Frontrunning: December 19
- Republicans put squeeze on Obama in "fiscal cliff" talks (Reuters)
- Inquiry harshly criticizes State Department over Benghazi attack (Reuters)
- Banks See Biggest Returns Since ’03 as Employees Suffer (BBG)
- Italy president urges election be held on time (Reuters)
- Bank of England Says Sterling Hurting Economy (WSJ) - there's an app for that, it's called a Goldman BOE chairman
- China slowdown hits Indonesian farmers (FT)
- China dispute hits Japanese exports (FT)
- Market to get even more monopolized by the HFT king: Getco wins Knight with $2 bln sweetened offer (Reuters)
- MF Global Cases Focus on 'Letters' (WSJ)
- UBS fined $1.5 billion in growing Libor scandal (Reuters)
- Spotlight swings to interdealer brokers (FT)
- China Widens Access to Capital Markets (WSJ)
- With Instagram, Facebook Spars With Twitter (WSJ)
- Stevens Says Australia May Not See Seamless Handover From Mining (BBG)
- Japan's Abe to pick LDP veteran Aso as finance minister (Reuters)
- Ex-Porsche CEO Wiedeking Charged Over Failed Volkswagen Bid (BBG)
Overnight Media Digest
* UBS AG became the second bank to settle accusations that it tried to rig benchmark interest rates, agreeing to pay roughly $1.5 billion in a deal with authorities in multiple countries.
* Google Inc received positive signals from the European Union about prospects for an antitrust settlement next year, but U.S. regulators have decided they need more time to complete their own probe of the Internet giant.
* Samsung Electronics Co Ltd said it would drop its injunction applications against Apple Inc in five European countries, in a major U-turn in a long-running patents war between the electronics giants.
* Knight Capital Group Inc agreed to pursue a merger with Getco LLC, a deal that would give the high-speed trading firm control of Knight's profitable business of processing trades for small investors, people involved in the discussions said.
* The Justice Department said it has reached a settlement with Pearson Plc's Penguin Group (USA) in its antitrust probe of e-book pricing, clearing away an issue in advance of Penguin's planned combination with Bertelsmann SE & Co's Random House publishing unit.
* Cable operator Time Warner Cable Inc said it would drop arts TV channel Ovation from its lineup on Dec. 31, the first such move since Chief Executive Glenn Britt warned earlier this month that it would begin dropping channels that "cost too much relative to the value of the service."
* The U.S. Department of Transportation said that Toyota Motor Corp agreed to pay $17.35 million in civil fines for failing to report safety defects to regulators within five days as required by law.
* LVMH Moët Hennessy Louis Vuitton SA named company veteran Michael Burke to lead Louis Vuitton, a surprising management shake-up at a vulnerable time for the world's biggest luxury brand.
* Despite progress toward agreement on a budget deal with the White House, House Republican leaders proposed a backup plan to prevent most Americans from facing an income-tax increase if negotiations collapse
GREEK BOND BET PAYS OFF FOR HEDGE FUND
One of the world's most prominent hedge funds is sitting on a $500 million profit after making a bet that Greece would not be forced to leave the euro zone.
GOVERNMENT TO MAKE IT EASIER TO FIRE STAFF
The 90-day consultation period before large-scale redundancies can take place is to be halved to 45 days from next April.
SAMSUNG ENDS FIGHT WITH APPLE IN EUROPE
Samsung has said it will no longer seek an injunction against Apple's devices in Europe.
SANTS SECURES 3 MLN POUNDS PACKAGE AT BARCLAYS
Hector Sants will receive a total remuneration package worth as much as 3 million pounds ($4.87 million) as part of his move to Barclays next month.
INSTAGRAM SPARKS BACKLASH OVER PRIVACY
GOOGLE CLOSES IN ON SETTLEMENT WITH EU
Google is edging closer to a settlement with the EU's top competition authority after Brussels said the U.S. search giant had made substantial progress.
BOEHNER PREPARES US FISCAL BACK-UP PLAN
John Boehner, the Republican Speaker of the House of Representatives, said he was preparing a back-up plan to extend current tax rates for all Americans except millionaires.
GEITHNER WAS TOLD OF LIBOR FEARS IN 2008
The Fed was warned as early as mid-2008 that banks may have been misreporting their Libor borrowing rate to aid their own trading positions, much earlier than previously known.
* The Federal Trade Commission is unlikely to finish until January its investigation into whether Google Inc abused its power in the search market, people briefed on the investigation said.
* Facebook Inc responded to the anger over the proposed Instagram changes. Kevin Systrom, a co-founder of Instagram, wrote a blog post saying the company would change the new terms of service to make clearer what would happen to users' pictures.
* Nielsen Holdings NV said that it had agreed to acquire Arbitron Inc, the radio ratings company, for $1.26 billion.
* Penguin, trying to ensure a clean slate before its planned merger with Random House, announced that it was settling a lawsuit brought by the Justice Department over the pricing of e-books.
* Private equity firm Cerberus Capital Management said that it would immediately sell its controlling stake in Freedom Group, the gun maker that made the rifle used in the Connecticut school shootings.
* Jefferies Group Inc said that it earned about $71.6 million in profit for the fourth quarter, up 48 percent from the same time a year ago as its core businesses showed marked improvement.
* House Republican leaders struggled to rally their colleagues around a backup measure to ease the sting of a looming fiscal crisis by allowing tax rates to rise only on incomes over $1 million.
* The Federal Trade Commission said that it had opened an inquiry into the practices of nine companies that collect and resell or analyze consumer data.
* Seven weeks after Hurricane Sandy dumped an estimated 500 million gallons of water in Hoboken, crippling its transportation network and leaving tens of thousands of commuters casting about for alternative modes of travel, officials said that PATH train service was at last set to resume.
* Joseph Lhota, the chairman of the Metropolitan Transportation Authority of New York, has informed the Cuomo administration that he is stepping down from his position, according to four people with direct knowledge of his plans. He is expected to resign on Friday, allowing him to pursue a candidacy for New York City mayor as a Republican.
THE GLOBE AND MAIL
* The White House signaled its support for a renewed federal ban on assault weapons on Tuesday, as the National Rifle Association and top Senate Republican expressed openness towards measures aimed at preventing a repetition of the Newtown massacre.
Reports in the business section:
* U.S. Republicans tried to squeeze more concessions from the White House on taxes on Tuesday in political maneuvering for a deal that would prevent the U.S. economy from going over the "fiscal cliff" in the new year.
* Canada has implemented new rules requiring airlines to advertise the actual bottom line ticket price -- including all taxes, charges and fees. Print advertising, billboards and online ads will also note the cost of those taxes and fees included in the actual airfare.
* The Harper government has approved funding for Canada's world-beating surveillance satellite program, just as it seemed that it may become the victim of spending cutbacks.
* Porter Airlines Inc said on Tuesday that it would be entering the packaged vacation market with the launch of Porter Escapes. The new offering from the Toronto Island-based airline will include flight and hotel bundles for all 19 of its destinations.
--The Ministry of Land and Resources said it will maintain and improve policies designed to contain housing and land prices, with focus on cities that have experienced either year-on-year growth or month-on-month growth for three straight months.
CHINA SECURITIES JOURNAL
--An op-ed from the research centre of the State-owned Assets Supervision and Administration Commission (SASAC), which manages the central government's equity stakes in China's largest state-owned enterprises, says that China should recognise the potential of investment by private equity funds to spur technological innovation.
--Income distribution reform must address the gap between the rich and the poor, the government-backed Chinese Academy of Social Sciences (CASS) said in its 2013 "Society Blue Book". CASS emphasised that merely increasing average incomes, without addressing this gap, is not sufficient.
SHANGHAI SECURITIES NEWS
--Among bankers included in the People's Bank of China's quarterly survey of bankers, 75 percent expect China will maintain 'moderately loose' monetary policy this quarter.
--China is studying policies to support the photovoltaic cell industry, amid a trade dispute with the United States and the European Union, said Shen Danyang, spokesman for the Ministry of Commerce of China.
CHINA BUSINESS NEWS
--The China Banking Regulatory Commission (CBRC) is considering ways to increase supervision of the country's rapidly growing but lightly regulated trust sector. In order to gain a clearer picture of who invests in trusts, CBRC is considering a proposal that requires trusts to submit a list of all its investors, including their names, contact details and their investment amount.
CHINA DAILY (www.chinadaily.com.cn)
--An additional two million tourists are likely to visit Beijing in 2013 due to a new policy that allows visitors from 45 countries to spend 72 hours in the city without a visa, said Wang Yue, deputy director of the Beijing Tourism Development Committee.
Fly On The Wall 7:00 AM Market Snapshot
Pioneer Southwest (PSE) upgraded to Neutral from Sell at UBS
Fidelity National (FNF) upgraded to Overweight from Equal Weight at Barclays
First American (FAF) upgraded to Overweight from Equal Weight at Barclays
Synaptics (SYNA) upgraded to Overweight from Neutral at JPMorgan
Access Midstream Partners (ACMP) upgraded to Buy from Neutral at UBS
StanCorp Financial (SFG) upgraded to Equal Weight from Underweight at Evercore
Reinsurance Group (RGA) upgraded to Overweight from Equal Weight at Evercore
Morgan Stanley (MS) upgraded to Overweight from Equal Weight at Evercore
Huntington Bancshares (HBAN) upgraded to Overweight from Equal Weight at Evercore
AkzoNobel (AKZOY) upgraded to Neutral from Sell at Citigroup
Panera Bread (PNRA) upgraded to Outperform from Neutral at Wedbush
H&R Block (HRB) downgraded to Neutral from Buy at Compass Point
SandRidge Energy (SD) downgraded to Neutral from Buy at Citigroup
Chubb (CB) downgraded to Equal Weight from Overweight at Morgan Stanley
PDC Energy (PDCE) downgraded to Hold from Buy at Canaccord
American Express (AXP) downgraded to Equal Weight from Overweight at Evercore
Wells Fargo (WFC) downgraded to Equal Weight from Overweight at Evercore
BJ's Restaurants (BJRI) downgraded to Neutral from Outperform at Wedbush
Antares Pharma (ATRS) initiated with a Buy at Jefferies
Baidu (BIDU) initiated with a Sell at Maxim
C.R. Bard (BCR) initiated with an Outperform at JMP Securities
First Niagara (FNFG) initiated with a Neutral at Goldman
Flowserve (FLS) initiated with an Outperform at Oppenheimer
Greenway Medical (GWAY) initiated with a Market Perform at Wells Fargo
Jarden (JAH) initiated with an Overweight at JPMorgan
M&T Bank (MTB) initiated with a Neutral at Goldman
Monro Muffler (MNRO) initiated with a Buy at Stifel Nicolaus
Omnicell (OMCL) initiated with a Market Perform at Wells Fargo
Onyx Pharmaceuticals (ONXX) initiated with a Buy at UBS
PACCAR (PCAR) initiated with a Hold at BB&T
Quanta Services (PWR) initiated with a Buy at UBS
TD Ameritrade (AMTD) initiated with an Outperform at William Blair
Target (TGT) initiated with a Hold at Stifel Nicolaus
Whitestone REIT (WSR) initiated with a Neutral at RW Baird
UBS (UBS) to pay CHF 1.4B in fines to settle LIBOR probes, sees Q4 loss CHF 2.0B-2.5B
Moody's reviews Alcoa's (AA) ratings for downgrade, cited aluminum price decline
Getco acquires Knight Capital (KCG) for $2B or $3.75 per share, reports say
Dell (DELL) acquired Credant Technologies
Alleghany (Y) sees preliminary after tax loss to Sandy approximately $288M
Assurant (AIZ) expects losses from Sandy to be $200M-$220M
Southwestern Energy (SWN) targeting 2013 net income $525M-$535M
WuXi PharmaTech (WX) and PRA sign joint venture agreement
Energen (EGN) cut 2012, 2013 production by 400,000 BOE
Reynolds American (RAI) reached agreement in principle in disputes with states
Philip Morris (MO) reached agreement to resolve MSA payment disputes
Lorillard (LO) reached agreement over disputed MSA adjustments
TheStreet (TST) announced SEC settlement of 2008, 2009 accounting issues
Imperial Holdings (IFT) settles class action lawsuits, to pay $12M
Companies that beat consensus earnings expectations last night and today include:
Hillenbrand (HI), Apogee Enterprises (APOG), AAR Corp. (AIR), Oracle (ORCL)
Oracle (ORCL) sees Q3 adjusted EPS 64c-68c, consensus 66c
Energen (EGN) sees FY12 EPS $3.15-$3.25, consensus $3.45
Apogee Enterprises (APOG) raises FY13 EPS view
Symmetricom (SYMM) lowers Q2 revenue view to $46-$49M from $55M-$62M
Health Net (HNT) sees FY13 EPS $2.00-$2.10, consensus $2.12
AAR Corp. (AIR) raises FY13 EPS to $1.70-$1.80 from $1.60-$1.70, consensus $1.73
The board of Knight Capital (KCG) will pursue a merger with Getco, with Getco planning to pay $3.75 per share for half of Knight's outstanding stock, according to a Wall Street Journal report that cites sources.
Penguin Group, part of Pearson (PSO), has reached a settlement with the U.S. DOJ over allegations that it and other publishers conspired to raise e-book prices for consumers, reports the Wall Street Journal.
The Federal Reserve Bank of New York was warned as early as mid-2008 in emails that banks may have been misreporting their Libor borrowing rate, the Financial Times reports.
A federal judge yesterday questioned whether shareholders accusing private-equity firms including KKR (KKR), Blackstone (BX) and Bain Capital, of bid-rigging had enough evidence to proceed with most of their lawsuit, the New York Post reports.
Home Loan Servicing (HLSS) 25.3M share Secondary priced at $19.00
Team Health (TMH) commences 8M share secondary offering of common stock