Frontrunning: October 23
- Top China Banks Triple Debt Write-Offs as Defaults Loom (BBG)
- PBOC suspends open market operations again (Global Times)
- Eurozone bank shares fall after ECB outlines health check plan (FT)
- O-Care falling behind (The Hill)
- Key House Republican presses tech companies on Obamacare glitches (Reuters)
- J.P. Morgan Faces Another Potential Huge Payouta (WSJ)
- Yankees Among 10 MLB Teams Valued at More Than $1 Billion (BBG)
- Free our reporter, begs newspaper as China cracks down on journalists (Reuters)
- Peugeot Reviews Cost-Saving Alliance With GM (WSJ)
- Ex-RBS IB head Hourican to lead Bank of Cyprus (FT)
- Obama’s Uncertain Path Amid Syria Bloodshed (NYT)
- Boutique Moelis Weighs an IPO in Its Vision of Future (WSJ)
- Underwriters to Lend Twitter $1 Billion (WSJ)
Overnight Media Digest
* The delayed September jobs report clouded the outlook for the U.S. economy, creating a new obstacle for the Federal Reserve to wind down its controversial bond-buying program.
* Republican critics say Senator Mike Lee helped chart a doomed course that weakened the party's standing and hurt the Utah's economy.
* Investors are seeking at least $5.75 billion from JPMorgan in a bid to recover losses from mortgage-backed securities sold to them before the financial crisis, said people familiar with the talks.
* In 87 deals since 2006, Puerto Rico and its public agencies sold $61 billion of bonds, giving the tiny island more municipal debt per capita than any U.S. state. In the process, the territory paid Wall Street securities firms, lawyers and others about $1.4 billion.
* Online brokerage firm Charles Schwab Corp showed customers on its trading platform incorrect prices on certain fixed-income securities for about a week, the latest financial firm to suffer from technology glitches.
* The Securities and Exchange Commission is set to propose rules allowing entrepreneurs to tap large numbers of ordinary investors for small amounts of capital, advancing long-delayed "crowdfunding" provisions from last year's Jumpstart Our Business Startups Act.
* Billionaire investor Carl Icahn sold more than half his stake in Netflix Inc for nearly $1 billion in recent days, he disclosed on Tuesday, saying it was "time to take some chips off the table."
* Dutch lender Rabobank Groep NV is poised to pay close to $1 billion to settle allegations that it participated in a wide-ranging scheme to manipulate benchmark interest rates, according to people familiar with the matter.
* Daniel Loeb often makes headlines for publicly pitching his investment ideas. His new brainstorm: Get smaller. Loeb's Third Point LLC will return 10 percent of its $14 billion in assets to investors, according to a letter received by investors Tuesday and reviewed by The Wall Street Journal.
* New York Times Co's sale of the Boston Globe and Worcester Telegram & Gazette to Boston Red Sox owner John Henry has been stalled by an unsettled class-action lawsuit related to the Telegram & Gazette, Times Co said Tuesday.
Alibaba, China's No. 1 e-commerce firm, is considering listing on the London Stock Exchange after failing to convince Hong Kong regulators of the merits of its corporate governance concerns.
JPMorgan Chase could face a $6 billion fine from institutional investors to settle claims that it mis-sold mortgage-backed securities, according to people familiar with the matter.
Rabobank could face a near $1 billion fine from British and U.S. regulators looking to settle allegations that the Dutch lender helped manipulate benchmark interbank lending rates, three people familiar with the matter said.
A hedge fund with a reputation for aggressive campaigning to boost company performance has bought a 5 percent stake in the recently listed Royal Mail.
E-commerce company eBay said it would buy Shutl, a London-based same-day courier service, in order to take more control of product deliveries
* Figures for unemployment and job creation in October and November will be skewed by the temporary disappearance of hundreds of thousands of government workers and contractors, economists say.
* A Labor Department report showing lackluster hiring in September - 148,000 jobs - is expected to further put off the Federal Reserve's decision to reduce its stimulus efforts.
* Apple applications, which essentially duplicate Microsoft Office and used to cost $10 each, will now be free to anyone who buys a new Apple device.
* A federal judge has ruled that Goldman Sachs must pay the legal fees of a former computer programmer, Sergey Aleynikov, accused of stealing code from the bank.
* SAC Capital Advisors will close its London office and cut six portfolio management teams in the United States, the hedge fund's management revealed.
* Amazon.com Inc is expected to generate $75 billion in revenue this year by putting its customers first. Tuesday, in a very rare move, it put its bottom line first by tightening the requirements for one of its most popular shipping methods, Super Saver Shipping, which for over a decade mailed items free as long as the order met a $25 threshold. The new threshold is $35.
* Federal gridlock over the debt ceiling could adversely affect the bottom lines of big Wall Street banks and firms, a report by Thomas DiNapoli, the New York State comptroller, asserts.
* The Internal Revenue Service plans to delay the start of tax-filing season by a week or two because of the government shutdown, the agency said on Tuesday. But taxpayers will still have to turn in their 2013 returns by April 15 as usual.
* A class-action suit by delivery workers at The Worcester Telegram & Gazette prompted a judge to issue a temporary injunction preventing the sale of The Boston Globe.
* A recent court case has given the federal government a chance to sidestep Congress and eliminate private equity's billion-dollar tax break. The question is whether the Obama administration takes up the fight.
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
- Beijing is expected to roll out new policies to curb the rapid rise in home prices in the fourth quarter after China's house prices rose 9.1 percent in September from a year earlier, the sharpest rise since January 2011, the newspaper reported without citing sources.
SHANGHAI SECURITIES JOURNAL
- Ninety-two companies have listed on the "E-board" in Shanghai, an electronic over-the-counter exchange for trading of non-listed companies. IPOs in China remain frozen.
- China will launch its new egg futures contract on Nov. 11 on the Dalian Commodities Exchange, sources said.
21ST CENTURY BUSINESS HERALD
- The province of Sichuan has unleashed a stimulus spending package of 4.26 trillion yuan ($699.11 billion) for infrastructure, environmental protection and other investment projects over 2013-2014.
- A joint operation by U.S. and Chinese police has resulted in the closure of four child pornography sites in China and the arrest of 180 suspects in 30 provinces, with an additional 19 detained in Hong Kong.
- A top pension official voiced support for raising the retirement age to deal with strain placed on pension funds by an aging population.
- The city of Harbin is shut for a second day due to heavy pollution, with one station still showing a PM2.5 reading of 367, down from Monday's reading of 1,000 but still as much as 15 times the levels deemed safe by the World Health Organisation.
- A total of 151,350 graft cases and 32 ministry-level officials were investigated for corruption from January 2008 to August 2013, according to a report from the Supreme People's Procuratorate released on Tuesday.
Fly On The Wall 7:00 AM Market Snapshot
BBCN Bank (BBCN) upgraded to Outperform from Market Perform at BMO Capital
BBCN Bank (BBCN) upgraded to Outperform from Market Perform at Raymond James
C.R. Bard (BCR) upgraded to Neutral from Sell at Goldman
C.R. Bard (BCR) upgraded to Overweight from Neutral at Piper Jaffray
Commercial Vehicle Group (CVGI) upgraded to Overweight from Neutral at JPMorgan
Consolidated Edison (ED) upgraded to Neutral from Sell at UBS
DuPont (DD) upgraded to Overweight from Neutral at JPMorgan
Eaton Vance (EV) upgraded to Outperform from Underperform at Credit Suisse
Fossil (FOSL) upgraded to Overweight from Neutral at Piper Jaffray
Gentex (GNTX) upgraded to Outperform from Neutral at RW Baird
Medtronic (MDT) upgraded to Buy from Hold at Deutsche Bank
Morgans Hotel (MHGC) upgraded to Buy from Neutral at MKM Partners
NuStar Energy (NS) upgraded to Equal Weight from Underweight at Morgan Stanley
NuStar GP Holdings (NSH) upgraded to Equal Weight from Underweight at Morgan Stanley
Papa John's (PZZA) upgraded to Buy from Neutral at Janney Capital
Peoples Bancorp (PEBO) upgraded to Outperform from Market Perform at Raymond James
Syngenta (SYT) upgraded to Overweight from Neutral at HSBC
ARM Holdings (ARMH) downgraded to Neutral from Buy at UBS
American Campus (ACC) downgraded to Neutral from Buy at UBS
American Equity (AEL) downgraded to Market Perform from Strong Buy at Raymond James
Centene (CNC) downgraded to Sell from Neutral at Citigroup
Cimarex Energy (XEC) downgraded to Market Perform from Outperform at FBR Capital
Coach (COH) downgraded to Neutral from Buy at BofA/Merrill
Cree (CREE) downgraded to Hold from Buy at Needham
EOG Resources (EOG) downgraded to Market Perform from Outperform at FBR Capital
Eagle Bancorp (EGBN) downgraded to Market Perform from Outperform at Keefe Bruyette
Exelon (EXC) downgraded to Underperform from Hold at Jefferies
Federated Investors (FII) downgraded to Neutral from Buy at Citigroup
Infinity Pharmaceuticals (INFI) downgraded to Neutral from Buy at UBS
Integra LifeSciences (IART) downgraded to Underweight at Morgan Stanley
Lannett (LCI) downgraded to Perform from Outperform at Oppenheimer
Matador (MTDR) downgraded to Hold from Buy at Canaccord
Modine Manufacturing (MOD) downgraded to Underweight from Neutral at JPMorgan
Monarch Casino (MCRI) downgraded Hold at Brean Capital
National CineMedia (NCMI) downgraded to Neutral from Overweight at JPMorgan
Panera Bread (PNRA) downgraded to Hold from Buy at KeyBanc
Regency Energy Partners (RGP) downgraded to Underweight at Morgan Stanley
Regions Financial (RF) downgraded to Neutral from Buy at SunTrust
Resolute Energy (REN) downgraded to Market Perform from Outperform at FBR Capital
Spectra Energy Partners (SEP) downgraded to Underweight at Morgan Stanley
Symmetricom (SYMM) downgraded to Neutral from Buy at B. Riley
Twin Disc (TWIN) downgraded to Neutral from Outperform at RW Baird
Ultra Petroleum (UPL) downgraded to Neutral from Buy at ISI Group
Waters (WAT) downgraded to Neutral from Buy at BofA/Merrill
Weight Watchers (WTW) downgraded to Neutral from Outperform at Credit Suisse
AOL (AOL) initiated with a Buy at BofA/Merrill
Expedia (EXPE) initiated with an Outperform at FBR Capital
HomeAway (AWAY) initiated with a Market Perform at FBR Capital
Liberty Media (LMCA) initiated with an Outperform at FBR Capital
Lifeway Foods (LWAY) initiated with an In-Line at Imperial Capital
MakeMyTrip (MMYT) initiated with a Market Perform at FBR Capital
NGL Energy Partners (NGL) initiated with a Neutral at Goldman
Orbitz (OWW) initiated with a Market Perform at FBR Capital
Pandora (P) initiated with a Market Perform at FBR Capital
PetSmart (PETM) initiated with a Neutral at ISI Group
priceline.com (PCLN) initiated with an Outperform at FBR Capital
Sirius XM (SIRI) initiated with an Outperform at FBR Capital
TripAdvisor (TRIP) initiated with a Market Perform at FBR Capital
Walker & Dunlop (WD) initiated with a Market Perform at Wells Fargo
American Realty (ARCP) acquired Cole Real Estate (COLE) for $11.2B or $14.59 per share
Twitter (TWTR) secured $1B credit line
Corning (GLW) announced strategic, financial agreements with Samsung (SSNLF)
Corning (GLW) announced additional $2B of share repurchases
Canadian National (CNI) announced two-for-one stock split, announced 15M share repurchase plan
Bill Barrett (BBG) announced $371M sale of West Tavaputs natural gas property
Broadcom (BRCM) sees cutting up to 1,150 employees in restructuring
Companies that beat consensus earnings expectations last night and today include:
W.R. Grace (GRA), Encana (ECA), JAKKS Pacific (JAKK), Wellpoint (WLP), Thermo Fisher (TMO), BE Aerospace (BEAV), Nabors Industries (NBR), TSYS (TSS), ACE Ltd. (ACE), Altera (ALTR), C.R. Bard (BCR), Corning (GLW), Broadcom (BRCM), Juniper (JNPR), iRobot (IRBT), Pzena Investment (PZN), Celestica (CLS), Amgen (AMGN), Cubist (CBST), RF Micro Devices (RFMD)
Companies that missed consensus earnings expectations include:
Hudson Valley (HVB), Flagstar Bancorp (FBC), Unisys (UIS), WesBanco (WSBC), Pacific Biosciences (PACB), Ziopharm (ZIOP), Abaxis (ABAX), Datalink (DTLK), FMC Technologies (FTI)
Companies that matched consensus earnings expectations include:
AmSurg (AMSG), Horace Mann (HMN), Waste Connections (WCN), Robert Half (RHI), Super Micro Computer (SMCI), Cree (CREE)
- As Blackstone Group (BX) prepares an IPO for Brixmor Property Group, investors and analysts are watching the deal to see what tone it sets for other Blackstone-led IPOs waiting in the wings. Blackstone is expected to take as many as four real-estate companies public over the next year, the Wall Street Journal reports
- Online brokerage firm Charles Schwab (SCHW) showed customers on its trading platform incorrect prices on certain fixed-income securities for about a week, the latest financial firm to suffer from technology glitches, the Wall Street Journal reports
- PSA Peugeot Citroen (PEUGY) said its alliance with GM (GM) may be reduced, as the troubled French carmaker posted a 3.7% quarterly revenue decline, Reuters reports
- Roche Holding (RHHBY) CEO Severin Schwan said he wouldn’t rule out a move into treatments for rare diseases. He wouldn't comment on whether the company was interested in buying Alexion Pharmaceuticals (ALXN) or BioMarin (BMRN), Reuters reports
- Warren Buffett (BRK.A), who invested over $11B in IBM (IBM), said he’s confident in the computer-service provider’s prospects after the stock slumped last week, Bloomberg reports
- Toyota Motor’s (TM) in-house lender is leveraging the automaker’s AA- credit rating and cash to offer low rates to customers. Toyota’s $37B cash pile and credit ratings that outrank GM (GM) and Ford (F), enable its Toyota Financial Services unit to offer more loans and take on riskier borrowers, Bloomberg reports
Cancer Genetics (CGIX) 2.86M share Secondary priced at $14.00
Crown Castle (CCI) 36M share Secondary priced at $74.00
Gigamon (GIMO) 5.1M share Secondary priced at $38.50
Guidewire Software (GWRE) 7.76M share Secondary priced at $48.75
OCZ Technology (OCZ) files to sell 13.48M shares of common stock for holders
Venaxis (APPY) files to sell $20M of common stock
Ziopharm (ZIOP) files to sell $50M in common stock