Frontrunning: January 9
- A Bold Dissenter at the Fed, Hoping His Doubts Are Wrong (NYT)
- China and Japan step up drone race as tension builds over disputed islands (Guardian)
- How Mario Draghi is reshaping Europe's central bank (Reuters)
- Merkel Economy Shows Neglect as Sick Man Concern Returns (BBG)
- US oil imports to fall to 25-year low (FT)
- China Loan Share at Record Low Shows Financing Risks (BBG)
- Dimon Says Some JPMorgan Execs ‘Acted Like Children’ on Loss (BBG) - children that revealed what 'excess reserves' are truly used for
- Fed injects new sell-off risk into Treasuries (FT) - really? So the Fed will stop monetizing the US deficit some time soon?
- Obama aide presses Republicans to accept more tax revenues (Reuters)
- Ex-SAC analyst named 20 alleged insider traders (FT)
- BOJ easing bets help dollar regain ground vs yen (Reuters)
- Goldman Sachs Said to Be Part of Fed-Led Foreclosure Settlement (BBG)
- Venezuela postpones inauguration for cancer-stricken Chavez (Reuters)
Overnight Media Digest
* Clearwire received an unsolicited bid from Dish Network to buy the wireless broadband operator, in a broadside against Sprint Nextel's agreed-upon buyout offer.
* Boeing Co's flagship Dreamliner jet, plagued by years of production delays before getting off the ground, hit fresh trouble on Tuesday as air-safety officials opened a formal probe into a fire that broke out on an empty plane, and another airline discovered wiring problems in one of its 787s.
* Apple Inc is working on a lower-end iPhone, according to people briefed on the matter, a big shift in corporate strategy as its supremacy in smartphones has slipped.
* Two more members of the management team that steered J.P. Morgan Chase & Co through the credit crisis have taken new jobs, as the largest U.S. bank assembles a younger set of top leaders.
* The chief executive of the Financial Industry Regulatory Authority said the regulator plans to shine a light on dark pools, private trading venues that allow buyers and sellers to post orders that are hidden from the market.
* In a reversal of industry practice, Goldman Sachs Group Inc will begin disclosing the values of its money-market mutual funds daily rather than monthly, according to people familiar with the company's plans. Some of the changes will take effect as early as Wednesday.
* The U.S. government has opened a high-level review of accidents and mishaps experienced by Royal Dutch Shell since it started the process of drilling for oil in the Arctic Ocean last year, the Interior Department said Tuesday.
* Alcoa Inc swung to a profit in the fourth quarter, helped by stabilizing prices for raw aluminum, increased sales in the higher-profit aerospace business and cost-cutting efforts.
* Former professional cyclist Lance Armstrong is slated to appear on Oprah Winfrey's "Next Chapter" on Jan. 17, at a time when people familiar with his thinking say he has been considering a confession of his alleged use of performance-enhancing drugs.
FORTRESS MOVES INTO CHINESE BAD DEBTS
Overview TELECOMS LOOK AT PAN-EUROPE NETWORK Europe's top telecoms executives are discussing setting up a pan-European infrastructure network to unite the region's fragmented national markets.
SCHRODERS DITCHES PWC AS AUDITOR Schroders Plc is dropping PWC as its auditor in favour of rival KPMG after more than 50 years.
TOP EXECUTIVES WARN CAMERON ON EU UK business leaders have warned Prime Minister David Cameron that he risks damaging the economy by taking Britain out of the European Union if he seeks renegotiation of membership.
TORIES TURN HEAT ON BETTER-OFF PENSIONERS Britain's wealthy pensioners will no longer be protected from austerity measures after the next election as politicians prepare to end their commitment to protect universal benefits.
HSBC'S PING AN STAKE SALE IN DOUBT HSBC's $9.4 billion sale of its stake in China's Ping An Insurance has been left in jeopardy after Thai buyer CP Group lost funding for some of the 15.6 percent shareholding.
AIG WEIGHS ACTION AGAINST US GOVERNMENT U.S. insurer AIG, which received the largest of all the government bailouts during the financial crisis, may sue the US government over the terms of the deal.
STRATEGIC SHAKE-UP AT MAN GROUP Hedge fund Man Group Plc said on Tuesday it would be making changes at its GLG unit, the London-based hedge fund it bought in 2010.
FORTRESS MOVES INTO CHINESE BAD DEBTS Fortress Investment Group Llc is buying a servicer of bad debts and distressed assets in China.
* Dish Network made an unsolicited bid for Clearwire, the wireless network operator, a complicated offer that threatens the existing takeover deal by the company's majority owner, Sprint Nextel.
* A former analyst at SAC Capital Advisors, the hedge fund owned by billionaire investor Steven Cohen, has given U.S. federal agents the names of about 20 people that he said engaged in insider trading, according to a court filing.
* As the board of AIG weighs whether to join a shareholder lawsuit against the United States government, several lawmakers have warned the company not to join the lawsuit.
* Jamie Dimon, the chief executive of JPMorgan Chase , has left the board of the Federal Reserve Bank of New York, a position that had stirred some controversy after the bank's big trading loss last year.
* Alcoa said that its fourth-quarter earnings met Wall Street's expectations and that it expected slightly higher demand for aluminum this year.
* Jeffrey Lacker, president of the Federal Reserve Bank of Richmond in Virginia, has warned that the central bank's efforts to stimulate growth are ineffective.
* JPMorgan Chase announced on Tuesday that it had hired Timothy Ryan, a senior Wall Street lobbyist, as its new top regulatory officer.
* Hope that Friday's face-to-face discussions between Prime Minister Stephen Harper and First Nations leaders will end protests and disruptions across Canada is fast disintegrating.
Idle No More organizers will hold their own Friday meeting for chiefs that were not invited to the talks with Harper.
* Canadian Prime Minister Stephen Harper ruled out any military intervention in Mali and said the country will work diplomatically with western allies and African countries to seek a solution.
His comments came after a closed-door meeting with President Thomas Boni Yayi of Benin, current head of the African Union, who said that the insurgency in Mali poses a terrorist threat to the whole world.
Reports in the business section:
* The Canadian Auto Workers union (CAW), facing steadily declining membership at the Detroit Three auto makers, has launched a new drive to organize about 7,000 workers at two Toyota Motor Corp assembly plants in Ontario.
* Sales and profit continue to rise but Canadian business leaders are surprisingly downbeat about the future.
Business confidence in the fourth quarter of 2012 suffered its largest drop in more than two years, according to Deloitte Canada's "CFO Signals" index that tracks the attitudes of Canadian chief financial officers.
* The Ontario government is considering asking seniors with higher incomes to chip in for their home care.
A report meant to pave the way for the province's strategy on seniors care recommends exploring the possibility of an "income-based system."
* Two Alberta-based First Nations said on Tuesday they were taking the Stephen Harper government to court over its budget legislation, adding another front in the actions aboriginals have taken across the country to protest Bill C-45 and C-38.
* Banks have had a long run of strong profits but the good times are about to become a little less because of the underlying issue of interest rates, Toronto-Dominion Bank Chief Executive Ed Clark said.
* GMP Capital Inc, one of Canada's largest independent investment dealers, cut 15 jobs on Tuesday in an effort to reduce costs and weather difficult conditions for dealers that are not housed within big banks.
The ongoing staff reductions, together with salary reductions and a "rationalization" of the firm's estate footprint, are expected to produce annual fixed cost savings of more than $5 million, GMP said.
CHINA SECURITIES JOURNAL
--China's Consumer Price Index (CPI) may have risen around 2.4 percent in December, bringing annual inflation in 2013 to about 2.7 percent, analysts and economists predicted.
--Analysts forecast that China's listed banks may have posted net profit increases of between 15 and 20 percent.
SHANGHAI SECURITIES NEWS
--A total of 11 senior analysts expected China's economic growth could be at 7.84 percent on average and inflation could rise to 2.05 percent on average in 2013.
--As China's property market showed a rebound at the end of 2012, most domestic real estate developers are optimistic that house prices would not fall sharply in 2013. But Qin Hong, head of research for the Ministry of Housing and Urban-Rural Development, said China will stick to a tighter property policy in 2013.
--Thailand's CP Group may still be able to buy a $9.4 billion stake in Ping An Insurance from HSBC, using its own capital if it cannot get funding from the China Development Bank.
CHINA DAILY (www.chinadaily.com.cn)
-- Nearly 56 percent of organizations interviewed for a report by global human resources company Hudson said they plan to increase the number of permanent staff in the first quarter of 2013.
-- The National Development and Reform Commission will cut the price of 20 kinds of medicine on the price-controlled national essential drugs list by 15 percent.
Fly On The Wall 7:00 AM Market Snapshot
Alliance Resource (ARLP) upgraded to Buy from Hold at Deutsche Bank
B&G Foods (BGS) upgraded to Overweight from Neutral at Piper Jaffray
Brinker (EAT) upgraded to Overweight from Equal Weight at Morgan Stanley
Citrix Systems (CTXS) upgraded to Buy from Hold at Jefferies
Elizabeth Arden (RDEN) upgraded to Outperform from Sector Perform at RBC Capital
Exterran Partners (EXLP) upgraded to Outperform from Neutral at Credit Suisse
FirstMerit (FMER) upgraded to Outperform from Perform at Oppenheimer
Healthcare Services (HCSG) upgraded to Buy from Hold at Benchmark Co.
KeyCorp (KEY) upgraded to Outperform from Perform at Oppenheimer
NuVasive (NUVA) upgraded to Sector Perform from Underperform at RBC Capital
PG&E (PCG) upgraded to Buy from Hold at Jefferies
Ralph Lauren (RL) upgraded to Outperform from Neutral at Macquarie
Red Robin (RRGB) upgraded to Equal Weight from Underweight at Morgan Stanley
Ross Stores (ROST) upgraded to Buy from Hold at Deutsche Bank
Urban Outfitters (URBN) upgraded to Neutral from Underperform at Macquarie
AmeriGas (APU) downgraded to Underperform from Neutral at Credit Suisse
Apollo Group (APOL) downgraded to Equal Weight from Overweight at First Analysis
Apollo Group (APOL) downgraded to Equal Weight from Overweight at Morgan Stanley
BJ's Restaurants (BJRI) downgraded to Equal Weight from Overweight at Morgan Stanley
Bank of America (BAC) downgraded to Neutral from Outperform at Credit Suisse
Boardwalk Pipeline (BWP) downgraded to Neutral from Outperform at Credit Suisse
Comerica (CMA) downgraded to Perform from Outperform at Oppenheimer
CommVault (CVLT) downgraded to Neutral from Buy at Goldman
Covanta (CVA) downgraded to Neutral from Outperform at RW Baird
Dollar General (DG) downgraded to Sector Perform from Outperform at RBC Capital
Family Dollar (FDO) downgraded to Sector Perform from Outperform at RBC Capital
First Financial Bancorp (FFBC) downgraded to Underweight from Equal Weight at Barclays
ITT Educational (ESI) downgraded to Sell from Neutral at Citigroup
Kohl's (KSS) downgraded to Underperform from Neutral at Macquarie
Macy's (M) downgraded to Neutral from Outperform at Macquarie
Metals USA (MUSA) downgraded to Hold from Buy at Deutsche Bank
Monsanto (MON) downgraded to Hold from Buy at Miller Tabak
Spectra Energy Partners (SEP) downgraded to Neutral from Outperform at Credit Suisse
Suburban Propane (SPH) downgraded to Neutral from Outperform at Credit Suisse
Walter Energy (WLT) downgraded to Hold from Buy at Deutsche Bank
Aflac (AFL) initiated with a Hold at Deutsche Bank
Lincoln National (LNC) initiated with a Hold at Deutsche Bank
MetLife (MET) initiated with a Hold at Deutsche Bank
Principal Financial (PFG) initiated with a Hold at Deutsche Bank
Prudential (PRU) initiated with a Buy at Deutsche Bank
Unum Group (UNM) initiated with a Buy at Deutsche Bank
Western Alliance (WAL) initiated with an Outperform at Wells Fargo
Clearwire (CLWR) received unsolicited $3.30 per share offer from DISH (DISH)
Apple (AAPL) working on less expensive iPhone, may come in late 2013, Dow Jones reports
Wal-Mart (WMT), Straight Talk Wireless to offer iPhone on $45 no contract unlimited plan
Goldman Sachs (GS), Morgan Stanley (MS) in talks with regulators about foreclosure settlement, Bloomberg reports
AMR (AAMRQ) said “reasonable possibility” of value for equity holders
Eli Lilly (LLY) CEO said company looking for M&A that adds revenue, not large merger, Bloomberg reports
Alcoa (AA) sees 2013 global aluminum demand growth of 7%
Said Q1 aerospace and automotive demand to remain strong
Interior Department launched assessment of Shell (RDS.A) Arctic drilling operations
Companies that beat consensus earnings expectations last night and today include:
AZZ Inc. (AZZ), Alcoa (AA), Global Payments (GPN), Apollo Group (APOL)
Companies that missed consensus earnings expectations include:
Companies that matched consensus earnings expectations include:
Alcoa (AA), Mistras (MG)
In a change of industry practice, Goldman Sachs (GS) will begin disclosing the values of its money-market mutual funds daily rather than monthly, sources say. Some of the changes will take effect as soon as today. Experts said the move could force other firms in the $2.7T industry to follow, the Wall Street Journal reports
Sony Corp. (SNE) wants to establish itself as one of the world's top-three smartphone manufacturers as part of its turnaround plan, but it doesn't see the need to acquire another handset maker to solidify its position behind Apple (AAPL) and Samsung (SSNLF), the Wall Street Journal reports
Apple (AAPL) CEO Cook is meeting with partners and government officials in China on his second visit to its second-largest market in less than a year. Analysts say the company's longer-term outlook in the market may hinge on expanding its partners to include China Mobile (CHL), Reuters reports
Pressured to improve the quality of its IPOs, China will tell underwriters and auditors of companies looking to list on mainland markets to review their financial statements and ensure that all is in order, sources say, Reuters reports
Irish Finance Minister Noonan said the government will sell at least half of its $1.3B of so-called contingent convertible capital notes in Bank of Ireland (IRE). Investment banks approached the ministry late last year indicating there was a “sizable investor interest,” Bloomberg reports
JPMorgan Chase & Co. (JPM) CEO Dimon said some top executives at the bank “acted like children” in handling an errant derivatives bet that cost the company more than $6.2B last year, Bloomberg reports
Chatham Lodging Trust (CLDT) files to sell 3.5M shares of common stock
Crosstex Energy LP (XTEX) announces offering of 7.5M common units
Summit Hotel Properties (INN) 15M share Secondary priced at $9.00
Tesoro Logistics (TLLP) 8.5M share Secondary priced at $41.70