Frontrunning: November 21
- Rough start for fiscal cliff talks (Politico)
- Europe Fails to Seal Greek Debt-Cut Deal in IMF Clash (Bloomberg)
- Japan’s Exports Reach Three-Year Low as Recession Looms (BBG)
- Beggars can be angry: Greek leaders round on aid delay (FT)
- More financial blogs launching soon: Financial Times Deutschland closing (Spiegel)
- China's backroom powerbrokers block reform candidates (Reuters)
- BOE Voted 8-1 to Halt Bond Purchases as QE Impact Questioned (Bloomberg). In the US the vote is 1-11
- UK heads for EU budget showdown (FT)
- Eurodollars - another epic scam: How gaming Libor became business as usual (Reuters)
- Clinton Shuttles in Mideast in Bid for Gaza Cease-Fire (Bloomberg)
- Fed Still Trying to Push Down Rates (Hilsenrath)
Overnight Media Digest
* Federal prosecutors charged a Wall Street portfolio manager in what they described as the most lucrative insider-trading scheme ever, but their ultimate target appeared to be one of Wall Street's most successful and prominent investors: hedge-fund giant Steven Cohen.
* Hewlett-Packard Co said on Tuesday it had been duped into overpaying for one of its largest acquisitions, contributing to an $8.8 billion write-down and a huge quarterly loss. The company said that an internal investigation had revealed "serious accounting improprieties" and "outright misrepresentations" in connection with U.K. software maker Autonomy, which HP acquired for $11.1 billion in October 2011.
* Former UBS AG trader Kweku Adoboli was found guilty of fraud and sentenced to seven years in prison in connection with a $2.3 billion loss that hobbled the Swiss bank and triggered an upheaval there whose repercussions continue to this day.
* News Corp, owner of Harper Collins Publishers, has expressed interest to CBS Corp about acquiring its Simon & Schuster book business, according to people familiar with the talks. The people described the discussions as preliminary and cautioned that a deal isn't imminent.
* Hostess Brands Inc will continue down the path to a full liquidation after a last-ditch mediation session with its striking bakers' union failed to save the Twinkie maker.
HP TAKES $8.8 BLN CHARGE OVER AUTONOMY
Hewlett-Packard Co on Tuesday took a massive $5 billion charge, claiming a raft of failures at software firm Autonomy.
PAY-OUT VOTE SEES EXIT OF XSTRATA CHAIRMAN
Xstrata's chairman is to resign once the merger with Glencore is completed, bowing to shareholder anger over a proposed multimillion-dollar payout to executives.
UBS FRAUD TRADER JAILED FOR SEVEN YEARS
UBS trader Kweku Adoboli was jailed for seven years on Tuesday for the biggest fraud in British history, which cost the Swiss bank $2.3 billion.
COHEN LINKED TO $276 MLN INSIDER TRADING SCHEME
The former hedge fund manager accused of a $250 million insider trading scheme worked for some time for SAC Capital.
CREDIT SUISSE SPLITS OFF GLOBAL INVESTMENT BANK
Credit Suisse is splitting its global investment banking operations from those in Switzerland as it seeks to adapt to what it calls "the new regulatory reality".
US BANKS WARN ON MONEY TRANSFER RULE
Banks are urging regulators and politicians to rethink new U.S. rules governing international money transfers just months before they are due to come into effect.
CHEVRON SEEKS PROBE OVER ECUADOR CASE
Chevron, the U.S. oil group, has filed a complaint calling for an investigation of the comptroller of New York state.
EADS PACT FACES SHAKE UP
The French and German governments are looking at forming a new shareholder pact at EADS, under which each would hold a stake of 12 percent in the company
* Kweku Adoboli, a former UBS trader, was sentenced to seven years in jail after he was found guilty on Tuesday of fraud that prompted a multibillion-dollar trading loss at the Swiss bank.
* In a new turn in the scandals swirling around Rupert Murdoch's British newspaper outpost, prosecutors said on Tuesday that two former top executives Rebekah Brooks and Andy Coulson, would be charged with paying bribes of up to $160,000 to public officials, in addition to several earlier charges against them.
* Over the last half-decade, as U.S. federal authorities secured dozens of insider trading convictions against hedge fund traders, they have tried doggedly to build a case against one of Wall Street's most influential players: the billionaire stock picker Steven Cohen. On Tuesday, the government appeared to inch closer to that goal.
THE GLOBE AND MAIL
* Alberta is overhauling parts of its election financing laws, boosting fines for illegal donations and removing a gag order on its chief electoral officer -- but doing little to rein in the influence of major donors.
Bill 7, tabled Tuesday, doesn't change the limit on donations to political parties, continues to allow corporate and union donations, doesn't cap party spending and doesn't clarify the law on donation splitting, where one person's cheque is apportioned into donations from several people.
* Israel's ambassador says Canada is backing her country's right to defend itself without pressuring the country to end its strikes in Gaza quickly.
Ambassador Miriam Ziv said Ottawa has given Israel a clear message of support since Israel began airstrikes in the Gaza strip a week ago. The Harper government has been unequivocal in backing Israel's right to defend itself in the face of rocket attacks from Hamas and other groups in Gaza, she said.
Reports in the business section:
* The World Trade Organization has ruled that a critical component of Ontario's green energy program breaches international trade law, according to sources.
A source familiar with the ruling said it is not favourable to the domestic content requirements contained in Ontario's so-called feed-in tariff program, the centrepiece of the green energy program that provides solar, wind and other renewable energy companies with long-term guaranteed revenue contracts.
* Airfares to many smaller Canadian communities could be cut by a half in a year's time, if WestJet Airlines Ltd's chief executive has his way.
Gregg Saretsky, who prefers terms such as "rational pricing" rather than price wars, says that he foresees WestJet's new regional carrier WestJet Encore offering fares up to 50 per cent lower for shorter flights once the subsidiary launches in the second half of next year. These would be for flights travelling on average 300 miles (483 kilometres), as opposed to average distances of 1000 miles for WestJet's main network.
* The good news for Pauline Marois' two-month-old Parti Quebecois minority government is that it is unlikely to fall on its first budget, tabled Tuesday in the National Assembly. The bad news is that the days when the PQ prided itself on visionary projects are a distant memory.
Finance Minister Nicolas Marceau began his speech to the legislature by invoking the legacy of his party's previous governments stretching back to 1976 and Rene Levesque's first election.
* The Quebec government, desperate to see companies put to work the cash they have hoarded since the last recession, is reviving a series of tax measures in a bid to accelerate private investment in the economy and create jobs in strategic sectors.
The measures, tabled in Tuesday's budget by Quebec Finance Minister Nicolas Marceau, are part of a wider effort by the separatist Parti Quebecois to shed its image as heavy-handed business haters and build some credibility in corporate boardrooms. ()
* Lululemon Athletica Inc says it has settled a patent infringement case against PVH Corp's Calvin Klein and G-III Apparel Group Ltd, a manufacturer and supplier for Calvin Klein.
Lululemon had claimed the companies infringed on three different patents covering a specific overlapping style of waistband. Terms of the deal were not disclosed, but Lululemon said the lawsuit will be dismissed as a result.
CHINA SECURITIES JOURNAL
-- China's insurance regulator has published draft rules that would allow insurers to distribute mutual fund products.
-- China CNR Corp Ltd has signed a total of 2.3 billion yuan ($369.03 million) worth of contracts, accounting for about 2.6 percent of its projected annual revenue this year.
-- China's Securities Regular Commission (CSRC) has approved an application from China's B-share listed company, China International Marine Containers (Group) Co Ltd, to switch to the Hong Kong bourse.
SHANGHAI SECURITIES NEWS
-- China's Angang Steel Co Ltd has decided to cut its stakes in two steel factories after a series of losses.
-- Industrial and Commercial Bank of China Ltd has received approval to open a branch in Riyadh, Saudi Arabia and another in Kuwait.
CHINA DAILY (www.chinadaily.com.cn)
-- China's baijiu industry has been hit with a scandal over the presence of plastics additives in almost all brands of the liquor. Plasticizers, which are banned in China for use in food, can cause male fertility problems and induce early female puberty.
-- Incoming Chinese Premier Li Keqiang said in an article published in the official People's Daily that China must boost consumption and internal demand, while contiuously improving the effectiveness of invesment.
Fly On The Wall 7:00 AM Market Snapshot
Greenlight Capital Re (GLRE) upgraded to Buy from Neutral at UBS
Inergy, L.P. (NRGY) upgraded to Outperform from Neutral at RW Baird
Penn National (PENN) upgraded to Buy from Neutral at Lazard Capital
Skechers (SKX) upgraded to Positive from Neutral at Susquehanna
Thoratec (THOR) upgraded to Outperform from Market Perform at Wells Fargo
Webster Financial (WBS) upgraded to Equal Weight from Underweight at Morgan Stanley
America Movil (AMX) downgraded to Neutral from Buy at Citigroup
Commerce Bancshares (CBSH) downgraded to Underweight from Equal Weight at Morgan Stanley
Eaton Vance (EV) downgraded to Sell from Neutral at Citigroup
HeartWare (HTWR) downgraded to Market Perform from Outperform at Wells Fargo
Hewlett-Packard (HPQ) downgraded to Sector Perform from Outperform at RBC Capital
Hewlett-Packard (HPQ) downgraded to Underperform from Neutral at Mizuho
Hormel Foods (HRL) downgraded to Underperform from Outperform at CLSA
Inergy Midstream (NRGM) downgraded to Neutral from Outperform at RW Baird
St. Jude Medical (STJ) downgraded to Market Perform from Outperform at Wells Fargo
BE Aerospace (BEAV) initiated with an Outperform at Imperial Capital
BRF Brasil Foods (BRFS) initiated with a Buy at Citigroup
Biogen (BIIB) initiated with a Buy at Brean Capital
Celgene (CELG) initiated with a Buy at Brean Capital
Infinity Pharmaceuticals (INFI) initiated with an Outperform at RBC Capital
LINN Energy (LINE) initiated with a Neutral at Goldman
LINN Energy (LINE) initiated with an Outperform at RW Baird
LinnCo (LNCO) initiated with a Buy at UBS
LinnCo (LNCO) initiated with a Neutral at Credit Suisse
MPLX (MPLX) initiated with a Buy at Citigroup
Matrix Service (MTRX) initiated with a Buy at DA Davidson
Pioneer Natural (PXD) initiated with a Buy at Citigroup
Realogy (RLGY) initiated with a Neutral at Citigroup
Repros Therapeutics (RPRX) initiated with a Buy at Roth Capital
Threshold Pharmaceuticals (THLD) initiated with a Buy at Brean Capital
Wesco Aircraft (WAIR) initiated with an In-Line at Imperial Capital
Yum! Brands (YUM) initiated with an Outperform at Macquarie
BASF (BASFY) offered to buy Pronova BioPharma for EUR 664M
News Corp. (NWSA) expressed interest to CBS (CBS) about merging book businesses, WSJ reports
S&P revised Gap (GPS) outlook to positive, 'BB+' rating affirmed
TransCanada (TRP) acquired BP (BP) interest in Crossfield gas storage facility
DISH (DISH): FCC plan would take a quarter of DISH uplink spectrum to favor Sprint (S)
HQ (THQI) announced that it entered into a forbearance agreement with Wells Fargo Capital Finance (WFC)
Zale (ZLC) expects to achieve positive net income for FY13
Brookfield Properties (BPO) sold two properties for net proceeds of $182M
lululemon (LULU) unit, Calvin Klein (PVH), G-III Apparel (GIII) reach patent suit settlement
Novartis (NVS): FDA approved new seasonal influenza vaccine, Flucelvax
FDA inspection report cited flaws in St. Jude's (STJ) oversight of Durata, WSJ reports
Kemper (KMPR) sees Q4 catastrophe losses from Hurricane Sandy about $45M
Companies that beat consensus earnings expectations last night and today include:
Jiayuan.com (DATE), Amira Nature Foods (ANFI), Salesforce.com (CRM)
Companies that missed consensus earnings expectations include:
Sociedad Quimica (SQM), Planar Systems (PLNR), Zale (ZLC)
Companies that matched consensus earnings expectations include:
Mecox Lane (MCOX), Tilly's (TLYS)
Fed Chairman Bernanke suggested that the central bank will continue trying to push down long-term interest rates next year, as federal tax and spending policies become a more substantial headwind to the U.S. economy, the Wall Street Journal reports
In Brussels, euro zone finance ministers and IMF officials ended about a 12-hour meeting this morning without a solution to Greece's debt problems, saying the technical details involved are so complex that they will meet again on Monday, the Wall Street Journal reports
The National Labor Relations Board said it’s unlikely to make a decision before the Thanksgiving holiday on Wal-Mart Stores’s (WMT) move push to end protests and rallies outside its stores, Reuters reports
German financial authorities cleared the way for News Corp. (NWSA) to own a majority in German pay-TV company Sky Deutschland, Reuters reports
The FBI, responding to an inquiry by the SEC, is looking into Hewlett-Packard’s (HPQ) allegations of accounting improprieties at its Autonomy Corp. unit, sources say, Bloomberg reports
U.S. housing starts jumped to a four-year high last month, up 3.6% to a 894,000 annual rate, the fastest since July 2008, according to the Commerce Department, Bloomberg reports
AcelRX (ACRX) files to sell $25M of common stock
Atlas Resource Partners (ARP) 7.6M share Secondary priced at $23.01
Charter (CHTR) files to sell 3.1M shares of common stock for holders
DCT Industrial (DCT) files to sell 16.95M shares of common stock for holders
Iron Mountain (IRM) to issue 17M shares of common in connection with special dividend
Neurocrine Biosciences (NBIX) files to sell $150M of common stock