Frontrunning: January 7

  • Secret and Lies of the Bailout (Rolling Stone)
  • Banks Win 4-Year Delay as Basel Liquidity Rule Loosened (BBG)
  • Hedge Funds Squeezed With Shorts Beating S&P 500 (BBG)
  • Bankruptcy regime for nations urged (FT)
  • Is the Fed Doing Enough—or Too Much—to Aid Recovery (WSJ)
  • Cracks widen in US debt ceiling debate (FT)
  • McConnell Takes Taxes Off the Table in Debt Limit Negotiations (BBG)
  • Abe Seen Spending 12 Trillion Yen to Boost Japan’s Economy (BBG)
  • Monti, Berlusconi Spar on Taxes in Weekend Media Barrage (BBG)
  • Cameron Sets New Priorities for U.K. Coalition (BBG)
  • Defiant Assad Rules Out Talks With Rebels (WSJ)
  • Korea Seen Resisting Rate Cut as Won Threatens Exports (BBG)


Overnight Media Recap


* Republicans won't accept further tax increases in the United States in coming budget and debt negotiations, the party's Senate leader said on Sunday, putting Republican lawmakers on a collision course with Democrats over raising the government's borrowing limit.

* Global banking regulators watered down a key element of their plan for creating a safer financial system, giving ground to banks that argued the rules were unworkable and financially risky.

* Banks were closing in on a $10 billion foreclosure-abuse settlement with U.S. regulators that could be announced as soon as on Monday, according to people familiar with the talks.

* ExxonMobil Corp said it will spend $14 billion to develop the Hebron oil field off the shore of eastern Canadian province Newfoundland and Labrador, a project it expects to yield 700 million barrels of oil.

* Syrian President Bashar al-Assad issued a defiant call to war to defend the country against what he called a foreign-inspired rebellion, ruling out talks with rebels and rejecting international peace efforts for a political plan of his own that keeps him in power.

* Flowers Foods and Grupo Bimbo are in discussions to acquire pieces of Hostess Brands Inc's bread business, as the maker of Wonder Bread and Twinkies sells off assets and liquidates, said people familiar with the talks.

* Oprah Winfrey's OWN Network unveiled six new original series on Saturday aimed at bolstering the fledgling network's audiences.








Overview 'MASSIVE SOFTENING' OF BASEL BANK RULES Regulators have announced that the first-ever global liquidity standards will be less tough than expected and will not be fully enforced until 2019, four years later than expected.

SONY REJOINS BMG FOR PARLOPHONE BID BMG, a joint venture between Bertelsmann and KKR , has teamed up with Sony to bid for Parlophone from Vivendi's Universal Music Group.

TERRA FIRMA EYES BIG PICTURE IN PLANS TO SELL ODEON CHAIN Private equity group Terra Firma is looking to sell assets this year that may include European cinema chain Odeon & UCI Group.

MORRISON LOSES MANAGER BEFORE SALES UPDATE Wm Morrison's company secretary Greg McMahon is leaving the supermarket chain, people familiar with the situation said, marking the sixth senior management change at the company over the past year.

AXA SEEKS 1 BLN STG FOR LONG-LEASE UK FUND AXA Real Estate, the property arm of the French insurer, is raising 1 billion pounds ($1.6 billion) from investors to buy buildings in the UK with long leases.

COMPANIES PAY HEED TO INVESTOR PROTESTS OVER EXECUTIVE SALARIES Britain's biggest firms are set to rein back executive pay as shareholders ramp up their campaign to keep pay and bonuses under control.



* A $10 billion settlement with U.S. regulators to resolve claims of foreclosure abuses by 14 major lenders is expected to be announced as early as Monday, several people with knowledge of the discussions said on Sunday.

* A group of top regulators and central bankers on Sunday gave banks around the world more time to meet new rules aimed at preventing financial crises, saying they wanted to avoid the possibility of damaging the economic recovery.

* Two pension funds that agreed to a relatively small settlement with the directors of Bank of America over its acquisition of Merrill Lynch are being ordered by a federal judge to strike a better deal beginning on Monday.

* Patrick Dempsey, best known for playing a hearthrob doctor on "Grey's Anatomy," said on Friday that he had prevailed in an auction of Tully's Coffee, a bankrupt coffee chain based in Seattle.




* Ontario Liberal leadership contender Glen Murray is calling for a "paradigm shift" in the way the province finances and develops public transit projects. Many people have difficulty getting to their offices, he said, because 90 percent are a kilometre or more away from subways, streetcars and other public transit systems.

* With fiscal prudence poised to take the spotlight in the British Columbia election, a special committee with a Liberal majority has decided to replace the province's outspoken auditor general John Doyle instead of renewing his term, according to the NDP Opposition.

Reports in the business section:

* Shaw Communications Inc's strategy to fend off competition from Telus Corp will come under scrutiny when the cable company releases its fiscal first-quarter results. The Calgary-based company is scheduled to report its financial results on Wednesday, just hours before its annual general meeting of shareholders.


* Canada was on a list of terrorist targets found by U.S. Navy SEALs during the May 2011 raid on Osama bin Laden's compound in Abbottabad, Pakistan, according to a newly declassified intelligence report by the Integrated Threat Assessment Centre.

* The Canadian navy's joint support ship program is expected to come under the political microscope within weeks in what is likely another defence equipment embarrassment for the Harper government. The parliamentary budget officer has been examining the program and is poised to release his findings once MPs return from their Christmas break.




-- More than 90 percent of Chinese fund managers recently polled by this newspaper forecast that China's stock market will stage a rebound this year. The market was generally weak over the past few years due in part to a slowdown of the world's second-largest economy.

-- China may not resume initial public offerings (IPOs) of shares in the first quarter of this year as firms which intend to float shares will be asked to add information on their 2012 annual results. IPOs were suspended in November due to the weak domestic stock market.


-- Top Chinese steel maker Baoshan Iron & Steel Co said it had so far bought back 1.92 billion yuan ($308 million) of its own shares in response to a regulatory call last year for listed companies to buy back their own shares to support the stock market.


-- Livzon Pharmaceutical Group Inc said trading in its shares will be suspended starting Monday pending a major announcement. Analysts said the company may be planning to convert its Shenzhen-listed B-shares into Hong Kong-listed H-shares.


-- With the majority of private enterprises in China faced with passing on the family business to the second generation, young entrepreneurs are facing a huge challenge in taking over family brands and presenting them to the world.


-- A commentary urges government departments to stop sending gifts to each other during the Chinese lunar new year in mid-February to help fight against official corruption.



Fly On The Wall 7:00 AM Market Snapshot



British American Tobacco (BTI) upgraded to Buy from Hold at Deutsche Bank
Canon (CAJ) upgraded to Buy from Hold at Jefferies
Credit Suisse (CS) upgraded to Outperform from Sector Perform at RBC Capital (CTRP) upgraded to Equal Weight from Underweight at Barclays
Family Dollar (FDO) upgraded to Overweight from Equal Weight at Barclays
Flowers Foods (FLO) upgraded to Buy from Hold at Deutsche Bank
Georgia Gulf (GGC) upgraded to Neutral from Reduce at SunTrust
Harmon (HAR) upgraded to Outperform from neutral at RW Baird
Hess Corp. (HES) upgraded to Buy from Hold at Deutsche Bank
Hexcel (HXL) upgraded to Buy from Neutral at Goldman
Mettler-Toledo (MTD) upgraded to Buy from Neutral at BofA/Merrill
Northrop Grumman (NOC) upgraded to Sector Perform from Underperform at RBC Capital
Textron (TXT) upgraded to Outperform from Sector Perform at RBC Capital
Walgreen (WAG) upgraded to Buy from Hold at Jefferies


ArcelorMittal (MT) downgraded to Sector Perform from Outperform at RBC Capital
BNY Mellon (BK) downgraded to Sell from Neutral at Goldman
Cree (CREE) downgraded to Hold from Buy at Canaccord
DSW (DSW) downgraded to Hold from Buy at Brean Capital
Family Dollar (FDO) downgraded to Equal Weight from Overweight at Morgan Stanley
Finish Line (FINL) downgraded to Neutral from Buy at Janney Capital
Ingersoll-Rand (IR) downgraded to Market Perform from Outperform at Wells Fargo
Lowe's (LOW) downgraded to Sell from Hold at Canaccord
O'Reilly Automotive (ORLY) downgraded to Neutral from Overweight at Piper Jaffray
Rexnord (RXN) downgraded to Sell from Hold at Deutsche Bank
Spirit AeroSystems (SPR) downgraded to Sector Perform from Outperform at RBC Capital
Under Armour (UA) downgraded to Equal Weight from Overweight at Morgan Stanley
Watts Water (WTS) downgraded to Hold from Buy at Brean Capital


SolarCity (SCTY) initiated with a Buy at Goldman
SolarCity (SCTY) initiated with a Buy at Roth Capital
SolarCity (SCTY) initiated with an Outperform at Credit Suisse
Spectrum Brands (SPB) coverage reinstated with a Buy at Deutsche Bank


A.M Best withdrew rating of six life insurance units of AIG (AIG)
Nebraska Governor Heineman to review final Keystone pipeline (TRP) route proposal
US Airways (LCC), American Airlines (AAMRQ) pilots announced framework of employment agreement
Humana (HUM) expects higher sales for individual Medicare Advantage plans in 2013
Lenovo (LNVGY) introduced "Interpersonal Computing" with company’s first table PC
Illumina (ILMN) acquired Verinata Health for $350M


U.S. businesses took on new office space at a sluggish pace in Q4, as employers remained cautious about adding jobs, the Wall Street Journal reports
This week Walgreen Co. (WAG) executives will outline what's ahead for the drugstore chain in 2013, with some analysts saying a busy flu season and firmer prescription orders could help the company outperform its rivals, the Wall Street Journal reports
Major U.S. technology companies could miss estimates for Q4 earnings as "fiscal cliff" concerns likely led some corporate clients to tighten their belts last month and hold off on spending all of their 2012 IT budgets, Reuters reports
The U.S. dominates the list of places that global commercial real estate investors would prefer to invest their money this year, while China has lost some luster and Turkey has drawn more interest, according to an annual survey by the Association of Foreign Investors in Real Estate, Reuters reports
China Investment Corp. may acquire a holding of 4% to 10% in Daimler AG (DDAIF), according to the Chinese newspaper People’s Daily which  reported the country’s sovereign-wealth fund may buy a stake in the luxury car maker, Bloomberg reports
The return of $10B-plus drug deals may be here as pharmaceutical companies including Pfizer (PFE) and Bristol-Myers Squibb (BMY) may be ready to start buying again. Five of the largest U.S. drug makers had more than $70B in cash, near cash and short-term investments at the end of the Q3, Bloomberg reports


Delta Air Lines (DAL) is best-of-breed, could reach $18.00 per share
With new TLDs, VeriSign (VRSN) could see emulators emerge


lululemon (LULU) files to sell 5.7M shares of stock for Chairman Dennis Wilson


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