boost from GE Capital on the cusp of the crucial holiday selling season, people familiar with the matter said. The General Electric unit will extend loans of about $835 million secured by existing assets, including inventory, to refinance outstanding bank debt.
* The Consumer Financial Protection Bureau is probing a lending business owned by eBay Inc that has been criticized for allegedly imposing excessive finance charges.
* Caesars Entertainment Corp disclosed Monday that federal regulators, continuing a crackdown on money laundering, are investigating the unit that operates its flagship hotel and casino in Las Vegas.
Former top JPMorgan Chase banker, Achilles Macris, filed a claim against Britain's financial watchdog, saying he was wrongly identified and criticised in settlement papers involving the "London Whale" trading scandal.
Former ICAP, Rabobank, Royal Bank of Scotland, Deutsche Bank and UBS employees were among the 22 names that Britain's financial watchdog included as alleged co-conspirators of Tom Hayes, a former star trader at both UBS and Citigroup, facing criminal charges for manipulating Libor benchmark interest rates.
A consortium led by Royal Dutch Shell, France's Total, Brazil's state-run Petrobras, and PetroChina won the bid for the Libra deepwater oilfield in an auction on Monday.
Subscription video company Netflix's shares rose about 10 percent in after-market trading after it reported it had signed on over 40 million global subscribers and tripled third-quarter profits, beating analysts' estimates.
British Sky Broadcasting and Twitter have teamed up to share video highlights from Uefa Champions League football games in real time.
* After a court suit from Macy's claimed an exclusive contract with Martha Stewart, J.C. Penney scaled back its Stewart line as a court deadline appeared near.
* With gargantuan revenue - expected to hit $75 billion this year - Amazon's recent profits have been slim to nonexistent. In its quest to become the world's bazaar, are earnings beside the point?
* Michael Evans, Goldman Sachs' global head of growth markets, who had been thought to be a possible successor to Chief Executive Lloyd Blankfein, plans to retire.
* Alaska's salmon fishing industry essentially declared victory last week in a bitter dispute with the Marine Stewardship Council over sustainability certification, a fight that involved Walmart.
* A panel of European Union lawmakers on Monday night backed a measure that could require American companies like Google and Yahoo to seek clearance from European officials before complying with United States warrants seeking private data.
* Both the New York Stock Exchange and the Nasdaq stock market have said they would accept what Alibaba calls a partnership governance structure, in which its founders and top executives would nominate a majority of board members.
* The parent of Madame Tussaud's and a clean energy business backed by the financier Guy Hands each said on Monday that they planned to go public on the London Stock Exchange, as their private equity owners seek to begin cashing out of their investments.
* Zhang Zhirong, a Chinese industrialist who was involved in an insider trading case in the United States last year, may make a takeover bid for Glorious Property Holdings, a Hong Kong developer in which he owns a majority stake.
* McDonald's warned on Monday that global sales at established restaurants would be relatively flat in October and signaled that weakness would continue in the fourth quarter because of stiff competition and a halting economic recovery, putting pressure on the company's Chief Executive, Donald Thompson.
THE GLOBE AND MAIL
* The Prime Minister's Office intervened directly in the Senate expense affair, pressing Prince Edward Island Senator Mike Duffy into a plan to repay past expense claims and instructing him on what he should say to the media, Duffy's lawyer says.
* A split has emerged in Prime Minister Stephen Harper's government over a fundamental principle: the rules governing the potential breakup of Canada. The Conservatives' senior Quebec minister has declared in two media interviews that a 50-percent-plus-one vote for separation is enough for a province to secede.
Reports in the business section:
* A U.S. unit of Montreal-based CGI Group Inc, a global technology services giant with annual revenue of $10 billion, is the main contractor behind the problem-plagued, Web-based insurance exchange that plays a key role in the Affordable Care Act, commonly known as Obamacare.
* Canadian food giant Maple Leaf Foods Inc is facing a potential breakup as it puts its $1.6-billion bakery unit up for sale, at the same time as potential suitors target its meat division.
* Hospitals and clinics should resist patient requests to be treated by doctors of a particular race, religion or sex, a top medical group is telling its members, highlighting a touchy yet reportedly common healthcare phenomenon.
* The West Coast General Hospital in Port Alberni, British Columbia, recently posted signs on its doors telling visitors to stop bringing flowers for friends and family.
* Canada will relax rules on foreign investment for the United States, Mexico and 12 other countries as a result of its free trade pact with the European Union.
* Sales of new homes in the Toronto housing market appear to be rebounding but activity in the country's largest market has a long way to go to match 2012 levels.
CHINA SECURITIES JOURNAL
- China's Ministry of Environmental Protection has submitted a proposal to curb soil pollution and the plan is expected to be rolled out no later than early next year, Zhuang Guotai, a senior ministry official, was quoted as saying.
- The northern city of Tianjin has submitted an application to turn its Binhai New Area to a free-trade zone similar to the one launched in Shanghai last month, the head of the area, Zong Guoying, told the newspaper.
SHANGHAI SECURITIES NEWS
- The Dalian Commodity Exchange has sought public feedback for its proposed fibreboard and plywood futures contracts as the bourse looks to introduce more forestry products to broaden its offering.
- Severe air pollution in the northern city of Harbin, the capital of the Heilongjiang province, this week is set to intensify calls for the government to clean up the environment. The haze, which shrouded the city and caused visibility to drop to less than 50 metres in some urban areas, led the city to suspend schools.
- Robust sales of high-end homes propelled the average cost of a new home in Shanghai to exceed the 26,000 yuan per square metre (US$4,262) threshold last week. The average price of new homes, excluding government-funded affordable housing, climbed 12 percent week on week to 26,527 yuan per square metre during the seven-day period ended on Sunday, Shanghai Deovolente Realty Co said.
- Baidu, China's largest Internet search engine operator, will tie up with China Asset Management Co Ltd to launch an asset management product for registered users of Baifubao, its payment arm, joining other Internet giants offering financial services to web users.
- Reforming the finance relationship between China's central and local governments will be the centrepiece of the nation's pending fiscal reform, which will be discussed at the coming plenary meeting in November, analysts said.
- A draft amendment to China's environmental law that was presented to lawmakers would require local governments to carefully consider how their long-term development strategies affect the environment. Another draft amendment would make it easier for environmental agencies to file public interest lawsuits against polluters.
21st Century Business Herald
- China will resolve the wind power sector's ongoing problems with grid connection in the next three years, the head of the renewables energy department at the National Energy Administration said at an industry conference.
- The Asia-Pacific region should strengthen coordination and cooperation among neighbouring countries to achieve win-win situation, the mouthpiece of the Chinese communist party said in a commentary.
Fly On The Wall 7:00 AM Market Snapshot
Crosstex Energy LP (XTEX) upgraded to Outperform from Neutral at Credit Suisse
Harmony Gold (HMY) upgraded to Neutral from Sell at Goldman
KeyCorp (KEY) upgraded to Market Perform from Underperform at Keefe Bruyette
Kohl's (KSS) upgraded to Hold from Sell at Deutsche Bank
NRG Yield (NYLD) upgraded to Buy from Neutral at Goldman
Netflix (NFLX) upgraded to Overweight from Equal Weight at Evercore
SanDisk (SNDK) upgraded to Market Perform from Underperform at BMO Capital
Triple-S (GTS) upgraded to Buy from Neutral at Citigroup
Zimmer (ZMH) upgraded to Outperform from Neutral at Credit Suisse
AK Steel (AKS) downgraded to Sell from Neutral at UBS
athenahealth (ATHN) downgraded to Market Perform from Outperform at Raymond James
Bon-Ton Stores (BONT) downgraded to In-Line from Outperform at Imperial Capital
Bonanza Creek (BCEI) downgraded to Hold from Buy at Wunderlich
CoreSite Realty (COR) downgraded to Hold from Buy at Jefferies
Crosstex Energy (XTXI) downgraded to Sector Perform from Outperform at RBC Capital
CubeSmart (CUBE) downgraded to Market Perform from Strong Buy at Raymond James
Digital Realty (DLR) downgraded to Hold from Buy at Jefferies
Extra Space Storage (EXR) downgraded to Outperform from Strong Buy at Raymond James
Federal Signal (FSS) downgraded to Neutral from Speculative Buy at Global Hunter
Forest Oil (FST) downgraded to Sell from Neutral at Goldman
Forest Oil (FST) downgraded to Underweight from Equal Weight at Morgan Stanley
Gap (GPS) downgraded to Market Perform from Outperform at BMO Capital
Marriott Vacations (VAC) downgraded to Neutral from Buy at SunTrust
Nokia (NOK) downgraded to Sell from Buy at Nordea
North American Palladium (PAL) downgraded to Neutral from Outperform at Credit Suisse
Public Storage (PSA) downgraded to Market Perform from Outperform at Raymond James
Reliance Steel (RS) downgraded to Neutral from Buy at UBS
Ruckus Wireless (RKUS) downgraded to Neutral from Buy at Goldman
Seadrill (SDRL) downgraded to Neutral from Overweight at JPMorgan
Sonic (SONC) downgraded to Underweight from Equal Weight at Barclays
Sovran Self Storage (SSS) downgraded to Market Perform at Raymond James
Synageva (GEVA) downgraded to Market Perform from Outperform at Leerink
U.S. Steel (X) downgraded to Neutral from Buy at UBS
Wisdom Tree (WETF) downgraded to Neutral from Buy at BofA/Merrill
Zions Bancorp (ZION) downgraded to Neutral from Buy at Citigroup
Altera (ALTR) initiated with a Buy at Drexel Hamilton
Analog Devices (ADI) initiated with a Buy at Drexel Hamilton
Applied Optoelectronics (AAOI) initiated with a Buy at Roth Capital
Auxilium (AUXL) initiated with an Outperform at JMP Securities
BioSpecifics (BSTC) initiated with an Outperform at JMP Securities
Broadcom (BRCM) initiated with a Hold at Drexel Hamilton
Clean Harbors (CLH) initiated with a Buy at KeyBanc
Enzymotec (ENZY) initiated with a Buy at BofA/Merrill
Enzymotec (ENZY) initiated with a Buy at Canaccord
Enzymotec (ENZY) initiated with a Hold at Jefferies
Linear Technology (LLTC) initiated with a Buy at Drexel Hamilton
Micron (MU) initiated with a Buy at Drexel Hamilton
Qualcomm (QCOM) initiated with a Buy at Drexel Hamilton
RingCentral (RNG) initiated with a Buy at Goldman
RingCentral (RNG) initiated with an Overweight at JPMorgan
Texas Instruments (TXN) initiated with a Buy at Drexel Hamilton
TripAdvisor (TRIP) initiated with an Outperform at Credit Suisse
Violin Memory (VMEM) initiated with a Buy at Deutsche Bank
Violin Memory (VMEM) initiated with a Neutral at RW Baird
Violin Memory (VMEM) initiated with an Equal Weight at Barclays
Violin Memory (VMEM) initiated with an Overweight at JPMorgan
Microsemi (MSCC) to buy Symmetricom (SYMM) for $7.18 per share, a transaction value of about $230M
Netflix (NFLX) expects to double original content investment in 2014
Said not interested in bidding on live sports programming
Sees very little potential lift from new gaming consoles
CNOOC (CEO) announced successful $700M bid (PBR, RDSA,TOT) for Libra Field in Brazil
TJX (TJX) to raise long-term store growth estimates, raise TJX Europe long-term outlook
Martha Stewart Living (MSO), J.C. Penney (JCP) announced revised partnership agreement
Kohl's (KSS) reported stores to open on Thanksgiving Day at 8 p.m.
Companies that beat consensus earnings expectations last night and today include:
CIT Group (CIT), Centene (CNC), DuPont (DD), TAL Education (XRS), Helix Energy (HLX), IDEX Corp. (IEX), Cathay General (CATY), Wilshire Bancorp (WIBC), Texas Instruments (TXN), Hexcel (HXL), W. R. Berkley (WRB), Illumina (ILMN), VMware (VMW), Netflix (NFLX)
Companies that missed consensus earnings expectations include:
Whirlpool (WHR), Novartis (NVS), Rent-A-Center (RCII), PLX Technology (PLXT), Discover (DFS)
Companies that matched consensus earnings expectations include:
Healthstream (HSTM), BancorpSouth (BXS), Forward Air (FWRD), Computer Task Group (CTG), Sonic (SONC)
- Options Clearing Corp., that handles all U.S. options trading, was hit with a wide-ranging critique of the way it manages risk and handles compliance, following an examination by the SEC. Regulators found flaws in the way it prepares for market freeze-ups and measures financial risks facing its members,the Wall Street Journal reports
- The next big IPO, from Alibaba Group Holdings (ALBCF), cleared a key hurdle to list its shares in the U.S. The firm received written confirmation from the New York Stock Exchange (NYX) and the Nasdaq (NDAQ) that it could list its shares on those platforms, the Wall Street Journal reports
- PSA Peugeot Citroen (PEUGY) will remain French, Industry Minister Arnaud Montebourg said today, days after sources said the loss-making firm was in talks with China's Dongfeng and the French government over a capital increase, Reuters reports
- Consumer goods group Reckitt Benckiser (RBGPY) is reviewing options for its pharmaceuticals unit, effectively putting up for sale its prescription medicine for heroin addiction, which faces cheap, copycat competition, Reuters reports
- J.C.Penney (JCP), its shares already under pressure as sales slump, has been forced to fend off anonymous attacks on Twitter. The company has denied two Twitter posts saying it had hired a bankruptcy attorney and had lost access to credit in Canada, Bloomberg reports
- Starbucks (SBUX) wants to apply Web technology to its own operations by networking coffee makers, refrigerators and other appliances. Over the next year, Starbucks said it plans to double the number of its Clover coffee-brewing machines, which connect to the cloud and track customer preferences, Bloomberg reports
Guidewire Software (GWRE) files to sell 6.5M shares of common stock
LaSalle Hotel (LHO) files to sell 6.7M shares of common stock
Oxygen Biotherapeutics (OXBT) to issue 3.4M common shares in private placement
Realty Income (O) files to sell 6.5M shares of common stock
Coliseum Capital reports 6.1% passive stake in Jamba (JMBA)
Millennium reports 5.1% passive stake in Spectrum (SPPI)
Steadfast Capital reports 5.07% passive stake in Zynga (ZNGA)