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Frontrunning: October 4

Tyler Durden's picture





 
  • Romney dominates presidential debate (FT)
  • What Romney’s Debate Victory Means (Bloomberg)
  • Obama Lead Shrinks in Two Battlegrounds (WSJ)
  • "Everything will fall apart unless the Spanish conditions are extremely tough" German policy-maker (Telegraph)
  • Draghi Stares at Spain as Brinkmanship Keeps ECB Waiting (Bloomberg)
  • RBS facing loss after Spanish property firm collapse (Telegraph)
  • Burdened by Old Mortgages, Banks Are Slow to Lend Now (WSJ)
  • The Woman Who Took the Fall for JPMorgan Chase (NYT)
  • European Banks Told to Hold On to $258 Billion of Fresh Capital (Bloomberg)
  • Europe Weighs More Sanctions as Iran’s Currency Plummets (Bloomberg)
  • City minister promotes tough rules to EU (FT)
  • Portugal Revamps Austerity Measures (WSJ)
  • Island plans by Tokyo's nationalist governor may stoke fresh China tensions (Reuters)
  • Japan Political Shifts Expose BOJ to Demands for Action (Bloomberg)

Overnight Media Digest

WSJ

* Cutting to the heart of their differences, President Barack Obama and Republican Mitt Romney laid out contrasting visions for the federal government in their first debate in Denver, sparring over tax-cut proposals, regulations and deficit-reduction plans.

* Hewlett-Packard Co warned profit and revenue will decline in the coming year before CEO Meg Whitman's turnaround effort gains traction. The bleak forecast sent the tech giant's shares sharply lower.

* Temasek Holdings, the Singapore state investment company that is the biggest shareholder of Standard Chartered Plc , has been expressing its discomfort with the bank's governance and is pressuring it to appoint more independent directors, people familiar with the investment company said.

* Asian suppliers for Apple Inc have started mass production of a new tablet computer smaller than the current iPad, executives at component makers said, as the Silicon Valley company tries to stay competitive against tablets from rivals such as Google Inc and Amazon.com Inc.

* A federal court in Iowa formally accepted a guilty plea by the chief executive of Peregrine Financial Group Inc, charged with defrauding his customers in a nearly 20-year scheme.

* A stock-trading "dark pool" backed by some of Wall Street's biggest banks agreed to settle a regulator's allegations that it improperly shared confidential client-trading information with a unit of Citigroup Inc, one of its investors.

* Ocwen Financial Corp, whose knack for profiting on Wall Street's mortgage castoffs has made it a stock-market darling, now aims to beat the banks at their own game with a foray into home lending.

* The European Banking Authority said the continent's banks must keep extra-thick capital cushions in place for now, likely dashing some lenders' hopes of buying back their own shares or doling out large dividends to shareholders in the near future.

* A draft report circulated to European officials this week sets the stage for a far-reaching debate over how euro-zone governments might surrender yet more national control over economic decisions in exchange for money from a common budget that would be used to soften the blow of recessions.

 

FT

THREE SUSPENDED OVER WEST COAST FIASCO

The government on Wednesday suspended three civil servants as it investigates what went wrong with the West Coast rail franchise contest.

NASDAQ SUFFERS FRESH HIGH-PROFILE GAFFE

Nasdaq suffered its second high-profile embarrassment in six months when it was forced to cancel trades in Kraft Foods .

RIAL'S PLUNGE SPARKS TEHRAN CLASHES

Iranian riot police clashed with demonstrators in central Tehran on Wednesday over the plunging value of the rial.

TESCO REPORTS FIRST PROFIT FALL IN 20 YEARS

Tesco's first-half pre-tax profit fell 12 percent to 1.66 billion pounds ($2.67 billion) - its first such decline in two decades.

US COAL EXPORTS TO EUROPE SOAR

U.S. coal exports rose 24 percent in the first half of the year, according to the US Energy

PEARSON CHIEF SCARDINO TO STEP DOWN

Dame Marjorie Scardino will step down on January 1 as chief executive of Pearson.

BUYERS POSITION FOR DIRECT LINE FLOAT

Royal Bank of Scotland took a step toward floating a Direct Line after the partly nationalised lender found buyers for the first tranche of shares.

PORTUGAL ANNOUNCES ENORMOUS TAX INCREASES

Portugal announced sweeping new tax increases in an effort to keep the country's faltering bailout programme on track.

US DATA POINT TO IMPETUS IN ECONOMY

Stronger employment figures were cautiously hailed on Wednesday as a sign of momentum returning to the U.S. economy.

HP SHARES TUMBLE ON WARNING

Hewlett-Packard warned its underperforming business would get worse before it improved as the U.S. computer maker issued an outlook below expectations.

 

Canada

THE GLOBE AND MAIL

* Parliament held an emergency debate Wednesday night on how to respond to an E. coli outbreak that has triggered the country's largest beef recall and sent the Harper government scrambling to defend the safety of Canada's food supply.

* The presidents of Canada's most prominent universities are issuing a call to action after six of the country's eight top-ranked schools lost ground in the latest edition of one of the most influential university rankings.

The University of Toronto fell out of the top 20 in this year's Times Higher Education World University Rankings list, dropping two places to 21.

Reports in the business section:

* Enbridge Inc has sought to meet with the B.C. government about Premier Christy Clarks's five demands, which include garnering greater compensation for the risk of having Alberta oil traverse the western-most province's lands and waters. But Enbridge has faced a problem.

The B.C. government, which on Wednesday made clear its willingness to use cabinet powers to block Gateway, has declined its requests for a meeting.

* TransCanada Corp is now months away from formalizing its plan to pump oil through part of its cross-country natural gas pipeline network.

This plan has won broad support from political and business leaders, who see it a way to ensure refineries in Ontario, Quebec and New Brunswick consume Canadian oil, rather than relying on more expensive imports from Europe, Africa and the Middle East. It would also jack up the price oil companies operating in the West receive for their crude.

NATIONAL POST

* Calling itself a "social justice union," the B.C. Teachers' Federation defended its promotion of anti-pipeline teaching resources on Wednesday, fueling a national debate about whether teachers should tout their own views in the classroom.

* A former construction boss says the arrival of an anti-corruption police unit three years ago instantly changed the culture of bid-rigging and kickbacks in Quebec and drastically reduced the price of public works in the province.

FINANCIAL POST

* Canada's investment industry regulator has accused two former First Leaside Group executives of breaking its rules, adding fresh allegations to two earlier actions taken against the now-defunct real estate and wealth management firm.

* Defence lawyers for three former top Nortel Networks Corp executives accused of fraud urged a judge on Wednesday to acquit the men, arguing in closing remarks that Crown allegations were unsubstantiated by the evidence.

 

Australia

THE AUSTRALIAN FINANCIAL REVIEW (www.afr.com)

Ruralco, the second largest farming services group in Australia, has proposed a A$500 million merger with rival Elders to create an entity that can better compete with market leader Landmark. John England, chairman of Ruralco, revealed the idea in a letter to his Elders equivalent, John Ballard, last month. Elders, however, has rejected the bid so far, saying that the suggestion lacked substance. Page 23.

--

Stephen Aboud, the former fund manager of the Lowy Family Group who is nicknamed the Sheik, yesterday said his new hedge fund's best investment - poker machine manufacturer Ainsworth Game Technology - came not from "the industry" but from "going out there and kicking tyres". "All that came about from a guy I play golf with who sells poker machines. I asked him what the best-selling poker machine was, and he said Ainsworth  I looked at the company, it had a tiny market cap, so I went and saw them. I got their story and bought some. Now it's worth A$700-odd million," Mr Aboud remarked. Page 25.

--

Newcrest Mining yesterday confirmed to shareholders that it had applied for two mining leases late last month covering the development of a dam extension in New South Wales, with the gold producer being sued by explorer Gold and Copper Resources for allegedly failing to acquire additional mining leases when it won project approval for its Cadia East venture two years ago. Newcrest told investors that it was confident in its legal case. Page 26.

--

BlueScope Steel yesterday achieved a small victory over Posco after the Australian Customs and Border Protection Service made a preliminary finding, after the service said hot rolled coil steel made by the Korean manufacturer was sold at an average discount of US$126 a tonne to the cost price between April 2011 to March this year. Posco is currently a member of a syndicate that is looking to buyout BlueScope's rival, Arrium, for A$1 billion. A final determination in favour of BlueScope could see Posco pay a 6 percent tax on all hot rolled coil supplied to Australia. Page 26.

--

THE AUSTRALIAN (www.theaustralian.news.com.au)

Lawyers for Goldman Sachs have warned Nine Entertainment Co's management that the latter's board could be held personally liable if the investment house is not fairly treated in talks over Nine's A$2.2 billion debt. Nine has threatened that it would consider selling the business if its financiers were unable to agree on a restructure of the company's debt. Goldman published a statement last night saying that "we have a fiduciary duty to our investors", but stressed that the company believes "that a consensual solution is in the best interests of all Nine stakeholders". Page 19.

--

PPB Advisory, the insolvency specialists selected as voluntary administrators of forestry group Gunns, is facing legal action against its appointment by investors in Gunns' managed investment schemes. Known as growers, the investors argue that PPB is conflicted as the administrator of Gunns and Gunns Plantations. Class action lawsuits have already been filed against the operators of failed schemes, including Wilmott Forests, Rewards Projects, Great Southern, Timbercorp and FEA Plantations over an alleged violation of disclosure laws. Page 19.

--

David McLemore has become the interim chief executive of mineral explorer Boart Longyear, with the chairman replacing Craig Kipp in a move that surprised the market. "Craig has done no wrong but at the end of the day we've got to deliver shareholder value and the share price, regardless of the ups and downs of the market, just wasn't happening," a spokesperson for the company said. One analyst said the main reason the sacking was unexpected was because the board "did acknowledge that they were happy with Craig's performance". Page 19.

--

British fashion retailer Topshop today will open its second Australian outlet in Sydney. David Shepherd, director of Arcadia Group, the franchiser of the clothing chain, said the company's products would enable it to avoid the downfalls that have beset local retailers including David Jones and Myer. "It's an opportunity because we're bringing something new - looking at the competition, we have a unique look that's a lot more fashion forward," Mr Shepherd added. Page 19.

--

THE SYDNEY MORNING HERALD (www.smh.com.au)

The Australian Bureau of Statistics yesterday published the nation's latest terms of trade figures. The A$2 billion trade deficit for August is Australia's largest trade deficit since before the global financial crisis and was triggered by a 3 percent drop in export earnings. Market observers responded negatively to the news, with the Australian dollar falling to a one month low against the American greenback at US102.04 cents. Page B1.

--

Investors in Australia have not yet come to terms with the future of lower iron ore prices, according to the foreign alliance of companies behind a takeover bid for Australian steel maker Arrium Limited. "We think the outlook for iron ore is around the current level, not returning to levels seen in the first half of the year. The market is still taking this fundamental change on board," a spokesman for the syndicate said. Page B2.

--

Supermarket giant Woolworths is expected to keep its valuable portfolio of pubs as the company prepares to spin off up to 70 outlets in a deal worth approximately A$1.2 billion. Market observers noted that Woolworths would probably not sell any big-box hardware Masters or discount retailer Big W stores that were leased through a shopping mall. Financial services firm Citigroup and Moelis & Co, advisers to Woolworths, are promoting a proposal to market the assets via a capital raising and an "in specie" dividend. Page B3.

--

A spokesman for News Limited yesterday said the media conglomerate was still committed to submitting paid subscriber figures for the online version of The Australian newspaper, despite missing a goal outlined by chief executive Kim Williams to release the data last month. News Limited has not revealed how many people have subscribed to the broadsheet's website since a paywall was established last year. Page B3.

--

THE AGE (www.theage.com.au)

Lawyers for Goldman Sachs have warned Nine Entertainment Co's management that the latter's board could be held personally liable if the investment house is not fairly treated in talks over Nine's A$2.2 billion debt. Nine has threatened that it would consider selling the business if its financiers were unable to agree on a restructure of the company's debt. Goldman published a statement last night saying that "we have a fiduciary duty to our investors", but stressed that the company believes "that a consensual solution is in the best interests of all Nine stakeholders". Page 19.

--

PPB Advisory, the insolvency specialists selected as voluntary administrators of forestry group Gunns, is facing legal action against its appointment by investors in Gunns' managed investment schemes. Known as growers, the investors argue that PPB is conflicted as the administrator of Gunns and Gunns Plantations. Class action lawsuits have already been filed against the operators of failed schemes, including Wilmott Forests, Rewards Projects, Great Southern, Timbercorp and FEA Plantations over an alleged violation of disclosure laws. Page 19.

--

David McLemore has become the interim chief executive of mineral explorer Boart Longyear, with the chairman replacing Craig Kipp in a move that surprised the market. "Craig has done no wrong but at the end of the day we've got to deliver shareholder value and the share price, regardless of the ups and downs of the market, just wasn't happening," a spokesperson for the company said. One analyst said the main reason the sacking was unexpected was because the board "did acknowledge that they were happy with Craig's performance". Page 19.

--

British fashion retailer Topshop today will open its second Australian outlet in Sydney. David Shepherd, director of Arcadia Group, the franchiser of the clothing chain, said the company's products would enable it to avoid the downfalls that have beset local retailers including David Jones and Myer. "It's an opportunity because we're bringing something new - looking at the competition, we have a unique look that's a lot more fashion forward," Mr Shepherd added. Page 19.

 

Fly on the Wall 7:00 Market Snapshot

ANALYST RESEARCH

Upgrades

Deutsche Telekom (DTEGY) upgraded to Buy from Hold at Deutsche Bank
Edison International (EIX) upgraded to Overweight from Equal Weight at Morgan Stanley
Ryder (R) upgraded to Buy from Neutral at SunTrust
SBA Communications (SBAC) upgraded to Buy from Neutral at Citigroup
eBay (EBAY) upgraded to Buy from Neutral at Nomura

Downgrades

Adtran (ADTN) downgraded to Neutral from Buy at UBS
Aruba Networks (ARUN) downgraded to Neutral from Buy at Goldman
Encana (ECA) downgraded to Sell from Hold at Deutsche Bank
Evercore Partners (EVR) downgraded to Market Perform at JMP Securities
HollyFrontier (HFC) downgraded to Neutral from Buy at UBS
Lazard (LAZ) downgraded to Market Perform from Outperform at JMP Securities
MetroPCS (PCS) downgraded to Reduce from Neutral at Nomura
NuVasive (NUVA) downgraded to Hold from Buy at Brean Murray
NuVasive (NUVA) downgraded to Market Perform from Outperform at JMP Securities
NuVasive (NUVA) downgraded to Market Perform from Outperform at Wells Fargo
NuVasive (NUVA) downgraded to Underperform from Market Perform at BMO Capital
NuVasive (NUVA) downgraded to Underperform from Outperform at RBC Capital
Polycom (PLCM) downgraded to Neutral from Buy at UBS
Sprint (S) downgraded to Underperform from Neutral at RW Baird
UPS (UPS) downgraded to Sector Perform from Outperform at RBC Capital

Initiations

Accelrys (ACCL) initiated with an Outperform at JMP Securities
Advocat (AVCA) initiated with a Hold at C.K. Cooper
Blue Nile (NILE) initiated with a Buy at Capstone
CF Industries (CF) initiated with a Sector Perform at RBC Capital
Cerner (CERN) initiated with a Hold at Jefferies
Cubist (CBST) initiated with an Overweight at Morgan Stanley
Ducommun (DCO) initiated with a Buy at B. Riley
Energy XXI (EXXI) initiated with a Buy at Canaccord
Hubbell (HUBB) initiated with an Overweight at Morgan Stanley
Lamar Advertising (LAMR) initiated with a Buy at Deutsche Bank
NPS Pharmaceuticals (NPSP) initiated with an Overweight at Morgan Stanley
Neurocrine Biosciences (NBIX) initiated with an Overweight at Morgan Stanley
Optimer (OPTR) initiated with an Underweight at Morgan Stanley
Quidel (QDEL) initiated with an Overweight at Piper Jaffray
Steven Madden (SHOO) initiated with a Buy at Brean Murray

HOT STOCKS

NuVasive (NUVA) lowered Q3 revenue outlook on high account churn
Pimco's Kashkari recommended Microsoft (MSFT), Logitech (LOGI) as stock ideas
Amazon (AMZN) opened portal for mobile app distribution in Japan
3M (MMM) terminated agreement for purchase of Avery Dennison (AVY) segment
Hotel stocks (H, HOT, WYN) traded higher after Marriott (MAR) Q3 results, guidance
Marriott (MAR) sees FY12 EBITDA $1.129B-$1.149B
A.H. Belo (AHC) sees FY13 adjusted EBITDA "in the same range" as FY12
Applied Materials (AMAT) to cut 900-1,300 positions
Costco (COST) to open up to 14 new warehouses by end of 2012
SunPower (SPWR) sold solar power plant in Australia
Carrizo Oil & Gas (CRZO) entered $82.5M Nobrara joint venture
Wi-LAN (WILN) launched litigation against LG Electronics (LG) claiming infringement of U.S. patents related to digital TV and display technology

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Marriott (MAR)

Companies that missed consensus earnings expectations include:
National American University (NAUH)

NEWSPAPERS/WEBSITES

A stock-trading "dark pool" backed by some of Wall Street's biggest banks--Citigroup (C), Credit Suisse (CS), Fidelity Investments, Bank of America Merrill Lynch (BAC) and the estate of Lehman Brothers Holdings--agreed to settle SEC allegations that broker-dealer exBX LLC improperly shared confidential client-trading information with a unit of Citigroup, the Wall Street Journal reports
U.S. malls saw vacancies fall and they held steady at strip shopping centers in Q3 as landlords attracted new retailers to fill space as companies such as Best Buy (BBY), Staples (SPLS), Gap (GPS) and Office Depot (ODP) closed stores or shifted to smaller ones. Malls in the highest 77 U.S. markets reported an average vacancy rate of 8.7% in the quarter, down from 8.9% in Q2, according to Reis Inc. (REIS) data, the Wall Street Journal reports
Gambling revenue in Macau (CZR, WYNN, LVS) increased a weaker-than-expected 12.3% in September to $2.99B, according to the Macau government, the second weakest revenue figure this year, Reuters reports
An illegal strike stopped production at Toyota Motor’s (TM) manufacturing plant in the South African city of Durban for the last three days. The plant produces 120,000 units annually, with 50% exported, with the rest sold in South Africa and neighboring states, Reuters reports
Unilever (UN) is selling its Skippy peanut butter brand, valued at $300M to $400M, as it reduces its food business to focus on health and beauty products, sources say, Bloomberg reports
AT&T (T) will announce plans today to sell Nokia’s (NOK) first device running on Windows Phone 8 software for the U.S. market, sources say, Bloomberg reports

SYNDICATE

Berry Plastics (BERY) 29.412M share IPO priced at $16.00
Boardwalk Pipeline (BWP) announces offering of 10M common units
Starwood Property (STWD) files to sell 14.5M shares of common stock
WageWorks (WAGE) 6M share Secondary priced at $17.50

ACTIVIST/PASSIVE FILINGS

Ayer Capital reports 9.99% passive stake in Insmed (INSM)
FPR Partners lowers stake in Sealy (ZZ) to 6.1% from 8.8%
Relational Investors lowers stake in Flowserve (FLS) to 4.58% from 5.65%
SAC Capital Advisors reports 5.0% passive stake in Superior Energy (SPN)

 


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Thu, 10/04/2012 - 07:49 | Link to Comment Dr Benway
Dr Benway's picture

Hey lot of stuff on the land of Oz, where the bald wizard is jutting his jaw and pulling the rate lever

Thu, 10/04/2012 - 07:53 | Link to Comment Bobbyrib
Bobbyrib's picture

My Gen Y, Obamamite boss is going to be furious Obama lost the debate. Today is going to suck.

 

"Pray.for.Mojo."

 

http://www.youtube.com/watch?v=UP8VlpAtbo4

Thu, 10/04/2012 - 09:59 | Link to Comment Catullus
Catullus's picture

What was the score of last night's debate?  Did the Blue Team win or the Red Team? 

Funny: debate about the economy yet the Federal Reserve wasn't mentioned once.  Some "influence" RP had the Republican party. 

 

When they talk about policy and economy, they really mean what policies DC can enact to better the Washington DC Metro economy.  The people that live there subside off of nothing but stealing, influencing others to steal on their behalf, or begging for some of the stolen loot.  Or having a job directing people what they can and can't do with their own property.  That's it.  So any new tax or regulation or new welfare program only exclusively helps the DC economy. 

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