Frontrunning: December 20
- IMF Demands Partial Default for Cyprus (Spiegel)
- Boehner's 'Plan B' Gets Pushback (WSJ)
- Beijing criticises US ‘political checks’ (FT)
- White House Said to Tell Business Groups Talks Stall (BBG)
- NYSE tries to get hitched again: IntercontinentalExchange in talks to buy NYSE (Reuters) -> N-Ice coming?
- Greece faces ‘make or break’ year (FT)
- Fed rejects idea of consensus forecasts, "maybe forever": Fisher (Reuters)
- Rajoy Drives Spanish Revolution With Low-Cost Manufacture (BBG)
- Italian Senate Set for Budget Vote Before Monti Resigns (BBG)
- BOJ Loosens With Pledge to Review Inflation Objectives (BBG)
- Bowing To Abe, BOJ To Review Price Goal (WSJ)
- NZ FinMin English Says N.Z. Powerless to Curb Kiwi’s Bond-Fueled Gain (BBG)
- Swan Says Australia Budget Surplus Unlikely This Fiscal Year (BBG)
Overnight Media Digest
* Cable-equipment maker Arris Group Inc has agreed to acquire Motorola solutions Inc's set-top box business from Google Inc in a cash-and-stock deal valued at about $2.35 billion.
* The U.S. Patent and Trademark Office issued a preliminary ruling against Apple Inc's "pinch-to-zoom" patent, which Apple used as a cornerstone of its case against Samsung Electronics Co.
* U.S., UK and Swiss authorities alleged a vast conspiracy led by UBS AG to rig interest rates tied to trillions of dollars in loans and other financial products, indicating the practice was far more pervasive than previously known. UBS agreed to pay about $1.5 billion to settle charges.
* NYSE Euronext is in talks to sell itself to rival IntercontinentalExchange Inc in a deal that may end more than two centuries of independence for the Big Board, one of Wall Street's most enduring symbols of American capitalism.
* General Motors Co took its biggest step yet to escape the shadow of bankruptcy and a government bailout, saying it would spend $5.5 billion to buy a chunk of its stock held by the U.S. Treasury, which now plans to unwind itself from the auto maker within the next year or so.
* Fannie Mae and Freddie Mac may have lost more than $3 billion as a result of banks' alleged manipulation of a key interest rate, according to an internal report by a federal watchdog sent to the mortgage companies' regulator.
* Knight Capital Group Inc's takeover by rival Getco LLC, confirmed on Wednesday, creates a brokerage powerhouse with control over a large chunk of all U.S. stock trades.
* Yum Brands Inc is facing increasing challenges in China after the Beijing-controlled national television broadcaster criticized the company's KFC chain over alleged improper use of antibiotics in chickens supplied by Chinese companies.
* Eastman Kodak Co has agreed to sell a portfolio of patents covering digital photography and Web-based photo applications for about $525 million, in a deal that brought together a Who's Who of the global technology industry.
* FedEx Corp said that economic weakness dragged down its quarterly results as airfreight customers continued to opt for lower-price shipping. The company's profit also took a hit from Hurricane Sandy.
* Videogame maker THQ Inc filed for Chapter 11 bankruptcy, and said its assets will be acquired by affiliates of private equity firm Clearlake Capital Group LP in a roughly $60 million deal.
* U.S. regulators broadened decade-old rules governing children's privacy online to cover new areas like smartphones, but amid pressure from the technology industry backed away from proposals that could have made companies like Facebook Inc and Apple Inc more responsible for violations
UBS PAYS PRICE FOR 'EPIC' SCANDAL
UBS agreed to pay a record $1.5 billion to U.S., UK and Swiss regulators to settle allegations of "pervasive" and "epic" efforts to manipulate interbank lending rates.
GREECE FACES 'MAKE OR BREAK' YEAR
Next year will be "a make or break" year for Greece's future as a member of the euro zone, Yannis Stournaras, the country's finance minister, has said.
APAX CALLS TIME ON DRIVE FOR 9 BLN EURO FUND
The intensifying struggle by private equity groups to raise funds has spurred plans by Apax Partners to call time on its current fund marketing push.
EX-PORSCHE BOSSES CHARGED OVER VW BID
Two former Porsche executives have been charged with market manipulation after a lengthy investigation into an attempt to take over the much larger Volkswagen.
GM BUYS BACK $5.5 BLN IN TREASURY SHARES
General Motors revealed on Wednesday it would pay $5.5 billion to buy back 40 percent of the Treasury stake in the carmaker.
BOE GOVERNOR TO GET 250,000 POUNDS FOR HOUSING
Mark Carney, the incoming governor of the Bank of England will get a housing allowance that dwarfs the salary of the prime minister.
BBC WAS IN 'CHAOS' OVER SAVILE SCANDAL
The BBC lost its deputy director of news, and several senior editorial staff changed jobs, on Wednesday after management was criticised over an investigation into Jimmy Savile.
GETCO ACQUIRES KNIGHT FOR $1.8 BLN
Getco has acquired Knight Capital in a $1.8 billion deal that could see the creation of one of the largest U.S. electronic trading and market-making companies.
* The United States Patent and Trademark Office has dealt a blow to Apple Inc in its legal battle with Samsung Electronics Co Ltd over smartphone patents, declaring that a patent that helped Apple win $1.05 billion in damages against Samsung in a jury trial should not have been granted.
* UBS AG announced it would plead guilty to one count of felony wire fraud as part of a broader settlement.
* The owner of the venerable New York Stock Exchange is in talks to be acquired by an upstart commodities and derivatives trading platform IntercontinentalExchange, according to people briefed on the matter. The IntercontinentalExchange is expected to offer about $33 a share, with two-thirds of that in stock, one of these people said.
* Nearly four years after what became a $49.5 billion bailout, the Treasury Department announced that it would sell 200 million shares back to General Motors Co for $5.5 billion, then sell an additional 300 million shares by early 2014.
* Knight Capital Group Inc, the stock market-making firm that nearly collapsed last summer after a $440 million trading glitch, has reached an agreement to merge with Getco, the Chicago-based high-speed trading firm.
* On Wednesday, the sale of digital imaging patents was finally announced, but instead of bringing as much as $2.6 billion as Eastman Kodak Co once predicted, the selling price was far short of that amount, at about $525 million.
* The Markel Corp, a specialty insurer, said it had agreed to acquire a rival, Alterra Capital Holdings Ltd , for $3.13 billion.
* Ally Financial Inc, formerly General Motors Acceptance Corporation, said that it had repaid the last of the debt it had borrowed in response to the financial crisis under a Federal Deposit Insurance Corporation program.
* American Electric Power Company Inc announced that it would shut its coal-burning boilers at the Big Sandy electric power plant near Louisa, Kentucky, a 1,100-megawatt facility that since the early 1960s has been burning coal that was mined locally.
* Lax leadership hampered by "rigid management chains" left the British Broadcasting Corp "completely incapable" of dealing with the sexual abuse crisis that has shaken the network, in the words of an exhaustive report released.
* In a move intended to give parents greater control over data collected about their children online, federal regulators broadened longstanding privacy safeguards covering children's mobile apps and websites.
THE GLOBE AND MAIL
* General Motors Co has cast a dark cloud over 3,700 high-paying manufacturing jobs and the future of its Oshawa, Ontario, operations, saying it will shift production of the Chevrolet Camaro to a plant in Michigan.
* Toronto District School Board employees visited bars, bought groceries and filled the gas tanks of their cars using public money and during working hours, according to the manager appointed to crack down on the board's troubled building management department.
Reports in the business section:
* Bombardier Inc is close to cinching an C$870 million ($881.59 million) contract to sell 12 C Series commercial jets to an airline based in the Americas.
* Oil-rich Alberta is dialing back its budget forecasts, saying that slumping commodity prices could mean belt tightening, bigger deficits, broken election pledges and a slower national economic recovery, Finance Minister Doug Horner said on Wednesday.
* Canada will appeal a World Trade Organization ruling that could derail a key element of Ontario's green energy program designed to encourage manufacturers to set up shop in the province.
* After a 37-year association, Delta Hotels and Resorts is taking its name off the city's largest hotel, in pursuit of four-star status elsewhere.
* Another domino fell in the widening Libor scandal Wednesday as UBS AG admitted that dozens of its employees worked together to manipulate the global benchmark and agreed to pay a C$1.5 billion ($1.52 billion) fine.
CHINA SECURITIES JOURNAL
--China is set to decide whether to use asset-debt ratios to judge a company's suitability to issues bonds. This would mean companies exceeding 90 percent may not be granted approval, the country's economic watchdog National Development & Reform Commission said.
--China is likely to launch asphalt futures on the Shanghai Futures Exchange next year, industry sources said.
--China will increase railway spending in 2013 from this year's 630 billion yuan ($101 billion), although it will not exceed 700 billion yuan, according to a source close to the Ministry of Railways.
SHANGHAI SECURITIES NEWS
--The State Council, led by Wen Jiabao, said on Wednesday that the government would table supportive policies for the solar power industry, particularly reducing industry costs, that will allow the domestic market to expand.
--Xi Jinping reaffirmed ties with Russia, the paper wrote citing Xinhua. He reportedly said that Russia is China's most important military ally and that China was keen to develop military cooperation.
--Zhuang Xinyi, the deputy chairman of China Securities Regulatory Commission, said on Wednesday that the regulator was looking into implementing a preferred shares system to satisfy investor demand for stable interest and returns.
CHINA DAILY (www.chinadaily.com.cn)
--The amount of new yuan loans extended by Chinese banks in 2013 is likely to hit or even surpass the record high set in 2009, state-owned Bank of Communications said in a report on Wednesday. The bank's chief economist said it could exceed 9.6 trillion yuan ($1.54 trillion), which would be up 14.5 percent from 2012.
--Industry leaders said export quotes for rare earth metals will hold steady in 2013. Liu Yinan, vice-chairman of the related Chamber of Commerce, told the official paper that export volumes in 2013 would be similar to this year.
--China has developed 22 big infrastructure projects in less-developed western regions this year with a total investment of 577.8 billion yuan.
Fly on the Wall 7:00 AM Market Snapshot
Everest Re (RE) upgraded to Overweight from Neutral at JPMorgan
Flir Systems (FLIR) upgraded to Buy from Neutral at Sterne Agee
Freeport McMoRan (FCX) upgraded to Buy from Hold at Deutsche Bank
HomeAway (AWAY) upgraded to Overweight from Equal Weight at Barclays
LaSalle Hotel (LHO) upgraded to Outperform from Neutral at Cowen
PPG Industries (PPG) upgraded to Outperform from Sector Perform at RBC Capital
Stantec (STN) upgraded to Outperform from Sector Perform at RBC Capital
Endurance Specialty (ENH) downgraded to Neutral from Overweight at JPMorgan
NewStar Financial (NEWS) downgraded to Sell from Neutral at Janney Capital
PartnerRe (PRE) downgraded to Underweight from Neutral at JPMorgan
Silgan Holdings (SLGN) downgraded to Sell from Neutral at Goldman
Abbott (ABT) initiated with an Outperform at William Blair
Array BioPharma (ARRY) initiated with an Outperform at Wells Fargo
BlackRock (BLK) initiated with an Overweight at JPMorgan
Boston Beer (SAM) initiated with a Neutral at Citigroup
Comverse (CNSI) initiated with a Neutral at JPMorgan
Conceptus (CPTS) initiated with a Buy at Stifel Nicolaus
Coronado Biosciences (CNDO) initiated with an Outperform at Wedbush
Craft Brew (BREW) initiated with a Neutral at Citigroup
DaVita (DVA) initiated with an Overweight at JPMorgan
EnteroMedics (ETRM) initiated with a Buy at Roth Capital
Exact Sciences (EXAS) initiated with a Buy at Roth Capital
Healthcare Trust (HTA) initiated with an Outperform at Wells Fargo
IEC Electronics (IEC) initiated with a Buy at C.K. Cooper
InterXion (INXN) initiated with a Neutral at Goldman
K12 (LRN) initiated with a Buy at Stifel Nicolaus
Lexington Realty (LXP) initiated with a Buy at Jefferies
LinnCo (LNCO) initiated with an Outperform at Wells Fargo
MasTec (MTZ) initiated with a Buy at Citigroup
Molson Coors (TAP) initiated with a Neutral at Citigroup
Patterson Companies (PDCO) initiated with a Buy at Stifel Nicolaus
People's United (PBCT) initiated with an Underweight at Evercore
ReachLocal (RLOC) initiated with a Buy at Janney Capital
Sunesis (SNSS) initiated with an Outperform at Wells Fargo
Trovagene (TROV) initiated with a Buy at Roth Capital
NYSE Euronext (NYX) and IntercontinentalExchange (ICE) are in merger talks that could value NYSE Euronext at roughly $33 per share, CNBC reported last night. A deal could be announced today.
American Railcar (ARII) issued open letter to Greenbrier (GBX), raised offer to $22 per share
SandRidge Energy (SD) to sell Permian Basin assets to Sheridan for $2.6B in cash
Arris (ARRS) acquired Google's (GOOG) Motorola Home Business for $2.35B in cash, stock
AMR (AAMRQ) said to take steps to move closer to merger with US Airways (LCC), Bloomberg reports
Carl Icahn said investment agreement terminated with Federal-Mogul (FDML)
Investors Bancorp (ISBC), Roma Financial (ROMA) announced merger agreement
Bed Bath & Beyond (BBBY) authorized new $2.5B share repurchase program
Chevron (CVX), YPF (YPF) signed Argentine shale agreement
Williams Partners (WPZ) seeks FERC approval to expand natural gas service
Allegiant Travel (ALGT) to acquire up to nine A320 Aircraft
Triumph Group (TGI) acquired Embee
Ultratech (UTEK) acquired assets of Cambridge Nanotech
Expects FY13 growth rate in outsourcing higher than consulting
SM Energy (SM) sees FY13 production to increase 20%
Expects annual production growth of 15% in 2014 and 2015
Companies that beat consensus earnings expectations last night and today include:
KB Home (KBH), Steelcase (SCS), ChinaEdu (CEDU), Bed Bath & Beyond (BBBY), Jabil Circuit (JBL)
Companies that missed consensus earnings expectations include:
Herman Miller (MLHR)
Companies that matched consensus earnings expectations include:
Accenture (ACN), Paychex (PAYX)
BlackRock (BLK) and Federated Investors (FII) may shield their funds from a torrent of money that is expected to flood out of U.S. banks when a federal guarantee lapses on about $1.7T in bank deposits. The worry that cash pouring into the $2.65T money-fund industry will further depress record low yields. They could also close some money-market funds to new investors, sources say, the Wall Street Journal reports
Nike (NKE) locked in a guarantee with Oregon that ensures that the company's state taxes will be calculated in the same way for 30 years, regardless of any changes to state law. Nike
will expand its presence in the state, making a capital investment of at least $150M and adding no fewer than 500 new jobs there by 2016, the Wall Street Journal reports
Russia’s President Vladimir Putin dismissed talk that he is suffering from health problems, Reuters reports
Brent crude fell from its highest close in two weeks amid speculation that U.S. budget negotiations faltered. Futures slid as much as 0.6%, ending two days of gains. U.S. crude inventories last week were 15% above the five-year average, Bloomberg reports
In the U.K., Vodafone Group (VOD) and Telefonica SA (TEF) are among seven bidders in an auction for frequencies to carry faster mobile-phone services, Bloomberg reports
AG Mortgage (MITT) intends to offer 3.75M shares of common stock
Timberline Resources (TLR) prices public offering of common stock at 20c per share