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Frontrunning: January 4

Tyler Durden's picture




 
  • Just like last year: A Postholiday Letdown for Retailers (WSJ)
  • Obama Fights Republicans on Debt as Investors Seek Growth (BBG)
  • Housing a Sweet Spot for U.S. Economy as Recovery Expands (BBG)
  • House chooses Boehner as speaker again despite dissent (Reuters)
  • Backlash pushes Republicans to seek cuts (FT)
  • Jobs Lost Hit 5 Million With Rigged Currencies (BBG)
  • Chavez still has "severe" respiratory problem (Reuters)
  • Paris promises flurry of economic reforms  (FT)
  • Investors Sour on Pro Stock Pickers (WSJ)
  • Abe moves to ease South Korea tensions (FT)
  • Wildfires Hit Australia Amid Worst Heatwave in Decade (BBG)
  • Monti attacks ‘extremist’ rivals (FT)

 

Overnight Media Summary

WSJ

* Investors are jumping out of mutual funds managed by professional stock pickers and shifting money into lower-cost funds that echo the broader market. Through November, investors pulled $119.3 billion from so-called actively managed U.S. stock funds in 2012, the biggest yearly outflow since 2008, according to data from research firm Morningstar.

* U.S. antitrust regulators who spent nearly two years probing Google Inc's business practices came up virtually empty-handed, preserving the company's dominant Web-search business and dealing a blow to competitors such as Microsoft Corp.

* Offshore driller Transocean Ltd will pay $1.4 billion to settle all federal civil and criminal claims relating to the 2010 Deepwater Horizon accident in the Gulf of Mexico, the U.S. Department of Justice said.

* Cautious U.S. consumers restrained their spending in December, making for a disappointing holiday season for retailers at what is usually their busiest time of the year.

* The U.S. Securities and Exchange Commission has wrapped up its investigation into possible insider trading by a former top executive at Warren Buffett's Berkshire Hathaway Inc and has decided not to take action, the executive's lawyer said Thursday.

* Wegelin & Co, Switzerland's oldest bank pleaded guilty to a criminal conspiracy charge in the United States on Thursday and admitted that it helped wealthy Americans for years avoid tens of millions of dollars in taxes by hiding their income from secret accounts abroad.

* Boeing Co said Thursday that it delivered 601 commercial jets last year, likely topping rival Airbus to become the world's largest aircraft manufacturer for the first time since 2002.

* U.S. auto sales finished the year strong as consumers largely ignored the debate over the fiscal cliff in Washington, D.C., and headed to dealers to replace aging vehicles.

* Hormel Foods Corp agreed to pay about $700 million for Unilever's Skippy peanut-butter business, seeking to expand its lunchtime offerings in the U.S. and accelerate growth in China.

 

NYT

* The Federal Trade Commission on Thursday handed Google Inc a major victory by declaring, after an investigation of nearly two years, that the company had not violated antitrust or anti-competition statutes in the way it arranges its Web search results.

* Just a few months after announcing a campaign to reduce unemployment, Federal Reserve officials are already debating how soon to stop it, reflecting persistent internal divisions about the effort's value.

* Congressional investigators in the United States are wrapping up an inquiry into the accounting practices of Apple Inc and other technology companies that allocate revenue and intellectual property offshore to lower the taxes they pay in the United States.

* Automakers on Thursday reported their strongest sales year since 2007, posting solid December results in the United States and promising more growth in 2013.

* Transocean Ltd, the driller whose floating Deepwater Horizon oil rig blew out in 2010, causing a massive oil spill, has agreed to settle civil and criminal claims with the U.S. federal government for $1.4 billion, the Justice Department announced Thursday.

* The U.S. Securities and Exchange Commission has decided not to file insider trading charges against David Sokol, a onetime top lieutenant at Berkshire Hathaway, Sokol's lawyer said Thursday.

* Barnes & Noble Inc's Nook unit suffered a 12.6 percent decline in sales compared with the same period a year earlier, a blow to its hopes of building up its digital division to compete with behemoths like Amazon.com.

* The Congressional budget deal brokered this week kept tax breaks in place for a variety of industries in the United States, but biodiesel got something even better: a retroactive reinstatement of a dollar-a-gallon credit going back to January 2012, when it lapsed.

 

Canada

THE GLOBE AND MAIL

* Canada's native leaders have petitioned the Prime Minister Stephen Harper and the Governor-General David Lloyd Johnston to gather three weeks from now to discuss perceived failings in the treaty relationships; but an Ontario chief on a hunger strike to force such a meeting says she can't wait that long.

Theresa Spence, the chief of the impoverished community of Attawapiskat, who has been fasting for 24 days to demand the face-to-face discussion, has told her supporters and other native leaders that a meeting must occur within the next 72 hours, and she will not start eating until it has begun.

Reports in the business section:

* Facebook Inc, has chosen Canada to be the testing ground for an enhanced mobile app that allows users to make free calls from their smartphones.

The world's largest social media site's Canadian pilot project centres on two key upgrades to its messenger app, bolstering the company's foray into the mobile market at a time when more and more consumers are flocking to data-hungry smartphones.

* Canadians drove 1.67 million vehicles off car dealers' lots in 2012, with favourable financing conditions propelling the industry to the second-highest sales year on record.

The best year since the record-setting tally of 1.70 million vehicles in 2002 was propelled by a surge in luxury sales, a strong rebound from 2011 levels by Japan-based auto makers, and continued growth at South Korea-based Kia Canada Inc and Hyundai Auto Canada Corp.

NATIONAL POST

* Canadian domestic extremists are capable of orchestrating "serious acts" of political violence, according to a newly released federal intelligence report that blames such groups for nine bombings since 2004.

FINANCIAL POST

* Tiff Macklem, the senior deputy governor of Bank of Canada, is seen by many as the front-runner to take over from Governor Mark Carney.

The central bank has begun the process of finding a new governor and the focus will no doubt be on it's No.2 policymaker.

* Cyber attacks targeting Canada's oil and gas industry and other major energy firms around the globe are occurring with disquieting frequency.

Last March, three confidential "amber" alerts were issued by the U.S. Department of Homeland Security warning of attacks against U.S. and Canadian natural gas pipeline companies.

 

China

CHINA DAILY

-- China's trade policies will become more open this year to help boost sluggish imports and exports, said Wei Jianguo, secretary general of the China Center for International Economic Exchanges, a top official Chinese think tank.

-- Pre-owned house sales in Beijing at were at a 23-month high in December, according to statistics from the Beijing Municipal Commission of Housing and Urban-Rural Development. That was a 24 percent rise against the previous month.

SHANGHAI DAILY

-- More than 40 foreigners travelling in China have made use of a 72-hour visa-free stay in Shanghai, under a new policy that came into effect on Jan. 1 with the aim of attracting more overseas travellers.

PEOPLE'S DAILY

-- The Chinese currency, the yuan, will rise modestly this year on the back of domestic economic recovery, while trading is likely to fluctuate in a wider band, the official People's Daily reported, citing economists.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Cardinal Health (CAH) upgraded to Buy from Neutral at Mizuho
Citigroup (C) upgraded to Conviction Buy from Buy at Goldman
Corcept Therapeutics (CORT) upgraded to Overweight from Underweight at Piper Jaffray
ESCO Technologies (ESE) upgraded to Outperform from Neutral at RW Baird
First Republic Bank (FRC) upgraded to Buy from Hold at Deutsche Bank
Illumina (ILMN) upgraded to Overweight from Neutral at Piper Jaffray
Johnson & Johnson (JNJ) upgraded to Buy from Hold at Deutsche Bank
Mattel (MAT) upgraded to Buy from Hold at Needham
NuVasive (NUVA) upgraded to Underperform from Sell at BMO Capital
PerkinElmer (PKI) upgraded to Overweight from Equal Weight at Morgan Stanley
Quiksilver (ZQK) upgraded to Buy from Neutral at Goldman
Sangamo BioSciences (SGMO) upgraded to Overweight from Underweight at Piper Jaffray
SunTrust (STI) upgraded to Buy from Neutral at Goldman
Target (TGT) upgraded to Buy from Neutral at Janney Capital
Texas Roadhouse (TXRH) upgraded to Buy from Hold at Deutsche Bank
U.S. Bancorp (USB) upgraded to Buy from Hold at Deutsche Bank
Under Armour (UA) upgraded to Outperform from Neutral at Credit Suisse
Urban Outfitters (URBN) upgraded to Outperform from Neutral at Credit Suisse

Downgrades

Abbott (ABT) downgraded to Hold from Buy at Deutsche Bank
AmerisourceBergen (ABC) downgraded to Neutral from Buy at Mizuho
BB&T (BBT) downgraded to Neutral from Buy at Goldman
BNY Mellon (BK) downgraded to Neutral from Buy at Citigroup
Cepheid (CPHD) downgraded to Neutral from Overweight at Piper Jaffray
Dole Food (DOLE) downgraded to Underperform from Buy at BofA/Merrill
First Solar (FSLR) downgraded to Underperform from Market Perform at Raymond James
JPMorgan (JPM) downgraded to Buy from Conviction Buy at Goldman
Ligand Pharmaceuticals (LGND) downgraded to Hold from Buy at Cantor
Ruth's Hospitality (RUTH) downgraded to Hold from Buy at Deutsche Bank
Tanger Factory (SKT) downgraded to Sell from Neutral at Goldman
Waters (WAT) downgraded to Equal Weight from Overweight at Morgan Stanley
Wells Fargo (WFC) downgraded to Neutral from Buy at Goldman
lululemon (LULU) downgraded to Neutral from Outperform at Credit Suisse

Initiations

AbbVie (ABBV) initiated with a Buy at BofA/Merrill
AbbVie (ABBV) initiated with an Equal Weight at Barclays
Avanir Pharmaceuticals (AVNR) initiated with an Overweight at Piper Jaffray
Cameron (CAM) initiated with an Outperform at Macquarie
Continental Resources (CLR) initiated with a Buy at Deutsche Bank
Cytokinetics (CYTK) initiated with an Overweight at Piper Jaffray
FactSet (FDS) initiated with a Sell at Goldman
National Oilwell (NOV) initiated with an Outperform at Macquarie
Orexigen (OREX) initiated with an Overweight at Piper Jaffray
Prospect Capital (PSEC) initiated with an Overweight at Barclays
Sanchez Energy (SN) initiated with a Buy at C.K. Cooper
Support.com (SPRT) initiated with a Neutral at B. Riley Caris
Transcept Pharmaceuticals (TSPT) initiated with an Overweight at Piper Jaffray
WhiteHorse Finance (WHF) initiated with a Buy at Deutsche Bank
WhiteHorse Finance (WHF) initiated with an Overweight at Barclays

HOT STOCKS

Microsoft (MSFT) criticized the "weak" ruling by the FTC on Google's (GOOG) improper business practices
AMR Corp. (AAMRQ) CEO expects to make merger decision “within matter of weeks,” the Wall Street Journal reports
Liberty Media (LMCA) announced FCC application approval for du jure control of SiriusXM (SIRI)
Abbott (ABT), Johnson & Johnson (JNJ), Sanofi (SNY) said to show interest in Bausch & Lomb bid, Bloomberg reports
Cliffs Natural (CLF), Anglo American (AAUKY) to sell stakes in Brazilian joint venture

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Progress Software (PRGS), Franklin Covey (FC)

Companies that matched consensus earnings expectations include:
Sonic (SONC)

NEWSPAPERS/WEBSITES

Investors are leaving mutual funds managed by professional stock pickers and moving large amounts of money into lower-cost funds that echo the broader market, the Wall Street Journal reports
Last month cautious U.S. consumers restrained their spending, resulting in a disappointing holiday season for retailers at what is usually their busiest time of the year. Indications are that profit margins will suffer, as much of the holiday shopping was late and at discounted prices, the Wall Street Journal reports
Global shares, oil and copper moved lower today, and the dollar gained after Fed officials raised concerns about possible side effects of its stimulus program, Reuters reports
Fiat (FIATY) plans to exercise an option to buy an additional 3.3% in Chrysler Group LLC for $198M, the latest step in its move to buy out the U.S. automaker's minority shareholder, a retiree healthcare trust fund called VEBA, affiliated with the UAW. Fiat now owns 58.5% percent of Chrysler, while the trust owns the rest, Reuters reports
Google (GOOG) Executive Chairman Eric Schmidt may travel to North Korea over opposition from the U.S. State Department, becoming the highest-profile businessman to visit there since Kim Jong Un succeeded his father as leader just over a year ago, Bloomberg reports
BMW sales jumped 39% in the U.S. last month to beat Daimler’s (DDAIF) Mercedes-Benz in luxury-auto deliveries for the year as U.S. light-vehicle sales reached the highest level since 2007. Toyota’s (TM) Lexus was third, Bloomberg reports

SYNDICATE

Adecogro (AGRO) files to sell 2M common shares for holders
Insulet (PODD) announces sale of $85M of common stock
Synageva Biopharma (GEVA) 2.15M share Secondary priced at $47.53

 

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Fri, 01/04/2013 - 08:42 | 3121492 edb5s
edb5s's picture

Friday humor:  http://finance.yahoo.com/news/3-huge-myths-plan-save-044758223.html?l=1

"Our debts are plenty manageable at current levels, and with interest rates the way the are." - Joe Weisenthal

Fri, 01/04/2013 - 08:54 | 3121506 Sheeple Shepard
Sheeple Shepard's picture

I cant believe this "trillion dollar coin" scenario still seems to have some legs, this is starting to get really weird.

"This line of reasoning ignores the point completely. People who say this (or say we should print a $100 trillion coin) are mistakenly thinking that the point of this exercise is to pay off our debts and get out of the hole."  Well whats the point then?, your just exchanging one liability(T-bills) for another! Are they really getting so desperate as to try this snake oil salesman crap and hope it buys them a bit more time? 

Full retard?

Fri, 01/04/2013 - 09:00 | 3121512 IvyMike
IvyMike's picture

If time is money, why can't you use money to buy time?

Fri, 01/04/2013 - 09:05 | 3121520 tabasco71
tabasco71's picture

That's what wages do.

Fri, 01/04/2013 - 09:19 | 3121543 IvyMike
IvyMike's picture

Wages merely make you a slave.

"Whoever gives his labor for money sells himself and puts himself in the rank of slaves."

~Marcus Tullius Cicero, De Officiis

(The control-freak Owner Class doesn't like that quote much.)

http://www.whywork.org/

Fri, 01/04/2013 - 09:49 | 3121634 tabasco71
tabasco71's picture

Quoting a Roman seems contradictory when the Roman's were the administration that abolished the practice of self-initiated debt eradication; a practice which hitherto nations had employed at will whenever their debts became too burdensome to continue defacto.

Anyway, I was considering your quote literally with my response before, so maybe missed your point:

- Employers use wages to buy your time

- Employees can use wages to buy holidays

and I guess time is only money if that's how someone choose to measure themself

Fri, 01/04/2013 - 10:14 | 3121657 IvyMike
IvyMike's picture

Employers use the government enFORCEment of self-styled "property rights" to regulate your free movement and opportunity to hunt and gather a free lunch off the land like your ancestors did.

Once humanity has been forced out of a Non-State lifeway of foraging the land, you're going to starve unless you work for the Owner Class.

Oh yeah, humans had an abundant FREE LUNCH for the hunting and gathering.

The control-freak Owner Class hates the concept of a free lunch, because they can't extract Time from your life if they can't starve you into submission.

"Food resources were 'both varied and abundant,' particularly the energy rich mangetti nut - 'so abundant that millions of the nuts rotted on the ground each year for want of picking."

~Marshall Sahlins, University of Chicago
The Original Affluent Society

Fri, 01/04/2013 - 09:06 | 3121521 Sudden Debt
Sudden Debt's picture

Nice quote Ivy! It pretty much fits in into my decisions I took for this year :)

Living on a slower speed.

Say "fuck it" more ofthen.

More time with the kids.

And if my boss can't give me respect, I'll stop trying to get it.

 

Fri, 01/04/2013 - 09:12 | 3121533 IvyMike
IvyMike's picture

"The Society for the Retardation of Time was established in 1990 and has a few hundred members in four European countries. Less whimsical than it may sound, its members are committed to reversing the contemporary acceleration of time in everyday life, toward the aim of being allowed to live more satisfying lives."

~John Zerzan, Time And its Discontents

Fri, 01/04/2013 - 09:00 | 3121513 kurzdump
kurzdump's picture

There is indeed a way to pay off debt with a "trillion dollar coin": price regulation! Set the price of gold to a trillion $ / ounce and give a hand full of golden eagles to the FED, China and Japan. 

Fri, 01/04/2013 - 09:02 | 3121518 Sudden Debt
Sudden Debt's picture

I think they tried it once during the Weimar period... didn't really work out fine...

Fri, 01/04/2013 - 09:08 | 3121524 Sheeple Shepard
Sheeple Shepard's picture

In that case what happens when numourous ZHers retreive their Kruggerands from the bottom of their relative lakes and become trillionaires overnight? Hyperinflation is as much a psychological event as a monetary event and when 1oz of gold(phizz) is worth $1 trillion you had better lock your doors and shut the curtains.

Fri, 01/04/2013 - 09:10 | 3121527 Sudden Debt
Sudden Debt's picture

And you won't be able to sell them on Ebay because paypal limits prevent trillion dollar transactions!

go figure...

 

Fri, 01/04/2013 - 09:17 | 3121545 Sheeple Shepard
Sheeple Shepard's picture

The people demand MOAR ZERO'S.

Fri, 01/04/2013 - 10:12 | 3121673 IvyMike
IvyMike's picture

Zeros are Arabic! And so is al'gebra!

Save the Republic with ROMAN NUMERALS!

Fri, 01/04/2013 - 09:26 | 3121566 BullsNBeers
BullsNBeers's picture

Any idea on whether or not such a coin would be usable in the vending machine where I work?

There's a bear claw in there that's just calling my name.

Fri, 01/04/2013 - 08:46 | 3121498 lolmao500
lolmao500's picture

All hail Obama!

http://rt.com/usa/news/drone-kill-mcmahon-obama-245/

White House wins fight to keep drone killings of Americans secret

A federal judge issued a 75-page ruling on Wednesday that declares that the US Justice Department does not have a legal obligation to explain the rationale behind killing Americans with targeted drone strikes.

United States District Court Judge Colleen McMahon wrote in her finding this week that the Obama administration was largely in the right by rejecting Freedom of Information Act (FOIA) requests filed by the American Civil Liberties Union and The New York Times for materials pertaining to the use of unmanned aerial vehicles to execute three US citizens abroad in late 2011 [pdf].

Anwar al-Awlaki and Samir Khan, both US nationals with alleged ties to al-Qaeda, were killed on September 30 of that year using drone aircraft; days later, al-Awlaki’s teenage son, Abdulrahman al-Awlaki, was executed in the same manner. Although the Obama administration has remained largely quiet about the killings in the year since, a handful of statements made from senior White House officials, including Pres. Barack Obama himself, have provided some but little insight into the Executive Branch’s insistence that the killings were all justified and constitutionally-sound.

http://livewire.talkingpointsmemo.com/entry/report-obama-to-make-push-fo...

Report: Obama To Make Push For Immigration Reform This Month

President Barack Obama is prepared to use his political capital to pursue immigration reform this month, according to a report published Wednesday in the Huffington Post.

The report cited an anonymous official in the Obama administration, who suggested that the president is unlikely to be deterred by the protracted fiscal cliff debate that will be revisited in the coming months. As such, the administration will reportedly move quickly on both immigration reform and gun control.

http://bostonherald.com/news_opinion/local_coverage/2013/01/menino_veep_...

Vice President Joe Biden “guaranteed” Mayor Thomas M. Menino — a leading national gun control advocate — that President Obama will pass sweeping firearms reforms by the end of the month, the mayor said today.

Fri, 01/04/2013 - 08:49 | 3121499 IvyMike
IvyMike's picture

House chooses Boehner

O - H - I - O

Now 75% vowels with all the goodness of a consonant H!

Fri, 01/04/2013 - 08:50 | 3121503 hero HNL
hero HNL's picture

Thanx for the daily run up. It's very helpful.

 

 

hero

Fri, 01/04/2013 - 08:50 | 3121504 DrDinkus
DrDinkus's picture

bonds better start co-operating or obammy is gonna have to start cutting some fatter treasury checks...OH MY!

Fri, 01/04/2013 - 08:58 | 3121509 booboo
booboo's picture

"Google (GOOG) Executive Chairman Eric Schmidt may travel to North Korea over opposition from the U.S. State Department, becoming the highest-profile businessman to visit there since Kim Jong Un succeeded his father as leader just over a year ago, Bloomberg reports"

Because one on one surveillance is so old school.

Fri, 01/04/2013 - 09:13 | 3121536 lolmao500
lolmao500's picture

It was denied by Schmidt.

Fri, 01/04/2013 - 08:59 | 3121511 Bobbyrib
Bobbyrib's picture

http://www.bloomberg.com/news/2012-12-28/lockheed-wins-dod-contracts-wor...

 

Lockheed Martin got a Department of Defense contract for F-35's. Did they at least make sure the basic problems are solved this time? Will it pass testing this time without any problems?

Who cares? Our great great grandchildren can pay for it. /sarcasm. 

Fri, 01/04/2013 - 09:01 | 3121514 Sudden Debt
Sudden Debt's picture

the housing recovery topic doesn't really fit in the list to be honest...

AND MAN!!! GOLD AND SILVER GOT MONKEYHAMMERED TODAY!

FUCK THAT!

WTF!

Fri, 01/04/2013 - 09:10 | 3121528 Esso
Esso's picture

Buying

Opportunity

Fri, 01/04/2013 - 09:15 | 3121537 tabasco71
tabasco71's picture

I'm hoping G & S are only getting smacked following the holiday period lazy markets coinciding with the resolution of the fiscal cliff and the breather in the EZ sovereign debt crisis.  Both would lead to the current ramping in equities and the retreat from pm's. Have to add in the enthusiasm of a new balance sheet year (it is only 4th Jan after all).

However, as there has been no change in fundamentals, its only a matter of days/weeks (?) until the new normal re-resumes.

Praying I don't get 'stop-hunted' out in the meantime....

Fri, 01/04/2013 - 09:16 | 3121544 Navymugsy
Navymugsy's picture

Panic selling and panic buying are the new normal.

Fri, 01/04/2013 - 10:29 | 3121770 tabasco71
tabasco71's picture

Agreed - they are indeed.

The new normal I was refering to was the disappearance of liquidity, the flailing of stocks and the return of QE to bail it all out once again.

Although the 'robustness' of the fiscal wall solution may mean that timescales gets stretched out the long-term horizon of March 2012.

In that lifetime of a horizon, perhaps there could even be a little growth occur...

Better review my stops

Fri, 01/04/2013 - 10:20 | 3121731 disabledvet
disabledvet's picture

This late in the game and I still don't understand QE. Makes railroads move, wilts the price of gold, causes equities to surge...hmmmmm

Fri, 01/04/2013 - 09:12 | 3121530 Aurora Ex Machina
Aurora Ex Machina's picture

Regarding Monti:

"I believe that cutting out the extreme wings would be a good thing," Monti told the Uno Mattina programme on state television...

A poll published on Wednesday said Monti's grouping would win 12 percent of the vote. One published last week said it could gain up to 16 percent, depriving rivals of a clear win, but not enough to govern.

The PD and its coalition ally, the Left, Ecology, Freedom party, are on track to win the elections, at least in the lower house." [source]

 

Remind me again if that sounds like a coup d'etat or not. 

 

 

p.s. TransOcean up 10% on that deal; thought as much - who's HF was into that again? Looks like they caught a breather.

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