Frontrunning: January 7
- Yellen’s Record-Low Senate Support Reflects Fed’s Politicization (BBG)
- Euro-Zone Inflation Rate Falls in December, even further below ECB's target (WSJ)
- Zambia politician charged for calling president a potato (AFP)
- Blame gold: India Savings Deposit Scam Collapse Leaves Thousands Penniless (BBG)
- Hedge Funds Raise Gold Wagers as Yamada Sees $1,000 (BBG)
- George Osborne limits cuts options with pensions promise (FT)
- Vietnam Raises Foreign Bank Ownership Caps to Aid System (BBG)
- But they said buy a year ago... Goldman to JPMorgan Say Sell Emerging Markets After Slide (BBG)
- SAC Trial Seen by Probe Convict as Latest Abusive Tactic (BBG)
- What euro crisis watchers should look for in 2014 (Munchau)
- Abe pledges to create virtuous economic cycle (Nikkei)
- Berkshire Stakes Name on Realty Business Buffett Barely Noticed (BBG)
Overnight Media Digest
* The Senate on Monday confirmed Janet Yellen to head the Federal Reserve, setting her up to take office Feb. 1 as one of the most powerful economic policy makers in the world.
* The trading boom that helped reshape global investment banks over the past decade is sputtering, raising fears that one of Wall Street's biggest profit engines is in peril.
* Ethiopia's Chinese-built mobile-telecom network faces criticism that illustrates the broader troubles sometimes facing poorer nations that borrow heavily to invest in infrastructure.
* Puerto Rico is experiencing a historic exodus of residents fleeing the island's battered economy and rampant crime. From 2000 to 2010, a net 288,000 people left for the U.S. mainland, the most since the 1950s.
* Restaurants and other customers are starting to fear the clout of the industry giant that would be created by a planned merger between the country's two biggest food distributors - Sysco Corp and US Foods Inc.
* JPMorgan Chase officials won't be penalized as part of a deal the U.S. bank is negotiating with the Justice Department over alleged failures to warn about Bernard Madoff's massive fraud.
* AT&T formally opened the door for content companies like Google and Netflix to subsidize the cost of using their services on smartphones and tablets.
* The Swiss central bank said the drop in gold prices will saddle it with a $10 billion loss for 2013, forcing it to cancel dividends for the first time.
* Natural-gas prices surged to all-time highs on the East Coast on Monday as frigid weather approached, raising the prospect of higher prices nationwide in coming weeks.
* Men's Wearhouse Inc bumped up its offer to buy Jos. A. Bank Clothiers Inc to about $1.6 billion, the latest in a months-long acquisition battle between the rival men's clothing retailers.
Deutsche Bank faces fresh pressure from regulators to reform its corporate culture over the Libor scandal, after extracts from a report by Bafin, Germany's financial regulator, was leaked to German media - suggesting that the bank had not done enough to restore its reputation.
General Electric Co said it would buy three businesses from Thermo Fisher Scientific Inc for $1.06 billion, a deal that will boost the industrial conglomerate's life sciences division and take forward its ambition of moving into high-tech, high-profit-margin areas of the market.
Britain's financial regulators, Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA), have launched an investigation into problems at the Co-operative Bank , kicking off what threatens to be a difficult year for the lender as it tries to rebuild its reputation following scandals.
British car sales grew by more than 10 percent last year to hit a five-year high, as abundant cheap credit and improved consumer confidence made the country's car market the most buoyant in Europe.
Benny Landa, a leading activist shareholder in Teva Pharmaceutical Industries, the world's largest generic drugmaker, has lent his support for the proposed nomination of Erez Vigodman as its new chief executive officer.
Coated paper maker Verso Paper Corp said it would buy privately held rival NewPage Holdings Inc for about $1.4 billion, including debt, as the sector that's been hit by falling demand and overcapacity continues to consolidate.
* The Senate confirmed Janet Yellen as the chairwoman of the Federal Reserve on Monday, marking the first time that a woman will lead the country's central bank in its 100-year history.
* A wave of frigid weather forced airlines to cancel flights, stranding passengers from Fort Lauderdale, Florida, to Los Angeles. Compounding the issue were new regulations requiring more rest time for pilots beginning this year.
* National health spending grew slowly for the fourth consecutive year, increasing 3.7 percent in 2012 to $2.8 trillion, the federal government said Monday. But officials disagreed over whether the Affordable Care Act or lingering effects of the recession were primarily responsible for the trend.
* On Tuesday, jury selection will begin in Federal District Court in Lower Manhattan for the insider trading case against Mathew Martoma, a former trader at SAC Capital Advisors. The trial, which is expected to last nearly a month, will shed light on the role of the hedge fund owner -- Steven Cohen.
* Glenn Hadden, head of global rates at Morgan Stanley , left on Monday after three years at the firm, according to a company memo. Hadden, one of the bank's highest-paid executives, was asked to resign, according to a person briefed on the matter. Hadden was hired to revitalize Morgan Stanley's business that trades government bonds and other instruments but the division racked up sizable losses.
* Metro-North Railroad's president, Howard Permut, is stepping down, according to several sources with knowledge of the move, after a year marred by a train collision, a worker's death and the first passenger fatalities in Metro-North's three-decade history.
* AT&T on Monday announced a program called Sponsored Data, where businesses working with AT&T can pay for the data that is used to consume their content or services so that it does not show up on a customer's phone bill. AT&T named three initial partners for the program - Aquto, an ad platform that provides marketers tools to use sponsored data, Kony Solutions, which helps businesses develop apps, and health care company UnitedHealth Group.
* Samsung Electronics introduced four new tablets aimed at professional users, including two 12.2-inch tablets - the Galaxy NotePRO and the TabPRO. These are much larger than Apple's 9.7-inch iPad, Microsoft's 10.6-inch Surface 2 and Amazon's 8.9-inch Kindle Fire.
THE GLOBE AND MAIL
* Prime Minister Stephen Harper said his cabinet will balance economic and environmental interests as it makes a final decision on whether to approve Enbridge Corp's proposed Northern Gateway $6-billion project to link the Alberta oil sands with Kitimat, British Columbia.
* Blackouts in storm-battered Newfoundland have reignited a debate over the provincial government's handling of its aging energy infrastructure and its future reliance on the Muskrat Falls hydroelectric megaproject in Labrador.
Reports in the business section:
* Edward Hadden, one of the most prominent Canadians on Wall Street, left his position at investment bank Morgan Stanley . Hadden, 43, was the global head of interest-rate trading for the firm, which he joined in 2011.
* A breakaway militant group looking to form a semi-autonomous state in eastern Libya has hired controversial Montreal-based lobbyist Ari Ben-Menashe to help it achieve international recognition, sell the region's oil and obtain cash for military hardware and training.
* Former Toronto city councillor and businessman David Soknacki has officially registered to run for mayor this year, vowing to bring "higher standards" to the campaign and the job.
* Canadian oil and gas companies are gearing up to recruit actively this year after hiring in the sector fell below expectations in 2013.
Of 80 Canadian oil and gas employers surveyed by recruitment specialists Hays Canada, 23 percent saw a decrease in permanent headcount in 2013, as project cancellations and low commodity prices compelled many companies to go back to the drawing board and defer hiring plans.
CHINA SECURITIES JOURNAL
- China must encourage securities traders to take responsibility for their sales, even as the principle of caveat emptor is strengthened, to build protection for small investors, said Xiao Gang, chairman of the China Securities Regulatory Commission at a meeting held on Tuesday.
- China should use capital markets to increase the growth of public pension funds, said Qi Bin, director of the China Securities Regulatory Commission's research centre recently.
- The sudden death of Li Ming, founder and chairman of Beijing Galloping Horse Media Co Ltd, may hamper its business prospects and impede the impending initial public offering, said industry analysts of the private entertainment and media firm.
CHINA BUSINESS NEWS
- The China Banking Regulatory Commission will approve 3 to 5 pilot private banks this year, as part of its plans to further liberalize the financial markets, according to the regulator in a Tuesday meeting.
- China-located foreign banks plan to expand their advisory departments, as Chinese companies continue to expand abroad, said Ernst & Young on Tuesday.
- Most elevators checked for quality in Shanghai failed to pass safety tests, said the Shanghai Municipal Bureau of Quality and Technical Supervision. A total of 616 elevators were checked in six districts, with 393 needing overall fixing, 117 needing maintenance and 106 needing renovation.
- The landing of China's Jade Rabbit on the moon has successfully fulfilled an ancient nation's thousand-year dream, said a commentary in the paper that acts as the Party's mouthpiece. The landing highlights the country's commitment to aerospace innovation, it said.
JPMORGAN SET TO BE FINED $2 BLN FOR ALLEGEDLY IGNORING BERNARD MADOFF PONZI SCHEME
Regulators and federal prosecutors in the United States are preparing to fine JPMorgan Chase & Co about $2 billion, after it allegedly ignored signs of Bernie Madoff's Ponzi scheme. The fine will take the investment bank's penalties to $22.2 billion, more than a fifth of its revenues.
BRITISH CAR MARKET RECORDS BEST YEAR FOR SALES SINCE 2007, SAYS SMMT
A combination of cheap credit and improved consumer confidence saw households buy more than 2.26 million vehicles in the past 12 months, a rise of 10.5 percent on 2012.
REGULATORS LAUNCH INVESTIGATIONS INTO CO-OP BANK'S 1.5 BLN STG CAPITAL SHORTFALL
Former directors of the Co-operative Bank face fines and bans from the financial services industry after two more investigations - by the Prudential Regulation Authority and the Financial Conduct Authority - into the events leading up to its 1.5 billion pounds bailout were announced.
BUSINESSES WARN LENDING CURBS WILL HIT RECOVERY
Britain's rapid recovery will be hampered in 2014 unless the government acts to encourage corporate lending, the British Chambers of Commerce warned.
ROUTE MAP WRITTEN AS YELLEN TAKES DRIVING SEAT
Janet Yellen was on Monday night confirmed by the U.S. Senate as the new head of the Federal Reserve, with the central bank's immediate strategy already mapped out for her.
SERVICES GROWTH COMPLETES HAT-TRICK FOR ECONOMY
All three key sectors of the economy powered ahead at their fastest pace since 1998 in the three months to December, fuelling speculation that growth will have surged by almost 2 percent last year. The Markit/CIPS purchasing managers' index of the manufacturing, construction and services sectors rose from 60.1 between July and September to 60.5 in the final quarter of 2013.
GEORGE OSBORNE INSISTS BRITAIN MUST MAKE 25 BLN STG MORE WELFARE CUTS IN 2014
George Osborne was accused of targeting the poor and vulnerable and sparing the rich as he outlined 25 billion pounds of new spending cuts, with half of them coming from the welfare budget.
SOFTER EUROPEAN RING-FENCE RULES COULD HURT UK BANKS
European banking watchdogs could allow banks to evade tough rules designed to ensure that lending operations are ring fenced from "casino" investment banking. The new regulation would hit 30 of the continent's biggest banks, including the big players in Britain.
Fly On The Wall 7:00 AM Market Snapshot
Arthur J. Gallagher (AJG) upgraded to Overweight from Equal Weight at Barclays
Becton Dickinson (BDX) upgraded to Neutral from Underperform at BofA/Merrill
Brandywine Realty (BDN) upgraded to Outperform from Market Perform at Raymond James
Brown & Brown (BRO) upgraded to Overweight from Equal Weight at Barclays
Capital One (COF) upgraded to Conviction Buy from Buy at Goldman
Continental Resources (CLR) upgraded to Buy from Neutral at BofA/Merrill
Covance (CVD) upgraded to Buy from Hold at Jefferies
Equity Lifestyle (ELS) upgraded to Outperform from Market Perform at Wells Fargo
Johnson & Johnson (JNJ) upgraded to Outperform from Sector Perform at RBC Capital
Logitech (LOGI) upgraded to Equal Weight from Underweight at Barclays
PacWest Bancorp (PACW) upgraded to Overweight from Equal Weight at Evercore
Pall Corp. (PLL) upgraded to Buy from Neutral at BofA/Merrill
Splunk (SPLK) upgraded to Buy from Neutral at UBS
St. Jude Medical (STJ) upgraded to Sector Perform from Underperform at RBC Capital
Sun Communities (SUI) upgraded to Outperform from Market Perform at Wells Fargo
SunTrust (STI) upgraded to Outperform from Market Perform at BMO Capital
UnitedHealth (UNH) upgraded to Buy from Hold at Deutsche Bank
Varian Medical (VAR) upgraded to Neutral from Sell at Citigroup
Workday (WDAY) upgraded to Buy from Neutral at UBS
Yum! Brands (YUM) upgraded to Top Pick from Outperform at RBC Capital
AEGON (AEG) downgraded to Neutral from Overweight at JPMorgan
Acadia Healthcare (ACHC) downgraded to Neutral from Buy at Citigroup
Baxter (BAX) downgraded to Sector Perform from Outperform at RBC Capital
CGG SA (CGG) downgraded to Neutral from Outperform at Exane BNP Paribas
CSR (CSRE) downgraded to Underweight from Equal Weight at Barclays
CVB Financial (CVBF) downgraded to Equal Weight from Overweight at Evercore
Campus Crest (CCG) downgraded to Market Perform from Outperform at Raymond James
Charles Schwab (SCHW) downgraded to Neutral from Buy at Citigroup
Check Point (CHKP) downgraded to Neutral from Buy at UBS
Chesapeake (CHK) downgraded to Neutral from Buy at BofA/Merrill
Chubb (CB) downgraded to Equal Weight from Overweight at Barclays
Cooper Companies (COO) downgraded to Sell from Neutral at Citigroup
Cross Country Healthcare (CCRN) downgraded to Neutral from Buy at Citigroup
CubeSmart (CUBE) downgraded to Market Perform from Outperform at Wells Fargo
Energizer (ENR) downgraded to Market Perform from Outperform at Wells Fargo
Gulfport Energy (GPOR) downgraded to Sector Perform from Outperform at RBC Capital
Humana (HUM) downgraded to Sell from Hold at Deutsche Bank
Michael Kors (KORS) downgraded to Neutral from Buy at Citigroup
MoneyGram (MGI) downgraded to Neutral from Overweight at Piper Jaffray
Netflix (NFLX) downgraded to Underweight from Equal Weight at Morgan Stanley
Omega Healthcare (OHI) downgraded to Underperform from Market Perform at Wells Fargo
Post Properties (PPS) downgraded to Outperform from Strong Buy at Raymond James
RenaissanceRe (RNR) downgraded to Equal Weight from Overweight at Barclays
STMicroelectronics (STM) downgraded to Underweight from Equal Weight at Barclays
Senior Housing (SNH) downgraded to Underperform from Market Perform at Wells Fargo
Sovran Self Storage (SSS) downgraded to Market Perform from Outperform at Wells Fargo
Spectranetics (SPNC) downgraded to Neutral from Buy at Citigroup
Spirit AeroSystems (SPR) downgraded to Neutral from Buy at BofA/Merrill
TD Ameritrade (AMTD) downgraded to Neutral from Buy at Citigroup
Textron (TXT) downgraded to Neutral from Buy at BofA/Merrill
Validus (VR) downgraded to Equal Weight from Overweight at Barclays
XPO Logistics (XPO) downgraded to Hold from Buy at Stifel
ANI Pharmaceuticals (ANIP) initiated with a Buy at Roth Capital
AcelRx (ACRX) initiated with an Outperform at RBC Capital
Actavis (ACT) initiated with an Outperform at RBC Capital
Akorn (AKRX) initiated with an Outperform at RBC Capital
Allergan (AGN) initiated with an Outperform at RBC Capital
Cheniere Energy Partners (CQH) initiated with an Outperform at Credit Suisse
Cheniere Energy Partners (CQH) initiated with an Outperform at RBC Capital
Cheniere Energy Partners (CQP) initiated with a Neutral at Goldman
Cheniere Energy Partners (CQP) initiated with an Outperform at Credit Suisse
Cheniere Energy (LNG) initiated with a Buy at Goldman
General Growth (GGP) initiated with an Outperform at Oppenheimer
Highwoods Properties (HIW) initiated with an Outperform at Oppenheimer
Impax (IPXL) initiated with a Sector Perform at RBC Capital
Liberty Property (LRY) initiated with an Outperform at Oppenheimer
Manitowoc (MTW) initiated with a Hold at Jefferies
Mylan (MYL) initiated with an Outperform at RBC Capital
Nimble Storage (NMBL) initiated with a Neutral at Goldman
Perrigo (PRGO) initiated with a Top Pick at RBC Capital
Physicians Realty Trust (DOC) initiated with an Outperform at Oppenheimer
Piedmont Office Realty (PDM) initiated with a Perform at Oppenheimer
Realty Income (O) initiated with an Outperform at Oppenheimer
Sagent Pharmaceuticals (SGNT) initiated with an Underperform at RBC Capital
Taubman Centers (TCO) initiated with a Perform at Oppenheimer
Terex (TEX) initiated with a Hold at Jefferies
Teva (TEVA) initiated with a Sector Perform at RBC Capital
Convergys (CVG) to acquire Stream Global Services for $820M in cash
U.S. Bancorp (USB) to buy over 100 Chicago-area Charter One branches owned by Royal Bank of Scotland (RBS), Crain's reports
AT&T (T), Ericsson (ERIC) announced deal for in-vehicle technology
Excel Trust (EXL) announced Moody’s assigned it an investment grade rating of (P)Baa3 with a stable outlook
Denny's (DENN) signed development agreement to open 30 restaurants in Middle East
Companies that beat consensus earnings expectations last night and today include:
IHS Inc. (IHS)
Companies that matched consensus earnings expectations include:
Synergy Resources (SYRG), Sonic (SONC)
- The trading boom that helped reshape global investment banks over the past decade is sputtering, raising fears that one of Wall Street's biggest profit engines is in peril. Executives have warned that lackluster markets could lead to year-over-year declines in fixed-income, commodities and currency trading revenue when banks begin reporting Q4 results, the Wall Street Journal reports
- While 2013 was a tough one for the coal industry, it isn't going away. Coal remains the biggest source of fuel for generating electricity (BTU, ACI, ANR, CLD) in the U.S. and coal exports are growing fast. Overall, U.S. coal production is projected to remain relatively constant over the next three decades, the Wall Street Journal reports
- Some Boeing (BA) machinists plan to push for a recount or even a new vote on their latest labor contract with the aircraft maker, possibly extending a long-running drama over which state will get to work on Boeing's new 777X jet, Reuters reports
- Consumer advocate and Sirius (SIRI) shareholder Ralph Nader says Liberty Media (LMCA) Chairman Malone's offer to buy out the remaining stake in satellite radio company Sirius XM was "ludicrous" and called for activist investor Carl Icahn to take notice, Reuters reports
- Wall Street’s biggest banks--from Goldman Sachs (GS) to JP Morgan (JPM) to Morgan Stanley (MS)--say the slump in emerging-market assets that left equities trailing advanced-nation shares by the most since 1998 last year will prove more than a fleeting sell-off, Bloomberg reports
- BYD Co., the Chinese automaker backed by Berkshire Hathaway (BRK.A), says Chinese cars are poised to begin hitting U.S. showrooms at the end of next year, Bloomberg reports
Centene (CNC) files to sell 2.43M shares of common stock for holders
Kennedy Wilson (KW) files to sell 8M common shares
New York Mortgage (NYMT) files to sell 10M common shares
PBF Energy (PBF) files to sell 15M common shares for holders
Parkway Properties (PKY) files to sell 10.5M common shares
Receptos (RCPT) files to sell 2.75M shares of common stock
Rouse Properties (RSE) files to sell 7M shares of common stock
Virtusa (VRTU) files to sell 2.3M common shares