Frontrunning: September 14

Tyler Durden's picture

  • Weeks before U.S. election, Mideast gives Obama perfect storm (Reuters)
  • Clashes intensify near US embassy in Cairo (Al Jazeera)
  • Puppet governments in trouble: Mursi Risks Rift With U.S. or Voters as Islamists Rally (Bloomberg)
  • Protests Put Egypt Relations on Edge (WSJ)
  • Fed insists politics had no role in decision (FT)
  • UBS "rogue trader" fraudulently gambled away $2.3 billion, court told (Reuters)
  • Obama Holds Lead in Three Key States (WSJ)
  • China's Xi recovering from bad back, could appear soon - sources (Reuters)
  •  Japan voices anger over Chinese incursion after vessels entered waters around disputed Senkaku islands  (FT)
  • Goldman Scales Back Junior-Analyst Program; No Contracts for College Hires (WSJ)
  • China commentary slams Romney's "foolish" China-bashing (Reuters)
  • Aging Baby Boomers Face Losing Care as Filipinos Go Home (Bloomberg)

Overnight media digest


* The Federal Reserve, frustrated by persistently high U.S. unemployment and the torpid recovery, launched an aggressive program to spur the economy through open-ended commitments to buy mortgage-backed securities and a promise to keep interest rates low for years.

* The proposed merger of Airbus parent European Aeronautic Defence & Space Co and BAE Systems Plc would create an aerospace giant with roots in Britain, France and Germany, but the deal is being structured in large part to appease possible security concerns of the U.S. Defense Department, according to people familiar with the talks.

* Goldman Sachs Group Inc is doing away with two-year contracts for most analysts hired out of college, according to communications reviewed by The Wall Street Journal and confirmed by a Goldman spokesman.

* Nike Inc new LeBron X basketball shoes won't break the $300 mark after all-but they will still be among the most expensive sneakers ever released.

* Home Depot Inc said it will close seven of its big-box home-improvement stores in China and take a $160 million after-tax charge in the third quarter as a result of the move




The U.S. Fed has launched an open-ended effort to spark the recovery by injecting an additional $40 billion into the economy.


Shares in EADS and BAE Systems tumbled amid fear that the tie-up of the biggest defence and aerospace group could hit political obstacles.


Some analysts have suggested Apple's new iPhone 5 could sell almost twice as many in the opening weekend as the iPhone 4 two years ago.


City of London law and accountancy firms are jostling for the opportunity to earn a place on the FSA's first panel of external experts.


Deutsche Bank is seeking to convince rival investment banks to share markets and trading IT software to lower costs.


HSBC's Head of UK Bank Joe Garner will step down from the role at the end of October.


German objections forced Brussels to shelve a blueprint for a single guarantee scheme to cover all 5 trillion euros ($6.45 trillion) in euro zone bank deposits.


Nintendo said the global launch of its redesigned Wii game console would begin in the U.S. in November.



* The Federal Reserve opened a new chapter in its efforts to stimulate the economy, saying that it intends to buy large quantities of mortgage bonds until the job market improves substantially.

* UBS will face the harsh glare of the spotlight again on Friday, as opening arguments begin in the trial of a former trader accused of hiding a multibillion-dollar loss at the investment bank.

* Johnson & Johnson named an outsider on Thursday to fill a top leadership role overseeing its troubled consumer health unit, a break from the company's longstanding tradition of promoting executives from within.

* A report from the Organization for Economic Cooperation and Development pointed to a slowdown in the coming months in Italy, China, India and Russia, with weak growth in France and Germany - the two biggest economies of the struggling euro zone.




* A Toronto resident has added to the mayor's pigskin problems by filing a new complaint with integrity commissioner Janet Leiper over allegations Rob Ford runs his football teams with city resources. In a seven-page affidavit submitted Thursday with the city clerk's office, Jude MacDonald alleges the mayor violated Article VI of council's code of conduct, which prohibits members from using municipal resources, staff or property for non-city activities.

* Two leading conservation groups have come up with C$10-million in funding to help protect a wilderness valley in British Columbia that President Barack Obama has long urged Canada to save.

Reports in the business section:

* Telus Corp took aim at BCE Inc's well-honed reputation as a good corporate citizen Thursday, as it asked Canada's broadcast regulator to stop BCE's C$3.4-billion acquisition of Astral Media Inc.


* Ontario's top human rights watchdog warned Thursday it will actively challenge "discriminatory" bylaws that restrict the location of group homes, but one prominent critic says the Ontario Human Rights Commission is treading clumsily into an area better left to local decision-makers.

* Ontario's Liberal government has been found in contempt of Parliament for refusing to produce all documents on the canceled electricity generating stations in Mississauga and Oakville.


* Canada's dollar strengthened to a 13-month high versus its U.S. counterpart after the Federal Reserve announced a third round of stimulus measures to spur economic growth in the nation's largest trading partner.


RanSquawk 7:00 am Market Snapshot



3M Company (MMM) upgraded to Buy from Underperform at BofA/Merrill
HollyFrontier (HFC) upgraded to Outperform from Market Perform at Wells Fargo
Sky West (SKYW) upgraded to Strong Buy from Outperform at Raymond James


Cracker Barrel (CBRL) downgraded to Hold from Buy at KeyBanc
Knight Transportation (KNX) downgraded to Neutral from Buy at Citigroup
LPL Investment (LPLA) downgraded to Sell from Neutral at UBS
Level 3 (LVLT) downgraded to Underperform from Market Perform at Raymond James
Quest Diagnostics (DGX) downgraded to Neutral from Outperform at Credit Suisse
Saul Centers (BFS) downgraded to Neutral from Outperform at RW Baird
Spirit Airlines (SAVE) downgraded to Market Perform from Outperform at Raymond James
Trina Solar (TSL) downgraded to Underperform from Market Perform at Raymond James
Viacom (VIAB) downgraded to Equal Weight from Overweight at Evercore
Weingarten Realty (WRI) downgraded to Neutral from Outperform at RW Baird
Werner (WERN) downgraded to Market Perform from Outperform at Raymond James
Werner (WERN) downgraded to Market Perform from Outperform at Wells Fargo
Werner (WERN) downgraded to Neutral from Buy at Citigroup
Westamerica (WABC) downgraded to Market Perform from Outperform at Keefe Bruyette


Acuity Brands (AYI) initiated with a Market Perform at Wells Fargo
Ametek (AME) initiated with a Buy at Janney Capital
Applied Industrial (AIT) initiated with a Buy at Janney Capital
Bofi Holding (BOFI) initiated with an Outperform at Raymond James
Children's Place (PLCE) initiated with a Buy at Citigroup
Cognizant (CTSH) initiated with a Neutral at Credit Suisse
Danaher (DHR) initiated with a Buy at Janney Capital
Grainger (GWW) initiated with a Buy at Janney Capital
MSC Industrial (MSM) initiated with a Buy at Janney Capital
Parametric Technology (PMTC) initiated with an Outperform at Wedbush
PolyOne (POL) initiated with a Buy at Jefferies
SPX Corp. (SPW) initiated with a Buy at Janney Capital
Splunk (SPLK) initiated with a Buy at Needham
Vantiv (VNTV) initiated with an Overweight at Evercore
WESCO (WCC) initiated with a Buy at Janney Capital


Bayer HealthCare (BAYRY) to acquire U.S. Animal Health Business from Teva (TEVA)
Moody's: BAE (BAESY)-EADS (EADSY) merger would be a credit positive for both companies
Microsoft (MSFT) said Windows RT tablets to include free version of Microsoft Office
RBS (RBS) to launch IPO of Direct Line Insurance
Home Depot (HD) closed seven big box stores in China
Backs FY12 EPS view of $2.95, consensus $2.97
Western Digital (WDC) adopted dividend policy, increased share buyback by $1.5B
Belden (BDC) to sell consumer electronics assets in China
Libbey (LBY) announced cost reduction measures for U.S. operations
Akamai (AKAM) acquired FastSoft
Lakeland Industries (LAKE) to evaluate strategic alternatives


Companies that beat consensus earnings expectations last night and today include:
Analogic (ALOG), Lakeland Industries (LAKE)


Some $28B in U.S. deals between private-equity firms have been announced this year, more than double the amount for all of 2011, and on pace to be the most since 2007's $51.1B, according to Dealogic, the Wall Street Journal reports
The proposed merger of Airbus parent European Aeronautic Defence & Space (EADSY) and BAE Systems (BAESY) is being structured in large part to appease possible security concerns of the U.S. Defense Department, sources say, the Wall Street Journal reports
Apple (AAPL) did not embed NFC chips into the iPhone 5, the technology used to turn cellphones into mobile wallets, Reuters reports
Japan said it intends to stop using nuclear power by the 2030s, a major shift from policy goals set before last year's Fukushima disaster that sought to increase the share of atomic energy to more than half of electricity supply, Reuters reports
Berkshire Hathaway (BRK.A) locked in a gain on its Intel (INTC) bet by selling its stake less than a year after making the investment, shunning the buy-and-hold strategy favored by Chairman Warren Buffett. Berkshire’s Geico unit accumulated 11.5M shares of Intel in the second half of 2011 for an average price of about $22 each. The firm sold the stake in the world’s largest semiconductor maker for an average price of $27.25 this year through May 8, netting about $60M in profit, Bloomberg reports
JPMorgan Chase (JPM), which fell as much as 24% in the month after disclosing a multibillion-dollar trading loss, has erased that decline. The shares rose 3.7% to $41.40 yesterday, passing the $40.74 closing price of May 10 when a trading loss of about $2B was announced. The loss this year now stands at $5.8B, Bloomberg reports


Neuralstem (CUR) sells 7M shares at $1.00 in registered direct offering
On Assignment (ASGN) 5.173M share Secondary priced at $17.00
Oriental Financial (OFG) files to sell $36M of common stock
Textainer (TGH) 7.5M share Secondary priced at $31.50
WageWorks (WAGE) files to sell $100M in common stock

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Fri, 09/14/2012 - 07:42 | 2793885 LongSoupLine
LongSoupLine's picture

On behalf of my children and future grandchildren...

Fuck You Ben Bernanke!

Fri, 09/14/2012 - 07:42 | 2793886 mantrid
mantrid's picture

Goldman Scales Back Junior-Analyst Program; No Contracts for College Hires


even goldman doesn't believe QE has still any impact on jobs :D perhaps FED should start employing indebted graduates. no, wait, QE is not for the masses.

Fri, 09/14/2012 - 07:43 | 2793888 Catullus
Catullus's picture

Opening the prosecution case a year almost to the day since the then trader was arrested at UBS's London offices in the middle of the night, counsel Sasha Wass said: "Mr Adoboli had ceased to act as a professional investment banker and had begun to approach his work as a naked gambler. He had become what is sometimes referred to as a rogue trader."

"Adoboli's motive for this behavior was to increase his bonus, his status within the bank, his job prospects and his ego," Wass said.

"He did this by exceeding his trading limits, by inventing fictitious deals to conceal this and then he lied to his bosses," she told the jury.

Wass said his fraudulent deals had wiped 10 percent, or about $4.5 billion, off the Swiss bank's share price.

At one stage he risked losing nearly $12 billion in unhedged investments. "He had been sucked into the gambler's mindset and he started throwing good money after bad," she said. "He was putting the very existence of the bank at risk."

I love the stories prosecutors invent. It's about inventing a narrative, isn't it? He could have just claimed he thought he was basis trading and the correlation blew up.

Fri, 09/14/2012 - 07:44 | 2793892 jayman21
jayman21's picture

"Fed insists politics had no role in decision (FT)"


LOL - Cognitive Dissonance on steroids.


Thanks Tyler - I like the front running page too.

Fri, 09/14/2012 - 07:49 | 2793905 q99x2
q99x2's picture

"Weeks before U.S. election, Mideast gives Obama perfect storm"

Should give us a little extra time to get out of the US before the banksters attack here.

Fri, 09/14/2012 - 07:50 | 2793909 GolfHatesMe
GolfHatesMe's picture

Open Ended Purchases?

Is there a new Schumer phone on Ben's desk?  or is it just like one of those Staples buttons?

Fri, 09/14/2012 - 09:21 | 2794299 lsbumblebee
lsbumblebee's picture

This should help inflate the DOW, as mac'n'cheese will soon be a luxury.

"NEW YORK (AP) -- UnitedHealth Group, the health insurance company, will replace Kraft Foods in the Dow Jones industrial average, the most widely known barometer of the American stock market."

Fri, 09/14/2012 - 09:26 | 2794311 merizobeach
merizobeach's picture

Jim Rickards is a guy who gets very little coverage here on ZH.  Why is that?

Fri, 09/14/2012 - 13:01 | 2795616 DR
DR's picture

"China's Xi recovering from bad back"


Whip marks have gotta hurt!

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