Frontrunning: January 31

Tyler Durden's picture
  • Risky Student Debt Is Starting to Sour (WSJ)
  • Political scandal in Spain as PP secret accounts revealed (El Pais)
  • New York Times claims Chinese hackers hijacked its systems (NYT)
  • Spain's Rajoy, ruling party deny secret payment scheme (Reuters)
  • Iran crude oil exports rise to highest since EU sanctions (Reuters)
  • BlackBerry 10’s Debut Fizzles as U.S. Buyers Left Waiting (BBG)
  • Costs drag Deutsche Bank to €2.2bn loss  (FT)
  • And the gaming of RWA continues - Deutsche Bank Beats Capital Goal as Jain Shrugs Off Loss (BBG)
  • More fun out of London - Barclays, RBS May Pay Billions Over Improper Derivatives Sales (BBG)
  • Hagel to face grilling by Senate panel on Mideast, budget (Reuters)


Overnight Media Digest


* Israel bombed a suspected shipment of anti-aircraft missiles in Syria on Wednesday, according to regional and U.S. officials, in its most ambitious strike inside its neighbor's territory in nearly two chaotic years of civil war there.

* Research in Motion Ltd executives excused more than a year of delays by saying they wanted the next BlackBerrys to be just right. But the smartphones that took more than two years to develop won't be available for the key U.S. market until mid-March, when carriers are expected to complete their tests.

* The U.S. economy shrank for the first time in more than three years in the fourth quarter, underscoring the halting nature of the recovery. But the strength of consumer spending and business investment suggested that the economy will grow, albeit slowly, this year.

* The U.S. Treasury for the first time auctioned holdings in U.S. banks that had missed a series of dividend payments, allowing the government to close out financial-crisis era investments only at steep discounts.

* Facebook reported a 40 percent fourth-quarter revenue jump as it ramped up its mobile business and offered new tools to advertisers, but the firm's shares slipped in after-hours trading.

* Boeing Co executives said it was business as usual despite the crisis surrounding its 787 Dreamliner, though airlines worldwide made preparations for an extended grounding of the aircraft.

* Illinois took the rare step Wednesday of postponing a bond auction just hours before it was expected to launch, as concerns grew among investors over the state's deep pension hole.



FLEE 'SAFE' SOVEREIGN DEBT, SAYS HASENSTAB - The man who oversees 175 billion dollars in bonds for Californian asset manager, Franklin Templeton, says its time to get out of government debt now before it is too late.

UNION REQUESTS IAG MEETING ON IBERIA - The chief executive of International Airlines Group, Willie Walsh will reject a request from a pilots' union to discuss the restructuring of Iberia.

MPS ATTACK BARCLAYS OVER BONUS CULTURE - The parliamentary commission on banking standards accused Barclays of empty rhetoric, tearing into the bank's remuneration committee.

FACEBOOK MOBILE AD GROWTH DRIVES SALES - An aggressive advertising drive by the Facebook during the U.S. presidential elections and shopping season saw the website post its first quarterly revenue growth since going public.

DEUTSCHE BANK CHIEFS MAINTAIN COURSE - To the dismay of analysts and some investors, Deutsche Bank's Anshu Jain and Jurgen Fitschen are firmly rejecting the need for the bank to raise more capital.

RIMLESS BLACKBERRY HOPES TO REGAIN TOUCH - The struggling handset maker Blackberry is taking a gamble by launching two touchscreen smartphones in a direct challenge to Apple and Samsung.

ÇUKUROVA WINS RIGHT TO CONTROL TURKCELL - A court decision by the UK Privy Council will allow one of Turkey's richest men, Mehmet Karamehmet, the chance to regain control of the country's biggest mobile phone operator, Turkcell.



* For the last four months, Chinese hackers have persistently attacked The New York Times, infiltrating its computer systems and getting passwords for its reporters and other employees.

* Research in Motion Ltd introduced a new operating system and a new generation of phones, along with a new corporate name, with the hope of restoring its products' status as a symbol of executive cool.

* The U.S. government played a role in slowing the economic recovery as cuts in military spending and other factors overwhelmed the Federal Reserve's expanded campaign to spur growth.

* Despite two serious safety failures and new questions about the reliability of its lithium-ion batteries, Boeing Co's chief executive said Wednesday that he saw no reason to retreat from using the new but volatile technology on its 787 jets.

* Chrysler, the smallest of the American automakers, on Wednesday reported a big increase in 2012 earnings that helped its Italian parent company, Fiat SpA, become profitable for the year as well.

* Time Inc joined the many news organizations trying to tighten their belts in a tough advertising climate by announcing layoffs and offering employees buyout packages on Wednesday.

* In a legal dispute that had been closely watched by multinational companies and environmental organizations, a Dutch court dismissed most of the claims brought by Nigerian farmers seeking to hold Royal Dutch Shell accountable for damage by oil spilled from its pipelines.




-- Livzon Pharmaceutical Group Inc said in a statement it will become the third company to move its dollar-denominated B shares to the Hong Kong H-share market.

-- Metallurgical Corporation of China Ltd said it expected to book a loss of 7.2 billion yuan ($1.16 billion) in 2012.


-- Galaxy Securities could give up its plan for a dual listing of yuan-denominated shares in Shanghai and Hong Kong, but it still expects to list H-shares in May.


-- The State Council, China's cabinet, has approved an energy consumption target as part of efforts to correct overuse and foster greener growth. The government aims to keep total energy consumption below 4 billion metric tonnes of standard coal equivalent by 2015, with electricity consumption below 6.15 trillion kwh.

-- Domestic and foreign inbound mergers and acquisition deals by strategic investors fell to a five-year low last year, but activity will rebound in 2013, a report by accounting firm PricewaterhouseCoopers said.


Corp Fin

* Germany plans a modest reform of its banking sector that would put a cap on risky activities but not lead to the breakup of banks or significantly impair big institutions like flagship lender Deutsche Bank, according to a draft law seen by Reuters.

* Prosecutors are investigating the former management of Italy's troubled Monte dei Paschi bank for bribery and fraud, judicial sources said on Wednesday, as pressure grew on the Bank of Italy and bourse watchdog Consob.

* Endo Health Solutions Inc has held talks in recent weeks with drugmakers potentially interested in buying the maker of pain relief medication, people familiar with the matter said.

* Russian state technology firm Rusnano is planning to sell through a private placing of 10 percent of its shares between March and June, its chief executive Anatoly Chubais said in an interview with the Interfax news agency.

* Quintiles Transnational Corp, the largest provider of testing services to drugmakers, has chosen Morgan Stanley, Barclays Plc and JPMorgan Chase & Co as joint bookrunners for a planned initial public offering, people familiar with the matter said.

* Germany's second-biggest lender Commerzbank by 2015 plans to shed half of the workforce at its mortgage unit Hypothekenbank Frankfurt, formerly known as Eurohypo, according to an internal paper obtained by Reuters



Fly On The Wall 7:00 AM Market Snapshot



Arthur J. Gallagher (AJG) upgraded to Buy from Neutral at BofA/Merrill
Arthur J. Gallagher (AJG) upgraded to Outperform from Market Perform at Keefe Bruyette
AudioCodes (AUDC) upgraded to Outperform from Perform at Oppenheimer
Citrix Systems (CTXS) upgraded to Buy from Neutral at BofA/Merrill
Core Laboratories (CLB) upgraded to Outperform from Market Perform at FBR Capital
MB Financial (MBFI) upgraded to Outperform from Market Perform at Keefe Bruyette
Vale (VALE) upgraded to Buy from Neutral at BofA/Merrill


Comerica (CMA) downgraded to Underperform from Market Perform at Bernstein
Endo Health (ENDP) downgraded to Perform from Outperform at Oppenheimer
Facebook (FB) downgraded to Hold from Buy at Stifel Nicolaus
Facebook (FB) downgraded to Market Perform from Outperform at BMO Capital
Facebook (FB) downgraded to Neutral from Buy at Citigroup
Fusion-io (FIO) downgraded to Neutral from Outperform at Credit Suisse
Fusion-io (FIO) downgraded to Neutral from Overweight at JPMorgan
Fusion-io (FIO) downgraded to Neutral from Overweight at Piper Jaffray
KeyCorp (KEY) downgraded to Underperform from Market Perform at Bernstein
Netgear (NTGR) downgraded to Equal Weight from Overweight at Barclays
Regions Financial (RF) downgraded to Underperform from Market Perform at Bernstein
Seagate (STX) downgraded to Underweight from Equal Weight at Barclays
Velti (VELT) downgraded to Market Perform from Outperform at Wells Fargo
Zions Bancorp (ZION) downgraded to Underperform from Market Perform at Bernstein


Cubist (CBST) initiated with a Buy at Janney Capital
Depomed (DEPO) initiated with a Buy at Janney Capital
Forest Labs (FRX) initiated with a Buy at Janney Capital
NPS Pharmaceuticals (NPSP) initiated with a Buy at Janney Capital
Salix (SLXP) initiated with a Buy at Janney Capital
Santarus (SNTS) initiated with an Outperform at Leerink


Apollo (APO), Metropoulos acquired majority of Hostess snack cake business for $410M
Annaly Capital (NLY) to acquire CreXus (CXS) for $872M
ACI Worldwide (ACIW) acquired Online Resources (ORCC) for $3.85 per share or $263M in cash
Facebook (FB) said mobile driving greater engagement
Said search could be “meaningful” business in the future
Said more clients using the site for “new launches”
Capital Southwest (CSWC) sold Heelys for $2.25 per share to Sequential Brands
Las Vegas Sands (LVS) said U.S. market saturated or near saturated
Cabot (CBT) remains cautious in near-term, cited mixed results across portfolio
Lucas Energy (LEI) cut staff by 40%, to cut 2013 expenses by 40% vs. 2012
Cardinal Health (CAH) reorganizing medical segment organization
AstraZeneca (AZN) said no share repurchases will take place in 2013


Companies that beat consensus earnings expectations last night and today include:
Dunkin' Brands (DNKN), Time Warner Cable (TWC), Whirlpool (WHR), AstraZeneca (AZN), ConocoPhillips (COP), Ameriprise (AMP), Silicon Graphics (SGI), Quantum (QTM),  Owens-Illinois (OI), Facebook (FB), Qualcomm (QCOM), Electronic Arts (EA)

Companies that missed consensus earnings expectations include:
Destination Maternity (DEST), Aetna (AET), Regis (RGS), Ball Corp. (BLL), Murphy Oil (MUR), Cabot (CBT), Las Vegas Sands (LVS)

Companies that matched consensus earnings expectations include:
Callaway Golf (ELY), Knight Transportation (KNX)


  • Investors in Chesapeake Energy (CHK) cheered when it announced that CEO Aubrey McClendon will leave, but its problems won’t end there. Chesapeake cannot count on rising natural prices to help bail it out, and the company still needs to sell at least $4B in assets in 2013 to keep afloat, the Wall Street Journal reports
  • The yen's recent drop is giving hard-hit corporate Japan its biggest break in years, raising hopes of a long-awaited earnings recovery. Daiwa Securities estimates that profit growth at the top 200 Japanese companies will nearly double to 13% for the fiscal year through March, reversing a 16% decline in the previous year, assuming exchange rates remain roughly at current levels for two months, the Wall Street Journal reports
  • Glencore (GLNCY) is becoming a Russian oil trade leader from an outsider by mending fences in just one year with Rosneft, and is extending its grip to a sector where it played second fiddle to companies such as rival trader Vitol or Royal Dutch Shell (RDS.A), Reuters reports
  • Citigroup (C) is looking to pull out of consumer banking in more countries in an effort to lower costs and boost profits, sources say, Reuters reports
  • Diminishing rubber supplies and record car sales are extending a five-month bull market that’s poised to raise costs for tire makers (GT, BRDCY, CTB), Bloomberg reports
  • Johnson & Johnson (JNJ) President Andrew Ekdahl told jurors the company recalled 93,000 all-metal hip implants because they “did not meet the clinical needs for the product” and not because they were unsafe, Bloomberg reports


Adecogro (AGRO) 13.9M share Spot Secondary priced at $8.00
AmeriGas (APU) files to sell 29.57M common units for holders
Fleetmatics (FLTX) 7M share Secondary priced at $25.00
Golar LNG Partners (GMLP) announces offering of 3.9M common units
Idera Pharmaceuticals (IDRA) files to sell 9.08M shares of common stock for holders
Keryx (KERX) 6.58M share Spot Secondary priced at $8.49
TRI Pointe Homes (TPH) 13.689M share IPO priced at $17.00
Towerstream (TWER) to offer common stock
Vanguard Natural (VNR) commences offering of 8M common units

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ss123's picture

Now they're using the term "sub-prime" for student loan debt.

Since most kids that get college loans start out broke, most are "sub-prime".

I wonder why they're starting to use the same terms used in the housing bubble collapse?

No Euros please we're British's picture

Dunno? Is it because GS are selling the debt as triple A rated investment bonds?

EscapeKey's picture

Either way the fix will no doubt be to hand the bankers lots of money (after all, ALL bank investments are now entirely risk free or the central banks will buy the troubled assets!), and tell the students to go fxxx themselves.

And the establishment has brainwashed economics students into believing this is for the benefit of the common man.

SWRichmond's picture

"Exclusive: Iran crude oil exports rise to highest since EU sanctions"

Well of course they did. Their currency collapsed and they're hungry for forex. Better get printing, Ben!

EscapeKey's picture

It actually stabilized after the initial devaluation.

Headbanger's picture

UPS just missed on earnings and blames Sandy.  So funny


And they just lowered guidance for 2013 blaming it on even moar hurricanes


Sudden Debt's picture

I'LL BE BACK! said sandy...

monad's picture

When they were a private company they didn't blame anyone. Then they started hiring "professionals with beneficial experience outside the scope of their expertise" - number juggling weasels like Paul Krugman, instead of tried & true, good old school advancement by merit. Oops

Sudden Debt's picture

an crude oil exports rise to highest since EU sanctions


they use the same tactics that prevents money flooding out of Europe and immigrants flooding in I guess...

spankfish's picture

Does this mean Spain is in the shitter?  Who da thunk... corrupt politicians, I thought we had that market cornered.  I am sure Wall St. has an algo for producing corrupt politicians.

Sudden Debt's picture

It's like when I fixed the plumbing in the bathroom myself...

it was fixed as long as you didn't tough it BECAUSE THAN THE FLOOD WOULD GO TO THE LIVING ROOM!

I still think my wife broke it on purpose because I think I did a good job...

EscapeKey's picture

"corrupt politician"... now, there's a redundancy...

Orly's picture

The thieves are starting to turn on themselves and each other.

How else do you explain this...

Political scandal in Spain as PP secret accounts revealed.

Coupled with this?

Prosecutors are investigating the former management of Italy's troubled Monte dei Paschi bank for bribery and fraud, judicial sources said on Wednesday, as pressure grew on the Bank of Italy and bourse watchdog Consob.

It's about to get interesting.  If only there could be a whistleblower in the States...say a former Golden Slacks type-person...

But maybe that's getting too happy?


Stuntgirl's picture

It's an unforeseen (by me, maybe i'm slow) consequence of the diminishing pile of cash to steal from.

I really did expect corporatism to get stronger, but the corruption being uncovered in Spain is EXCLUSIVELY due to cannibalization. That, and before, you could pay someone enough to accept a scapegoat role. Not anymore. Barcenas will sooner take the whole thing down than go down alone.

I sort of weirdly admire his huge balls.

LongSoupLine's picture

None of this fucking matters...

Jeremy "Professor fullretard" Siegel just said DOW 15,000 is a "guarantee" by end of 2013.

Fucking shill asshole. I want a full investigation into his personal finances. I know that crooked fuck is paid off.

Shell Game's picture

Blue Pill dreams are strong, Soup.  We've been painfully observinging the self-perpetuating effect of this collective dream for years.  Of course, none of them will see it coming and call those who did - terrorists.