- SURPRISE - Goldman Sachs won a preliminary victory to limit losses from a wave of erroneous trades that roiled U.S. options markets (WSJ)
- HP’s Whitman abandons 2014 revenue growth target (FT) - just keep doing those buybacks and ignore CapEx: revenue growth estimated in 2022
- Republicans in Echo Before Big Burn Defy Affordable Care (BBG)
- China's banks to take next step in rate reform push (Reuters)
- Berlin’s Consistency on Greece’s Rescue (FT) and lack thereof
- Summers as Obama Voice of Authority Rides Car Rescue in Fed Race (BBG)
- Cuomo in Manure Fight as New York Promotes Yogurt (BBG)
- Yellen’s Ties From London to Shanghai Bypass White House (BBG)
- Sanctions Gap Allows China to Import Iranian Oil (WSJ)
- Bo Xilai Lashes Out at Wife's Details of Wealth (WSJ), Defiant Bo denies bribery charge as China trial opens (AFP)
- Czech president to dissolve parliament on August 28 to trigger snap election (Reuters)
- Hands off Detroit’s final treasures! (Salon)
Overnight Media Digest
* A U.S. investigation into Microsoft Corp's relationships with business partners that allegedly bribed foreign officials in return for contracts includes activity in Russia and Pakistan, a sign that the probe is wider reaching than previously known, according to people familiar with the matter.
* Alibaba Group Holding Ltd founder and Chairman Jack Ma will take a seat on the board of the operator of China's most popular third-party smartphone Web browser, the most recent attempt by the e-commerce company to appeal to China's growing number of smartphone users.
* The arrest by Chinese authorities of two private corporate investigators could indicate the latest effort by authorities to limit public access to sensitive private records. Briton Peter Humphrey and his American wife and business partner, Yu Yingzeng, were arrested in recent days, according to a family statement. They run investigations firm ChinaWhys Co and were detained six weeks ago in Shanghai on suspicion of purchasing private-identification information, the family said.
* Facebook Inc Chief Executive Mark Zuckerberg said the company is teaming up with six others to help bring Internet access to more than four billion people who still don't have it. The group, called internet.org, will attempt to aid emerging economies by making Web access more affordable, use data more efficiently and help business drive access to more users.
* Whole Foods Market Inc wants to shed its "whole paycheck" reputation. The upscale grocer, known for its pricey organic products, is increasingly emulating the discount tactics used by traditional supermarkets. It is also moving beyond the realm of grass-fed beef with more lower-priced items like frozen meatballs and vacuum-packed fish fillets.
* Short sellers are facing their worst losses in at least a decade, a Wall Street Journal analysis has found, as many of the rising stocks they bet against have only continued to soar. That has stung several high-profile hedge-fund managers, including William Ackman and David Einhorn, who have placed prominent short bets.
Financial institutions, including banks and credit card issuers, will face a bill of about 1.3 billion pounds to redress consumers who were mis-sold protection for identity theft and credit card fraud.
Minutes of the U.S. Federal Reserve's July policy meeting showed that Fed officials discussed lowering the unemployment threshold, now set at 6.5 percent, for the first increase in rates. With current U.S. unemployment at 7.4 percent, a change in the threshold would reassure investors that the Fed will not move to raise rates any time soon.
GIC Private Ltd, Singapore's sovereign wealth fund, is in talks to buy Blackstone Group's stake in the Broadgate office and retail complex in London for 1.7 billion pounds, in what would be one of the biggest UK property deals since the financial crisis.
AIG's proposed $4.8 billion sale of its aircraft leasing unit suffered a setback after a Chinese-led group pulled out of the bid, underscoring doubts about the ability of Chinese entities to secure approvals and funding for large overseas deals.
British lender Lloyds Banking Group is selling a German subsidiary and a portfolio of loans for more than 500 million pounds as it seeks to streamline its business and comply with stringent regulatory capital demands.
Danish wind turbine maker Vestas ousted Chief Executive Ditlev Engel, hoping to restore investor confidence following a string of profit warnings and pending lawsuits from angry shareholders.
* The confusion over exactly when the Federal Reserve will begin scaling back its huge economic stimulus efforts only deepened Wednesday, with the release of a summary of the deliberations at the central bank's last meeting in late July.
* A closely-watched survey of manufacturing-sector activity in China provided the latest indication that the world's second-largest economy appears to have bottomed out after many months of slowing growth.
* A fierce legal battle that pits financial firms against the retailing industry took a new turn on Wednesday when the Federal Reserve said it would appeal a recent decision involving debit card transaction fees.
* United Parcel Service Inc has told its white-collar employees that it will stop providing health care coverage to their spouses who can obtain coverage through their own employers, joining an increasing number of companies that are restricting or eliminating spousal health benefits.
* The beleaguered Indian rupee continued its steep descent on Wednesday, hitting a record low of 64.54 to the dollar amid global nervousness about the timing and scale of the Federal Reserve's likely scaling back of its bond-buying program.
* Some of the technology industry's biggest names are finding out that once you fall behind, it is pretty hard to catch up. However, the bad earnings news from older, big tech companies does not appear to be spreading to more youthful Internet companies like Google or Salesforce.com, which provide their software as a service over the Internet.
* Bloomberg LP said on Wednesday that it was making several changes to its journalism operation after an investigation commissioned by the company detailed problems with the past use of client data.
THE GLOBE AND MAIL
* New federal electoral maps have been finalized in Quebec, British Columbia and Saskatchewan, setting the stage for the 2015 election races in each province. Quebec's commission complained that onerous demands from MPs for riding name changes undermined the commission's authority, while the redrawn map in Saskatchewan could lead to more competitive races in the province's cities, despite complaints by Stephen Harper's Conservatives.
* The discount mortgages that stoked the Canadian housing boom are disappearing, increasing the likelihood of a correction in home values. On Thursday, Royal Bank of Canada will hike its five-year fixed-rate mortgage to 3.89 per cent, one day after the Bank of Montreal raised its rate to 3.79 per cent. The other major lenders are all moving in the same direction.
* The Ontario government wants assurances that the province will benefit economically from TransCanada Corp's pipeline project to ship crude from Alberta to refineries and export terminals in eastern Canada.
* A multi-million dollar public inquiry examining whether privileged Albertans received preferential access to the health-care system acknowledged isolated cases of queue jumping on Wednesday - including the infamous incident in which Calgary Flames hockey players received vaccinations for the H1N1 virus ahead of other citizens. It also concluded that allegations of political influence in queue-jumping cases were unfounded.
* Canada's battle with the European Union over a proposal to label oil sands crude dirty is set to intensify as the Alberta-based industry eyes exports from the country's East Coast. Natural Resources Minister Joe Oliver has played down the likelihood of a formal complaint to the World Trade Organization against the bloc's so-called fuel quality directive, which gives oil sands-derived fuel a greenhouse gas intensity value that is 22 percent higher than conventional crudes.
CHINA SECURITIES JOURNAL
-- China's Premier Li Keqiang said on Wednesday at a State Council meeting that China would work to reduce bureaucratic hurdles and decentralize government functions.
-- Yang Xiuyu and Qin Zhihui, the founder and an employee of a marketing company in Beijing, were detained for fabricating online information that had a defamatory effect, Chinese police said on Wednesday.
-- China's coastal provinces are evacuating residents and tourists as a typhoon with wind speeds close to 120 kilometers per hour approaches land, said local authorities on Wednesday.
-- Shanghai will explore opportunities that arise from a free trade zone trial, said the city's vice mayor Zhou Bo on Wednesday. The government will abolish more than 10 regulations in order to free up the market, he added.
-- A study conducted by Tian Guoliang, a professor at China's official Central Party School revealed that corruption in China's government exists at higher levels than it did before, while the sums involved in bribery cases have risen.
-- The gifting of extravagant moon cakes is contrary to the original sentiment of the Chinese Mid-Autumn Festival, according to an editorial in the official paper. Regulators have recently implemented checks to ensure that public funds are not used for the purpose of gifting overly luxurious moon cakes.
Fly On The Wall 7:00 AM Market Snapshot
Canadian Pacific (CP) upgraded to Outperform from Neutral at Credit Suisse
Marathon Oil (MRO) upgraded to Outperform from Market Perform at Raymond James
Microsoft (MSFT) upgraded to Buy from Neutral at Nomura
Precision Castparts (PCP) upgraded to Outperform from Market Perform at Wells Fargo
H.B. Fuller (FUL) downgraded to Underperform from Neutral at Longbow
NII Holdings (NIHD) downgraded to Underweight from Equal Weight at Morgan Stanley
Target (TGT) downgraded to Buy from Strong Buy at ISI Group
Target (TGT) downgraded to Underperform from Market Perform at William Blair
Telecom Italia (TI) downgraded to Hold from Buy at Societe Generale
Vanguard Health (VHS) downgraded to Sector Perform from Outperform at RBC Capital
BioCryst (BCRX) initiated with an Outperform at Wells Fargo
Cimarex Energy (XEC) initiated with a Neutral at Citigroup
Regeneron (REGN) initiated with an Outperform at Oppenheimer
SM Energy (SM) initiated with a Neutral at Citigroup
Tesla (TSLA) initiated with a Hold at Stifel
Vertex (VRTX) initiated with an Outperform at Oppenheimer
Zynga (ZNGA) initiated with a Hold at Benchmark Co.
Hewlett-Packard (HPQ) CEO Whitman said “confident” in turnaround progress
HP sees continued weak enterprise spending environment, continued weakness in PC segment in Q4. Said demand in China is soft “across the board”
Barrick Gold (ABX) to divest Yilgarn South to Gold Fields (GFI), backs FY13 production view
Wells Fargo (WFC) said to cut 2,300 mortgage lending jobs, Bloomberg reports
Onyx (ONXX) talks with Amgen (AMGN) move past drug trial data dispute, Reuters reports
Kratos Defense (KTOS) awarded Department of Homeland Security CMaaS BPA valued at $6B
Williams (WMB) backs FY13-FY15 guidance of 20% annual dividend growth
Companies that beat consensus earnings expectations last night and today include:
Jiayuan.com (DATE), AFC Enterprises (AFCE), Synopsys (SNPS), Hain Celestial (HAIN), L Brands (LTD)
Companies that missed consensus earnings expectations include:
Hormel Foods (HRL), Sears Holdings (SHLD), Stage Stores (SSI), ValueVision (VVTV)
Companies that matched consensus earnings expectations include:
Safe Bulkers (SB)
- The SEC will soon put CEO compensation back into the spotlight when it proposes a long-delayed rule requiring companies to disclose the pay gap between chief executives and rank-and-file employees, the Wall Street Journal reports
- Goldman Sachs (GS) won a preliminary victory to limit losses from a wave of erroneous trades that roiled U.S. options markets on Tuesday as U.S. options-exchange officials (NYX, NDAQ, CBOE) canceled most of the trades caused by a technical glitch in a Goldman trading system, sources say. That could reduce potential losses for Goldman but hit a broad swath of trading firms that were on the other side of those transactions, the Wall Street Journal reports
- Abercrombie & Fitch (ANF), Aeropostale (ARO) and American Eagle Outfitters (AEO) have fallen out of fashion with fickle U.S. teen shoppers and aren't likely to win back their business anytime soon. They’re more eager to go to low-cost, fast-fashion chains like Zara, Forever 21 and H&M, Reuters reports
- Officials in Florida, Texas and North Carolina are pushing back against the U.S. government's attempt to block the proposed merger of American Airlines (AAMRQ) and US Airways (LCC), saying the combined company would benefit their local economies, Reuters reports
- The roadblocks to Hewlett-Packard (HPQ) turnaround are mounting as CEO Meg Whitman dropped her prediction that revenue would rise next year as PC sales stabilized. PC shipments are slumping for longer than Whitman had foreseen, there’s weak demand for enterprise hardware and services, and competitors are siphoning away sales with aggressive pricing, Bloomberg reports
ExOne (XONE) files to sell 2.66M shares of common stock
MusclePharm (MSLP) files to sell 780,000 shares for holders
ParkerVision (PRKR) files to sell 3.99M shares for holders