Frontrunning: November 7

Tyler Durden's picture
  • Twitter's IPO to Make Market Debut (WSJ); Twitter Raises $1.82 Billion, Pricier Value Than Facebook (BBG)
  • Worried Senators Press Obama on Health Law (WSJ)
  • Greenspan Says Yellen Was His Guide to Economics Research at Fed (BBG)
  • European Central Bank seen holding rates despite inflation tumble (Reuters)
  • Wall St. Bonuses Over All Are Predicted to Rise 5 to 10% (NYT)
  • Cautious consumers seen curbing U.S. economic growth (Reuters)
  • China Grants U.S. Investors Indirect Access to Its Stock Markets (WSJ)
  • Higher Tax Rates Give Top U.S. Earners Year-End Headaches (BBG)
  • Iran Loses Nuclear Leverage as World Ignores Export Drop (BBG)
  • NYPD Commissioner Ray Kelly in the running for JPMorgan job (Post)
  • German Industrial Production Falls as Recovery Slows (BBG)
  • LME Board Approves Warehouse Policy Changes (WSJ)
  • Watch Billionaire Steven Cohen Stumble Over Insider Trading Rules (PBS)
  • U.S. Pushes Germany for Details of Art Cache (WSJ)
  • Return of Cash Sparks Emerging-Market Rallies (WSJ)


Overnight Media Digest


* Democratic senators took their complaints about the troubled launch of the federal health law directly to the White House, as some in the party warned they would face voter backlash next year if the problems weren't fixed.

* The White House heralded President Obama's phone call with Iranian counterpart Hasan Rouhani earlier this fall as a foreign-policy milestone born of a rush of last-minute diplomacy. But top National Security Council officials began planting the seeds for the exchange months earlier in a series of secret meetings and telephone calls.

* Cash is returning to emerging markets, sparking stock rallies and a surge in fundraising. Calm in the United States, combined with low rates, has spurred global investors to try to juice returns before the end of the year.

* China has approved two domestic fund managers to offer products in the United States that for the first time would give investors there indirect access to shares traded in Shanghai and Shenzhen.

* Nestlé is slimming down. The Swiss food giant has struck a deal to sell its struggling Jenny Craig diet business unit to North Castle Partners, a U.S. buyout firm.

* Wall Street's bonus season should be a good one for those who manage other people's money. But for many bond traders and merger bankers, 2013 could be a year to forget.

* Senior U.S. regulators are reviewing the risks associated with the asset management industry, including a preliminary study of some of its top players, like Fidelity and BlackRock .

* Wal-Mart Stores Inc suffered from a website glitch Wednesday that set off a shopping frenzy as customers tried to snap up expensive items, such as computer monitors and televisions, for less than $10.

* A Manhattan federal judge on Wednesday approved one piece of the $1.8 billion settlement between the Justice Department and hedge-fund group SAC Capital Advisors LP, saying whether or not he thinks the penalty is appropriate is "irrelevant."

* Bank of America Corp Chief Executive Brian Moynihan painted a picture of modest economic growth in the U.S., but said he expects the Federal Reserve to continue its pace of bond buying until stronger signs of expansion appear.



Twitter's priced its initial public offering above the expected range at $26 per share on Wednesday, pushing its valuation to $18 billion as it capitalised on strong investor demand.

Royal Dutch Shell is expected to soon file a formal exploration plan with the U.S. government for the Chukchi Sea off the northwest coast of Alaska.

British credit data provider Experian agreed to buy U.S. healthcare data firm Passport Health Communications for $850 million on Wednesday, sending its shares down more than 6 percent amid fears that it had overpaid.

U.S. alternative asset manager Carlyle Group LP reported an 11 percent drop in third-quarter profit on Wednesday, hurt by fewer portfolio company sales and listings.

British discount retailer Poundland kick-started plans for a London share sale on Wednesday with its private equity owner Warburg Pincus picking investment banks Credit Suisse Group AG and JPMorgan Chase & Co to advise it on the listing that could value the company at between 700 million pounds and 800 million pounds ($1.1 billion to $1.3 billion), according to people familiar with the situation.

Brazil's Vale SA reported its first quarterly profit increase in more than two years on Wednesday, as China's steelmakers replenish stocks and aggressive cost-cutting plan at the world's second-largest miner starts to pay off.



* Twitter's initial public offering, which values the company at roughly $18 billion, is a sign of its maturity, even as it combats slowing growth.

* Giant retailer Amazon announced a program to pay independent bookstores to sell its e-books and popular reading devices.

* Federal prosecutors and SAC Capital Advisors cleared a legal hurdle on Wednesday after Judge Richard Sullivan said he would sign off on the civil portion of the hedge fund's insider trading guilty plea and roughly $1.2 billion penalty.

* Google said it would appeal a French court's ruling that it strip from its search results nine images of the former European racing chief Max Mosley.

* Certain products on the Walmart website displayed wildly low prices Wednesday morning, such as a kayak for $11 or a treadmill for $33, according to news reports and Walmart. There was even a $579 projector available for $8.85.

* Time Warner reported mostly upbeat earnings on Wednesday, and television was the biggest reason. The company reported earnings of $1.18 billion for the third quarter of 2013, compared with $822 million for the same quarter a year ago, a 44 percent increase.

* Video-rental chain Blockbuster will close the 300 stores that it still has in the next two months, said the company's owner, Dish Network.

* Wall Street's financial advisers, asset managers and underwriting investment bankers can expect their 2013 bonuses to rise as much as 15 percent, according to a closely watched compensation survey to be released on Thursday.

* The move by the activist hedge fund Clinton Group to try to oust senior executives at the Internet and shopping network ValueVision is poised to become a bitter battle.




* Canadian Senators Mike Duffy, Pamela Wallin and Patrick Brazeau have been suspended without pay from the Senate over their expense claims, but they may have other avenues to collect money from the taxpayers of Canada.

* Canada is a global steward of the seas with the longest coastline in the world stretched along three oceans, but that role is at risk, says a new report.

Reports in the business section:

* Canada's crude oil discount is back with a vengeance, as pipeline congestion, recent refinery fires and ever-increasing supply from the oil sands hammer prices.

* Canada's Chemtrade Logistics Inc is in advanced talks to buy General Chemical Corp, two people familiar with the matter said on Wednesday, in a deal that could value the specialty chemicals maker at around $1 billion.


* The Parti Quebecois' controversial charter of values is being rebranded, and its official new name is less than succinct. It will be tabled on Thursday as a bill in the legislature under the formal title: Charter Affirming the Values of Secularism and the Religious Neutrality of the State, as Well as the Equality of Men and Women, and the Framing of Accommodation Requests.

* Los Angeles may be home to three-hour traffic delays and Toronto may host perpetually backed-up downtown thoroughfares, but according to a new report by a Netherlands-based GPS manufacturer, traffic congestion in Metro Vancouver beats them all.


* British Columbia is touting an immense oil and gas resource identified by a new study of the province's emerging shale prospects as a competitive advantage in the race to develop a liquefied natural gas industry.

* Qatar Holding LLC, a foreign arm of the Qatar Investment Authority, will buy about $200 million of an offering of convertible debentures announced by BlackBerry earlier this week, according to a report by the Sovereign Wealth Fund Institute.




- Two academic institutions on Wednesday started issuing China's first ocean development index, the Xinhua Ocean Development Index, which rose 23.18 percent a year on average from 2006 to 2011, faster than an annual 10.52 percent growth in China's gross domestic product (GDP) during the period.

- China's big four state banks extended 182 billion yuan ($29.8 billion) in new local-currency loans in October, the lowest monthly lending in 2013, mainly due to seasonal factors which typically make banks' deposits drop in October.


- Some mainland Chinese banks, including Agricultural Bank of China, Bank of China and China Development Bank, may win approval to issue bonds in Taiwan before the end of this year -- the first time for Chinese companies to float debt in Taiwan.

- China Life Anbao Fund Management Co, the first Chinese stock mutual fund owned by an insurer, China Life Insurance (Group) Co, was established on Wednesday.


- The Hong Kong Stock Exchange plans to start evening trading in yuan futures early next year in the latest sign of the rising global status of the Chinese currency.


- China plans to raise its whole-year target of installed solar capacity to 12 gigawatts in 2014, an increase of 20 percent from the original target, in an attempt to stimulate the sector.


- A commentary by this mouthpiece of the Chinese Communist Party urges officials to stop pursuing achievements during their terms at the cost of environment so as to win promotions -- a common practice in China at present.



Fly On The Wall 7:00 AM Market Snapshot



American Eagle (AEO) upgraded to Buy from Hold at Brean Capital
HomeAway (AWAY) upgraded to Strong Buy from Outperform at Raymond James
Parker-Hannifin (PH) upgraded to Buy from Hold at Jefferies
Rocket Fuel (FUEL) upgraded to Outperform from Perform at Oppenheimer
Synaptics (SYNA) upgraded to Overweight from Neutral at JPMorgan
Two Harbors (TWO) upgraded to Buy from Neutral at Sterne Agee
Williams-Sonoma (WSM) upgraded to Buy from Hold at BB&T


51job (JOBS) downgraded to Underweight from Equal Weight at Morgan Stanley
Abercrombie & Fitch (ANF) downgraded to Underperform from Buy at BofA/Merrill
Aimco (AIV) downgraded to Sector Perform from Outperform at RBC Capital
Devon Energy (DVN) downgraded to Neutral from Outperform at Credit Suisse
Garmin (GRMN) downgraded to Neutral from Buy at BofA/Merrill
Genesis Energy (GEL) downgraded to Market Perform from Outperform at Wells Fargo
IAMGOLD (IAG) downgraded to Underweight from Equal Weight at Barclays
InnerWorkings (INWK) downgraded to Market Perform from Outperform at William Blair
Meadowbrook Insurance (MIG) downgraded to Neutral from Buy at Compass Point
SkyWest (SKYW) downgraded to Market Perform from Outperform at Raymond James
Talisman Energy (TLM) downgraded to Sector Perform from Outperform at RBC Capital


Manitowoc (MTW) initiated with an Outperform at Credit Suisse
TripAdvisor (TRIP) initiated with a Hold at Cantor
Twitter (TWTR) initiated with a Buy at Cantor
Twitter (TWTR) initiated with an Outperform at RBC Capital


Toll Brothers (TOL) agreed to purchase Shapell Homes for about $1.6B in cash
RDA Microelectronics (RDA) received acquisition proposal of $18 per ADS from Unigroup
Nestle (NSRGY) solds Jenny Craig in North America and Oceania, terms not disclosed
AES Corp. (AES) to sell Cameroon businesses for $220M of net equity proceeds
Activision Blizzard (ATVI) sees 'challenging' Q4 due to increased competition
Siemens (SI) sees FY14 earnings growth at least 15%, plans EUR 4B share buyback over next 24 months
Qualcomm (QCOM) sees lower growth rate in 2014, sees completing $4B in stock repurchases in FY14
Whole Foods (WFM) raised dividend 20%, announced additional $500M share repurchase, sees 33-38 store openings in FY14, 35-40 in FY15
YRC Worldwide (YRCW) met with International Brotherhood of Teamsters, postponed Q3 earnings call


Companies that beat consensus earnings expectations last night and today include:
Prestige Brands (PBH), Towers Watson (TW), Brookdale Senior Living (BKD), Prudential (PRU), Sanchez Energy (SN), EOG Resources (EOG), Transocean (RIG), Omega Protein (OME), Genco Shipping (GNK), Giant Interactive (GA), EnerSys (ENS), Activision Blizzard (ATVI), Primerica (PRI), ProAssurance (PRA), Walter Investment (WAC), Genpact (G), Whole Foods (WFM)

Companies that missed consensus earnings expectations include:
Fairway Group (FWM), Coty (COTY), Visteon (VC), Delek US (DK), Checkpoint Systems (CKP), Kronos Worldwide (KRO), Cal Dive (DVR), Willbros Group (WG), BioScrip (BIOS) Neenah Paper (NP), Luby's (LUB), tw telecom (TWTC), Markel (MKL), Flotek (FTK), Rosetta Stone (RST), American Water (AWK), PHH Corp. (PHH), Qualcomm (QCOM)

Companies that matched consensus earnings expectations include:
Corrections Corp. (CXW), ACADIA (ACAD), CenturyLink (CTL), ARC Document Solutions (ARC), Noodles & Company (NDLS), Envestnet (ENV), CBS (CBS)


  • Bank of America (BAC) CEO Moynihan painted a picture of modest economic growth in the U.S., but said he expects the Fed to continue its pace of bond buying until stronger signs of expansion appear.  He said he thinks the Fed will continue its current bond-buying program to keep interest rates low, the Wall Street Journal reports
  • It isn't a good time to invest in Twitter (TWTR) when it starts trading today. Three reasons to sit this one out: Don't invest in individual stocks. Especially don't invest in tech IPOs. You don't understand Twitter. Few people do, really. Twitter's place in the advertising business isn't clear, the Wall Street Journal reports
  • The door is still ajar for Alibaba (ALBCF) to list its shares in Hong Kong as public comments by the  e-commerce's founder Jack Ma and Hong Kong politicians, blog posts from the head of the Hong Kong stock exchange, and a statement from the bourse show a thaw, Reuters reports
  • Humana (HUM) gave the first detailed view of how the problem-plagued roll out of President Obama's signature healthcare law is affecting the industry, saying it had cut its enrollment forecasts by at least a half and expected the government to delay the sign-up deadline, Reuters reports
  • Treasury Secretary Lew warned CEOs of top U.S. banks in a private meeting last month that the final Volcker rule ban on proprietary trading would be tougher than Wall Street expects.
  • He told industry leaders that he has been encouraging regulators to make provisions of the Volcker rule more stringent, sources say, Bloomberg reports
  • Southwest Airlines (LUV) and JetBlue (JBLU) told regulators they’re interested in acquiring Washington flight slots that may be available under a settlement of the U.S. lawsuit to block the American Airlines (AAMRQ)-US Airways (LCC) merger, sources say, Bloomberg reports


Twitter (TWTR) 70M share IPO priced at $26.00
Armstrong World (AWI) files to sell 6M shares of common stock for holders
Carrizo Oil & Gas (CRZO) 4.5M share Secondary priced at $44.00
Diamondback Energy (FANG) 2M share Secondary priced at $53.46
Forum Energy (FET) files to sell 6M shares of common stock for holders
Glowpoint (GLOW) files to sell 6.43M shares of common stock for holders
Hospitality Properties (HPT) files to sell 8M shares of common stock
Ikanos(IKAN) 25M share Spot Secondary priced at $1.00
Integra LifeSciences (IART) 3.5M share Secondary priced at $40.00
Intuit (INTU) files to sell 116K shares of common stock for holders
KAR Auction (KAR) 23.9M share Spot Secondary priced at $27.60
LGI Homes (LGIH) 9M share IPO priced at $11.00
MRC Global (MRC) files to sell 17.49M shares of common stock for holders
Mavenir Systems (MVNR) 5.45M share IPO priced at $10.00
Midcoast Energy (MEP) 18.5M share IPO priced at $18.00
Millennial Media (MM) files to sell 24.75M shares of common stock for holders
Norcraft (NCFT) 6.4M share IPO priced at $16.00
Ramco-Gershenson (RPT) files to sell 4.5M shares of common stock
Tableau Software (DATA) 7.7M share Secondary priced at $65.00

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Confused's picture

-NYPD Commissioner Ray Kelly in the running for JPMorgan job (Post)


This is fucking classic. 


-U.S. Pushes Germany for Details of Art Cache (WSJ)


Who is REALLY pushing Germany? 

Urban Redneck's picture

The IRS loves taxing zero basis capital gains.

There's also an aspect to internal law and foreign relations that doesn't get covered history books-- since an individual can have "difficulty" bringing a legal case against an entity that has sovereign immunity in its own courts, an individual can actually transfer that claim to another sovereign entity and then let them negotiate/litigate/fight it out... The history of that particular maneuver in the US is almost as old as the nation itself.

29.5 hours's picture



Maybe Tyler left off this link so he could be first in line outside Blackstone offices...

Blackstone Lures Investors to Home-Rental Bonds




Confused's picture

Same game, different name, what could possibly go wrong? 

no more banksters's picture


Breaking: neoliberal dictatorship invades in the ERT building!

polo007's picture

Today, a small group of central bank chiefs can meet in private and wield unprecedented power over global markets, economies, and wealth distribution. They are held accountable to the ruling politicians that in most cases have no respect for the principle of sound money. Instead, in Europe, the UK, Japan, the US, and elsewhere, central bankers have become intricately linked to monetizing government debts, and financing the expansion of the welfare state. As such, disciplined and independent central banking, a cornerstone to any hope for sound money and credit, has been relegated to the dustbin of history.

Central banking, - ostensibly designed to combat high levels of inflation and promote economic growth, while overseeing the stability of the banking industry, has instead, morphed into technocratic planning boards that are constantly involved in rigging the value of the financial markets. Their principal modus of operandi is to encourage risk taking in the local stock markets, through massive injections of ultra-cheap liquidity. However, the result isn't better economic conditions, but rather the expansion of massive bubbles in various financial markets. In turn, central bankers have widened the wealth gap between the owners of equities, and the rest of the struggling population whose wages are sliding backwards, and is increasingly seeking out assistance through welfare programs.

Historically, the value of the stock market reflected the dynamics of the local economy, and would influence the social mood of the populace. A stock market that is booming would signal an up-and-coming economy that would be followed by increased business investment and the creation of good paying jobs. Rising share prices boost the fortunes of about 10% of households in the country, and triggers a greater propensity to spend for goods and services - otherwise known as the "trickle down" effect. Therefore, keeping a constant vigil on the behavior of the stock market, - has become the raison d'être of central banks.

In earlier times, stocks traded on the local stock exchange used to track or even anticipate the nation's business cycle. But that reliable role as a leading indicator began to seriously break down after the financial crisis of 2008. Since then, because of the hallucinogenic effects of "quantitative easing" (QE), - stock markets are no longer reflections of the health of the local economies or forecasting mechanisms of the business cycles. Instead, they are just slices of ownership in specific companies that are unreliable gauges of anything but the underlying strength of the companies they represent, their dividend payments and buybacks, and the schizophrenic mind-set of the traders who buy and sell the shares.

Bobbyrib's picture

China Grants U.S. Investors Indirect Access to Its Stock Markets

If you actually believe China is not a communist country, you have no idea what a communist country is.

sbenard's picture


In the Bloomberg article above, former Fed Chairman Alan Greenspan says that Janet Yellen, Obama's new proposed Fed Chair, was his primary inspiration for monetary and economic policy, presenting him regularly with "various new theories /that/ were coming up and the like in academia". Greenspan was and is so entranced with Yellen's "new theories" and "academia" that he fully endorses his beloved inspiration source as the next Fed Chair. It must have been love at first sight!

But do these people ever consider that the latest fad and "new economic theory" may be WRONG? That it may be incomplete? That it may even be destructive? That it may bring a disaster? NO! To them, it's a new tool or toy to use US and the US economy as their latest guinea pig to experiment on!

"Greenspan's put", as it was called at the time, was likely the primary cause of the housing bubble, and when it collapsed, the housing crisis and resulting Great Recession. But did he show even a hint of remorse for what he did? No!

How many people lost their livelihoods because of the Greenspan/Yellen penchant for playing with the latest "new economic theory" that resulted in catastrophic collapse? How many people lost their homes? How many people's lives were ruined because of his obsession with the latest economic toy from the ivory towers of academia? Greenspan is still in denial of his mistakes and the resulting chaos he brought. Worse still, he is unapologetic, and thinks that Yellen, his economic playmate in his science experiments, should now be empowered to play with us, by putting their pattycake experimentation on steroids!

dizzyfingers's picture

Posted: 05 Nov 2013 10:00 PM PST

Cargill will begin labeling their beef products that have “finely textured beef” (FTB) or pink slime and genetically engineered ingredients. Wish government would do the same?