Frontrunning: November 19
- Israel Ready to Invade Gaza If Cease-Fire Efforts Fail (Bloomberg)
- Petraeus: A Phony Hero for a Phony War (NYT)
- IMF'S Lagarde says Greek deal should be "rooted in reality" (Reuters) "rooted" or "roofied"? And where was it until now?
- ECB's Asmussen says Greece to need aid beyond 2014 (AP)
- EU makes budget plans without (FT)
- Japanese Poll Shows LDP Advantage Ahead of Election (WSJ)
- Shanghai Composite Dips Below, Regains 2,000 Level (Bloomberg)
- Bond investor takes big punt on Ireland (FT)
- Noda defends BoJ’s independence (FT) Indewhatnow?
- Inaba Says BOJ Could Ease More If Government Reins in Debt (Bloomberg) Actually it's the other way around
- Miles Says Bank of England Can Do More If U.K. Slump Persists (Bloomberg) So much for the end of QE
- US tax breaks worth $150bn face axe (FT)
Overnight Media Digest
* Citigroup Inc is on track to eliminate 300 sales-and-trading jobs globally in 2012, according to people briefed on the process. The cuts follow a 5 percent reduction in Citigroup's securities-and-banking unit last year, a move that culled 900 jobs. The sales-and-trading business is part of the securities unit, which employs roughly 17,000 people.
* U.S. companies are scaling back investment plans at the fastest pace since the recession, signalling more trouble for the economic recovery.
* The trustee unwinding Lehman Brothers Inc reached an agreement with Citigroup that ends a long-running legal fight over more than $1 billion that Lehman deposited at the bank the week it filed for bankruptcy protection.
* Surf and skate apparel retailer Billabong International Ltd said on Monday the head of its Americas division, Paul Naude, was considering a buyout of the company.
* Cisco Systems Inc said on Sunday that it will acquire closely held Meraki Inc in a cash deal valued at about $1.2 billion.
EU MAKES BUDGET PLANS WITHOUT UK
EU officials have begun work on a plan to create a long-term budget without the UK in a move that reflects mounting frustration with Britain.
FSB SEEKS TO TAME SHADOW BANKING
Non-bank lending markets face unprecedented levels of government intervention under sweeping new proposals to tame "shadow banking", regulators said.
INFRASTRUCTURE HOPES HIT BY CITY STAND OFF
The government's hopes of boosting growth through infrastructure projects are being thwarted by a stand-off with the City of London.
BOND INVESTOR TAKES BIG PUNT ON IRELAND
A prominent U.S. bond investor has increased an already aggressive bet on Ireland's recovery from the financial crisis, raising eyebrows among rival fund managers.
MAERSK TO SWITCH AWAY FROM SHIPPING
Danish conglomerate AP Moller-Maersk has delivered a damning assessment of the state of the container shipping sector by signalling it will switch investment to its other businesses.
TOYS R US BOSS HITS AT ONLINE SHOPPING
The head of Toys R Us, a retailer battling online rivals, has warned that e-commerce can cause environmental harm that consumers have not yet recognised.
OSBORNE TO WIDEN RETIS TAX INCENTIVES
George Osborne is poised to introduce a major change to the listed commercial property sector by allowing real estate investment trusts (Reits) to invest in each other.
VIRGIN TO LAUNCH UK SHORT-HAUL SERVICE
Virgin Atlantic is on Monday expected to unveil ambitious plans to break into the short-haul domestic market from Heathrow.
* Cisco Systems said Sunday that it had agreed to buy Meraki for about $1.2 billion as the networking titan continues to bolster its cloud computing services. By buying Meraki, a privately held company backed by the likes of Google and Sequoia Partners, Cisco will add products that allow networks to be controlled through the Internet.
* Wal-Mart has filed a complaint seeking to prevent a group known as OUR Walmart from staging protests against the company on Black Friday, the busiest shopping day of the year.
* As governments throughout Europe seek to close gaping holes in their budgets, they are taking aim at United States multinational companies, especially Internet giants like Google and Amazon.com, which pay little or no taxes in Europe, despite generating billions of dollars in revenue on the continent.
* Tablets were supposed to be a simple alternative to the bloated personal computer market. But now that the iPad has strong competitors, shopping decisions are becoming harder
THE GLOBE AND MAIL
* A decision that promises to shape the course of Ontario's growing labour strife with teachers will be waiting on Education Minister Laurel Broten's desk Monday morning, in the form of three tentative deals signed this weekend.
The agreements give a glimmer of hope for labour peace, but they must still be approved by Broten, who insists that they be "substantively identical" to terms agreed with the English Catholic teachers' union in July. Details of the deals were not released.
* Canada's diplomats in Moscow will have to work another three years in an embassy compound that's vulnerable to terrorist attack and the prying eyes of foreign spies, The Canadian Press has learned.
Foreign Affairs Minister John Baird was warned in an internal memo from a senior bureaucrat that Canada's embassy in the Russian capital offers "almost no protection" against a terrorist attack.
Reports in the business section:
* Among the risks looming over Canada's economy, from the U.S. fiscal cliff to Europe's recession, inflation does not rank high on the list.
The pace of consumer price increases has been tame for the past half year, running at an annual pace of 2 percent or less since March. In recent months, core inflation has been lower than the Bank of Canada had expected, and the central bank now says inflation won't pick up to its 2 percent target until the end of 2013, "somewhat later than previously anticipated".
* Canadian real estate speculators have been on a spending spree in the United States over the past three years, buying up billions of dollars of foreclosed homes from Florida to California with an eye to renting those properties out and eventually cashing in on a rebound in home prices. Several companies have since gone public or are now laying the groundwork for initial public offerings.
* Awash in resource revenues and the blessings of high growth and low unemployment, Alberta said this past week it would nonetheless become the final province to succumb to the temptation of debt financing. After enjoying a virtually debt free ledger for decades, premier Alison Redford announced what amounted to a stunning shift in the province's long standing policy when she told reporters:"If everything we do right now is funded fully with cash in the bank, then we are never going to build anything more in this province".
* Several major retailers are taking the Quebec government to court over the provincial language watchdog's insistence they modify their commercial brand names to include some French.
The retailers include some of the biggest brand names in North America - Walmart Stores Inc, Best Buy Co Inc and Costco Wholesale Corp. Their lawyers are expected in Quebec Superior Court on Thursday.
* John De Goey was considered a villain when he started arguing in the early 2000s that fee-based compensation was the necessary way of the future for Canada's investment industry. The idea that financial advisors would have clients pay directly and transparently for their services was a slap in the face to the commission-based model that had long been their bread and butter.
Today the majority of Canadian advisors earn their living from "trailer fees" embedded in mutual funds so quietly that many investors believe the advice is free. Some people actually buy mutual funds without an adviser, in which case the fees are still charged.
CHINA SECURITIES JOURNAL
-- Bank stocks play a key role in bolstering the Shanghai Composite Index, which is hovering above 2,000, but it is too early to say the valuation of bank shares has been bottomed out, analysts said.
-- Jiang Yang, vice president of China's Ministry of Commerce, said that China's carbon market should still be based on spot transactions, but regulators should conduct a feasibility study on carbon futures trading.
SHANGHAI SECURITIES JOURNAL
-- China will lower capital requirements for domestic brokerages and allow them to sell a wider variety of products.
-- Chinese securities brokers' year-on-year underwriting income from initial public offerings has fallen over 50 percent to 5.42 billion yuan ($869.20 million) from 12.17 billion yuan.
CHINA DAILY (www.chinadaily.com.cn)
-- China has proposed a draft regulation to ease requirements for long-time foreign residents of China. Foreigners who live in China for over 10 years may be eligible for a permanent residency document that falls slightly short of citizenship, similar to the U.S. "green card."
-- Chinese banks should do more to educate their clients about complex financial products and that regulators should strengthen consumer protection regulations regarding such products, Xiao Gang, the chairman of the board of Bank of China, wrote in an opinion column.
-- China will depend on foreign oil for 60 percent of its total supply in 2013, said Zhong Shan, deputy minister of commerce.
Fly on the Wall 7:00 AM Market Snapshot
Actuant (ATU) upgraded to Buy from Hold at KeyBanc
Agilent (A) upgraded to Buy from Neutral at Goldman
Agnico-Eagle (AEM) upgraded to Outperform from Sector Perform at RBC Capital
Altria Group (MO) upgraded to Buy from Neutral at UBS
Astoria Financial (AF) upgraded to Neutral from Underperform at Sterne Agee
athenahealth (ATHN) upgraded to Strong Buy from Market Perform at Raymond James
Barclays (BCS) upgraded to Buy from Neutral at Goldman
Bruker (BRKR) upgraded to Buy from Neutral at Goldman
CSC (CSC) upgraded to Buy from Hold at Deutsche Bank
Dean Foods (DF) upgraded to Buy from Neutral at Goldman
E-Trade (ETFC) upgraded to Equal Weight from Underweight at Evercore
Enerplus Resources (ERF) upgraded to Outperform from Sector Perform at RBC Capital
Flowers Foods (FLO) upgraded to Buy from Hold at KeyBanc
Investors Bancorp (ISBC) upgraded to Buy from Neutral at Sterne Agee
OceanFirst Financial (OCFC) upgraded to Buy from Neutral at Sterne Agee
Old National Bancorp (ONB) upgraded to Strong Buy from Outperform at Raymond James
PetSmart (PETM) upgraded to Overweight from Equal Weight at Barclays
Provident Financial (PFS) upgraded to Buy from Neutral at Sterne Agee
Rambus (RMBS) upgraded to Overweight from Neutral at JPMorgan
Randgold Resources (GOLD) upgraded to Outperform from Sector Perform at RBC Capital
Suncor (SU) upgraded to Overweight from Neutral at JPMorgan
AK Steel (AKS) downgraded to Neutral from Buy at Longbow
Cepheid (CPHD) downgraded to Neutral from Buy at Goldman
Diamond Foods (DMND) downgraded to Underperform from Hold at Jefferies
K12 (LRN) downgraded to Market Perform from Outperform at Wells Fargo
LabCorp (LH) downgraded to Sell from Neutral at Goldman
PennantPark (PNNT) downgraded to Neutral from Outperform at RW Baird
FleetCor (FLT) initiated with an Overweight at Evercore
IPC The Hospitalist Co. (IPCM) initiated with a Buy at WallachBeth
Marriott (MAR) initiated with a Hold at Jefferies
NextWave Wireless (WAVE) initiated with a Neutral at Goldman
Starwood Hotels (HOT) initiated with a Buy at Jefferies
WEX Inc. (WXS) initiated with an Equal Weight at Evercore
Cisco (CSCO) announced intent to acquire Meraki for $1.2B
California AG Kamala Harris filed suit against eBay (EBAY) for a “handshake” hiring agreement with Intuit (INTU), prohibiting the company from recruiting and hiring one another's employees
Illumina (ILMN) confirmed failed bid for Complete Genomics (GNOM)
ING (ING) reached agreement on amended EC restructuring plan
Visa (V) said FTC requested information on possible Durbin violations
Smithfield Foods (SFD) purchased 7M shares of its common stock from COFCO Corp.
Allison Transmission (ALSN) and UAW reached tentative five-year labor agreement
Swisher Hygiene (SWSH) to delay filing Q3 report on Form 10-Q
Community Bankers Trust Corp. (BTC) announced dividend payment on TARP preferred stock
Illinois Tool Works (ITW) CEO David Speer died; Scott Santini elected CEO
Fluor (FLR) received adverse ruling on Greater Gabbard project
Cinemark (CNK) to acquire 32 theatres from Rave Cinemas
Wright Medical Group (WMGI) and BioMimetic Therapeutics (BMTI) entered into an agreement for a business combination
Companies that matched consensus earnings expectations include:
U.S. companies are cutting back investment plans at the fastest rate since the recession, a sign of more trouble for the economic recovery, the Wall Street Journal reports
HSBC Holdings (HBC) is negotiating with an unnamed potential buyer for its 15.6% stake in Ping An Insurance Co. of China. The stake would be worth $9.17B at current prices, the Wall Street Journal reports
Goldman Sachs (GS) bought warrants worth $40M in Dubai's Drake & Scull International less than a week after helping arrange a loan facility for the contracting firm, Reuters reports
The French power group EDF is part of a consortium in talks with Total (TOT) to buy its gas network and storage business, TIGF, according to Les Echos, Reuters reports
The shadow banking industry has grown to about $67T, $6T higher than previously thought, leading global regulators to seek more oversight of financial transactions that fall outside traditional oversight, Bloomberg reports
Shares of Nokia (NOK) increased as much as 5.5%, the most in a month, after the company said it received reports that its new Lumia 920 smartphone had sold out in Germany, Bloomberg reports
Apple (AAPL) has the advantage over Samsung (SSNLF)
Wyndham (WYN) shares can rise another 20%
Leucadia (LUK) shares can rise following Jefferies (JEF) deal
Sparton (SPA) shares can rise 50% as earnings increase
Lear (LEA) shares can more than double within a few years
PC stocks likely not worth buying
Opexa Therapeutics (OPXA) files to sell 12.94M shares of common stock for holders
Public Storage (PSA) files to sell 712,400 shares of common stock for holders