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Frontrunning: September 25

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  • JPMorgan eyes $4bn ‘pay for peace’ deal (FT)
  • Prosecutors Pursue Big SAC Settlement (WSJ) - in the US if you are rich enough, no crime is bad enough
  • Cruz's Defiant Stand Is Also a Lonely One (WSJ); Texas senator speaks for more than 14 hours (FT)
  • Iran Applies Brakes to U.S. Mideast Plans (WSJ)
  • Americans in Poll Doubt Economy Rebound in Defiance of Forecasts (BBG)
  • Big Banks Cut Basel III Shortfall by $112 Billion at End of 2012 (BBG) - the equivalent of 10 bridges to the Kalahari desert
  • Obama’s Jabs at Russia on Syria Shows Diplomacy Tensions (BBG)
  • ICAP Staff Face Criminal Charges Tied to Libor  (WSJ)
  • Alibaba Is Said to Shift Target for I.P.O. to U.S. From Hong Kong (NYT)
  • Home gold rush is over (Reuters)
  • Conoco in landmark Alaska drone flight (FT)
  • Real Men Use Mud Masks as Toiletries Win in Guy Grooming (BBG)

 

Overnight Media Digest

WSJ

* President Barack Obama argued the U.S. case before world leaders for resolving the Middle East's deepest conflicts, but faced pushback from Iran.

* U.S. prosecutors proposed settling a criminal insider-trading case against SAC Capital Advisors for $1.5 billion to $2 billion.

* JPMorgan Chase has offered to pay about $3 billion as it seeks to settle criminal and civil investigations by federal and state prosecutors into its mortgage-backed-securities activities.

* Applied Materials agreed to acquire Tokyo Electron to create the largest provider of chip manufacturing equipment. The deal to combine two of the semiconductor industry's biggest suppliers is the latest sign of technical and financial pressures confronting the electronics industry.

* A former UBS executive, now at Bank of America , is facing criticism for a testimony he gave to a UK Parliament committee about the Libor-rigging scandal.

* American International Group Inc's Chief Executive Robert Benmosche sparked a fresh outcry on Tuesday when social media lighted up regarding his comments in a recent interview. In the interview, Benmosche compared the outrage about banker pay during the financial crisis to inflammatory rhetoric from the civil-rights era.

* New York Life Investments agreed to pay 380 million euros ($512 million) to buy Dexia SA's asset-management unit, the latest asset sale by the Franco-Belgian lender that has been raising funds to repay government bailout money.

* China took a 12.5 percent stake in Russia's Uralkali , moving to secure supplies of potash and casting doubt on whether a global pricing cartel for the fertilizer ingredient could be revived.

* General Motors said it issued $4.5 billion in a private debt offering, its first major placement since emerging from bankruptcy protection.

* The latest iPhones that launched last week aren't expected to officially go in sale in Russia before December, creating a gray market of imported phones that undermines future sales by local carriers and pressures Apple's market share in the country.

 

FT

U.S. authorities are expected to bring criminal charges against past and present employees of interdealer broker ICAP Plc as early as Wednesday for allegedly manipulating the London Interbank Offered Rate, or Libor, and other benchmark interest rates, people familiar with the matter said.

JPMorgan Chase & Co is seeking a $4 billion settlement deal with U.S. authorities for all outstanding allegations of wrongdoings in its mortgage practices, according to people familiar with the matter.

New York Life Investments announced on Tuesday that it had agreed to purchase the asset management arm of Dexia SA , the Franco-Belgian bank that had to be bailed out three times by taxpayers, for 380 million euro ($512 million).

Applied Materials Inc, the U.S. maker of equipment used to manufacture semiconductors, will buy rival Tokyo Electron Ltd in an all-stock deal valued at nearly $10 billion to extend its lead in one of the world's most technically challenging and capital intensive industries

Fiat SpA has warned Chrysler Group LLC that it is reconsidering the benefits and costs of further expanding its relationship with the U.S. automaker because of its concerns over the effects of Chrysler's potential initial public offering.

U.S. private equity group Blackstone and the Miller family, who together own UK's largest privately-owned housebuilder Miller Group, are considering a possible stock market debut, according to people familiar with the matter, as the positive sentiment around the country's property market continues to gather momentum.

 

NYT

* The hedge fund SAC Capital Advisors and federal prosecutors have begun talks to settle criminal insider trading charges against the firm, people briefed on the case said on Tuesday. Settlement discussions are at an early stage, and the two sides are far from any agreement, these people said. The government is seeking a guilty plea from SAC and a financial penalty of as much as $2 billion, they said.

* The housing market, one of the main drivers of the economic recovery, continues to gain strength despite the drag of rising mortgage rates and other economic headwinds, but some analysts are worried that it may slow in the months ahead.

* JPMorgan Chase & Co, seeking to avert a wave of litigation from the government, is negotiating a multibillion-dollar settlement with state and federal agencies over the bank's sale of troubled mortgage securities to investors in the run-up to the financial crisis.

* The Obama administration on Tuesday provided the first detailed look at premiums to be charged to consumers for health insurance in 36 states where the federal government will run new insurance markets starting next week, highlighting costs it said were generally lower than previous estimates.

* To help prevent the deaths of children hit by cars that are backing up, the Transportation Department said on Tuesday that it would add rear-view cameras to its list of recommended safety measures. The recommendation, though, fell short of a law passed by Congress in 2008 requiring that the department set standards for rear visibility.

* New York State, failing to keep pace with technological change and increasingly sophisticated economic crimes, needs to update its laws to help authorities prosecute white-collar wrongdoing, according to a report released on Tuesday by the Manhattan district attorney, Cyrus Vance.

* With the chip-manufacturing industry facing more pressure, Applied Materials Inc is aiming to shore up its business in a big way by striking a big takeover of a Japanese company. Applied Materials agreed on Tuesday to buy smaller rival Tokyo Electron Ltd in an all-stock deal that will create a big new producer of semiconductor and display manufacturing equipment.

* The top law enforcer in New York State is not done scrutinizing high-speed trading based on early looks at sensitive data. Eric Schneiderman, New York State's attorney general, said on Tuesday that such trading - which he called "insider trading 2.0" - was still a focus of his office, which reached a settlement with Thomson Reuters Corp over the issue in July.

* The business of peer-to-peer loans is drawing still more prominent investors. Prosper Marketplace, one of the biggest companies in the business, disclosed on Tuesday that it had raised $25 million in a new round of financing. The new investment was led by Sequoia Capital and includes BlackRock Inc , the giant money manager, as a new backer.

 

Canada

THE GLOBE AND MAIL

* A Stanley Cup rioter whom a provincial court judge called "the most serious of any case heard so far" has been sentenced to eight months in jail. Vasilios George Makris, 29, pleaded guilty to participating in a riot and assaulting another person in the June 15, 2011, Stanley Cup riot in downtown Vancouver.

* One day after Toronto Mayor Rob Ford celebrated C$660 million ($640.81 million) in federal funding for a Scarborough subway extension, another council battle is brewing over how Toronto will pay for transit expansion. Toronto City Council will be asked next month to decide how to fill a funding gap estimated to be more than C$900 million if it wishes to follow the underground route from Kennedy Station to Sheppard Avenue favored by the TTC and city council.

* The Alberta government plans to prohibit building in so-called floodways - designated areas close to rivers - to mitigate damages from future floods. Municipal Affairs Minister Doug Griffiths, charged with leading Alberta's flood recovery effort, said the Progressive Conservatives will introduce legislation this fall forcing municipalities to block development in the most flood-prone zones.

Reports in the business section:

* The federal government has launched a public relations campaign to beat back criticism of its wireless policy by the Big Three industry players - even as the telecom companies face gag orders that limit what they can say on the topic.

* China has bought a chunk of one of the world's largest potash producers, giving the Asian country more control over what price it should pay for the fertilizer - a move that could drag down prices of the mineral and eat into profits of Canada's potash companies.

* After 10 years as the lead advertising agency for the Bank of Montreal, Cossette is resigning the account. The decision, announced on Tuesday, comes amid a tumultuous time in bank marketing in Canada.

NATIONAL POST

* New Democrat member of Parliament Pat Martin accepted a personal loan from the New Democratic Party and numerous donations from labor unions to help pay down debt incurred in a defamation lawsuit over the robocalls case. Documents filed with the federal ethics commissioner by the Manitoba MP earlier this month show he accepted contributions to a legal defense fund from the Canadian Labour Congress, the United Steelworkers and the Canadian Union of Public Employees, and 14 other unions or locals.

* The British Columbia New Democratic Party (NDP), shell-shocked by the May election debacle and leader Adrian Dix's intention to resign, got a welcome dose of enthusiasm on Tuesday when four federal members of Parliament from British Columbia said they would consider bids to lead the provincial party. They include Nathan Cullen, the federal NDP House leader who ran a surprising third in the 2012 federal NDP leadership vote won by Tom Mulcair, and Jinny Sims, the firebrand former British Columbia Teachers' Federation leader.

* After 17 months in Swiss custody, former SNC-Lavalin Group Inc executive Riadh Ben Aissa is to return to Canada to face fraud, bribery and money laundering charges in relation to a Montreal hospital contract. A ruling handed down by Switzerland's Federal Criminal Court shows Canada's Department of Justice formally sought Ben Aissa's extradition in January. Swiss authorities approved the request in May. Ben Aissa appealed but lost.

FINANCIAL POST

* Major takeovers are often the ultimate embodiment of capitalist risk versus reward, but this week's $4.7 billion offer for BlackBerry Ltd appears to contain very little new risk for lead investor Fairfax Financial Holdings.

* Struggling department store operator Sears Canada Inc shocked the market on Tuesday when it put a decorated former U.S. Marine pilot who fought in the Iraq war at its helm to replace Calvin McDonald, a savvy merchant who revamped the chain's look and retail brands.

 

China

CHINA SECURITIES JOURNAL

- The next round of tax reforms in China is likely to play a crucial role in economic reform, according to experts who attended a forum organised by China News Service on Tuesday. A cautious approach should be taken to the uptick in the economy that occurred in July and August.

- China's National Development and Reform Commission released a notice on Tuesday, allowing enterprises involved in shantytown renovation and construction to issue corporate bonds. The value of the bond financing is limited to 70 percent of the total investment.

21ST CENTURY BUSINESS HERALD

- In the month ended Sept. 22, China Construction Bank Corp , Agricultural Bank of China Ltd, Bank of China Ltd and the Industrial and Commercial Bank of China Ltd, all had negative growth in renminbi deposits of over 202 billion yuan ($33.00 billion), according to sources.

SHANGHAI DAILY

- Chinese military officers will undergo an audit of their real estate, use of power, official cars and service personnel before they are promoted or retire, the Central Military Commission said in a guideline on Tuesday.

PEOPLE'S DAILY

- A government official needs to act in accordance with his words in order to gain trust, said an editorial in the paper that acts as the government's mouthpiece.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Ascena Retail (ASNA) upgraded to Market Perform from Underperform at FBR Capital
CF Industries (CF) upgraded to Overweight from Neutral at Atlantic Equities
CME Group (CME) upgraded to Outperform from Market Perform at Keefe Bruyette
Cash America (CSH) upgraded to Neutral from Underperform at Sterne Agee
Ctrip.com (CTRP) upgraded to Buy from Hold at Deutsche Bank
Dawson Geophysical (DWSN) upgraded to Outperform from Market Perform at Raymond James
Infosys (INFY) upgraded to Outperform from Neutral at RW Baird
Nordstrom (JWN) upgraded to Outperform from Neutral at Macquarie
Red Robin (RRGB) upgraded to Neutral from Underweight at Piper Jaffray
Ross Stores (ROST) upgraded to Conviction Buy from Buy at Goldman
Silver Spring Network (SSNI) upgraded to Buy from Neutral at Goldman

Downgrades

Bravo Brio Restaurant (BBRG) downgraded to Neutral from Overweight at Piper Jaffray
Carnival (CCL) downgraded to Neutral from Buy at BofA/Merrill
Carnival (CCL) downgraded to Reduce from Neutral at Natixis
Carnival (CCL) downgraded to Underweight from Equal Weight at Morgan Stanley
Dollar Tree (DLTR) downgraded to Buy from Conviction Buy at Goldman
Raptor Pharmaceuticals (RPTP) downgraded to Perform from Outperform at Oppenheimer
Reliance Steel (RS) downgraded to Neutral from Buy at BofA/Merrill
Semtech (SMTC) downgraded to Neutral from Buy at B. Riley
Skyworks (SWKS) downgraded to Neutral from Buy at B. Riley

Initiations

Cirrus Logic (CRUS) initiated with a Market Perform at Northland Securities
DSW (DSW) initiated with a Neutral at Goldman
DTE Energy (DTE) initiated with a Market Perform at Wells Fargo
Facebook (FB) initiated with a Buy at Canaccord
Financial Institutions (FISI) initiated with a Buy at Sterne Agee
Healthstream (HSTM) initiated with an Outperform at Northland Securities
Men's Wearhouse (MW) initiated with a Buy at Goldman

HOT STOCKS

Attorneys General send letter to FDA urging e-cigarettes regulation
Banner Corp. (BANR) to acquire Home Federal Bancorp
Capital Bank (CBF) announces stock repurchase of up to $100M of common stock
Copart (CPRT) board concludes investigation into possibly converting into a REIT
Crown Holdings (CCK) lowers Q3 earnings outlook
Genomic Health (GHDX) announces NICE recommendation for Oncotype DX test
Krispy Kreme (KKD) signs South American development agreement
Noble (NE) board approves plan to separate drilling business
Oncothyreon (ONTY) reports Merck Serono decision to continue development of tecemotide
SAC Capital reports 5.1% passive stake in SunEdison (SUNE)
YPF, Dow Chemical sign $188M shale gas deal

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Ascena Retail (ASNA)

Companies that missed consensus earnings expectations include:
Copart (CPRT), Landec (LNDC)

Companies that matched consensus earnings expectations include:
AAR Corp. (AIR)

NEWSPAPERS/WEBSITES

  • AT&T (T), Dish deal off table, WSJ says
  • Alibaba plans U.S. listing after Hong Kong talks end, WSJ reports
  • Clovis (CLVS) gets no buyout interest, Bloomberg says
  • JPMorgan (JPM) in negotiations to settle mortgage allegations, NY Times says
  • JPMorgan (JPM) offers $3B to settle cases, WSJ says
  • Liberty Global (LBTYA) CEO doesn't see Apple selling TV, Bloomberg says
  • Shell picks Louisiana site for LNG project, WSJ says
  • Vale (VALE) weighing more asset sales, Bloomberg says

SYNDICATE

Chatham Lodging Trust (CLDT) files to sell 3.25M common shares of beneficial interest
Evoke (EVOK) 2.1M share IPO priced at $12.00
Foundation Medicine (FMI) 5.889M share IPO priced at $18.00
Idera Pharmaceuticals (IDRA) files to sell common stock and pre-funded warrants
QIWI (QIWI) files to sell 8.2M American Depositary Shares for holders
Synageva (GEVA) 2.75M share Spot Secondary priced at $56.63
Westar Energy (WR) 8M share Secondary priced at $31.15

 

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