Frontrunning: December 4
- Two weeks ago here: The Latest Greek "Bailout" In A Nutshell: AAA-Rated Euro Countries To Fund Massive Hedge Fund Profits... and now on Bloomberg: "Hedge Funds Win as Europe Will Pay More for Greek Bonds" (BBG)
- Oracle sends shareholders cash as tax uncertainty looms (Reuters)
- GOP Makes Counteroffer In Cliff Talks (WSJ)
- Iran says captures U.S. drone in its airspace (Reuters)
- IMF drops opposition to capital controls (FT)
- Vogue Editor Wintour Said to Be Possible Appointee as U.K. Envoy (BBG)
- Juncker Stepping Down French Finance Minister to Head Euro Group? (Spiegel)
- Australia cuts rates to three-year low (FT)
- Europe’s banking union ambitions under strain (Reuters)
- EU Nations Eye New ECB Bank Supervisor Amid German Doubts (BBG)
- Frankfurt's Ambitions Get Cut Back (WSJ)
- House Republicans Propose $2.2 Trillion Fiscal-Cliff Plan (BBG)
- Greek-style deal for Portugal not on the table: PM (Reuters)
- Schaeuble, Moscovici Exclude Easy Aid for Irish, Portugal (BBG)
- BoE credit scheme fails to boost lending (FT)
- Osborne Urged to Boost Growth as BCC Cuts U.K. Outlook (BBG)
- China, S. Korea to Boost Use of Local Currencies in Trade (BBG)
Overnight media digest
* House Republicans on Monday made a fresh deficit-reduction proposal to the White House that calls for $800 billion in increased tax revenue, half of what President Barack Obama has proposed.
* At a time when American companies hold near record amounts of cash, many are surprisingly cash poor at home. That doesn't mean they could suddenly run out of money to pay their bills. But it does mean there could be unseen limits on their ability to pay dividends and buy back shares.
* Financially ailing companies such Hostess Brands often pay bonuses to executives before filing for bankruptcy protection. Federal law restricts "retention" bonuses paid to such "insiders" after a bankruptcy case is filed but not before.
* Securities regulators took aim at the Chinese affiliates of big global accounting firms on Monday, after a wave of accounting debacles at publicly traded Chinese firms that led to billions of dollars of shareholder losses.
* Oracle Corp said it will pay dividends for the next three quarters early, joining other companies that are accelerating payouts ahead of likely tax increases next year.
* A Seattle judge has dismissed Motorola Mobility's request for an injunction on Microsoft Corp products because they could infringe standard essential patents. The ruling is part of a broader case over how much a patent holder can charge for technology considered part of an industry standard.
* Minority shareholders in the traded unit of Russian oil company TNK-BP Ltd have filed to withdraw a $3 billion suit against BP Plc as the British energy giant and its partners close in on deals to sell Russia's No. 3 oil producer.
UK FINANCE MINISTER TO BACK GAS IN BUDGET
UK Chancellor George Osborne is to approve up to 30 gas-fired power stations in a move which will also see a new regulator and possible tax breaks for the shale gas sector.
CREDIT SUISSE TO CHARGE FOR DEPOSITS
Credit Suisse's banking clients are to be charged for parking their cash with the Swiss bank after it announced plans to introduce negative rates on short-term deposits held by financial institutions in Swiss francs.
REPUBLICANS MAKE FISCAL CLIFF COUNTER-OFFER
Republicans in the House of Representatives delivered a counter-offer to President Barack Obama in talks to avert the fiscal cliff, suggesting some movement in the delicate budget negotiations.
EURO MINISTERS APPROVE SPANISH BANK AID
Eurozone finance ministers formally approved 39.5 billion euros in aid to Spanish banks on Monday night, having said in June they were ready to provide up to 100 billion euros.
UBS IN GLOBAL TALKS OVER LIBOR SETTLEMENT
UBS is in global talks to reach a settlement of more than $450 million over the alleged manipulation of Libor, putting the Swiss bank on track for a record fine in the wide-reaching rate-rigging scandal.
CHINESE UNITS OF TOP AUDITORS CHARGED BY SEC
The US financial markets regulator has charged the Chinese affiliates of five leading accounting firms with violating securities laws for refusing to produce paperwork relating to nine Chinese companies.
FORMER HBOS CHIEF EXEC SORRY FOR BANK FAILURE
James Crosby, former chief executive of HBOS, now part of Lloyds Banking Group, has apologised for his role at the bank, admitting the British mortgage bank had failed because of "incompetence".
NEWS CORP SHAKES UP BOARD AHEAD OF SPLIT
Rupert Murdoch has revealed senior management appointments across News Corp as he prepares to split News Corp into two separate divisions next year.
CME INVESTIGATES FORMER GOLDMAN TRADER
CME Group regulators are investigating Glenn Hadden, the US Treasuries trader who was hired last year to head Morgan Stanley's interest rates business, over trades he made while at Goldman Sachs.
* Toy makers are seizing on a marketplace shift that has more fathers making buying decisions as girls are increasingly encouraged to play with toys that develop math and science skills.
* The Securities and Exchange Commission charged the Chinese affiliates of five big accounting firms on Monday with violating securities laws, claiming they failed to produce documents from their audits of several China-based companies under investigation for fraud.
* Oracle said on Monday that it would pay more than $800 million in next year's dividends to shareholders later this month, joining a growing number of companies accelerating such payments or declaring special dividends because of the possibility that income tax rates will rise in 2013.
* Automakers said on Monday that new-vehicle sales in the United States rose 15 percent in November, as the replacement of cars and trucks damaged in Hurricane Sandy contributed to the industry's best monthly sales rate in four years.
* This year, more than 40 brand-name drugs - valued at $35 billion in annual sales - lost their patent protection, meaning that generic companies were permitted to make their own lower-priced versions of well-known drugs like Plavix, Lexapro and Seroquel - and share in the profits that had exclusively belonged to the brands.
* A phone hacking scandal and restless shareholders may have forced Rupert Murdoch to split News Corporation into two companies, but on Monday he celebrated the decision by pouring Veuve Clicquot Champagne over the head of his newest editor.
* The British government announced plans on Monday to crack down on tax dodgers as a parliamentary report criticized United States companies for what it described as tax avoidance.
* In a bold bid to reduce its debt burden, Greece offered on Monday to spend as much as 10 billion euros to buy back 30 billion euros of its bonds from investors and banks. While the buyback had been expected, the prices offered by the government were above what the market had forecast, with a minimum price of 30 euro cents and a maximum of 40 cents, for a discount of 60 percent to 70 percent.
THE GLOBE AND MAIL
* Republicans made their first formal proposal to avert America's fiscal cliff, offering to increase government revenue by $800 billion over a decade but the plan does little to narrow their differences with the White House.
* Canada's foreign aid agency should play an active role in promoting the country's economic interests abroad rather than limiting its scope to poverty reduction alone, international co-operation minister Julian Fantino said.
Reports in the business section:
* Accounting firm Ernst & Young LLP has been accused by regulators of failing to properly scrutinize the books of failed forestry company Sino-Forest Corp, marking a rare case of auditors facing allegations of wrongdoing by the Ontario Securities Commission.
* Saputo Inc is bolstering its presence in the United States with the $1.45 billion acquisition of dairy products maker Morningstar Foods LLC.
* Iran has suspended the death sentence for Canadian resident Saeed Malekpour, a computer programmer who was facing execution on charges of developing and promoting porn websites.
* Canadian auto sales are expected to come in just shy of a new record in 2012 after a strong month of sales across the country in November. Ford Motor Co of Canada Ltd remained the top seller in Canada for the month, and for the year to date.
CHINA SECURITIES JOURNAL
-- Guo Shiqing, chairman of the China Securities Regulatory Commission (CSRC), said China must put more emphasis on the rule of law to promote capital markets and reform and improve public offerings, the private equity market and the bond market.
-- The CSRC will speed up innovation in the area of futures products for sectors including energy, chemicals, metals and agriculture, said vice chairman Jiang Yang.
-- Baoshan Iron & Steel Co Ltd (Baosteel) said it had bought back 393 million shares in a price range of 4.51 yuan to 4.69 yuan per share as of Dec. 3.
SHANGHAI SECURITIES NEWS
-- Several banks and stock brokers expected that new bank loans will reach 500-550 billion yuan in November, slightly higher than a month earlier. The total amount of social financing is estimated to stay on a growing trend.
-- Bank of Communications, China's fifth-biggest lender, will become the first bank to trade on the Shanghai Gold Exchange's newly-launched interbank gold trading platform on Dec. 3.
-- After a price reduction in November, the price of domestic jet fuel again fell by 329 yuan per tonne to 7,436 yuan per ton from Dec. 1, according to the Civil Aviation Administration of China.
CHINA DAILY (www.chinadaily.com.cn)
-- Home prices in major cities increased for the sixth consecutive month in November, the China Index Academy, a property research body, reported.
-- Blizzards in northeastern China led to the cancellation of hundreds of flights and the closure of schools on Monday. Temperatures could drop further.
Fly On The Wall 7:00 AM Market Snapshot
Francesca's (FRAN) upgraded to Buy from Hold at Jefferies
Gold Fields (GFI) upgraded to Buy from Neutral at UBS
Health Net (HNT) upgraded to Outperform from Market Perform at Wells Fargo
Omeros (OMER) upgraded to Buy from Hold at Needham
Partner Communications (PTNR) upgraded to Buy from Underperform at BofA/Merrill
Public Storage (PSA) upgraded to Buy from Hold at Cantor
Renren (RENN) upgraded to Hold from Sell at Deutsche Bank
SBA Communications (SBAC) upgraded to Top Pick from Outperform at RBC Capital
Smithfield Foods (SFD) upgraded to Buy from Hold at BB&T
Career Education (CECO) downgraded to Market Perform from Outperform at Wells Fargo
Demand Media (DMD) downgraded to Sell from Neutral at Goldman
Esterline (ESL) downgraded to Hold from Buy at KeyBanc
Exa Corp. (EXA) downgraded to Neutral from Outperform at RW Baird
InterActiveCorp (IACI) downgraded to Sell from Neutral at Goldman
Olympic Steel (ZEUS) downgraded to Hold from Buy at Jefferies
PNM Resources (PNM) downgraded to Hold from Buy at Jefferies
Regal Entertainment (RGC) downgraded to Neutral from Outperform at Macquarie
Sovran Self Storage (SSS) downgraded to Sell from Hold at Cantor
Timken (TKR) downgraded to Neutral from Buy at Longbow
Alexza Pharmaceuticals (ALXA) initiated with a Buy at Roth Capital
Allete (ALE) initiated with a Buy at KeyBanc
Bank of Nova Scotia (BNS) initiated with a Neutral at Citigroup
Caribou Coffee (CBOU) initiated with a Buy at Longbow
Corning (GLW) initiated with an Outperform at Bernstein
DSW Inc. (DSW) initiated with an Outperform at William Blair
Dunkin' Brands (DNKN) initiated with a Buy at Longbow
Flowserve (FLS) initiated with a Buy at KeyBanc
Imperva (IMPV) initiated with an Outperform at Oppenheimer
Lehigh Gas (LGP) initiated with a Buy at Janney Capital
Lehigh Gas (LGP) initiated with an Outperform at RW Baird
Medivation (MDVN) initiated with an Equal Weight at Barclays
NCI Building Systems (NCS) initiated with an Outperform at FBR Capital
Royal Bank of Canada (RY) initiated with a Buy at Citigroup
Starbucks (SBUX) initiated with a Buy at Longbow
Toronto-Dominion (TD) initiated with a Buy at Citigroup
TreeHouse Foods (THS) initiated with a Buy at Longbow
Qualcomm's (QCOM) Pixtronic expanded agreement with Sharp (SHCAY), becomes minority shareholder
Boeing (BA) sees sufficient financing for global aircraft deliveries
Fitch: Dean Foods' (DF) ratings not immediately affected by Morningstar sale
Suncor (SU) sees FY13 capital spending a balance of $7.3B
Oracle (ORCL) to accelerate payment of three quarters of dividends
Atlas Pipeline Partners (APL) to acquire Cardinal Midstream for $600M
To acquire 60% interest in Centrahoma JV between Cardinal, MarkWest Energy Partners (MWE)
France Telecom's (FTE) Orange to make strategic investment in Lookout
RedPrairie, JDA Software (JDAS) secured German court clearance for pending merger
Google (GOOG) launching update to Google Maps Android API
Starwood Hotels' (HOT) Luxury Collection Hotels to invest $200M in renovations
Big Lots (BIG) sees Q4 comparable store sales down low to mid single digits
Parkway Properties (PKY) to purchase office towers in Houston, Atlanta, Charlotte
Forum Energy (FET) acquired Dynacon, terms not disclosed
Flextronics (FLEX) acquired Saturn Electronics & Engineering, terms not disclosed
IRIDEX (IRIX) announced FDA 510(k) and CE clearance for TxCell scanning laser system
Companies that beat consensus earnings expectations last night and today include:
Big Lots (BIG)
Companies that missed consensus earnings expectations include:
Casella Waste (CWST), Pep Boys (PBY), Exa Corp. (EXA)
As U.S. companies hold near record amounts of cash, many are surprisingly cash poor at home. That means there could be unseen limits on their ability to pay dividends and buy back shares, the Wall Street Journal reports
In November, U.S. sales of cars and light trucks were the strongest in over four years, jumping 15% to 1.14M compared with a year ago. The seasonally adjusted annualized sales rate was 15.5M, the highest since January 2008, according to Autodata, the Wall Street Journal reports
Fed bankers appear satisfied with their latest monetary stimulus, but there’s some disagreement over how strongly to continue purchasing bonds. Boston Fed President Rosengren said there was a "strong case" for the Fed to stay the course, while St. Louis Fed President Bullard said they shouldn’t replace its expiring 'Operation Twist' program on a dollar-for-dollar basis, Reuters reports
U.S. rail and trucking companies are making big investments on both sides of the border with Mexico to capitalize on booming trade between the two countries, Reuters reports
Four experimental cancer treatments that may one day help gravely ill children are facing review by U.S. pediatric advisers. The medicines from GlaxoSmithKline (GSK), Amgen (AMGN) Threshold (THLD) and Boehringer Ingelheim have the potential to treat children with a variety of tumors and fast-spreading leukemia, Bloomberg reports
The move by Microsoft (MSFT) and Intel (INTC) to combat Apple’s (AAPL) iPad in the $63.2B tablet market is getting off to a slow start, Bloomberg reports
Acadia Healthcare (ACHC) files to sell 9.58M shares of common stock
Atlas Pipeline Partners (APL) commences offering of 9.25M common units
Fifth Street Finance (FSC) commences offering of 14M shares of common stock
New Mountain Finance (NMFC) commences offering of 3M shares of common stock
Parkway Properties (PKY) commences offering of 13.5M shares of common stock
Select Income REIT (SIR) announces offering of 6M common shares