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Frontrunning: September 20

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  • JPMorgan Guilty Admission a Win for SEC’s Policy Shift (BBG)
  • Pricing Glitch Afflicts Rollout of Online Health Exchanges (WSJ)
  • This will end well: Japan LDP Considers Draft Bill to Put Government in Control of Fukushima Cleanup (WSJ)
  • How a German tech giant trims its U.S. tax bill (Reuters)
  • Despite Merkel's Popularity, Angst Creeps In (WSJ)
  • Hank Paulson warns of regulatory conflict (FT)
  • Rajan Surprises With India Rate Rise to Quell Inflation (BBG)
  • Apple Begins Selling New iPhones (WSJ)
  • Pope Says Church Should Stop Obsessing Over Gays, Abortion (BBG)
  • Pinterest takes new tack with advertising launch (FT)
  • Dow Jones to Split Ways With AllThingsD Site (WSJ)
  • Several shot in Chicago park (Reuters)

 

Overnight Media Digest

WSJ

* Less than two weeks before the launch of insurance marketplaces created by the federal health overhaul, the government's software can't reliably determine how much people need to pay for coverage, according to insurance executives and people familiar with the program.

* Pope Francis has warned that the Catholic Church's focus on abortion, contraception and gay marriage risked overshadowing its pastoral mission, threatening to bring down the church "like a house of cards."

* As German Chancellor Angela Merkel leads polls ahead of her Sunday re-election bid, the business community and others are calling for her to move more quickly to confront simmering domestic problems.

* The SEC is still investigating a number of JPMorgan Chase officials in connection with the "London whale" trading debacle, even as the bank agreed to pay about $920 million in fines over the matter.

* A former Halliburton manager was charged with destroying evidence following the 2010 Gulf oil spill, a case that coincides with a guilty plea to a related charge by the Houston-based oilfield services company.

* A glitch at the U.S. Treasury's bidding system last week blocked Goldman Sachs's multibillion-dollar order for three-month Treasury bills, altering prices in the U.S. debt market.

* Sales of previously owned homes rose unexpectedly in August to the highest level since 2007 as buyers rushed to lock in deals before mortgage rates increased further. But the industry's trade group warned that home sales could slow in the coming months due to higher borrowing costs and prices.

* Departing Nokia Corp Chief Executive Stephen Elop is set to receive a compensation package estimated by the Finnish company to be about 18.8 million euros ($25.4 million), as a result of the $7.2 billion sale of Nokia's devices business to Microsoft Corp.

* New York Times Co will restore a dividend payment to company shareholders that was eliminated four years ago, putting to use cash raised through a string of recent divestitures.

 

FT

Empire State Realty Trust, the real estate investment trust that owns the iconic New York skyscraper, plans to raise as much as $1.07 billion from its planned initial public offering on the New York Stock Exchange.

Goldman Sachs suffered a loss when a clerical error by the New York Federal Reserve left the bank without any of the three-month Treasury bills it had ordered at a government debt auction, sources familiar with the matter said.

Rating agency Standard & Poor's warned that the recent wave of technical glitches at global exchanges suggests that they have become more prone to breakdowns, and could trigger a downgrade of their credit ratings.

British aero engine maker Rolls-Royce and U.S.-based Pratt & Whitney, a unit of United Technologies Corp, have abandoned a planned joint-venture to develop engines for mid-sized aircraft.

Online scrapbook Pinterest has launched an advertising business that will charge businesses to place content that is integrated with the photos already on its users' pinboards - similar to ad concepts developed by Facebook and Twitter.

 

NYT

* As the favorite to succeed Ben Bernanke to lead the U.S. Federal Reserve, Janet Yellen faces no shortage of hurdles. The first would be to win confirmation from the Senate - an obstacle that doomed the previous front-runner for the job, Lawrence Summers. While Yellen faces much less potential opposition than Summers did, the White House is not taking Senate approval for granted.

* The Obama administration has decided to revive a controversial clean energy loan guarantee program at the Energy Department, administration officials said on Thursday, even as the program remains under Congressional scrutiny after losing hundreds of millions in taxpayer money on investments in failed green energy start-ups like the solar module maker Solyndra.

* Even as regulators on Thursday announced a settlement over the "London whale" trading loss, JPMorgan's board members had a pressing question about regulatory problems that have dogged the bank for more than a year: are we done yet? JPMorgan Chase & Co emerged from the financial crisis healthier and more profitable than its rivals, but in just 18 months it has swung from Washington's favorite bank to financial punching bag. The bank is now facing scrutiny from at least seven federal agencies, several state regulators and two foreign nations.

* A year after a plan by President Obama to limit greenhouse gas emissions from new power plants set off angry opposition, the administration will announce on Friday that it is not backing down from a confrontation with the coal industry and will press ahead with enacting the first federal carbon limits on the nation's power companies.

* New York Times Co announced on Thursday that it would pay a quarterly dividend to its shareholders for the first time in five years. The company's board voted to approve a dividend of 4 cents a share to all shareholders of record as of Oct. 9. It will be paid on Oct. 24, the week before the Times announces its third-quarter earnings. The Times has not paid a dividend since December 2008.

* Sales of existing houses climbed 1.7 percent in August to a 6-1/2-year high, and factories grew busier in the mid-Atlantic region this month, providing signs that rising borrowing costs are weighing only modestly on the economy.

* FireEye, a provider of cybersecurity software, priced its initial public offering on Thursday at $20 a share, handily beating expectations. Earlier this week, the company raised its price range to $15 to $17 a share.

* Rocket Fuel, an advertising technology company that relies on artificial intelligence, priced its initial public offering on Thursday at the top of its expectations, garnering $116 million in proceeds. The company sold 4 million shares at $29 each, the high end of an already raised range. The stock sale values it at $942.5 million.

 

Canada

THE GLOBE AND MAIL

* The Palestinian Authority, which had bitter words for Ottawa just a year ago, is now offering praise, and the Harper government - known for its staunch pro-Israel views - is opening the purse strings to send new aid. The rapprochement does not entail a shift in the Conservatives' support for Israel, but it is clear that the government is looking to strike a gentler, friendlier tone with the Palestinian Authority in the West Bank.

* An overflow crowd sparred over the future of Toronto's island airport during an occasionally heated public meeting Thursday evening. At issue is a proposal to extend the runway by up to 200 meters at each end to accommodate jet aircraft at the facility, which is known properly as Billy Bishop Toronto City Airport.

* Ontario has condemned Quebec's proposed secular charter, passing a resolution promising that religious symbols will always be welcome in the province's public places. While politicians across the country have lined up against the Parti Québécois's attempts to keep religion out of the public realm, Ontario legislators went a step further on Thursday.

Reports in the business section:

* Already planning a huge round of layoffs in a bid to bring costs in line with its sales, BlackBerry Ltd must confront another painful reality of its business: a big overhang of unsold devices. Released this year, the company's new BlackBerry 10 smartphones were well received by critics but have sold poorly in many of BlackBerry's key markets - most notably, the United States. As a result, many devices the company has shipped to retail channels remain unsold.

* The federal government announced a plan to create a national securities watchdog by signing on Ontario and British Columbia, a significant advance in a decades-long power struggle between Ottawa and provincial authorities over who should police the country's capital markets.

* A project eight years in the making, Canada's newest refining facility will be marked with an official ceremony on Friday celebrating the ground-breaking just north of Edmonton in Alberta's industrial heartland. North America has not seen the construction of a major new refinery for almost three decades, and the C$5.7 billion (about $5.6 billion) Sturgeon project brought forward by North West Upgrading Inc is a rare example of new refining capacity on the continent.

NATIONAL POST

* When the Harper government unveils its new "consumers first" agenda in next month's Throne Speech, it will undoubtedly trumpet the establishment of a common securities regulator as the dawn of a new era in investor protection. Canada's finance minister, Jim Flaherty, signed an agreement with his colleagues from Ontario and British Columbia on Thursday to set up a new body to regulate securities in the two provinces.

FINANCIAL POST

* The real estate is estimated to be worth billions of dollars, but Canada's largest telcos turned down investment bankers trying to get them to turn their cell towers into cash, according to a top Bay Street asset manager. As recently as six months ago the telcos were wooed by financial executives hoping to get them to spin off their cell phone towers and leases into a real estate investment trust.

* Chevron Corp and other liquefied natural gas developers in Canada are facing renewed calls from Asian buyers for cheaper exports of the super-cooled fuel. The decades-old practice of linking LNG sales to the price of oil is "unreasonable" in a world flush with gas, Kunio Nohata, a senior general manager of gas resources with Tokyo Gas Co Ltd, Japan's second-biggest LNG importer, said at a Calgary forum on Thursday

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Ameren (AEE) upgraded to Overweight from Equal Weight at Barclays
Bank of Hawaii (BOH) upgraded to Overweight from Equal Weight at Barclays
CF Industries (CF) upgraded to Buy from Neutral at Citigroup
DiamondRock (DRH) upgraded to Buy from Hold at MLV & Co.
Facebook (FB) upgraded to Outperform from Market Perform at Cowen
MetLife (MET) upgraded to Conviction Buy from Buy at Goldman
Pier 1 Imports (PIR) upgraded to Outperform from Neutral at Credit Suisse
SM Energy (SM) upgraded to Buy from Hold at Societe Generale
StanCorp Financial (SFG) upgraded to Neutral from Sell at Goldman
Synaptics (SYNA) upgraded to Outperform from Perform at Oppenheimer
TAL International (TAL) upgraded to Buy from Neutral at SunTrust
Techne (TECH) upgraded to Outperform from Neutral at RW Baird
Urban Outfitters (URBN) upgraded to Buy from Hold at Canaccord

Downgrades

Assurant (AIZ) downgraded to Neutral from Buy at Goldman
Bruker (BRKR) downgraded to Market Perform from Outperform at Wells Fargo
Cardinal Financial (CFNL) downgraded to Market Perform from Outperform at FBR Capital
Clorox (CLX) downgraded to Underperform from Neutral at Credit Suisse
Insulet (PODD) downgraded to Market Perform from Outperform at JMP Securities
Level 3 (LVLT) downgraded to Equal Weight from Overweight at Morgan Stanley
NetApp (NTAP) downgraded to Underperform from Market Perform at William Blair
Prudential (PRU) downgraded to Buy from Conviction Buy at Goldman
Sigma-Aldrich (SIAL) downgraded to Neutral from Outperform at RW Baird
SolarWinds (SWI) downgraded to Sell from Neutral at Goldman
Symetra Financial (SYA) downgraded to Sell from Neutral at Goldman

Initiations

AU Optronics (AUO) initiated with a Hold at Cantor
Amphenol (APH) initiated with a Hold at Cantor
Cisco (CSCO) initiated with a Buy at Cantor
Clovis (CLVS) initiated with a Buy at Citigroup
Corning (GLW) initiated with a Hold at Cantor
Dun & Bradstreet (DNB) initiated with a Sell at Goldman
EMC (EMC) initiated with a Buy at Cantor
Equifax (EFX) initiated with a Buy at Goldman
F5 Networks (FFIV) initiated with a Buy at Cantor
FactSet (FDS) initiated with a Sell at Goldman
Gartner (IT) initiated with a Neutral at Goldman
General Growth (GGP) initiated with a Neutral at Credit Suisse
HP (HPQ) initiated with a Hold at Cantor
IBM (IBM) initiated with a Buy at Cantor
IHS Inc. (IHS) initiated with a Neutral at Goldman
JPMorgan (JPM) initiated with a Hold at Societe Generale
Juniper (JNPR) initiated with a Buy at Cantor
LG Display (LPL) initiated with a Hold at Cantor
Macerich (MAC) initiated with an Underperform at Credit Suisse
McGraw Hill Financial (MHFI) initiated with a Buy at Goldman
MoneyGram (MGI) initiated with an Equal Weight at Evercore
Moody's (MCO) initiated with a Neutral at Goldman
NPS Pharmaceuticals (NPSP) initiated with an Overweight at JPMorgan
NetApp (NTAP) initiated with a Buy at Cantor
Nielsen (NLSN) initiated with a Neutral at Goldman
Renasant (RNST) initiated with a Buy at MLV & Co.
Simon Property (SPG) initiated with a Neutral at Credit Suisse
Splunk (SPLK) initiated with a Buy at Cantor
Taubman Centers (TCO) initiated with an Outperform at Credit Suisse
Thomson Reuters (TRI) initiated with a Neutral at Goldman
VMware (VMW) initiated with a Hold at Cantor
Verisk Analytics (VRSK) initiated with a to Neutral at Goldman
Wells Fargo (WFC) initiated with a Hold at Societe Generale

HOT STOCKS

BASF (BASFY) offered $4 per share or $62M to acquire Verenium (VRNM)
Prudential (PRU) to be more strictly regulated, said entitled to bring court action
Vornado (VNO) selling 13.4M share stake in J. C. Penney (JCP) via Citigroup (C), DJ reports
Penn National Gaming (PENN) received regulatory approvals for REIT spin-off
Lionsgate (LGF), OddL to enter multipicture agreement

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
TIBCO (TIBX)

Companies that missed consensus earnings expectations include:
Intrexon (XON)

Companies that matched consensus earnings expectations include:
Cintas (CTAS), Fox Factory (FOXF)

NEWSPAPERS/WEBSITES

  • The Obama administration will move ahead today with stiff requirements for new coal-fired power plants, moving to impose for the first time strict limits on the pollution blamed for global warming (ANR, CNX, BTU, CLF), the Wall Street Journal reports
  • France plans to move for new Europe-wide regulations and tax rules on U.S. Internet giants (GOOG, APPL, AMZN, FB) when EU leaders meet next month to discuss the bloc's digital challenges, the Wall Street Journal reports
  • Warren Buffett says he would recommend reappointing Ben Bernanke as Fed chairman, while adding that low interest rates have inflated asset values and complicated his hunt for investments at his company, Berkshire Hathaway (BRK.A), Reuters reports
  • Telecom Italia (TI) Chairman Bernabe and core shareholders failed in hastily-convened talks to bridge differences on how to relaunch the debt-laden group ahead of a board meeting early next month, Reuters reports
  • US Airways Group (LCC) climbed to the highest close since federal antitrust regulators sued to block the planned merger with AMR’s (AAMRQ) American Airlines in a sign of investor optimism that the deal will occur, Bloomberg reports
  • KKR & Co. (KKR) and Apollo Global Management (APO) are vying for a slice of Spain’s $2T lending market, as private equity firms snap up customers the nation’s banks deem too risky, Bloomberg reports

SYNDICATE

Atlas Financial (AFH) files to sell 1.26M shares for Kingsway America
BIND Therapeutics (BIND) 4.7M share IPO priced at $15.00
Baltic Trading (BALT) files automatic common stock offering
Clubcorp Holdings (MYCC) 18M share IPO priced at $14.00
FireEye (FEYE) 15.18M share IPO priced at $20.00
JinkoSolar (JKS) 3.8M share Secondary priced at $16.25
KAR Auction (KAR) announces offering of 12M shares of common stock for holder
LGL Group (LGL) files to sell 421,083 shares for holders
NGL Energy Partners (NGL) files to sell 4.1M common units for limited partners
Navios Maritime Partners (NMM) 5M share Spot Secondary priced at $14.26
NextEra Energy (NEE) to sell $500M of equity units
Regional Management (RM) 3.48M share Secondary priced at $27.50
Rocket Fuel (FUEL) 4M share IPO priced at $29.00
Shutterstock (SSTK) 4.6M share Secondary priced at $60.00
Textura (TXTR) 4.59M share Secondary priced at $38.00

 


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