Frontrunning: September 19

  • Deposit Flight From Europe Banks Eroding Common Currency (Bloomberg)
  • BOJ eases monetary policy as global slowdown bites (Reuters)
  • Stalled Rally Puts Pressure on Spain (WSJ)
  • Missed Chances Stoke Skepticism Over EU’s Crisis Fight (Bloomberg)
  • Germany's big worry: China, not Greece (Reuters)
  • Goldman names new CFO, heralding end of an era (Reuters)
  • Russia Demands U.S. Agency Halt Work (WSJ)
  • Fed’s Dudley Says Easing Vital to Spur Too-Slow Growth (Bloomberg)
  • Romney under fire from all sides (FT)
  • Poland cuts red tape to spur growth (FT)
  • IMF to Put Argentina on Path to Censure Over Inflation Data (Bloomberg)
  • BOE Unanimous on QE Amid Divisions on Need for More Stimulus (Bloomberg)
  • Singh’s Biggest Ally to Quit Coalition Over Foreign Retail (Bloomberg)
  • S&P Affirms Australia’s AAA Grade, Citing Economic Resilience (Bloomberg)
  • Asian demand will cushion economy, says RBA (Australian)

Overnight Media Digest


* The head of FedEx Corp on Tuesday sounded a warning about the fate of China's export-driven economy as the world's largest air package shipper cut its forecast for global growth in 2012 and 2013.

* Wall Street's longest-serving chief financial officer stepped down Tuesday as Goldman Sachs Group Inc gave its first nod to a group of younger leaders.

* Yahoo Inc has begun to cash out a large chunk of its considerable stake in Chinese Internet concern Alibaba Group Holding Ltd, rewarding shareholders in the U.S. firm and accumulating strategic cash with the long-anticipated move.

* Anschutz Co is planning to sell Anschutz Entertainment Group, its powerhouse sports-and-entertainment subsidiary whose properties include a piece of the Los Angeles Lakers as well as sports teams, stadiums and music festivals around the world.

* China Investment Corp is taking a more active role in its investments overseas by co-investing with private-equity fund managers such as Canada's Brookfield Asset Management Inc, according to people with the direct knowledge of the fund, reflecting a shift in how one of the world's largest sovereign funds prefers to invest its money




Saudi Arabia has offered its main customers in the US, Europe and Asia extra oil supplies, a sign the world's largest exporter is worried about the impact of rising prices on the global economy.


Bondholders are becoming more confident that RBS will successfully float Direct Line, even as people close to the process warn the bank is prepared to pull the deal if equity investors value the business at much less than 3 billion pounds ($4.88 billion).


BP has held talks to sell its Texas City refinery to Marathon Petroleum Corp, the latest stage of a big asset disposal plan to cover the costs of the 2010 Deepwater Horizon disaster.


Striking mineworkers and Lonmin reached a wage agreement on Tuesday that should signal the end of more than five weeks of industrial action marred by violence and 45 deaths.


Lloyds Banking Group became the latest UK lender to offer to buy back a large portfolio of its own debt as it looks to use excess cash on its balance sheet to eliminate expensive funding.


BHP Billiton will not increase the basic salaries of more than 100 of its top directors, including chief executive Marius Kloppers, as it looks to show restraint and clamp down on costs.


All eyes have been on Paris since merger talks between Franco-German EADS and the UK's BAE Systems became public, with the British side claiming their French counterparts were the most likely block to a deal.



* Private equity firms have been vying to buy portfolios of European bank debt on commercial real estate at deep discounts, and hope eventually to earn generous returns.

* Yahoo Inc closed on the sale of half of its stake in the Alibaba Group of China, the company said on Tuesday, giving it $3 billion to return to its shareholders.

* Goldman Sachs introduced on Tuesday what may be the first of the next generation of leaders to run the storied Wall Street firm, saying that its longtime chief financial officer, David Viniar, would retire at the end of January and be replaced by Harvey Schwartz, a 48-year-old executive.

* FedEx Corp says the global economy is stalling and that the situation is likely to get worse next year. The company cut its outlook for global growth and industrial production on Tuesday while reducing its forecast for company earnings, part of its statement of first-quarter results.




* Faced with deepening cuts to the time they get from teachers, students are pushing back, testing whether they can be more than pawns in Ontario's latest labour battle.

* A massive delegation of Indian finance officials is in Canada this week looking for tips on how to successfully launch a new sales tax. One of the main lessons they've learned so far: Putting it to a referendum is a bad idea.

Reports in the business section:

* Suncor Energy Inc has rolled out plans to buy back up to $1-billion worth of its own stock, reinforcing its new focus on financial returns rather than production growth.


* A relatively new section of the Criminal Code makes it too easy to label certain serial offenders as "dangerous offenders" and infringes upon the principles of fundamental justice under the Charter, an Ontario judge has ruled in a precedent-setting case.


* Canada's housing correction "appears to be underway," Toronto-Dominion Bank's chief economist said Tuesday, one day after data showed national home sales plummeted in August.

* The head of the Canadian Auto Workers union says he is optimistic after a day of constructive talks with General Motors that a new collective agreement can soon be reached with the automaker.


The Fly On The Wall's 7:00 AM Market Snapshot



Achillion (ACHN) upgraded to Buy from Neutral at BofA/Merrill
AstraZeneca (AZN) upgraded to Neutral from Underperform at Exane BNP Paribas
Chiquita Brands (CQB) upgraded to Buy from Hold at BB&T
Corning (GLW) upgraded to Buy from Neutral at Goldman
Fresh Del Monte (FDP) upgraded to Buy from Hold at BB&T
Golar LNG Partners (GMLP) upgraded to Outperform from Market Perform at Wells Fargo
Marathon Oil (MRO) upgraded to Outperform from Neutral at Credit Suisse
Monsanto (MON) upgraded to Conviction Buy from Buy at Goldman
St. Jude Medical (STJ) upgraded to Outperform from Market Perform at Wells Fargo
Webster Financial (WBS) upgraded to Strong Buy from Outperform at Raymond James


Bon-Ton Stores (BONT) downgraded to Underperform from Neutral at Credit Suisse
Broadcom (BRCM) downgraded to Market Perform from Outperform at Wells Fargo
CSX (CSX) downgraded to Neutral from Buy at UBS
Charles Schwab (SCHW) downgraded to Neutral from Buy at Goldman
Chicago Bridge & Iron (CBI) downgraded to Neutral from Outperform at Macquarie
GlaxoSmithKline (GSK) downgraded to Underperform from Outperform at Exane BNP Paribas
Idenix (IDIX) downgraded to Neutral from Buy at BofA/Merrill
Kansas City Southern (KSU) downgraded to Sell from Neutral at UBS
Lam Research (LRCX) downgraded to Neutral from Buy at Citigroup
Norfolk Southern (NSC) downgraded to Neutral from Buy at UBS
Northern Trust (NTRS) downgraded to Underperform from Neutral at Credit Suisse
PriceSmart (PSMT) downgraded to Neutral from Buy at Janney Capital
Royal Gold (RGLD) downgraded to Neutral from Overweight at HSBC
Union Pacific (UNP) downgraded to Neutral from Buy at UBS
Waste Management (WM) downgraded to Underweight from Neutral at JPMorgan


ASML (ASML) initiated with an Overweight at JPMorgan
Achillion (ACHN) initiated with a Buy at Deutsche Bank
Allergan (AGN) initiated with a Hold at Canaccord
ArcelorMittal (MT) initiated with a Sell at BTIG
Baxter (BAX) initiated with an Outperform at BMO Capital
Celanese (CE) initiated with an Outperform at RBC Capital
Delcath Systems (DCTH) initiated with an Outperform at JMP Securities
Dover (DOV) initiated with a Buy at Capstone
Dow Chemical (DOW) initiated with a Sector Perform at RBC Capital
DuPont (DD) initiated with a Sector Perform at RBC Capital
FMC Corporation (FMC) initiated with a Neutral at Goldman
Fusion-io (FIO) initiated with an Outperform at Pacific Crest
Generac (GNRC) initiated with a Buy at Canaccord
GulfMark Offshore (GLF) initiated with a Market Perform at Wells Fargo
LyondellBasell (LYB) initiated with an Outperform at RBC Capital
Optimer (OPTR) initiated with an Outperform at Leerink
RPC, Inc. (RES) initiated with a Market Perform at Wells Fargo
Sherwin-Williams (SHW) initiated with a Top Pick at RBC Capital
Tidewater (TDW) initiated with an Outperform at Wells Fargo
Valspar (VAL) initiated with an Outperform at RBC Capital


ACE Ltd. (ACE) acquired 80% of PT Asuransi Jaya Proteksi in Indonesia
W&T Offshore (WTI) to acquire offshore blocks from Newfield Exploration (NFX)
Goldman Sachs Group (GS) CFO David Viniar to retire. Harvey M. Schwartz, global co-head of the Securities Division, will become CFO at the end of January, 2013
Johnson & Johnson (JNJ) unit requested FDA approval of SIMPONI
Syngenta (SYT) to acquire Pasteuria Bioscienc
VF (VFC) targets $1.1B in revenue growth in Asia Pacific business over next five years
JDSU (JDSU) announced sale of holographic security product line to OpSec Security
Churchill Downs (CHDN) joint venture removes closing condition for purchase agreement
MSB Financial (MSBF) to suspend dividend
Wintrust Financial (WTFC) to acquire HPK Financial for $27.5M
Sandstorm Metals (SAND) agreed to purchase precious metals from Colossus Minerals
Trimble (TRMB) acquired Logicway to expand its transportation, logistics capabilities


Companies that beat consensus earnings expectations last night and today include:
ChinaEdu (CEDU)


The Bank of Japan decided on strong steps to further ease its monetary policy today following recent easing action by the Fed, as the central bank looks to tackle entrenched deflation, the strong yen, and slowing global growth, the Wall Street Journal reports
Research that suggests prescription drugs are as good or better at preventing strokes than interventional procedures is prompting a range of leading doctors to recommend against carotid surgery and carotid stent implants in most patients who haven't had stroke symptoms. The shift has broad implications for large medical-device makers (ABT, BSX, JNJ, COV), the Wall Street Journal reports
Anschutz Co. said it wants to sell its sports and entertainment unit in a potential multi-billion dollar sale. Potential buyers could include Liberty Media Corp. (LMCA) and News Corp. (NWSA), Reuters reports
American Airlines (AAMRQ) said it notified over 11,000 workers they could lose their jobs as part of its bankruptcy reorganization, and that it was reducing flights 1% to 2% for the rest of September and October, Reuters reports
Richmond Fed President Jeffrey Lacker said the shock from the credit crisis may impede efforts by the central bank to quickly bring down unemployment even with the use of record stimulus, Bloomberg reports
Johnson & Johnson (JNJ) is setting up four centers around the world to look for early-stage acquisitions, partnerships and investment opportunities, Bloomberg reports


Approach Resources (AREX) files to sell 5M shares of common stock
Flamel Technologies (FLML) files to sell 3.3M ordinary shares for holders
Goldcorp (GG) announces secondary sale of 8.42M Primero Mining shares
Health Care REIT (HCN) 26M share Secondary priced at $56.00
Thermon Group (THR) files to sell 8M shares for holders


Gabelli reports 5.18% stake in Kenexa (KNXA)
Gabelli reports 7.64% stake in U.S. Home Systems (USHS)
Roust Trading reports 19.4% stake in Central European Distribution (CEDC)
York Capital lowers stake in Dollar Thrifty (DTG) to 7.9% from 11.3%