Frontrunning: December 9

  • Glass-Steagall Fans Plan New Assault If Volcker Rule Deemed Weak (BBG) … “if”? The banks control the legislators and regulators…
  • Cellphone data spying: It’s not just the NSA (USA Today)
  • Major tech companies push for limits on government surveillance (Reuters)
  • Shanghai Warns Kids to Stay Indoors for Seventh Day on Smog (BBG)
  • Protesters fell Lenin statue, tell Ukraine’s president ‘you’re next’ (Reuters)
  • Everyone must be flying private these days: EADS to cut 5000-6000 jobs, close Paris HQ in restructuring (FT)
  • Big Players Trade ‘Upstairs’ (WSJ)
  • There’s no way to tell how many people who think they’ve signed up for health insurance through the U.S. exchange actually have (BBG)
  • Slower China inflation reduces worries of tighter policy (Reuters)
  • BIS Sounds Alarm Over Record Sales of Payment-in-Kind Junk Bonds (BBG)
  • Singapore hit by rare outbreak of rioting, 27 arrested (Reuters)
  • Japan’s GDP Growth Slows, Current Account in Red (WSJ)
  • Bargains Beckon Funds to European Equities (BBG)
  • Banks Listen In to Trader Talk (WSJ)


Overnight Media Digest


* After a nearly yearlong effort to sell its gun business, Cerberus Capital Management LP is close to bringing on a minority investor and lender to the weapons maker to let some of its investors sell out, a person familiar with the matter said.

* General Motors Co is preparing a concerted attack on its most troubled international operations that would entail big output cuts at factories in South Korea and likely an end to production in Australia, said people familiar with the auto maker’s plans.

* Given Imaging Ltd, a maker of ingestible pills that take photos inside patients’ bodies, agreed to be acquired by Covidien PLC for $860 million.

* When employees of the new American Airlines Group Inc ring the Nasdaq Stock Market’s opening bell Monday from the carrier’s Texas headquarters, many of them will be cheering because they already know what their pay and benefits will be-unlike in most airline mergers. The new American has secured temporary labor agreements that spell out how the merged airline will quickly integrate key groups of workers from the former American Airlines and US Airways.

* Some of the world’s biggest advertising companies are predicting faster growth in ad spending in 2014 than occurred this year, although concerns about the U.S. and European economies weigh on some of their projections.

* Inc received a lot of news coverage for its sci-fi drone-delivery idea last week. But an immediate robotics effort under way in the Seattle retailer’s warehouses could save the company more than $900 million a year, according to an analyst.

* As enrollment picks up on the website, many people with modest incomes are encountering a troubling element of the federal health law: deductibles so steep they may not be able to afford the portion of medical expenses that insurance doesn’t cover.

* When Hertz Global Holdings Inc acquired car-rental rival Dollar Thrifty last year, the Federal Trade Commission sought to combat rising prices by forcing Hertz to sell off its Advantage Rent a Car brand, making it a new, independent competitor. But the arrangement has taken a sharp detour.

* A high-speed rail project linking the three Baltic states embodies the economic hopes the European Union has placed on the fast-train technology. It also exemplifies one of high-speed’s biggest hurdles: national borders.

* Russia is undertaking a series of long-delayed and politically sensitive economic overhauls aimed at boosting efficiency as the country struggles with the longest period of economic stagnation yet in Vladimir Putin’s 13-year reign, according to a top official.

* European Aeronautic Defence & Space Co, fresh from streamlining its Airbus unit and its own complex corporate structure, is moving down its to-do list and trimming its defense operations to fit shrunken growth prospects. Top EADS executives Monday will meet with labor representatives to unveil their restructuring plans, according to people familiar with the discussions.



HSBC Holdings is considering the potential sale of a stake in its British retail and commercial banking business, according to three people familiar with the project.

Former Barclays Chief Executive Bob Diamond has secured the preliminary support of several big institutional investors for the $250 million London listing of a shell company, targeting the African financial sector.

U.S. private equity company Cerberus Capital Management is offering shareholders a way to sell their interest in Freedom Group, the maker of the gun used in the Newtown school shootings last year, after failing to deliver on its promise to dispose of the company.

IAG’s British Airways is taking legal action to try to prevent the trustees of one of its pension schemes from increasing payments to some of its retired workers.

Renault-Nissan is working towards striking an agreement with its German partner Daimler that will deepen the alliance between the carmakers during the first quarter of next year.



* Federal Reserve officials are in no hurry to retreat from their bond-buying campaign to stimulate the economy and are likely to postpone any cuts to the program until next year, according to public statements by Fed officials and interviews with some of them.

* Kevyn D. Orr, the man who must now revive Detroit, commutes each week from Maryland to a cavernous old office building here that seems to dare him to succeed: the former headquarters of a company, itself recently in bankruptcy, that once sold more than half of America’s cars – General Motors .

* Eight prominent technology companies, bruised by revelations of government spying on their customers’ data and scrambling to repair the damage to their reputations, are mounting a public campaign to urge President Obama and Congress to set new limits on government surveillance.

* Cellphone carriers last year answered at least 1.1 million requests from law enforcement agencies seeking information on caller locations, text messages and other data for use in investigations, according to repor
ts from the carriers.

* Last week, Bob Evans Farms announced that it had declined to make strategic changes recommended by one of its biggest investors. Now that investor, the hedge fund Sandell Asset Management, plans to turn up the heat on the restaurant operator.

* Comcast has hired JPMorgan Chase to advise it on a possible bid for Time Warner Cable, according to people briefed on the matter.

* China’s exports rose more than expected last month, government figures released Sunday showed, as resurgent demand from consumers in the United States and the European Union helped put the Asian manufacturing juggernaut on track for its biggest annual trade surplus since 2008.

* Greece’s Parliament early on Sunday approved a budget for 2014 which predicts a timid return to growth after six years of recession despite the reluctance of many government lawmakers to impose further cutbacks on a country reeling from economic hardship.




* Ontario’s Liberal government is leaning away from hiking the harmonized sales tax as a method of paying for transit expansion, reasoning that such a move would be too unpopular.

* Bahrain, Algeria and Iraq, countries with dubious human rights records or a history of violent internal conflict, have recently become new buyers of Canadian-made guns and ammunition, an analysis of federal government data shows.

* At least two more key Conservative MPs received gold-embossed business cards, contrary to long-standing government rules against fancy stationery. Tony Clement was given his gold cards shortly after being promoted to Treasury Board president in the May 2011 cabinet shuffle, following the election of a Conservative majority.

Reports in the business section:

* On its 4,000-km path across the country, TransCanada Corp’s Energy East’s pipeline would traverse the traditional territory of 180 different aboriginal communities, each of whom must be consulted and have their concerns accommodated as part of the company’s effort at winning project approval.

* Incoming Barrick Gold Corp Chairman John Thornton has friends in high places in China – including the country’s premier, central bank chief and anti-corruption czar, to name a few. Now Thornton’s job is to turn those connections into new business opportunities for the gold miner as it seeks to turn the corner on a string of costly setbacks.

* Winter has not been good to Transat AT Inc in recent years. Canada’s largest tour operator has lost money in the past four winter seasons. Among the reasons for the poor performance have been stiff competition from chief rival Sunwing Travel Group Inc, management’s overestimation of capacity requirements and failure to fully match appropriate fleet deployment to seasonal needs.


* The quantum revolution Mike Lazaridis expects is grand enough. Inventing the mythical quantum computer, which the BlackBerry billionaire has set as the primary goal of his massive investment in the southern Ontario technology hub known as Quantum Valley, could create a trillion-dollar market that Canada stands to dominate. He says the question is when, not if. The scientists say years, not decades.


* Once again Canada’s big five banks have delivered a record performance, with total profit in the last fiscal year of $29.4-billion, up a healthy 5 percent from last year despite the weak economy, slower consumer lending and other headwinds.

* Despite predictions that the recent Black Friday sales push would be the most robust to date in this country, one post-mortem analysis found only 27 percent of Canadians partook of the deals on Nov. 29.




– The China Banking Regulatory Commission (CBRC) plans to introduce bank insolvency regulations, said Yan Qingmin, the vice chairman of the CBRC at a forum recently. The country’s overall level of non-credit business operations needs to be improved, Yan added.


– China’s largest car leasing companies are starting to launch asset securitization products. Xinjiang Guanghui Leasing Services Limited issued “the yuan issue” of its specific asset management plan on Dec 5.

– On Dec. 6, China Life Insurance Co Ltd held the opening ceremony for the listing of its e-commerce subsidiary, the industry’s first e-commerce company.


– China’s development is at an important period of strategic opportunity, but the nature of these opportunities is changing, said a commentary in the paper that acts as the party’s mouthpiece. The country is closer to a great rejuvenation than ever, but must focus on the challenges it faces, it said.


– The Tianjin government is spending 60 billion yuan ($9.87 billion) on a land-reclamation project for the purpose of building a site for China’s second free trade zone, according to insiders.

– Zambia has shut a mine owned by China Nonferrous Metals (8306.HK) at Chambishi Copper Mines due to “contempt of environmental law”



The Telegraph


Formula E, the world’s first electric single-seater motor racing series, is in talks with BT Sport and BSkyB about a British television rights deal.


Ineos, the owner of Grangemouth, is planning to attract other companies to the Scottish industrial site in a bid to expand its customer base and share soaring energy and other utility costs.


Britain’s unilateral carbon tax should be scrapped before it causes blackouts, pushes up household bills and makes Britain uncompetitive, ScottishPower argues.

The Guardian


Dong Energy, the company that claims to be the biggest developer of windfarms in the world, believes it is “game on” in the North Sea with nothing to hold back new investment.

The Times


British business will receive 1 billion pounds ($1.64 billion) per year from the “historic” deal struck yesterday to end a 20-year impasse on global trade. Prime Minister David Cameron hailed the agreement as a “lifeline” for the world’s poorest people, as well as a boon for Britain’s exporters.


Ed Davey’s claim that British companies will win most of the work to build EDF’s 16 billion pound Hinkley Point nuclear reactor was on shaky ground last night after it emerged that his remarks contradicted a government report.


Lloyds Banking Group is preparing to kick-start the sell-off of De Vere Group in a move that could push total write-offs on the taxpayer-supported bank’s backing of the hotel and leisure operator to almost 900 million pounds.


Energy companies and their successful lobbying efforts have come under fire from consumer groups after it emerged that even fewer households will have their homes insulated under an abbreviated government-backed scheme.


More than 1,000 jobs at Silverdell, an asbestos clean-up specialist, are to be secured by a rescue deal. Rcapital, a turnaround fund, stepped in as the troubled company’s bank prepared to pull the plug.


Fly On The Wall 7:00 AM Market Snapshot



Alon USA Energy (ALJ) upgraded to Buy from Hold at Deutsche Bank
American Eagle (AEO) upgraded to Buy from Neutral at B. Riley
BRE Properties (BRE) upgraded to Market Perform from Underperform at BMO Capital
CRH Plc. (CRH) upgraded to Neutral from Sell at Citigroup
Cabot Oil & Gas (COG) upgraded to Buy from Hold at Deutsche Bank
Delek US (DK) upgraded to Buy from Hold at Deutsche Bank
KCG Holdings (KCG) upgraded to Overweight from Equal Weight at Evercore
Kraft Foods (KRFT) upgraded to Overweight from Equal Weight at Morgan Stanley
Manitowoc (MTW) upgraded to Buy from Neutral at Longbow
Mohawk (MHK) upgraded to Outperform from Neutral at Credit Suisse
Phillips 66 (PSX) upgraded to Buy from Hold at Deutsche Bank
PolyOne (POL) upgraded to Outperform from Market Perform at Wells Fargo
Portland General Electric (POR) upgraded to Overweight from Equal Weight at Barclays
Protective Life (PL) upgraded to Overweight from Equal Weight at Evercore
Valero Energy (VLO) upgraded to Buy from Hold at Deutsche Bank


Camden Property (CPT) downgraded to Underperform from Outperform at BMO Capital
Continental Resources (CLR) downgraded to Hold from Buy at Deutsche Bank
Danone (DANOY) downgraded to Underperform from Neutral at Exane BNP Paribas
Dean Foods (DF) downgraded to Equal Weight from Overweight at Morgan Stanley
Given Imaging (GIVN) downgraded to Hold from Buy at Cantor
Home Properties (HME) downgraded to Underperform from Market Perform at BMO Capital
Noble Energy (NBL) downgraded to Hold from Buy at Deutsche Bank
Ply Gem (PGEM) downgraded to Neutral from Outperform at Credit Suisse
Stock Building Supply (STCK) downgraded to Neutral from Buy at Citigroup


American Airlines (AAL) initiated with a Buy at CRT Capital
American Airlines (AAL) initiated with a Buy at Deutsche Bank
Atlantic Coast Financial (ACFC) initiated with an Outperform at FBR Capital
Brixmor (BRX) initiated with a Buy at SunTrust
Brixmor (BRX) initiated with a Neutral at Citigroup
Brixmor (BRX) initiated with an Outperform at RBC Capital
Brixmor (BRX) initiated with an Outperform at Wells Fargo
Brixmor (BRX) initiated with an Overweight at JPMorgan
Chegg (CHGG) initiated with a Buy at Jefferies
Chegg (CHGG) initiated with an Overweight at Piper Jaffray
Dynagas LNG (DLNG) initiated with a Hold at Deutsche Bank
Dynagas LNG (DLNG) initiated with an Equal Weight at Morgan Stanley
Dynagas LNG (DLNG) initiated with an Outperform at Credit Suisse
Dynagas LNG (DLNG) initiated with an Overweight at Barclays
Eros International (EROS) initiated with a Buy at Jefferies
Fibrocell Science (FCSC) initiated with an Overweight at Barclays
Tandem Diabetes (TNDM) initiated with an Overweight at Piper Jaffray
Universal Electronics (UEIC) initiated with an Overweight at Piper Jaffray
XPO Logistics (XPO) initiated with an Outperform at Credit Suisse


Alibaba to invest $364M in Haier to boost China logistics (YHOO)
WhiteWave Foods (WWAV) agreed to acquire Earthbound Farm for $600M
Equal Energy (EQU) agreed to be acquired by PetroFlow Energy for $5.43 per share
Quanta Services (PWR) sold equity ownership in Howard Energy for $221M
Phillips 66 (PSX) sees 2014 capital expenditures 40% higher than 2013 capital target
Spherix (SPEX) subsidiary filed lawsuit against AT&T (T) for alleged patent infringement
Verizon (VZ) to buy CDN provider EdgeCast Networks for over $350M, TechCrunch reports


  • Some of the world’s biggest investors (TROW) are changing the way they trade in U.S. markets in response to what they say are rising risks for institutions of their size, including conducting more “upstairs trades,” in which deals are executed among big institutions, bypassing the broader market, the Wall Street Journal reports
  • Major advertising companies (WPPGY, PUBGY, IPG) predict faster growth in ad spending in 2014 than this year, although concerns about the U.S. and European economies weigh on some of their projections, the Wall Street Journal reports
  • U.S. Supreme Court Justice Ruth Bader Ginsburg on Saturday night denied a last-ditch effort by a group of consumers and travel agents to stop the merger of American Airlines (AAMRQ) and US Airways (LCC), Reuters reports
  • European aerospace company EADS (EADSY) plans to cut between 5,000 and 6,000 jobs and sell its Parisian headquarters as part of a restructuring program it will detail later today, according to Le Figaro newspaper, Reuters reports
  • Dealer revenue from negotiating interest-rate swap transactions is poised to drop about 45% as new rules boost trading costs, pressures that may prompt banks to participate less in the $633T over-the-counter derivatives market, Tabb Group LLC estimates, Bloomberg reports
  • American mutual funds are scouring Europe for bargains, snapping up Dutch oil drillers, French drugmakers and Swiss food producers on speculation the region’s rally is just beginning as the U.S. bull market ages. While investors speculate the Fed will cut stimulus in March, they are betting the European Central Bank will keep economic measures for longer, Bloomberg reports


Barron’s listed its 10 favorite stocks for 2014: Barrick Gold (ABX), Canadian Natural (CNQ), Citigroup (C), Deere (DE), General Motors (GM), Intel (INTC), MetLife (MET), Nestle (NSRGY), Simon Property (SPG), US Airways (LCC). The new US Airways, American Airlines symbol will be AAL
Allergan (AGN) shares could rise 15%-20%
Coach (COH) shares could rise 25% in two years
Astoria (AF), Brookline (BRKL), Northfield (NFBK) could be takeover targets
Quarterly results may bring 3-D printing stock correction (DDD, XONE, VJET, SYSS)
Ulta Salon (ULTA) still unattractive after selloff


Ocera Therapeutics (OCRX) files to sell 4.73M shares for holders
SeaWorld (SEAS) to repurchase 1.5M shares from Blackstone Group LP


via Zero Hedge Tyler Durden

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