Frontrunning: August 7

  • Standard Chartered Falls Most in 24 Years on U.S. Iran Probe (Bloomberg)
  • Iran accusations wipe $15 billion off StanChart shares (Reuters)
  • Hilsenrath tells us that Fed Official Calls for Open-Ended Bond Buying (WSJ) - shocking indeed
  • German opposition backs fiscal union, demands constitutional change and referendum (FT)
  • Gary Gensler speaks: Libor, Naked and Exposed (NYT)
  • IMF Pushes Europe to Ease Greek Burden (WSJ)
  • Second TSE System Error in Seven Months Halts Derivatives (Bloomberg)
  • Rice Hoard Offers World Respite as Food Costs Surge (Bloomberg)
  • UK coalition in crisis over parliamentary reform (Reuters)
  • Ethics probe could deal losing hand to Nevada Democrat (Reuters)
  • Greece Agrees With Troika on Need to Strengthen Policy (Bloomberg)
  • Fed Says Banks Ease Standards on Business, Consumer Loans (Bloomberg)
  • Chidambaram Pledges Indian Fiscal Plan in Bid to Lure Investment (Bloomberg)
  • Indonesia to Allow Currency Hedging for Banks: Islamic Finance (Bloomberg)

Overnight Media Digest


* Best Buy Co founder and former chairman Richard Schulze said he wanted to buy the company for about $10 billion. Mr. Schulze started Best Buy 46 years ago and owns 20 percent of it, making him the company's single largest shareholder.

* Spyker NV filed a lawsuit against General Motors Co that seeks $3 billion in damages and accuses the Detroit car giant of forcing Saab Automobile AB into bankruptcy last year.

* Eastman Kodak Co received two bids from investor groups pitting Silicon Valley giants Apple Inc and Google Inc against each other ahead of an auction set for Wednesday, people familiar with the process said.

* Apple Inc plans to remove its YouTube app from the iPhone and iPad, the latest sign of a growing gulf between Apple and Google Inc.

* Lawyers grilled a Samsung Electronics Co Ltd's strategy head for roughly an hour as Apple Inc continued its efforts to convince a jury that the Korean tech giant copied its designs.

* The International Monetary Fund, facing discontent among its members about the huge sums it has lent to the euro zone, is pushing the currency bloc's governments to take steps to lighten the burden of the bailout loans they made to Athens, officials familiar with continuing discussions said.

* New York's top banking regulator threatened to strip UK bank Standard Chartered Plc of its license to do business in the state, alleging that a unit illegally handled at least $250 billion in transactions with Iranian entities.

* Chesapeake Energy Corp, the second-biggest U.S. gas producer after Exxon Mobil Corp, reported higher profit but growing debt in its second quarter as the natural-gas giant detailed plans to raise more cash by shedding assets.

* The Federal Aviation Administration is seeking a record $162.4 million of proposed and potential civil penalties from American Airlines parent AMR Corp according to court documents in the company's bankruptcy case.

* Eric Rosengren, president of the Federal Reserve Bank of Boston, called on the Fed to launch an aggressive, open-ended bond buying program that the central bank would continue until economic growth picks up and unemployment starts falling again.

* HCA Holdings Inc said federal prosecutors in Miami are probing the "medical necessity" of cardiology procedures performed at several of its hospitals.




New York state's financial watchdog accused Standard Chartered of hiding $250 billion of transactions with the Iranian government.


Refunds of mis-sold PPI are doing more to boost Britain's economy than government initiatives to stimulate growth, official and bank data show.


Curiosity, Nasa's $2.5 billion robotic rover, landed safely on Mars on Monday morning after a complex descent involving a parachute, retrorockets and a hovering "sky crane".


A group of investors rescued Knight Capital Group in a $400 million deal that keeps the leader in U.S. equities market-making in business.


Best Buy Co founder Richard Schulze on Monday offered to take the struggling U.S. electronics retailer private.


BHP Billiton is in protracted talks with Harry Winston, the Canadian mining and retail group, about a sale of its diamond business.


Acer, the world's fourth largest computer manufacturer by shipments, has attacked Microsoft's planned move into tablets.


HMV is close to naming Carphone Warehouse executive Ian Kenyon as its new finance director.



* Apple Inc released a test version of its coming iOS 6 operating system, which powers iPads and iPhones, and developers promptly noticed that the YouTube app was missing from its lineup of built-in apps. Apple said in a statement that "our license to include the YouTube app in iOS has ended."

* The New York State Department of Financial Services accused Standard Chartered Plc, which the agency called a "rogue institution," of masking more than 60,000 transactions for Iranian banks and corporations, motivated by the millions of dollars it reaped in fees.

* Richard Schulze, who founded Best Buy Co Inc with a single audio equipment store in 1966, announced a preliminary takeover proposal that would give the company a market value of $8.8 billion.

* Johnson & Johnson and Pfizer Inc said that they were halting development of a closely watched Alzheimer's drug after two clinical trials failed to show that it was effective in patients with mild to moderate forms of the disease.




* In what will go down as one of the more memorable performances in Canadian soccer history, Canadian captain Christine Sinclair scored three goals but was left once again attempting to give a state of the team address after a gutting loss.

Alex Morgan's header with 30 seconds gave the U.S. the win and advanced them to the gold medal game on Thursday at Wembley Stadium. Canada will play France for the bronze in City of Coventry Stadium.

* Many see the emerging rift between Alberta and British Columbia over compensation for the Northern Gateway pipeline as hampering energy development by stalling the creation of a national energy strategy. However, calls for a strategy may themselves be the fundamental cause of the political fallout.

Alberta Premier Alison Redford has been leading the charge for the provinces to agree to a common plan for developing Canada's energy resources. The outcome of the latest meeting of the premiers is that Redford will be part of a working group to develop the strategy.

Report in the business section:

* Just days after being slammed by the U.S. regulator governing pipelines, Enbridge Inc has been granted permission to restart an oil line that leaked in July.

Enbridge expects oil will once again begin flowing through Line 14 on Tuesday. The Pipeline and Hazardous Materials Safety Administration (PHMSA), which sharply criticized Enbridge last week, said on Monday that the Calgary-based company had met the conditions necessary to restart the line in Wisconsin, although the regulator pledged to closely monitor the company's safety plan.

* A bid by Best Buy Co Inc founder and former chairman Richard Schulze to take the struggling electronics chain private has been greeted by a wave of skepticism in the market.

On Monday, Schulze, who holds 20.1 percent of Best Buy stock, said he would offer to buy the shares he doesn't already own for $24 to $26 apiece, which values the entire company at $8.2 billion to $8.9 billion. As a result, the company's stock price jumped more than 13 per cent on Monday but closed at $19.99 - below the proposal, which represents a premium of 36 to 47 per cent above Friday's closing level.


* Unlike lottery winners or Nobel Laureates, Canada's returning Olympic champions will need to claim their medals for Revenue Canada.

Despite the Olympics being classified as amateur sport, all government prize money awarded to Canadian Olympic athletes is taxable under the Canadian Income Tax Act.


* Food prices may grow by as much as 4 percent next year, economists predict, as drought conditions in the U.S. are expected to inflate the cost of everything from pork to cereal.


European Economic Update:

  • UK Industrial Production -2.5% m/m -4.3% y/y – higher than expected. Consensus -3.5% m/m -5.3% y/y. Previous 1.0% m/m -1.6% y/y. Revised -1.8% y/y.
  • UK Manufacturing Production -2.9% m/m -4.3% y/y – higher than expected. Consensus -4.3% m/m -5.7% y/y. Previous 1.2% m/m -1.7% y/y. Revised -1.8% y/y.
  • Switzerland Unemployment Rate 2.7% 2.9% sa – in line with expectations. Consensus 2.7% 2.9% sa. Previous 2.7% 2.9% sa.
  • Switzerland CPI – EU Harmonised -0.3% m/m -0.8% y/y. Previous -0.2% m/m -1.2% y/y.
  • Sweden Budget Balance -2.2B. Previous -28.1B.
  • Netherlands Industrial Production -0.6% sa m/m -2.4% na y/y – lower than expected. Consensus 0.3% sa m/m. Previous -0.3% sa m/m -0.5% nsa y/y. Revised 0.0% nsa y/y.
  • Italy GDP sa and wda -0.7% q/q -2.5% y/y – higher than expected. Consensus -0.8% q/q -2.5% y/y. Previous -0.8% q/q -1.4% y/y.
  • Russia Official Reserve Assets 510.5B – higher than expected. Consensus 505.0B. Previous 514.3B.
  • Hungary Industrial Production -2.2% sa m/m 0.6% wda y/y – lower than expected. Consensus 2.2% wda y/y. Previous 3.2% sa m/m 1.9% wda y/y. Revised 3.5% sa m/m 2.4% wda y/y.


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