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Frontrunning: August 23

Tyler Durden's picture




 
  • Lew warns Congress to strike debt ceiling deal (FT)
  • Central-Bank Moves Blur the View (WSJ)
  • Brazil, Indonesia launch measures to shore up their currencies (FT)
  • More mainstream media reminded about Fukushima - Radioactive ground water under Fukushima nears sea (AP)
  • Fukushima inspectors 'careless', Japan agency says, as nuclear crisis grows (Reuters)
  • New York Banker Arrested on Rape Charges in East Hampton (NYT)
  • This time they mean business, for real: CFTC Moves to Rein In High-Speed Traders (WSJ)
  • Britain operates secret monitoring station in Middle East (Reuters)
  • Moody’s considers downgrading top US banks (FT)
  • China's Bo calls wife mad after she testifies against him (Reuters)
  • JPMorgan Sub-New Normal Growth Seen Vexing Next Fed Chief (BBG)
  • SEC calls for cooling-off period for more staff (Reuters)
  • Paralyzed Nasdaq opted for caution over speed in restoring trade (Reuters)
  • 17-minute trading glitch put Goldman’s reputation on the line (FT)
  • Record Bank Rally in Southern Europe May End on Economy (BBG)

 

Overnight Media Digest

WSJ

* The United States began refining its military options for possible strikes in Syria, officials said, and initiated diplomatic efforts to craft an international response to allegations that Syria's government killed over 1,100 civilians with chemical weapons.

* Canada's landlocked oil-sands producers have sought to access markets beyond North America in recent years, a quest that has taken on greater urgency as U.S. crude output booms. But with few direct outlets overseas, some have started considering Canadian crude exports from the U.S. Gulf Coast.

* The Food and Drug Administration is considering a ban on online sales of electronic cigarettes, as part of a package of regulations the agency is readying for the increasingly popular devices, people familiar with the matter said. The FDA, which warned in 2009 that e-cigarettes could pose health risks, has been meeting with e-cigarette makers this week to hear their views on its proposed regulations for the industry.

* A Goldman Sachs banker has been charged with raping a 20-year-old woman while on vacation in the Hamptons, authorities said Thursday.

* Federal prosecutors expanded their allegations against a former SAC Capital Advisors LP trader at the center of one of the most lucrative insider-trading schemes ever charged, saying he spoke to a second doctor involved in an Alzheimer's drug trial at the heart of the case.

* The Commodity Futures Trading Commission is completing a road map it will use to develop rules aimed at taming the practice of computer trading, which has led to market disruptions such as Thursday's failure at Nasdaq OMX Group Inc and the 2010 "flash crash" that sent markets plunging in a matter of minutes.

 

FT

A technical breakdown on Nasdaq, the country's second-largest exchange, halted trading for more than three hours on Thursday crippling U.S. equity markets.

Ratings agency Moody's has warned that it could cut the credit ratings of Goldman Sachs, JPMorgan Chase, Morgan Stanley and Wells Fargo saying the government may be less likely to bail them out if they got into trouble in the future.

Copper miner Kazakhmys scrapped its dividend amid attempts to control costs and focus on more efficient mines.

U.S. drugmaker Eli Lilly and Co became the latest western pharmaceutical group to be drawn into escalating allegations of corruption in China with a local media reporting that the company spent more than 30 million yuan ($4.90 million) to bribe doctors in China to prescribe the firm's medicines instead of rival products.

Activist investor Edward Bramson is stepping down as chairman of F&C Asset Management, one of UK's biggest investment management groups.

Swiss prosecutors are investigating whether Philipp Hildebrand, former head of the Swiss National Bank (SNB), breached Switzerland's federal secrecy laws.

Britain's John Lewis Partnership will fork out 40 million pounds to compensate staff who were underpaid after the staff-owned department store chain discovered it miscalculated holiday pay for the last seven years.

 

NYT

* Last August, when the renowned trial lawyer David Boies announced the hiring of David Bernick, general counsel at the tobacco giant Philip Morris, he called the move a "huge step" for his firm, Boies Schiller & Flexner. But after just a year at Boies Schiller, Bernick is leaving. He is expected to announce on Friday that he is moving to the law firm Dechert, according to people briefed on the matter.

* Believing that the government is now more likely to let large banks fail in a crisis, Moody's Investors Service threatened on Thursday to downgrade the credit ratings of several big financial firms.

* The United States stock market showed again on Thursday that it remained vulnerable to technological breakdowns even as regulators and market operators work to keep up with trading that is increasingly electronic and driven by speed. The latest trouble shut down trading on the Nasdaq market and its more than 3,000 stocks for more than three hours Thursday afternoon.

* Pandora Media Inc, the company behind the popular Internet radio service about to face major competition from Apple Inc, reported on Thursday a loss of $7.8 million, or about 4 cents a share, for the second quarter but the company continues to experience rapid growth.

* Ron Motley, a trial lawyer who built a fortune out of high-risk cases against the asbestos and tobacco industries, leading the litigation team that helped bring about the largest civil settlement in American history - $246 billion - died on Thursday in Charleston, South Carolina. He was 68. The cause was respiratory complications related to a long illness, said his friend and law partner of nearly 35 years, Joe Rice.

* Federal prosecutors filed an updated indictment in the criminal insider trading case against a former SAC Capital Advisors portfolio manager, adding a claim that he received secret information about drug trials from a second doctor.

 

Canada

THE GLOBE AND MAIL

* An aboriginal woman is taking the lead of a Royal Canadian Mounted Police division for the first time in Canadian history. Chief Superintendent Brenda Butterworth-Carr is the new top police officer in Saskatchewan. She says it's a "bit surreal."

* Bringing change in culture and attitude to Toronto's firefighter community is not easy, the city's fire chief said on Thursday as he announced the suspension of two members over comments made on Twitter.

* Prime Minister Stephen Harper says revelations that Liberal Leader Justin Trudeau smoked marijuana even after being elected to Parliament "speak for themselves."

Reports in the business section:

* Canadian telecom stocks haven't recovered much from their June swoon, when investors learned that giant Verizon Communications Inc was planning to enter the wireless market by snapping up one of the smaller newcomers, perhaps Wind Mobile - even as some observers now cast doubts on the entry. That makes the Canadian players look intriguing to income-oriented investors.

* A new national cellphone company is unlikely to drive down prices for consumers as it fights its way to profitability, Moody's Investors Service said, as it predicted that it would cost Verizon Communications Inc close to $3 billion to expand into Canada.

* Spot prices for Canada's potash exports may have eased, an indication of a softer market following the breakup of a Russian-Belarusian industry oligopoly last month. Some analysts have said potash prices would fall almost 20 percent between now and next spring, roughly to a range of $325 to $350 a ton, depending on the contract and region.

NATIONAL POST

* Justin Trudeau, who has endorsed legalizing marijuana, is making no apologies for smoking pot once as a member of Parliament, while Prime Minister Stephen Harper had a decidedly unimpressed reaction to the revelation.

* A child welfare agency's misdirected funds, poor file management, high staff turnover and inability to adhere to standards all contributed to the death of a 13-month-old girl on an Alberta First Nations reserve, according to a fatality inquiry report released on Thursday.

FINANCIAL POST

* Canadian Pacific Railway Ltd said on Thursday that it has been ordered by federal regulators to continue to do business with Montreal, Maine & Atlantic Railway, despite concerns its embattled former partner is no longer fit to operate in the country.

* The widening spread between Western Canada Select and Brent could weaken the Canadian dollar, according to an analyst at Nomura Securities Co Ltd.

* Rogers Communications Inc, Canada's largest wireless operator, will introduce a credit card for its customers "shortly," Chief Executive Nadir Mohamed said in an interview.

 

China

SECURITIES TIMES

-- Ping An Bank Co Ltd and China Minsheng Banking Corp Ltd have stopped new property loans, according to sources. In Guangzhou, seven banks have also stopped lending for real estate acquisitions, the paper said.

SHANGHAI SECURITIES NEWS

-- Suning Commerce Group Co Ltd confirmed in a notice released on Friday that it plans to develop banking services and sell funds connected with innovative businesses.

SHANGHAI DAILY

-- China has officially started the process to approve a pilot free-trade zone in Shanghai, the Ministry of Commerce said in a statement released on Thursday. The proposal is subject to approval from the Standing Committee of the National People's Congress, the nation's top legislative body.

PEOPLE'S DAILY

-- For China's Communist Party to connect with its citizens, spiritual advancement should be prioritised as well as material needs, according to an editorial in the party's mouthpiece paper. Both these areas are needed to further the development of "socialism with Chinese characteristics".

 

Fly on the Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Autodesk (ADSK) upgraded to Buy from Neutral at B. Riley
Children's Place (PLCE) upgraded to Buy from Hold at Topeka
ExlService (EXLS) upgraded to Outperform from Neutral at RW Baird
FMC Technologies (FTI) upgraded at Societe Generale
FMC Technologies (FTI) upgraded to Buy from Hold at Societe Generale
First Solar (FSLR) upgraded to Market Perform from Underperform at Raymond James
National Retail Properties (NNN) upgraded to Outperform from Neutral at RW Baird
ONEOK Partners (OKS) upgraded to Buy from Underperform at BofA/Merrill
Realty Income (O) upgraded to Outperform from Neutral at RW Baird
Simon Property (SPG) upgraded to Outperform from Market Perform at BMO Capital
Trina Solar (TSL) upgraded to Market Perform from Underperform at Raymond James
VMware (VMW) upgraded to Buy from Hold at Jefferies
Williams Partners (WPZ) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Abercrombie & Fitch (ANF) downgraded to Neutral from Outperform at RW Baird
Aeropostale (ARO) downgraded to Hold from Buy at Topeka
Aeropostale (ARO) downgraded to Underperform from Neutral at BofA/Merrill
Arch Coal (ACI) downgraded to Hold from Buy at Deutsche Bank
Brookfield (BAM) downgraded to Market Perform from Outperform at Wells Fargo
DFC Global (DLLR) downgraded to Market Perform from Outperform at JMP Securities
Dendreon (DNDN) downgraded to Sell from Hold at Deutsche Bank
Dick's Sporting (DKS) downgraded to Perform from Outperform at Oppenheimer
Edwards Group (EVAC) downgraded to Sector Perform from Outperform at RBC Capital
General Growth (GGP) downgraded to Market Perform from Outperform at BMO Capital
Gold Fields (GFI) downgraded to Sell from Neutral at Citigroup
Guess (GES) downgraded to Neutral from Overweight at Piper Jaffray
Jiayuan.com (DATE) downgraded to Perform from Outperform at Oppenheimer
Pandora (P) downgraded to Market Perform from Outperform at Raymond James
Staples (SPLS) downgraded to Neutral from Outperform at Credit Suisse
TC PipeLines (TCP) downgraded to Underperform from Neutral at BofA/Merrill

Initiations

Apricus Biosciences (APRI) initiated with a Hold at Cantor
First BanCorp (FBP) initiated with a Buy at BofA/Merrill
First BanCorp (FBP) initiated with an Outperform at Credit Suisse
Hancock Holding (HBHC) initiated with a Sector Perform at RBC Capital
NRG Yield (NYLD) initiated with a Hold at KeyBanc

HOT STOCKS

NASDAQ (NDAQ) said identified, addressed connectivity issues
Moody's to review Goldman (GS), JPMorgan (JPM), Morgan Stanley (MS), Wells Fargo (WFC) ratings for downgrade
AMR Corp. (AAMRQ), US Airways (LCC) filed motion to set November 12 trial date in connection with Justice Department lawsuit regarding merger
Baidu (BIDU) signed definitive agreement with Renren (RENN) for strategic investment in Nuomi
Judge rules that Chevron (CVX) can subpoena lawyer's e-mail information in Ecuador case, Bloomberg reports
Gap (GPS) raised annual dividend to 80c from 60c per share
To open about 160 company-operated stores in FY13, to open first Old Navy store in Shanghai in 1H14
Aeropostale (ARO) to close 30-40 stores in FY13, had planned to close 15-20
Expedia (EXPE), Travelocity announced strategic marketing agreement

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Net 1 UEPS (UEPS), Solera (SLH), Mentor Graphics (MENT), Marvell (MRVL), Scansource (SCSC), Aruba Networks (ARUN), Immunomedics (IMMU), DFC Global (DLLR), Autodesk (ADSK), Ross Stores (ROST), Pandora (P)

Companies that missed consensus earnings expectations include:
Nordson (NDSN), RetailMeNot (SALE), New York & Co. (NWY), Aeropostale (ARO)

Companies that matched consensus earnings expectations include:
MICROS (MCRS), Gap (GPS)

NEWSPAPERS/WEBSITES

  • The Commodity Futures Trading Commission is preparing to take their first big step toward reining in high-speed computer trading and subjecting it to tougher oversight. It will develop rules aimed at taming the practice of computer trading, which has led to market disruptions such as yesterday’s failure at NASDAQ OMX Group (NDAQ), the Wall Street Journal reports
  • Sears Holding (SHLD) built its Kenmore brand into the dominant force in U.S. major appliances over the better part of a century. It only took a few years of tinkering by hedge fund manager Eddie Lampert to take it apart. Sears says weakness in home appliance sales caused a key measure of sales at existing U.S. stores to shrink, the Wall Street Journal reports
  • Exxon Mobil (XOM) is selling stakes it controls in Iraq's West Qurna-1 oilfield to China's Petro China (PTR)  and Indonesia's Pertamina, Abdul Kareem Luaibi, the country's oil minister confirmed today, Reuters reports
  • Toshiba Corp (TOSYY), KKR (KKR) and a consortium including Bain Capital are expected to participate in the final round of bids next week for Panasonic’s (PCRFY) healthcare business, a deal worth about $1.5B, sources say, Reuters reports
  • SEC Chairman White said she would push to adopt proposed automated-trading rules after system caused a three-hour halt on the NASDAQ (NDAQ), a failure that affected NASDAQ's system for reporting quotes and trades bolsters the regulator’s case for the proposal issued in March, Bloomberg reports
  • Walt Disney’s (DIS) ESPN is meeting Fox Sports 1’s (FOX) challenge with additional shows, broader online offerings and a new studio. ESPN accounts for about 70% of the $5.7B in  operating income Disney reported from its cable networks in fiscal 2012, Bloomberg reports

SYNDICATE

Independent Bank (IBCP) 11.5M share Secondary priced at $7.75
Teekay LNG (TGP) files to sell 931,098 common units for holders

 

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