Frontrunning: December 17
- Fed’s $4 Trillion Assets Draw Lawmaker Ire Amid Bubble Concern (BBG)
- Ex-Goldmanite Fab Tourre fined more than $1 million (WSJ)
- EU Banks Shrink Assets by $1.1 Trillion as Capital Ratios Rise (BBG)
- Japan to bolster military, boost Asia ties to counter China (Reuters)
- China condemns Abe for criticizing air defense zone (Reuters)
- Insider-Trading Case May Hinge on Phone Call (WSJ)
- Republicans Gird for Debt-Ceiling Fight (WSJ)
- Mario Draghi pushes bank union deal (FT)
- German Coalition Plans More Pension Money (WSJ)
- Oil Supply Surge Brings Calls to Ease U.S. Export Ban (BBG)
- Euro-Zone Prices Fall, Raising Specter of Too-Low Inflation (WSJ)
- Multivitamins Found to Have Little Benefit (WSJ)
- China’s Treasury Holdings Approach Record After Taper Delay (BBG)
- In rural China, teacher upholds Mao Thought to save the world (Reuters)
- Ukraine Protesters Settle In for Long Haul (WSJ)
- China's Sprawling Cities Bet Their Future on Getting Even Bigger (WSJ)
- Accidental Tax Break Saves Wealthiest Americans $100 Billion (BBG)
Overnight Media Digest
* A federal judge ruled the National Security Agency's collection of phone records "almost certainly" violates the Constitution, setting up a larger legal battle.
* The Energy Department blocked about 2,200 attempts this year by users seeking to get data from its websites in ways that endangered equal access to the agency's widely followed economic reports.
* The effects of the week-old Volcker rule are being felt thousands of miles from Wall Street as small and midsize banks begin to sell debt. Other institutions are looking for new ways to finance muni bonds.
* U.S. securities regulators are seeking more than $1 million in fines and other payments from Fabrice Tourre, the former Goldman Sachs trader found liable for defrauding investors.
* The Commodity Futures Trading Commission is moving to force overseas financial firms to comply with certain U.S. rules, a move likely to stoke criticism the U.S. is bidding to become the de facto global financial regulator.
* SAC Capital portfolio manager Michael Steinberg's fate could come down to what jurors think about a two-minute phone call.
* Lured by low costs, bond issuers in developing countries are poised to sell a record amount of euro-denominated debt this year.
* At the height of the holiday shopping season, Amazon.com Inc employees in Germany said they would continue strikes at local logistics centers this week as their supporters in the U.S. staged a protest at the online retailer's headquarters in Seattle on Monday to highlight the workers' grievances.
* Boeing Co's board authorized a 50 percent increase in its dividend and $10 billion to repurchase its shares over the next several years, efforts to satisfy shareholders who have pushed for the company to return some of its soaring earnings to investors.
* A California Superior Court judge in San Jose ordered three paint companies to pay $1.1 billion into a fund to be used to clean up hazards from lead paint in hundreds of thousands of homes in the state.
* The Federal Communications Commission said it has withdrawn a proposal to relax the longstanding ban on owning multiple media outlets in the same market.
BP has signed a $16 billion deal to drill some 300 wells in the Omani desert, aiming to extract around 1 billion cubic feet per day of natural gas.
In the wake of bribery allegations in China, GlaxoSmithKline has said it will scrap individual sales targets for its commercial staff in a bid to repair its image and reform working practices.
JPMorgan Chase & Co, the biggest U.S. bank by assets, is hoping to get more than $1 billion for its Asia-based Global Special Opportunities Group that is up for sale, according to sources.
Commercial jet maker Boeing Co plans to raise its dividend by 50 percent and ask shareholders to approve $10 billion in share buybacks.
RSA has been dealt another blow after Standard & Poor's downgraded its credit rating on the troubled FTSE-100 insurer to A- from A.
* The Securities and Exchange Commission disclosed on Monday that it is seeking $910,000 in fines against Fabrice Tourre, a former Goldman Sachs vice president whose defeat handed the government its first big legal victory in a case arising from the financial crisis.
* The British drug maker GlaxoSmithKline will no longer pay doctors to promote its products and will stop tying compensation of sales representatives to the number of prescriptions doctors write, its chief executive said on Monday, effectively ending two common industry practices that critics have long assailed as troublesome conflicts of interest.
* Wall Street's senior executives have been holed up in conference rooms across Manhattan the last couple of weeks, locked in tense all-day sessions. The special project: dividing up this year's spoils as bonus season approaches.
* Kohlberg Kravis Roberts said on Monday that it planned to buy a publicly traded credit investment affiliate for about $2.6 billion as it seeks to simplify its corporate structure while expanding its balance sheet.
* The Weinsteins and Miramax Films are together again. And that means movies like "Shakespeare in Love" and "Swingers" may get a second life. Bob and Harvey Weinstein, who founded Miramax but left in a split in 2005 with its owner then, Walt Disney, will produce and distribute films and television shows based on the studio's library of about 750 films.
* The beginning of the end probably will not come on Wednesday, but it is coming soon. The Federal Reserve has made clear that its bond-buying campaign will not continue at the present pace for much longer.
* General Motors, the nation's largest auto company, said it would spend about $1.3 billion to upgrade five factories in the Midwest, including a major overhaul of one of its highly profitable truck plants.
* USEC, the sole American company in the uranium enrichment business, said that it would file for bankruptcy early next year, although it hopes to keep operating.
* Oman and the global oil giant BP said on Monday that they had agreed to jointly develop a major, technically challenging natural gas field in the country's desert interior. BP plans to use approaches relatively new to the Middle East, including horizontal wells and advanced hydraulic fracturing, to release gas that is tightly embedded in sandstone.
THE GLOBE AND MAIL
* Canada Post will push for deeper concessions from its 60,000-plus workers as it scrambles to fix a badly underfunded pension plan, Chief Executive Deepak Chopra said.
* Justice Minister Peter MacKay is fighting back against an emerging judicial revolt, accusing judges of showing contempt for the law by refusing to apply a mandatory financial penalty to convicted criminals.
Reports in the business section:
* Asia will be the prized customer for crude oil in Kinder Morgan Canada Inc's plans to nearly triple its Trans Mountain pipeline capacity from Edmonton to the West Coast.
* Canada's Competition Bureau has filed a legal motion against Google Inc, alleging that the company is abusing its dominant position in online search, joining U.S. and European anti-trust authorities in challenging the practices of the web giant.
* Canada's housing market is on track to close out 2013 on a stronger note than last year, defying the expectations of economists just a few months ago.
* After spending eight years and $20 million in a quixotic bid to fix up a bargain-basement Soviet car ferry, M/V Nonia, once derided as the "rust bucket from Estonia," the government of Newfoundland and Labrador has given up, selling it for scrap for just $76,000.
* Canadian scientists announced their discovery of a new carnivorous species of dinosaur on Monday. The dinosaur, called Acheroraptor Temertyorum, was a close cousin of the Velociraptor, they said.
* Ottawa says it will review decisions by Canada's National Energy Board to award natural gas export permits to several energy majors in a move that introduces a new measure of political scrutiny to the regulatory process.
* Norway's Statoil ASA is weighing new expansions in Alberta's oil sands against the price tag of developing a trove of newly discovered crude on Canada's East Coast as it grapples with a global run-up in development costs, the chief executive of its Canadian arm said.
* The Canadian oil sands sector is set to revive its rivalry with resurgent Mexican heavy crude production in the next few years as the southern country pushes through reforms and starts attracting billions of dollars in foreign investment in its energy sector.
CHINA SECURITIES JOURNAL
- China will reveal rules for its national over-the-counter exchange for small and medium enterprise' share transfer system by the end of the year, said an official with direct knowledge of the matter. The system will accept business listing applications before the year end.
- Dai Xianglong, head of China's social security fund, proposed recently at an international finance forum that China should implement a "Hong Kong stocks through train", to allow the Chinese to purchase Hong Kong listed shares directly.
SHANGHAI SECURITIES NEWS
- Tencent Holdings Ltd acquired a stake in Howbuy, a fund consultancy and distribution firm on Tuesday, said a Tencent spokesman. This is the first time that Tencent has invested in a domestic third-party investment management company. The report did not disclose the financial details of the transaction.
- China's plans to restrict the expansion of its large cities while diverting resources to the less-developed central and western parts of the country will get the country's urbanization out of the unsustainable rut it is in, a commentary in the paper said. All the problems the eastern region faces can be attributed to hasty development plans, it said.
- Over 35 years of reform and opening up, China has brought great advances to society and given birth to the great awakening of Chinese thinking, said a commentary in the paper that acts as the Party's mouthpiece. Currently, China is facing a series of challenges so reform needs to be promoted, it said.
RBS CANCELS 8 BLN STG TAXPAYER-GUARANTEE
Royal Bank of Scotland has cancelled one of the final pieces of the multi-billion pound bailout package put in place five years ago as part of its 46 billion pound ($75 billion) taxpayer-funded rescue. (link.reuters.com/tyb55v)
GLAXOSMITHKLINE ANNOUNCES 629 MLN STG INDIA SPENDING SPREE
Drug group GlaxoSmithKline has decided to spend 629 million pounds to increase its stake in its Indian pharmaceutical unit as it hopes to offset slowing sales in developed markets with growth in emerging economies. (link.reuters.com/syb55v)
BARCLAYS MOVES TO BLOCK US FROM COLLECTING $488 MLN FINES IN ELECTRICITY MARKET MANIPULATION CASE
Barclays has asked a U.S. judge to block the Federal Energy Regulatory Commission from collecting $488 million in fines after the bank was found to have manipulated the U.S. electricity market. (link.reuters.com/vyb55v)
LLOYD'S OF LONDON APPOINTS FIRST FEMALE CHIEF EXECUTIVE IN 325-YEAR HISTORY
Forty years after the first woman entered the Lloyd's of London dealing floor as a broker, the 325-year-old insurance market has named its first female boss. The company is to be run by 30-year industry veteran Inga Beale from January. (link.reuters.com/xyb55v)
AGGREKO WINS WORLD CUP AND COMMONWEALTH GAMES POWER CONTRACTS
Temporary power supplier Aggreko has won contracts to supply power at next year's World Cup in Brazil and Commonwealth Games in Glasgow, following a challenging period for the British company. (link.reuters.com/zyb55v)
RSA DEALT FRESH BLOW WITH S&P DOWNGRADE
RSA Insurance Group, the embattled insurer, suffered a fresh blow last night when its credit rating was downgraded for the second time in a month by one of the main rating agencies, which branded management at the company as weak. (link.reuters.com/bac55v)
PRIVATE EQUITY GROUP GENERAL ATLANTIC BUYS METEOGROUP FOR 190 MLN EUROS
Trinity Mirror, the parent company of the Press Association, said it would sell its weather forecasting business MeteoGroup for 190 million euros ($261.33 million) to private equity company General Atlantic. (link.reuters.com/cac55v)
BP SECURES $16 BLN DEAL TO DEVELOP OMAN GAS PROJECT
Oil giant BP has signed a deal to work on a $16 billion, 30-year gas production deal in Oman. (link.reuters.com/fac55v)
STANDARD CHARTERED TAKES A HIT AS FINANCE DIRECTOR IS STRIPPED OF RISK ROLE
Shares of Standard Chartered suffered another blow as the bank tried to play down suggestions of turmoil after it was revealed that Finance Director Richard Meddings is handing over responsibility for risk to Chief Executive Peter Sands. (link.reuters.com/dac55v)
'RING-FENCING' OF BANKS POISED TO START WITHIN WEEKS OF LORDS VOTE
The most sweeping reforms to banking in more than a generation face their final hurdle in Britain's House of Lords tonight amid criticism that they could spell the end for "free" retail banking. (link.reuters.com/gac55v)
Fly On The Wall 7:00 AM Market Snapshot
CommonWealth REIT (CWH) upgraded to Hold from Sell at Stifel
Curtiss-Wright (CW) upgraded to Buy from Hold at Deutsche Bank
Douglas Emmett (DEI) upgraded to Buy from Neutral at Citigroup
Extra Space Storage (EXR) upgraded to Market Perform from Underperform at BMO Capital
HP (HPQ) upgraded to Overweight from Neutral at JPMorgan
Huntington Ingalls (HII) upgraded to Buy from Hold at Deutsche Bank
LVMH Moet Hennessy (LVMUY) upgraded to Buy from Neutral at Natixis
Liberty Property (LRY) upgraded to Buy from Hold at Stifel
Magellan Midstream (MMP) upgraded to Buy from Hold at Deutsche Bank
Medtronic (MDT) upgraded to Buy from Neutral at Goldman
Salix (SLXP) upgraded to Buy from Hold at Stifel
Seagate (STX) upgraded to Neutral from Underweight at JPMorgan
Western Digital (WDC) upgraded to Overweight from Neutral at JPMorgan
iRobot (IRBT) upgraded to Strong Buy from Outperform at Raymond James
Facebook (FB) upgraded to Positive from Neutral at Susquehanna
CareFusion (CFN) downgraded to Sell from Neutral at Goldman
Catamaran (CTRX) downgraded to Neutral from Buy at Goldman
Cedar Realty Trust (CDR) downgraded to Underperform from Neutral at BofA/Merrill
Forest Oil (FST) downgraded to Neutral from Outperform at RW Baird
GlaxoSmithKline (GSK) downgraded to Hold from Buy at Deutsche Bank
Haemonetics (HAE) downgraded to Sell from Neutral at Goldman
Parkway Properties (PKY) downgraded to Sell from Neutral at Citigroup
Plains All American (PAA) downgraded to Hold from Buy at Deutsche Bank
Public Storage (PSA) downgraded to Underperform from Market Perform at BMO Capital
Quantum (QTWW) downgraded to Buy from Strong Buy at Ascendiant
Santarus (SNTS) downgraded to Hold from Buy at Stifel
Solta Medical (SLTM) downgraded to Hold from Buy at Cantor
Stonegate Mortgage (SGM) downgraded to Market Perform at Keefe Bruyette
Twitter (TWTR) downgraded to Neutral from Overweight at Atlantic Equities
U.S. Physical Therapy (USPH) downgraded to Market Perform at JMP Securities
500.com (WBAI) initiated with a Neutral at Piper Jaffray
CBL & Associates (CBL) initiated with a Hold at Jefferies
Church & Dwight (CHD) initiated with a Hold at KeyBanc
Cubist (CBST) initiated with an Outperform at JMP Securities
Eastman Chemical (EMN) initiated with a Buy at UBS
Elizabeth Arden (RDEN) initiated with a Hold at KeyBanc
Enbridge Energy Management (EEQ) initiated with a Hold at Deutsche Bank
Energizer (ENR) initiated with a Hold at KeyBanc
Evogene (EVGN) initiated with a Buy at Deutsche Bank
Gaming and Leisure Properties (GLPI) initiated with a Sell at ISI Group
Glimcher Realty Trust (GRT) initiated with a Hold at Jefferies
Helen of Troy (HELE) initiated with a Hold at KeyBanc
IHS Inc. (IHS) initiated with a Hold at Stifel
Iron Mountain (IRM) initiated with a Hold at Jefferies
Jarden (JAH) initiated with a Buy at KeyBanc
Midcoast Energy (MEP) initiated with a Buy at BofA/Merrill
Midcoast Energy (MEP) initiated with a Buy at Goldman
Midcoast Energy (MEP) initiated with a Buy at UBS
Midcoast Energy (MEP) initiated with a Hold at Deutsche Bank
Midcoast Energy (MEP) initiated with a Neutral at Citigroup
Midcoast Energy (MEP) initiated with an Outperform at Wells Fargo
Newell Rubbermaid (NWL) initiated with a Buy at KeyBanc
Oxford Immunotec (OXFD) initiated with an Overweight at JPMorgan
Oxford Immunotec (OXFD) initiated with an Overweight at Piper Jaffray
Rockwell Medical (RMTI) initiated with a Sell at Brean Capital
Sally Beauty (SBH) initiated with a Hold at KeyBanc
Sapiens (SPNS) initiated with a Buy at Roth Capital
Scotts Miracle-Gro (SMG) initiated with a Hold at KeyBanc
StoneCastle (BANX) initiated with an Outperform at Keefe Bruyette
Triumph Group (TGI) initiated with an Overweight at JPMorgan
Tupperware Brands (TUP) initiated with a Buy at KeyBanc
Ulta Salon (ULTA) initiated with a Buy at KeyBanc
Vince Holding (VNCE) initiated with a Hold at Stifel
Vince Holding (VNCE) initiated with a Neutral at Goldman
Vince Holding (VNCE) initiated with an Outperform at Wells Fargo
Boeing (BA) raised dividend 50%, authorized $10B share repurchase plan
KKR (KKR) to acquire KKR Financial (KFN) for $2.6B in stock
Bill Ackman: Not the role of Herbalife (HLF) auditors to rule on pyramid scheme, CNBC reports
GlaxoSmithKline (GSK) announced changes to its global sales and marketing practices
Kinder Morgan Energy Partners subsidiary Kinder Morgan Cochin signed letter of intent with NOVA Chemicals to develop a $300M pipeline from the Utica Shale (KMP, KMI, KMR, EPB)
Asanko Gold (AKG) to acquire PMI
Companies that missed consensus earnings expectations include:
- Facebook (FB) will begin selling video advertisements later this week, sources say. The ads, which will play automatically in users' news feeds may help Facebook capture a share of the $66.4B advertisers are expected to spend on U.S. TV this year, the Wall Street Journal reports
- Google (GOOG), Facebook (FB) and other tech giants are expanding efforts to control more of the world's Internet backbone, raising tensions with telecom companies (S,VZ,T) over who runs the Web, the Wall Street Journal reports
- GM (GM) plans to cut its headcount in South Korea next year as it prepares to withdraw its Chevy brand in Europe, a major export market for South Korean-made cars, Reuters reports
- The Fed’s balance sheet is poised to exceed $4T, prompting warnings its record easing is inflating asset-price bubbles and drawing renewed lawmaker scrutiny just as Janet Yellen prepares to take charge, Bloomberg reports
- U.S. banks seeking regulatory approval to boost payouts to shareholders next year will face a new hurdle as the Fed begins making its own projections for lenders’ balance sheets in annual stress tests, Bloomberg reports
Global Eagle (ENT) files to sell common stock
Marchex (MCHX) files to sell 3.5M shares of Class B common stock for holders
Rice Energy (RICE) files $800M IPO
Standard Register (SR) files to sell 3.68M shares of common stock for holders