Frontrunning: December 3
- With website improved, Obama to pitch health plan (Reuters)
- Joe Biden condemns China over air defence zone (FT)
- Tally of U.S. Banks Sinks to Record Low (WSJ)
- Black Friday Weekend Spending Drop Pressures U.S. Stores (BBG)
- Cyber Monday Sales Hit Record as Amazon to EBay Win Shoppers (BBG)
- Ukraine's Pivot to Moscow Leaves West Out in the Cold (WSJ)
- Investment banks set to cut pay again despite rise in profits (FT)
- Worst Raw-Material Slump Since ’08 Seen Deepening (BBG)
- Democrats Face Battles in South to Hold the Senate (WSJ)
- Hong Kong reports 1st case of H7N9 bird flu (AP)
- In Fracking, Sand Is the New Gold (WSJ)
- UK construction expands at fastest pace in more than six years (BBG)
- Thai Politician Turned Protest Leader Vows to Uproot System (WSJ)
- Door opens to offshore accounts in trade zone (China Daily)
Overnight Media Digest
* The number of banking institutions in the United States has dwindled to its lowest level since at least the Great Depression, as a sluggish economy, stubbornly low interest rates and heightened regulation take their toll on the sector. (http://link.reuters.com/vug25v)
* Across the former Soviet Union, Moscow's increasingly tight embrace is forcing governments that had long sought to maneuver between Russia and the West to choose sides. (http://link.reuters.com/xug25v)
* The ability of Democrats to keep control of the Senate in 2014 will depend largely on elections in the southern states, where candidates are contending with the dismal approval ratings of President Obama and increased political pressure from the problem-ridden rollout of the health care law. (http://link.reuters.com/zug25v)
* Dow Chemical plans to shed at least $5 billion worth of low-margin businesses, including the products that sparked its creation more than a century ago. (http://link.reuters.com/dyg25v)
* Apple has acquired social-media analytics firm Topsy Labs for more than $200 million, according to people familiar with the matter. The startup specializes in data from Twitter. (http://link.reuters.com/fyg25v)
* Federal prosecutors are seizing cars and cash from those using straw buyers to acquire expensive new vehicles in the United States and export them to China, where the cars fetch much more. (http://link.reuters.com/gyg25v)
* As the five lead underwriters for Twitter Inc's IPO rolled out their first research reports on the stock, only two gave Twitter a ratings equivalent of "buy." (http://link.reuters.com/hyg25v)
* A federal appeals court ruling late Monday might spare BP Plc from making hundreds of millions of dollars in compensation payments stemming from its 2010 Gulf of Mexico oil spill. (http://link.reuters.com/jyg25v)
* Bank of America Corp and Freddie Mac said Monday they reached a settlement to resolve claims stemming from mortgage loans the bank sold to Freddie over the past decade, the latest in a string of large bank payouts. (http://link.reuters.com/myg25v)
* Elite New York law firm Cravath, Swaine & Moore LLP plans to pay its associate attorneys the same end-of-year bonuses it paid in 2012, reflecting a cautious mode after a year in which many big law firms are on track to make only modest revenue gains. Junior-most attorneys at Cravath will receive $10,000 and those with the most experience will get $60,000, according to an internal memo reviewed by The Wall Street Journal. (http://link.reuters.com/pyg25v)
* A top lieutenant to Bernard Madoff explained in detailed, often colorful testimony the lengths required to maintain the firm's massive Ponzi scheme, including one incident in which the staff put fake trading records into a refrigerator so an auditor wouldn't be able to tell they were still warm from having just been printed. (http://link.reuters.com/qyg25v)
An FT analysis reveals that the nine biggest investment banks are prepared to take pay cuts for the third time in three years. Investment banks would slash remunerations such as bonuses keeping in mind the interests of the shareholders.
Mediobanca is expected to announce the appointment of Barclays adviser Stefano Marsaglia as co-head of the bank's global corporate and investment banking unit with an eye to use its London office to expand operations in Europe.
The Pensions Regulator outlined on Tuesday a consultation paper on companies' approach on striking a balance between sustaining their business performance and funding their employees' retirement benefits.
International Data Corporation PC tracker says personal computer sales fall more than 10 percent and would be the most severe yearly contraction on record in 2013.
Former News Corp executive Peter Chernin has bought a stake in a specialist video streaming business Crunchyroll for about 100 million pounds.
Anglo-Australian mining group Rio Tinto pledged to cut capex by up to 20 per cent in each of the next two years as the company looks to woo investors.
* Government authorities are trying to choke off the supply of borrowers to online lenders that offer short-term loans with annual interest rates of more than 400 percent, the latest development in a broader crackdown on the payday lending industry.
* The rollout of President Obama's health care law may have deeply disappointed its supporters, but on at least one front, the Affordable Care Act is beating expectations: its cost.
* Between 2007 and 2009, Jon Horvath developed a regular routine as a trader at SAC Capital Advisors: obtaining confidential information about Dell Inc's financial results well before the computer company's quarterly disclosures. And those efforts, Horvath detailed for a jury on Monday in a Manhattan federal district courtroom, were made with the full knowledge of his boss, Michael Steinberg.
* On Monday, the Chernin Group acquired a majority stake in Crunchyroll, a San Francisco-based company that streams Japanese anime over the Internet. Terms of the deal were not announced, but a person briefed on the matter said the investment was worth a little less than $100 million. Existing management and TV Tokyo, another investor in Crunchyroll, will remain involved. Former News Corp executive, Peter Chernin, is the founder and chief executive of the Chernin Group.
* Goldman Sachs and JPMorgan Chase have finally overcome a regulatory rebuke that had been hanging over both banks since the Federal Reserve performed stress tests this year on large financial firms.
* On Monday, Thoma Bravo sold Digital Insight, a company it owned for about 124 days, to NCR for $1.65 billion.
THE GLOBE AND MAIL
* The price of electricity is set to rise steadily in Ontario over the next two decades, with the most dramatic increases in the next five years. The province's long-term energy plan, released Monday, projects a 42-percent jump in home power bills by 2018, climbing to 68 percent by 2032. The cost for industrial enterprises will also rise, by 33 per cent in the next five years and 55 per cent in the next 20.
* A Canadian businessman in the West Bank said the Palestinian Authority wrongly detained his father for nine hours because he had criticized Palestinian president Mahmoud Abbas.
Reports in the business section:
* BlackBerry Ltd's new leader made a forceful plea to its largest customers to stick with the company, despite growing evidence that competitors are eating away at what was once the smartphone maker's most dominant market position.
"Our 'for sale' sign has been taken down and we are here to stay," John Chen, the company's new executive chairman and interim chief executive, said in the letter to customers Monday.
* The food fight in the grocery sector is expected to remain fierce in 2014, as low inflation keeps a firm lid on prices. A University of Guelph report to be released on Tuesday predicts food prices will rise between 0.3 percent and 2.6 percent in 2014. The low level of inflation, or even deflation in some cases, may be a boon to consumers, but it leaves retailers struggling to boost their sales.
* As his brother took on the voice of business in the city, Mayor Rob Ford vowed to find $50-million in budget cuts and took a shot at a meeting between the deputy mayor and the premier, suggesting it should take place with him, "the elected Mayor of Toronto."
* In the months before the nasty public relations battle waged between Canada's biggest cellphone companies and Ottawa last summer, the federal government was crafting a strategy designed to avoid earlier "failures" to create competition in the wireless industry.
That strategy centered around keeping cellular airwaves specifically earmarked for new players in the sector indefinitely out of the hands of the dominant three providers - Rogers Communications Inc, BCE Inc and Telus Corp - partly in hopes of pushing the upstarts into each others arms.
* Is it time for the Bank of Canada to start "talking down" the dollar? True, inflation is weak - and could get weaker - and that has helped push the dollar lower, but probably not enough to significantly benefit Canadian sales of products abroad and ease the burden of economic growth on consumers
SOUTH CHINA MORNING POST
-- Famed film director Zhang Yimou faces a fine for breaching the one-child policy as local authorities in Jiangsu province said he and his wife violated family planning rules by having three children without approval and before they were married.
-- The mainland's central bank has announced detailed reform guidelines to support the Shanghai Free Trade Zone, but foreign investors are still questioning just how free the zone will be.
-- In a growing sign of the Chinese currency's dominance, HSBC said the city's yuan deposits are likely to grow at a faster pace than the Hong Kong dollar and other currency deposits, rising to 30 percent of all deposits by 2015 from the current 10 percent.
-- Securities and Futures Commission chairman Carlson Tong said the appointment of Mary Ma as SFC non-executive director has nothing to do with Alibaba's intended listing in Hong Kong. Boyu Capital, which Ma chaired and co-founded, holds a stake in Alibaba.
-- Mid-size developer Chuang's Consortium International is seeking to sell its retail complex in Tsim Sha Tsui at up to HK$35,000 ($4,500) per square foot. Agents said the price was relatively high as compared to commercial units in Central.
-- Financial Secretary John Tsang Chun-wah reiterated his warning on the risk of a property bubble. But executive councillor Fanny Law Fan Chiu-fun said she expects the city's real estate market to be stable next year.
HONG KONG ECONOMIC JOURNAL
-- Hong Kong government suspended live chicken imports from nearby Shenzhen with immediate effect after the city's first human case of H7N9 bird flu virus was confirmed late on Monday.
-- Coach, Inc announced the renewal of a Memorandum of Understanding on anti-counterfeiting with Taobao Marketplace, China's most popular consumer-to-consumer online marketplace, in a bid to better protect consumer interest.
-- New World Development expects to generate more than HK$10 billion from flat sales next year, a level similar to what it achieved in 2013, according to the senior management at the developer.
HONG KONG ECONOMIC TIMES
-- China's biggest funeral service group Fu Shou Yuan is set to sell 500 million shares in its initial public offering in Hong Kong to be launched next week, raising $200 million, according to listing document.
MING PAO DAILY NEWS
-- Bain Capital is cutting its stake in aseptic packaging products producer Greatview Aseptic Packaging Co Ltd, selling 68 million shares at price ranging HK$4.55-HK$4.6 each for up to HK$312 million ($40.25 million), according to a term sheet.
DERIVATIVE MARKETS HAVE ALREADY UPGRADED BRITAIN TO AAA
The cost of insuring British debt against default has fallen below the levels for the US, Switzerland, Japan and every major eurozone state except Germany, marking a dramatic change of view on UK's economic prospects.
ALBEMARLE & BOND PUTS ITSELF UP FOR SALE
Britain's second biggest pawnbroker Albemarle & Bond has put itself up for sale and said that the process includes the possibility of a takeover offer for the company although there could be no certainty that the offer will be made.
NATWEST AND RBS CARDS DECLINED DUE TO IT MELTDOWN ON MEGA MONDAY
A technological banking glitch on one of the busiest online shopping days of the year left millions of shoppers unable to pay for transactions using their credit or debit cards.
TRIAL BEGINS FOR FORMER BP ENGINEER ACCUSED OF DESTROYING OIL SPILL EVIDENCE
Jury selection began Monday for the Justice Department's case against a former BP drilling engineer charged with deleting text messages and voicemails about the company's response to its massive 2010 oil spill in the Gulf of Mexico.
DEBT ADVICE SERVICE A WASTE OF MONEY, SAY FURIOUS MPS
An official money advice service bankrolled by every retail financial institution in Britain is being accused by MPs of wasting a large chunk of its 81million pounds budget and paying some of its executives far too much.
FIFTY YEARS ON, DIAGEO PAYS OUT TO THALIDOMIDE VICTIMS
Dozens of Antipodean victims of thalidomide won a 52million pounds payout from Diageo yesterday as the British drinks company settled longstanding liabilities associated with the drug.
CABLE TO NAME MORGAN AS BUSINESS BANK CHIEF
A former board member of Northern Rock will this week be named as the first permanent boss of the British Business Bank, one of the Government's flagship projects for stimulating lending to smaller companies.
HOUSEHOLDS RAID SAVINGS AT RECORD RATE
Households are pulling money out of their savings accounts at the fastest rate in modern record, according to Bank of England figures. In the past year, families have withdrawn £23bn from their long-term savings account to convert into cash and put into current accounts.
Fly On The Wall 7:00 AM Market Snapshot
AK Steel (AKS) upgraded to Neutral from Underperform at BofA/Merrill
AbbVie (ABBV) upgraded to Conviction Buy from Buy at Goldman
Apple (AAPL) upgraded to Buy from Neutral at UBS
CACI International (CACI) upgraded to Outperform from Market Perform at Cowen
DHT Holdings (DHT) upgraded to Buy from Neutral at Global Hunter
FLIR Systems (FLIR) upgraded to Buy from Fair Value at CRT Capital
Forest Labs (FRX) upgraded to Buy from Neutral at SunTrust
Fortinet (FTNT) upgraded to Buy from Neutral at BofA/Merrill
HollyFrontier (HFC) upgraded to Buy from Neutral at BofA/Merrill
Liberty Property (LRY) upgraded to Outperform from Market Perform at Wells Fargo
Oceaneering (OII) upgraded to Buy from Hold at Societe Generale
Smith & Nephew (SNN) upgraded to Overweight from Equal Weight at Morgan Stanley
Statoil (STO) upgraded to Outperform from Market Perform at Bernstein
Verint Systems (VRNT) upgraded to Buy from Fair Value at CRT Capital
AMRI (AMRI) downgraded to Neutral from Buy at Sterne Agee
Cobalt (CIE) downgraded to Neutral from Outperform at Credit Suisse
CubeSmart (CUBE) downgraded to Neutral from Buy at SunTrust
Disney (DIS) downgraded to Neutral from Buy at B. Riley
Fusion-io (FIO) downgraded to Neutral from Buy at UBS
HSBC (HBC) downgraded to Neutral from Buy at Nomura
IMAX (IMAX) downgraded to Neutral from Buy at Goldman
Myriad Genetics (MYGN) downgraded to Market Perform from Outperform at JMP Securities
Pfizer (PFE) downgraded to Buy from Conviction Buy at Goldman
Ship Finance (SFL) downgraded to Equal Weight from Overweight at Morgan Stanley
Xcel Energy (XEL) downgraded to Neutral from Buy at Goldman
Continental Resources (CLR) initiated with an Overweight at Barclays
Fibrocell Science (FCSC) initiated with an Outperform at Wedbush
Galectin Therapeutics (GALT) initiated with a Buy at MLV & Co.
Internap (INAP) initiated with an Outperform at Raymond James
Micron (MU) initiated with a Buy at Needham
NMI Holdings (NMIH) initiated with an Outperform at FBR Capital
New York Mortgage (NYMT) initiated with a Market Perform at JMP Securities
Pattern Energy (PEGI) initiated with an Outperform at Wells Fargo
QuickLogic (QUIK) initiated with a Speculative Buy at Benchmark Co.
VOXX International (VOXX) initiated with an Outperform at Cowen
NCR Corp. (NCR) acquired Digital Insight Corp. for $1.65B
Fed hasn’t objected to revised capital plans from Goldman Sachs (GS), JPMorgan (JPM)
Rio Tinto (RIO) to cut capital expenditure 20% year-on-year through FY15
Potash (POT) announced 18% workforce reduction in U.S., Canada, Trinidad
Johnson Controls (JCI), Hitachi (HTHIY) announced global air conditioning JV
Mondelez (MDLZ) to invest $190M in India plant
QEP Resouces (QEP) to pursue a separation of its midstream business (QEPM)
Oil States (OIS) acquired Quality Connector Systems, terms undisclosed
Companies that beat consensus earnings expectations last night and today include:
Thor Industries (THO), Envivio (ENVI), Shoe Carnival (SCVL), Ascena Retail (ASNA), Krispy Kreme (KKD)
Companies that missed consensus earnings expectations include:
Gordmans Stores (GMAN)
- The race to drill for oil in the U.S. is creating another boom—in sand, a key ingredient in fracking. The stocks of publicly traded companies that deal in sand have soared, including Hi-Crush Partners (HCLP) and U.S. Silica Holdings (SLCA), the Wall Street Journal reports
- The number of banking institutions in the U.S. dwindled to 6,891 in Q3, its lowest level since at least the Great Depression, the FDIC says, as a sluggish economy, stubbornly low interest rates and heightened regulation take their toll on the sector, the Wall Street Journal reports
- U.S. online sales are expected to hit $2B on "Cyber Monday," for the first time since the data firm comScore has been tracking such information, Reuters reports
- Less than 24 hours after Amazon (AMZN) CEO Jeff Bezos floated the idea of delivering packages via airborne drones, the notion was met with balking by the FAA and skepticism from the shipping industry. UPS (UPS) said it too has met with drone vendors and for now is content to stick to terra firma, Bloomberg reports
- At least three U.S. regulators--the Fed, Office of the Comptroller of the Currency and FDIC-- will meet on December 10 to adopt the final version of the Volcker rule banning banks from making speculative bets with their own money, sources say, Bloomberg reports
- Fiat (FIATY) and its Chinese partner are near a deal to begin producing Jeeps in China for the first time since 2006 after they compromised on the plant’s location, sources say, Bloomberg reports
Clovis (CLVS) files to sell 2M shares of common stock for holders
Echo Therapeutics (ECTE) offers 3.23M units of shares and warrants
Medallion Financial (TAXI) files to sell 2.9M shares of common stock
Norwegian Cruise Line (NCLH) files to sell 22M shares for holders
Regional Management (RM) files to sell 2.04M shares of common stock for holders
RetailMeNot (SALE) files to sell $75M of series 1 common stock for holders
Seadrill Partners (SDLP) files to sell 12.9M common units
Sensata (ST) files to sell 15.5M shares of common stock
Western Gas Partners (WES) files to sell 4.5M common units for limited partners