Frontrunning: October 9
- Rajoy’s Deepening Budget Black Hole Outpaces Spain’s Cuts (Bloomberg)
- ECB May Need to Cut Rates Given Deflation Risk, IMF Says (Bloomberg)
- Global Recession Risk Rises (WSJ)
- Romney Leads Obama in Pew Likely Voter Poll After Debate (Bloomberg)
- IMF Sees Global Risk in China-Japan Spat (WSJ)
- Republicans shift tone on taxing the rich (FT)
- Romney casts Obama's foreign policy as weak, dangerous (Reuters)
- Europe Salutes Greek Budget-Cutting Will, Raising Aid Prospects (Bloomberg)
- U.S. Downgrade Seen as Upgrade as U.S. Debt Dissolved (Bloomberg)
- IMF Says Most Advanced Nations Making Progress Reducing Deficits (Bloomberg)
- Eurozone launches €500bn rescue fund (FT)
- Australia labour market softer than jobless implies-RBA (Reuters)
- India Growth to Drop to Decade Low Amid High Inflation, IMF Says (Bloomberg)
Overnight Media Digest
* The global economy risks skidding toward recession just three years after pulling out of the previous one, the International Monetary Fund warned, adding that fighting a renewed world-wide downturn will be much more complex than it was in 2009.
* Chinese telecommunications giant Huawei Technologies lashed out Monday at a scathing congressional report, calling allegations that it may be spying on Americans and violating U.S. laws "little more than an exercise in China-bashing".
* BP Plc said Monday it has sold the large Texas City refinery, scene of a fatal industrial accident in 2005, to Marathon Petroleum Corp in a deal worth up to $2.5 billion.
* UnitedHealth Group Inc's $4.3 billion deal to take over Brazil's Amil Participações SA represents a major bet on the international future of the health-care business, part of a broader effort by American insurers and hospital operators to seek growth overseas.
* The biggest shareholder in BAE Systems Plc has "significant reservations" about a proposed merger with EADS because it may harm the company's ability to win U.S. defense contracts.
* U.S. banks and the Federal Reserve are battling over a new round of "stress tests" even before the annual exams get going later this fall.
The clash centers on the math regulators are using to produce the results. Bankers want more detail on how the calculations are made, and the Fed thus far has resisted disclosing more than it has already.
* American Express Co and Wal-Mart Stores Inc are rolling out a new prepaid card in the retailer's stores and online, opening up a new revenue stream and offering what they call a cheaper alternative to traditional debit cards.
* Coca-Cola Co, PepsiCo Inc and Dr Pepper Snapple Group will start displaying their drinks' calories on vending machines next year and point consumers toward less sugary versions, their latest response to critics who have singled them out for contributing to the nation's obesity epidemic.
* An experimental Alzheimer's treatment from Eli Lilly & Co slowed memory loss by 42 percent in patients with a mild form of the memory-robbing disease in one drug trial and showed positive signs of doing so in another study, according to new data presented on Monday.
* Calxeda Inc, a start-up that provides chips for a new breed of server systems, has raised an additional $55 million as computer makers like Hewlett-Packard Co prepare to offer its technology.
INVESTOR OPPOSITION TO BAE DEAL MOUNTS
More than 30 percent of shareholders in BAE Systems have expressed significant concerns about the deal with EADS .
OSBORNE DELIGHTS TORY RIGHT WITH SPEECH
George Osborne delighted the Tory right with plans to let bosses strip new staff of employment rights in exchange for shares.
IRAQ SEND CRUDE OIL TO SYRIA
Iraq is quietly shipping supplies of fuel oil to Syria in a deal that has triggered concern in Washington.
RECKITT ADMITS CHIEF SHARE PLEDGE BREACH
Reckitt Benckiser is facing the risk of a regulatory probe after failing to notify the stock market its chief executive pledged shares against a personal loan.
BP'S PARTNER IN TNK-BP LOOKS TO SELL STAKE
BP's billionaire partners in TNK-BP said they want to sell or list their 50 percent stake in the business.
TOTAL WARNS OVER 'INACCURATE' BENCHMARKS
Total, one of the world's largest oil trading groups has warned of "inaccurate pricing" in the benchmarks for the energy market.
FINANCIAL STALWARTS LINE UP TO LEAD BOE
The deadline for aspirants for the BoE governorship passed on Monday with at least four, possibly five, applicants.
EURO ZONE LAUNCHES 500 BLN EURO RESCUE FUND
Euro zone finance ministers launched their permanent 500 billion euro bailout fund on Monday but said Spain did not need a bailout.
STANCHART TARGETS SUB-SAHARAN PUSH
Standard Chartered is preparing to ramp up its presence in sub-Saharan Africa in response to growing investor. demand.
* The International Monetary Fund is cutting its global economic forecasts yet again, calling the risks of a slowdown "alarmingly high", primarily because of policy uncertainty in the United States and Europe.
* In the latest development to highlight the sensitive terrain that the United States and China are navigating on economic issues, a House committee issued a blistering bipartisan report on Monday that accused Huawei Technologies and ZTE Corp of being arms of the government that had stolen intellectual property from American companies and could potentially spy on Americans.
* UnitedHealth Group agreed on Monday to buy a 90 percent stake in the Brazilian health care provider Amil Participações for $4.9 billion as the American insurer looked to expand in the fast-growing country.
* Big beverage makers including PepsiCo Inc and Coca-Cola Co are retooling their vending machines to let consumers know the number of calories in the drinks available to buy.
* Wal-Mart Stores Inc is taking another leap into the banking world, announcing on Monday a prepaid card and debit account with American Express Co that will give low-income consumers access to features like smartphone deposits.
* Combined results from two studies of an experimental Alzheimer's drug from Eli Lilly & Co suggest it may modestly slow mental decline, especially in patients with mild disease.
* International officials told Greece on Monday night to accelerate the pace of economic reform in exchange for further financing from a stalled bailout package.
* Germany sought on Monday to ward off talk of a bailout program for Spain, as euro zone finance ministers were gathering for their monthly meeting.
* American Airlines and British Airways said Monday that Qatar Airways would join their Oneworld alliance, giving them access to one of the world's fastest-growing airlines and a modern hub in Doha, the capital of Qatar.
* With its economy still reeling from the housing crash, Ireland is making a bold move to help tens of thousands of struggling homeowners.
The Irish government expects to pass a law this year that could encourage banks to substantially cut the amount that borrowers owe on their mortgages, a step that no major country has been willing to take on a broad scale.
* Allied World Assurance, a publicly traded insurance company, has acquired a substantial minority interest in MatlinPatterson, the private equity and hedge fund firm, according to people briefed on the deal.
THE GLOBE AND MAIL
* Faced with a $14.8 billion deficit and a stubbornly high health-care budget, the Ontario government is taking a heightened interest in the billings of emergency-department doctors.
A group representing the province's 2,000 emergency doctors is warning its members of a recent flurry of formal audits by the Ministry of Health questioning the details of billings for services.
* Corporate tax revenue coming in to Ottawa was up slightly last year, even as the Conservative government was in the midst of an aggressive plan to lower the corporate tax rate.
The federal government raised $31.7 billion from corporate taxes in the fiscal year that ended March 31, up from $30.5 billion in 2010-11. The new data on corporate tax revenue will be examined closely in Ottawa, where debate over the appropriate rate has been a dominant theme of recent election campaigns.
Reports in the business section:
* Retailers bracing for next year's arrival of U.S. discount juggernaut Target Corp face a more immediate threat: the lowly dollar store.
The fastest-growing sector in Canadian retailing, dollar stores are forcing mainstream merchants, ranging from discounter Wal-Mart Canada Corp to generalist Canadian Tire Corp Ltd , to step up their own dollar promotions.
* Canada's clean tech sector is getting some new help from the federal government as Ottawa looks to grab a fatter share of the booming global market for renewable energy and energy efficiency.
The government's lead agencies on export assistance and sustainable technology are teaming up to identify and support companies that are moving from development to full commercial effort and are eager to penetrate international markets.
* Canada's electronic spy organization says that the state-of-the-art headquarters now being built in an Ottawa suburb will make it a leader among its allies and attract the best and brightest of spies, according to newly released government documents obtained by The Ottawa Citizen.
* The chief executive of Quebecor Inc warned Monday the Canadian entertainment industry must start making content that appeals to audiences beyond its borders or risks being overtaken by Web-based providers who are increasingly ramping up global distribution businesses.
* Pension fund managers are looking at taking on more risk in their portfolios as they look to boost returns amid low interest rates and volatile stock markets, according to a report by Pyramis Global Advisors.
Fly on the Wall 7:00 AM Market Snapshot
Allot Communications (ALLT) upgraded to Buy from Hold at Jefferies
Cardinal Health (CAH) upgraded to Buy from Hold at ISI Group
Eli Lilly (LLY) upgraded to Neutral from Sell at Goldman
Interpublic Group (IPG) upgraded to Buy from Neutral at Citigroup
Questcor (QCOR) upgraded to Buy from Hold at Jefferies
RadioShack (RSH) upgraded to Buy from Underperform at BofA/Merrill
Shoe Carnival (SCVL) upgraded to Buy from Neutral at Sterne Agee
Trinity Industries (TRN) upgraded to Strong Buy from Market Perform at Raymond James
Ann Inc. (ANN) downgraded to Equal Weight from Overweight at Morgan Stanley
Arch Coal (ACI) downgraded to Sell from Neutral at Goldman
DirecTV (DTV) downgraded to Neutral from Overweight at JPMorgan
Edison International (EIX) downgraded to Hold from Buy at Jefferies
First Interstate (FIBK) downgraded to Equal Weight from Overweight at Barclays
Fluidigm (FLDM) downgraded to Neutral from Buy at Mizuho
Fulton Financial (FULT) downgraded to Equal Weight from Overweight at Barclays
Intel (INTC) downgraded to Underperform from Market Perform at Bernstein
Johnson & Johnson (JNJ) downgraded to Sell from Neutral at Goldman
Netflix (NFLX) downgraded to Underperform from Buy at BofA/Merrill
Progress Software (PRGS) downgraded to Underperform from Neutral at Mizuho
State Auto (STFC) downgraded to Underperform from Market Perform at Keefe Bruyette
Taseko Mines (TGB) downgraded to Hold from Buy at Canaccord
ASML (ASML) initiated with an Outperform at CLSA
Allison Transmission (ALSN) initiated with an Overweight at Piper Jaffray
Apple (AAPL) initiated with a Neutral at Nomura
Caterpillar (CAT) initiated with a Neutral at Piper Jaffray
Cisco (CSCO) initiated with a Buy at Buckingham
Cullen/Frost (CFR) initiated with an Underweight at Barclays
Dell (DELL) initiated with a Sell at Citigroup
F5 Networks (FFIV) initiated with a Neutral at Buckingham
FirstMerit (FMER) initiated with an Overweight at Barclays
Fuel Systems (FSYS) initiated with an Overweight at Piper Jaffray
Hewlett-Packard (HPQ) initiated with a Sell at Citigroup
IBM (IBM) initiated with a Buy at Citigroup
Juniper (JNPR) initiated with a Neutral at Buckingham
Lazard (LAZ) initiated with a Sell at UBS
Lexmark (LXK) initiated with a Sell at Citigroup
NetApp (NTAP) initiated with a Neutral at Citigroup
Oshkosh (OSK) initiated with a Neutral at Piper Jaffray
POZEN (POZN) initiated with a Buy at Ascendiant Capital
Paccar (PCAR) initiated with an Overweight at Piper Jaffray
Pier 1 Imports (PIR) initiated with a Buy at Deutsche Bank
Pioneer Natural (PXD) initiated with an Outperform at Wells Fargo
SYNNEX (SNX) initiated with a Neutral at Citigroup
Vertex (VRTX) initiated with a Buy at Deutsche Bank
ING Groep (ING) to sell ING Direct UK to Barclays (BCS)
AT&T (T) and IBM (IBM) create breakthrough global cloud service for businesses
Rio Tinto (RIO) said planning further cost reductions
Boston Scientific (BSX) to acquire Rhythmia Medical
Continental Resources (CLR) announced five-year plan to triple production/reserves
Sees FY13 production growth of 30%
Korn/Ferry International (KFY), SAP’s (SAP) SuccessFactors form strategic partnership
Publicis Groupe (PUBGY) acquired premier Malaysian interactive agency Arachnid
AOL (AOL) launched new Games.com
ABM (ABM) to acquire Air Serv for $158M
Principal Financial (PFG) to acquire Cuprum
Ithaca Energy buys two U.K. subsidiaries from Noble Energy Capital (NBL) for $38.5M
AngioDynamics (ANG) to acquire Vortex Medical for $15M
Companies that beat consensus earnings expectations last night and today include:
E2open (EOPN), AngioDynamics (ANGO)
The global economy risks sliding toward recession three years after pulling out of the previous one, the IMF warned, adding that fighting a renewed world-wide downturn will be much more complex than it was before, the Wall Street Journal reports
U.S. banks and the Fed are fighting over a new round of "stress tests" before the annual exams begin this fall. The battle centers on the math regulators are using to produce the results. Bankers want more detail on how the calculations are made, and the Fed has resisted disclosing more than it has, the Wall Street Journal reports
Phil Anschutz began auctioning Anschutz Entertainment Group, with an expectation that the sports and entertainment giant should draw bids in the $10B range, higher than previously believed, sources say. Potential bidders include trade buyers such as Liberty Media Corp (LMCA), investment companies such as Guggenheim Partners LLC; private equity firms such as Thomas H. Lee Partners LP, Bain Capital LLC and Colony Capital LLC, Reuters reports
British Defence Secretary Philip Hammond said he hoped to meet his French, German and U.S. counterparts to discuss the proposed merger of aerospace groups EADS (EADSY) and BAE Systems (BAESY), a day before a deadline for the deal, Reuters reports
State Street (STT) and Bank of New York Mellon (BK) will charge depositors negative interest rates to hold Danish kroner and Swiss francs as customers seek refuge from the crisis-stricken euro. That means money managers, insurance companies and pension funds have to pay the bank to hold the cash, Bloomberg reports.
Fiat (FIATY) will lower its outlook for the European auto market when the company updates its five-year plan that runs through 2014,said CEO Sergio Marchionne said, Bloomberg reports
Athersys (ATHX) files to sell 17M shares of common stock
Laredo Petroleum (LPI) offers 12.5M shares of common stock for holders
Penn Virginia (PVA) announces offering of 12M shares of common stock
Sophrosyne Capital reports 8.95% passive stake in AspenBio Pharma (APNB)
Clarke sends letter to Vitran (VTNC), recommends sale of SCO segment