Frontrunning: September 28
- China accuses Bo Xilai of multiple crimes, expels him from communist party (Reuters), China seals Bo's fate ahead of November 8 leadership congress (Reuters)
- "Dozens of phone calls on days, nights and weekends" - How Bernanke Pulled the Fed His Way - Hilsenrath (WSJ)
- Fed won't "enable" irresponsible fiscal policy-Bullard (Reuters)
- PBOC Adviser Says Easing Restrained by Concerns on Homes (Bloomberg)
- Data Point to Euro-Zone Recession (WSJ)
- Fiscal cliff dims business mood (FT)
- FSA to Oversee Libor in Streamlining of Tarnished Rates (Bloomberg)
- Monti Says ECB Conditions, IMF Role Hinder Bond Requests (Bloomberg)
- Japan Heads for GDP Contraction as South Korea Weakens (Bloomberg)
- Moody’s downgrades South Africa (FT)
- Madrid Struggles With Homage to Catalonia (WSJ)
Overnight Media Digest
* Mitt Romney and President Barack Obama are running neck and neck in the battleground states of North Carolina and Nevada, new polling shows, while Romney faces an uphill battle to win New Hampshire, a state he picked to launch his campaign and that has long served as a second home.
* Israeli Prime Minister Benjamin Netanyahu said Iran was on track to build an atomic bomb by summer of 2013 and exhorted the U.S. and other global powers to set a strict limit on Tehran's nuclear fuel production as the clear "red line" that would trigger military strikes.
* Spain unveiled a series of regulatory overhauls and $16.7 billion of spending cuts and tax increases, as mounting political turmoil heightened investor concerns over Prime Minister Rajoy's ability to stabilize the economy.
* A proposed outlay of $200 million in retention bonuses appears to be threatening the $70 billion proposed combination of natural-resource giants Glencore International Plc and Xstrata Plc.
* Research in Motion Ltd posted its third straight quarterly loss. But the BlackBerry maker's revenue and operating loss came in significantly better than expectations.
* The European Union on Thursday asked the World Trade Organization for permission to impose $12 billion in annual trade penalties on U.S. companies, saying Washington hadn't ended subsidies to aerospace company Boeing Co that the WTO said last year violated international trade rules.
* General Electric Co Chief Executive Jeff Immelt gave an upbeat outlook for sales in the company's industrial businesses, thanks to booming aircraft-engine sales, rising medical-device orders in emerging markets and a growing oil and gas business.
* Google Inc on Thursday said it blocked a Brazilian political video from its YouTube site, a day after that country's Federal Police detained the head of the Internet giant's Brazilian operations for refusing a court order to do so.
LIBOR LENDING RATE TO GET FULL OVERHAUL
The "broken" Libor interbank lending rate will get "a complete overhaul", according to Martin Wheatley, the Financial Services Authority managing director.
SPAIN UNVEILS AUSTERITY BUDGET
The Spanish government announced budget cuts and tax increases totalling 40 billion euros ($51.45 billion)for next year.
CAR INSURERS FACE SHAKE-UP WITH PROBE INTO MARKET
Regulators will launch a full-blown investigation into the motor insurance market on Friday.
CHINA BUYS INTO UK STUDENT HOUSING
A Chinese government fund is set to buy a 40 percent stake in the UK's largest developer of student housing.
BANK EARNINGS FROM M&A DROP TO LEHMAN LOW
Investment bank earnings from mergers and acquisitions and debt and equity capital markets has slowed to a low not seen since the collapse of Lehman Brothers.
UK FEARS FRENCH PUSH FOR BAE-EADS STAKE
The French government is pushing to hold a large stake in the group to be created by combining EADS and BAE .
GOLDMAN IN $14 MLN FINE FOR CONTRIBUTIONS
Goldman Sachs will pay about $12 million to settle charges it violated "pay-to-play" rules.
US FARM DROUGHT HITS GROWTH
The effects of drought across the U.S. farm belt resulted in revised estimates for second quarter down from 1.7 to 1.3 percent.
* British authorities are set to announce significant changes to the interest rate at the heart of a recent manipulation scandal as they aim to improve the accuracy and reliability of the benchmark.
* The Spanish government on Thursday presented a draft budget for 2013 with a package of tax increases and spending cuts that it said would guarantee the country could meet deficit-cutting targets agreed to with the rest of the euro zone.
* The European Union inched closer to a trans-Atlantic trade war on Thursday, saying that it would ask the World Trade Organization for the right to impose up to $12 billion in annual trade sanctions against the United States in retaliation for subsidies to Boeing Co that Brussels says give the plane maker an unfair advantage over its European rival, Airbus.
* A closely watched measure of consumer confidence surged to its highest level since February, even as job growth and the overall economy in the United States weakened.
* Treasury Secretary Timothy Geithner on Thursday urged the regulatory team that he leads to push ahead with new rules aimed at money market funds, which manage $2.6 trillion.
* Research in Motion Ltd, the troubled manufacturer of the once-dominant BlackBerry smartphone, reported another sizable quarterly loss on Thursday, but a smaller one than the previous quarter. However, the company continues to face a difficult future as it struggles to get a new phone out the door.
* Nike Inc reported on Thursday that its fiscal first-quarter net income fell 12 percent as stronger sales of its clothing and footwear brands were offset by increased costs and advertising spending.
* Greece, heavily in debt and desperate to track down money, is asking British authorities about investments by Greeks in expensive real estate.
* The optimistic view at the Paris Motor Show on Thursday was that auto sales were so bad that they could not possibly get any worse.
But even if there is a slight recovery in 2013, as some predict, it is dawning on industry executives that it could be years before sales return to the levels of 2007, when they peaked just before the financial crisis.
THE GLOBE AND MAIL
* The Conservative government is poised to adopt a sweeping new investment treaty between Canada and China without a single Parliamentary vote or debate.
The text of the Foreign Investment Promotion and Protection Agreement was released for the first time this week and members of Parliament are just starting to work their way through the legal document.
* The Supreme Court of Canada has joined the battle to eliminate bullying, clearing the way for a Nova Scotia girl to pursue her Facebook tormentors under a cloak of anonymity.
The court said on Thursday that vulnerable minors cannot be expected to confront cyber bullies unless they can do so without exposing their full identities.
* Canada's population is growing faster than any other G8 country, driven largely by immigration, Statistics Canada says. Saskatchewan has become a magnet for newcomers, with immigration fuelling a larger share of its population growth than any other province or territory.
The country's population nudged closer to 35 million, sitting at an estimated 34,880,500 on July 1. The figure is up 1.1 per cent from a year earlier, making Canada's annual growth rate the highest among G8 countries.
Reports in the business section:
* Research in Motion Ltd is learning to be hungry again. Once the dominant force in the smartphone industry, the struggling BlackBerry maker is undertaking a company-wide plan to become smaller and leaner, slashing thousands of jobs to offset its tumbling sales.
* Ontario Finance Minister Dwight Duncan is trying to make amends with Alberta, telling business leaders his government supports development in the oil sands despite previously saying the hot energy industry hurts manufacturing in eastern Canada.
* Big investment decisions loom for auto makers and the federal and Ontario governments in the next four years as companies take advantage of a new contract that should stabilize their labour costs and possibly cut them.
* NDP leader Adrian Dix says if he is elected premier, he will consider getting rid of British Columbia's balanced-budget legislation.
Dix said Thursday he doesn't like the Liberal government's budget law, saying it's better to have the goal of balancing the budget rather than having a law that has to be repealed every time the books are inconveniently in the red.
* By going against party wishes and voting to re-evaluate Canadian policy on where personhood begins, Rona Ambrose, minister of state for the status of women, has sparked not only a backlash, but a debate over whether women can both champion women's rights and yet have nuanced views about abortion.
Ambrose faced calls for her resignation and a barrage of criticism Thursday after standing up in support of M-312, a private member's motion that would have struck a committee to study parts of the Criminal Code that establish when a fetus becomes a legal person.
* The impressive rally in commodities this past summer has lost steam in recent weeks despite another flood of liquidity from central banks, and slower emerging market growth may further weaken resource prices, says a new report from Capital Economics.
"The prospects for economic growth in commodity-hungry emerging markets suggest the outlook remains challenging," said economists Mark Williams and Neil Shearing.
* The scene has been set for a little diversification in the world of mutual fund trusts, a category of issuer available under Canada's Income Tax Act.
Over the past 22 months, the category has been the home of oil and gas issuers who own properties in the U.S. and sell a piece of those properties to Canadian investors. So far three issuers - Eagle Energy Trust, Parallel Energy Trust and Argent Energy Trust - have tested the market and found willing buyers.
Fly on the Wall 7:00 am Market Snapshot
Publicis (PUBGY) upgraded to Outperform from Neutral at Macquarie
Syngenta (SYT) upgraded to Overweight from Neutral at HSBC
ArcelorMittal (MT) downgraded to Neutral from Outperform at Macquarie
Box Ships (TEU) downgraded to Equal Weight from Overweight at Morgan Stanley
Caterpillar (CAT) downgraded to Neutral from Buy at BofA/Merrill
FMC Corporation (FMC) downgraded to Neutral from Buy at BofA/Merrill
McDonald's (MCD) downgraded to Neutral from Buy at Janney Capital
United Technologies (UTX) downgraded to Perform from Outperform at Oppenheimer
American Capital Mortgage (MTGE) initiated with an Outperform at JMP Securities
American Financial Group (AFG) initiated with a Buy at Janney Capital
Atlas Pipeline Partners (APL) initiated with an Overweight at Stephens
Avago (AVGO) initiated with a Buy at Brean Murray
Broadcom (BRCM) initiated with a Buy at Brean Murray
Devon Energy (DVN) initiated with an Outperform at Credit Suisse
HCC Insurance (HCC) initiated with a Buy at Janney Capital
Halcon Resources (HK) initiated with a Buy at Canaccord
MarkWest Energy (MWE) initiated with an Overweight at Stephens
Marvell (MRVL) initiated with a Hold at Brean Murray
NVIDIA (NVDA) initiated with a Hold at Brean Murray
Qualcomm (QCOM) initiated with a Buy at Brean Murray
RF Micro Devices (RFMD) initiated with a Buy at Brean Murray
Skyworks (SWKS) initiated with a Buy at Brean Murray
CIT Group (CIT) CEO Thain told CNBC: "Absolutely not" shopping company
Medtronic (MDT) acquired China Kanghui (KH) for $30.75 per ADS, or $816M in cash
Nike (NKE) sees Q2 revenue growth to be in the mid-high single digits
Will continue to make strategic investments
Research in Motion (RIMM) sees continued pressure on operating results for FY13
Said continues to hold talks with potential partners
Prudential (PRU) acquired Hartford’s (HIG) life Insurance business for $615M In cash
Sealy (ZZ) shareholder H Partners said Tempur-Pedic (TPX) offer undervalues Sealy
Accenture (ACN) targeting FY13 new bookings $31B-$34B
Tata Starbucks Ltd. (SBUX) readies India market entry by end of October
Ralcorp Holdings (RAH) announced sale of stake in Post Holdings (POST)
Ecolab (ECL) purchased FEMSA (FMX) subsidiary
Rambus (RMBS), Fujitsu Semiconductor signed patent license agreement
FTI Consulting (FCN) to acquire KordaMentha, terms not disclosed
AZZ Inc. (AZZ) to acquire Galvcast Manufacturing
Navarre (NAVR) to acquire SpeedFC for $50M in cash and stock
Companies that beat consensus earnings expectations last night and today include:
AZZ Inc. (AZZ), Nike (NKE), Correction: Research in Motion (RIMM)
Companies that missed consensus earnings expectations include:
Companies that matched consensus earnings expectations include:
Accenture (ACN), Global Payments (GPN)
Wal-Mart Stores (WMT) is expanding in Japan for the first time since 2008, as increases in the ranks of the working poor and pensioners on fixed incomes propel a trend toward thrift there. The retailer is planning 22 new stores in Japan in the next two years, the Wall Street Journal reports
Sharp Corp. (SHCAY) reached a deal for a $4.64B syndicated loan, helping keep the struggling firm’s operations afloat amid an apparent standstill in talks with Taiwan's Hon Hai Precision Industry over a previously agreed upon capital injection, the Wall Street Journal reports
China's economy is expected to grow at a much slower pace of about 7% over the next decade, but its stock market still has the most attractive upside among "BRIC" countries, said Jim O'Neill, Chairman of Goldman Sachs (GS) Asset Management, Reuters reports
Germany will give France a list of proposals regarding the planned merger of European aerospace group EADS (EADSY) and BAE Systems (BAESY), sources say, Reuters reports
Facebook (FB) and Twitter Inc. have millions of users in China, where the social networking services are banned, according to the results of a GlobalWebIndex survey. Facebook grew to 63.5M in Q2 from 7.9M in 2009, while Twitter users tripled to 35.5M in the same period, Bloomberg reports
The Justice Department, conducting a criminal probe of interest-rate manipulation, asked the U.K.’s Home Office for permission to interview London traders, sources say, Bloomberg reports
Clearwire (CLWR) to offer 46.4M shares of common stock by Time Warner Cable affiliates
Dollar General (DG) 36M share Secondary priced at $51.75
EMCORE (EMKR) intends to offer $8M of common stock
Eagle Materials (EXP) 3M share Secondary priced at $46.50
Hercules Technology (HTGC) announces offering of 3.1M shares of common stock
Qualys (QLYS) 7.575M share IPO priced at $12
Summit Hotel Properties (INN) 12M share Secondary priced at $8.15
Summit Midstream (SMLP) Partners 12.5M share IPO priced at $20.00
Wesco Aircraft (WAIR) files to sell 1.8M shares of common stock for holders
Western Asset Mortgage (WMC) announces offering of 12M shares of common stock