Frontrunning: December 26

  • Grand Bargain Shrinks as Congress Nearing U.S. Budget Deadline (BBG)
  • Budget Talks Cloud Outlook (WSJ)
  • Obama to cut vacation short to deal with fiscal crisis (Reuters)
  • Stop-gap fix most likely outcome of "fiscal cliff" talks (Reuters)
  • Aso Named Japan’s Next Finance Chief as Abe Primes Fiscal Pump (BBG)
  • Aluminum Glut No Bar to Gains as Barclays Says Sell (BBG)
  • Morsi signs controversial charter into law  (FT)
  • Children, many ill, would be victims of Russia ban on U.S. adoption (Reuters)
  • Turkey Central Bank Unveils New Tool to Limit Bank Debt Risk (BBG)
  • Refi Program Expansion Eyed (WSJ)
  • India Joins Indonesia Facing Heightened Policy Dilemma (BBG)


Overnight Media Digest


* Washington's budget gridlock is unsettling consumers and businesses, raising the risks that economic growth would be hurt next year no matter what Congress does in the coming days.

* Small banks around the country are spending the last days of 2012 trying to assure customers they can be trusted to hold their deposits, as the government's unlimited insurance on certain accounts expires this year.

* The Obama administration is considering expanding its mortgage-refinancing programs to include borrowers whose mortgages aren't backed by the government and who owe more than their homes are worth, according to people familiar with the discussions.

* ICE Chief Executive Jeffrey Sprecher, whose exchange plans to acquire the NYSE, has some views that challenge the prevailing wisdom and business models of many securities-trading firms.

* The holiday shopping season drew to a muted close for many retailers, according to preliminary data, reflecting what some experts said was the slowest growth in spending since 2008.

* Venture capitalists are reining in their spending in areas like the consumer Internet following the disappointing stock market performances of recently public Web companies Facebook, Zynga and Groupon.

* Herbalife Ltd said it has hired a strategic adviser and will hold an analyst and investor meeting next month in an effort to thwart a wave of criticism reignited by investor William Ackman.

* Newsweek ended almost 80 years in print with its issue dated Dec. 31 as it transitions to an online only format, a move that makes it the most widely read magazine yet to give up on the print media.

* Netflix said it restored its streaming video service a day after it was hit by an outage as a result of problems at Web service provider

* ConocoPhillips is joining the search for shale gas in China, adding its experience in extracting gas by unconventional means to the challenge of making hydraulic fracturing a viable development approach in China



Yen hits fresh low for 2012

Morsi signs controversial charter into law

Abe sworn in as Japanese prime minister

Samsung seeks Ericsson sales ban in US

Chinese rating agency Dagong warns on US fiscal cliff

Tokyo climbs on Abe’s inauguration

Hindujas complete $1bn US oil deal




* Two firemen shot dead in western New York were killed by a gunman who set his house alight as "a trap," police said Tuesday, and then lay in wait with three guns, including the type of assault rifle used by Adam Lanza in the Sandy Hook school massacre.

* Mid-size Canadian universities are starting a new kind of cost-cutting exercise as they face the prospect of prolonged austerity and sustained pressure to show their graduates are succeeding.

Reports in the business section:

* A struggling natural gas export project on the British Columbia coast is on the cusp of being built after Chevron Corp agreed to take over as operator of Kitimat LNG.


* The official approval of Egypt's disputed, islamist-backed constitution on Tuesday held out little hope of stabilizing the country after two years of turmoil and islamist President Mohammed Morsi may now face a more immediate crisis with the economy falling deeper into distress.

* Police have found human remains in the burned out home of the Webster, N.Y., ex-con who killed two firefighters and believe the victim is the gunman's sister.


* Sears Canada Inc is on the hunt for a new chief financial officer after the unexpected resignation of Sharon Driscoll.




--China's State Council has allowed more commercial banks to set up fund management businesses in a move to boost capital market liquidity.

--Coal contract prices set by major producers and power plants for the next year will be slightly higher than this year, the newspaper reported. Contract prices for 2012 were set at around 599 yuan ($96.14) per tonne, and the government introduced a price ceiling of 800 yuan on spot coal prices in late 2011.

--The State Council has approved a pilot project on financial reform in Quanzhou city in coastal Fujian province, following similar steps in Wenzhou, Zhejiang province, and the Pearl River Delta in Guangdong province, aiming to formalise private lending and boost financing to smaller private companies.


- Japan's new ambassador to China told reporters in his first news conference that his top task is to deepen diplomatic ties between the two countries. However, Peking University professor Liang Yunxiang says Tokyo has so far refused to make substantial concessions to improve strained ties.


-- China will start building 6 million units of affordable homes next year. It will also aim to complete the construction of 4.6 million homes in 2013. Construction of social housing for ordinary city dwellers is a crucial part of Beijing's policies to cool property prices and support the slowing economy.


Fly on the Wall 7:00 am Market Snapshot


Aegerion (AEGR) price target raised to $30 from $25 at Leerink
JDSU price target (JDSU) raised to $16 from $12 at Piper Jaffray


Netflix (NFLX) video streaming service returned after problem at Amazon's (AMZN) AWS system
CNH Global (CNH) announced changes in alliance with Kobelco Construction Machinery


For the eight weeks from October 28 through Christmas Eve, retail sales for the holidays increased just 0.7% from a year ago, according to MasterCard’s (MA) SpendingPulse unit, the slowest growth in spending since the 2008 recession, the Wall Street Journal reports
Venture capitalists are pulling back on spending in areas like the consumer Internet, a trend that could accelerate in 2013, the Wall Street Journal reports
A number of senior executives are leaving TCW Group weeks before the asset manager is set to be acquired by the Carlyle Group (CG), sources say, Reuters reports
Rosneft raised $16.8B in bank loans and agreed on long-term trade finance deals with Glencore (GLNCY) and Vitol. The company said loans raised from Western banks would be sufficient to cover its acquisition of the 50% of Anglo-Russian oil firm TNK-BP which it is buying from BP (BP) for $27B in cash and stock, Reuters reports
China’s stocks surged as the benchmark index rose to the highest level in five months, after property developers rallied on speculation the government’s urbanization plan will support housing demand, Bloomberg reports
The record glut in aluminum will not slow a rise in prices because of delays in getting metal from warehouses, even as Barclays (BCS) advises investors to sell and Morgan Stanley (MS) says it has the worst outlook of any commodity, Bloomberg reports


Cyclacel Pharmaceuticals (CYCC) files to sell 1.7M shares for Aspire Capital Fund
Healthcare Trust (HTA) files automatic mixed securities shelf


New-Wave Investment lowers stake in SINA (SINA) to 4.8% from 6.8%
Qatar Investment raises passive stake in Tiffany (TIF) to 7.8% from 5.2%
Park West reports 5.1% passive stake in Ligand Pharmaceuticals (LGND)