Frontrunning: December 23

Apple, China Mobile sign long-awaited deal to sell iPhones (Reuters)
U.S. growth hopes help shares shrug off China money market jitters (Reuters)
Rule Change on Health Insurance Rattles Industry (WSJ), Obamacare’s signup deadline on Monday has its exceptions (Reuters)
Tale of Two Polish Mines Shows Biggest EU Producer’s Woes (BBG)
Probes See U.K. Market Manipulation Reports Rise 43% (BBG)
Shoppers Grab Sweeter Deals in Last-Minute Holiday Dash (BBG)
Banks Mostly Avoid Providing Bitcoin Services (WSJ)
Secret Handshakes Greet Frat Brothers on Wall Street (BBG)
Businessmen and academics denied entry to Ukraine (FT)
Quest to Track Nazi Loot Stirs Complex Emotions (WSJ)
Tiffany Ordered to Pay Swatch $449 Million in Watch Case (BBG)

Overnight Media Digest

WSJ

* Monday is the final day for consumers to get health coverage that takes effect on Jan. 1, leaving thousands racing to sign up and insurers trying to figure out whether the law will work in the way they had hoped.

* Lenders are leery of dealing with virtual-currency companies because of concerns that the businesses could run afoul of anti-money-laundering laws or be involved in illegal activities.

* Tough restrictions, such as the Volcker rule, which prohibits banks from owning more than 3 percent of a hedge fund or private equity portfolio, excluded many real-estate loans, allowing Wall Street firms to continue making concentrated bets with their own capital.

* Money managers and analysts say they are beginning to think the Federal Reserve is succeeding in restoring economic growth. Some analysts now think the economy is on the mend, many money managers share the view that, while 2014 probably won’t match 2013, indexes probably will finish the year with gains. That helps explain why stocks surged last week despite the announcement of stimulus cuts.

* Gasoline futures are climbing in response to signs of unseasonably strong demand for the fuel. Prices surged 5.9 percent last week to a three-month high after the U.S. Energy

* Boeing Co’s largest union plans to hold a vote on a contract that would guarantee that the planned 777X jetliner would be assembled at unionized facilities in Washington state.

* The U.S. Transportation Department doesn’t plan to change regulations to better protect underground pipelines from riverbed erosion, a year after Congress ordered it to evaluate its policies in the wake of pipeline breaks that spilled hazardous liquids into waterways.

* As much as a third of all Internet sales gets returned, according to retail consultancy Kurt Salmon. And the tide of goods flowing back to retailers is rising. Shipper United Parcel Service Inc expects returns to jump 15 percent this season from last year, making them a significant and growing cost for retailers.

* YRC Worldwide Inc is close to raising funds to cover upcoming debt payments as the trucking company works to persuade employees to extend their labor contracts for five years, people familiar with the matter said.

* Investment firm Starboard Value LP which has taken a 5.6 percent stake in Darden Restaurants Inc thinks the company’s move to cast off Red Lobster falls short of what is needed to boost Darden’s shares.

* A growing number of Asian textile manufacturers setting up production in the U.S. Southeast to save money as salaries, energy and other costs rise at home. As costs continue to increase in China, textile manufacturers can ship yarn to manufacturers in Central America, which, unlike companies in China, can send finished clothes duty-free to the United States.

* Hedge-fund firm Paulson & Co sold its Washington Mutual Inc bank bonds last week following a lawsuit seeking billions of dollars from the thrift’s 2008 failure, according to people familiar with the move. The giant hedge fund, run by billionaire John Paulson, exited after JPMorgan Chase, which bought the banking operations of Washington Mutual, filed a suit last week against the Federal Deposit Insurance Corp.

Apple struck a long-awaited distribution deal on Sunday night with China Mobile, a partnership worth billions of dollars in extra iPhone revenues that finally opens up the largest mobile market to the world’s most valuable technology company.

Companies that create data dossiers on consumers are tapping new technologies to unearth ever more intimate information despite intensifying regulatory scrutiny of the multibillion-dollar data broker industry.

Britain’s growing army of elderly shoppers is helping to breathe fresh life into the country’s battered high streets, with rising demand for hearing aids, mobility scooters and elasticated trousers sending retailers scuttling to open new stores to cope with growing demand.

Gold and chocolate covered strips of bacon, pastrami from New York’s famous Katz Deli and a subscription for monthly delivery of pickles are among the festive temptations being offered by a whole new generation of food start-ups in the United States.

The crisis in South Sudan, which has left hundreds dead, has started to hit global oil supplies, compounding the effects of production losses in Nigeria and Libya and putting upward pressure on prices.

NYT

* Apple Inc and China Mobile, the largest wireless network in the world, announced a deal to bring the iPhone to the Chinese carrier on Jan. 17. An agreement with China Mobile could, at least initially, give Apple a big lift into the vast Chinese market, analysts say, increasing its worldwide sales.

* A plan by the Tribune Company to separate eight newspapers, including The Los Angeles Times and The Chicago Tribune, from its more profitable digital and television businesses could threaten their survival, staff members, industry analysts and a congressman said last week.

* Tiffany & Company was ordered to pay Swatch Group about $449 million in compensation over a contractual dispute, the companies said Sunday. The dispute arose in 2011 when Swatch canceled its cooperation with Tiffany, saying the jeweler was in breach of contract because it was trying to “block and delay” a joint venture that both companies had entered in 2007.

* The police in Bangladesh charged the owners of a garment factory and 11 of their employees with
culpable homicide in the deaths of 112 workers in a fire last year that came to symbolize the appalling working conditions in the country’s dominant textile industry. The fire in Bangladesh, the No. 2 exporter of apparel after China, also revealed the poor controls that top retailers had throughout their supply chain.

* A former United States air base in neighboring Río Hato is set to reopen as an international airport, capable of handling direct flights from Canada and the United States. And the increased traffic is expected to bring more vacation home development in Farallón, best known for its white sandy beach, a rarity along Panama’s coast.

Canada

THE GLOBE AND MAIL

* A massive ice storm has plunged large parts of Toronto including the home of Mayor Rob Ford into darkness and crippled Southern Ontario’s transportation grid during one of the busiest travel times of the year, with the slippery aftermath threatening to keep hundreds of thousands without power until Christmas Day.

* Alberta Premier Alison Redford says that heading into 2014, she sees encouraging political signs in relation to approval of the Keystone XL pipeline in the United States, and North Americans are realizing that pipelines are a better means of shipping crude than rail.

* The Supreme Court of Canada effectively gutted Canada’s prostitution laws by finding this week that legislation against street soliciting, living on the avails and keeping a brothel was unconstitutional. The court gave Parliament one year to come up with a new legislative scheme before the old laws are unenforceable.

Reports in the business section:

* In 2013, Canadians who were carrying record debt levels did not shift to frugality as analysts had predicted. Consumers kept on buying, led by record purchases of cars and trucks. The trend is expected to stretch into next year, giving the economy an unexpectedly strong foundation to build on.

NATIONAL POST

* An analysis of federal accounting records by Postmedia News shows that Prime Minister Stephen Harper’s government has offered taxpayers’ subsidies for green projects to money-making companies such as Shell Canada, Suncor Energy Inc, Husky Energy Inc and Enbridge Inc to pursue projects in biofuels production and wind energy as well as new technology to capture carbon pollution and bury it underground. Canadian taxpayers have given more than C$400 million ($374.6 million) to some large oil, gas and pipeline companies in recent years to support green projects.

* Edgar Bronfman, the Canadian-born billionaire and longtime president of the World Jewish Congress, which lobbied the Soviets to allow Jews to emigrate and helped spearhead the search for hidden Nazi loot, died on Saturday at the age of 84.

* The Supreme Court’s ruling on the Constitutional amending formula on whether or how the Senate can be reformed or abolished does not give Nunavut, Yukon or the Northwest Territories a voice on how to change the document that outlines the way Canada is governed.

FINANCIAL POST

* In Vancouver, a new firm, Zipments, which launched in early December, is offering people the chance to make money by making local deliveries on their way to work, or elsewhere. They are dropping off anything from gift baskets, to water bottles, to chocolates and they’re all part of the new, shared economy. Zipments is effectively a franchise of an existing U.S. operation, said Robert Safrata, its chief executive, who owns courier company Novex.

China

SECURITIES TIMES

– Chinese investors invested $5.89 billion in the U.S. property market in the first 10 months of this year, six times of the combined value of their investment in 2011 and 2012, according to the data published by the New York-based research institute, Rhodium Group.

CHINA BUSINESS NEWS

– The People’s Bank of China’s pro-tight liquidity stance in recent weeks is believed partly motivated by preventing the repetition of a tradition that government departments rush to spend at the end of a year, analysts said.

CHINA SECURITIES JOURNAL

– The central bank’s pro-tight liquidity stance that has caused a money market squeeze implies that China’s stock market will remain weak in the short term, analysts said.

– Data published by the China Securities Regulatory Commission shows 756 Chinese companies are now on a waiting list to launch stock initial public offerings (IPOs).

SHANGHAI SECURITIES NEWS

– China is expected to build 6 million cheap homes next year in a continuation of a policy to support low-income families, although the number will be slightly less than that of this year.

– The Shanghai Stock Exchange said an unexpected 2-percent fall in China’s main Shanghai Composite Index last Friday was mainly caused by adjustments of share portfolio by a handful of foreign institutional investors in the last few minutes of trading.

CHINA DAILY

– China is moving in the right direction by pledging to set up dedicated courts for intellectual property rights cases, that will help judges become more proficient in handling complex cases, Johannes Christian Wichard, deputy director-general of the World Intellectual Property Organisation, said.

PEOPLE’S DAILY

– China published a chronicle of late leader Mao Zedong during the years from 1949 to 1976 ahead of the 120th anniversary of his birthday on Thursday.

Britain

The Telegraph

LIVINGSTON VOWS 10,000 FIRMS TO GET EXPORT HELP

Lord Livingston has vowed to offer each of Britain’s 10,000 medium-sized companies “personal” advice on overseas expansion in an effort to boost exports to £1 trillion a year by 2020.

ONLINE CLOTHING SELLER N BROWN SEEKS 20 STORES TO BOOST GROWTH

The online and catalogue clothes retailer N Brown has appointed property agents to find locations for 20 shops, delivering a timely Christmas boost to Britain’s troubled high streets.

The Guardian

VINCE CABLE: INTEREST RATES MAY HAVE TO RISE TO COMBAT HOUSING BOOM

The business secretary, Vince Cable, has warned that interest rates may have to rise to constrain a “raging housing boom” in London and the south-east.

LATE CHRISTMAS SHOPPING HELPS JOHN LEWIS TO RECORD WEEKLY SALES

A late shopping surge helped John Lewis serve up record weekly sales, but many retailers have been forced to slash prices to entice in cash-constrained customers.

The Times

BARRISTERS SAY ‘NO’ AND PUT FRAUD TRIALS IN JEOPARDY

The future viability of complex and expensive fraud prosecutions has been thrown into doubt after it emerged that there are not enough barristers prepared to defend fraudsters.

WARNING LIGHT FLASHES OVER GREEN LEVIES

Manufacturers are launching a lobbying campaign to persuade the Chancellor to exempt them from green energy levies in the Budget. The steel companies’ trade body is warning that the coalition’s green levies will make industry unable to compete with lower-cost rivals overseas.

The Independent

RETAILERS PANIC AND SLASH PRICES AMID LOW SALES

Retailers have slashed their prices this weekend in the hope that shoppers will finally flood Britain’s high streets today after one of the slowest Christmases on record.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

ARIAD (ARIA) upgraded to Outperform from Market Perform at William Blair
Five Below (FIVE) upgraded to Outperform from Neutral at Credit Suisse
Fortinet (FTNT) upgraded to Outperform from Neutral at RW Baird
Heartland Express (HTLD) upgraded to Buy from Hold at BB&T
LivePerson (LPSN) upgraded to Buy from Hold at Benchmark Co.
Sarepta (SRPT) upgraded to Neutral from Underweigh
t at Piper Jaffray
Skullcandy (SKUL) upgraded to Buy from Neutral at Roth Capital
Teekay Offshore Partners (TOO) upgraded to Overweight from Neutral at JPMorgan
United Therapeutics (UTHR) upgraded to Neutral from Underweight at JPMorgan
Xilinx (XLNX) upgraded to Buy from Hold at Drexel Hamilton

Downgrades

Coleman Cable (CCIX) downgraded to Hold from Buy at BB&T
Micron (MU) downgraded to Underperform from Neutral at BofA/Merrill
Navios Maritime Partners (NMM) downgraded to Neutral from Overweight at JPMorgan

Initiations

CONSOL Energy (CNX) reinstated with a Neutral at Goldman
Darling (DAR) reinstated with an Outperform at BMO Capital
Extended Stay America (STAY) initiated with a Buy at BofA/Merrill
Extended Stay America (STAY) initiated with a Hold at Stifel
Extended Stay America (STAY) initiated with a Neutral at Citigroup
Extended Stay America (STAY) initiated with a Neutral at Goldman
Extended Stay America (STAY) initiated with a Neutral at RW Baird
Extended Stay America (STAY) initiated with an Overweight at JPMorgan
NASDAQ (NDAQ) initiated with a Neutral at JPMorgan
OGE Energy (OGE) initiated with a Hold at KeyBanc
Plains All American (PAA) initiated with a Buy at Wunderlich
Plains GP Holdings (PAGP) initiated with a Buy at Wunderlich
Salesforce.com (CRM) initiated with an Outperform at BMO Capital
US Ecology (ECOL) initiated with an Outperform at Raymond James

HOT STOCKS

Apple (AAPL), China Mobile (CHL) announced multi-year iPhone agreement
Engility Holdings (EGL) to acquire Dynamics Research (DRCO) for $11.50 per share in cash
Archer Daniels (ADM) reached Foreign Corrupt Practices Act settlement with DOJ, SEC
CIT Group (CIT) to pay $60M to settle with Tyco (TYC)
Tiffany (TIF) lowered FY14 outlook after Dutch court ruled in favor of Swatch Group (SWGAY), to take charge of $295M-$305M in Q4
CIT Group (CIT) to pay $60M to settle with Tyco (TYC)
Tribune (TRBAA), Time Warner Cable (TWC) announced new retransmission consent agreement
Arden Group (ARDNA) to be acquired by TPG for $126.50 per share in cash
CMS Bancorp (CMSB) announced termination of merger with Customers Bancorp (CUBI)

NEWSPAPERS/WEBSITES

Behind the uptick in e-commerce is a little known secret: As much as a third of all Internet sales gets returned, and the tide of goods flowing back to retailers is rising. UPS (UPS) expects returns to jump 15% this season from last year, making them a significant and growing cost for retailers (LINTA, BBY, GPS, JWN, AMZN), the Wall Street Journal reports
Today is the final day for consumers to get new health coverage that takes effect when the new year arrives, leaving thousands of people racing to sign up in time—and health insurers (CNC, UNH, WLP, CI, HUM) trying to figure out whether the federal health law will work in the way they had hoped, the Wall Street Journal reports
GM’s (GM) European unit Opel is cautiously optimistic that sales will grow enough in 2014 to avoid a further round of cost cutting, CEO Karl-Thomas Neumann told newspaper Sueddeutsche Zeitung, Reuters reports
Unionized workers at Boeing (BA) will vote on January 3 on the company’s latest proposed contract, according to the International Association of Machinists and Aerospace Workers last night, Reuters reports
Fiat (FIATY) CEO Sergio Marchionne privately restarted negotiations with a UAW medical trust to buy the remaining shares of Chrysler Group LLC, sources say, Bloomberg reports
Las Vegas Sands (LVS) billionaire Sheldon Adelson said he is considering building individual integrated resorts in major European cities, 10 days after abandoning a plan to construct a $30B mega-resort in Spain, Bloomberg reports

BARRON’S

Nike (NKE) facing near-term earnings headwinds
American Tower (AMT) could rise over 20%
Ambac Financial (AMBC) could rise 50% in a year
PVH Corp. (PVH) could see higher profits
A. M. Castle (CAS) could recover to $16.00 in the next year
Apache (APA) could rise over $100
A Discovery (DISCA) bid for Scripps (SNI) could draw takeover interest (VIAB, FOXA, DIS)

SYNDICATE

Facebook (FB) 70M share Secondary priced at $55.05
CollabRx (CLRX) files to sell $10M in common stock, preferred stock purchase rights