Frontrunning: November 6

Tyler Durden's picture
  • Christie Sets Himself Up for Run in 2016 (WSJ)
  • De Blasio Elected Next New York City Mayor in Landslide (WSJ)
  • Hilsenrath: Fed Study: Rate Peg Off Mark (WSJ)
  • MF Global Customers Will Recover All They Lost (NYT) - amazing what happens when you look under the rug
  • Virginia, Alabama Voter Choices Show Tea Party Declining (BBG)
  • Explosions kill 1, injure 8 in north China city (Reuters)
  • Toyota boosts full-year guidance as weak yen drives revenues (FT)
  • Starbucks wants to recruit 10,000 vets, spouses to its ranks (Reuters)
  • U.S. Economy Slack Justifies Stimulus, Top Fed Staff Papers Show (BBG)
  • Israel set to become major gas exporter (FT)
  • Apple Adds Suppliers to Boost Smartphone, Tablet Production (WSJ)
  • China's Slower Growth Puts a Drag on Western Profits (WSJ)
  • Brent Crude Traders Claim Proof BFOE Boys Rigged Market (BBG)
  • Young Avoid New Health Plans (WSJ)
  • Apple reveals government data request figures (Telegraph)
  • Facebook Misadventure Means Scrutiny on NYSE With Twitter (BBG)
  • New York Nerds Sift Citi Bike Data to Solve Availability (BBG)
  • IRS Cracks Down on Breaks Tied to Land of Rich Americans (BBG)


Overnight Media Digest


* Republican Governor Chris Christie easily won re-election in New Jersey, while Democrat Terry McAuliffe won in Virginia, a decision that sent mixed messages to both parties about their political strengths.

* On the day he coasted to re-election as governor of New Jersey, Republican Chris Christie spent his time talking about issues facing the entire country, setting himself up for a possible 2016 White House bid.

* Elite MBAs are increasingly heading to work in technology over finance as the lingering aftereffects of the financial crisis-along with Wall Street's long hours and scaled-back pay-send newly minted MBAs elsewhere.

* The Federal Reserve could help drive down unemployment faster if it promised to keep short-term interest rates near zero for longer than currently envisioned by officials or investors, according to a new research paper by a top central-bank staff member.

* Shares of Colombian airline Avianca Holdings are due to begin trading Wednesday on the New York Stock Exchange, capping a turnaround 10 years in the making by investor Germán Efromovich.

* J.C. Penney is expected to say this week that its sales turned positive in October - but that won't quell worries about the retailer's financial health. Gross margin and cash burn remain concerns.

* EU regulators are poised to levy massive fines against a group of banks tied to their alleged attempts to manipulate benchmark interest rates, according to officials briefed on the discussions.

* Bart Chilton, the animated and outspoken member of the Commodity Futures Trading Commission who has agitated for tougher Wall Street regulation, is stepping down from his post after he secured agency support for trading restraints. Chilton, a Democrat, announced his departure Tuesday ahead of the agency's 3-1 vote to propose restraints aimed at curbing speculation in commodities such as oil, gold and sugar.

* Demand Media Inc showed it is moving forward on a planned spin off of its domain services business, disclosing both the name of the new company and the appointment of a senior executive in the domain services unit to be its chief executive.



Electric car maker Tesla Motors Inc reported third-quarter deliveries of its Model S below analysts' expectations, pushing shares down more than 12 percent in after-the-bell trade on Tuesday.

JT Wang, chairman and chief executive of Taiwan's Acer , said he would step down as a continuing decline in global demand for PCs pushed the computer maker into further losses.

Rupert Murdoch's 21st Century Fox Inc reported quarterly earnings below analysts' estimates on Tuesday, hurt by investments in new sports channel and a weaker performance from its movie studio.

Dahabshiil, Africa's biggest money transfer company, has won an injunction to stop Barclays Plc closing its account until the conclusion of a full trial, expected next year.

Big global oil companies are under pressure from investors to curb their vast capital spending programmes and return more cash to shareholders.

Encana Corp, Canada's largest natural gas producer, said on Tuesday it would cut capital spending, workforce and dividends as it looks to shift to oil production to bolster its finances.

Deutsche Bank's co-CEO Jürgen Fitschen was named on Monday as a suspect in a investigation into falsifying evidence, as a decade-long civil suit brought by the media empire Kirch Group continues to cast a shadow over the lender.



* A federal bankruptcy judge cleared the way for brokerage firm MF Global's roughly 20,000 customers to collect their full $1.6 billion in vanished money, covering the remaining shortfall.

* The government's $1.2 billion settlement with SAC Capital Advisors set a record for insider trading penalties.

* The Commodity Futures Trading Commission on Tuesday voted 3 to 1 to limit the size of any trader's footprint in the commodities market. Gary Gensler, the chairman of the commission, said on Tuesday that the new position limits would "help to protect the markets both in times of clear skies, price discovery functions, certainly, as well as when there's a storm on the horizon."

* Ford's plant in Genk, Belgium, is scheduled to close at the end of the year, but only after a long, bitter struggle that cost the company $750 million.

* Tesla Motors said it narrowed its third-quarter loss compared with the same period a year ago, as it sold more Model S all-electric luxury sedans. But Tesla said its fourth-quarter earnings would be similar to the third quarter as it continues to invest in research and development and build infrastructure.

* CBS News, under fire from critics who dispute details in a "60 Minutes" report on the Benghazi attacks last year that was broadcast on Oct. 27, aggressively defended the report's accuracy on Tuesday and the account of its main interview subject.

* On a day when consumers in Washington State were voting on whether to require food companies to label products containing genetically engineered ingredients, Cargill announced that it would begin labeling packages of ground beef containing what is colloquially known as pink slime.

* New York state financial regulators have subpoenaed about 20 companies that help New York's pension trustees decide how to invest the billions of dollars under their control to determine whether any outside advice is clouded by undisclosed financial incentives or other conflicts of interest.

* The private equity firm Brentwood Associates has won the bidding war for the Allen Edmonds Corp, the high-end men's shoemaker, ending a sale process that included suitors like Men's Wearhouse.

* Endo Health Solutions, a health care company known for its pain medication, has reached a deal to acquire a Canadian specialty drug company, Paladin Labs, for $1.6 billion in stock and cash.




* U.S. giant Verizon Communications Inc appears to be taking a second look at the Canadian market after hiring a consultant to lobby the federal government on its telecommunications policy.

* The premiers of British Columbia and Alberta have reached a framework for an agreement to satisfy British Columbia's five conditions for supporting oil pipeline development in the province, though they agree work remains to be done to ensure British Columbia gets its "fair share" of revenues from such projects.

Reports in the business section:

* Inventory levels are creeping up in Canada's most populous city Toronto and a large number of new towers are still projected to come on stream next year.

* Canada's oil industry is producing more greenhouse gas emissions per barrel than it did five years ago, despite Alberta regulations aimed at curbing them and growing political pressure on the industry from governments in the United States and Europe concerned about climate change.


* Amid growing concerns about Toronto Mayor Rob Ford's ability to do his job, councillors are mounting an effort to curb his power at city hall, and to convince him to take a leave.

* After more than two weeks of startling, acrimonious and sometimes emotional debate, the Senate of Canada on Tuesday suspended three of its members - Pamela Wallin, Mike Duffy and Patrick Brazeau - without pay for the next two years.


* Waterloo, Ontario-based software company Open Text Corp announced on Tuesday that it was buying cloud technology provider GXS Group Inc in a deal worth $1.17 billion.

* Rogers Communications Inc confirmed on Tuesday that it has cut close to 100 jobs at its media division. The Toronto-based company laid off 94 employees, spokeswoman Andrea Goldstein said, adding that represents less than 2 percent of its workforce of about 5,400.




- Wu Jinglian, senior research fellow for the State Council Developmental Research Centre, said he expects a major reform breakthrough at the upcoming 3rd Party Plenum.


- For the first three quarters of this year, the net profit of 19 Chinese listed brokerage firms rose 35.44 percent year-on-year to 19.8 billion yuan ($3.25 billion), in part due to an income increase in asset management business.

- Carbon markets in Beijing, Shanghai and Guangdong are expected to start trading by the end of this year to reduce the overall cost of emission reduction and thereby reduce emissions, said Xie Zhenhua, vice-director of the National Development and Reform Commission, on Tuesday at a conference.


- China's top climate negotiator has said he expects Chinese pollution to ease in five to 10 years.


- China's CPI in October is likely to increase by 3.2 percent year-on-year, according to a survey of 20 economists conducted by China Business News.


- After 30 years of rapid development, environmental issues, such as air pollution have become not only economic and social problems, but a political issue, said a commentary in the paper that serves as the government's mouthpiece.


- Sellers of Gannan navel oranges from Jiangsu province falsely labelled their fruit as imported from Australia or the U.S. after domestic sales tanked on reports they contained cancer-causing chemical dyes, according to official statements.


Fly On The Wall 7:00 AM Market Snapshot



Cardinal Health (CAH) upgraded to Buy from Neutral at Sterne Agee
Encana (ECA) upgraded to Hold from Sell at Deutsche Bank
Encana (ECA) upgraded to Neutral from Underperform at BofA/Merrill
Endo Health (ENDP) upgraded to Hold from Sell at Cantor
Endo Health (ENDP) upgraded to Neutral from Underweight at Piper Jaffray
Hancock Holding (HBHC) upgraded to Buy from Neutral at SunTrust
Host Hotels (HST) upgraded to Buy from Neutral at SunTrust
Interactive Intelligence (ININ) upgraded to Outperform from Market Perform at Northland
Office Depot (ODP) upgraded to Buy from Neutral at B. Riley
Pike Electric (PIKE) upgraded to Buy from Neutral at Janney Capital
Ryanair (RYAAY) upgraded to Buy from Neutral at Nomura
Southern Copper (SCCO) upgraded to Market Perform from Underperform at Cowen
T-Mobile (TMUS) upgraded to Buy from Hold at Canaccord


AMR Corp. (AAMRQ) downgraded to Neutral from Overweight at JPMorgan
Advisory Board (ABCO) downgraded to Market Perform from Outperform at Raymond James
AerCap (AER) downgraded to Underperform from Buy at BofA/Merrill
Buffalo Wild Wings (BWLD) downgraded to Hold from Buy at Miller Tabak
ExlService (EXLS) downgraded to Market Perform from Outperform at William Blair
Expeditors (EXPD) downgraded to Neutral from Buy at Goldman
Halcon Resources (HK) downgraded to Hold from Buy at Canaccord
LeapFrog (LF) downgraded to In-Line from Outperform at Imperial Capital
Maxim Integrated (MXIM) downgraded to Neutral from Buy at SunTrust
Penn National (PENN) downgraded to Sector Perform from Outperform at RBC Capital
Pioneer Natural (PXD) downgraded to Neutral from Buy at Sterne Agee
Red Robin (RRGB) downgraded to Underperform from Neutral at BofA/Merrill
Tornier (TRNX) downgraded to Sector Perform from Outperform at RBC Capital
Unilever (UN) downgraded to Neutral from Buy at Nomura
VIVUS (VVUS) downgraded to Neutral from Buy at BofA/Merrill
ZAGG (ZAGG) downgraded to Neutral from Overweight at JPMorgan


Bruker (BRKR) initiated with an Overweight at Morgan Stanley
Magnum Hunter (MHR) re-initiated with an In-Line at Imperial Capital
Morningstar (MORN) initiated with a Market Perform at Keefe Bruyette
Pattern Energy (PEGI) initiated with an Outperform at BMO Capital
Pattern Energy (PEGI) initiated with an Outperform at RBC Capital
Rogers Communications (RCI) initiated with an Equal Weight at Barclays
Shaw Communications (SJR) initiated with an Equal Weight at Barclays
TELUS (TU) initiated with an Overweight at Barclays
TG Therapeutics (TGTX) initiated with a Buy at MLV & Co.


Columbia Property Trust (CXP) sold 18 properties for $521.5M
Liberty Global (LBTYA) on track for target of $3.5B of buybacks by mid-2015
SM Energy (SM) to divest Anadarko Basin assets
VMware (VMW), Mirantis announced partnership
M/A-Com (MTSI) to acquire Mindspeed Technologies (MSPD) for $5.05 per share
Amdocs (DOX) to acquire Celcite for $129M cash


Companies that beat consensus earnings expectations last night and today include:
Humana (HUM), Delek Logistics (DKL), Mindspeed (MSPD), SandRidge Energy (SD), RenaissanceRe (RNR), HCI Group (HCI), Zillow (Z), URS Corporation (URS), ONEOK (OKE), Emerald Oil (EOX), Jazz Pharmaceuticals (JAZZ), Life Technologies (LIFE), Seattle Genetics (SGEN), ServiceSource (SREV), (WWWW), Fossil (FOSL), DaVita (DVA), DealerTrack (TRAK), Tesla (TSLA), Hain Celestial (HAIN), Ternium (TX)

Companies that missed consensus earnings expectations include:
Endeavour (END), Global Geophysical (GGS), Liberty Global (LBTYA), Ormat Technologies (ORA), Energy Transfer Equity (ETE), J2 Global (JCOM), LSB Industries (LXU), Medifast (MED), C.H. Robinson (CHRW), MAKO Surgical (MAKO),  Live Nation (LYV), Amdocs (DOX), OfficeMax (OMX), VIVUS (VVUS), Office Depot (ODP), 21st Century Fox (FOXA)

Companies that matched consensus earnings expectations include:
Papa John's (PZZA), SciQuest (SQI), Brookfield Residential (BRP), M/A-COM (MTSI), ONEOK Partners (OKS), Frontier Communications (FTR), Cadence (CADX), Limelight Networks (LLNW)


  • EU antitrust regulators are poised to levy large fines against six global banks (CRARY, SCGLY, DB, HBC, RBS, JPM) tied to their alleged attempts to manipulate benchmark interest rates, sources say, the Wall Street Journal reports
  • J.C. Penney (JCP) is expected to say this week that its sales turned positive in October, but that won't quell worries about the retailer's financial health. The concern is that sales won't rise fast enough or be profitable enough to head off the need to raise more cash next year, the Wall Street Journal reports
  • Microsoft (MSFT) narrowed its list of external candidates to replace CEO Ballmer to about five people, including Ford Motor (F) CEO Mulally and former Nokia (NOK) CEO Elop, sources say, Reuters reports
  • Starbucks (SBUX) would commit to hiring at least 10,000 veterans and spouses of active military in five years, Reuters reports
  • The U.S. oil industry (XOM, CVX,TSO), riding a domestic energy boom, is preparing to challenge restrictions on crude exports, possibly by arguing that limits designed to keep petroleum in America may violate international trade rules, Bloomberg reports
  • Wells Fargo (WFC) is among firms facing federal scrutiny of mortgage-bond sales under a 1989 law the government is using to extend probes of banks’ roles in the credit crisis, sources say, Bloomberg reports


Arc Logistics (ARCX) 6M share IPO priced at $19.00
Barracuda Networks (CUDA) 4.1M share IPO priced at $18.00
Blue Capital (BCRH) 6.25M share IPO priced at $20.00
Boise Cascade (BCC) files to sell 8M shares of common stock for holders
ChannelAdvisor (ECOM) 5M share Secondary priced at $34.00
Diamondback Energy (FANG) files to sell 17.46M shares for holders
InterMune (ITMN) 6.5M share Secondary priced at $13.00
Karyopharm (KPTI) 6.8M share IPO priced at $16.00
Keating Capital (KIPO) announces rights offering of 2.95M shares of common stock
Seacoast Banking (SBCF) commences registered direct offering of $75M of common stock (WIX) 7.7M share IPO priced at $16.50
ZELTIQ Aesthetics (ZLTQ) files to sell 4.5M shares of common stock for holders
Zogenix (ZGNX) 26.67M share Secondary priced at $2.25

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GetZeeGold's picture



De Blasio Elected Next New York City Mayor in Landslide


They voted in a communist?


On purpose?

kralizec's picture

...with their eyes open...

...some people get exactly what they deserve.

El Tuco's picture

This is awesome the city will become what it use to be in the 70's -80's before Giuliani. A fucking cesspool...

kralizec's picture

Fuck Christie!  If that is the trash the Pubbies put up against Hillary Clinton in 2016 (if we make it to 2016) what fucking difference does it make?!

I don't know who the other option will be, but they already have my vote...not that it will be counted or matter...

We are beyond FUBAR!

Bearhug Bernanke's picture

Vote third party, or don't vote. Anything else is just encouraging this false dichotomy. 

Stoploss's picture

No, no, vote Democrat. It ends faster, otherwise we end up with the same.

Red team runs defense for the blue team, and vise versa.

The "trick" is to have all one party control. To serve this purpose it has to be Dems.

Vote DEM. No IND.

edb5s's picture

"The Federal Reserve could help drive down unemployment faster if it promised to keep short-term interest rates near zero for longer than currently envisioned by officials or investors, according to a new research paper by a top central-bank staff member."


LOL.  These guys (as if we didn't already know this) are entirely batshit crazy.

polo007's picture

The Federal Reserve’s policy of seeking to drive down the U.S. unemployment rate is effective, and the level of slack in the economy justifies an accommodative stance, according to two separate papers by top Fed officials.

William English, head of the Division of Monetary Affairs, wrote that the strategy of not raising interest rates if unemployment is above 6.5 percent has provided effective stimulus, and that an even lower threshold could be helpful. A paper by David Wilcox, the research and statistics chief, says that slack in the economy argues for loose policy at a time of contained expectations for inflation.

With the central bank debating the timing of winding down its $85 billion a month in bond purchases, the research provides a window into the views of the senior Fed staff members who write the briefing materials for Federal Open Market Committee meetings and draft the Fed’s policy options. The papers were posted on the International Monetary Fund’s website ahead of a two-day conference starting tomorrow in Washington.


polo007's picture

Nov 2013/2013-76

The Federal Reserve's Framework for Monetary Policy--Recent Changes and New Questions

William B. English, J. David Lopez-Salido, and Robert J. Tetlow


polo007's picture

Nov 2013/2013-77

Aggregate Supply in the United States: Recent Developments and Implications for the Conduct of Monetary Policy

Dave Reifschneider, William Wascher, and David Wilcox

polo007's picture

According to Macquarie Research:

Could the Fed flip flop?

“Enlargement” could become the new “tapering”

- Our view that tapering will commence in March 2014 has become the consensus and continues to be our base case (50% chance). We place a lower probability (15%) on an earlier taper (Dec/Jan) and a higher probability (25%) it occurs later (April to Sept). While incremental delays could impact near-term asset class performance these would only provide temporary respite from longer-term trends established when expectations for tapering began in early 2013.

- One outcome (to which we assign our final 10% probability) that would result in a more dramatic shift would be a 180 degree turn or flip flop in Fed communication that caused investor anticipation to move from “taper” to “enlargement”. The potential for such a shift is barely being acknowledged (no less considered!), by consensus. This is all the more reason to give it attention in our view. Such a flip flop would have important implications for asset market returns. In particular, it would likely lead to outperformance from emerging market equities and precious metals. Treasury bonds would also benefit.

The Fed would need to doubt the recovery’s sustainability

- Incoming data are an obvious catalyst for a Fed flip flop. The labour market has softened recently (Fig 8, 9), housing momentum has slowed (Fig 10, 11) and inflation is well below target (Fig 12, 13). Despite downgrades in its forecasts (Fig 14), the FOMC remains above consensus (Fig 15). While this evidence may be enough to delay tapering, modest downgrades or data misses likely won’t be enough to change the Fed’s tapering narrative.

- In our view, for such a flip flop to take place, members must become more pessimistic about the recovery’s sustainability. What might cause this? The combination of continued soft data alongside greater than expected fiscal tightening in 2014 is one possibility. It was the worry about the impact from the fiscal cliff, after all, that contributed to the QE3 launch decision in 2013.

And the Tea Party could provide the catalyst

- Consensus expects the Tea Party and other Republicans to take a less hardline approach towards negotiations in 1Q14 after they were punished in public opinion polls as a result of the shutdown. Such a near-term detente in Washington will only become likely should President Obama make concessions. Should this occur, the President may be more willing to sacrifice on near-term spending rather than changes to Obamacare (his legacy) or long-term entitlement programs (resistance from his own party) (see pgs 3 to 5).

- The magnitude required to impact the 2014 growth outlook is not high. Annual spending cuts offsetting just one-third of the long-term debt impact from Obamacare would act as an incremental ~0.4% headwind to growth in 2014 (combined with sequestration already embedded in current law, this would mean fiscal drag of ~0.5 to 1.0% for much of the year) (Fig 7).

Shadow750's picture

DHS to Hire “Top Secret” Domestic Security Force

Is the Department of Homeland Security building a mercenary unit?

Paul Joseph Watson

 November 5, 2013

The Department of Homeland Security is to spend $19 million dollars on a private security force in Wisconsin and Minnesota, an armed unit that must have a “Top Secret” security clearance according to an official solicitation.

According to a solicitation posted on the Federal Business Opportunities website, the Federal Protective Service, a sub-agency of the DHS, intends to hire “armed Protective Security Officer (PSO) services at various locations throughout the states of Minnesota and Wisconsin.”

“The project will have a requirement for the contractor to have a Top Secret facility clearance by the start of performance,” states the FPS notice.

Unlike previous solicitations, which normally detail how the guards will be deployed to protect government buildings, the document does not divulge what role the armed security force will undertake.

The fact that the contractors being hired must have a “Top Secret” security clearance clearly suggests that the DHS is not merely seeking to hire armed guards, but Blackwater-style mercenaries who will be engaged in some kind of clandestine activity.


The notion of an armed security force operating domestically under a “Top Secret” designation, something normally reserved for foreign spying and military operations, underscores how the DHS increasingly treats America like some kind of occupied territory.

The hiring of private mercenaries with Top Secret clearances also suggests the DHS may be planning on using the contractors as cutouts who will be involved in a variety of different operations outside the purview of public and Congressional scrutiny.

For some, the idea of an ever-expanding federal government turning to a private security force with a “Top Secret” clearance will stir memories of Barack Obama’s pre-election promise to build “a civilian national security force that’s just as powerful, just as strong, just as well-funded (as the US military).”

The DHS’ purchase of over 1.6 billion rounds of ammunition over the course of the last 12 months has also prompted concerns that the feds are gearing up for trouble.

As we previously reported, the federal agency has spent large sums of money in recent weeks hiring large numbers of armed guards to protect government buildings, a development some have connected to the likelihood of civil unrest in America which could arise from food shortages linked to welfare cuts.


Fox News’ Neil Cavuto suggested that the Department of Homeland Security’s recent $80 million dollar outlay on armed guards to protect government buildings in upstate New York was related to potential food stamp riots.

The federal agency is also seeking to acquire 723,000 hours of armed guard services to protect government buildings in Arkansas and other areas.

The DHS also recently purchased half a million dollars worth of fully automatic pepper spray launchers and projectiles that are designed to be used during riot control situations.

Cynthia's picture

It's really sad when we consider it good news that vets can get jobs that are essentially the same as the "you want fries with that?" cliché, rather than the manufacturing jobs that used to be available in this country.

ebworthen's picture

Chris Christie and 2016 = official death of the GOP.

S.N.A.F.U.'s picture

"Starbucks wants to recruit 10,000 vets, spouses to its ranks"

In related news, Starbucks is determined to hire 10,000 less "traitors" who refused (or allowed their spouse to refuse) to work as paid assassins for a tyrannical government bent on world domination.