Frontrunning: January 10
- Obama Picking Lew for Treasury Fuels Fight on Budget (BBG)
- Deutsche Bank Bank Made Huge Bet, and Profit, on Libor (WSJ)
- Spain Beats Maximum Target in First 2013 Debt Sale (BBG) - In other news, the social security fund is now running on negative?
- "Icahn is also believed to have taken a long position in Herbalife" (NYPost) - HLF +5% premarket
- Lew-for-Geithner Switch Closes Era of Tight Fed-Treasury Ties (BBG)
- Turkey Beating Norway as Biggest Regional Oil Driller (BBG)
- Greek State Firms are Facing Closure (WSJ)
- Draghi Spared as Confidence Swing Quells Rate-Cut Talk (BBG)
- China’s Yuan Loans Trail Estimates (BBG)
- SEC enforcement chief steps down (WSJ)
- CFPB releases new mortgage rules in bid to reduce risky lending (WaPo)
- Japan Bond Investors Expect Extra Sales From February (BBG)
- BOJ Said to Consider Boosting Price Forecast as Yen Falls (BBG)
- BOE Seen Refraining From More QE as Credit Plan Assessed (BBG)
Overnight Media Digest
* Deutsche Bank made at least 500 million euros ($652 million)in profit in 2008 from trades pegged to the interest rates under investigation by regulators world-wide, internal bank documents show. ()
* New mortgage rules set to be unveiled on Thursday by the Consumer Financial Protection Bureau will spell out how lenders in the United States must ensure that borrowers can repay their home loans. ()
* Morgan Stanley plans to lay off 1,600 employees, largely in its mainstay securities unit, according to people familiar with the situation. The company is focusing the cuts on senior ranks and also plans to promote a smaller number of employees to managing director this month than in any year since early 2009, one of these people said.
* Two hedge-fund rivals are squaring off over Herbalife Ltd , with one saying the nutritional-supplements maker is a pyramid scheme and the other defending the company.
* Stock-exchange operator BATS Global Markets Inc said late on Wednesday that a "system issue" allowed hundreds of thousands of transactions in a four-year period to be executed at prices that may have violated securities rules.
* Chrysler Group LLC could be forced to stage an initial public offering as a means of resolving a dispute over its value with a United Auto Workers' retiree trust that holds a 41.5 percent stake in the auto maker.
* As Congress discussed raising tax rates last month in the United States, dozens of top executives sold big chunks of company stock, saving themselves millions of dollars.
* As Boeing Co continued to wrestle with new threats to the reputation of its prized 787 Dreamliner jet, the aircraft's chief engineer defended the safety and reliability of the new plane and its innovative electrical system.
* AIG decided on Wednesday to pass on a shareholder lawsuit that accuses the U.S. government of unfairly burdening the company during its financial-crisis rescue, in a move that could snuff out a brewing controversy for the insurer.
MORGAN STANLEY TO AXE 1,600 JOBS Morgan Stanley is to cut 1,600 jobs in its institutional services business, the latest example of a Wall Street investment bank axing staff to reduce expenses.
VOW TO KEEP HOVIS 100 PCT BRITISH WASHED AWAY BY RECORD RAINFALL Premier Foods's bread division Hovis is to abandon its pledge to use only British wheat in its loaves following rain-blighted harvests.
US WARNS BRITAIN AGAINST LEAVING EU The Obama administration publicly signalled its growing concern about a possible UK exit from the European Union on Wednesday.
UBS' ORCEL ADMITS BANKS MUST CHANGE Bankers have become too arrogant and the industry must change, the chief executive of the UBS's investment banking arm told UK lawmakers.
TESCO SET TO UNVEIL SENIOR APPOINTMENTS Tesco is set to announce a management shake-up on Thursday in which the grocer will make two senior appointments to bolster its top team.
M&S TAKES PLACE AMONG BIGGEST HIGH STREET LOSERS OVER CHRISTMAS Marks & Spencer confirmed its position as one of the biggest losers over Christmas with worse than expected trading figures.
JESSOPS ENTERS ADMINISTRATION Jessops, the camera retailer, fell into administration on Thursday to become the first high street casualty of 2013.
* Morgan Stanley is planning another deep round of cuts, just a week ahead of the release of fourth-quarter earnings, which are expected to show the gains the firm has made since the financial crisis in areas like stock trading, banking and wealth management but still will be weighed down by the diminished earnings power of its fixed income business.
* Banks and other lenders will be prohibited from making home loans that offer deceptive teaser rates or require no documentation from borrowers, and will be required to take more steps to ensure that borrowers can repay, under new consumer protections in the United States to be announced on Thursday.
* President Obama will announce on Thursday that he intends to elevate Jacob Lew to be the next secretary of Treasury, officials familiar with the decision said.
* AIG will not join a lawsuit against the federal government over its $182 billion financial crisis bailout, the company said.
* Daniel Loeb, the Third Point chief, and William Ackman are locked in a battle over Herbalife, the nutritional supplements company that makes protein bars and energy shakes.
* Hanergy Holding Group of China added to its international acquisitions with MiaSolé, a thin-film solar panel manufacturer that is considered one of Silicon Valley's most promising young firms.
* Robert Khuzami, a former terrorism prosecutor who revamped the U.S. Securities and Exchange Commission's enforcement unit in the wake of the financial crisis, said on Wednesday that he was stepping down from the agency after a four-year tenure.
* A former analyst at SAC Capital Advisors who has become a crucial informant in the government's insider trading investigations avoided prison on Wednesday after a judge sentenced him to probation.
* The California State Teachers Retirement System, known as Calstrs, which is one of America's largest pension funds, began on Wednesday to divest itself of firearms holdings, a response to the schoolhouse shooting in Newtown, Connecticut, that other pension funds could follow.
SHANGHAI SECURITIES NEWS
--China's consumer price index (CPI) could rise to 2.4 percent in December from 2.0 percent of November, pushed up by a rise in food prices, analysts told the official paper.
--China has approved a number of brokerages in the southern Chinese Pearl River Delta region to sell insurance products, according to the China Insurance Regulatory Commission.
21st CENTURY BUSINESS HERALD
--New deposits in China's "big four" banks could hit 1.4 trillion yuan ($224.86 billion) in December, while new deposits in the entire Chinese banking system could reach 2 trillion, industry sources told the paper.
--China Vanke Co Ltd, China's largest real estate developer by revenue, said on Wednesday that property firms in the country still face significant pressure from large stockpiles, which would keep house prices subdued.
CHINA DAILY (www.chinadaily.com.cn)
--China's communist party disciplinary authority punished more than 160,000 people last year, including around 4,700 high-level officials, the Central Commission for Discipline Inspection said on Wednesday. The figure marked a 12.5 percent rise against 2011.
--Chinese Premier Wen Jiabao said that China will increase its basic pension for enterprise retirees by 10 percent at a State Council executive meeting on Wednesday.
THE GLOBE AND MAIL
* Ontario Premier Dalton McGuinty urged elementary teachers not to walk off the job on Friday and vowed to punish them with hefty fines if they do. The Liberals will file an application on Thursday morning with the Ontario Labour Relations Board, seeking to block the illegal strike where 76,000 teachers are planning to voice their opposition to a government-imposed contract that froze wages and cut sick days.
* Alberta Premier Alison Redford continued to give veiled warnings and mixed messages about her looming budget, opening the door to eventual tax hikes with what one critic calls a "trial balloon."
Reports in the business section:
* Buttressing Canada's position in the global race to export liquefied natural gas, TransCanada Corp said on Wednesday that it plans to build a $5 billion pipeline to transport British Columbia shale gas to the West Coast and onward to lucrative Asian markets.
* Porter Aviation Holdings Inc said it will provide regular service despite a strike by 22 employees who fuel the aircraft, after talks broke down on Wednesday.
* A small Inuit community on Hudson Bay is appealing for help after a dozen killer whales, one of which is bleeding, were trapped in nearby ice. Inukjuak mayor Peter Inukpuk said they are becoming agitated and panicked, at times attempting to come up to the surface all at once, gasping for air.
* British Columbia's deep-rooted environmentalism is about to get a much stronger counterpoint as a growing number of energy giants establish a corporate presence on the West Coast. Chevron Corp, Royal Dutch Shell PLC, Malaysian oil and gas company Petronas, BG Group, Enbridge Inc , TransCanada Corp and Kinder Morgan Inc have opened offices, are expanding or planning to set up offices in Vancouver or nearby.
* Ontario Municipal Employees Retirement System (OMERS) has sold half its stake in TD Canada Trust Tower to Public Sector Pension Investment Board for about $465 million, veteran real estate analyst Neil Downey, managing director, global equity at RBC Capital Markets, said in a note to investors. The deal is probably the largest real estate swap at the highest per-square-foot price to date in Canadian commercial property history.
Fly On The Wall 7:00 am Market Snapshot
ACE Ltd. (ACE) upgraded to Outperform from Market Perform at Wells Fargo
Alkermes (ALKS) upgraded to Overweight from Equal Weight at Morgan Stanley
CGG Veritas (CGV) upgraded to Neutral from Sell at Citigroup
Credit Suisse (CS) upgraded to Buy from Neutral at Nomura
Delta Air Lines (DAL) upgraded to Buy from Sell at Goldman
Evercore Partners (EVR) upgraded to Buy from Neutral at Goldman
News Corp. (NWSA) upgraded to Outperform from Market Perform at Bernstein
Ryder (R) upgraded to Buy from Neutral at Goldman
Synchronoss (SNCR) upgraded to Outperform from Market Perform at Wells Fargo
Taubman Centers (TCO) upgraded to Overweight from Equal Weight at Evercore
Wynn Resorts (WYNN) upgraded to Buy from Neutral at Lazard Capital
AIG (AIG) downgraded to Market Perform from Outperform at Wells Fargo
CBOE Holdings (CBOE) downgraded to Market Perform from Outperform at Raymond James
CIT Group (CIT) downgraded to Neutral from Buy at Janney Capital
CSX (CSX) downgraded to Neutral from Buy at Goldman
Chesapeake (CHK) downgraded to Neutral from Buy at SunTrust
EMC (EMC) downgraded to Equal Weight from Overweight at Morgan Stanley
Hertz Global (HTZ) downgraded to Underweight from Overweight at Morgan Stanley
Legg Mason (LM) downgraded to Market Perform from Outperform at Keefe Bruyette
MICROS (MCRS) downgraded to Outperform from Top Pick at RBC Capital
Macerich (MAC) downgraded to Equal Weight from Overweight at Evercore
MarketAxess (MKTX) downgraded to Market Perform from Outperform at Keefe Bruyette
Microsoft (MSFT) downgraded to Equal Weight from Overweight at Morgan Stanley
Norfolk Southern (NSC) downgraded to Neutral from Buy at Goldman
Penn National (PENN) downgraded to Neutral from Buy at Lazard Capital
Red Robin (RRGB) downgraded to Neutral from Buy at BofA/Merrill
RenaissanceRe (RNR) downgraded to Market Perform from Outperform at Wells Fargo
St. Jude Medical (STJ) downgraded to Market Perform from Outperform at BMO Capital
U.S. Silica (SLCA) downgraded to Hold from Buy at Jefferies
VeriFone (PAY) downgraded to Sector Perform from Outperform at RBC Capital
ADT Corp. (ADT) initiated with an Outperform at William Blair
Aflac (AFL) initiated with a Buy at Citigroup
Capital Senior Living (CSU) initiated with an Outperform at Imperial Capital
Hartford Financial (HIG) initiated with a Buy at Citigroup
Lincoln National (LNC) initiated with a Neutral at Citigroup
LinkedIn (LNKD) initiated with an Outperform at CLSA
MetLife (MET) initiated with a Neutral at Citigroup
Principal Financial (PFG) initiated with a Neutral at Citigroup
Prudential (PRU) initiated with a Buy at Citigroup
Reinsurance Group (RGA) initiated with a Neutral at Citigroup
SourceFire (FIRE) initiated with a Market Perform at Raymond James
Torchmark (TMK) initiated with a Neutral at Citigroup
Unum Group (UNM) initiated with a Neutral at Citigroup
Credit Suisse (CS) agreed to sell ETF business to BlackRock (BLK)
AIG (AIG) CEO Benmosche told CNBC that Starr bailout lawsuit is about fairness but the company won’t join. Said shareholders best served by company looking forward, not back
Expects continued upward momentum for company in 2013
GeoEye (GEO), DigitalGlobe (DGI) received Justice Department antitrust clearance
Vivendi (VIVHY) to appeal ruling in Liberty Media (LMCA) suit “'to fullest extent possible,” Bloomberg reports
MGM Resorts (MGM) CEO told CNBC sees involvement in Internet poker by year end
Bayer's (BAYRY) Skyla pregnancy prevention system approved by FDA
Companies that beat consensus earnings expectations last night and today include:
Companies that missed consensus earnings expectations include:
Texas Industries (TXI), Richardson Electronics (RELL), DragonWave (DRWI), Ruby Tuesday (RT), Raptor Pharmaceuticals (RPTP)
- BATS Global Markets (BATS) said that a "system issue" allowed hundreds of thousands of transactions in a four-year period to be executed at prices that may have violated securities rules. At issue are rules the SEC has in place requiring orders to go to the best bid or offer in the market, the Wall Street Journal reports
- Major banks pushed to complete an $8.5B legal settlement with federal regulators this past weekend so they could book the deal's costs in their Q4 results and present a cleaner slate to investors in 2013, sources say, the Wall Street Journal reports
- Sprint Nextel (S) is under no pressure to raise its $2B offer for Clearwire (CLWR) to beat a higher bid by Dish Network (DISH) as it holds several trump cards it can play to thwart its rival, sources say, Reuters reports
- Apple (AAPL) CEO Tim Cook met with China Mobile (CHL) Chairman Xi Guohua today to discuss "matters of cooperation," a China Mobile spokesman said, raising hopes that a deal between the two may move forward, Reuters reports
- Berkshire Hathaway’s (BRK.A) Warren Buffett, who oversees stakes in some of the largest U.S. banks, said the nation’s lenders have rebuilt capital to the point where they no longer pose a threat to the economy, Bloomberg reports
- The $500B market for leveraged loans, one of the last to depend on facsimile machines, is turning to computers to save time and money as stock, bond and commodities exchanges have done for years. More than four million faxes with information ranging from quarter-end payments to interest rates were received by loan custodians in 2012, Bloomberg reports
ArcelorMittal (MT) 104M ordinary share Secondary priced at $16.75
Duke Realty (DRE) files to sell 30M shares of common stock
Inergy Midstream (NRGM) files to sell 67.11M common units for holders