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Frontrunning: October 18

Tyler Durden's picture




 
  • Germany will pay Greek aid (Spiegel)
  • Spain Banks Face More Pain as Worst-Case Scenario Turns Real (Bloomberg)
  • China’s Growth Continues to Slow (WSJ)
  • Executives Lack Confidence in U.S. Competitiveness (WSJ)
  • Poor Market Conditions will See 180 Solar Manufacturers Fail by 2015 (OilPrice)
  • Wen upbeat on China’s economy (FT)
  • Gold remains popular, despite the doubts of economists (Economist)
  • Armstrong Stands to Lose $30 Million as Sponsors Flee (Bloomberg)
  • IMF urges aid for Italy, Spain but Rome baulking (Reuters)
  • EU Summit Highlights Financial Divide (WSJ)
  • FOMC Straying on Price Target, Former Fed Officials Say (Bloomberg)
  • Putin defiant over weapons sales (FT)
  • India and Australia Agree to Start Talks on Nuclear Trade Deal (Bloomberg)

European Economic Summary

  • Switzerland Trade Balance 2.01B. Previous 1.61B.
  • Sweden Unemployment 7.8% - in line with consensus. Consensus 7.8%. Previous 7.8%.
  • UK Retail Sales Ex Auto Fuel 0.6% m/m 2.9% y/y – higher than expected. Consensus 0.3% m/m 2.4% y/y. Previous -0.2% m/m 2.9% y/y. 
  • Spain Trade Balance -3145.1M –lower than expected. Consensus -2500M. Previous -1692.6M
  • Poland Producer Prices 0.6% m/m 4.6% y/y. Previous 1.2% m/m 4.2% y/y.

Overnight Media Digest

FT

ROSNEFT SET TO CLINCH DEAL ON TNK-BP

The chief executive of Rosneft will on Thursday finalise a deal with BP that will turn the Russian oil group into the world's largest publicly traded crude oil producer.

HIGH STREET HIT BY RISE IN RETAILER CLOSURES

British retail chains shut an average of 20 stores a day in the first six months of this year as the pace of high street closures accelerated.

PARIS STEPS IN OVER TROUBLED PEUGEOT UNIT

The French government has been forced to step in with a rescue package for troubled carmaking group PSA Peugeot .

ARMSTRONG DROPPED BY SPONSORS

Nike, RadioShack, AB InBev and Trek have dropped their sponsorship deals with Lance Armstrong, once one of the world's most endorsed athletes.

NEW CITI CHIEF SEEKS TO REASSURE BANKERS

Citigroup's new boss Mike Corbat is rushing to plug the gap he left at the helm of the U.S. bank's European business.

'WIZARD OF OZ' BOWS OUT OF MOORE CAPITAL

Greg Coffey, one of the UK's biggest hedge fund stars, has resigned from Moore Capital Management.

JOHNSON WARNS ON AIRPORT PLAN DELAYS

Boris Johnson on Wednesday raised the possibility of legal action over delays of government aviation policy.

EUROPE BANKING SUPERVISOR PLAN 'ILLEGAL'

A plan to create a single euro zone banking supervisor is illegal, according to a secret legal opinion for EU finance ministers.

VOLCKER CRITICISES BANKING REFORM MOVES

A few simple rules should form the backbone of bank regulation after the financial crisis, former U.S. Federal Reserve Chairman Paul Volcker said on Wednesday.

FOREIGN MONEY SEEKS LONDON PROPERTY

New figures show the flow of foreign money seeking a home in London means the capital now accounts for a third of total European investment transactions.

 

WSJ

* Sprint Nextel Corp is in talks to gain control of partner Clearwire Corp's board via agreements with the wireless broadband operator's other investors, people familiar with the matter said.

* BP Plc is close to a pact to sell its 50 percent stake in troubled Russian venture TNK-BP Ltd to state oil company NK Rosneft' OAO for about $25 billion in cash and shares, people close to the talks said.

* Oil-rich Angola launched a $5 billion sovereign-wealth fund that will focus on infrastructure and hotel projects at home and will seek investment opportunities beyond the borders of the southern African country.

* ASML Holding NV launched a 1.95 billion euros ($2.56 billion) cash and shares offer for U.S.-based Cymer Inc as it tries to speed the development of the next generation of microchips needed to improve the performance and efficiency of smartphones and tablets.

* PepsiCo Inc's soda brands continued to gain share in North America in the third quarter. Pepsi reported a 4.9 percent decline in third-quarter earnings due to higher costs, more spending on advertising and unfavorable currency translation.

* Commercial fallout from doping allegations against Lance Armstrong hit Wednesday, as Nike Inc, RadioShack Corp , Anheuser-Busch InBev Worldwide Inc, the makers of Trek bikes and Giro helmets, and others distanced themselves from the former cycling champ.

* A former U.S. corporate leader and Goldman Sachs Group Inc director, Rajat Gupta, should spend up to 10 years in prison for "shocking" crimes that led to his insider-trading conviction, prosecutors said. However, lawyers for Rajat Gupta said he should receive probation and community service.

* The death toll from fungal-meningitis cases rose to 19 people on Wednesday and health officials said that about 250 patients have contracted fungal meningitis tied to a steroid injection from the New England Compounding Center of Framingham, Massachusetts.

 

NYT

* Sprint Nextel Corp is seeking greater control of Clearwire Corp, the wireless network operator in which it owns close to a majority stake, through negotiations with its partners in the company, people briefed on the matter said.

* One way or the other, NK Rosneft' OAO, the Russian state oil company, is poised to significantly expand its oil and gas holdings in Russia. And BP Plc, its latest Western partner, could benefit from whatever move Rosneft makes.

* Exxon Mobil Corp agreed to buy Celtic Exploration Ltd for about $3.1 billion in cash and stock, as it sought to expand its presence in the energy-rich shale formations of western Canada.

* The Dutch semiconductor equipment maker ASML Holding NV agreed to buy Cymer Inc, a maker of microchip components, for 1.95 billion euros ($2.56 billion).

* Following the doping scandal, Lance Armstrong fell further from grace on Wednesday. Nike Inc, the sports brand most closely associated with his racing days, was among several companies severing ties with him.

* A judge handed Warner Brothers a major victory in its quest to defend its Superman franchise, ruling that heirs of the comic book hero's co-creators have no right to seize control of half of the lucrative property.

* Federal prosecutors want Rajat Gupta to spend as much as 10 years in prison for insider trading. However, Gupta's lawyers have pleaded for a lenient sentence of probation, accompanied by an order that he perform community service.

* eBay Inc reported that net income in the third quarter rose $597 million, or 45 cents a share, a 22 percent jump from the quarter a year earlier. Revenue climbed 15 percent to $3.4 billion.

* Bank of America Corp reported a slim $340 million quarterly profit even after doling out huge payments to settle legal claims from its takeover of Merrill Lynch during the financial crisis.

 

Canada

THE GLOBE AND MAIL

* After pushing back retirement benefits for millions of Canadians earlier this year, the Conservative government is shrinking the generous pensions of MPs and federal public servants.

* Ontario Premier Dalton McGuinty's office established a high-level initiative code named Project Vapour to manage the fallout from the government's decision to pull the plug on a multibillion-dollar power plant, documents show.

A dozen e-mails, made public days before McGuinty resigned, show that the premier's closest advisers were directly involved in sensitive talks with TransCanada Corp, the Calgary energy giant that was to build the province's third-largest gas-fired power plant in Oakville.

Reports in the business section:

* Exxon Mobil Corp is acquiring Celtic Exploration Ltd for $2.6-billion, capping ten years of growth for the Calgary company that has amassed large tracts of land that are rich with liquid hydrocarbons and natural gas that could one day be exported to Asia.

* The venerable Hudson's Bay Co is accelerating its makeover for 21st-century retail, with a public share offering that would value Canada's oldest company at up to $2.6-billion.

NATIONAL POST

* A subsidiary of a Brazilian-based company that calls itself a leading animal protein processor in the U.S. and Australia says it is taking over management of XL Foods, the Alberta-based plant at the heart of the recent beef recall.

* Two months after the 23-year-old wife of Manitoba senator Rod Zimmer was thrust into the spotlight after causing a disturbance on an airliner, she is kicking off her acting career by starring in an independent film about a world ruled by women.

FINANCIAL POST

* During Tuesday night's U.S. presidential debate, Mitt Romney once again painted Canada as a glowing example of a country where corporate tax rates are done right. "Canada's tax rate on companies is now 15 percent, ours is 35 percent," Romney said during the debate. "So if you're starting a business, where would you rather start it?"

So is he right about Canada being a better place to start a business?

* After Potash Corp slashed its earnings guidance on Wednesday, many investors had one question: What took so long?

 

Fly On The Wall 7:00 am Market Digest

ANALYST RESEARCH

Upgrades

American Eagle (AEO) upgraded to Outperform from Market Perform at Wells Fargo
Annaly Capital (NLY) upgraded to Market Perform from Underperform at Wells Fargo
Atwood Oceanics (ATW) upgraded to Overweight from Equal Weight at Morgan Stanley
ConocoPhillips (COP) upgraded to Neutral from Sell at Goldman
Duke Energy (DUK) upgraded to Buy from Neutral at Citigroup
East West Bancorp (EWBC) upgraded to Outperform from Market Perform at Keefe Bruyette
Harley-Davidson (HOG) upgraded to Buy from Neutral at Goldman
Lindsay Corp. (LNN) upgraded to Outperform from Market Perform at William Blair
PacWest Bancorp (PACW) upgraded to Outperform from Market Perform at Keefe Bruyette
Seadrill (SDRL) upgraded to Buy from Neutral at Goldman
Taylor Capital (TAYC) upgraded to Market Perform from Underperform at Keefe Bruyette
U.S. Bancorp (USB) upgraded to Positive from Neutral at Susquehanna
Western Refining (WNR) upgraded to Buy from Neutral at Goldman

Downgrades

Abbott (ABT) downgraded to Market Perform from Outperform at Raymond James
CSX (CSX) downgraded to Hold from Buy at Deutsche Bank
Comerica (CMA) downgraded to Neutral from Buy at Sterne Agee
Deutsche Bank (DB) downgraded to Underweight from Neutral at JPMorgan
Halliburton (HAL) downgraded to Equal Weight from Overweight at Stephens
Linear Technology (LLTC) downgraded to Neutral from Buy at Nomura
Potash (POT) downgraded to Sector Perform from Outperform at RBC Capital
Questar (STR) downgraded to Neutral from Buy at Citigroup
Reinsurance Group (RGA) downgraded to Market Perform from Outperform at Keefe Bruyette
Royal Dutch Shell (RDS.A) downgraded to Sell from Neutral at Goldman
Skullcandy (SKUL) downgraded to Market Perform from Strong Buy at Raymond James
St. Jude Medical (STJ) downgraded to Hold from Buy at Canaccord
St. Jude Medical (STJ) downgraded to Market Perform from Outperform at William Blair
St. Jude Medical (STJ) downgraded to Neutral from Buy at Goldman
Stanley Black & Decker (SWK) downgraded to Market Perform from Outperform at Raymond James
Stryker (SYK) downgraded to Perform from Outperform at Oppenheimer

Initiations

Excel Trust (EXL) initiated with a Buy at Cantor
Fusion-io (FIO) initiated with an Equal Weight at Barclays
Ramco-Gershenson (RPT) initiated with an Outperform at Raymond James
Zillow (Z) initiated with a Buy at Goldman

HOT STOCKS

WESCO (WCC) acquired EECOL Electric Corp. for C$1.14B
Verizon (VZ) to transfer $7.5B in management pension plan obligations to Prudential (PRU)
Moody's placed Murphy Oil’s (MUR) Baa3 senior unsecured ratings on review for downgrade
Sprint (S) disclosed intent to acquire Eagle River's Clearwire (CLWR) holdings
eBay (EBAY) said mobile continues to be a game changer for us
Said "increasingly confident" in FY12, FY13 plans
Sees international expansion as "significant opportunity" for the company
Expects active users to double in next three to five years
Stryker (SYK) sees market conditions remaining challenging in Europe
Albermarle (ALB) expects market, economic conditions to remain ”unstable”
Eli Lilly (LLY) said FDA approved new use of ALIMTA for NS NSCLC
Core Laboratories (CLB) sees 2013 outlook "positive"
Gold Fields (GFI) reported full turn-out at Beatrix Gold Mine
ACE (ACE) to by Ally Financial's Mexican insurance business

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
WESCO (WCC), Polaris Industries (PII), Diamond Offshore (DO), Huntington Bancshares (HBAN), Ethan Allen (ETH), Steel Dynamics (STLD), Core Laboratories (CLB), Reinsurance Group (RGA), SLM Corp. (SLM), eBay (EBAY), Albermarle (ALB), RLI Corporation (RLI)

Companies that missed consensus earnings expectations include:
Danaher (DHR), BB&T (BBT), CVB Financial (CVBF), Noble Corporation (NE), Align Technology (ALGN), Stryker (SYK)

Companies that matched consensus earnings expectations include:
Fifth Third Bancorp (FITB), Verizon (VZ), HNI Corporation (HNI), Crown Holdings (CCK),  Covanta (CVA), American Express (AXP)

NEWSPAPERS/WEBSITES

China said its economy slowed in Q3, weeks before it changes leadership, compounding concerns about the outlook for growth growth. The GDP fell to 7.4%, China's National Bureau of Statistics said, down from 7.6% in Q2, the weakest since the beginning of 2009, the Wall Street Journal reports
Residential construction in the U.S. picked up momentum in September and now is running at its highest level in four years. Builders started work on new houses and apartments at a seasonally adjusted annual rate of 872,000 units last month, the Commerce Department said, up 15% from August and 34.8% from September a year ago, the Wall Street Journal reports
A troubled world economy took a toll on much of Corporate America in Q3, raising concerns among investors that the year-long streak of profit growth could be nearing an end as CEOs run out of costs to cut and customers are increasingly concerned about spending, Reuters reports
Private equity firms plan to increase investment in Asia over the next year as they look to tap into potential growth, a survey from Ernst & Young ERNY.UL showed. About 83% of PE  firms surveyed for its Global Capital Confidence Barometer, said they planned to increase investment activity in emerging Asian countries, Reuters reports
Toyota Motor (TM) may cut its 2012 group-wide production plan by about 2% because of a drop in sales in China after a territorial fight, according to the Mid-Japan Economist newspaper, Reuters reports
Lenovo Group (LNVGY) said slowing demand in the PC market, where it passed Hewlett-Packard (HPQ) to become the global leader last quarter, is a good reason for it to expand into smartphones, Bloomberg reports

SYNDICATE

Anacor Pharmaceuticals (ANAC) files to sell common stock
CytRx (CYTR) 8M share Spot Secondary priced at $2.50
Howard Hughes (HHC) files to sell 20.21M shares of common stock for holders
ImmunoCellular (IMUC) files to sell common stock and warrants
Lexicon Pharmaceuticals (LXRX) to offer common stock
MannKind (MNKD) files to sell common stock and warrants
Palo Alto (PANW) Networks 4.8M share Secondary priced at $63.00
Tornier (TRNX) files to sell 1.94M ordinary shares of common stock

ACTIVIST/PASSIVE FILINGS

SAC Capital reports 5.1% passive stake in Plains Exploration (PXP)
Kensico Capital reports 11.35% stake in WebMD (WBMD)

 

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Thu, 10/18/2012 - 07:52 | 2900460 GetZeeGold
GetZeeGold's picture

 

 

Germany will pay Greek aid

 

Wow.....sure as hell didn't see that coming.

 

Thu, 10/18/2012 - 08:49 | 2900472 LongSoupLine
LongSoupLine's picture

PARIS STEPS IN OVER TROUBLED PEUGEOT UNIT

The French government has been forced to step in with a rescue package for troubled carmaking group PSA Peugeot .

 

Get ready for the French version of channel stuffing...

Thu, 10/18/2012 - 08:06 | 2900486 A Man without Q...
A Man without Qualities's picture

The 1% probability worse case scenario for Spain will turn out to have been an optimistic one.  

Thu, 10/18/2012 - 08:10 | 2900496 AnAnonymous
AnAnonymous's picture

That Armstrong guy, that Lance "Where's the syringe?" Armstrong guy, what a fine 'American'.

One can easily understand why Texans take so much pride in this guy.

Guy can star in any movie as the perfect teacher of 'americanism'. Dont believe the 'american' saying that if you cant do, you teach, because Armstrong, wooo, can teach 'americanism' to an ape cause he is such a fine specimen.

This 'american' guy dances his 'american' ballet by the menu.

Hiding behind his disease and the disease of cancer striken people to benefit from his 'american' drugs dependency. Really shows what 'americans' mean by charity and how they organize it so they become a recipient of their own charity business.

Guy has made dozens of millions lying through his teeth, the 'american' way. Bullying anyone who reported his drug addiction. Even an 'american' politician threw his weight around in order to keep concealing what kind of cheater this 'american' armstrong guy is. As if 'american' politicians have nothing else to do.

The Bush family would not be so entrenched in Texas I would give that 'american' man a brilliant political future. Who knows?

Nevertheless, I highly recommand to anyone interested in bettering oneself as an 'american' or simply becoming one, to learn from that great 'american' example.

Figures of the past are great but sometimes, role models from present days work better as it is easier to relate to them.

Lance "Where's the syringe?"Armstrong is totally 'american' approved. How to conceal your little ugly business behind the welfare of humanity and all...

Thu, 10/18/2012 - 08:28 | 2900546 Sofa King
Sofa King's picture

You must be fat and lazy.

Thu, 10/18/2012 - 08:51 | 2900611 LongSoupLine
LongSoupLine's picture

who gives a fuck!  How does this relate to Congress, Fed, regulators and TBTF fucking us up the ass every fucking day?

Fucking focus!

Thu, 10/18/2012 - 09:05 | 2900665 I am a Man I am...
I am a Man I am Forty's picture

Newsflash, America doesn't have a monopoly on doping in the Tour de France.  If you look at the list of those that have been thrown off the tour, it is very long and it is ALL of the best riders, no exceptions.  Did Armstrong lie to everyone or at least giving the impression that he wasn't blood doping, yes.  But he's done more than any other single person in the world raising money for cancer than anyone I can think of.  So yes he is full of shit and he cheated, but all of the other top riders were cheating too.  It is what it is.  The clean riders got screwed, not sure who they were back then, those were the ones hurt in all of this, the best riders were all taking stuff to win because that is unfortunately what you have to do.  The tours were much more entertaining back then too.  If it was up to me, I would make it all legal.  I wouldn't test at all.  

But let's get off the high horse, this certainly is not uniquely American, there's plenty of bad shit we got going on, and this doesn't make the top 100.

Thu, 10/18/2012 - 08:27 | 2900541 Catullus
Catullus's picture

* Federal prosecutors want Rajat Gupta to spend as much as 10 years in prison for insider trading. However, Gupta's lawyers have pleaded for a lenient sentence of probation, accompanied by an order that he perform community service.

Victimless crime

 

 

Thu, 10/18/2012 - 12:18 | 2901309 mkhs
mkhs's picture

Victimless?  How many sold those stocks for less or paid more to buy?

There were plenty of victims.

Thu, 10/18/2012 - 08:29 | 2900545 Catullus
Catullus's picture

First Energy downgraded by S&P

Thu, 10/18/2012 - 09:19 | 2900730 Screwball
Screwball's picture

Heard something on CNBC this morning (I know, I know, just to see what the futures were doing) and I heard Kernan say something about the banksters writing a letter to the CONgress clowns about the fiscal cliff, but I don't see anything in the news.  Anyone have a link?

 

I would be curious to know what weasel dicks want them to print more money?

Thu, 10/18/2012 - 14:20 | 2901959 covert
covert's picture

failure is popular.
http://covert.ias3.com/expose/

Do NOT follow this link or you will be banned from the site!