Frontrunning: December 12
- J.P. Morgan to Pay Over $1 Billion to Settle U.S. Criminal Probe Related to Madoff (WSJ)
- Ford board aims to pin down CEO Mulally's plans (Reuters)
- Raising Minimum Wage Is a Bad Way to Help People (BBG)
- Japan Lawmakers Demand Speedy Pension Reform (WSJ)
- EU reaches landmark deal on failed banks (FT)
- In which Hilsenrath repeats what we said in August: Fed Moves Toward New Tool for Setting Rates (WSJ)
- Senators Vow to Add to Iran Economic Sanctions in 2014 (BBG)
- Centerbridge in $3.3bn LightSquared bid (FT)
- Banks, Agencies Draw Battle Lines Over 'Volcker Rule' (WSJ)
- Swedish Housing Surges to Unsafe Value as Debt Soars (BBG)
- In the land of the holy cow, fury over beef exports (Reuters)
- Pensions Make the Most of Stocks' Surge (WSJ)
- No Longer Motor City (BBG)
- Pilots of Asiana crash knew speed was low (Reuters)
Overnight Media Digest
* Stanley Fischer, widely seen as a dean among the world's top central bankers, is President Barack Obama's choice to become second-in-command at the Federal Reserve, according to people familiar with the matter.
* Private-equity firm Centerbridge Partners LP reached a tentative deal to buy LightSquared Inc out of bankruptcy proceedings, said people familiar with the matter, potentially upstaging a bid by Dish Network Corp to take over the wireless-telecommunications firm.
* Just days before the latest "Hobbit" movie hits theaters on Friday, it has landed in court. Independent movie moguls Harvey and Bob Weinstein, along with their former company Miramax LLC, sued Time Warner Inc's Warner Bros late Tuesday for a share of the proceeds from the coming second and third "Hobbit" movies.
* Avon Products Inc is pulling the plug on a $125 million software overhaul that has been in the works for four years after a test of the system in Canada drove away many of the salespeople who fuel the door-to-door cosmetics company's revenue.
* Top Google Inc executives for six years flew their private jet fleet on discounted fuel purchased from the federal government that they weren't entitled to buy, according to a new inspector general review released Wednesday.
* Japan overtook the United States to become the world's No. 1 country in app store revenue, thanks to an explosion in growth of smartphone and tablet games. Japanese consumers spent roughly 10 percent more than U.S. consumers did on all apps found on smartphones and tablets in October, according to app tracker App Annie.
* PokerStars' ambitions to re-enter the U.S. market suffered a major setback Wednesday when New Jersey gambling regulators, citing the company's legal woes, said that it would not receive a license to operate online poker in the state for at least two years.
* After a years-long decline in Barnes & Noble Inc's stock price, even the company's chairman, Leonard Riggio, is taking a loss on at least a portion of his shareholding. Riggio disclosed on Wednesday that he sold 2 million shares a day earlier, realizing a loss of about $40 million.
* Fortis Inc has signed a deal to acquire UNS Energy Corp for about $2.5 billion, as the Canadian utility moves to boost exposure within the U.S. by acquiring a firm with a presence in the U.S. Southwest.
* Boeing Co's largest union presented a preliminary contract proposal to the aerospace giant to secure manufacturing of the planned 777X jetliner in Washington state, marking a fresh start to negotiations after the union overwhelmingly rejected a Boeing offer last month.
* Kontagent and Medium Entertainment, two closely held companies that create tools for mobile game makers to improve their products, are merging businesses in an effort to offer a fuller set of products to customers.
The second-largest U.S. oil company Chevron said the Australian Gorgon project it is leading has slipped further behind schedule and over budget - the plant's expected cost, which was estimated at $37 billion when it was launched in 2009, has been increased to $54 billion.
Six years after taking Hilton Worldwide private in one of the largest deals of the leveraged buyout boom, Blackstone Group LP is set to return the hotel operator to the public markets after it raised $2.35 billion in its IPO.
State-backed Royal Bank of Scotland will pay U.S. regulators a $100 million fine to resolve probes that the lender violated sanctions prohibiting business dealings with Iran, Sudan and other regimes.
The European Central Bank could make eurozone banks hold capital against sovereign bonds, in a bid to stop weak lenders from using its cash to buy up debt from crisis-hit countries, according to ECB executive board member Peter Praet.
JPMorgan Chase Chief Executive Jamie Dimon signalled the bank intended to pay penalties over allegations that it had failed to notify U.S. authorities that it suspected Bernard Madoff was running a Ponzi scheme.
PSA Peugeot Citroen and state-owned Chinese carmaker Dongfeng have agreed to an industrial and commercial alliance that will include a sizable capital injection into the French group in return for technology sharing.
* JPMorgan Chase and federal authorities are nearing settlements over the bank's ties to Bernard Madoff, striking tentative deals that would involve roughly $2 billion in penalties and a rare criminal action. The government will use a sizable portion of the money to compensate Madoff's victims.
* The number of people selecting health insurance plans in the federal and state marketplaces increased last month at a brisk pace, bringing the overall figure to nearly 365,000, the Obama administration said on Wednesday. The November number was more than double the one for October, but still well below the administration's goal.
* In an unusual deal that goes far beyond the soda wars, PepsiCo is to announce on Thursday that it is unseating Coca-Cola as the beverage supplier to one of the nation's hottest restaurant chains, Buffalo Wild Wings.
* The Boies, Schiller & Flexner law firm is paying bonuses of as much as $300,000 to some of its associates, with the average young lawyer taking home an additional $85,000, a firm spokeswoman, Dawn Schneider, confirmed late Tuesday. Last year, the maximum bonus handed out to some of the young lawyers at the firm, which specializes in trial and appellate litigation, was $250,000.
* Shares in China Cinda Asset Management rose as much as 33 percent on their trading debut in Hong Kong on Thursday after it raised around $2.5 billion last week on huge demand for its initial public offering.
* They might prominently feature the Barclays logo and the bank's light-blue corporate color, but ever since a popular bike-sharing program started here three years ago, Londoners have referred to the bicycles as "Boris bikes," after the capital's cycling mayor, Boris Johnson. But Barclays is ending its sponsorship of the program in 2015, the bank and Transport for London, a city agency, said Wednesday.
* Spanish lender Banco Santander has agreed to buy an 8 percent stake in Bank of Shanghai for 470 million euros as part of its strategy to increase its presence in Asia.
* The British soccer team Manchester United has made a poor showing on the field this season. Now the British hedge fund manager Crispin Odey is making a multi-million dollar bet that the club's New York-listed shares are destined for a similar trajectory. Odey Asset Management, Odey's fund, has taken a $22 million short position against Manchester United shares.
* With competition growing in the streaming music market, Spotify announced a series of changes meant to entice new customers and extend its digital footprint farther around the world.
* The Royal Bank of Scotland is paying $100 million in fines to New York and federal banking regulators to settle civil investigations into accusations that some of its former employees helped conceal transactions involving customers from Iran, Sudan and other nations subject to international sanctions for about a decade.
THE GLOBE AND MAIL
* Ontario Premier Kathleen Wynne is seeking her legislature's blessing for an expansion of the Canada Pension Plan in a final push ahead of a crucial federal-provincial meeting next week.
* First Nations leaders in British Columbia are seeking multibillion-dollar loan guarantees from the federal government to enable them to take ownership stakes in various liquefied natural gas projects being planned in the province, and have also traveled to China and Japan looking for backers.
Reports in the business section:
* Canada Post's decision to raise stamp prices and shift to community mailboxes has sent shivers through small businesses and home offices. The mail carrier unveiled a series of changes on Wednesday aimed at reversing its losses, including phasing out urban home delivery and cutting between 6,000 and 8,000 jobs.
* Shopify Inc has become Canada's first internet startup since the dot-com crash to reach a billion-dollar valuation, thanks to one of the largest venture financings in Canadian history.
* A spokesman for TransCanada says the company is looking to address concerns raised by the mayor of Edmundston about the route for the Energy East pipeline project.
* The governing Liberals confirmed on Wednesday that ousted Ornge CEO Chris Mazza collected $9.3 million over six years at Ontario's publicly funded air ambulance service.
* Police Chief Bill Blair flatly denied any suggestion that a probe into Toronto Mayor Rob Ford's dealings was payback for past budget cuts, before facing questions at a meeting of the budget committee on Wednesday that did not produce anticipated fireworks.
* Toronto-Dominion Bank surpassed Royal Bank of Canada as Canada's largest lender by assets for the first time after a decade-long expansion in U.S. consumer lending.
* The Canadian economy is forecast to lag that of the United States in 2014, even as exports and business investment begin to recover next year. That's the new outlook from CIBC World Markets, which expects the Canadian economy to grow by 2.3 percent in 2014, compared with a forecast of 3 percent for the United States.
* The head of Canadian National Railway Co says he understands public concern about the movement of dangerous goods by rail through urban centers in the aftermath of the Lac-Megantic disaster last summer. But Claude Mongeau said it would be impractical to reroute the shipments elsewhere because many of those goods are integral to the way Canadians live.
CHINA SECURITIES JOURNAL
- China's plans to make the management of growth enterprise market (GEM) refinancing easier aim at opening up companies to market forces, said industry insiders. A key proposal is that the refinancing of GEM companies no longer be limited by equity investment projects.
- The number of A-share accounts opened under China's QFII scheme in November hit a 4-month high, according to statistics from the China Securities Depository and Clearing Limited. On the Shanghai stock exchange 12 accounts were opened, while Shenzhen saw 10.
- An expat who knocked down a woman while on a motorcycle without a license will be deported after serving five days administrative detention for working without a permit, said police in Beijing on Wednesday. His father, who was also working without a permit, will also be departed, while their employer will be fined 20,000 yuan ($3,300).
- China's antitrust office plans to recruit at least 170 new employees for its enforcement team, said Xu Kunlin, head of the department of price supervision at the National Development and Reform Commission. The expansion is being hailed as a means for protecting fair competition in China.
- To build a beautiful and sustainable Chinese nation is the grand goal of the government, said a commentary in the paper that acts as the party's mouthpiece. Xi Jinping has stressed repeatedly the extreme importance of environmental concerns, it said.
RBS AGREES $100 MLN U.S. SETTLEMENT OVER SANCTION BREACHES
The Royal Bank of Scotland has agreed to pay $100 million to a trio of U.S. regulators to settle civil allegations that the bank broke sanctions relating to Iran, Sudan, Cuba and Burma.
FIRSTGROUP INVESTOR CLAIMS HE HAS BACKING FOR BREAK-UP
The activist investor proposing a break-up of FirstGroup said he had early expressions of support from other investors as he claimed the group's U.S. assets alone were worth more than the current share price.
FERROVIAL EYES HEATHROW'S REGIONAL AIRPORTS
Spain's Ferrovial, the biggest investor in Heathrow, has expressed an interest in buying the airport's three regional businesses, the Aberdeen, Glasgow and Southampton airports.
GSK TO PUMP 200 MLN STG INTO UK MANUFACTURING
GlaxoSmithKline is to pour 200 million pounds ($327.4 million) into two of its oldest UK manufacturing sites as it continues to buck industry trends by investing in Britain.
SUPERMARKETS URGED TO BIN "DAMAGING" FUEL PROMOTIONS TIED TO GROCERY SHOPPING
Independent forecourts beg Office of Fair Trading to reopen petrol market investigation after Australia's biggest supermarkets agree to limit fuel promotions funded by other parts of their business.
ASDA CLAIMS BLACK FRIDAY WAS A 'PHENOMENON' IN UK
The boss of supermarket group Asda claims its U.S.-style "Black Friday" discounts were a "phenomenon" with customers and has pledged to run the initiative again next year despite scuffles between customers battling for products.
LLOYDS BANKING GROUP FINED RECORD 28 MLN STG IN NEW MIS-SELLING SCANDAL
Former and current directors of Lloyds Banking Group could face having their bonuses clawed back, after the bailed-out bank was hit with a record £28m fine for putting staff under intense pressure to sell products customers did not want - or face demotion and pay cuts.
HOUSE PRICE RISES REALISE BUBBLE FEARS, SAYS ECONOMIST
The average UK home has seen its value rise by 10,329 pounds over the past year, or by 28.30 pounds a day, according to figures from property search engine Zoopla. This follows research from a leading economics professor that around three-quarters of properties in the UK are overvalued, with a 93 percent probability that London is already in the grip of a house price "bubble".
BORIS FURY AS COMMISSION 'PLUMPS FOR HEATHROW'
Boris Johnson called into question the independence of the Airports Commission yesterday amid claims it is backing Heathrow to the exclusion of a new hub airport.
MILLBURN INSURANCE SLIPS INTO ADMINISTRATION
A specialist insurer that was founded in the aftermath of the Second World War has collapsed into administration in a rare example of an underwriter failing.
GLENCORE OIL TRADER ANDREW KEARNS LOSES WRONGFUL DISMISSAL CLAIM AFTER HE WAS SACKED FOR 'HEAVY NIGHT' OF DRINKING
An oil trader sacked because he was said to be not in a fit state after a heavy night out in Singapore has lost his damages action for wrongful dismissal and now faces having to pay at least 150,000 pounds in costs.
VICTOR DAHDALEH CORRUPTION CASE: BILLIONAIRE'S FRAUD TRIAL COLLAPSES AFTER KEY SFO WITNESSES REFUSE TO GIVE EVIDENCE
A major anti-corruption trial involving a billionaire Labour donor who is a friend of Tony Blair collapsed yesterday following an embarrassing error by Britain's Serious Fraud Office.
Fly On The Wall 7:00 AM Market Snapshot
Hancock Holding (HBHC) upgraded to Buy from Hold at Wunderlich
ICICI Bank (IBN) upgraded to Buy from Hold at Jefferies
iRobot (IRBT) upgraded to Neutral from Underweight at JPMorgan
Johnson Controls (JCI) upgraded to Overweight from Equal Weight at Barclays
LyondellBasell (LYB) upgraded to Top Pick from Outperform at RBC Capital
Micron (MU) upgraded to Buy from Neutral at Nomura
NewBridge Bancorp (NBBC) upgraded to Outperform from Market Perform at Raymond James
Southwest (LUV) upgraded to Buy from Neutral at BofA/Merrill
Synchronoss (SNCR) upgraded to Strong Buy from Outperform at Raymond James
Zale (ZLC) upgraded to Buy from Neutral at Northcoast
Apache (APA) downgraded to Neutral from Buy at Citigroup
Brown & Brown (BRO) downgraded to Underperform from Market Perform at William Blair
HD Supply (HDS) downgraded to Sell from Neutral at Goldman
ImmunoCellular (IMUC) downgraded to Hold from Buy at MLV & Co.
ImmunoCellular (IMUC) downgraded to Neutral from Buy at Roth Capital
Infinity Pharmaceuticals (INFI) downgraded to Neutral from Outperform at Credit Suisse
Marathon Oil (MRO) downgraded to Neutral from Buy at Citigroup
Oracle (ORCL) downgraded to Equal Weight from Overweight at Morgan Stanley
Oracle (ORCL) downgraded to Sector Perform from Outperform at RBC Capital
Progress Software (PRGS) downgraded to Market Perform at JMP Securities
Scripps Networks (SNI) downgraded to Sector Perform from Outperform at RBC Capital
Sherwin-Williams (SHW) downgraded to Outperform from Top Pick at RBC Capital
Sigma Designs (SIGM) downgraded to Hold from Buy at Needham
Teradata (TDC) downgraded to Sector Perform from Outperform at RBC Capital
ARM Holdings (ARMH) initiated with an Outperform at FBR Capital
Accenture (ACN) initiated with an Outperform at RBC Capital
Altera (ALTR) initiated with an Outperform at JMP Securities
Brixmor (BRX) initiated with a Buy at UBS
CONSOL Energy (CNX) coverage reinstated with a Buy at Deutsche Bank
Cempra (CEMP) initiated with an Outperform at RW Baird
FTI Consulting (FCN) initiated with a Hold at Stifel
L Brands (LB) initiated with a Buy at Brean Capital
Microchip (MCHP) initiated with a Buy at Drexel Hamilton
Microsemi (MSCC) initiated with a Hold at Drexel Hamilton
Navigant Consulting (NCI) initiated with a Hold at Stifel
Plum Creek Timber (PCL) initiated with a Neutral at JPMorgan
Rayonier (RYN) initiated with an Underweight at JPMorgan
Relypsa (RLYP) initiated with a Buy at B. Riley
Sapiens (SPNS) initiated with an Outperform at William Blair
Tetra Technologies (TTI) initiated with a Neutral at Credit Suisse
United Natural Foods (UNFI) initiated with a Hold at Jefferies
Weyerhaeuser (WY) initiated with an Overweight at JPMorgan
Xilinx (XLNX) initiated with an Outperform at JMP Securities
Yelp (YELP) initiated with a Neutral at B. Riley
Ziggo said in talks to be acquired by Liberty Global (LBTYA)
Toyota (TM): GM (GM) Holden decision to place 'unprecedented' pressure on supplier network in Australia
Peugeot (PEUGY), GM (GM) reported progress on strategic alliance implementation
UNS Energy (UNS) to be acquired by Canada's Fortis for $60.25 per share
Air Canada (AIDIF) to buy up to 109 Boeing (BA) 737 Max jets, replacing Airbus aircraft (EADSY)
Rouse Properties (RSE) acquired two malls for $292.5M
Emergent BioSolutions (EBS) to acquire Cangene Corp.
Exelis (XLS) to spin off new publicly traded military and government services company
Vista Gold (VGZ) to convert interest in Awak Mas project into royalty
Companies that beat consensus earnings expectations last night and today include:
Men's Wearhouse (MW), Amtech Systems (ASYS), Coldwater Creek (CWTR), Vera Bradley (VRA)
Companies that missed consensus earnings expectations include:
Sigma Designs (SIGM), Nordson (NDSN), Oxford Industries (OXM)
- Exxon Mobil (XOM) is calling for the U.S. to lift restrictions on exporting domestic oil that date back to the Arab oil embargo of 1973, the Wall Street Journal reports
- A day after the “Volcker rule” was approved by U.S. regulators, banks and their law firms were busy figuring out how to comply with strict new guidelines on Wall Street firms' trading activities and how to mitigate any hit to profits. Also, regulators were on a collision course over who gets supremacy in enforcing the rule, the Wall Street Journal reports
- Ford Motor’s (F) board plans to press CEO Mulally soon for a decision on his future, as speculation intensifies that he may be offered the job of CEO at Microsoft (MSFT), Reuters reports
- Morgan Stanley (MS) launched a formal effort to sell its controlling stake in U.S. oil terminal and transport business TransMontaigne, sources say, following other Wall Street powerhouses in yielding to intense regulatory pressure to get out of commodity investments, Reuters reports
- Daimler (DDAIF) is working to end rebates on its Mercedes-Benz vehicles in China, including pricing of its C- and E-Class sedans, while matching the premium segment’s growth next year, Bloomberg reports
- Samsung Electronics (SSNLF) built the world’s largest smartphone business in China, but will now shift output to Vietnam to secure even lower wages and defend profit margins as growth in sales of high-end handsets slows, Bloomberg reports
AES Corp. (AES) files to sell 40M shares of common stock for holders
ARAMARK (ARMK) 36.25M share IPO priced at $20.00
American Midstream Partners (AMID) 2.4M share Secondary priced at $22.47
CatchMark Timber (CTT) 10.526M share IPO price $13.50
Constellium (CSTM) 8.345M share Secondary priced at $19.80
Empire Resorts (NYNY) files to sell 1.08M shares of common stock for holders
Harbinger Group (HRG) files to sell 105.16M shares of common stock for holders
Hilton Worldwide (HLT) 117.64M share IPO priced at $20.00
HomeAway (AWAY) 6.019M share Spot Secondary priced at $37.00
Northstar Realty (NRF) files to sell 50M shares of common stock
Pinnacle Foods (PF) 17M share Secondary priced at $26.75
Synthetic Biologics (SYN) files automatic common stock offering
Taminco (TAM) 10M share Secondary priced at $20.00