Frontrunning: December 18

  • Obama Concessions Signal Potential Bipartisan Budget Deal (BBG)
  • Cerberus to sell gunmaker after massacre (CNN)
  • With New Offers, Fiscal-Cliff Talks Narrow (WSJ)
  • Judge rejects Apple injunction bid vs. Samsung (Reuters)
  • U.S. policy gridlock holding back economy? Maybe not (Reuters)
  • President fears for Italy’s credibility (FT)
  • Struggles Mount for Greeks as Economy Faces Winter (WSJ)
  • Abe leans on BoJ in post-election meeting (FT)
  • Bank of Japan to mull 2 percent inflation target as Abe turns up heat (Reuters)
  • EU exit is ‘imaginable’, says Cameron (FT)
  • Sweden cuts interest rates to 1% (FT)
  • Mortgage Risk Under Fire in Nordics as Bubbles Fought (BBG)
  • External risks impede China recovery, more easing seen (Reuters)
  • China appoints new top official for export powerhouse Guangdong (Reuters)
  • RBA Cites Softer Labor Market for Dec. 4 Interest Rate Cut (BBG)


Overnight Media Digest


* Morgan Stanley agreed to pay $5 million to settle allegations that one of its highest-profile investment bankers tried to "improperly influence" research analysts days before Facebook Inc went public in May.

* Apple Inc is in early discussions to integrate local data from Foursquare Labs Inc into its mapping application, according to people familiar with the talks, as the company continues to build an arsenal of local data to try to take on Google Inc.

* A U.S. judge denied Apple Inc's request to seek a ban on the sale of some Samsung Electronics Co Ltd's products in the U.S. market.

* General Electric Co is on the verge of agreeing to a deal to buy Italian aerospace group Avio SpA for as much as 3 billion euros ($3.95 billion), according to people familiar with the negotiations.

* Sprint Nextel Corp said it reached a $2.2 billion agreement to buy the half of Clearwire Corp it doesn't already own, forcing the wireless broadband operator's shareholders to choose between a deal that could save the struggling company and a price that is lower than many had expected.

* Elliot Management Corp offered to buy the remaining stake in Compuware Corp that the hedge fund doesn't already own in a deal that values the software company at roughly $2.4 billion.

* Spain's Banco Santander SA said it would fully take over its publicly traded affiliate Banco Español de Crédito SA or Banesto, in a deal that will result in the closure of about 700 branches and underscores the gathering pace of restructuring in the country's stricken banking sector.

* Boeing Co said it will raise its quarterly dividend by 10 percent and resume a $7 billion share-buyback program, providing a long-awaited disclosure of plans to redeploy cash back to shareholders.

* Chevron Corp has offered to pay $149 million to settle two civil lawsuits in Brazil related to an oil spill in late 2011, with final approval of the deal likely in January, Brazil's federal prosecutor's office said.

* Wal-Mart Stores Inc, the largest seller of guns and ammunition in the country, removed a website listing for a semiautomatic assault rifle similar to the gun used in the Newtown, Connecticut, school massacre.

* Edison International's wholesale-power unit, Edison Mission Energy, filed for Chapter 11 bankruptcy protection in an anticipated move that the parent company said would cost at least $1.5 billion.

* President Barack Obama backed away from his long-standing call for raising tax rates on households making more than $250,000 a year, a development that inches the White House and congressional Republicans closer to a budget deal.

* The mass shooting in Connecticut appears to be reshaping the politics of gun control, with several ardent supporters of gun rights in Congress calling for steps to toughen the nation's weapons laws.




A deal to avert the U.S. fiscal cliff is at last emerging, with at least $1 trillion in new taxes, up to $1 trillion in fresh spending cuts and an increase in America's debt ceiling.


About three dozen bankers and senior managers will be implicated in the alleged rigging of Libor interest rates when UBS settles with global regulators later this week.


G4S is set to win a role in implementing the government's contentious and complex changes to child benefit and the universal credit.


Tesco is moving closer to appointing a UK chief executive, with Chris Bush, chief operating officer, emerging as the front-runner for the role.


The most prominent of Iceland's one-time corporate raiders has been indicted in the latest attempt to uncover alleged wrongdoing from its dramatic financial crisis.


Wall Street's debate over how to value Apple has intensified with the iPhone maker's stock skirting around the $500 mark on Monday.


Morgan Stanley <MS.N > was fined $5 million by the Massachusetts securities regulator who said the company's investment bankers had "improper influence" on analysts.


Carlos Slim, the world's richest man, has overseen a loss of close to 2 billion euros ($2.63 billion) on his foray this year into the European market.



* Massachusetts's top financial authority fined Morgan Stanley $5 million for violating securities laws, the first major regulatory action tied to Facebook Inc's initial public stock offering.

* Google Inc seems on its way to coming through a major antitrust investigation in the United States essentially unscathed. But the outlook is not as bright for Google here, as the European Union's top antitrust regulator prepares to meet with Eric Schmidt, Google's executive chairman.

* General Electric Co is expected to strike a deal to buy the Italian aerospace company Avio for $4 billion or more, in a bid to bolster its commercial jet engine business.

* Sprint Nextel Corp agreed to buy all of the wireless network operator Clearwire Corp, an important step for the cellphone service provider as it continues its big turnaround campaign.

* Banco Santander SA said it would absorb Banesto, its main domestic subsidiary and once one of Spain's leading banks, as part of a plan to cut 700 branches, or about 15 percent of its retail network.

* Instagram released an updated version of its privacy policy and terms of service, which include lengthy stipulations on how photographs uploaded by users may be used by Instagram and its parent company, Facebook Inc. The changes, which will go into effect Jan. 16, will not apply to pictures shared before that date.

* Wal-Mart de Mexico was an aggressive and creative corrupter, offering large payoffs to get what the law otherwise prohibited, an examination by The New York Times found. It used bribes to circumvent regulatory safeguards that protect Mexican citizens from unsafe construction.

* Lockheed Martin Corp expects to earn a profit in the high single digits under a new contract signed last week for the fifth batch of its radar-evading F-35 fighter planes, company officials said.

* The hedge fund Elliott Management Corp offered to buy Compuware Corp, a business software maker, for about $2.3 billion, repeating a tactic that prompted the sale of Novell in late 2010.

* Sun Life Financial Inc, Canada's third-largest life insurance company, announced a deal to sell its annuity and some life insurance businesses in the United States for $1.35 billion.

* President Obama delivered to Speaker John Boehner a new offer to resolve the pending fiscal crisis, a deal that would raise revenue by $1.2 trillion over the next decade but keep in place the Bush-era tax rates for any household with earnings below $400,000.




* Dozens of vulnerable women who disappeared from Vancouver's poverty-stricken, drug-ridden downtown eastside were victims of systemic police bias and blatant police failures, says a highly anticipated public inquiry report.

* Just days after a lone gunman's rampage through a Connecticut elementary school left 20 children and six adults dead, a Vancouver primary school imposed a four-hour lockdown Monday after being informed of threats made toward its students and staff.

Reports in the business section:

* Mark Carney will face a grilling from British members of Parliament over his political ambitions and leanings after revelations the next Bank of England governor was recently courted by liberals to run for leader and that he and his family holidayed at the party finance critic's seaside home in Nova Scotia.

* Inmet Mining Corp's shares rose more than 4 percent Monday as investors in the Toronto miner bet that an ardent suitor has not played its last card with its C$5.1-billion ($5.18 billion) hostile takeover bid.

* Sun Life Financial Inc is selling for $1.35 billion a risky American division that swings wildly between profits and losses in an effort to focus on growth in Canada and Asia.

* The government of Newfoundland and Labrador and Nova Scotia utility company Emera Inc are proceeding with development of the C$7.7 billion ($7.82 billion) Muskrat Falls hydroelectric project despite lingering cost and environmental concerns, Premier Kathy Dunderdale said late on Monday.


* A pair of NASA spacecraft crashed into a mountain near the moon's north pole on Monday, bringing a deliberate end to a mission that peered into the lunar interior.


* North American markets diverged on Monday as the Toronto Stock Exchange moved lower on widespread weakness across major sectors while Wall Street got a boost on encouraging signs from talks to resolve the "fiscal cliff" stalemate in Washington.




-- Zhou Xiaochuan, governor of the People's Bank of China, said China will encourage foreign funds to invest in China's stock exchanges and bond market.

-- Alcoholic beverage maker Wuliangye Yibin Co Ltd said its senior management has purchased 83,301 company shares to express confidence in its healthy development. The shares are worth around 2.2 million yuan ($352,800) at the current price.


-- Inner Mongolia Yili Industrial Group Co Ltd said in a statement that it plans to invest 214 million New Zealand dollars ($180.71 million) in an infant milk formula project in New Zealand.


-- The growing number of Chinese looking to move money abroad could damage employment and rural economies in their homeland, warns a new report. Wealthy Chinese are increasingly looking for opportunities to move capital abroad, according to the 2012 Annual Report on Chinese International Migration.


-- China's domestic non-financial direct investment rose 25 percent in the first 11 months year-on-year, data from the Ministry of Commerce showed.

Fly On The Wall 7:00 AM Market Snapshot



Duke Energy (DUK) upgraded to Buy from Hold at Deutsche Bank
Goldman Sachs (GS) upgraded to Positive from Neutral at Susquehanna
Horizon Technology (HRZN) upgraded to Outperform from Market Perform at Wells Fargo
Spreadtrum (SPRD) upgraded to Neutral from Underperform at BofA/Merrill


Centene (CNC) downgraded to Hold from Buy at Jefferies
Covenant Transportation (CVTI) downgraded to Hold from Buy at BB&T
FirstEnergy (FE) downgraded to Hold from Buy at Deutsche Bank
LG Display (LPL) downgraded to Neutral from Buy at UBS
Owens & Minor (OMI) downgraded to Sell from Neutral at Goldman
Rush Enterprises (RUSHA) downgraded to Hold from Buy at BB&T
Woodward (WWD) downgraded to Neutral from Outperform at Credit Suisse


Biogen (BIIB) initiated with a Hold at Canaccord
C&J Energy (CJES) initiated with a Buy at Goldman
Carbonite (CARB) initiated with a Market Perform at Northland Securities
Community Health (CYH) initiated with an Overweight at JPMorgan
Delek Logistics (DKL) initiated with an Outperform at Wells Fargo
Demandware (DWRE) initiated with a Hold at Stifel Nicolaus
HCA Holdings (HCA) initiated with an Overweight at JPMorgan
Health Management (HMA) initiated with a Neutral at JPMorgan
Joy Global (JOY) initiated with a Neutral at Citigroup
LifePoint Hospitals (LPNT) initiated with an Overweight at JPMorgan
LogMeln (LOGM) initiated with an Outperform at Northland Securities
Proofpoint (PFPT) initiated with an Outperform at Northland Securities
RPC, Inc. (RES) initiated with a Neutral at Goldman
Raymond James (RJF) initiated with a Buy at Citigroup
Sirius XM (SIRI) initiated with a Buy at Goldman
SolarWinds (SWI) initiated with a Market Perform at Northland Securities
Tenet Healthcare (THC) initiated with an Overweight at JPMorgan
Tesla (TSLA) initiated with a Neutral at JPMorgan
Unilife (UNIS) initiated with a Buy at Cantor
Universal Health (UHS) initiated with an Overweight at JPMorgan
Vanguard Health (VHS) initiated with a Neutral at JPMorgan


Banking analyst Meredith Whitney upgraded shares of Citigroup (C), Bank of America (BAC) and Discover (DFS), CNBC reports
Icahn proposed American Railcar (ARII) acquire Greenbrier (GBX) for $20 per share
Boeing (BA) raised dividend 10%, resumed $3.6B share repurchase
Eli Lilly (LLY) announced new $1.5B share repurchase program
Allstate (ALL) announced new $1B share repurchase program
AIG (AIG) priced entire remaining stake of AIA Group
Liberty Global (LBTYA) opened voluntary and conditional cash offer for Telenet
Manhindra acquired Navistar's (NAV) stake in India joint ventures for $33M
Gulfport Energy (GPOR) announced proposed acquisition of additional Utica acreage
Fluor (FLR), Granite Construction (GVA) team to build Tappan Zee Bridge replacement in New York State
Solar Capital (SLRC) to acquire Crystal Financial
Vitamin Shoppe (VSI) to acquire Super Supplement for $50M


Companies that beat consensus earnings expectations last night and today include: Sanderson Farms (SAFM), Biodel (BIOD), Stewart Enterprises (STEI), Diamond Foods (DMND)

Companies that missed consensus earnings expectations include:
Shuffle Master (SHFL)


GE (GE) CEO Jeff Immelt said economic uncertainty in the fourth quarter has caused "an investment pause" that has crimped the company's sales, although he voiced optimism overall and forecast industrial revenue growth in 2013, the Wall Street Journal reports
A U.S. judge denied Apple’s (AAPL) request for a ban on the sale of some Samsung Electronics (SSNLF) products in the U.S. market, tempering Apple's sweeping win in a California court case this summer, the Wall Street Journal reports
Knight Capital Group's (KCG) board was split between two competing offers for the firm after a meeting where Getco Holding Company LLC and Virtu Financial LLC presented their sweetened bids to Knight's directors, sources say, Reuters reports
United Parcel Service (UPS) offered more concessions in a bid to gain EU regulatory approval for its $6.84B TNT Express (TNTEY) bid, sources say, Reuters reports
Global coal demand will likely increase by 2.6% a year to 6.17B metric tons of coal equivalent in the six years to 2017, driven by China’s economic expansion, according to the International Energy Agency, Bloomberg reports
Goldman Sachs (GS) and Bain Capital are set to defend before U.S. District Judge Edward Harrington in Boston what they call legitimate private-equity practices against investor claims that buyout firms and their bankers colluded to rig bids on takeovers, Bloomberg reports


Galena Biopharma (GALE) intends to offer common stock and warrants
Gulfport Energy (GPOR) commences offering of 9M shares of common stock
RAIT Financial (RAS) commences offering of 9M shares of common stock
The Bancorp (TBBK) commences offering of $50M of common stock


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