Frontrunning: October 19
- Debt Fuels a Dividend Boom - Firms Collect Payouts, and Investors Get Yield; 'Reminiscent of the Bubble Era' (WSJ)
- Black Monday Echoes With Computers Failing to Restore Confidence (BBG)
- Poll: Obama Leads in Wisconsin, Iowa (WSJ)
- Gold Imports by India Seen Climbing First Time in Six Quarters (BBG)
- Europe pushes ahead towards ECB bank supervision (Reuters)
- ... And fails: Summit fails to agree timetable for aid to failing lenders (FT)
- Toyota Prius Dominates California as State’s No. 1 Model (BBG)
- Italy raises €18bn in huge bond sale (FT)
- Diplomacy inbox fills up as U.N. awaits U.S. presidential vote (Reuters)
- Goldman braced for more revelations (FT)
- China power brokers agree preferred leadership team (Reuters)
- EU, Japan Warn Against New US Swaps Rules (WSJ)
- Why VaR is the most meaningless contraption ever: Morgan Stanley shows the ‘flaky’ side of model (FT)
- Made in France Trumps Consumer Choice in Hollande Jobs Quest (BBG)
- North Korea threatens South over propaganda balloons (Reuters)
Overnight Media Digest
* President Barack Obama retains steady leads over Mitt Romney in Wisconsin and Iowa, two battlegrounds drawing increased attention in the final sprint to Election Day, according to new polls conducted just before and after Tuesday's presidential debate.
* Google Inc's quarterly earnings report hit Wall Street more than three hours early on Thursday due to a glitch. The bigger glitch was what the Internet giant's results actually showed.
* European leaders early Friday agreed to have a new supervisor for euro-zone banks up and running next year, a step that will pave the way for the bloc's bailout fund to pump capital directly into banks throughout the single-currency area.
* Microsoft Corp's quarterly earnings dropped 22 percent amid weak demand for personal computers and slowing growth for its once-strong business software, underscoring the stakes for the company to successfully launch its dramatically overhauled Windows operating system next week.
* Big bond auctions in Italy and Spain gave a surprising boost to the biggest countries reeling under Europe's debt crisis, with Italy selling a record 18 billion euros ($23.57 billion) worth - enough to satisfy its borrowing needs for the rest of the year in one unexpected stroke.
* China said its economy continued to slow in the third quarter just weeks before it embarks on a once-a-decade change in leadership, compounding concerns about the outlook for one of the world's major engines of growth.
* The board of Lowe's Cos Inc is looking for an heir apparent to Chief Executive Robert Niblock, as the home-improvement retailer struggles to compete with resurgent rival Home Depot Inc.
* Chilean retail giant Cencosud SA agreed to acquire the Colombian business of French retailer Carrefour SA for 2 billion euros ($2.6 billion), in a move that shows how local companies are taking advantage of European counterparts weakened by the Continent's debt crisis.
BARCLAYS SETS ASIDE FURTHER FUNDS FOR PPI
Barclays reported a spike in claims of unwanted insurance policies sold, forcing it to set aside a further 700 million pounds ($1.13 billion).
OXFORD INVESTMENT CHIEF CRITICISES BUYOUTS
Oxford University's investment chief accused private equity bosses of failing their clients by charging excessive fees and delivering lacklustre returns.
GOOGLE TRADING HALTED AFTER EARNINGS ERROR
Third-quarter earnings from Google were published several hours earlier than planned on Thursday, sparking a panic sell-off of the company's shares.
ARCELORMITTAL EXPLORES IRON ORE STAKE SALE
ArcelorMittal is exploring the sale of a stake in its $10 billion Canadian iron ore business, as the world's biggest steel company struggles to cope with the downturn.
M STANLEY SHOW THE 'FLAKY' SIDE OF MODEL
Morgan Stanley adjusted its own benchmark of potential losses in a move that boosted its reported capital buffers, sparking debate over banking measures.
NEWSWEEK TO ABANDON PRINT EDITION
Newsweek's print edition in to cease publication after 79 years, pinning their hopes on cost-cutting and an "all-digital" strategy.
WALMART PROBED IN INDIA OVER INVESTMENT
Walmart is being investigated in India over accusations that it secretly invested in supermarkets.
SHELL IN US TALKS TO EXTEND ARCTIC LEASES
Royal Dutch Shell, the European oil company, has been in talks with the U.S. government over extending its leases for oil development in the Arctic seas north of Alaska.
* Sprint Nextel Corp has moved to protect one of its most valuable assets - access to a big chunk of spectrum - just as it is preparing to become a more aggressive force in wireless, with the backing of SoftBank Corp of Japan.
* Google Inc released a disappointing earnings report on Thursday that sent its stock price plummeting and reflected the challenges the company faces as it tries to make money in a mobile world.
* On Thursday, Newsweek buckled under the pressure afflicting the magazine industry in general and newsweeklies in particular, with their outdated print cycles that have been overtaken by the Internet. Tina Brown, editor-in-chief of Newsweek and The Daily Beast, announced that Newsweek would cease print publication at the end of the year and move to an all-digital format.
* Microsoft Corp is on the verge of releasing Windows 8, its biggest software product in years - and the company's lackluster financial results on Thursday underscored how badly the company needs it to succeed.
* Indian regulators have begun an informal inquiry into allegations that Wal-Mart Stores Inc violated rules restricting foreign investment in the country's fast-growing retailing industry.
* Morgan Stanley earnings rebounded strongly in the third quarter as skittish clients returned to doing business with the company.
* Verizon Communications reported on Thursday that its net income in the third quarter rose 15.5 percent, to $1.59 billion, from a year ago. The company said revenue climbed 3.9 percent to $29 billion, in line with a survey of analysts' expectations by FactSet.
* Union Pacific Corp said Thursday that its third-quarter profit climbed 15 percent because price increases and more automotive and chemical shipments helped the railroad offset a 12 percent decline in coal shipments.
* Southwest Airlines Co eked out a small third-quarter profit in spite of a September slowdown, the company said on Thursday.
* After months of slowing growth, the Chinese economy may finally have bottomed out. But concerns remain about whether and when it can resume the rapid expansion of recent years.
* Airtime, the much-hyped video chat site created by Sean Parker and Shawn Fanning, the two behind the music sharing service Napster, has turned out to be far from a sure thing.
The site is just four months old, and the staff is tweaking its features to make it more appealing. So far, though, Airtime's traffic appears to be little more than a trickle.
* Hoping to stave off a brewing trade war, Mexican tomato growers said on Thursday that they would agree to significant increases in the minimum price at which their products can enter the United States and to establish a system to bolster compliance and enforcement.
THE GLOBE AND MAIL
* Dalton McGuinty's decision to suspend all business at the Ontario legislature has created divisions within Liberal Party ranks, with some members of provincial parliament g r owing uneasy and one potential leadership candidate openly criticizing the move as a way to avoid scrutiny.
* After escaping the largest human-trafficking ring in Canadian history, Tibor Baranyai could have quietly returned to his native Hungary. Instead, he chose to help police and prosecutors take down the criminal organization that forced him to work as a virtual slave on construction sites.
Reports in the business section:
* With one eye on the strong resource economy and the other on its chief rival, Air Canada is ramping up the frequency of its short regional flights in Western Canada.
* The spat between Enbridge Inc and British Columbia is escalating, with each side accusing the other of being out of line regarding discussions - or more precisely, the lack of discussions - over explosive issues tied to the controversial oil sands pipeline the province currently opposes.
* A retired city of Montreal engineer says he collected more than $600,000 in cash kickbacks from construction companies over nearly 20 years.
* Research In Motion Ltd Chief Executive Thorsten Heins fired back at a New York Times article on the apparent social embarrassment of being seen using a BlackBerry smartphone.
* Canada's securities industry regulator is calling for tougher oversight of the Canadian version of Libor. In an emailed statement, a spokesperson for the Investment Industry Regulatory Organization of Canada said while it isn't aware of any problems with the Canadian Dealer Offered Rate, or CDOR, "(r)ecent experiences with Libor have pointed to a need for increased scrutiny of such survey-based reference rates."
Fly On The Wall 7:00 am Market Snapshot
Abbott (ABT) upgraded to Outperform from Market Perform at Wells Fargo
Alliant Energy (LNT) upgraded to Buy from Hold at Wunderlich
Cheniere Energy Partners (CQP) upgraded to Outperform from Neutral at Credit Suisse
Cummins (CMI) upgraded to Overweight from Neutral at Piper Jaffray
Harley-Davidson (HOG) upgraded to Overweight from Neutral at JPMorgan
Home Loan Servicing (HLSS) upgraded to Overweight from Equal Weight at Barclays
Huntington Bancshares (HBAN) upgraded to Market Perform from Underperform at FBR
Intuitive Surgical (ISRG) upgraded to Buy from Neutral at BofA/Merrill
SanDisk (SNDK) upgraded to Overweight from Neutral at Piper Jaffray
T. Rowe Price (TROW) upgraded to Overweight from Neutral at JPMorgan
Verizon (VZ) upgraded to Outperform from Sector Perform at Pacific Crest
AMD (AMD) downgraded to Market Perform from Outperform at FBR Capital
athenahealth (ATHN) downgraded to Underperform from Hold at Jefferies
Barclays (BCS) downgraded to Hold from Buy at Canaccord
Fifth Third Bancorp (FITB) downgraded to Neutral from Buy at Compass Point
Genco Shipping (GNK) downgraded to Sell from Hold at Deutsche Bank
Google (GOOG) downgraded to Neutral from Buy at BofA/Merrill
Google (GOOG) downgraded to Perform from Outperform at Oppenheimer
Janus Capital (JNS) downgraded to Underweight from Neutral at JPMorgan
KeyCorp (KEY) downgraded to Neutral from Buy at Citigroup
Lloyds Banking (LYG) downgraded to Underweight from Neutral at JPMorgan
Marvell (MRVL) downgraded to Hold from Buy at Deutsche Bank
Marvell (MRVL) downgraded to Hold from Buy at Jefferies
Marvell (MRVL) downgraded to Market Perform from Outperform at FBR Capital
Marvell (MRVL) downgraded to Neutral from Outperform at Credit Suisse
Marvell (MRVL) downgraded to Neutral from Overweight at JPMorgan
Marvell (MRVL) downgraded to Underperform from Outperform at CLSA
Meadowbrook (MIG) downgraded to Underperform from Sector Perform at RBC Capital
NVIDIA (NVDA) downgraded to Market Perform from Outperform at FBR Capital
Northrop Grumman (NOC) downgraded to Perform from Outperform at Oppenheimer
Snap-On (SNA) downgraded to Neutral from Buy at Janney Capital
WESCO (WCC) downgraded to Neutral from Buy at Citigroup
Celanese (CE) initiated with a Neutral at JPMorgan
Clarcor (CLC) initiated with a Perform at Oppenheimer
DSW Inc. (DSW) initiated with a Neutral at Citigroup
Donaldson (DCI) initiated with a Perform at Oppenheimer
Guess (GES) initiated with an Underweight at Morgan Stanley
Pegasystems (PEGA) initiated with a Neutral at Wedbush
Salesforce.com (CRM) initiated with an Outperform at Wedbush
Microsoft (MSFT) reaffirmed FY13 operating expense guidance $30.3B-$30.9B
Said rise of multi-screen consumer creating huge opportunities
Burger King (BKW) launched specialty coffees with Nescafe Milano by Nestle (NSRGY)
ING Groep (ING) to sell insurance units in Hong Kong, Macau, Thailand
Yahoo (YHOO) to close Korean business
Air Products (APD) CEO: starting our FY13 with weak economic momentum worldwide
MeadWestvaco (MWV) to acquire Ruby Macons, terms not disclose
Baker Hughes (BHI) CEO: Well positioned in growing and emerging markets
Schlumberger (SLB) still sees uncertainty surrounding global economy outlook
USB's (USB) Elavon and Banco Santander (SAN) form merchant services JV in Spain
Chipotle (CMG) sees flat to low-single digit comparable restaurant sales in 2013
Sees 165-180 new restaurant openings next year
AMD (AMD) sees PC market under pressure for "several quarters"
Said it must diversify beyond the traditional PC market
To cut workforce by 15%
Duff & Phelps (DUF) acquired CETERIS
Companies that beat consensus earnings expectations last night and today include: Honeywell (HON), Schlumberger (SLB), Valmont (VMI), Western Alliance (WAL), Capital One (COF), Rambus (RMBS), Robert Half (RHI), SanDisk (SNDK), athenahealth (ATHN), NCR Corp. (NCR), B&G Foods (BGS), Cubist (CBST), Microsoft (MSFT)
Companies that missed consensus earnings expectations include:
Baker Hughes (BHI), Air Products (APD), Cytec Industries (CYT), AMD (AMD), E-Trade (ETFC), Chipotle (CMG), Acacia Research (ACTG)
Companies that matched consensus earnings expectations include:
General Electric (GE), People's United (PBCT)
The Google (GOOG) filing was sent early due to human error and not a systems problem, R.R. Donnelley (RRD) CEO Tom Quinlan told the Wall Street Journal
A series of failed deals is upsetting Chinese firms trying to invest in U.S. businesses and throwing fuel on an increasingly tense trade relationship between the two largest economies, the Wall Street Journal reports
Archer Daniels Midland (ADM), which bought a 10% stake in Australia’s GrainCorp, valuing the company at $2.8B, wants talks on a takeover that would give the U.S. agribusiness a stronger platform to supply Asia, Reuters reports
BP’s (BP) board will meet today to consider a cash and stock offer worth over $25B from Rosneft for its 50% stake in TNK-BP, Reuters reports
Expansion by tech companies from Amazon (AMZN) to Apple (AAPL) to Facebook (FB) is helping drive a rebound in U.S. office development from the lowest in more than five decades as default rates on construction mortgages decline from a 2010 peak, Bloomberg reports
Foreign direct investment in China declined for the 10th time in 11 months, as companies reduced spending amid a slowdown in their economy. Investment fell 6.8% from a year earlier to $8.43B, according to the Ministry of Commerce, Bloomberg reports
Cleveland BioLabs (CBLI) files to sell common stock and warrants
Copano Energy (CPNO) files to sell 6M common units
Marathon Petroleum (MPC) unit launches 15M share IPO
Puma Biotechnology (PBYI) 6.5M share Secondary priced at $16.00
Seadrill Partners (SDLP) 8.75M share IPO priced at $22.00