Frontrunning: October 25
- Japan grapples with own fiscal cliff (Bloomberg)
- Japan Protests After Four Chinese Vessels Enter Disputed Waters (Bloomberg)
- Asian Stocks Rise as Exporters Gain on China, U.S. Data (Bloomberg)
- An obsolete Hilsenrath speaks: Fed Keeps Rates Low, Says Growth Is Moderate (WSJ)
- ECB Said to Push Spain’s Bankia to Swap Junior Debt for Shares (Bloomberg)
- Spain’s Bad Bank Seen as Too Big to Work (Bloomberg)
- China postpones Japan anniversary events (China Daily)
- Carney Says Rate Increase ‘Less Imminent’ on Economy Risk (Bloomberg)
- Credit Suisse to Cut More Costs as Quarterly Profit Falls (Bloomberg)
- Obama offers a glimpse of his second-term priorities (Reuters)
- Draghi defends bond-buying programme (FT)
- S.Korea sees no new capital flow measures-finance minister (Reuters)
- N.Z. Holds Benchmark Rate at 2.5% as Wheeler Term Begins (Bloomberg)
Overnight Media Digest
* Facebook Inc on Wednesday posted its biggest daily stock gain since its initial public offering in May, a day after reporting strong revenue and progress on making money from mobile ads.
* Chief executives of more than 80 big-name United States corporations, from Aetna Inc to Weyerhaeuser Co, are banding together to pressure Congress to reduce the federal deficit with tax-revenue increases as well as spending cuts.
* Former Goldman Sachs Group Inc director Rajat Gupta was sentenced to two years in federal prison for leaking corporate secrets about the bank to a hedge fund at the height of the financial crisis.
* The federal government filed a civil lawsuit against Bank of America Corp, alleging the second-biggest United States bank by assets saddled taxpayers with losses by misrepresenting the quality of home loans it sold to mortgage-finance firms Fannie Mae and Freddie Mac.
* The head of Lockheed Martin Corp said scheduled across-the-board cuts to the United States defense budget wouldn't hit existing business before March, though there has been no official word from the Pentagon that they will be avoided.
* Uganda has taken back control of a prospective oil area licensed to CNOOC Ltd, Tullow Oil Plc and Total SA after initial drilling failed to yield any crude, the government said in a short statement.
* The sports-shoe giant, Nike Inc, said it has agreed to sell Umbro, its struggling UK-based soccer-gear unit to Iconix Brand Group Inc for $225 million, less than half of the $578 million or so that Nike paid in 2008.
* Best Buy Co announced a leadership shake-up as the struggling electronics chain warned that earnings this quarter would be "significantly below" those it posted a year ago.
* A report by the Senate Finance Committee based on thousands of documents it subpoenaed from Medtronic Inc raises new questions about the integrity of the medical research underpinning one of the medical-device maker's products.
* Rajat Gupta, the former Goldman Sachs Group Inc director, was sentenced to two years in prison for leaking boardroom secrets to the former hedge fund manager Raj Rajaratnam.
* Visa Inc announced that it had named Charles Scharf, a former head of JPMorgan Chase & Co's vast retail arm, as chief executive, as Visa's current leader prepares for retirement next year.
* Boeing Co reported a third-quarter profit that was better than analysts had expected because of sharp increases in aircraft deliveries. It also raised its earnings forecast for 2012 for the third time.
* AT&T Inc says it is facing a temporary setback in growth partly because there aren't enough new iPhones to go around. But it still made a solid profit in the latest quarter, and along with its main rival, Verizon Wireless, remains a dominant force in the American wireless industry.
* On Wednesday, federal prosecutors in New York accused Bank of America Corp of carrying out a scheme, started by its Countrywide Financial unit, that defrauded government-backed mortgage agencies by churning out loans at a rapid pace without proper controls.
* Officials of Medtronic Inc, the medical device maker, edited studies by outside researchers about a controversial spine treatment sold by the company, inserting claims that their product was superior to a competing one, according to a Senate finance committee report.
THE GLOBE AND MAIL
* Billionaire entrepreneur and Edmonton Oilers owner Daryl Katz gave Alberta's Progressive Conservatives nearly half a million dollars -- almost one third of the party's total fundraising in a single donation -- as Premier Alison Redford's cash strapped campaign was staring down defeat at the ballot box in the spring election.
* Finance Minister Jim Flaherty confirmed Wednesday that the recession has derailed Ottawa's long-term debt plans and new targets won't be set until the government starts posting yearly surpluses again -- which is not forecast to happen for three more years.
Reports in the business section:
* Buffeted by volatile markets for the commodities it produces, Teck Resources Ltd is deferring some C$1.5 billion ($1.50 billion) in capital spending over the next year or so, the latest in a string of Canadian resource companies to rewrite its plans in response to rising costs and an unpredictable outlook for the economy.
* The jockeying for Astral Media Inc's highest-profile assets has begun, as Rogers Communications Inc signalled the company would consider buying some of Astral's specialty channels if the company is sold off following a failed takeover attempt by BCE Inc
* A disgraced Montreal bureaucrat told a public inquiry Wednesday why he never reported the rampant corruption he witnessed at city hall: It wasn't his job.
Gilles Surprenant, a retired city engineer, took to the stand for a fourth day and was questioned about hundreds of thousands of dollars he received in kickbacks on rigged sewer contracts.
* Ontario's opposition parties reacted with disbelief Wednesday after Premier Dalton McGuinty dismissed a contempt motion against his minority government as "phoney" and blamed them for his sudden decision to prorogue the legislature.
* An influential Canadian business association on Wednesday sought to quell domestic objections over the development of Alberta's oil sands by releasing a study showing country wide economic benefits.
* Agnico Eagle Mines Ltd increased its production guidance for the year as it reported a swing back to profitability in the third quarter.
The gold miner said it now expects to produce 1.025 million ounces of gold for the year, up from an earlier estimate of 975,000.
CHINA SECURITIES JOURNAL
-- Regulators are expected to cut China's retail oil prices next month due to weakness in global crude prices.
SHANGHAI SECURITIES NEWS
-- China's Chongqing Iron & Steel Co Ltd said it plans to raise as much as 2 billion yuan through private placements.
-- China Great Wall Asset Management Corp, currently processing bad loans held by the Industrial and Commercial Bank of China Ltd (ICBC), is going to restructure its shareholding structure.
-- An opinion column objected to accusations in Japanese media that China is "sabre-rattling" by sending naval vessels near the disputed Diaoyu Islands (called the Senkaku Islands in Japanese) and rejected Japanese calls for more transparency as hypocritical. "Japan itself has never informed China of its frequent military drills near Chinese waters."
-- The State Council, China's Cabinet, has decided to establish an overall income distribution plan by the end of this year. Uneven income distribution and excessive wealth gaps among groups have become a severe problem in China.
Fly On The Wall 7:00 Am Market Snapshot
Akamai (AKAM) upgraded to Buy from Hold at Canaccord
Akamai (AKAM) upgraded to Outperform from Perform at Oppenheimer
AllianceBernstein (AB) upgraded to Outperform from Market Perform at Keefe Bruyette
Cullen/Frost (CFR) upgraded to Neutral from Underperform at Sterne Agee
Equinix (EQIX) upgraded to Buy from Neutral at Citigroup
FMC Technologies (FTI) upgraded to Hold from Underperform at Jefferies
Honeywell (HON) upgraded to Outperform from Market Perform at Bernstein
Hormel Foods (HRL) upgraded to Overweight from Equal Weight at Stephens
LRR Energy (LRE) upgraded to Outperform from Perform at Oppenheimer
Newfield Exploration (NFX) upgraded to Market Perform at Raymond James
Prosperity Bancshares (PB) upgraded to Outperform from Market Perform at Keefe Bruyette
SEI (SEIC) upgraded to Outperform from Market Perform at Keefe Bruyette
Skyworks (SWKS) upgraded to Strong Buy from Outperform at Raymond James
Zynga (ZNGA) upgraded to Buy from Hold at Needham
Allegheny Technologies (ATI) downgraded to Neutral from Buy at Longbow
Allegheny Technologies (ATI) downgraded to Neutral from Overweight at JPMorgan
Canadian National (CNI) downgraded to Sector Perform from Outperform at RBC Capital
Computer Programs (CPSI) downgraded to Outperform from Strong Buy at Raymond James
F5 Networks (FFIV) downgraded to Hold from Buy at Wunderlich
F5 Networks (FFIV) downgraded to Perform from Outperform at Oppenheimer
FMC Technologies (FTI) downgraded to Sell from Neutral at Goldman
Greenway Medical (GWAY) downgraded to Market Perform at Raymond James
Intersil (ISIL) downgraded to Sell from Neutral at Citigroup
Motorola Solutions (MSI) downgraded to Outperform from Strong Buy at Raymond James
New York Community (NYB) downgraded to Market Perform at Keefe Bruyette
NuVasive (NUVA) downgraded to Market Perform from Outperform at Leerink
TrueBlue (TBI) downgraded to Market Perform from Outperform at BMO Capital
WPP PLC (WPPGY) downgraded to Neutral from Buy at Citigroup
Wyndham (WYN) downgraded to Hold from Buy at Deutsche Bank
Charter (CHTR) initiated with a Buy at Guggenheim
Cubist (CBST) initiated with a Sell at Cantor
DISH (DISH) initiated with a Neutral at Guggenheim
DirecTV (DTV) initiated with a Neutral at Guggenheim
Gevo (GEVO) initiated with an Outperform at JMP Securities
Time Warner Cable (TWC) initiated with a Buy at Guggenheim
Hess (HES) to sell its interest in the Beryl area fields and the Scottish Area Gas Evacuation System to Royal Dutch Shell (RDS.A) for $525M
Visa (V) increased dividend rate 50% to 33c per share
Best Buy (BBY) sees Q3 EPS ”significantly below” prior-year period
Announced new leadership organization for U.S. operations
Apple (AAPL) won preliminary ruling in ITC case against Samsung (SSNLF), Bloomberg reported
Kaiser Aluminum (KALU) sees weakness in Q4 due to poor service center orders
Pacer (PACR) entered agreement with Union Pacific (UNP) for cross border service
International Paper (IP), Grupo Orsa to form joint venture
3M Company (MMM) announced collaboration with Mersive
Forest City (FCE) announced NHL’s New York Islanders to relocate to Barclays Center in Brooklyn, NY
Companies that beat consensus earnings expectations last night and today include:
Colfax (CFX), Starwood Hotels (HOT), Evercore Partners (EVR), Dunkin' Brands (DNKN), Aetna (AET), AstraZeneca (AZN), O'Reilly Automotive (ORLY), Hill-Rom (HRC), Ameriprise (AMP), Superior Energy (SPN), Everest Re (RE), AllianceBernstein (AB), Owens-Illinois (OI)
Companies that missed consensus earnings expectations include:
Cabot Microelectronics (CCMP), Novartis (NVS), Potash (POT), Nexen (NXY), Teradyne (TER), Cliffs Natural (CLF), Clearwater Paper (CLW), Skechers (SKX), Knight Transportation (KNX)
Companies that matched consensus earnings expectations include:
NXP Semiconductors (NXPI), KBR (KBR), Quantum (QTM), Cheesecake Factory (CAKE), Trinity Industries (TRN)
CEOs from over 80 major U.S. corporations are coming together to pressure Congress to reduce the federal deficit with tax-revenue increases as well as spending cuts, the Wall Street Journal reports
PC maker Lenovo Group (LNVGY) plans to sell its smartphones outside of China for the first time, in emerging markets amid an economic slowdown at home and lackluster global demand for mainstay PCs, the Wall Street Journal reports
GM (GM) plans to have talks to buy a stake in its South Korean unit from the unit's second-biggest shareholder, Korea Development Bank. GM owns about 77% of GM Korea but Korea Development Bank's 17% holding gives the state-run bank the right to veto decisions made by the automaker, Reuters reports
The Treasury Department and Fed need to stop using the benchmark interest rate known as Libor in financial rescue programs, as it might not be reliable and could put taxpayer dollars at risk, says the special inspector-general for the Troubled Asset Relief Program. They recommended that the Treasury and the Fed change some initiatives to ensure participating U.S. firms use alternatives to the London inter-bank offered rate in pricing billions of dollars in loans, Reuters reports
Banks facing lower revenue from debit-card and overdraft fees are increasing marketing of small short-term loans, prompting regulators to question if they carry the same risks to borrowers as other forms of payday lending, Bloomberg reports
A growing number of companies are firing thousands of workers as sluggish U.S. growth and Europe’s deepening recession lead to a persisting slump in sales. North American companies have announced plans to cut 62,600 positions at home and abroad since September 1, the biggest two-month drop since the start of 2010, according to data compiled by Bloomberg
Excel Trust (EXL) files to sell 8.5M shares of common stock
Lehigh Gas (LGP) 6M share IPO priced at $20.00
Monroe Capital (MRCC) 5M share IPO priced at $15.00
Navistar (NAV) 10.667M share Secondary priced at $18.75
Orexigen (OREX) files to sell common stock
Oriental Financial (OFG) files to sell 4.39M shares of common stock
Corvex, Soros report 5.02% stake in ADT Corp. (ADT), held talks with company
SAC Capital Advisors reports 5.1% passive stake in OpenTable (OPEN)