Frontrunning: December 31

  • Japan PM Abe wants to replace landmark war apology (Reuters) - to summarize Abe's strategy: crush the JPY even as China is alienated so much not a single Japanese export goes to Beijing. Brilliant
  • Unthinkable Cuts Almost a Reality (WSJ)
  • Signs of Negative Economic Impact Growing (WSJ)
  • Greek retail sales slump deepens in October, recession bites (Reuters)
  • Carlyle Agrees to Buy Duff & Phelps for $665.5 Million (BBG)
  • Congress Dysfunction as Deadline Arrives Poses 2013 Risks (BBG)
  • For Euro, All Eyes Are on Central Bank's Actions (WSJ)
  • France Seeks New Path to High Tax (WSJ)
  • Japan Rebuke to G-20 Nations May Signal Moves to Weaken Yen (BBG)
  • Portugal braced for ‘fiscal earthquake’ (FT)
  • Monti's reform path faces test beyond Italy elections (Reuters)
  • South Korea’s Inflation Slows Even as Economy Gaining Momentum (WSJ)
  • China factory sector strongest since May 2011 (Reuters)


Overnight Media Digest


* In a step that potentially could ease the way for a merger of American Airlines parent AMR Corp and US Airways Group Inc, the board of American's pilots union approved an interim labor framework should the two carriers proceed with a combination to take AMR out of bankruptcy-court protection.

* U.S. investment firm Lone Star Funds and other shareholders of Tokyo Star Bank are in talks on selling the midsize Japanese lender to Taiwan's Chinatrust Commercial Bank Co Ltd, a person close to the talks said.

* If Congress and the White House fail to strike a deal to avert the so-called fiscal cliff, Republicans are under few illusions as to who will get much of the blame - even if past polls suggest there will be plenty to go around.

* Europe's poor economic outlook could drag on the euro in 2013, but it is the actions of the European Central Bank and its peers that will largely determine how it trades, analysts and investors say.

* The government of Socialist President François Hollande on Sunday said it would consider other ways of imposing a top income-tax rate of 75 percent on high-wealth individuals after the country's top constitutional authority scrapped the plan.

* A stroke-preventing pill from Pfizer Inc and Bristol-Myers Squibb Co won approval from U.S. health regulators, setting the stage for a fierce fight among drug makers to replace the widely used blood thinner warfarin.

* A group of pension funds that oversee more than $3 trillion in assets asked U.S. securities regulators to revamp rules on how corporate executives can trade their company stock.

* Stricter international safety rules will kick in next year to tackle hazards from shipments of lithium batteries aboard planes, but pilot groups and power-cell makers are battling over whether there should be even tougher measures.

* Mandatory federal spending cuts designed to be prohibitively drastic will become a reality on Wednesday if negotiators remain unable to reach an agreement to avert the reductions.



* Banking regulators are close to a $10 billion settlement with 14 banks that would end the government's efforts to hold lenders responsible for foreclosure abuses like faulty paperwork and excessive fees that may have led to evictions, according to people with knowledge of the discussions.

* Duff & Phelps Corp, which provides valuation and merger advice to other companies, announced that it had reached a $665.5 million deal to be acquired by a consortium that includes the Carlyle Group LP.

* Senate leaders on Sunday failed to produce a fiscal deal with just hours to go before large tax increases and spending cuts were to begin taking effect on New Year's Day, despite a round of volatile negotiations over the weekend and an attempt by Vice President Joseph Biden Jr. to intervene.

* Even if President Obama and Republicans in Congress can reach a last-minute compromise that averts some tax increases before Monday's midnight deadline, experts still foresee a significant drag on the economy in the first half of 2013 from the fiscal impasse in Washington.

* The federal government has given national security clearance to the controversial purchase of an American DNA sequencing company by a Chinese firm, BGI-Shenzhen.

* William Baer was confirmed by the U.S. Senate on Sunday as the government's top antitrust lawyer, placing him in charge of the Justice Department division that reviews corporate mergers and prosecutes price-fixing cases.

* The body of Adam Lanza, who fatally shot 26 people, including 20 children, at an elementary school this month, has been claimed for burial, according to the Connecticut chief medical examiner's office




* Defense Minister Peter MacKay has opened the door to sending Canadian Forces personnel into the troubled west African nation of Mali, citing the contribution of Canadian military trainers in Afghanistan.

* Dazed passengers were being cared for in a convention center in Pendleton, Oregon, after a bus crash that killed nine people and injured more than 20 others.

Reports in the business section:

* After a flood of new hires in November, December's national employment numbers are expected to show only a small increase, weighed down by declines in the service sector.


* French President Francois Hollande was described as an "amateur" and compared to the emperor with no clothes Sunday as members of his party began to turn on him after his flagship 75 percent tax rate for France's richest was ruled unconstitutional.


* Penny stock promoter Bobby Genovese cashed in a big profit on shares of Liberty Silver Corp before they were halted by regulators in October, a filing shows




-- China's economic growth could hit 7.5 percent in 2013, while inflation could rise to 3.5 percent, said Zhang Xiaoqiang, vice deputy chief with the National Development and Reform Commission (NDRC).

-- China should continue to contemplate an easier monetary policy, adjust the reverse requirement ratio to keep relative ample liquidity and widen the intra-day trading band for the yuan against the dollar, according to an editorial.


-- Profits at China's major companies hit 3.6 trillion yuan ($577.52 billion) in the past three years (2010-2012), according to the State-owned Assets Supervision and Administration Commission (SASAC).


Fly on the Wall 7:00 AM Market Snapshot


Bristol-Myers (BMY) upgraded to Neutral from Underweight at Atlantic Equities
Alon USA Energy (ALJ) initiated with a Buy at Goldman
Alon USA Partners (ALDW) initiated with a Neutral at Goldman
Galena Biopharma (GALE) initiated with an Overweight at Piper Jaffray
Duff & Phelps (DUF) unlikely to receive higher bid, says William Blair


Duff & Phelps (DUF) to be acquired by private investor consortium for $15.55 per share valued at about $665.5M. The consortium comprises controlled affiliates of, or funds managed by, The Carlyle Group (CG), Stone Point Capital LLC, Pictet & Cie and Edmond de Rothschild Group
Brady Corp. (BRC) acquired Precision Dynamics Corporation for $300M
Bristol-Myers Squibb (BMY), Pfizer (PFE) announced FDA approved Eliquis


Companies that missed consensus earnings expectations include:
Cal-Maine Foods (CALM)


Facebook (FB) has received negative reviews from investors since its IPO, but securities analysts who work at the investment banks that did the deal have never wavered in their enthusiasm. Since it went public in May, analysts at Morgan Stanley (MS), JPMorgan (JPM) and Goldman Sachs (GS) have issued 40 reports on the stock and every one has urged investors to buy, the Wall Street Journal reports
A group of pension funds that oversee over $3T in assets asked the SEC to revamp rules on how corporate executives can trade their company stock, the Wall Street Journal reports
Congress will return today without a deal to avert the "fiscal cliff" and only a few hours of actual legislative time scheduled in which to act if an agreement materializes, Reuters reports
Germany will avoid recession in 2013 and achieve growth rates similar to 2012, said Dieter Hundt, leader of Germany's employer association, Reuters reports
This year, Treasuries gave up their first-place rank among world bonds as signs of improvement in the world economy cut demand for the safety of U.S. debt, Bloomberg reports
Hedge funds lowered bullish commodity bets to a six-month low as rising concern that slowing economic growth will erode demand drove prices toward the first fourth-quarter retreat since the global recession, Bloomberg reports


Now is a good time to buy Apple (AAPL). The shares are cheap, having dropped 30% from their all-time high, mostly due to investors with capital gains looking to avoid possible new taxes in 2013
Downtrodden VeriFone (PAY) could jump 35%
Cash used in about 29% of retail transactions (V, MA, AXP, DFS, EBAY, GOOG, PAY)


Glowpoint (GLOW) files to sell 2.94M shares of common stock for holders
Peregrine (PPHM) files $75M at-the-market secondary
StemCells (STEM) files to sell $30M of common stock


No comments yet! Be the first to add yours.