Frontrunning: November 18

  • What can possibly go wrong: Tepco Successfully Removes First Nuclear Fuel Rods at Fukushima (BBG)
  • Japan’s Banks Find It Hard to Lend Easy Money (WSJ)
  • U.S. Military Eyes Cut to Pay, Benefits (WSJ)
  • Airbus to Boeing Cash In on Desert Outpost Made Field of Dreams (BBG); Dubai Air Show: Boeing leads order books race (BBG)
  • Sony sells 1 million PlayStation 4 units in first 24 hours (Reuters)
  • Russian Tycoon Prokhorov to Buy Kerimov’s Uralkali Stake (WSJ)
  • Google Opening Showrooms to Show Off Gadgets for Holidays (BBG)
  • Need. Moar. Prop. Trading: Federal Reserve considering a delay to Volcker rule (FT)
  • Raghuram Rajan plans ‘dramatic remaking’ of India’s banking system (FT)
  • SAC Capital’s Steinberg faces insider trading trial (Reuters)
  • Six killed as tornadoes rip through U.S. Midwest (Reuters)
  • High-Risk Patients Fuel More Health-Law Worry (WSJ)
  • Greece has fired or suspended 116 tax inspectors, deputy minister says (Kathimerini)
  • J.P. Morgan Reaches $4.5 Billion Settlement With Investors (WSJ)
  • Iceland Tells Hedge Funds Not to Bet on 75% Claims Writedown (BBG)


Overnight Media Digest


* The U.S. military’s top commanders, amid a shrinking Pentagon budget, have agreed to a plan that would curb the growth of pay and benefits for housing, education and health.

* The Obama administration’s overtures to Iran are straining the U.S. alliance with Israel in ways not seen in decades, compounding concerns about the White House’s ability to manage the Middle East’s proliferating security crises.

* The dearth of borrowers illustrates the reality behind Japan’s economic-policy experiment: It is easier to increase the money supply than to get people to put the cash to work.

* The asset-management industry is pushing back against a powerful, yet little known Treasury Department office that is laying the groundwork for tougher federal regulation of mutual funds and other asset managers.

* Boeing formally launched its 777X jetliner with record orders, as jet-buying commitments at the Dubai Airshow for Boeing and rival Airbus highlighted the growing ambition of Persian Gulf airlines.

* The committees that control consolidated data feeds for Nasdaq OMX Group and NYSE Euronext are nearing agreement on a plan to back up their data streams, according to people familiar with the matter.

* More than 15 percent of the factories in Wal-Mart Stores Inc’s initial round of safety inspections in Bangladesh failed their audits and had to make improvements to keep doing business with the giant retailer.

* Suntech Power Holdings Co, mired in more than $2.3 billion in debt, would pay back about 30 percent of what it owes to Chinese creditors in a deal that would also keep its solar-equipment factories humming under new management.

* Bloomberg LP’s news division will lay off about 50 people or about 2 percent of its newsroom, according to people familiar with the company’s plans, the latest financial news and data provider to make job reductions



The chair of the European Banking Authority has warned that Europe’s ability to deal effectively with the next financial crisis risks being undermined, if decision-making is not streamlined and nationalist tendencies contained.

Gulf airlines splashed out over $150 billion on new plane deals on day one of the Dubai Airshow, underlining their status as powerful forces in global aviation.

Less than a week after Barclays slashed 1700 jobs at its UK branches, the bank’s global retail head has warned of further job cuts as the bank tries to trim its cost-heavy high-street business.

Edmond de Rothschild is preparing to launch a London-based merchant banking business this week as the Franco-Swiss private banking group seeks to turn London into its fourth major business centre.

Directors’ pay at the UK’s biggest listed companies has risen 14 percent, as company bosses reap the benefits of a windfall from long-term incentive plans.

Former U.S. Treasury Secretary Timothy Geithner is joining private-equity firm Warburg Pincus as president and managing director.



* The push to reshape financial oversight hinges on negotiations in the coming weeks over the so-called Volcker Rule, a regulation that strikes at the heart of Wall Street risk-taking.

* Mobile games are a major growth opportunity, and analysts say a recent flop underscores the challenges Walt Disney faces in a shifting marketplace.

* As many as 4.8 million people could be affected by expiring jobless benefits through 2014, and there is little sign that Congress will act before it adjourns in two weeks.

* J. Craig Venter, the maverick scientist, is looking for a new world to conquer – Mars. He wants to detect life on Mars and bring it to Earth using a device called a digital biological converter, or biological teleporter.

* The flood of orders at the Dubai Airshow, including the sale of 225 of Boeing’s new 777X jets, highlighted how the big money in aviation is shifting to the Middle East and Asia.

* Timothy Geithner will join the private equity firm Warburg Pincus as president, the firm said on Saturday. It would be his first prominent position since leaving office as Treasury secretary this year.

* Were the young founders of Snapchat, a mobile-messaging start-up, delusional for turning down a multibillion-dollar buyout offer? Greedy to think they might get more later? Or courageous to chase their dreams? The decision they faced – to cash out or remain independent – is one that all successful technology entrepreneurs eventually confront.




* In a historic showdown, Rob Ford faces formal repudiation from Toronto city council, which will vote on Monday on a motion stripping him of virtually all of his powers as mayor, after three tumultuous weeks of disclosures over his use of crack cocaine and a

* A line of severe storms swept across southern and eastern Ontario Sunday night, bringing heavy rain and winds gusting to 90-kilometres an hour.

Reports in the business section:

* On two week-long trips to Australia in the past month, the CEO and vice-chairman of Saputo Inc has travelled hundreds of kilometres in the state of Victoria to meet with dairy farmers who own shares of Warrnambool Cheese and Butter Factory Co.

* Malaysia’s Petronas is lining up Asian energy players to help build a Canadian liquefied natural gas megaproject, but there is a catch. Before anyone joins the ownership team, the prospective partners must sign long-term contracts to buy LNG.


* Canada’s auditor general has found that the billions of dollars set aside for the federal government’s shipbuilding plan won’t be enough to get the navy the vessels it was promised, or needs.

* A lawyer representing embattled Toronto Mayor Rob Ford said Sunday it was “highly unlikely” he would seek a court-ordered injunction to block Toronto city council from moving forward Monday with a motion to further diminish the mayor’s power.


* It’s not exactly the 11th province just yet, but Canadian companies have been gobbling up property in the United States like never before.

* The highly anticipated next-generation gaming consoles from Sony Corp and Microsoft Corp are expected to re-energize earnings growth and boost share prices across the industry.




– Insurance regulators are considering accelerating the establishment of shipping insurance pilot programs in the Shanghai Free Trade zone, and plan to establish an offshore insurance market.


– An official with the State-owned Assets Supervision and Administration Commission (SASAC) and enterprise reform gave an interview to the China Securities Journal in which he said reforms would concentrate on institutions managing state-owned enterprises.

– Alibaba’s payment unit has partnered with Intime Retail (Group) Co Ltd to allow customers at Intime’s department stores to shop using their mobile phones, potentially leading to a shake-up of China’s Point of Sales (POS) market.


– There will be 570 million people in China who use their mobile phones to access the Internet by the end of this year, according to a forecast by consultancy iMedia Research.


– The end of the controversial “reform through labour” detention system, announced after the third party plenum, is expected to come no earlier than the end of November.

– The Chinese small and medium enterprise (SME) confidence index from Standard Chartered declined to 52.04 in the third quarter, down from the previous quarter, as small businesses remain cautiously optimistic. The article said surveys indicate SMEs are having an easier time getting loans this year.


– China is set to have the largest number of lung cancer patients in the world by 2025, according to experts at a forum in Beijing.


– In an editorial, People’s Daily called on China to further liberate people’s mind, social productivity and vibrancy.



Fly On The Wall 7:00 AM Market Snapshot



Baxter (BAX) upgraded to Outperform from Neutral at Credit Suisse
Diebold (DBD) upgraded to Buy from Hold at KeyBanc
Goldcorp (GG) upgraded to Buy from Neutral at Citigroup
Kirkland’s (KIRK) upgraded to Buy from Neutral at SunTrust
Kosmos (KOS) upgraded to Buy from Neutral at Mizuho
Lamar Advertising (LAMR) upgraded to Overweight from Equal Weight at Evercore
MSC Industrial (MSM) upgraded to Buy from Hold at BB&T
PS Business Parks (PSB) upgraded to Outperform from Market Perform at BMO Capital
Penn National (PENN) upgraded to Outperform from Market Perform at Wells Fargo
PennantPark Floating Rate (PFLT) upgraded to Outperform at Keefe Bruyette
Sappi Ltd. (SPP) upgraded to Buy from Sell at UBS
Swift Transportation (SWFT) upgraded to Outperform from Neutral at RW Baird
Vitamin Shoppe (VSI) upgraded to Conviction Buy from Buy at Goldman


Alpha Natural (ANR) downgraded to Sell from Neutral at Citigroup
Bill Barrett (BBG) downgraded to Neutral from Buy at Goldman
Bona Film (BONA) downgraded to Market Perform from Outperform at Cowen
CONSOL Energy (CNX) downgraded to Neutral from Buy at Citigroup
Commercial Metals (CMC) downgraded to Neutral from Buy at Citigroup
Corporate Office (OFC) downgraded to Market Perform from Outperform at BMO Capital
GSE Holding (GSE) downgraded to Market Perform from Outperform at Cowen
Halcon Resources (HK) downgraded to Sell from Neutral at Goldman
Interactive Brokers (IBKR) downgraded to Market Perform at Keefe Bruyette
MercadoLibre (MELI) downgraded to Underweight from Equal Weight at Morgan Stanley
Microsoft (MSFT) downgraded to Underperform from Neutral at BofA/Merrill
NVIDIA (NVDA) downgraded to Underweight from Equal Weight at Morgan Stanley
Nucor (NUE) downgraded to Neutral from Buy at Citigroup
Renewable Energy (REGI) downgraded to Hold from Buy at Canaccord
SuperValu (SVU) downgraded to Sell from Neutral at Goldman
Synchronoss (SNCR) downgraded to Neutral from Outperform at RW Baird
Walter Energy (WLT) downgraded to Neutral from Buy at Citigroup


Cyberonics (CYBX) initiated with a Buy at Citigroup
Gaming and Leisure Properties (GLPI) initiated with a Neutral at Credit Suisse
Gastar Exploration (GST) re-initiated with an Outperform at Imperial Capital
Stonegate Mortgage (SGM) initiated with an Outperform at FBR Capital


JPMorgan (JPM) reached $4.5B agreement with 21 institutional investors
Lloyds (LYG) sold asset management business to Scottish Widows Investment Partnership
Boeing (BA) launched 777X program at Dubai Airshow with over $95B in agreements
GE (GE) received $26B in agreements at Dubai Air Show
Royal Bank of Scotland (RBS) said making progress on IP&ED unit sale
FDA classified Medtronic’s (MDT) voluntary field action on guidewires a Class I recall
Media General (MEG), DISH (DISH) reached retransmission consent agreement
Insight (NSIT) announced it will be reseller of Google Chromebooks (GOOG)
Oracle (ORCL) acquired Bitzer Mobile, terms not disclosed


  • The Dubai Airshow is shaping up to be an order extravaganza for Boeing (BA), but that doesn’t mean rival Airbus (EADSY) has ceded the field, and has reported respectable numbers  as well, the Wall Street Journal reports
  • The asset-management industry (BLK) is pushing back against the Financial Stability Oversight Council, a powerful, yet little-known Treasury Department office that is laying the groundwork for tougher federal regulation of mutual funds and other asset managers, the Wall Street Journal reports
  • Capital ratios at U.S. banks have strengthened and bank lending is quite strong, Boston Fed President Eric Rosengren said today at a financial regulation conference in the United Arab Emirates, Reuters reports
  • Daimler (DDAIF) and its Chinese partner BAIC Motor will sign a new strategic cooperation agreement tomorrow, with Daimler becoming an “important partner” with shareholding rights, Reuters reports
  • Google (GOOG) is opening showrooms called Winter Wonderlabs in six U.S. cities, promoting its latest products and stepping up retail efforts against Apple (AAPL) and Microsoft (MSFT) as the year-end holiday shopping season gets under way, Bloomberg reports
  • (CRM )introduced an overhauled version of its mobile software, seeking to en
    sure clients and partners will be able to use more features of the company’s sales, marketing and customer service software, Bloomberg reports


Kimberly Clark (KMB) shares expensive despite spin-off
Blount (BLT) could offer a dividend buyback
Carlyle Group (CG) could return over 20% next year
Discovery (DISCA) could rise 20%
US Airways (LCC) could reward investors (AAMRQ)


Ascent Capital Group (ASCMA) files to sell 253,333 shares for holders
MetLife (MET) files automatic mixed securities shelf
The Bancorp (TBBK) files $100M mixed securities shelf
UPS (UPS) files automatic mixed securities shelf


via Zero Hedge Tyler Durden

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