Frontrunning: November 8
- Fed Anxiety Rises as QE Raises Risk of Loss With Political Cost (BBG)
- Iran Nuclear Deal Expected as Early as Friday (WSJ)
- Israel rejects mooted interim Iran nuclear deal, Kerry heads to talks (Reuters)
- JPMorgan Banker Backed $200 Million Madoff Loan in 2008 (BBG)
- Unleashing the food nazis - FDA Says Trans Fats Aren't Safe in Food (WSJ)
- Draghi Aggression Shows Pledges Backed by Rate Surprise (BBG)
- S&P Cuts France's Credit Rating by One Notch to Double-A (WSJ)
- S&P criticises France’s high tax rates for stifling growth (FT)
- Payroll Gains in U.S. Probably Cooled Amid Government Shutdown (BBG)
- What to Watch for in October’s Jobs Report (WSJ)
- US spent $2bn on furloughed workers (FT)
- Snowden persuaded other NSA workers to give up passwords - sources (Reuters)
- Reno Better Than Manhattan for Buyers Demanding Yield (BBG)
- Super Typhoon Haiyan Slams Philippines With Category-5 Power (BBG)
Overnight Media Digest
* Iran and world powers expect to announce an initial deal as early as Friday to curb Tehran's nuclear program in exchange for an easing of sanctions, a step that would mark the first breakthrough in a decade.
* The FDA ruled for the first time that trans fats aren't generally considered safe in food, a sharp policy shift that could lead to banning them in baked goods and other foods.
* Thousands of middle-class Syrians are trying to get to Europe's northern countries to seek asylum, but many refugees are stuck in the continent's south.
* Twitter shares launched without incident Thursday, skirting the troubles that plagued rival Facebook in its debut last year and delivering the kind of hefty "pop" that investors in initial public offerings covet.
* Exports rebounded sharply in October from a September slump, in a potentially positive sign for the global economic outlook.
* Senators will press Janet Yellen on a number of issues during a confirmation hearing on her nomination to lead the Fed, but one likely topic is a matter over which she has no control: a key vacancy on the Fed board.
* The European Central Bank's action reflects heightened worries in Europe that dangerously low inflation threatens the region's tepid economic recovery.
* Gross domestic product grew at an annual rate of 2.8 percent in the third quarter, which was higher than economists expected, but consumer caution and political friction could be a drag in the coming months.
* Goldman Sachs Group Inc is known as Wall Street's smartest trading firm, but a dismal third quarter has raised questions on whether the firm needs to take bold steps to right the ship.
* Fairfax Financial said its partners in a $1 billion investment in smartphone maker BlackBerry include a Qatar-based sovereign wealth fund and several Canadian investment funds.
NEW BATTLE FOLLOWS HARD ON OBAMA WIN
Barack Obama returned to Washington on Wednesday after his electoral victory over Mitt Romney, braced for emergency negotiations with Congress over the budgetary impasse that threatens to send the U.S. economy back into recession.
CULT OF EQUITY KILLED OFF BY PENSION FUNDS
UK pension funds are holding more bonds than equities for the first time since the so-called cult of equity in the 1950s, say leading City fund managers.
MISSED DEBT TARGET TOPS BRITAIN'S AGENDA
Leading members of the coalition are in urgent talks about how to handle a failure to meet the government's public debt target as ministers move into the final month before the December 5 autumn statement.
EU HITS BACK AT IMF OVER AUSTERITY
Brussels' defence is part of an economic forecast that shows several eurozone countries - including France, Belgium and Spain - are on track to miss their EU-mandated deficit targets, meaning they may be forced to impose yet more austerity to get budgets back in line.
EUROPE FEARS U.S. ENERGY GAP
Europe's ability to compete against the US as a manufacturing centre is being damaged by rising energy costs as North America benefits from cheap natural shale gas, Germany's biggest companies have warned.
CANTAB HITS CAPACITY AS IT BUCKS TREND
Cantab Capital Partners, the Cambridge-based hedge fund set up by an astrophysicist and former Goldman Sachs partner, is to stop accepting new money after its assets under management doubled this year to $4.5 billion.
EADS OFFICES RAIDED IN BRIBERY PROBE
Several EADS offices in Germany were raided by German state prosecutors and police on Tuesday as part of an investigation into alleged bribes paid to smooth the sale of Eurofighter Typhoon fighter jets to Austria five years ago.
PEARSON IN CONFLICT OF INTERESTS PROBE
Pearson is being investigated in the UK over possible conflicts of interest within its role as both a publisher of textbooks and an issuer of academic qualifications, as regulators seek to ensure that schools buying its teaching resources do not get any unfair advantages.
NORDIC GROUPS TO SLASH HEADCOUNT
Three of the biggest companies in the Nordic region on Wednesday announced plans to slash thousands of jobs in a further sign that Europe's economic problems are catching up with businesses in what was perceived as a haven.
* The Royal Bank of Scotland agreed on Thursday to pay the U.S. Securities and Exchange Commission $153.7 million to settle charges that it misled investors into buying a risky mortgage-backed security offering, the latest move in a crackdown on mortgage practices that fueled the financial crisis.
* Twitter reached a valuation of $31.7 billion as it began trading on the New York Stock Exchange on Thursday, a figure the company will have to justify by showing a profit sooner rather than later.
* Federal safety investigators said they would review an accident in Tennessee in which a Tesla Model S caught fire, the third such fire in recent weeks.
* Dylan Davies, a security officer hired to help protect the United States Special Mission in Benghazi, Libya, gave the FBI an account of the night that terrorists attacked the mission on Sept. 11, 2012 that contradicts a version of events he provided in a recently published book and in an interview with the CBS News program "60 Minutes."
* The White House has thrown its weight behind a proposal to raise the federal minimum wage to at least $10 an hour.
* Walt Disney ended its fiscal year in blockbuster style on Thursday, reporting solid growth in fourth-quarter profit, unveiling a substantial Netflix deal and savoring a stock price that has climbed 35 percent over the last 12 months.
* Federal safety officials missed or ignored warning signs before four deadly crashes involving heavy trucks or intercity buses in the last year, the National Transportation Safety Board said on Thursday.
* The White House on Thursday nominated Stefan Selig, a top executive at Bank of America, to a senior Commerce Department post, a rare appointment of a Wall Street banker by the Obama administration.
* A combination of Canadian, American and Qatari investors are helping to finance Fairfax Financial Holding's planned $1 billion investment in struggling smartphone maker BlackBerry , a filing shows.
* Salix Pharmaceuticals said Thursday that it would acquire Santarus, a maker of gastrointestinal medications like Zegerid and other specialty drugs, for $2.6 billion in cash, or $32 a share.
THE GLOBE AND MAIL
* Canadian investors are lining up to provide 80 percent of the $1 billion in new financing for BlackBerry Ltd with Brookfield Asset Management Inc and a unit of Power Financial Corp headlining the list of institutions joining Fairfax Financial Holdings Ltd in its bet that the smartphone maker will succeed.
* Federal New Democrats provoked a debate about Keystone XL pipeline on Thursday in the Commons with a motion that opposes the controversial project on the grounds that it will send oil-industry processing jobs to the United States and therefore "is not in Canada's best interests."
Reports in the business section:
* The introduction of new two-year cellphone contracts slowed subscriber growth for some of Canada's biggest carriers during the back-to-school season, a sign that consumers are spurning those higher-priced plans even before they become the industry standard in December.
* Both of Canada's most widely traded insurers, Manulife Financial Corp and Sun Life Financial Inc, as well as Industrial Alliance Insurance beat analysts' expectations for the quarter as they reported in the last two days, while Great-West Lifeco Inc met consensus.
* Veterans injured in the line of duty could soon find themselves at the front of the line when it comes to federal job openings thanks to a proposal unveiled by the Conservative government on Thursday.
* U.S. investors are readying legal action against the Canadian government over Quebec's resistance to Strateco Resources Inc's Matoush uranium mining project, the company's chief executive says.
* The new interim chief executive is worth a lot to struggling BlackBerry Ltd - enough to warrant up to $3 million in yearly salary, and 13 million restricted shares.
* France's Total SA is upsizing its flagship Joslyn oil sands mine in northern Alberta by at least 50 percent in a bid to spread costs thin over larger volumes, the chief executive of its Canadian arm says.
CHINA SECURITIES JOURNAL
- The simulation of CSI 300 stock index options contracts trading started on Friday. The move indicates the introduction of stock index options is not far off, said unnamed sources.
- China Merchants Property Development Co Ltd approved a 6.5 billion yuan ($1.07 billion) A-share financing program on Thursday. The transaction is still subject to regulatory approval.
SHANGHAI SECURITIES NEWS
- The reforms in China's Shanghai free trade zone could be extended nationwide after three years, said Ai Baojun, Shanghai's deputy major, on Thursday at a round table forum.
- In Shanghai, air pollution on Thursday rose to a PM2.5 density, nearly four times the national limit. It peaked at a hazardous level of about 270 micrograms per cubic meter, four times the national limit of 75.
- Certain local authorities in China engage in protectionist behaviour, by for example issuing official documents to 'protect' local products, said the paper which acts as the mouthpiece of the Chinese government. It is important to reform this attitude in order to better develop the market, it said.
Fly On The Wall 7:00 AM Market Snapshot
AkzoNobel (AKZOY) upgraded to Overweight from Neutral at JPMorgan
Alaska Air (ALK) upgraded to Equal Weight from Underweight at Barclays
Amarin (AMRN) upgraded to Buy from Neutral at Citigroup
Aspen Insurance (AHL) upgraded to Buy from Neutral at UBS
BlackRock Kelso (BKCC) upgraded to Market Perform from Underperform at Wells Fargo
Brandywine Realty (BDN) upgraded to Neutral from Underperform at BofA/Merrill
Broadridge (BR) upgraded to Neutral from Underweight at JPMorgan
Concho Resources (CXO) upgraded to Buy from Neutral at SunTrust
Corporate Office Properties (OFC) upgraded to Buy from Neutral at BofA/Merrill
Eastman Chemical (EMN) upgraded to Overweight from Neutral at JPMorgan
Peabody Energy (BTU) upgraded to Buy from Neutral at Goldman
Republic Airways (RJET) upgraded to Overweight from Equal Weight at Evercore
Salix (SLXP) upgraded to Buy from Neutral at Janney Capital
Scotts Miracle-Gro (SMG) upgraded to Market Perform from Underperform at BMO Capital
SolarWinds (SWI) upgraded to Buy from Hold at Needham
AECOM Technology (ACM) downgraded to Neutral from Buy at UBS
AVG Technologies (AVG) downgraded to Neutral from Overweight at JPMorgan
Apollo Global (APO) downgraded to Neutral from Buy at Citigroup
Deere (DE) downgraded to Neutral from Buy at BofA/Merrill
Health Net (HNT) downgraded to Market Perform from Outperform at Wells Fargo
Nationstar (NSM) downgraded to Equal Weight from Overweight at Evercore
Nationstar (NSM) downgraded to Equal Weight from Overweight at Morgan Stanley
Santarus (SNTS) downgraded to Neutral from Overweight at Piper Jaffray
Tremor Video (TRMR) downgraded to Hold from Buy at Canaccord
United Continental (UAL) downgraded to Underweight from Equal Weight at Barclays
Whole Foods (WFM) downgraded to Neutral from Buy at Goldman
Antero Resources (AR) initiated with a Buy at Jefferies
Brinker (EAT) initiated with an Outperform at RBC Capital
Burger King (BKW) initiated with a Sector Perform at RBC Capital
C&J Energy (CJES) initiated with a Buy at Guggenheim
CNH Industrial (CNHI) initiated with an Underperform at BofA/Merrill
Chipotle (CMG) initiated with an Outperform at RBC Capital
Community Health (CYH) initiated with an Outperform at FBR Capital
Darden (DRI) initiated with a Sector Perform at RBC Capital
Dunkin' Brands (DNKN) initiated with an Outperform at RBC Capital
EchoStar (SATS) initiated with an Outperform at Raymond James
HCA Holdings (HCA) initiated with an Outperform at FBR Capital
Health Management (HMA) initiated with a Market Perform at FBR Capital
LabCorp (LH) initiated with a Market Perform at FBR Capital
LifePoint Hospitals (LPNT) initiated with a Market Perform at FBR Capital
McDonald's (MCD) initiated with a Sector Perform at RBC Capital
Noodles & Company (NDLS) initiated with a Sector Perform at RBC Capital
Peugeot (PEUGY) initiated with a Reduce at Nomura
Quest Diagnostics (DGX) initiated with a Market Perform at FBR Capital
Starbucks (SBUX) initiated with an Outperform at RBC Capital
Tenet Healthcare (THC) initiated with a Market Perform at FBR Capital
Texas Roadhouse (TXRH) initiated with an Outperform at RBC Capital
Twitter (TWTR) initiated with a Neutral at Wedbush
Universal Health (UHS) initiated with an Outperform at FBR Capital
Wendy's (WEN) initiated with a Sector Perform at RBC Capital
Yum! Brands (YUM) initiated with an Outperform at RBC Capital
UBS (UBS) paid $3.76B to buy back StabFund from Swiss National Bank
S&P lowered long-term ratings on France to 'AA'; outlook stable
Salix Pharmaceuticals (SLXP) to acquire Santarus (SNTS) for $32 per share in cash or $2.6B
Talisman Energy (TLM) announced C$1.5B all cash sale for portion of Montney position
NVIDIA (NVDA) announced additional $1B under stock repurchase plan
Disney (DIS) to release next Star Wars film in December, 2015
Advanced Semiconductor (ASX) to collaborate with Infineon (IFNNY) on auto product assembly
Liberty Property (LRY) to sell 97 properties for $705M
Groupon (GRPN) acquired Korea’s Ticket Monster for $260M
Ensign Group (ENSG) to spin-off real estate assets into REIT
Companies that beat consensus earnings expectations last night and today include:
Covidien (COV), Atwood Oceanics (ATW), Alamo Group (ALG), AVG Technologies (AVG), Molycorp (MCP), Franklin Covey (FC), NVIDIA (NVDA), Disney (DIS), CareFusion (CFN), Stifel Financial (SF), Groupon (GRPN), bebe stores (BEBE), priceline.com (PCLN), Air Lease (AL)
Companies that missed consensus earnings expectations include:
Atlas Resource Partners (ARP), Denison Mines (DNN), Bio-Rad (BIO), PharmAthene (PIP), Darling (DAR), Ensign Group (ENSG), Tallgrass Energy (TEP), Erickson Air-Crane (EAC), Allscripts (MDRX), Monster Beverage (MNST)
Companies that matched consensus earnings expectations include:
Great Plains Energy (GXP), Northern Oil and Gas (NOG), Demand Media (DMD), CTPartners (CTP)
- Declining sales of high-end cameras and lenses are raising an alarming question for companies like Canon (CAJ) and Nikon (NNOY): Could the proliferation of camera-enabled, app-heavy smartphones be crushing not only the simple point-and-shoot, but premium models as well? the Wall Street Journal reports
- Boeing (BA) warned that it could look to build its planned 777X jetliner outside Washington state, amid signs of union resistance to a proposed contract designed to keep the production work at the aerospace giant's traditional manufacturing base, the Wall Street Journal reports
- Coca-Cola (KO) will invest over $4B in China and build new plants between 2015 and 2017, to counter competition which is chipping away at its share of the country's $69.12B soft drinks market, Reuters reports
- A U.S. judge gave Southwest Airlines (LUV) permission to file a brief asking that US Airways Group (LCC) and American Airlines (AAMRQ) be required to give up take-off and landing slots at key U.S. airports should they merge, Reuters reports
- The longer the Federal Reserve continues its bond-buying stimulus, the higher the odds it will face a year without any money to give the Treasury after taxpayers received a record $88.4B profit in 2012, Bloomberg reports
- Lenovo Group (LNVGY), the largest maker of PCs, will triple the number of markets in which it sells smartphones by focusing on emerging economies where Apple’s (AAPL) iPhone is seen as too costly, Bloomberg reports
Addus HomeCare (ADUS) files to sell 4.95M shares of common stock for holders
Boise Cascade (BCC) 7M share Secondary priced at $22.50
CST Brands (CST) 13.1M share Secondary priced at $31.00
Constellium (CSTM) 17.5M share Secondary priced at $17.00
DURECT (DRRX) files to sell common stock
FalconStor (FALC) files to sell 13.17M shares of common stock for holders
Sprouts Farmers Markets (SFM) files to sell 22.5M shares of common stock for holders
Toll Brothers (TOL) 6.25M share Spot Secondary priced at $32.00
U.S. Silica (SLCA) files to sell 10.5M shares of common stock for holders
ZELTIQ Aesthetics (ZLTQ) 4.5M share Secondary priced at $13.00