Frontrunning: November 29

Tyler Durden's picture
  • So much for the euphoria: Stores open early on Thanksgiving but shoppers in no rush (Reuters)
  • Get to work Mr. Chairwoman: Do-Nothing Congress Dithers on Budget as Deadline Nears (BBG)
  • FX to Libor Probes Leave U.K. Traders Looking for Lawyers (BBG)
  • Protesters Briefly Storm Thai Army Headquarters (WSJ)
  • Berlusconi accused of bribing witnesses in prostitution trial (Reuters)
  • Japan Price Gauge Rises Most Since ’98 in Boost to Abe (BBG)
  • S&P downgrades Netherlands’ AAA credit rating (FT)
  • GrainCorp Verdict Clouds Australia Open-For-Business Pledge (BBG)
  • Hertz Fix in Dollar Thrifty Deal Fails as Insider Warned (BBG)
  • Narrow Budget Agreement Comes Into View (WSJ)
  • Billionaire Agarwal Regrets $8 Billion Aluminum Spending (BBG)
  • No Door-Busters Here: Small Merchants Tread Cautiously on Black Friday (WSJ)
  • Prisoners Fight U.S. Over Repatriation From Guantanamo Bay (WSJ)
  • Structured credit: They’re back! Leveraged super seniors return (Euromoney)
  • Brazil's OGX Asks for More Help (WSJ)


Overnight Media Digest


* Investors are piling into bets against the yen, taking another run at a trade that proved lucrative for some of the industry's largest money managers earlier this year.

* Fortress Investment and Centerbridge Partners have shown interest in LightSquared, the wireless venture that is up for sale in bankruptcy proceedings. The private-equity firms, both with penchants for buying distressed assets, have each expressed interest to LightSquared in acquiring the company's spectrum - the limited pockets of airwaves that telecommunications firms need to operate wireless networks.

* Brazil's OGX wants to persuade creditors to put up more money as it strives to avoid outright failure. The oil company posted a third-quarter loss of nearly $1 billion.

* An attempt by regulators to prevent the kind of lax underwriting that exacerbated the financial crisis is running into resistance from corporations, investors and asset managers who said new rules will cripple a $300 billion market for loans to U.S. companies.

* UBS is shaking up its investment bank, and has removed a top foreign-exchange executive, amid a burgeoning investigation into potential manipulation of currency markets.

* Australia blocked a $2.7 billion bid by U.S. agribusiness company Archer Daniels Midland to buy grain handler GrainCorp Ltd, saying a takeover would go against the national interest.

* Negotiators in Congress are moving toward a narrow agreement on this year's federal budget that would scale back some spending cuts set to take effect in January but likely wouldn't ask either party to compromise on its core stands on taxes and entitlements.

* A former top executive at UBS AG who has been sitting in an Italian jail for about a month is headed to the U.S. to face charges that he helped Americans evade taxes by stashing their money in Swiss bank accounts.



David Cameron's government faces accusations of a soft stance on human rights issues in China. An investigation by the Financial Times casts doubts over groups with Chinese backing that are looking to fund projects in the UK.

The Bank of England announced pulling off stimulus to mortgage lending and personal loans, popularly known as the Funding for Lending scheme.

Lloyds Banking Group is likely to announce the appointment of Lord Norman Blackwell as its new chairman replacing outgoing chairman Sir Win Bischoff in 2014.

Barclays is set to announce new salary structure for Chief Executive Antony Jenkins as the European Union imposed bonus caps early this year. Based on the revamped plan, Jenkins will get a part of his salary in shares next year.

Hedge fund Aurelius Capital Management has sold most of its stake in Co-operative Bank, which has recently restructured its debt, sources told The Financial Times.

Private equity firm Apollo Global Management is the preferred bidder for a 400 million pounds UK property of Aviva, sources told The Financial Times.



* The struggle of low-income workers, many in retailing, is adding momentum to efforts to increase the federal minimum wage.

* Many retailers didn't wait for the predawn hours of Black Friday this year. They were open before breakfast on Thanksgiving Day, and customers were waiting.

* The Swiss bank UBS is combining its currency, interest rates and credit trading businesses into one unit, according to a memo circulated at the bank earlier this month.

* Calpers and Calstrs, the giant employee and teachers' pension funds in California, and others are beginning to take a more aggressive role in the operation and election of corporate boards of companies they have invested in.

* The French telecommunications company Orange has reached an agreement to sell its Dominican Republic operations to the Luxembourg cable and broadband provider Altice for $1.4 billion.

* Jon Horvath, the federal government's star witness in an insider trading case, said his former boss, Michael Steinberg, wanted him to cross a legal line.




* A delicate balancing act is playing out among the growing number of retailers in Canada offering deep Black Friday discounts. The challenge is to slash prices and lure shoppers, and still come out in the black.

* Quebec child-protection authorities are in talks with their counterparts in Ontario to determine the fate of 14 children in an ultra-Orthodox Jewish community who have been ordered into foster homes.

* A New Brunswick Mountie is questioning his employer's decision not to allow him to smoke medically prescribed marijuana while in uniform. Corporal Ronald Francis told the CBC that he received a prescription for medical-grade marijuana earlier this month to help treat his post-traumatic stress disorder. He is allowed three grams of marijuana a day, although he said that he does not usually use that much.

Reports in the business section:

* Entrepreneurs seeking to launch a western discount carrier say their recipe to woo budget-minded travelers will start with two planes in the summer of 2014. Canada Jetlines Ltd describes its proposal to open an ultra low-cost carrier as a strategy to meet demand from bargain hunters turned off by higher fares charged by Air Canada and WestJet Airlines Ltd .

* Cable operator Cogeco Cable Inc is promising it will fight any large fee increases that follow the NHL's blockbuster agreement to sell its Canadian broadcasting rights to Rogers Communications Inc, an early sign of the friction the C$5.2-billion deal could create.


* With temperatures beginning their inevitable plunge below freezing on Thursday, Canada, one of the world's coldest nations, reminded its citizens to wear a hat, a scarf and "something to keep your face warm."

* With no prospect of continuing their short-lived TV talk show, the Ford brothers are planning to take their concept to YouTube, Councillor Doug Ford said on Thursday. In the aftermath of a series of scandals, U.S. and Canadian production houses have flooded Mayor Rob Ford's office, said his brother, all pitching a reality show concept. Councillor Ford said they have passed on all offers.


* In a stunning miss of budgetary forecasts that will trigger credit rating reviews, the Quebec government has pushed back its goal of wiping out its budget deficit by two years.

* Quebec's professional engineering association is vowing to "clean house" and sanction crooked members as revelations of corruption and shady business liaisons continue to surface almost daily in the province's construction industry.




- Twenty-five more policies for the planned Shenzhen Qianhai economic zone have been submitted for approval, according to an unnamed government official.

- China could allow eligible financial corporations to issue bonds, said Li Jianhua, a senior official at the China Banking Regulatory Commission.


- The China Securities Regulatory Commission will support banks to issue preferred shares in future, said Jia Wenqin, a senior official of CSRC's accounting department.


- President Xi Jinping has urged officials to push forward with reforms but avoid being rash and reckless in the process.


- Government workers need to take concrete actions, not just words, said a commentary in the paper that acts as the party's mouthpiece.



Fly On The Wall 7:00 AM Market Snapshot



Commerzbank (CRZBD) upgraded to Equal Weight from Underweight at Morgan Stanley
Concha Y Toro (VCO) upgraded to Buy from Neutral at Citigroup
Prudential plc (PUK) upgraded to Outperform from Market Perform at Keefe Bruyette
Rentokil (RTOKY) upgraded to Buy from Neutral at BofA/Merrill


Experian (EXPGY) downgraded to Sell from Neutral at Goldman
Remy Cointreau (REMYF) downgraded to Sell from Hold at Societe Generale
Remy Cointreau (REMYF) downgraded to Sell from Neutral at Citigroup
Renren (RENN) downgraded to Underperform from Hold at Jefferies
Volvo (VOLVY) downgraded to Underweight from Equal Weight at Morgan Stanley


Antofagasta (ANFGY) initiated with an Outperform at Bernstein


Archer Daniels (ADM) said 'disappointed' by rejection of GrainCorp (GRCLF) application
KKR (KKR), Gland Pharma announced partnership
Rio Tinto (RIO) to suspend production at Gove alumina refinery
DSS Technology (DDS) filed patent lawsuit against Apple (AAPL)
Vale (VALE) said will pay back tax bill for overseas operations to Brazil, Reuters reports


  • An attempt by the Fed, SEC and other regulators to prevent the kind of lax underwriting that exacerbated the financial crisis is running into resistance from corporations, investors and asset managers (WFC, WEN, DNKN, JCP, SEAS) who said new rules will cripple a $300B market for loans to U.S. companies, the Wall Street Journal reports
  • Dish Network’s (DISH) $2.2B bid for LightSquared can go forward with the involvement of Dish Chairman Charlie Ergen, a Nevada judge ruled. Separately, Fortress Investment Group (FIG) and Centerbridge Partners have shown interest in LightSquared, the Wall Street Journal reports
  • (AMZN) has no intention of bowing to pressure from striking workers in Germany, its second biggest market behind the U.S., and is more concerned about bad weather hurting Christmas deliveries, Reuters reports
  • Exxon Mobil (XOM) turned over a 25% stake in Iraq's West Qurna-1 oilfield project to China energy company PetroChina (PTR), said Iraq's deputy prime minister for energy, Reuters reports
  • Morgan Stanley (MS) is set to take the top spot in Japanese M&A’s for the first time in 16 years, a sign the firm’s three-year-old tie-up with Mitsubishi UFJ Financial Group (MTU) is paying off. Goldman Sachs (GS) is second, Bloomberg reports
  • Sotheby’s (BID) is bringing works by Picasso, Rembrandt and Zao Wou-Ki to Beijing where it will hold its first mainland commercial auction on December 1. The auction house said it’s offering $212M worth of western and Chinese art, jewelry and furniture, Bloomberg reports


Brave Warrior Advisors reports 5.7% passive stake in Higher One (ONE)
Gabelli raises stake in Mocon (MOCO) to 8.34% from 6.94%
Greenwoods reports 4.9% passive stake in Noah Holdings (NOAH)

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no more banksters's picture

Opposition MP hints big interests of multinational pharmaceuticals behind a recent amendment voted by Greek parliament

Headbanger's picture

Oh no!  Not The Netherlands being down graded!   I can't take this anymore!

Next thing you know they'll down grade  Belarus and it's all over then!

GrinandBearit's picture

So much for the euphoria: Stores open early on Thanksgiving but shoppers in no rush (Reuters)

The MSM is desperate to pump it... every year it gets worse too. 

How can there be a rush to shop when real unemployment is around 20-22%, most "shopppers" are barely making ends meet earning mimimum wage and 50 million people in this country are on food stamps?

lolmao500's picture

Hopefully the no rush thingee will be for real since I work today...

Fucking brilliant :

US Defense Sec Hagel assured his Japanese counterpart in a phone call that US-Japan defense pact covers Senkakus

China does it's bit :

China responds. Sends patrols, incl Su-30 fighters into ADIZ.

polo007's picture


With Beijing repressing domestic consumption and holding down the yuan's exchange rate to give it a competitive edge in world markets, foreign direct investment poured into China to take advantage of cheap labour, land and other inputs.

Exports duly exploded. China's resulting current account surplus, though now declining, contributed to a glut of global savings that depressed U.S. interest rates and helped fuel the fateful boom in sub-prime mortgages.

China's foreign exchange reserves today stand at an unfathomable $3.66 trillion.

Tens of millions of people have been lifted out of poverty by the rise of China and other poor countries plugged into global supply chains.

But outsourcing of production has hollowed out skilled jobs in advanced economies in what British financial analyst Tim Morgan, in his book ‘Life After Growth' calls "a self-inflicted disaster with few parallels in economic history".

Jen added: "If you are a labourer in the West, you have been hurt. It's very clear. If you are a capitalist in the West, you have benefited immensely."

Dominic Rossi, global chief investment officer for equities at Fidelity Worldwide Investment, noted that labour's share of U.S. non-financial output held steady at between 61 percent and 65 percent for half a century.

"Then, something happened. From 2000, it plummeted and currently rests at an all-time low of 57 percent," Rossi wrote in the Financial Times. Over the same period, median U.S. household incomes have fallen in real terms.

"Overall, labour is not participating in economic growth as it has done in the past," he said.

The flip side is that U.S. corporate profit margins stand at 12 percent of gross domestic product, a record high, yet net corporate investment is only 4 percent of GDP, Rossi noted.

The picture of corporations awash with cash but reluctant to invest is mirrored in Europe.


So what is to be done?

Against a background of high debt and depressed incomes and investment, former U.S. Treasury secretary Larry Summers posited at a recent IMF conference that real interest rates consistent with full employment could now be minus 2-3 percent.

"We may well need in the years ahead to think about how we manage an economy in which the zero nominal interest rate is a chronic and systemic inhibitor of economic activity, holding our economies back below their potential," Summers said.

He is not alone in worrying about the limits of monetary policy even as the risks of outright deflation grow.

Alan Blinder, a former Federal Reserve vice-chairman, expects inflation to be lower on average over the next half a century than in the past 50 years. As a result, central banks would keep hitting the zero lower bound (ZLB) on nominal interest rates.

"We have just experienced first-hand how difficult the ZLB can make it for a central bank to stimulate its economy out of a recession and, therefore, how large the potential social costs are," Blinder wrote in a recent essay.

Bill White, a former chief economist of the Bank for International Settlements, blamed central banks for wrongly analysing the strong disinflationary impulse imparted by the reintegration of previously isolated economies such as China into the world trading system.

"Globalisation constituted a significant, long-lasting and positive productivity shock that should have been met with tighter rather than easier monetary policy," White said in a speech to Omfif, a London think tank.

By leaning against what they saw as excessive disinflation, central banks have helped to create the imbalances now dogging the global economy and have postponed the adjustments needed to achieve sustainable, balanced growth, White argued.

"In short, ‘still more of the same' monetary policies since 2007 have left us, in my view, with old problems unresolved and some new ones added as well," he said.

TheRideNeverEnds's picture

That is a lot of words but I didn't see the only thing that matters; is QEternity still in effect?  


I think it must be as we opened up and shot directly to all new new all time highs.