Author: admin

As was long predicted and foreshadowed (and analyzed here previously with the proposed FRN term sheet shown half a year ago), after nearly two years of foreplay with the idea of issuing inflation-friendly floating rate notes, moments ago as part of its refunding announcement, the Treasury announced the first floater issuance in history would take place on January 29, 2014, will have a 2 year tenor, and will amount to between $10 and $15 billion.

From the press release:

Floating Rate Notes (FRNs)

 

Treasury intends to announce the details of the initial Floating Rate Note (FRN) auction on Thursday, January 23, 2014, with the first auction occurring on Wednesday, January 29, 2014. Settlement of the security will occur on Friday, January 31, 2014.

 

The FRN is the first new product that Treasury has brought to market in 17 years.  The FRN will have a maturity of two years and Treasury anticipates that the size of the first auction will be between $10 and $15 billion. 

 

Specific terms and conditions of each FRN issue, including the auction date, issue date, and public offering amount, will be announced prior to each auction.  For more details about the new Treasury FRN product, including a term sheet, FRN auction rules, and Frequently Asked Question, please see:

 

http://www.treasurydirect.gov/instit/statreg/auctreg/auctreg.htm

 

In addition, a tentative auction calendar that includes Treasury FRNs can be found at:

 

http://www.treasury.gov/resource-center/data-chart-center/quarterly-refunding/Pages/default.aspx

As posted previously, here is what the Treasury proposes for an indicative FRN term sheet:

FRN Term Sheet

Away from the topic of FRNs, the TSY also indicated it will offer $70 billion in new paper to refund $63.5 billion, for net new cash proceeds of $6.5 billion. Recall that a few days ago, the Treasury announced it would increase its cash build by a whopping $60 billion in the quarter, hoping to leave it with $140 billion in total cash by December 31. Which begs the question: is the Treasury, in order to keep net collateral roughly flat in light of no Fed monetizing, now simply issuing more gross debt to build up cash with the proceeds? If so, this would mean that the Treasury and the Fed which is monetizing the bulk of its issuance, have reached a level of synchronicity unseen before, all of it simply to preserve the upward ramp in stocks.

Finally, and as largely expected, the Treasury once again reminded Congress to fix itself promptly (i.e., ignore the enabling impact of the Fed), and to lift the debt ceiling ahead of February 7, 2014.

Debt Limit

 

The debt limit places a limitation on the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds, and other payments.  Raising the debt limit does not authorize new spending commitments; it simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.

 

The Continuing Appropriations Act, 2014 suspended the debt limit through February 7, 2014.  A new debt limit will be calculated on February 8, 2014 in the manner prescribed by the Act.  At that time, Treasury will have extraordinary measures available, which will allow the government to continue to finance its obligations for a period of time.

 

During the recent debt limit impasse, concerns that the debt limit would not be increased before extraordinary measures were exhausted led to significant disruptions in the secondary market for short-dated Treasury securities and a measurable increase in borrowing costs for newly issued Treasury bills.  As such, Treasury respectfully urges Congress to provide certainty and stability to the economy and financial markets by acting to raise the debt limit well before February 7, 2014.

Good luck with getting a functioning congress as long as the Fed is around.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/WJYK11862e8/story01.htm Tyler Durden

The last month has seen the USD price of Bitcoins double from $130 to $270 as a combination of wider acceptance (in China and even ebay/Paypal ‘watching’) and concerns over ongoing global money printing (delayed taper) have sent the cryptocurrency to new record highs. With most ‘markets’ now manipulated or repressed by government mandate, one wonders whether Bitcoin represents the last bastion of free market expression for concern at the fiat status quo? Or is it already ‘broken‘?

 

 

Charts: Bitcoincharts.com

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/MNFRAr7e7ZI/story01.htm Tyler Durden

While it took Japan over two years to admit the Fukushima situation on the ground is “out of control“, a development many had predicted for years, a just as important topic is what are the implications of this uncontrolled radioactive disaster on not only the local environment and society but also globally, particularly Japan’s neighbor across the Pacific – the US.

To be sure, there has been much speculation, much of it unjustified, in the past two years debating when, how substantial and how acute any potential debris from Fukushima would be on the US. Which is why it was somewhat surprising to see the NOAA come out with its own modeling effort, which shows that not only “some buoyant items first reached the Pacific Northwest coast during winter 2011-2012” but to openly confirm that a debris field weighing over 1 million tons, and larger than Texas is now on the verge of hitting the American coastline, just west off the state of California.

Obviously, the NOAA in releasing such a stunner could well be hammered by the administration for “inciting panic” which is why it caveated its disclosure carefully:

Many variables affect where the debris will go and when. Items will sink, disperse, and break up along the way, and winds and ocean currents constantly change, making it very difficult to predict an exact date and location for the debris’ arrival on our shores.

 

The model gives NOAA an understanding of where debris from the tsunami may be located today, because it incorporates how winds and ocean currents since the event may have moved items through the Pacific Ocean. This model is a snapshot of where debris may be now, but it does not predict when debris will reach U.S. shores in the future. It’s a “hindcast,” rather than a “forecast.” The model also takes into account the fact that winds can move different types of debris at different speeds. For example, wind may push an upright boat (large portion above water) faster than a piece of lumber (floating mostly at and below the surface).

Still despite this “indemnity” the NOAA does come stunningly close with an estimate of both the location and size of the debris field. One look at the map below shows clearly why, while the Fed may have the economy and markets grasped firmly in its central-planning fist, when it comes to the environment it may be time to panic:

Source: NOAA

Some of the disclosures surrounding the map:

• Japan Ministry of the Environment estimates that 5 million tons of debris washed into the ocean.
• They further estimated that 70% of that debris sank near the coast of Japan soon after the event.
• Model Results: High windage items may have reached the Pacific Northwest coast as early as winter 2011-2012.
• Majority of modeled particles are still dispersed north and east of the Hawaiian Archipelago.
• NOAA expects widely scattered debris may show up intermittently along shorelines for a long period of time, over the next year, or longer.

In light of these “revelations” which come not from some tinfoil website but the Department of Commerce’s National Oceanic and Atmospheric Administration, it becomes clear why there has been virtually zero mention of any of these debris traffic patterns on the mainstream media in recent history, or ever.

Appropriately enough, since the US media will not breach this topic with a radioactive 10 foot pole, one has to go to the Russian RT.com website to learn some more:

Over a million tons of Fukushima debris could be just 1,700 miles off the American coast, floating between Hawaii and California, according to research by a US government agency.

 

 

The National Oceanic and Atmospheric Administration (NOAA) recently updated its report on the movement of the Japanese debris, generated by the March 2011 tsunami, which killed 16,000 people and led to the Fukushima nuclear power plant meltdown.

 

Seventy percent of an estimated 5 million tons of debris sank near the coast of Japan, according to the Ministry of Environment. The rest presumably floated out into the Pacific.

 

While there are no accurate estimates as to where the post-tsunami junk has traveled so far, the NOAA has come up with a computer model of the debris movement, which gives an idea of where its highest concentration could be found.

Having released the radioactive genie from the bottle, the NOAA is now doing all it can to avoid the inevitable social response. RT has more:

The agency was forced to alleviate the concerns in an article saying there was “no solid mass of debris from Japan heading to the United States.”

 

“At this point, nearly three years after the earthquake and tsunami struck Japan, whatever debris remains floating is very spread out. It is spread out so much that you could fly a plane over the Pacific Ocean and not see any debris since it is spread over a huge area, and most of the debris is small, hard-to-see objects,” NOAA explains on its official webpage.

 

The agency has stressed its research is just computer simulation, adding that “observations of the area with satellites have not shown any debris.”

 

 

Scientists are particularly interested in the organisms that could be living on objects from Japan reaching the west coast.

 

“At first we were only thinking about objects like the floating docks, but now we’re finding that all kinds of Japanese organisms are growing on the debris,” John Chapman of the Marine Science Center at Oregon State University told Fox News.

 

“We’ve found over 165 non-native species so far,” he continued. “One type of insect, and almost all the others are marine organisms … we found the European blue mussel, which was introduced to Asia long ago, and then it grew on a lot of these things that are coming across the Pacific … we’d never seen it here, and we don’t particularly want it here.”

What is the worst-case scenario:

The worst-case scenario would be that the trash is housing invasive organisms that could disrupt the local environment’s current balance of life. Such was the case in Guam, where earlier this year it was announced that the US government intended to parachute dead mice laced with sedatives on to the island in order to deal with an invasive species of brown tree snake that was believed
to have been brought to the American territory on a military ship over 60 years ago. In a little over half a century, a few snakes spawned what became an estimated 2 million animals, the likes of which ravaged the island’s native bird population and warranted government intervention.

 

Other concerns such as radiation, meanwhile, have been downplayed. On its website, the NOAA says, “Radiation experts agree that it is highly unlikely that any tsunami-generated marine debris will hold harmful levels of radiation from the Fukushima nuclear emergency.”

 

Independent groups like the 5 Gyres Institute, which tracks pollution at sea, have echoed the NOAA’s findings, saying that radiation readings have been “inconsequential.” Even the release of radioactive water from the Fukushima nuclear reactor shouldn’t be a grave concern, since scientists say it will be diluted to the point of being harmless by the time it reaches American shores in 2014.

Which is great news: since even the worst case scenario is inconsequential, we expect the broader media will promptly report on the NOAA’s findings: after all, the general public surely has nothing to fear.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vaZl1vxAC2k/story01.htm Tyler Durden

While it took Japan over two years to admit the Fukushima situation on the ground is “out of control“, a development many had predicted for years, a just as important topic is what are the implications of this uncontrolled radioactive disaster on not only the local environment and society but also globally, particularly Japan’s neighbor across the Pacific – the US.

To be sure, there has been much speculation, much of it unjustified, in the past two years debating when, how substantial and how acute any potential debris from Fukushima would be on the US. Which is why it was somewhat surprising to see the NOAA come out with its own modeling effort, which shows that not only “some buoyant items first reached the Pacific Northwest coast during winter 2011-2012” but to openly confirm that a debris field weighing over 1 million tons, and larger than Texas is now on the verge of hitting the American coastline, just west off the state of California.

Obviously, the NOAA in releasing such a stunner could well be hammered by the administration for “inciting panic” which is why it caveated its disclosure carefully:

Many variables affect where the debris will go and when. Items will sink, disperse, and break up along the way, and winds and ocean currents constantly change, making it very difficult to predict an exact date and location for the debris’ arrival on our shores.

 

The model gives NOAA an understanding of where debris from the tsunami may be located today, because it incorporates how winds and ocean currents since the event may have moved items through the Pacific Ocean. This model is a snapshot of where debris may be now, but it does not predict when debris will reach U.S. shores in the future. It’s a “hindcast,” rather than a “forecast.” The model also takes into account the fact that winds can move different types of debris at different speeds. For example, wind may push an upright boat (large portion above water) faster than a piece of lumber (floating mostly at and below the surface).

Still despite this “indemnity” the NOAA does come stunningly close with an estimate of both the location and size of the debris field. One look at the map below shows clearly why, while the Fed may have the economy and markets grasped firmly in its central-planning fist, when it comes to the environment it may be time to panic:

Source: NOAA

Some of the disclosures surrounding the map:

• Japan Ministry of the Environment estimates that 5 million tons of debris washed into the ocean.
• They further estimated that 70% of that debris sank near the coast of Japan soon after the event.
• Model Results: High windage items may have reached the Pacific Northwest coast as early as winter 2011-2012.
• Majority of modeled particles are still dispersed north and east of the Hawaiian Archipelago.
• NOAA expects widely scattered debris may show up intermittently along shorelines for a long period of time, over the next year, or longer.

In light of these “revelations” which come not from some tinfoil website but the Department of Commerce’s National Oceanic and Atmospheric Administration, it becomes clear why there has been virtually zero mention of any of these debris traffic patterns on the mainstream media in recent history, or ever.

Appropriately enough, since the US media will not breach this topic with a radioactive 10 foot pole, one has to go to the Russian RT.com website to learn some more:

Over a million tons of Fukushima debris could be just 1,700 miles off the American coast, floating between Hawaii and California, according to research by a US government agency.

 

 

The National Oceanic and Atmospheric Administration (NOAA) recently updated its report on the movement of the Japanese debris, generated by the March 2011 tsunami, which killed 16,000 people and led to the Fukushima nuclear power plant meltdown.

 

Seventy percent of an estimated 5 million tons of debris sank near the coast of Japan, according to the Ministry of Environment. The rest presumably floated out into the Pacific.

 

While there are no accurate estimates as to where the post-tsunami junk has traveled so far, the NOAA has come up with a computer model of the debris movement, which gives an idea of where its highest concentration could be found.

Having released the radioactive genie from the bottle, the NOAA is now doing all it can to avoid the inevitable social response. RT has more:

The agency was forced to alleviate the concerns in an article saying there was “no solid mass of debris from Japan heading to the United States.”

 

“At this point, nearly three years after the earthquake and tsunami struck Japan, whatever debris remains floating is very spread out. It is spread out so much that you could fly a plane over the Pacific Ocean and not see any debris since it is spread over a huge area, and most of the debris is small, hard-to-see objects,” NOAA explains on its official webpage.

 

The agency has stressed its research is just computer simulation, adding that “observations of the area with satellites have not shown any debris.”

 

 

Scientists are particularly interested in the organisms that could be living on objects from Japan reaching the west coast.

 

“At first we were only thinking about objects like the floating docks, but now we’re finding that all kinds of Japanese organisms are growing on the debris,” John Chapman of the Marine Science Center at Oregon State University told Fox News.

 

“We’ve found over 165 non-native species so far,” he continued. “One type of insect, and almost all the others are marine organisms … we found the European blue mussel, which was introduced to Asia long ago, and then it grew on a lot of these things that are coming across the Pacific … we’d never seen it here, and we don’t particularly want it here.”

What is the worst-case scenario:

The worst-case scenario would be that the trash is housing invasive organisms that could disrupt the local environment’s current balance of life. Such was the case in Guam, where earlier this year it was announced that the US government intended to parachute dead mice laced with sedatives on to the island in order to deal with an invasive species of brown tree snake that was believed to have been brought to the American territory on a military ship over 60 years ago. In a little over half a century, a few snakes spawned what became an estimated 2 million animals, the likes of which ravaged the island’s native bird population and warranted government intervention.

 

Other concerns such as radiation, meanwhile, have been downplayed. On its website, the NOAA says, “Radiation experts agree that it is highly unlikely that any tsunami-generated marine debris will hold harmful levels of radiation from the Fukushima nuclear emergency.”

 

Independent groups like the 5 Gyres Institute, which tracks pollution at sea, have echoed the NOAA’s findings, saying that radiation readings have been “inconsequential.” Even the release of radioactive water from the Fukushima nuclear reactor shouldn’t be a grave concern, since scientists say it will be diluted to the point of being harmless by the time it reaches American shores in 2014.

Which is great news: since even the worst case scenario is inconsequential, we expect the broader media will promptly report on the NOAA’s findings: after all, the general public surely has nothing to fear.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vaZl1vxAC2k/story01.htm Tyler Durden

Listening to our friends on the financial media, one is tempted to think that skillful investors are somehow able to dodge the flaming asteroids of inflation as they fall to earth.  See the last few minutes of the latest installment of the David Twohy film “Riddick” starring Vin Diesel for the visuals.  

The idea of an object falling from space as a metaphor for inflation may surprise some readers of Zero Hedge, but our friend Marc Faber likes to remind us there are many ways to lose money from inflation.  Chief among them are asset bubbles instigated by the monetary emissions of reckless central bankers who pretend, at least, to believe that they can solve problems like unemployment by merely debasing our beloved fiat currency.

The whole notion of value and wealth in a fiat monetary system is relative, especially following a major catastrophe such as the Second World War.  The history of the US of course paints the WWII period as a victory for democracy, but the fact is that the disruption and dislocation caused by that conflict and the subsequent surge in population we loving refer to as the baby boom is still being felt.  My friend and mentor Alex Pollock, Resident Scholar at American Enterprise Institute, puts it nicely in a draft essay entitled appropriately “Wealth” and Illusion:

“Before 2007, central bankers convinced themselves they had created a new era, “The Great Moderation,” but what they actually presided over was the Era of Great Bubbles.  In the U.S. we had first the Great Overpaying for Tech Stocks in the 1990s, then the Great Leveraging of Real Estate in the 2000s,” Pollock writes.  “Inevitably following each of the great bubbles was a price shrivel.  Then many commentators talked about how people “lost their wealth,” with statements like “in the housing crisis households lost $7 trillion in wealth.”  But since the $7 trillion was never really there in the first place, it wasn’t really lost.” 

To the real estate bubble of the 2000s, we could add the more recent rebound of the housing sector and stock prices.  But in truth, if you take the distressed transactions out of the time series, the rebound in home prices over the past 24 months is probably in single digits.  Meaning no offense to the investors in Invitation Homes 2013-SFR1, a rent securitization collateralized by one floating rate loan secured by 3,207 single family rental residential properties, the peak in US home prices in this “cycle” probably coincided with the initial public offering of RMAX.  

More to the point of wealth illusions, consider the latest run up in the Dow and other equity market indices.  Somehow commentators in the financial media are able to talk into the camera with a straight face about investor gains in stocks, this even as the central bank is robbing consumers of real purchasing power via a steady inflation of the currency.  If the major stock market indices are at all-time highs, but the supposed risk free rate is zero, what does this imply?  Are we all wealthier because the Dow is at 15,000 or is the whole point of quantitative easing merely to boost “confidence” as the Fed’s own policy statements suggest?  Again Pollock:

“Common calculations of aggregate ‘wealth’ take the entire stock of an asset class and multiply it by the bubble prices, on the theory that financial value is what you can sell something for.  Of course, some clever or lucky individuals succeed in selling at the bubble highs, but the aggregate bubble prices can never be realized by sale.  As soon as any very great number of the owners of a bubble asset try to sell it, the bubble collapses, the evanescent “wealth” disappears, and the long-term trend reasserts itself.”

And what is the long term trend for wealth creation in America?  Pollock suggests that it is about 2% a year in real, inflation adjusted terms.  “The rate of increase may seem modest, but in fact represents a miracle of the market economy,” he notes. While this rate of increased in aggregate wealth may reassure those who care about long terms trends, it also suggests that the latest increase in equity market valuations are greatly exaggerated and probably not sustainable.

Of course the neo-Keynesian socialists who dominate the economics profession like us all to believe that the “wealth effect” of rising home or stock prices is real, but in fact, like most economic notions, it is merely an illusion foisted upon all of us by a servile financial media. Income and production, not asset prices, are the real bases of wealth.  

If you tell people the truth; that real wealth can only ever rise 2% per annum on average, nobody would give a hoot about the global equity or bond markets.  Humans like dogs and fish, prefer to chase the shiny object rather than let time and hard work grow wealth slowly.  The whole notion of the “wealth effect” is a canard and should not be mistaken with real affluence. 

Home prices, as with aggregate wealth, only really ever increase at the rate of population growth.  So if the population of households and home owners is actually declining, as it is today, what does this imply for future home price appreciation and personal wealth?  If Case-Shiller is rising at a 12% annual rate, does this not imply that home prices must soon decline to be consistent with long-term price trends?  

But as Pollock notes, “per capita wealth of the sustainable kind grows at 2%, with the inflations and shrivels of bubbles netting themselves out.  With this trend increase, in a lifetime of 83 years, Americans will on average grow five times as wealthy.  Along the way, they should avoid confusing the ‘wealth’ of bubbles with actual aggregate wealth.” 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/TOElwl90wmc/story01.htm rcwhalen

• Christie Sets Himself Up for Run in 2016 (WSJ)
• De Blasio Elected Next New York City Mayor in Landslide (WSJ)
• Hilsenrath: Fed Study: Rate Peg Off Mark (WSJ)
• MF Global Customers Will Recover All They Lost (NYT) – amazing what happens when you look under the rug
• Virginia, Alabama Voter Choices Show Tea Party Declining (BBG)
• Explosions kill 1, injure 8 in north China city (Reuters)
• Toyota boosts full-year guidance as weak yen drives revenues (FT)
• Starbucks wants to recruit 10,000 vets, spouses to its ranks (Reuters)
• U.S. Economy Slack Justifies Stimulus, Top Fed Staff Papers Show (BBG)
• Israel set to become major gas exporter (FT)
• Apple Adds Suppliers to Boost Smartphone, Tablet Production (WSJ)
• China’s Slower Growth Puts a Drag on Western Profits (WSJ)
• Brent Crude Traders Claim Proof BFOE Boys Rigged Market (BBG)
• Young Avoid New Health Plans (WSJ)
• Apple reveals government data request figures (Telegraph)
• Facebook Misadventure Means Scrutiny on NYSE With Twitter (BBG)
• New York Nerds Sift Citi Bike Data to Solve Availability (BBG)
• IRS Cracks Down on Breaks Tied to Land of Rich Americans (BBG)

 

Overnight Media Digest

WSJ

* Republican Governor Chris Christie easily won re-election in New Jersey, while Democrat Terry McAuliffe won in Virginia, a decision that sent mixed messages to both parties about their political strengths.

* On the day he coasted to re-election as governor of New Jersey, Republican Chris Christie spent his time talking about issues facing the entire country, setting himself up for a possible 2016 White House bid.

* Elite MBAs are increasingly heading to work in technology over finance as the lingering aftereffects of the financial crisis-along with Wall Street’s long hours and scaled-back pay-send newly minted MBAs elsewhere.

* The Federal Reserve could help drive down unemployment faster if it promised to keep short-term interest rates near zero for longer than currently envisioned by officials or investors, according to a new research paper by a top central-bank staff member.

* Shares of Colombian airline Avianca Holdings are due to begin trading Wednesday on the New York Stock Exchange, capping a turnaround 10 years in the making by investor Germán Efromovich.

* J.C. Penney is expected to say this week that its sales turned positive in October – but that won’t quell worries about the retailer’s financial health. Gross margin and cash burn remain concerns.

* EU regulators are poised to levy massive fines against a group of banks tied to their alleged attempts to manipulate benchmark interest rates, according to officials briefed on the discussions.

* Bart Chilton, the animated and outspoken member of the Commodity Futures Trading Commission who has agitated for tougher Wall Street regulation, is stepping down from his post after he secured agency support for trading restraints. Chilton, a Democrat, announced his departure Tuesday ahead of the agency’s 3-1 vote to propose restraints aimed at curbing speculation in commodities such as oil, gold and sugar.

* Demand Media Inc showed it is moving forward on a planned spin off of its domain services business, disclosing both the name of the new company and the appointment of a senior executive in the domain services unit to be its chief executive.

 

FT

Electric car maker Tesla Motors Inc reported third-quarter deliveries of its Model S below analysts’ expectations, pushing shares down more than 12 percent in after-the-bell trade on Tuesday.

JT Wang, chairman and chief executive of Taiwan’s Acer , said he would step down as a continuing decline in global demand for PCs pushed the computer maker into further losses.

Rupert Murdoch’s 21st Century Fox Inc reported quarterly earnings below analysts’ estimates on Tuesday, hurt by investments in new sports channel and a weaker performance from its movie studio.

Dahabshiil, Africa’s biggest money transfer company, has won an injunction to stop Barclays Plc closing its account until the conclusion of a full trial, expected next year.

Big global oil companies are under pressure from investors to curb their vast capital spending programmes and return more cash to shareholders.

Encana Corp, Canada’s largest natural gas producer, said on Tuesday it would cut capital spending, workforce and dividends as it looks to shift to oil production to bolster its finances.

Deutsche Bank’s co-CEO Jürgen Fitschen was named on Monday as a suspect in a investigation into falsifying evidence, as a decade-long civil suit brought by the media empire Kirch Group continues to cast a shadow over the lender.

 

NYT

* A federal bankruptcy judge cleared the way for brokerage firm MF Global’s roughly 20,000 customers to collect their full $1.6 billion in vanished money, covering the remaining shortfall.

* The government’s $1.2 billion settlement with SAC Capital Advisors set a record for insider trading penalties.

* The Commodity Futures Trading Commission on Tuesday voted 3 to 1 to limit the size of any trader’s footprint in the commodities market. Gary Gensler, the chairman of the commission, said on Tuesday that the new position limits would “help to protect the markets both in times of clear skies, price discovery functions, certainly, as well as when there’s a storm on the horizon.”

* Ford’s plant in Genk, Belgium, is scheduled to close at the end of the year, but only after a long, bitter struggle that cost the company $750 million.

* Tesla Motors said it narrowed its third-quarter loss compared with the same per
iod a year ago, as it sold more Model S all-electric luxury sedans. But Tesla said its fourth-quarter earnings would be similar to the third quarter as it continues to invest in research and development and build infrastructure.

* CBS News, under fire from critics who dispute details in a “60 Minutes” report on the Benghazi attacks last year that was broadcast on Oct. 27, aggressively defended the report’s accuracy on Tuesday and the account of its main interview subject.

* On a day when consumers in Washington State were voting on whether to require food companies to label products containing genetically engineered ingredients, Cargill announced that it would begin labeling packages of ground beef containing what is colloquially known as pink slime.

* New York state financial regulators have subpoenaed about 20 companies that help New York’s pension trustees decide how to invest the billions of dollars under their control to determine whether any outside advice is clouded by undisclosed financial incentives or other conflicts of interest.

* The private equity firm Brentwood Associates has won the bidding war for the Allen Edmonds Corp, the high-end men’s shoemaker, ending a sale process that included suitors like Men’s Wearhouse.

* Endo Health Solutions, a health care company known for its pain medication, has reached a deal to acquire a Canadian specialty drug company, Paladin Labs, for $1.6 billion in stock and cash.

 

Canada

THE GLOBE AND MAIL

* U.S. giant Verizon Communications Inc appears to be taking a second look at the Canadian market after hiring a consultant to lobby the federal government on its telecommunications policy.

* The premiers of British Columbia and Alberta have reached a framework for an agreement to satisfy British Columbia’s five conditions for supporting oil pipeline development in the province, though they agree work remains to be done to ensure British Columbia gets its “fair share” of revenues from such projects.

Reports in the business section:

* Inventory levels are creeping up in Canada’s most populous city Toronto and a large number of new towers are still projected to come on stream next year.

* Canada’s oil industry is producing more greenhouse gas emissions per barrel than it did five years ago, despite Alberta regulations aimed at curbing them and growing political pressure on the industry from governments in the United States and Europe concerned about climate change.

NATIONAL POST

* Amid growing concerns about Toronto Mayor Rob Ford’s ability to do his job, councillors are mounting an effort to curb his power at city hall, and to convince him to take a leave.

* After more than two weeks of startling, acrimonious and sometimes emotional debate, the Senate of Canada on Tuesday suspended three of its members – Pamela Wallin, Mike Duffy and Patrick Brazeau – without pay for the next two years.

FINANCIAL POST

* Waterloo, Ontario-based software company Open Text Corp announced on Tuesday that it was buying cloud technology provider GXS Group Inc in a deal worth $1.17 billion.

* Rogers Communications Inc confirmed on Tuesday that it has cut close to 100 jobs at its media division. The Toronto-based company laid off 94 employees, spokeswoman Andrea Goldstein said, adding that represents less than 2 percent of its workforce of about 5,400.

 

China

SHANGHAI SECURITIES NEWS

– Wu Jinglian, senior research fellow for the State Council Developmental Research Centre, said he expects a major reform breakthrough at the upcoming 3rd Party Plenum.

CHINA SECURITIES JOURNAL

– For the first three quarters of this year, the net profit of 19 Chinese listed brokerage firms rose 35.44 percent year-on-year to 19.8 billion yuan ($3.25 billion), in part due to an income increase in asset management business.

– Carbon markets in Beijing, Shanghai and Guangdong are expected to start trading by the end of this year to reduce the overall cost of emission reduction and thereby reduce emissions, said Xie Zhenhua, vice-director of the National Development and Reform Commission, on Tuesday at a conference.

CHINA DAILY

– China’s top climate negotiator has said he expects Chinese pollution to ease in five to 10 years.

CHINA BUSINESS NEWS

– China’s CPI in October is likely to increase by 3.2 percent year-on-year, according to a survey of 20 economists conducted by China Business News.

PEOPLE’S DAILY

– After 30 years of rapid development, environmental issues, such as air pollution have become not only economic and social problems, but a political issue, said a commentary in the paper that serves as the government’s mouthpiece.

SHANGHAI DAILY

– Sellers of Gannan navel oranges from Jiangsu province falsely labelled their fruit as imported from Australia or the U.S. after domestic sales tanked on reports they contained cancer-causing chemical dyes, according to official statements.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Cardinal Health (CAH) upgraded to Buy from Neutral at Sterne Agee
Encana (ECA) upgraded to Hold from Sell at Deutsche Bank
Encana (ECA) upgraded to Neutral from Underperform at BofA/Merrill
Endo Health (ENDP) upgraded to Hold from Sell at Cantor
Endo Health (ENDP) upgraded to Neutral from Underweight at Piper Jaffray
Hancock Holding (HBHC) upgraded to Buy from Neutral at SunTrust
Host Hotels (HST) upgraded to Buy from Neutral at SunTrust
Interactive Intelligence (ININ) upgraded to Outperform from Market Perform at Northland
Office Depot (ODP) upgraded to Buy from Neutral at B. Riley
Pike Electric (PIKE) upgraded to Buy from Neutral at Janney Capital
Ryanair (RYAAY) upgraded to Buy from Neutral at Nomura
Southern Copper (SCCO) upgraded to Market Perform from Underperform at Cowen
T-Mobile (TMUS) upgraded to Buy from Hold at Canaccord

Downgrades

AMR Corp. (AAMRQ) downgraded to Neutral from Overweight at JPMorgan
Advisory Board (ABCO) downgraded to Market Perform from Outperform at Raymond James
AerCap (AER) downgraded to Underperform from Buy at BofA/Merrill
Buffalo Wild Wings (BWLD) downgraded to Hold from Buy at Miller Tabak
ExlService (EXLS) downgraded to Market Perform from Outperform at William Blair
Expeditors (EXPD) downgraded to Neutral from Buy at Goldman
Halcon Resources (HK) downgraded to Hold from Buy at Canaccord
LeapFrog (LF) downgraded to In-Line from Outperform at Imperial Capital
Maxim Integrated (MXIM) downgraded to Neutral from Buy at SunTrust
Penn National (PENN) downgraded to Sector Perform from Outperform at RBC Capital
Pioneer Natural (PXD) downgraded to Neutral from Buy at Sterne Agee
Red Robin (RRGB) downgraded to Underperform from Neutral at BofA/Merrill
Tornier (TRNX) downgraded to Sector Perform from Outperform at RBC Capital
Unilever (UN) downgraded to Neutral from Buy at Nomura
VIVUS (VVUS) downgraded to Neutral from Buy at BofA/Merrill
ZAGG (ZAGG) downgraded to Neutral from Overweight at JPMorgan

Initiations

Bruker (BRKR) initiated with an Overweight at Morgan Stanley
Magnum Hunter (MHR) re-initiated with an In-Line at Imperial Capital
Morningstar (MORN) initiated with a Market Perform at Keefe Bruyette
Pattern Energy (PEGI) initiated with an Outperform at BMO Capital
Pattern Energy (PEGI) initiated with an Outperform at RBC Capital
Rogers Communications (RCI) initiated with an Equal Weight at Barclays
Shaw Communications (SJR) initiated with an Equal Weight at Barclays
TELUS (TU) initiated with an Overweight at Barclays
TG Therapeutics (TGTX) initiated with a Buy at MLV & Co.

HOT STOCKS

Columbia Property Trust (CXP) sold 18 properties for $521.5M
Liberty Global (LBTYA) on track for target of $3.5B of buybacks by mid-2015
SM Energy (SM) to divest Anadarko Basin assets
VMware (VMW), Mirantis announced partnership
M/A-Com (MTSI) to acquire Mindspeed Technologies (MSPD) for $5.05 per share
Amdocs (DOX) to acquire Celcite for $129M cash

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Humana (HUM), Delek Logistics (DKL), Mindspeed (MSPD), SandRidge Energy (SD), RenaissanceRe (RNR), HCI Group (HCI), Zillow (Z), URS Corporation (URS), ONEOK (OKE), Emerald Oil (EOX), Jazz Pharmaceuticals (JAZZ), Life Technologies (LIFE), Seattle Genetics (SGEN), ServiceSource (SREV), Web.com (WWWW), Fossil (FOSL), DaVita (DVA), DealerTrack (TRAK), Tesla (TSLA), Hain Celestial (HAIN), Ternium (TX)

Companies that missed consensus earnings expectations include:
Endeavour (END), Global Geophysical (GGS), Liberty Global (LBTYA), Ormat Technologies (ORA), Energy Transfer Equity (ETE), J2 Global (JCOM), LSB Industries (LXU), Medifast (MED), C.H. Robinson (CHRW), MAKO Surgical (MAKO),  Live Nation (LYV), Amdocs (DOX), OfficeMax (OMX), VIVUS (VVUS), Office Depot (ODP), 21st Century Fox (FOXA)

Companies that matched consensus earnings expectations include:
Papa John’s (PZZA), SciQuest (SQI), Brookfield Residential (BRP), M/A-COM (MTSI), ONEOK Partners (OKS), Frontier Communications (FTR), Cadence (CADX), Limelight Networks (LLNW)

NEWSPAPERS/WEBSITES

• EU antitrust regulators are poised to levy large fines against six global banks (CRARY, SCGLY, DB, HBC, RBS, JPM) tied to their alleged attempts to manipulate benchmark interest rates, sources say, the Wall Street Journal reports
• J.C. Penney (JCP) is expected to say this week that its sales turned positive in October, but that won’t quell worries about the retailer’s financial health. The concern is that sales won’t rise fast enough or be profitable enough to head off the need to raise more cash next year, the Wall Street Journal reports
• Microsoft (MSFT) narrowed its list of external candidates to replace CEO Ballmer to about five people, including Ford Motor (F) CEO Mulally and former Nokia (NOK) CEO Elop, sources say, Reuters reports
• Starbucks (SBUX) would commit to hiring at least 10,000 veterans and spouses of active military in five years, Reuters reports
• The U.S. oil industry (XOM, CVX,TSO), riding a domestic energy boom, is preparing to challenge restrictions on crude exports, possibly by arguing that limits designed to keep petroleum in America may violate international trade rules, Bloomberg reports
• Wells Fargo (WFC) is among firms facing federal scrutiny of mortgage-bond sales under a 1989 law the government is using to extend probes of banks’ roles in the credit crisis, sources say, Bloomberg reports

SYNDICATE

Arc Logistics (ARCX) 6M share IPO priced at $19.00
Barracuda Networks (CUDA) 4.1M share IPO priced at $18.00
Blue Capital (BCRH) 6.25M share IPO priced at $20.00
Boise Cascade (BCC) files to sell 8M shares of common stock for holders
ChannelAdvisor (ECOM) 5M share Secondary priced at $34.00
Diamondback Energy (FANG) files to sell 17.46M shares for holders
InterMune (ITMN) 6.5M share Secondary priced at $13.00
Karyopharm (KPTI) 6.8M share IPO priced at $16.00
Keating Capital (KIPO) announces rights offering of 2.95M shares of common stock
Seacoast Banking (SBCF) commences registered direct offering of $75M of common stock
Wix.com (WIX) 7.7M share IPO priced at $16.50
ZELTIQ Aesthetics (ZLTQ) files to sell 4.5M shares of common stock for holders
Zogenix (ZGNX) 26.67M share Secondary priced at $2.25

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4OUZaVMssAg/story01.htm Tyler Durden