Frontrunning: October 16
- Hillary Clinton Accepts Blame for Benghazi (WSJ)
- In Reversal, Cash Leaks Out of China (WSJ)
- Spain Considers EU Credit Line (WSJ)
- China criticizes new EU sanctions on Iran, calls for talks (Reuters)
- Portugal sees third year of recession in 2013 budget (Reuters)
- Greek PM says confident Athens will secure aid tranche (Reuters)
- Fears over US mortgages dominance (FT)
- Fed officials offer divergent views on inflation risks (Reuters)
- China Credit Card Romney Assails Gives Way to Japan (Bloomberg)
- Fed's Williams: Fed Actions Will Improve Growth (WSJ)
- Rothschild Quits Bumi to Fight Bakries’ $1.2 Billion Offer (Bloomberg)
- Netanyahu Opens Israel Re-Election Bid With Speech (Bloomberg)
- Rivals tied in polls before second debate (FT)
- Zeti Says Malaysia Can Withstand Capital Flows: Southeast Asia (Bloomberg)
European economic update:
- Italy Trade Balance -598M. Previous 4510M.
- UK CPI 0.4% m/m 2.2% y/y – in line with expectations. Consensus 0.4% m/m 2.2% y/y. Previous 0.5% m/m 2.5% y/y.
- Eurozone CPI 0.7% m/m 2.6% y/y – in line with expectations. Consensus 0.7% m/m 2.7% y/y. Previous 0.4% m/m 2.7% y/y.
- Eurozone Trade Balance -6.6B – lower than expected. Consensus 10.0B. Previous 14.7B.
- Germany ZEW Survey (current situation) 10 – lower than expected. Consensus 11.8. Previous 12.6.
- Germany ZEW Survey (economic sentiment) -11.5 – higher than expected. Consensus -14.9. Previous -18.2.
Overnight Media Digest
* Spain is considering a request for a line of credit from the European Union's new bailout mechanism, a senior Spanish finance ministry official said Monday, giving the first details of the country's plans for seeking help to avoid its debt problems spinning out of control.
* Congressional staff began poring over thousands of pages of Federal Reserve Bank of New York documents regarding its monitoring of banks and a key interest rate, in a move likely to intensify scrutiny of regulators and financial companies involved in the matter.
* President Barack Obama and his Republican rival, Mitt Romney, enter their debate Tuesday night with different goals than the last time they met: Romney will try to build on growing strength among centrist voters that arose from his performance in the first debate, while Obama will aim to portray Mr. Romney as more conservative than his opponent has recently suggested.
* Mutual-fund company BlackRock Inc, the biggest provider of exchange-traded funds in the U.S., Monday said it plans to slash fees on some of its iShares ETFs, introduce new low-fee ETFs, reorganize its sales force and roll out BlackRock's first-ever television ads to spread its message to individual investors.
* Citigroup Inc posted an 88 percent decline in third-quarter net income, as gains in the company's securities and banking unit were swamped by one-time charges.
* Revenue growth slowed for the second consecutive quarter at French holding company LVMH, which is a barometer in the luxury-goods industry.
* Portugal's government braced for more public backlash against its austerity program after it unveiled a budget proposal for 2013 that centered on sharp tax increases.
* Federal regulators are considering giving mortgage lenders protection from certain lawsuits, according to people familiar with the matter, a move designed to encourage lending to well-qualified borrowers.
* Americans boosted their spending in September on everything from iPhones to restaurant meals in the latest sign that the consumer economy is gaining strength even as other sectors are weakening.
ROTHSCHILD RESIGNS FROM BUMI PLC BOARD
Nat Rothschild, the financier who created Bumi Plc , has resigned from the board of the London-listed coal miner.
REBEKAH BROOKS RECEIVED 7 MLN GBP PAY-OFF
Rebekah Brooks received a pay-off totalling more than 7 million pounds ($11.24 million) following her resignation from News International last year.
SALMOND SAYS STERLING-ZONE WOULD WORK
Alex Salmond insists an independent Scotland could cohabit happily with the rest of the UK in a monetary union.
RBS SUSPENDS HEAD OF RATES TRADING
RBS has suspended its head of rates trading in Europe and Asia Pacific, the most senior employee to be put on leave on the Libor rate.
STATE STREET INVESTORS SEEK NEW BLOOD AT TOP
Four of the 10 largest shareholders at State Street are agitating for the removal of the custody bank's chief executive or chief financial officer.
SOFTBANK TO INJECT $8 BLN IN CAPITAL INTO SPRINT
Sprint Nextel has been given $8 billion in capital it can use to better compete with Verizon Wireless and AT&T after SoftBank.
RBS SET TO LEAVE TOXIC ASSET SCHEME
RBS will this week get the go-ahead from government and regulators to exit the state-backed insurance scheme covering its old "toxic assets".
SFO DROPS PROBE INTO ICELAND'S KAUPTHING
The Serious Fraud Office has dropped its investigation into the collapse of Kaupthing, the Icelandic bank, and shut its case against Robert Tchenguiz
* Citigroup Inc's wager that international lending will offset a sluggish recovery in the United States started to pay off Monday when the bank reported third-quarter earnings.
* Even as talks with international creditors stalled, the Greek prime minister expressed optimism on Monday that an agreement would be reached that would end once and for all speculation that the country will leave the euro zone.
* The European Union toughened sanctions against Iran over its disputed nuclear program on Monday, banning trade in industries like finance, metals and natural gas, and making other business transactions far more cumbersome.
* Americans spent more money at retailers in September - a surge that reflected growing consumer confidence and Apple Inc's introduction of the iPhone 5.
* Two Americans, Alvin Roth and Lloyd Shapley, were awarded the Nobel Memorial Prize in Economic Science on Monday for their work on market design and matching theory, which relate to how people and companies find and select one another in everything from marriage to school choice to jobs to organ donations.
THE GLOBE AND MAIL
* Canadians have entered the debt danger zone that helped trigger real estate crashes in the U.S. and Britain. The average household now has just 63 cents of disposable income for every dollar of debt, according to figures released Monday by Statistics Canada. That's the highest ratio of debt to income ever recorded in Canada, and more inflated than the levels witnessed in the U.S. and Britain before their housing market collapses in the mid-2000s.
* Only one thing allegedly stands in the way of the timely completion of New York's tallest skyscraper: a Quebec steel firm. In a lawsuit filed on Friday, the government agency that owns the World Trade Center site accused ADF Steel Corp of refusing to deliver the steel required for the antenna that tops the building.
Reports in the business section:
* Ontario has apparently lost a key trade challenge to its green energy policies that force companies to buy equipment from local manufacturers. A reputable international trade newsletter said Monday the World Trade Organization has issued a preliminary report that agrees with Japan and the European Union, in their complaint about Ontario's support for its renewable energy industry.
* The oil sands are a "marginal" resource, and Statoil ASA's new Canadian president believes companies tapping it must substantially optimize the way they work, or risk fumbling a play that could prove to be the world's largest.
* Ontario's education minister is facing backlash from Catholic and anti-abortion groups after she appeared to equate anti-abortion views with "misogyny", sparking questions of whether the provincial government seeks to restrict these teachings in publicly funded Catholic schools.
* A group of hackers claims it's found the man who drove 15-year-old Amanda Todd to suicide after years of tormenting her. Anonymous, an amorphous collective of online activists, posted the name, address and email of a 32-year-old New Westminster, B.C., the man it believes used a nude image of Todd to try to blackmail her.
* The Toronto stock market racked up a minor gain Monday amid positive earnings from the American financial sector and economic data from China and the United States that was better than expected.
* Score Media Inc shareholders approved Monday the sale of the company's television network and related properties to Rogers Communications Inc, moving the $167 million deal a step closer to completion. The vote was unanimously in favour of the transaction.
SOUTH CHINA MORNING POST
-- Apple Inc is stepping up its retail expansion in the mainland with the opening of its third branded store in Beijing on Saturday (Oct. 20), three weeks after it launched a new outlet in Hong Kong. The store will take the number of Apple's branded stores to 386 in 13 countries.
-- A residential site near Yuen Long's Long Ping MTR station, estimated to cost up to HK$1.9 billion ($245.12 million), attracted eight bids from developers, include Cheung Kong (Holdings) Ltd, Sun Hung Kai Properties Ltd and New World Development Co Ltd.
-- The Asia-Pacific region will overtake Europe to become the world's biggest market expansion services (MES) market by 2015, with China among the fastest growing, a study said. It predicts Asia's MES market will grow 8 percent per year until 2015, while the global MES market will grow 7.1 percent annually to $3.1 trillion in 2015.
HONG KONG ECONOMIC TIMES
-- Henderson Land Development Co Ltd Chairman Lee Shau-kee expects local property prices to rise by 10-20 percent in two to three years due to inflated construction costs.
-- The Long-Term Housing Strategy Steering Committee, which is chaired by the Secretary for Transport and Housing, Anthony Cheung, will review the demand for flats in the city. A report laying out the housing strategy for the next 10 years is expected by the middle of next year.
CHINA SECURITIES JOURNAL
--In order to speed up development of the alternative energy automotive industry, China will earmark a part from the "conserving energy and reducing emissions" special fund to encourage innovation in green energy cars.
--Baoshan Iron & Steel Co (Baosteel) said in a statement it had bought back 217 million shares in a price range of 4.51 to 4.65 yuan per share in the past one week.
SHANGHAI SECURITIES NEWS
--China's securities regulator has for the first time publicly disclosed the application process for seeking approval for mergers and acquisitions, as well as the criteria used to approve or reject applications.
--LDK Solar announced on Monday it would repay 400 million yuan in short-term commercial paper on time, easing investors' fears that it would become China's first-ever domestic bond default.
--Telecom equipment maker ZTE Corp , after its disclosure of a large operating loss in the third quarter of 2012, said it will take steps to reduce debt and improve operational efficiency in the fourth quarter.
--China's securities regulator said it is launching an investigation into whether listed companies have carried out promises made in their public disclosures. The promises include asset restructuring, intra-company competitions, and changes to shareholding structures.
--An additional 14 securities brokerages have been approved to participate in the pilot programme on margin financing launched last month, raising the total number to 25.
--Police arrested 11 people for poaching in a virgin forest on the border of Hubei and Hunan provinces in central China. They seized 17 bear paws, five bear gall bladders, and 300 kg of bear meat.
Fly On The Wall 7:00 AM Market Digest
Alliance Data (ADS) upgraded to Outperform from Market Perform at Wells Fargo
Citigroup (C) upgraded to Strong Buy from Outperform at Raymond James
Denbury Resources (DNR) upgraded to Positive from Neutral at Susquehanna
Fossil (FOSL) upgraded to Buy from Neutral at Citigroup
Helmerich & Payne (HP) upgraded to Outperform from Sector Perform at RBC Capital
Kroger (KR) upgraded to Buy from Hold at Jefferies
Lorillard (LO) upgraded to Outperform from Market Perform at Wells Fargo
Mueller Water (MWA) upgraded to Outperform from Sector Perform at RBC Capital
Sprint (S) upgraded to Market Perform from Underperform at Bernstein
Sprint (S) upgraded to Neutral from Underperform at RW Baird
Strategic Hotels (BEE) upgraded to Overweight from Neutral at JPMorgan
The Medicines Co. (MDCO) upgraded to Buy from Hold at Jefferies
AECOM Technology (ACM) downgraded to Hold from Buy at BB&T
Expeditors (EXPD) downgraded to Neutral from Outperform at RW Baird
Hub Group (HUBG) downgraded to Hold from Buy at BB&T
Mechel (MTL) downgraded to Neutral from Overweight at HSBC
Riverbed (RVBD) downgraded to Neutral from Buy at Citigroup
UPS (UPS) downgraded to Neutral from Outperform at RW Baird
UTi Worldwide (UTIW) downgraded to Neutral from Outperform at RW Baird
Cameron (CAM) initiated with an Outperform at Credit Suisse
Glu Mobile (GLUU) initiated with a Buy at Stifel Nicolaus
Goldcorp (GG) initiated with an Overweight at Barclays
Halliburton (HAL) initiated with an Outperform at Credit Suisse
Hilltop Holdings (HTH) initiated with a Buy at Sterne Agee
Newmont Mining (NEM) initiated with an Overweight at Barclays
Schlumberger (SLB) initiated with a Neutral at Credit Suisse
CVS Caremark (CVS) reached civil settlement with Justice Department over false pricing
Bridgepoint Education (BPI) disclosed Justice Department investigation
Amazon (AMZN) is hiring for 50,000 seasonal positions in the U.S.
iStar Financial (SFI) closed new $1.82B senior secured credit facility
Par (PRX) to acquire 14 generic products from Watson (WPI) and Actavis Group
Watson Pharmaceuticals (WPI) received FTC clearance for Actavis acquisition
Hologic (HOLX) announced FDA approval of APTIMA HPV 16 18/45 Genotype Assay
SunPower (SPWR) to reduce workforce by about 900 employees
A123 Systems (AONE) may need to seek bankruptcy protection
Boardwalk Pipeline (BWP, L) purchased remaining interest in PL Midstream
New Frontier Media (NOOF) to be acquired by LFP Broadcasting for $2.02 per share
Microchip (MCHP) CEO cited macro, industry conditions for lowered revenue view
ModusLink (MLNK) said form 10-K will be delayed
Infraredx and Philips (PHG) announced collaboration to develop catheterization lab
SkyB (BSYBY) lands exclusive access from Warner Bros. (TWX) to all eight Harry Potter films
Companies that beat consensus earnings expectations last night and today include:
PNC Financial (PNC),UnitedHealth (UNH), Mattel (MAT), Joe's Jeans (JOEZ), ICU Medical (ICUI)
Companies that missed consensus earnings expectations include:
Wolverine World Wide (WWW), Mercantile Bank (MBWM), Brown & Brown (BRO), Packaging Corp. (PKG), WD-40 (WDFC)
Federal regulators are considering giving mortgage lenders protection from certain lawsuits, sources say, a move designed to encourage lending to well-qualified borrowers. The proposal for the first time would establish a basic national standard for loans, known as a "qualified mortgage," the Wall Street Journal reports
China is now watching cash stream out. China hasn't reported on capital inflows and outflows since last year, but it is possible to gauge more recent flows using trade data, reign-exchange reserves numbers released Saturday and other economic statistics. Iin the 12 months through September, about $225B flowed out of China, equivalent to about 3% of the nation's economic output last year, suggests an analysis by the Wall Street Journal
Mongolia’s state-owned developer of the huge Tavan Tolgoi coal deposit invited Peabody Energy (BTU) to help build infrastructure and be a temporary mine contractor on the project ahead of a much-delayed bidding process, Reuters reports
News Corp. (NWSA) CEO Rupert Murdoch faces renewed calls from shareholders today to step down as chairman. Investors have mounted a campaign to separate the chairman and CEO roles, both held by Murdoch, to increase accountability, Bloomberg reports
The global sugar glut is extending into a third year, the longest stretch in more than a decade, as Brazil and Australia expand output and imports contract to the smallest since 2008. Raw-sugar futures traded in New York may fall 9.9% to 18 cents a pound by the end of the year, according to the median of 15 estimates from traders and analysts compiled by Bloomberg
Costamare (CMRE) to offer 7M shares of common stock
Emerald Oil (EOX) files $300M mixed securities shelf; 12.1M shares for holders
Golub Capital (GBDC) to offer 2.6M shares of common stock
Government Properties (GOV) commences offering of 7M common shares
Mid-Con Energy (MCEP) offers 1M common units representing limited partner interests
Palo Alto (PANW) files to sell 4.8M shares of common stock for holders
Walter Investment (WAC) to offer 4.5M shares of common stock