Frontrunning: Friday 13


  • Presidential Task Force Recommends Overhaul of NSA Surveillance Tactics (WSJ)

  • Monte Paschi's Largest Shareholder Says It Will Vote Against $4.1 Billion Capital Increase (WSJ)

  • SAC Reconsiders Industry Relationships—and Its Name (WSJ)

  • Icahn’s Apple Push Criticized by Calpers as ‘Johnny Come Lately’  (BBG)

  • In Yemen, al Qaeda gains sympathy amid U.S. drone strikes (Reuters)

  • Missing American in Iran was on unapproved mission (AP)

  • In China, Western Companies Cut Jobs as Growth Ebbs (WSJ)

  • U.S. lays out steps to smooth Obamacare coverage for January (Reuters)

  • Las Vegas Sands Said to Drop $35 Billion Spanish Casino Proposal (BBG)

  • Twitter Reverts Changes To Blocking Functionality After Strong Negative User Feedback (TechCrunch)

  • U.S. Video-Game Hardware Sales Rise on New Consoles (BBG)

  • Stolper makes Bloomberg: Goldman Sachs Goes Against Consensus in Dollar Call (BBG)

  • Chinese men try to steal U.S. seed technology (Reuters)


 


Overnight Media Digest


WSJ


* A presidential task force has drafted recommendations that constitute a sweeping overhaul of the National Security Agency, according to people familiar with the recommendations. The panel's draft proposals would change the spy agency's leadership from military to civilian and limit how it gathers and holds the electronic information of Americans.


* Airplanes are unlikely to be filled with passengers talking on cellphones anytime soon, after the Obama administration signaled it would keep a ban on calls in place.


* Major wireless carriers committed on Thursday to allowing consumers to keep their cellphones when they switch providers, in a voluntary move backed by federal regulators. AT&T Inc , Sprint Corp, T-Mobile USA Inc, U.S. Cellular Corp and Verizon Wireless signed on to the agreement, which requires carriers to "unlock" devices or ask manufacturers to do so within two days of receiving a consumer's request.


* Facebook Inc's Instagram app is launching a photo- and video-messaging service, soon after popular mobile app Snapchat spurned a $3 billion offer from the social network.


* Apple Inc's major supplier Foxconn hasn't reduced overtime hours at some of its factories to meet the legal requirement in China, the Fair Labor Association said in a report.


* Google Inc's hopes of settling its high-profile antitrust case in the European Union suffered a setback as rivals and consumer groups blasted its latest proposal for resolving the EU's competition concerns.


* Coca-Cola Co is shaking up its senior management, announcing late Thursday that its Americas chief is leaving. The sudden departure of Steve Cahillane, once viewed as a potential successor to Chief Executive Muhtar Kent, comes as the maker of Minute Maid orange juice, Powerade sports drinks and its namesake cola struggles to grow in its key U.S. market and faces slowing sales in Brazil and Mexico.


* A U.S. bankruptcy judge ruled Anadarko Petroleum Corp could be liable for at least $5 billion in a lawsuit over environmental and legal liabilities related to its 2006 acquisition of Kerr-McGee Corp.


* Jones Group Inc is nearing a deal to sell itself to private-equity firm Sycamore Partners, according to a person familiar with the matter, in a takeover that would value the footwear and apparel maker at roughly $1.2 billion.


* Americans spent more freely as the holiday shopping season opened, reflecting renewed consumer strength that could boost economic growth next year. Retail sales rose a seasonally adjusted 0.7 percent in November from October, marking the biggest gain since June, the Commerce Department said Thursday. The prior month's gain was revised up to 0.6 percent from 0.4 percent.


* Netflix is trying to better understand your binge-viewing habits. The company on Friday will reveal a snapshot of a phenomenon that is reshaping TV culture-viewers devouring shows in long jags, episode after episode.


 


FT


German banking regulator Bafin has demanded documents from Deutsche Bank as part of a probe into suspected manipulation of benchmark gold and silver prices by banks, according to people familiar with the matter.


After a new contribution from JPMorgan Chase & Co, funds set up for victims of Bernard Madoff's Ponzi scheme should recover almost three-quarters of the $17.5 billion of losses.


Bank of Japan Governor Haruhiko Kuroda said the central bank would keep its highly expansionary monetary policy in place until inflation hits and stabilises at its 2 percent target.


European financial watchdogs have warned of the "violent fluctuations in electronic currencies" consumers face by using virtual currencies such as Bitcoin, the price of which has fluctuated between $340 and $1,240 in the past week.


Tom Enders, chief executive of Europe's largest aerospace company EADS, has warned that Europe will have to buy its next fighter jet from the U.S. or Asia if it does not invest in its own defence industry and allow sector consolidation.


An audit of operations at Foxconn Technology Group , best known for assembling Apple Inc's iPhones, has found that workers still do more overtime than permitted by Chinese labour law.


 


NYT


* The United States Treasury called on Thursday for a greater federal role in the regulation of insurance, particularly in areas like mortgage insurance, the collection and use of personal data to set prices, and the use of secretive entities known as captives to keep risks off the books of insurers.


* The fallout from the bursting of the housing bubble continues to plague Wall Street. Bank of America agreed on Thursday to pay the Securities and Exchange Commission a $131.8 million penalty to settle an investigation linked to the structuring and sale of two complex mortgage securities that its Merrill Lynch division sold to investors.


* Wall Street financiers have occasionally been referred to as sharks or snakes. But on Thursday, one prominent firm was associated with entirely different kinds of cute and lovable critters. About a dozen kindergartners, and a few high-powered financiers, gathered at the Blackstone Group's Midtown Manhattan headquarters to get up close with eight animal ambassadors from Sea World, the theme park operator that the firm took public this year.


* The Energy Department will give a small company in Corvallis, Ore., up to $226 million to advance the design of tiny nuclear reactors that would be installed under water, making meltdown far less likely and opening the door to markets around the world where the reactors now on the market are too big for local power grids.


* Graduate teaching and research assistants at New York University have voted overwhelmingly to unionize, the American Arbitration Association announced this week after conducting the vote.


* In what could be the biggest economic change in two decades, President Enrique Pena Nieto is on the verge of rewriting the Constitution to open Mexico's oil, gas and electricity industry to private investment - a provocative move expected to lure international oil companies and expand North America's energy supply while testing the grip oil has on Mexico's soul.


* When Spotify, the digital music company of the moment, announced an exclusive deal with Led Zeppelin and free access on mobile devices, it also reported impressive numbers. Its listeners have streamed 4.5 billion hours of music this year, and it has paid more than $1 billion in music royalties since its founding. But Spotify, a private company, did not disclose how many people use the service and how many pay for it.


* Verizon Communications has taken an aggressive stance against a proposed shareholder resolution that would require it to be more forthcoming about the customer information it shares with the government.


 


Canada


THE GLOBE AND MAIL


* The Conservative government's decision to approve major cuts at Canada Post was driven by concern that the Crown Corp was just months away from becoming a major drain on Ottawa's bottom line.


* Quebec authorities are calling it a first - an elected official coming forward to denounce people after being the target of alleged corruption. The province's anti-corruption squad, known as UPAC, is giving Chateauguay Mayor Nathalie Simon full marks for filing a complaint with police this past September.


Reports in the business section:


* Canada is heading for a gridlock in energy development that will rob the country of future wealth unless it can solve vexing environmental and aboriginal conflicts, a blue-ribbon group including senior Calgary business people warned in a new report.


* The Canada Pension Plan Investment Board is making a foray into the booming Canadian agriculture business with the $128-million purchase of a portfolio of Saskatchewan farmland from Assiniboia Farmland LP.


* Another high-flying Canadian startup backed by deep-pocketed U.S. venture capitalists has hit an impressive milestone - although it admits it's still a long way off from generating profits or meaningful revenues.


Kik Interactive, a Waterloo, Ontario-based instant messenger service started in 2009, said on Thursday that it now had more than 100 million registered users, a 233 percent increase in 12 months, and ahead of rival BlackBerry Messenger.


* Bank of Canada Governor Stephen Poloz used a speech in Montreal to set the record straight: He is not as dovish as many have thought; nor does he talk the dollar down to boost exports and listless inflation.


NATIONAL POST


* Toronto City Councillor Doug Ford has been accused of vote buying after he was filmed handing out $20 bills to public housing residents. It's the second time in a week he has faced accusations of using his personal wealth for political gain.


* The commander-in-chief of the Canadian Forces, Governor General David Johnston, says the military and country must do more to treat post-traumatic stress disorder and prevent suicides among soldiers, explaining a "stiff upper lip" attitude needs to be overcome to help treat soldiers and veterans with mental illness.


FINANCIAL POST


* Canada's telecom regulator said on Thursday that it would take a closer look at the rates cellphone providers charge their competitors to roam on each others' networks, something it said the country's big players could be using to kill competition from new entrants.


* U.S. hedge fund Golden Tree Asset Management LP increased its stake in Postmedia Network Canada Corp last month and now owns 39 percent of the newspaper chain's shares. The New York City-based fund is Postmedia's largest shareholder and in November it bought a further 4 percent of the company's Class B shares, according to a Dec. 4 regulatory filing.


 


China


CHINA SECURITIES JOURNAL


- China's first and second-tier property market is cooling following the implementation of policies to control pricing, according to data and industry insiders. Prices will continue to fall in the coming months, insiders predicted.


CHINA BUSINESS NEWS


- China's small and medium commercial banks now need to apply for operating licenses, according to an announcement by the China Banking Regulatory Commission (CBRC). The aim is to tighten regulation over the services provided by such banks, said an unnamed CBRC source.


SHANGHAI SECURITIES NEWS


- A simulated stock option trial in China will involve four companies including Industrial and Commercial Bank of China Ltd and China Petroleum & Chemical Corp, broker sources said. The trial will also involve the launch of call and put option contracts.


CHINA DAILY


- There are currently around 3,000 government WeChat accounts across mainland China, Hong Kong and Macau, as China looks to make use the popular social media application to improve communication with citizens.


- Over 600 children's products failed to meet quality standards, China's industry watchdog said this week. The watchdog said 644 items, including toys, clothes and diapers, from 571 manufacturers were substandard.


PEOPLE'S DAILY


- China should unite to help build the "China dream", which is to achieve national prosperity, said a commentary in the paper that acts as the Party's mouthpiece. This dream embodies the aspirations of several generations of Chinese people and the overall interests of the nation, it said.


SHANGHAI DAILY


- A total of 24 Chinese provinces levied more than 20 billion yuan ($3.29 billion) in fines for extra births in 2012, but did not disclose how they spent the money. Ten other provinces have not yet published figures.


- The average salary in China is set to rise between 6 and 10 percent in 2014, a survey from recruiter Michael Page showed. Over 60 percent of respondents said they expected to raise salaries by this amount next year, while a further 18 percent eyed double-digit growth.


 


Britain


The Telegraph


GLG FINED $9 MLN FOR OVERVALUING STAKE


One of London's largest hedge funds, GLG Partners, has been fined $9 million after it allegedly told investors that its assets were worth $160 million more than they really were.


EGGBOROUGH COAL PLANT CLOSURE 'WOULD PUSH UP BILLS'


Household energy bills could be pushed higher if Eggborough power plant, which supplies 4 percent of the UK's power, is forced to close, the company has claimed.


The Guardian


CENTRICA-LED CONSORTIUM POISED FOR IRISH ENERGY TAKEOVER


A consortium led by Centrica, the owner of British Gas, has been made preferred bidder by Irish ministers to take control of the state-owned energy group, Bord Gais Energy, for around 1 billion euros ($1.38 billion).


FORMER CITY MINISTER MYNERS JOINS CO-OP GROUP BOARD ON 1 POUND SALARY


Former minister Myners is to lead the overhaul of the management structure of the Co-operative Group after scandals at its banking arm that have seen control ceded to its bondholders and its former chairman accused of using illegal drugs.


G4S AND SERCO HAND OVER OFFENDER TAGGING CONTRACTS OVER FRAUD CLAIMS


Security companies G4S and Serco are to hand over their contracts to electronically tag criminals following fraud allegations over the way they charged the government.


EE THREAT TO RURAL 4G BROADBAND IF SPECTRUM FEES ARE QUADRUPLED


Britain's largest mobile network EE has waded into the cost of living debate, saying if the government continues to raise spectrum fees and clamp down on mobile charges it will have to scale back plans to bring 4G mobile broadband to rural areas.


The Times


BIG FOUR AUDITORS FACING REVIEW


The Big Four accountancy firms are failing to properly question the books of banks and building societies despite being told to raise their game after the financial crisis.


SPORTS DIRECT GETS SHIRTY OVER KIT DISPUTE


Billionaire retailer Mike Ashley is tangled in a dispute with adidas after the German sportswear manufacturer refused to supply the Chelsea kit to Sports Direct next season.


The Independent


AT THE BANK OF ENGLAND, NOT EVERYONE AGREES WITH MR CARNEY


A Bank of England rate-setter yesterday said that Threadneedle Street's flagship forward guidance policy was likely to have had little impact on the economy and appeared to clash with Governor Mark Carney over the timing of possible rate rises.


 


 


Fly on the Wall 7:00 AM Market Snapshot


ANALYST RESEARCH


Upgrades


Advance Auto Parts (AAP) upgraded to Top Pick from Outperform at RBC Capital
Amazon.com (AMZN) upgraded to Strong Buy from Buy at ISI Group
ArcelorMittal (MT) upgraded to Outperform from Market Perform at Cowen
athenahealth (ATHN) upgraded to Outperform from Market Perform at Leerink
athenahealth (ATHN) upgraded to Strong Buy from Outperform at Raymond James
Bed Bath & Beyond (BBBY) upgraded to Neutral from Cautious at ISI Group
Broadridge (BR) upgraded to Outperform from Market Perform at Keefe Bruyette
Charles Schwab (SCHW) upgraded to Market Perform from Underperform at Keefe Bruyette
Ciena (CIEN) upgraded to Outperform from Market Perform at BMO Capital
FedEx (FDX) upgraded to Strong Buy from Outperform at Raymond James
LPL Financial (LPLA) upgraded to Outperform from Market Perform at Keefe Bruyette
Omnicell (OMCL) upgraded to Buy from Neutral at B. Riley
Quiksilver (ZQK) upgraded to Buy from Neutral at B. Riley
Seagate (STX) upgraded to Buy from Neutral at Citigroup
Sibanye Gold (SBGL) upgraded to Neutral from Sell at UBS
SunCoke Energy (SXC) upgraded to Buy from Neutral at BofA/Merrill
U.S. Steel (X) upgraded to Outperform from Market Perform at Cowen
Western Digital (WDC) upgraded to Buy from Neutral at Citigroup


Downgrades


Anadarko (APC) downgraded to Underweight from Neutral at JPMorgan
Anglo American (AAUKY) downgraded to Hold from Buy at Deutsche Bank
BP (BP) downgraded to Neutral from Buy at UBS
CounterPath (CPAH) downgraded to Hold from Speculative Buy at Canaccord
Iberdrola (IBDRY) downgraded to Sell from Neutral at Goldman
Ipsen (IPSEY) downgraded to Neutral from Buy at Goldman
RWE AG (RWEOY) downgraded to Neutral from Buy at Goldman
Restoration Hardware (RH) downgraded to Neutral from Overweight at Piper Jaffray
lululemon (LULU) downgraded to Neutral from Outperform at Credit Suisse


Initiations


Avago (AVGO) initiated with an Outperform at Oppenheimer
Axcelis (ACLS) initiated with a Buy at B. Riley
Baker Hughes (BHI) initiated with a Neutral at RW Baird
Blue Capital (BCRH) initiated with an Outperform at Raymond James
Brixmor (BRX) initiated with a Buy at Deutsche Bank
China Mobile Games (CMGE) initiated with a Buy at Brean Capital
Coca-Cola (KO) initiated with a Buy at Janney Capital
Cott Corp. (COT) initiated with a Neutral at Janney Capital
Dr Pepper Snapple (DPS) initiated with a Buy at Janney Capital
Federated National (FNHC) initiated with a Neutral at Janney Capital
FireEye (FEYE) initiated with an Outperform at FBR Capital
FormFactor (FORM) initiated with a Neutral at B. Riley
Gazprom (OGZPY) initiated with an Underperform at Credit Suisse
Halliburton (HAL) initiated with a Neutral at RW Baird
Hilton Worldwide (HLT) initiated with a Neutral at SunTrust
Kaiser Aluminum (KALU) initiated with a Neutral at Goldman
LTX-Credence (LTXC) initiated with a Buy at B. Riley
OFG Bancorp  (OFG) initiated with a Buy at Guggenheim
Post Holdings (POST) initiated with a Buy at Citigroup
Proofpoint (PFPT) initiated with an Outperform at FBR Capital
Schlumberger (SLB) initiated with an Outperform at RW Baird
Tableau Software (DATA) initiated with a Market Perform at FBR Capital
TriMas (TRS) initiated with a Neutral at Goldman
Ubiquiti Networks (UBNT) initiated with an Outperform at Wells Fargo
Valero Energy (VLO) reinstated with a Neutral at Credit Suisse
Weatherford (WFT) initiated with a Neutral at RW Baird


HOT STOCKS


BlackBerry (BRY) extended purchase option deadline on convertible debt (FRFHF)
Simon Property (SPG) announced plan to spin off strip center business
EchoStar (SATS), GVT (VIVHY) ended talks for Brazilian JV
Las Vegas Sands (LVS) no longer pursuing Spain development, will continue in Asia
U.S. federal court ruled in favor of Tronox (TROX), Anadarko (APC) found liable, will appeal
United Technologies (UTX) said FY14 outlook 'stretched but achievable'
Adobe (ADBE) expects to surpass 4M subscribers by end of FY15


EARNINGS


Companies that beat consensus earnings expectations last night and today include:
Restoration Hardware (RH)


Companies that missed consensus earnings expectations include:
SAIC (SAIC)


Companies that matched consensus earnings expectations include:
Adobe (ADBE)


NEWSPAPERS/WEBSITES



  • Google’s (GOOG) hopes of settling its high-profile antitrust case in the EU suffered a setback as rivals and consumer groups (MSFT, NOK, TRIP) blasted its latest proposal for resolving the EU's competition concerns, saying they would do next to nothing to improve competition in online search, the Wall Street Journal reports

  • DirectTV (DTV) is exploring the idea of an online video service that would appeal to "price-sensitive" young people or other customers who have dropped their pay-TV service, the Wall Street Journal reports

  • SEC Chairman White says her team will not shy away from high-stakes trials, and not just strike settlements with wrongdoers, but a string of recent court setbacks shows she has her work cut out for her, Reuters reports

  • Singapore's defense minister said his country was seriously considering buying Lockheed Martin Corp.'s (LMT) F-35 fighter jet but was in "no particular hurry" to buy new jets, Reuters reports

  • The Louisiana Sheriffs’ Pension and Relief Fund, an IBM (IBM) shareholder, sued claiming the company’s cooperation with a National Security Agency eavesdropping program hurt investors as China sales dropped, Bloomberg reports

  • McGraw Hill Financial’s (MHFI) Standard & Poor’s said it would be unfair to let the Justice Department put more than 150 selected securities before a jury to argue the firm’s ratings were the result of fraud, Bloomberg reports


SYNDICATE


Cheniere Energy Partners LP (CQH) 36M share IPO priced at $20.00
Fidelity & Guaranty Life (FGL) 9.75M share IPO priced at $17
Macquarie Infrastructure (MIC) 2.125M share Secondary priced at $52.50
Nimble Storage (NMBL) 8M share IPO priced at $21.00
Response Genetics (RGDX) files automatic common stock offering
TCP Capital (TCPC) files to sell 3.75M shares of common stock
XOMA (XOMA) files to sell common stock, no amount given

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