Frontrunning: September 18

Tyler Durden's picture
  • Nothing has changed and things have just gotten worse: Europe Banks Fail to Cut as Draghi Loans Defer Deleverage (Bloomberg)
  • Mitt Romney secret video reveals views on Obama voters (BBC)
  • Romney Stands by Government-Dependent ‘Victims’ Remark (Bloomberg)
  • Video shows Libyans helping rescue U.S. ambassador after attack (Reuters)
  • Fannie Mae paid BofA premium to transfer soured loans-regulator (Reuters)
  • Northrop to shed nearly 600 jobs (LA Times)
  • LOLmarkets: Retail Currency Traders Turn to Algorithms (WSJ)
  • U.K. Royal Family Wins French Ruling on Kate Photos (Bloomberg)
  • Nevada recluse dies with $200 in bank, $7 million in gold at home (LA Times)
  • Gap Between Rich and Poor Grows in Germany (Spiegel)
  • Chicago teachers meet Tuesday to decide whether to end strike (Reuters)
  • Australia's Fortescue wins debt breather, shares soar (Reuters) ... a deal which ultimately will prime equity and unsecureds by $4.5 billion in secured debt
  • Ford car sales fall 29% in Europe (FT)

Overnight media Digest


* Political pressures in both the United States and China are straining ties between the two superpowers as President Obama seeks trade sanctions and Beijing faces off with Japan over an island dispute.

* Even before executives negotiating the mega merger of Airbus parent European Aeronautic Defence & Space Co and Britain's BAE Systems Plc try to win over wary investors, they face the delicate challenge of pleasing five governments in four languages with dozens of conflicting interests.

* The Reserve Bank of India declined on Monday to cut interest rates despite the government's moves last week to pare its deficit and let in more foreign investment, steps the central bank had set as prerequisites for further monetary easing.

* Credit Suisse AG is handing over more internal documents to U.S. authorities in response to Washington's crackdown on tax evasion, according to an internal memo reviewed by The Wall Street Journal.

* Russia drew strong investor demand for the sale of a $5 billion stake in its largest lender, Sberbank Rosii OAO , in the country's first major state asset sale in more than 18 months.




Britain's prime minister has demanded a rethink of flagship state pension reforms amid fears they could alienate core Conservative supporters, including the electorally crucial "grey" vote.


Sberbank is set to close a more than $5 billion London-Moscow public offering as soon as Tuesday, in a deal that is seen as a cornerstone of Russia's privatisation programme.


Apple's iPhone 5 has smashed records before hitting the shelves with more than 2 million people pre-ordering the coveted smartphone in its first 24 hours.


"Airbus" has been proposed by EADS as a possible name for the new 38 billion euro company to be formed by combining he Franco-German group with the UK's BAE Systems .


A technology company racing to become the default "wallet" on mobile devices has been valued $3.25 billion in its latest fundraising, confirming its status as one of Silicon Valley's hottest start-ups.


Shell had hoped its Arctic campaign would be a showcase for its technological prowess, highlighting its ability to operate at the frontiers of oil exploration, but the programme has so far failed to take off.


Switzerland's two biggest banks could suffer outflows of more than 60 billion swiss francs ($64.80 billion)as a result of international efforts to clamp down on wealthy individuals using the country's bank secrecy laws to evade taxes.



* With the prospect of rich new oil fields in tantalizing reach, Royal Dutch Shell Plc announced on Monday that it was forced to put off completing wells in the Alaskan Arctic for another year after a spill containment dome was damaged during a testing accident.

* The French finance minister on Monday laid out a series of concerns that would have to be addressed before France signs off on the proposed merger of the defense giants European Aeronautic Defense & Space Co and BAE Systems Plc.

* Home improvement retailer Lowe Cos Inc on Monday abandoned its $1.8 billion hostile bid for its Canadian competitor Rona Inc, a move that avoids a political showdown with the government in Quebec.

* Vanity Fair magazine, which has been battling declining newsstand sales in the United States, is looking for more readers in Europe. Next year, Conde Nast is starting a monthly edition of Vanity Fair in France.




* Conservative MPs are locked in debate over how to water down the lucrative pensions enjoyed by federal politicians - changes that will force Members of Parliament to shoulder far more of the burden for their nest eggs.

Reports in the business section:

* A strike that would have halted a large chunk of Canada's auto production has been averted after the Canadian Auto Workers union extended contracts with Chrysler Group LLC and General Motors Co and reached a tentative deal with Ford Motor Co .

* Canada's housing market is cooling rapidly in the wake of government changes to mortgage insurance rules, amid suggestions that many potential first-time buyers are opting to remain tenants.


* The Canadian flag was removed from its spot inside the Quebec legislature as members of the pro-independence Parti Quebecois took oath of office Monday.


* Canada's top natural gas producers warned the National Energy Board on Monday that they won't support an uncompetitive Mainline, opening the door to declaring the $6 billion natural gas pipeline a "stranded asset" unless owner TransCanada Corp finds ways to adapt to market realities.

* Battle lines are being drawn in the oil sands - and on Parliament Hill - over the $15 billion proposed takeover of Calgary-based energy producer Nexen Inc by Chinese state-owned oil giant CNOOC Ltd.


Fly on the Wall 7:00 AM Market Snapshot



Broadcom (BRCM) upgraded to Outperform from Sector Perform at RBC Capital
Jive Software (JIVE) upgraded to Outperform from Market Perform at Wells Fargo
Lamar Advertising (LAMR) upgraded to Conviction Buy from Neutral at Goldman
Manhattan Associates (MANH) upgraded to Buy from Hold at ThinkEquity
Pall Corp. (PLL) upgraded to Neutral from Underperform at BofA/Merrill
Rubicon (RBCN) upgraded to Buy from Hold at ThinkEquity
TASER (TASR) upgraded to Overweight from Neutral at JPMorgan


Abbott (ABT) downgraded to Market Perform from Outperform at Leerink
Alcoa (AA) downgraded to Hold from Buy at Jefferies
American Capital Agency (AGNC) downgraded to Hold from Buy at Jefferies
Analog Devices (ADI) downgraded to Sector Perform from Outperform at RBC Capital
Bed Bath & Beyond (BBBY) downgraded to Perform from Outperform at Oppenheimer
Boston Scientific (BSX) downgraded to Market Perform from Outperform at Leerink
CARBO Ceramics (CRR) downgraded to Hold from Buy at Dahlman Rose
Cash America (CSH) downgraded to Hold from Buy at Jefferies
DFC Global (DLLR) downgraded to Hold from Buy at Jefferies
Health Net (HNT) downgraded to Underperform from Hold at Jefferies
Intel (INTC) downgraded to Sector Perform from Outperform at RBC Capital
Lumber Liquidators (LL) downgraded to Underperform from Market Perform at Raymond James
Molina Healthcare (MOH) downgraded to Underperform from Hold at Jefferies
NVIDIA (NVDA) downgraded to Sector Perform from Outperform at RBC Capital
Optimer (OPTR) downgraded to Underperform from Buy at BofA/Merrill
Reliance Steel (RS) downgraded to Hold from Buy at Jefferies
Schnitzer Steel (SCHN) downgraded to Hold from Buy at Jefferies
Steel Dynamics (STLD) downgraded to Hold from Buy at Jefferies
Texas Instruments (TXN) downgraded to Sector Perform from Outperform at RBC Capital
WMS Industries (WMS) downgraded to Sell from Hold at Deutsche Bank
Worthington (WOR) downgraded to Hold from Buy at Jefferies


A.O. Smith (AOS) initiated with a Buy at Janney Capital
Albermarle (ALB) initiated with an Equal Weight at Morgan Stanley
Beazer Homes (BZH) initiated with a Neutral at Goldman
Bloomin' Brands (BLMN) initiated with a Hold at Deutsche Bank
Bryn Mawr Bank (BMTC) initiated with a Buy at Janney Capital
Clayton Williams (CWEI) initiated with a Buy at Miller Tabak
Dover (DOV) initiated with a Neutral at Citigroup
Groupon (GRPN) initiated with a Neutral at Piper Jaffray
HeartWare (HTWR) initiated with a Buy at WallachBeth
Old Line Bancshares (OLBK) initiated with a Buy at Janney Capital


Dole Food (DOLE) to sell worldwide packaged foods and Asia fresh produce businesses for $1.685B in cash to ITOCHU Corp. (ITOCY)
Oracle (ORCL) to acquire SelectMinds, a provider of cloud-based social talent sourcing and corporate alumni management applications
Shell (RDS.A) to drill Brazil shale gas exploratory wells in 2013, Bloomberg reported
Worthington (WOR) acquired Westerman Companies for $70M
WABCO (WBC) acquired Ephicas for undisclosed amount
Oxigene (OXGN), FDA reached deal on special protocol assessment for trial of ZYBRESTAT
iRobot (IRBT) acquired Evolution Robotics for $74M
Xilinx (XLNX) acquired Modesat Communications, terms not disclosed


Political pressures in the U.S. and China are straining ties between the two world powers. President Obama is asking the WTO to rule that Beijing is illegally subsidizing autos and auto parts. Chinese leaders are under internal pressure to appear tough and please the military during China's leadership transition which begins this fall. They are facing off with Japan and other regional powers over ownership of several Pacific islands. And, some major Japanese companies closed factories in China following an outbreak of anti-Japan demonstrations over the weekend, the Wall Street Journal reports
The union representing engineers and technicians at Boeing (BA) recommended that members reject a new contract offer outlined last week, increasing tensions with management ahead of the current deal's expiration on October 6, the Wall Street Journal reports
A U.S. regulation--the Volcker rule-- that limits how much of its own capital a bank can put at risk is causing headaches for Morgan Stanley (MS) as it prepares to raise a new multi-billion-dollar global infrastructure fund, sources say, Reuters reports
Tokyo Electric Power is in advanced talks to secure LNG supplies from North America and help reduce high import prices as Japan reduces reliance on nuclear power after the Fukushima disaster, Reuters reports
Oil’s decline continued after the biggest drop in two months on speculation that a slowing U.S. economy may curb fuel demand, Bloomberg reports. Futures fell as much as 0.7% in New York on top of a 2.4% decline in the previous session. Crude fell over $3 in less than a minute yesterday as October options were about to expire
Medtronic (MDT) is seeking pharmaceutical industry partners to couple the company’s pump technology with Alzheimer’s medicines that may be more effective if pushed directly into the brain, Bloomberg reports

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malikai's picture

Retail Currency Traders Turn to Algorithms

Uh, TradeStation, Ninja Trader, and Metatrader have been around for years and are all heavily used by whatever is left of retail.

Are they talking about Afghan retail traders?

Itch's picture

I think it's a spendid idea, i mean, why not upload a detailed blueprint of the strategy you have been developing directly to your marketmakers makes perfect sense? Lets face it, you will save your trusty market maker thousands of bucks and hours of hassle they have to go through of trying to work you out - then they can just rip you off fair and square, you dont even have to think - and then they will pass their profits back on to you "in the spreads" like the good citizens they truely are! Genius.


Just of note, i had an interesting "conversation" with a certain swiss broker about leverage, if i opened an account with them...turns out they are quite keen in trying rush people into signing up, and also to strong arm people not to trade with anything under 100:1, think i will pass. Its not that i smelt a rat, but rather had one crawling all over my face.

LongSoupLine's picture

I am NOT political (both parties are complete shithead crooks imo), but I do think Romney's comments will end up helping him, because ultimately they are true.

JPM Hater001's picture

My Favorite quote from the piece: " "It's hard to serve as president for all Americans when you've disdainfully written off half the nation," Jim Messina, Mr Obama's campaign manager, said in a statement."


Well, Obama has written off more than half...most just dont know it.  So it appears they both have just one constituency...Banks.

Bobbyrib's picture

There is a part of the video where he said if he were born Latino, he would have a better chance of winning the election. Can someone find the total context of these remarks. MSM is only showing part of the video.

malikai's picture

I love his "personal responsibility" shpeel. I'd love to see him take some "personal responsibility" for his role in the Salvadorean death squads. Heh..

malek's picture

I only by accident saw a few takeouts on TV, but I have to say it actually for the first time gave me a bit of respect for Mitten.

I still won't vote for any of the two puppets, as no matter how nice they talk in the end they will fold to banking interests anyway.

Sudden Debt's picture

•Ford car sales fall 29% in Europe


AnAnonymous's picture

Romney video: 47pc of US Americans...

If true, then it is over for 'american' Romney because 40pc of US Americans vote.

Another result of the 'american' manipulation of painting a minority as the majority.

It is an 'american' world.

Catullus's picture

Nevada recluse dies with $200 in bank, $7 million in gold at home

Goddamnit people, set up a will and/or a trust. Don't let that shit go to probate.

LongSoupLine's picture's either JPM's or the Fed's gold now.

Bobbyrib's picture

I would not include any gold in a will. I would tell family members where to find it should anything happen to me. As long as the government doesn't know about it, they can't tax you on it.

Another thing, why the hell did the state search this guy's house so thoroughly? You would think there would be laws (i know..haha) against something like that.

Benjamin Glutton's picture

So Ed DeMarco is ok with cram-ups that favor banksters and hurt taxpayers but cram-downs are out of the question....BAU


In January 2011, Fannie Mae started discussions with Bank of America about buying the mortgage servicing rights to 384,000 loans with an unpaid principal balance of about $74 billion, according to the report.


Fannie Mae had projected losses of about $11 billion on the loans, but determined it could get savings of up to $2.7 billion by transferring them to another servicer. Fannie Mae concluded that the bank's overall service was below average compared with its peers, but it had not determined the bank to be in breach of its contract, according to the report.


Eventually, Fannie Mae agreed to pay a termination fee of $512 million to Bank of America, about $85 million more than it had to under its contract, according to the report. The bank had balked at a lower price and would have been allowed to delay the sale for up to three months as it sought another buyer.

At the time, the FHFA reviewed the deal and was concerned about the premium, according to the report. The regulator had previously raised concerns about similar transactions, determining Fannie Mae "routinely paid more than the contractually specified fee for terminations without cause."


Catullus's picture

Mitt Romney secret video reveals views on Obama voters

There's nothing secret about it. He's at a luncheon. Someone recorded it.

Actually, it's a great speech. It's basically why the Republican party has nothing to offer and will never win one of these major elections again with this platform. He's right -- the GOP has nothing to offer the 47% of people who pay no net taxes. Soon that number will be 54-55%. They will be at permanent disadvantage. You can't sell these people tax cuts or welfare cuts.

So... why is anyone giving Romney any money to run this campaign? Because they think they're going to convince some independents to swing the vote? Ballsy move. BUT for that to work, he needed to keep the libertarians and Ron Paul folks. Did they do that? Nope. They shit on them at the convention and the RP folks walked out.

Of course, Ron Paul had the better message. Don't go after the welfare programs first. Go after the warfare. Rollback the expensive Empire. Peace is in incredibly popular issue. You would have stolen Obama's base and even some of these net zero taxpayers. Tell them to dismantle to the Empire so you can "take care of things at home." They can interpret that as "more money for me".

roadhazard's picture

"47% don't pay taxes"...


I always laff at this right wing comment. It would be a lot less if people were paid enough to be in a bracket to pay income taxes. Every dollar they eventually do get in there pay check is taxed to infinity for everything else every time they open there wallet. Poor "Conservatives", my heart bleeds for you and your tax lawyers.



Diplodicus Rex's picture


"I always laff at this right wing comment."

That's probably because you don't understand even basic maths. People who work for the government (local or national) do not pay taxes (PAYE in the UK, Income Tax in the US) or Social Security (National Insurance in the UK or SS(?) in the US). Before you jump off the deep end let me explain. As both an employer and an employee I see both sides of the balance sheet. On any normal salary slip you have gross at the top, deductions int eh middle and net at the bottom. Nearly all salary slips conform with this basic layout. As an employer I see the cheque leaving the company bank account for the net value and being sent to the employee. Another cheque is sent to the HMRC (Tax Collector in UK) for the deductions portion of the salary slip. In addition, in the UK, there's an additional payment from the employer to the HMRC called the Employers NI currently running at 11%. With my employees hat on I see the net amount on the salary slip coming into my bank account.

Now consider the position of a state employee. His/her salary slip looks identical to mine, Gross, Deductions and Net. They receive the net amount in their bank account just like me. However, no deductions ever left any bank account to pay for any of the taxes because the bank account which would have paid them out would have been the same bank account that received them. Thererfore no tax or NI was paid by the state employee.

Now, you will no doubt be livid att his. Most state employees and statists alike are usually apoplectic when they here this for the first time. Just remain calm enough to let it sink in. Then get really, really mad when it dawns on you that if state employees don't pay tax then who does? The unemployed, sick, young or retired (on state pensions) sure don't. So that leaves the people working in the private sector.

Catullus's picture

Ok. The number would be less if they got paid more. So what? Why work harder when you can just elect the person who promises you more goodies?