Frontrunning: November 13

  • Headline du jour: Granted ‘decisive’ role, Chinese markets decide to slide (Reuters)
  • Desperate Philippine typhoon survivors loot, dig up water pipes (Reuters)
  • Fading Japanese market momentum frustrates investors (FT)
  • China’s meager aid to the Philippines could dent its image (Reuters)
  • Central Banks Risk Asset Bubbles in Battle With Deflation Danger (BBG)
  • Navy Ship Plan Faces Pentagon Budget Cutters (WSJ)
  • Investors pitch to take over much of Fannie and Freddie (FT)
  • To expand Khamenei’s grip on the economy, Iran stretched its laws (Reuters)
  • Short sellers bet that gunmaker shares are no long shot (FT)
  • Deflation threat in Europe may prompt investment rethink (Reuters)
  • Apple’s $10.5B on Robots to Lasers Shores Up Supply Chain (BBG)
  • Japan passes law to launch reform of electricity sector (Reuters)
  • Attack on Junk-Loan Excess Risks LBO Profits as U.S. Cracks Down (BBG)
  • Equity Traders’ Bonuses Seen Rising as Rates Salesmen Face Drop (BBG)


Overnight Media Digest


* New guidelines for reducing cholesterol and heart-attack risks mark the biggest shift in cardiovascular-disease prevention in nearly three decades. The change could more than double the number of Americans who qualify for treatment with the cholesterol-cutting drugs known as statins. ()

* China’s Communist Party plans to establish a new state security committee that analysts say will cement President Xi Jinping’s hold on the military, domestic security and foreign policy. ()

* AMR Corp and US Airways Group reached an antitrust settlement with the U.S. government to allow their $17 billion merger to proceed with only limited concessions, paving the way for a new global airline colossus. ()

* Microsoft is abandoning major elements of its controversial “stack ranking” employee review and compensation system, the latest blow against a once-popular management technique. ()

* Starbucks was ordered to pay nearly $2.8 billion for backing out of a partnership with Kraft Foods to distribute packaged coffee to grocery stores. ()

* President Barack Obama tapped senior Treasury Department official Timothy Massad to head the Commodity Futures Trading Commission, setting up a tight deadline to avoid a commission hobbled by vacancies. ()

* Boeing’s unionized workers were set to vote Wednesday on a contract that could have a far-reaching impact on relations between America’s biggest exporter and organized labor. ()

* Francis Bacon’s “Three Studies of Lucian Freud” just became the most expensive work at auction when it sold for $142.4 million at Christie’s in New York. Christie’s in New York made auction history Tuesday when it sold well over half a billion dollars worth of contemporary art in less time than it takes to watch a football game. ()



US Airways Group Inc and AMR Corp, parent of bankrupt American Airlines, will be allowed to merge to become the world’s largest airline after they agreed a series of divestments to settle a suit filed by U.S. antitrust regulators to stop the $11 billion merger.

Britain’s Financial Conduct Authority, one of seven regulators investigating a global probe on foreign exchange manipulation, has so far requested information from at least 15 of the world’s biggest banks, according to two people close to the situation.

Activist investor Dan Loeb, founder of hedge fund Third Point LLC, said Tuesday that his investment firm has taken a stake in FedEx Corp and that he met Chief Executive Fred Smith to discuss ways to improve the U.S. parcel delivery company’s performance.

Starbucks Corp has been ordered to pay Kraft Foods $2.76 billion for ending the companies’ grocery deal at least three years early, the coffee chain said on Tuesday.

IntercontinentalExchange Inc confirmed it would float Euronext, dismissing speculation that the owner of the Paris and Amsterdam stock exchanges could be sold, as it completed the $10 billion takeover of NYSE Euronext on Wednesday.

EDF Energy, one of the Britain’s “big six” energy suppliers, said it would raise gas and electricity prices for British households by 3.9 percent, significantly lower than the size of increases announced by four of its competitors.



* Nearly half of the members of the House of Representatives have signed letters signaling opposition to “fast track” authority for a trade pact with Pacific Rim nations.

* After months of setbacks and delays, the merger of American Airlines and US Airways to create the world’s largest airline became all but certain on Tuesday after the airlines reached a settlement with the Justice Department just two weeks before a scheduled trial.

* President Obama nominated Timothy Massad, who oversaw the unwinding of the government’s bailout program, to succeed Gary Gensler at the Commodity Futures Trading Commission.

* Johnson & Johnson has tentatively agreed to a settlement that could reach up to $4 billion to resolve thousands of lawsuits filed by patients injured by a flawed all-metal replacement hip, said two lawyers briefed on the plan. ()

* Mayor Michael Bloomberg on Tuesday insisted that Bloomberg News, which he owns, did not censor itself by killing two articles related to China. But he also asserted that, for at least a couple more months, he is not involved with the news service because of his role as mayor. ()

* Janet Yellen, President Obama’s choice to lead the Federal Reserve over the next four years, has championed the idea that the Fed can stimulate the economy simply by speaking clearly. ()

* High-voltage, superfast public devices for recharging electric cars are appearing more frequently, though some are more expensive for drivers than home chargers, or even gasoline. ()

* Starbucks said on Tuesday that it would pay Kraft Foods $2.75 billion, ending a long-running spat over an agreement the two food titans had for distribution of Starbucks packaged coffee in grocery stores. ()

* Private bank consultants, long known as Wall Street’s shadow regulators, are now facing some regulation of their own. The Office of the Comptroller of the Currency, which oversees some of the nation’s biggest banks, announced on Tuesd
ay that it had adopted some of the first federal standards governing the use of consultants. ()

* Hotel operator Extended Stay America priced its initial public offering on Tuesday at $20 a share, in the middle of its expected range. At that price, the company will have raised $565 million and will be valued at $4 billion. ()




* The Conservative government will squeeze public-service salaries and sell off government assets to enter the next federal election with a budget surplus of at least $3.7 billion, paving the way for promised big-ticket tax cuts.

* Ontario is looking to clamp down on tax-dodging corporations, reform its system of credits and drag the black market into the light of day – all in a bid to raise more revenue.

Reports in the business section:

* The U.S. oil boom will vault the country into first place among crude producers within two years, the International Energy Agency says, which will pose a stiff challenge for the Canadian energy industry as it faces rapidly declining American demand for imported oil.

* Canada’s finance minister Jim Flaherty says he’ll intervene in the housing market for a fifth time, if that’s what’s needed, to head off any bubble. Canada’s housing market is seen by some groups as among the frothiest in the world, though most economists do not expect a U.S.-style meltdown.


* Ottawa has earmarked $2.8 billion to pay for Alberta’s flood recovery costs. Federal Employment Minister Jason Kenney says the amount is less than the $3.1 billion Alberta had asked for following the devastating floods that hit southern Alberta in June.

* Members of Canada’s top court directed sharp questions at federal lawyers Tuesday about whether the Harper government can unilaterally change the Senate and thus alter Canada’s democratic landscape.


* The Chinese state-owned firm CNOOC Ltd has plunked down $12 million with the British Columbia government to secure land for a potential gas plant on Canada’s West Coast, in the latest move by a state-owned energy company doubling down on the province’s gas resources.

* The Canadian Secured Credit Facility, one of Ottawa’s responses to the credit crisis, may be the most financially successful government program in recent history. The reason: every penny of capital that was provided has now been repaid and the government received market interest rates along the way.




– The People’s Bank of China is mulling the creation of a commodities trading platform in the Shanghai free trade zone, starting with an oil futures contract, an unnamed industry source said at a forum on the free trade zone (FTZ) in Shanghai.

– China’s central bank is considering a platform for trading commercial paper in the Shanghai FTZ, said an academic.


– Shanghai will adjust the city’s air pollution warning system after it took 27 hours to report poor air quality last week, the Shanghai Environmental Protection Bureau said on Tuesday. Changes may include a lower threshold and a more finely delineated pollution gauge.


– The Ministry of Public Security says it is preparing to crack down on websites brokering marriages between Chinese and foreigners on concerns they enable human trafficking and fraud.

– Electric luxury car maker Tesla continues to struggle with a trademark dispute in China preventing it from selling cars under the Tesla or Tesla Motors name.

– SOHO China has begun to “rebalance” its real estate portfolio in Shanghai and Beijing, according to a microblog post by SOHO Chairman Pan Shiyi, indirectly confirming domestic media reports that the property giant was beginning to sell off property in both markets.


– China’s reforms stand at a historic starting point, said a commentary in the paper that acts as the government’s mouthpiece, referring to announcements of new policy directives from the third party plenum that closed on Tuesday. The overall objective of comprehensive reform is to improve the socialist system with Chinese characteristics, it said.


Fly On The Wall 7:00 AM Market Snapshot



ATK (ATK) upgraded to Outperform from Neutral at Credit Suisse
Heartland Express (HTLD) upgraded to Outperform from Market Perform at Wells Fargo
NuStar GP Holdings (NSH) upgraded to Neutral from Underperform at Credit Suisse
Pernix Therapeutics (PTX) upgraded to Hold from Sell at Cantor
Red Hat (RHT) upgraded to Overweight from Neutral at Piper Jaffray
Synutra (SYUT) upgraded to Outperform from Perform at Oppenheimer
U.S. Steel (X) upgraded to Overweight from Equal Weight at Morgan Stanley
Western Refining (WNR) upgraded to Buy from Neutral at UBS


Air Methods (AIRM) downgraded to Hold from Buy at WallachBeth
Amedisys (AMED) downgraded to Sell from Hold at Deutsche Bank
Aon plc (AON) downgraded to Neutral from Buy at UBS
Computer Programs (CPSI) downgraded to Equal Weight from Overweight at First Analysis
Dean Foods (DF) downgraded to Neutral from Outperform at Credit Suisse
Denbury Resources (DNR) downgraded to Market Perform from Outperform at Raymond James
Nucor (NUE) downgraded to Equal Weight from Overweight at Morgan Stanley
WhiteHorse Finance (WHF) downgraded to Equal Weight from Overweight at Barclays
WhiteHorse Finance (WHF) downgraded to Hold from Buy at BB&T


Aetna (AET) initiated with an Outperform at FBR Capital
Boyd Gaming (BYD) initiated with a Market Perform at FBR Capital
Centene (CNC) initiated with an Outperform at FBR Capital
Durata Therapeutics (DRTX) initiated with a Buy at Janney Capital
Flamel Technologies (FLML) initiated with a Buy at Janney Capital
Humana (HUM) initiated with a Market Perform at FBR Capital
Impax (IPXL) initiated with a Buy at Janney Capital
Las Vegas Sands (LVS) initiated with an Outperform at FBR Capital
lululemon (LULU) initiated with an Overweight at JPMorgan
MGM Resorts (MGM) initiated with an Outperform at FBR Capital
Penn National (PENN) initiated with a Market Perform at FBR Capital
Splunk (SPLK) initiated with a Hold at Jefferies
Tableau Software (DATA) initiated with a Buy at Janney Capital
UnitedHealth (UNH) initiated with an Outperform at FBR Capital
Wellpoint (WLP) initiated with a Market Perform at FBR Capital
Wynn Resorts (WYNN) initiated with a Market Perform at FBR Capital


Five banks (C, BK, JPM, HBC, BAC) to provide information on U.S. taxpayers with offshore bank accounts
PetroChina (PTR) acquired Petrobras (PBR) assets in Peru for about $2.6B
Mondelez (MDLZ): Arbitrator ruled Starbucks (SBUX) must pay $2.7B to end contract dispute (KRFT)
CNOOC (CEO) to examine LNG development in British Columbia
Cooper Tire (CTB) filed to delay 10-Q
Clean Energy (CLNE), UPS (UPS) signed LNG fuel agreements to supply LNG in North America
YRC Worldwide (YRCW) in contract talks with International Brotherhood of Teamsters
Tim Hortons (THI) to buy back up to 2.12M common shares
Cosi (COSI) adopted shareholders rights plan


Companies that beat consensus earnings expectations last night and today include:
TRI Pointe Homes (TPH), E-House (EJ), Copa Holdings (CPA), SINA (SINA), WuXi PharmaTech (WX), Hyperion Therapeutics (HPTX), Babcock & Wilcox (BWC), Luxoft (LXFT), MBIA (MBI), GenMark (GNMK), Potbelly (PBPB), RealD (RLD), Cvent (CVT), Woodward (WWD)

Companies that missed consensus earnings expectations include:
Dawson Geophysical (DWSN), NGL Energy Partners (NGL), Thompson Creek (TC
), Banro Corporation (BAA), Frank’s International (FI), Discovery Labs (DSCO), MarkWest Energy (MWE), Federal Agricultural Mortgage (AGM), YRC Worldwide (YRCW), Codexis (CDXS),

Companies that matched consensus earnings expectations include:
NQ Mobile (NQ)


  • Royal Dutch Shell (RDS.A) and the Iraqi government are nearing a deal to build an $11B petrochemical facility in southern Iraq, sources say, the Wall Street Journal reports
  • The pay TV industry (DISH, VZ, CHTR, T, DIS) continued to lose subscribers in Q3, analysts estimated, providing further evidence that some consumers are dropping their pay TV subscriptions, or cutting the cord, the Wall Street Journal reports
  • The Federal Reserve should keep monetary policy ultra-easy given the economy’s tepid growth and an uncertain outlook for jobs growth, two senior officials said, reinforcing views that the U.S. central bank will not taper bond buying before next year, Reuters reports
  • NTT Docomo (DCM), Japan’s largest mobile-phone operator, said the addition of Apple’s (AAPL) iPhone to its handset lineup in September is helping reduce subscriber losses to competing carriers (SFTBF), Bloomberg reports
  • Wynn Resorts (WYNN) has yet to receive a demand for information for a U.S. criminal investigation into the company’s donation to the University of Macau seven months after prosecutors disclosed the probe, Bloomberg reports


Annie’s (BNNY) announces secondary offering of 2.54M shares for holders
Atossa Genetics (ATOS) files to sell 4.2M shares of common stock for holders
Baltic Trading (BALT) files to sell common stock
BreitBurn Energy (BBEP) files to sell 15M common units
Chegg (CHGG) 15M share IPO priced at $12.50
Chelsea Therapeutics (CHTP) to offer common stock
Dynagas LNG (DLNG) 12.5M share IPO priced at $18.00
EROS International (EROS) 5M share IPO priced at $12.00
Einstein Noah (BAGL) files to sell 2.5M shares of common stock for holders
Extended Stay America (STAY) 28.25M share IPO priced at $20.00
Luxoft (LXFT) files to sell common stock for Rus Lux Limited
Safe Bulkers (SB) files to sell 5M shares and 1M shares in private placement
Synta Pharmaceuticals (SNTA) files to sell common stock


via Zero Hedge Tyler Durden

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