Frontrunning: November 22

  • Wonder why: JPMorgan plans to keep pay roughly flat from last year (Reuters) - maybe this: Charles Schwab Warns "We Are In A Manipulated Market"

  • Democrats overturn filibuster rule, increasing Obama’s power (FT)

  • Day JFK Died We Traded Through Tears as NYSE Shut (BBG)

  • When even dictators snub Obama - Afghanistan rejects U.S. call for quick security deal (Reuters)

  • Obama Plunges in Investor Poll as Stocks Make New Highs (BBG)

  • Iran, six powers struggle to overcome snags in nuclear talks (Reuters)

  • Derision for China’s ‘rejuvenation index’ (FT)

  • Bottom is in: Paulson Said to Inform Clients He Won’t Add More to Gold (BBG)

  • German business sentiment rebounds strongly (WSJ)

  • WTO on verge of global trade pact (FT)

  • And confirming that: Gold Analysts Most Bearish Since June on Fed Taper (BBG)

  • Indonesia, Australia spy claim tension spreads to corporate world (Reuters)

  • Blame Rich, Overeducated Elites as Our Society Frays (BBG)

  • Bank of America Staff Quizzed as Coroner Probes Intern Death (BBG)


Overnight Media Digest


* A bitterly divided Senate voted Thursday to eliminate filibusters for most presidential nominees, a momentous and politically risky step that limits the ability of Republicans to block President Obama's choices for executive-branch and most judicial posts.

* Sales of convertible bonds are booming, as investors seeking to benefit from the roaring U.S. stock rally rush to purchase debt that can convert into shares.

* Charter Communications is nearing an agreement with banks to borrow money for a bid for Time Warner Cable , according to people familiar with the situation.

* The Dow industrials vaulted past another milestone as stocks closed above 16,000 for the first time, extending a record run fueled by optimism for a recovering global economy and continuing low interest rates.

* The U.S. plans to sell its remaining shares in General Motors by year-end, completing the final piece of the government's controversial bailout of the nation's largest auto maker.

* The Financial Industry Regulatory Authority is highlighting a fast-track program it began earlier this year to go after what it calls "high-risk brokers."

* Janet Yellen's confirmation as the next Federal Reserve chief became a virtual lock Thursday when a Senate committee approved her nomination and Senate Democrats eased the confirmation process for most presidential nominees.

* After 15 months of appeals and an eight-day retrial, a dispute between Apple Inc and Samsung Electronics Ltd over smartphone patents has come nearly full circle.

* UBS AG has reached an immunity deal with European Union antitrust authorities that will spare the giant Swiss bank from further fines for manipulation of benchmark interest rates, according to people familiar with the matter.



Several big banks including Barclays, Citigroup and Royal Bank of Scotland have banned traders from some online chat rooms in response to investigations into alleged collusion between dealers over key financial market benchmark rates.

Goldman Sachs said on Thursday it did not suffer a loss in its currencies business in the third quarter, in an attempt to reassure investors after reports that it had suffered more than $1 billion in trading losses.

Activist investor Dan Loeb, who is pushing for change at Sony, has revealed another $1 billion plus position in Japan's SoftBank.

The World Trade Organisation is poised to seal the first global trade deal for more than a decade, in a rare victory for the body, whose struggle to secure an international pact has increasingly undermined its relevance.

Spotify has raised about $250 million in a new funding round valuing the Swedish digital music service at more than $4 billion.

The U.S. Federal Communications Commission said it was considering plans to do away with the 'outdated' ban on using cell phones during flights.



* The Federal Communications Commission said on Thursday that it would consider changing its rules to permit the use of cellphones and other wireless-data devices during airline flights. If approved, the change is certain to delight some passengers but frustrate many others.

* Nearly 80,000 people have enrolled in health plans through California's online marketplace, at a rate of several thousand a day in November - a sizable increase over a month ago.

* A jury on Thursday said that Samsung Electronics would have to pay Apple $290 million more in damages for violating patents, putting an end to one chapter in the long-running patent struggle between the two tech companies.

* The number of Americans filing new claims for unemployment benefits fell sharply last week and a gauge of factory activity hit an eight-month high in early November, hinting at some strength in the economy.

* Officials say many predatory lenders have steadily found ways around the Military Lending Act, a law that was meant to stop them.

* Janet Yellen on Thursday moved closer toward becoming the first woman to lead the Federal Reserve Board when the Senate Banking Committee sent her nomination to the full Senate with a 14-8 vote.

* Fashion retailer Vince Holding priced its stock sale at $20 a share, a dollar above its expected range. At that price, investors valued the clothing store chain at $726 million.

* A tax proposal released on Thursday by the chairman of the Senate Finance Committee, Max Baucus, addresses a topic that tends to make my students' eyes glaze over: cost recovery.

* SAC's chief financial officer said that portfolio managers were rewarded special "Cohen tag bonuses" for ideas that translated into windfall gains.




* Canadian Prime Minister Stephen Harper is denying any knowledge of a one-time plan for the Conservative Party to repay Mike Duffy's expense claims, even though police documents suggest the Prime Minister gave some sort of approval for arrangements with Duffy at the time the party payment was being negotiated.

* The U.S. government plans to sell its remaining General Motors Co shares by the end of the year, an announcement that helped the two Canadian provincial governments that joined Washington in bailing out GM move closer to breaking even on their investment.

Reports in the business section:

* Canada is giving U.S. discounter Target Corp the cold shoulder, and the snub is dragging down the retailer's overall results.

* Saudi Prince al-Waleed bin Talal, who was in Toronto last week to meet with hotel executives, is pressing Four Seasons Hotels Inc and the parent company of Fairmont Hotels & Resorts Inc to look at options such as merging or going public.


* Just three days after having his mayoral powers sharply restricted, a frustrated Rob Ford suggested to his budget chief that he thinks the "gravy train" is rolling back into Toronto city hall.

* A police investigation that four years ago saw allegations that key players in the Ontario justice system were conspiring to obstruct justice has fizzled out with admissions that the police investigators themselves were routinely breaking the law.


* When Cliffs Natural Resources suspended the Ring of Fire project that had promised to bring jobs and prosperity to the city of Thunder Bay, it proved what local authorities already know: Economic growth in the mining industry is hard to predict and even harder to plan for.

* The dramatic restructuring underway at Canadian Pacific has been a boon for investors but appears to be ruffling the feathers of some of the railway's customers.





- The reform of

capital market should stick to the direction of marketisation and

internationalisation, said Xiao Gang, chairman of China Securities

Regulatory Commission. It is a priority to enhance the competitiveness

of the financial institutions, he added.

- The property market

will be regulated through the development of comprehensive data systems

in the future, said Wang Juelin, a fellow of the policy research centre

under the ministry of Housing and Urban-Rural Development of the China.



The rate of industrial capacity utilisation in China in the first half

of 2013 stood at 78 percent on average, the lowest since the fourth

quarter of 2009, the National Bureau of Statistics said. Analysts

believe the rate will continue to dip if the government does not

intervene to cut overcapacity.

- A number of large state-owned

enterprises (SOEs) facing heavy losses are rushing to sell assets to

make up for their deficits and avoid getting delisted from the stock

market. However, analysts said the moves may not be enough to reverse

the long-term downturn faced by SOEs in sunset industries.



China will encourage spending via online channels and targets a

transaction volume of 18 trillion yuan ($2.95 trillion) by 2015 as the

country focuses on moving toward a consumption-powered economy from an

investment-driven one.



Fly On The Wall 7:00 AM Market Snapshot



Aruba Networks (ARUN) upgraded to Buy from Hold at Needham
Bon-Ton Stores (BONT) upgraded to Neutral from Underperform at Credit Suisse
Dollar Tree (DLTR) upgraded to Overweight from Equal Weight at Barclays
ECA Marcellus (ECT) upgraded to Outperform from Market Perform at Raymond James
GameStop (GME) upgraded to Buy from Hold at Needham
Insulet (PODD) upgraded to Outperform from Market Perform at Raymond James
PartnerRe (PRE) upgraded to Buy from Neutral at UBS
United Continental (UAL) upgraded to Buy from Neutral at Goldman
United Financial (UBNK) upgraded to Buy from Neutral at Sterne Agee
VeriFone (PAY) upgraded to Buy from Hold at Jefferies
Yum! Brands (YUM) upgraded to Buy from Hold at Deutsche Bank


Abercrombie & Fitch (ANF) downgraded to Market Perform from Outperform at Wells Fargo
Everest Re (RE) downgraded to Neutral from Buy at UBS
Gogo (GOGO) downgraded to Neutral from Overweight at JPMorgan
Liquidity Services (LQDT) downgraded to Neutral from Buy at Janney Capital
Nucor (NUE) downgraded to Market Perform from Outperform at Wells Fargo
Sappi Ltd. (SPP) downgraded to Underperform from Neutral at Credit Suisse
Take-Two (TTWO) downgraded to Market Perform from Outperform at Cowen
Target (TGT) downgraded to Underperform from Neutral at BofA/Merrill
U.S. Steel (X) downgraded to Underperform from Market Perform at Wells Fargo
Violin Memory (VMEM) downgraded to Hold from Buy at Deutsche Bank
Violin Memory (VMEM) downgraded to Neutral from Overweight at JPMorgan


AMC Networks (AMCX) initiated with a Buy at Goldman
Bonanza Creek (BCEI) initiated with a Hold at MLV & Co.
Carrizo Oil & Gas (CRZO) initiated with a Buy at MLV & Co.
Covanta (CVA) initiated with an In-Line at Imperial Capital
EPL Oil & Gas (EPL) initiated with a Hold at MLV & Co.
Energy XXI (EXXI) initiated with a Buy at MLV & Co.
Gaming and Leisure Properties (GLPI) initiated with an Outperform at RBC Capital
Gulfport Energy (GPOR) initiated with a Hold at MLV & Co.
Halcon Resources (HK) initiated with a Hold at MLV & Co.
Midstates Petroleum (MPO) initiated with a Buy at MLV & Co.
PDC Energy (PDCE) initiated with a Buy at MLV & Co.
QIWI (QIWI) initiated with a Buy at Goldman
Rackspace (RAX) initiated with a Neutral at DA Davidson
Sanchez Energy (SN) initiated with a Buy at MLV & Co.
Silicon Graphics (SGI) initiated with a Neutral at DA Davidson
Silicon Motion (SIMO) initiated with a Buy at BofA/Merrill
Stone Energy (SGY) initiated with a Buy at MLV & Co.
Stonegate Mortgage (SGM) initiated with an Overweight at Barclays
Super Micro Computer (SMCI) initiated with a Buy at DA Davidson
Teleflex (TFX) initiated with a Buy at Brean Capital
Tribune Co. (TRBAA) initiated with an Outperform at Oppenheimer
Virtus Investment Partners (VRTS) initiated with a Neutral at Goldman
ZELTIQ Aesthetics (ZLTQ) initiated with a Buy at Cantor


Volkswagen (VLKAY) to invest EUR 84.2B in automotive unit over five years
Wal-Mart (WMT) lowered free shipping minimum for holidays, matches Amazon (AMZN)
Intel (INTC) sees PC group FY14 revenue down in mid-single digits, Bloomberg reports
Novartis (NVS) announced $5B share repurchase program
Gap (GPS) announced $1B share repurchase authorization, sees Q4 results negatively impacted from foreign currency headwinds
Kaman (KAMN) announced new agreement with Boeing (BA)
UPS (UPS) to raise rates an average net of 4.9% for 2104
Williams (WMB) expects to increase dividend in FY14, FY15 by 20%
Boyd Gaming (BYD) to begin online gaming testing in New Jersey


Companies that beat consensus earnings expectations last night and today include:
Berry Plastics (BERY), Mentor Graphics (MENT), Aruba Networks (ARUN), Marvell (MRVL), Splunk (SPLK), Haynes (HAYN), Autodesk (ADSK), Intuit (INTU), Gap (GPS)

Companies that missed consensus earnings expectations include:
The Fresh Market (TFM), Textura (TXTR), Violin Memory (VMEM)

Companies that matched consensus earnings expectations include:
Geospace (GEOS), Natural Grocers (NGVC), Ross Stores (ROST), Pandora (P)


  • Under pressure from Washington to crack down on rogue stockbrokers, the Financial Industry Regulatory Authority is highlighting a fast-track program it began earlier this year to go after what it calls "high-risk brokers," the Wall Street Journal reports

  • Federal investigators are probing a subsidiary of Caterpillar (CAT) to determine whether it was dumping train parts into the ocean near the Port of Long Beach, CA, as part of a possible scheme to bill railroad companies for unneeded repairs, sources say, the Wall Street Journal reports

  • Many prominent managers at the Reuters 2014 Global Investment Outlook Summit believe the record-setting run-up in U.S. stocks is due for a reckoning but acknowledge that ample liquidity could push equities higher regardless of fears, Reuters reports

  • Delta Air Lines (DAL) said it would not allow cellphone use even if the FCC approves it, citing an "overwhelming sentiment" in customer feedback against voice calls in flight. United Continental (UAL) and Southwest Airlines (LUV) also said their customers have expressed concerns, Reuters reports

  • JPMorgan Chase’s (JPM) record $13B deal to end mortgage bond probes has terms that undermine U.S. efforts to reduce taxpayer support of the market, according to BlackRock (BLK), Bloomberg reports

  • Banks should avoid large acquisitions “until the dust settles” from deals done during the financial crisis, U.S. Bancorp (USB) CEO Richard Davis said, citing costs that can come years later, Bloomberg reports


Agree Realty (ADC) files to sell 1.65M shares of common stock
Cache (CACH) files to sell 3.56M common shares for holders
Hi-Crush Partners (HCLP) files to sell 708k shares of common units
Ideal Power (IPWR) 3M share IPO priced at $5.00
Luxoft (LXFT) 2.8M share Secondary priced at $34.00
NTELOS (NTLS) files to sell 1.5M shares of common stock for holders
National Health Investors (NHI) 4.5M share Secondary priced at $57.00
Nielsen (NLSN) files to sell 30M shares of common stock for holders
Nordic American Tanker (NAT) files to sell $65M in common stock
RiT Technologies (RITT) 3M share Secondary priced at $2.00
Sungy Mobile (GOMO) 7M share IPO priced at $11.22

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