Frontrunning: December 7

  • Bundesbank cuts growth outlook as crisis bites (Reuters)
  • Strong quake hits off Japan near Fukushima disaster zone (Reuters)
  • Greece to Buy Debt It Already Owns to Reach Target (BBG)
  • Draghi’s Go-to ECB Seen Risking Credibility Through Overload (BBG)
  • Judge urges Apple and Samsung ‘peace’  (FT) ... Alas only the US government has a Magic Money Tree; others need profit
  • Fed Exit Plan May Be Redrawn as Assets Near $3 Trillion (BBG)... make that $5 trillion this time in 2014
  • Level Global, SAC Fund Managers Ruled Co-Conspirators (BBG)
  • Egypt demonstrators reject Mursi call for dialogue (Reuters)
  • Japanese Dealerships in China Retrench in Wake of Dispute (BBG)
  • Apparel factory fire reveals big brands' shadowy supply chainsa (Reuters)
  • Republican Defectors Weigh Deal on Tax-Rate Increase (BBG)


Overnight Media Digest


* Apple Inc plans to build some Mac computers in the U.S. for the first time in about a decade, investing $100 million next year in an effort that could serve as a high-profile test of American manufacturing competitiveness.

* U.S. officials launched a criminal probe of a $10 million sale of stock by Big Lots Chief Executive Fishman before the company announced news that sank its stock.

* The Securities and Exchange Commission said it may bring suit against Netflix Inc and Chief Executive Reed Hastings over a post that Hastings made on Facebook several months ago, marking one of the higher-profile reverberations for an executive for posting on Facebook Inc's namesake site.

* Apple Inc and Samsung Electronics Co spent their latest go-round in federal court by dickering over more than $1 billion in damages set by a jury in August following a high-profile patent trial.

* The Washington Post, one of the last holdouts against the trend of charging readers for online access to newspaper articles, is likely to reverse that decision in 2013, according to people familiar with the matter.

* IBM, a bellwether for employee benefits, is overhauling its retirement program to contribute once a year to employee 401(k) accounts in a lump-sum payment.

* Tax uncertainty in Washington is setting off a mad scramble among wealthy taxpayers and charities to maximize donations before the end of the year.

* Military counterterrorism officials are seeking more capability to pursue extremist groups in Africa and elsewhere that they believe threaten the U.S., and the Obama administration is considering asking Congress to approve expanded authority to do it.

* Alcatel-Lucent is considering mortgaging parts of its past and future as it looks to buy time for a restructuring.

* Investors have been flocking to buy bonds issued by top-rated companies. But some of the biggest fund managers warn of risks in what were once seen as the safest investments.

* The rise in Deloitte's nonaudit revenue spotlights a recent resurgence in consulting and other nonaudit work by the Big Four accounting firms, a decade after conflict-of-interest concerns and corporate scandal sharply limited such work.

* Steelmakers, trying to reverse a prolonged decline in prices, have demanded spot-market price increases of up to 15 percent in the U.S. over the last seven weeks, according to letters sent to customers, but are only getting an average rise of around 10 percent, marking a modest recovery for a battered industry.

* Fidelity Investments is offering its retail clients access to hedge-fund firms through a mutual fund launched in partnership with Arden Asset Management.

* PokerStars is in talks to buy the Atlantic Club casino, a move that could position the company to benefit should New Jersey legalize online gambling.




The European Central Bank slashed its eurozone economic outlook for next year, forecasting further contraction at a time of record unemployment, but decided to keep interest rates on hold as it saw no big threat from inflation.


The revelations that German regulators were briefed about Deutsche Bank's valuation of a clutch of complex derivatives now under investigation by the SEC potentially sets up a transatlantic conflict with U.S. investigators.


The U.S. Senate approved legislation Thursday that blacklists a group of Russian officials accused of human rights violations as part of a broader bill that normalises trade relations with Russia.


Apple will move manufacturing of some Mac computers back to the United States next year, the first time in more than a decade that its products will be made as well as designed in America, its chief executive said on Thursday.


The UK's Serious Fraud Office - which is investigating whether Rolls-Royce paid bribes in connection with sales it made via intermediaries in China and Indonesia - found reasons for concern on Thursday.


Blackstone Group is buying Intertrust Group, which is owned by Dutch investor Waterland Private Equity Investments and in part helps companies minimise their tax bills, for 675 million euros ($877 million).


BG Group is exploring selling more assets linked to it $20 billion natural gas development in Australia, in yet another move to unlock capital that would help finance its spending commitments.


UPS is making progress in its quest to win EU approval for its 5.2 billion euro takeover of TNT Express but still faces a big challenge in convincing Brussels that it has a credible buyer for a swath of assets across eastern Europe.


Spotify has attracted 1 million subscribers in the United States, catching up with the 11-year-old American pioneer of digital music subscriptions, Rhapsody, in only 16 months.



* Apple Inc plans to join a small but growing number of companies that are bringing some manufacturing jobs back to the United States, drawn by the growing economic and political advantages of producing in their home market.

* Netflix Inc disclosed on Thursday that the Securities and Exchange Commission was considering taking action against the company and Chief Executive Reed Hastings for its Facebook communication. The agency, in a so-called Wells notice, warned that it may file civil claims or seek a cease-and-desist order.

* The antivirus software pioneer John McAfee was hospitalized briefly on Thursday after being denied political asylum in Guatemala, and his lawyers said they were making a last-ditch effort to keep him from being flown back to Belize for questioning about the killing of a fellow American expatriate.

* Acknowledging that the economy is likely to remain weak well into next year, the European Central Bank sharply reduced its growth forecast for the euro zone Thursday, and left its main interest rate unchanged at a record low of 0.75 percent.

* A blaze that killed 112 workers in Bangladesh last month exposed a disconnect among retailers like Sears Holdings Corp and Wal-Mart Stores Inc, the monitoring system to protect workers and the factories filling the orders.

* President Obama's insistence that marginal tax rates rise for families making more than $250,000 has convinced millions of affluent Americans that they are likely to be writing larger checks to the government next year.

* Mylan Inc is suing the U.S. Food and Drug Administration to force the agency to revoke Ranbaxy Laboratories Ltd's exclusive rights and allow Mylan to begin selling a generic version of Novartis' top-selling blood pressure drug Diovan.

* Julius Genachowski, chairman of the Federal Communications Commission, sent a letter to the Federal Aviation Administration Thursday urging the agency to allow more electronics on airplanes.

The letter, which was addressed to Michael Huerta, the acting administrator of the FAA, went on to promote the importance of allowing people to use these devices on planes as more Americans become increasingly reliant on devices for work and pleasure.

* The pharmaceutical industry is challenging a California law that stipulates it pay for the proper disposal of leftover pills that could otherwise pose a threat to the environment.

* Planning delays, lack of money and limitations in technology have slowed the creation of a communications network for the police, firefighters and others in the United States.

* George Zimmerman, accused of second-degree murder in the shooting of Trayvon Martin earlier this year, filed suit against NBCUniversal on Thursday, alleging that news reports that edited his voice on a 911 tape constituted defamation and intentional infliction of emotional distress.




* Two of the rivals for Premier Dalton McGuinty's job have come out in favor of selling beer and wine in corner stores, marking the first major policy difference among the Liberal leadership contenders.

* Quebec's universities say they have been blindsided by a directive from the provincial government demanding they slash C$124 million ($125.33 million) in spending by April.

The government says universities should have known of the cuts from the previous Liberal government; the universities say they never got the memo.

* Single cheques from political donors for sums above the C$30,000 ($30,300) limit are allowable so long as they are later split up and "attributed" to several entities, Alison Redford, Alberta premier said.

Reports in the business section:

* Michigan Governor Rick Snyder is launching an assault on the stronghold of the U.S. labor movement, calling for the state to adopt so-called right-to-work legislation - a move that threatens to revive the bitter lab our-management battles of the 1930s and 1940s.

If Snyder is successful, right to work legislation moves a step closer to Ontario.


* Faced with the imminent release of an audit by accountants KPMG that will push the total projected life-cycle costs of the F-35 jet fighter purchase above C$30 billion ($30.32 billion), the operations committee of cabinet decided Tuesday evening to scrap the controversial sole source program and go back to the drawing board, a source familiar with the decision said.


* WestJet Airlines Ltd estimated that up to two-thirds of the historical cost advantage it had enjoyed over Air Canada has been wiped out by the newfound flexibility its larger rival has been granted in an arbitrated labor agreement with pilots and a gradual increase in the Calgary carrier's own costs.




-- With 800 companies waiting to list and investor confidence dented, China needs to develop its bond and over-the-counter markets and lower the requirements for listing abroad to avoid a massive backlog of companies waiting to list, sources told the paper.


-- According to China's Ministry of Commerce, the average food price increased by 1.26 percent in November than the previous month. While the price of vegetables rose by 8.99 percent compared to last month, the fruit and meat prices increased by 1.22 percent and 0.74 percent, respectively.


-- Auditor KPMG released a report on Thursday saying China's merger and acquisition volume fell by 19 percent in the third quarter compared with the same period a year earlier, but the average transaction amount saw an increase.


-- China United Property Insurance, a non-life insurer specialising in agriculture, is hoping to lure international strategic investors to boost its competitiveness, the firm's chairman said on Thursday.


-- China's Communist Party head Xi Jinping said although China's economy is relatively healthy, the country cannot underestimate its current and future challenges, due to the world's slow economic growth, weak demand and over capacity in some industries domestically and the impact of rising prices and the lack of innovation.


Fly On The Wall 7:00 AM Market Snapshot



Acadia Realty Trust (AKR) upgraded to Outperform from Market Perform at BMO Capital
McDonald's (MCD) upgraded to Buy from Neutral at Janney Capital
Melco Crown (MPEL) upgraded to Overweight from Neutral at JPMorgan
Syngenta (SYT) upgraded to Neutral from Underweight at JPMorgan


AvalonBay (AVB) downgraded to Hold from Buy at Cantor
DragonWave (DRWI) downgraded to Hold from Speculative Buy at Canaccord
InterDigital (IDCC) downgraded to Equal Weight from Overweight at Stephens
Overland Storage (OVRL) downgraded to Neutral from Buy at Roth Capital
Regal Entertainment (RGC) downgraded to Neutral from Overweight at Piper Jaffray
Toronto-Dominion (TD) downgraded to Sector Performer from Outperformer at CIBC
Universal American (UAM) downgraded to Sell from Neutral at Goldman
Whitestone REIT (WSR) downgraded to Market Perform from Outperform at BMO Capital


3D Systems (DDD) initiated with a Buy at BB&T
Alexion (ALXN) initiated with a Neutral at Citigroup
Atmel (ATML) initiated with a Neutral at Lazard Capital
Bank of America (BAC) initiated with a Neutral at SunTrust
Capital One (COF) initiated with a Buy at Janney Capital
Citigroup (C) initiated with a Buy at SunTrust
Corporate Executive Board (CEB) initiated with a Buy at Janney Capital
Danaher (DHR) initiated with an Outperform at BMO Capital
FIS (FIS) initiated with a Hold at Jefferies
Fiserv (FISV) initiated with a Buy at Jefferies
Goldman Sachs (GS) initiated with a Neutral at SunTrust
JPMorgan (JPM) initiated with a Buy at SunTrust
Microchip (MCHP) initiated with a Buy at Needham
ON Semiconductor (ONNN) initiated with a Neutral at Lazard Capital
Oracle (ORCL) initiated with a Neutral at Wedbush
PNC Financial (PNC) initiated with a Buy at SunTrust
Stratasys (SSYS) initiated with a Buy at BB&T
The Advisory Board (ABCO) initiated with a Buy at Janney Capital
U.S. Bancorp (USB) initiated with a Neutral at SunTrust
Wells Fargo (WFC) initiated with a Neutral at SunTrust


Moody's downgraded U.S. Bancorp (USB) senior debt to A1 from Aa3
Wi-LAN (WILN) filed five separate patent infringement suits against Apple (AAPL), others
Netflix (NFLX), CEO Reed Hastings received "Wells Notices" from SEC
United Technologies (UTX) terminated agreement to sell pump and engine system to TransDigm (TDG)
Bunge (BG) to sell Brazilian feritilizer business to Yara (YARIY) for $750M in cash
ExxonMobil (XOM) and Rosneft signed agreement for Western Siberia oil pilot project
Boston Scientific (BSX) received EU approval for new Precision Spectra SCS
VimpelCom (VIP) raised stake in Euroset to 50%
The FCC announced acceleration of nationwide Text-To-911 availability (T, VZ, S, DTEGY)
Solera (SLH) acquired CarweB, additional information not disclosed.
Geo Group (GEO) declared $5.68 special dividend
Taking steps to qualify as REIT for 2013
Constellation Energy (CEP) withdrew proposals regarding potential tax election change
Affiliates of Apollo Global Management (APO) to acquire AURUM
FDA granted QIDP designation to two Cubist (CBST) Phase 3 antibiotic candidates
FDA granted orphan drug designation to Biodel (BIOD) for Glucagon
Endo Health (ENDP) subsidiary issued voluntary recall of 101 lots of drug tablets
Sequenom (SQNM) announced issuance of patent for detecting fetal aneuploidy
Morgan Stanley (MS) revised broker compensation system for 2013, Bloomberg reports
BioCryst (BCRX) announced restructuring that will reduce workforce by 50%


Companies that beat consensus earnings expectations last night and today include:
Comtech (CMTL), Palo Alto (PANW), Esterline (ESL)

Companies that missed consensus earnings expectations include:
Harry Winston (HWD), Analogic (ALOG), Flow International (FLOW), Cooper Companies (COO)

Companies that matched consensus earnings expectations include:
Smith & Wesson (SWHC), EMCORE (EMKR)


U.S. officials launched a criminal investigation of a $10M sale of stock by Big Lots (BIG) CEO Steven Fishman before the company announced news that sank its stock, sources say, the Wall Street Journal reports
Investors have been buying bonds issued by top-rated companies at a record rate this year, but some of the biggest fund managers warn that dangers are lurking in what were once seen as the safest investments. These managers point to unusual wrinkles suggesting that now could be one of the most dangerous times in decades to lend to investment-grade companies, the Wall Street Journal reports
Germany's Bundesbank cut its 2013 growth outlook today to 0.4% from 1.6% in June, and now expects the country’s economy to barely grow next year, while it pointed to risks of a recession as the euro zone debt crisis takes its toll, Reuters reports
AXA (AXAHY) is considering investing in Sareb, Spain's so-called 'bad bank', CEO Henri de Castries said, a show of private sector support for the entity, Reuters reports
Hewlett-Packard’s (HPQ) value has fallen to less than the $31B it spent during a five-year takeover binge, the strongest evidence yet that investors would be better served by disassembling the company, Bloomberg reports
The lawyer for AMR Corp.’s (AAMRQ) unsecured creditors committee warned American Airlines pilots of the risks of rejecting a tentative contract that would allow the carrier’s post-bankruptcy plan to be weighed against a merger with US Airways Group (LCC), sources say, Bloomberg reports


Acadia Healthcare (ACHC) 10.577M share Secondary priced at $22.50
AcelRx (ACRX) 12.5M share Secondary priced at $3.31
ArrowHead Research (ARWR) to offer common stock and warrants
Avago (AVGO) announces sale of 21.49M ordinary shares by holders
Market Leader (LEDR) files to sell 1.5M shares of common stock for holders
Memorial Production (MEMP) 10.5M share Secondary priced at $17.00
Multi-Fineline (MFLX) files to sell 14.82M shares of common stock for holders
Pacific Mercantile Bancorp (PMBC) files to sell 4.96M shares of common for holders
QR Energy (QRE) commences offering of 12M common units
Vantiv (VNTV) 12.45M share Secondary priced at $20.10
Vitesse (VTSS) files to sell common stock
Webster Financial (WBS) announces secondary offering of 10M shares
Western Gas Equity Partners (WGP) 17.181M share IPO priced at $22.00