Frontrunning: September 13

Frontrunning: September 13
  • U.S., Russia to push for new Syria peace talks (Reuters)
  • Elite Syrian Unit Scatters Chemical Arms Stockpile (WSJ)
  • Obama to nominate Summers as Fed chief: Nikkei (Reuters)
  • Boehner Wants Joint Talks on Debt, Budget (WSJ)
  • House Republicans go for broke in fiscal battles (Reuters)
  • Pimco, BlackRock Together Received More Than a Quarter of Verizon’s $49 Billion Bond Deal (WSJ)
  • Insane financial system lives post-Lehman (Gillian Tett)
  • JPM to add $2.5 billion to its litigation reserves in the second half of the year (WSJ)
  • Goldman’s Zurich offices visited over working-hours complaint (FT)
  • SEC calls for plan to beat exchange failures (FT)… and it will keep calling until the market crashes and doesnt reopen
  • Banks Allying With Hedge Funds as Capital Rules Bite (BBG)
  • Twitter fails to answer key IPO questions (FT)
  • Market Disruption Seen Sign of Times After Nasdaq Mishap (BBG)

Overnight Media Digest


* A secretive Syrian military unit at the center of the Assad regime’s chemical weapons program has been moving stocks of poison gases and munitions to as many as 50 sites to make them harder for the U.S. to track, according to American and Middle Eastern officials.

* Twitter said it has confidentially submitted paperwork to the SEC to begin the process for an initial public offering. Goldman Sachs is the lead underwriter.

* J.P. Morgan Chase, facing a host of regulatory and legal woes, plans to spend an additional $4 billion and commit 5,000 extra employees this year to clean up its risk and compliance problems.

* Bond-fund managers PIMCO and Blackrock bought more than a quarter of the debt offered in Verizon Communications’ $49 billion bond deal, the latest sign of the growing strength of the large investment firms in global financial markets.

* British banks have spent about $1.2 billion on a plan that makes it easier for account holders to defect to rivals. The system will be rolled out on Monday.

* Dell Inc said its shareholders approved a $25 billion deal to sell the computer maker back to founder Michael Dell and a private-equity partner, capping a bitter, yearlong buyout effort and putting the company’s success or failure squarely in Michael Dell’s hands.

* A federal judge on Thursday confirmed AMR Corp’s plan to exit bankruptcy-court protection through a merger with U.S. Airways Group Inc leaving a U.S. antitrust lawsuit as the deal’s final, if formidable, barrier.

* U.S. Bancorp lowered its long-term forecasts for revenue and income growth, citing a slowdown in mortgage activity that has already begun.

* Walt Disney plans to nearly double its annual stock buyback, spending between $6 billion and $8 billion in the next fiscal year. The move comes as Disney is reaching the end of what Chief Financial Officer Jay Rasulo called “a huge capital cycle.” Though he didn’t rule out new acquisitions or investments, the company is now largely focused on the results of its recent spending.

* Hilton, the world’s largest hotel chain, filed plans on Thursday to raise at least $1.25 billion through one of the most anticipated IPOs in years and one that would offer a crucial test of the hospitality industry’s recent recovery.

* The U.K. government said it would sell a majority stake in state-owned postal service the Royal Mail through an IPO in the coming weeks, formalizing one of the biggest privatizations the country has seen for decades.

* The United Auto Workers union said it passed a key hurdle in its bid to organize workers at Volkswagen’s sole U.S. factory, raising political pressures that are squeezing the German auto maker from both sides of the Atlantic.


Twitter took its first steps towards going public on Thursday when it filed preparatory documents to the Securities and Exchange Commission for an initial public offering in the United States.

Vodafone won backing from 75 percent of Kabel Deutschland’s shareholders on Thursday night, paving the way for its 7.7 billion euro ($10.25 billion)takeover of the German cable company.

The U.S. Securities and Exchange Commission has asked leading stock and options exchanges in the country to specific changes that can be made to improve the structural foundation of the U.S. market following high-profile outages.

French carmaker Renault and industrial group Bollore on Thursday said they would join forces for the development of a new three-seater electric car, and to produce electric vehicles to be used in urban car-sharing programmes.

Lawyers, traders and restructuring specialists have been working to unwind the remaining assets of Lehman Brothers’ , once the fourth-biggest investment bank by market value in the United States.


* Twitter, which began as a side project in a small but failing start-up seven years ago and grew into one of the world’s largest platforms for public conversation, is about to take its biggest step yet into maturity: selling stock to the public. The company announced on Thursday – in a tweet, one of the 140-character messages that are the backbone of the service – that it had filed paperwork with regulators to eventually sell shares in an initial public offering.

* The Securities and Exchange Commission is asking the nation’s stock exchanges to introduce “kill switches” and other technological changes after the latest in a long line of computer problems scrambled stock trading. The relatively new chairwoman of the agency, Mary Jo White, asked for the changes at a meeting on Thursday with the top executives of the nation’s exchanges.

* After months of hurdles, Michael Dell is finally poised to buy full control of the company that bears his name, in his biggest move yet to turn around the computer maker’s fortunes as its industry goes through tectonic shifts. But a newly private Dell will most likely look much like the current one.

* With Congress momentarily freed from the Syrian crisis, lawmakers plunged back into their bitter fiscal standoff on Thursday as Speaker John Boehner appealed to the Obama administration and Democratic leaders to help him resolve divisions in the Republican ranks that could lead to a government shutdown by month’s end.

* A federal advisory committee cleared the way on Thursday for the first approval of a cancer drug that would be used to treat patients before surgery to remove their tumors. The advisory committee to the Food and Drug Administration voted 13 to 0, with one abstention, that Perjeta, a Genentech drug approved last year for late-stage breast cancer, could also be used at the disease’s earliest stage.

* A federal judge approved American Airlines’ bankruptcy plan on Thursday but ruled that the decision was contingent on Justice Department approval of the carrier’s merger with US Airways Group Inc.

* On Thursday, Hilton Hotels filed for an initial public offering, seeking to raise $1.25 billion. When it begins to trade, Hilton could be valued at around $30 billion.



* The review for possible errors in 3,500 computerized tomography (CT) scans and mammogram by a Toronto-area radiologist highlights a critical problem at Canadian hospitals: the lack of national oversight standards for diagnostic tests, radiologists and medical leaders say.

* The mayor of a small city in northern New Brunswick is using his civic blog to chronicle his and his residents’ opposition to the proposed TransCanada Corp pipeline that could, if approved, see Alberta crude oil flowing through his community.

Reports in the business section:

* Encana Corp’s new chief is looking for “radical change” in the way the company spends money, a quest to leave behind a scattershot strategy and a shift that could include selling assets and forgoing production growth. Doug Suttles, who took over as the natural gas company’s chief executive in June, also broke from Encana’s traditional stance, saying its dividend is under review.

* Canadian entrepreneur John Douglas, known for proposing huge and innovative power projects, is now planning a C$1 billion (about $970 million) underwater transmission line to take electricity from Ontario to the U.S. northeast. The cable, to run across Lake Erie, would carry surplus electricity from Ontario to Pennsylvania and on to 13 U.S. states and the District of Columbia, where there is increasing demand for power, particularly from “clean” sources.


* The Bloc Quebecois has kicked out a Montreal member of Parliament from its caucus after she publicly criticized the Quebec government’s proposed Charter of Values. Leader Daniel Paille, who doesn’t have a seat of his own in the House of Commons, said he was forced to remove Maria Mourani, the first woman of Lebanese origin elected to the House of Commons, from caucus because she refused to retract comments that the charter was part of an electoral strategy based on ethnic nationalism.

* An Ontario man facing charges in New York of masterminding the largest international penny stock fraud in history was thoroughly denounced in Toronto by the Ontario Securities Commission (OSC) on Thursday for approaching “a new standard” of predatory capital market fraud. And for that, the OSC is asking that 55-year-old Sandy Winick be forever banned from securities trading and fined C$1.25 million ($1.21 million).


* Canadian home prices will drop 10 to 15 percent “over time” as mortgage rates rise and supply swells, said Sadiq Adatia, chief investment officer of Sun Life Global Investments Inc. “I don’t think the demand is going to be there for housing,” said Adatia, who manages about C$6.4 billion at Sun Life Global, a unit of Sun Life Financial Inc.



— There have been over one hundred new members approved on China’s QFII foreign investor list since 2012, according to the latest figures from China’s securities regulator. The total now stands at 237 firms.


— Six foreign hedge funds have jointly raised $300 million through China’s Qualified Domestic Limited Partner (QDLP) scheme, which allows non-Chinese funds to raise money from mainland investors, which can then be used to invest overseas.


— China is not facing a property market bubble, despite high real estate prices and some regional problems, said Li Tie, director of the China Centre for Urban Development, talking at the World Economic Forum in Dalian on Thursday.

— A U.S. decision to block China’s Sany Group Ltd’s involvement in a wind farm project is “totally foolish” said Li Ruogu, Chairman of the state-owned Export-Import Bank of China at the World Economic Forum. He added that the justification of national security was “totally groundless”.

— Speaking in New York, the president of China’s Ningxia Hanas New Energy Group said he hopes to form a joint venture with an liquified natural gas (LNG) partner in the United States by the end of the year with an investment value of about $5 billion.


— Some of China’s publications for children contain murder, violence, pornography and other content which harms the physical and mental health of children, said an editorial in the paper that is considered a mouthpiece of the Chinese government. The country should not tolerate such publications.

Fly On The Wall 7:00 AM Market Snapshot



Aetna (AET) upgraded to Buy from Neutral at BofA/Merrill
Chesapeake Utilities (CPK) upgraded to Buy from Hold at Brean Capital
Commercial Metals (CMC) upgraded to Neutral from Underperform at BofA/Merrill
Dominion (D) upgraded to Overweight from Neutral at JPMorgan
Finish Line (FINL) upgraded to Neutral from Underweight at Piper Jaffray
Huntsman (HUN) upgraded to Buy from Hold at KeyBanc
Intel (INTC) upgraded to Buy from Hold at Jefferies
lululemon (LULU) upgraded to Outperform from Neutral at Credit Suisse
Oclaro (OCLR) upgraded to Buy from Neutral at B. Riley
Pinnacle West (PNW) upgraded to Neutral from Sell at Citigroup
Safeway (SWY) upgraded to Outperform from Underperform at Credit Suisse
Sibanye Gold (SBGL) upgraded to Buy from Neutral at Goldman
Verizon (VZ) upgraded to Overweight from Equal Weight at Evercore
Vodafone (VOD) upgraded to Overweight from Equal Weight at Evercore
WGL Holdings (WGL) upgraded to Buy from Hold at Brean Capital
Weatherford (WFT) upgraded to Outperform from Neutral at Credit Suisse
Wellpoint (WLP) upgraded to Neutral from Underperform at BofA/Merrill


Approach Resources (AREX) downgraded to Underweight from Overweight at JPMorgan
Axiall (AXLL) downgraded to Neutral from Buy at BofA/Merrill
Brady (BRC) downgraded to Neutral from Outperform at RW Baird
Diana Shipping (DSX) downgraded to Hold from Buy at Deutsche Bank
Ensco (ESV) downgraded to Market Perform from Outperform at Bernstein
Harmony Gold (HMY) downgraded to Sell from Neutral at Goldman
Noble Corp. (NE) downgraded to Market Perform from Outperform at Bernstein
QEP Resources (QEP) downgraded to Hold from Buy at Deutsche Bank
Teva (TEVA) downgraded to Neutral from Overweight at JPMorgan
Transocean (RIG) downgraded to Market Perform from Outperform at Bernstein
Under Armour (UA) downgraded to Neutral from Outperform at Credit Suisse
Vitamin Shoppe (VSI) downgraded to Neutral from Buy at Sterne Agee


Barclays (BCS) initiated with a Buy at Jefferies
Cobalt (CIE) initiated with a Buy at Mizuho
DexCom (DXCM) initiated with an Overweight at JPMorgan
Durata Therapeutics (DRTX) initiated with a Hold at Jefferies
Gran Tierra (GTE) initiated with a Buy at Mizuho
Kosmos (KOS) initiated with a Neutral at Mizuho
LabCorp (LH) initiated with a Buy at Cantor
Maximus (MMS) initiated with a Buy at Jefferies
The Advisory Board (ABCO) initiated with a Buy at BofA/Merrill
Urban Outfitters (URBN) initiated with a Buy at Sterne Agee


Microsoft (MSFT) to trade-in old iPads (AAPL) for store credit
Teva  (TEVA), Champions Oncology form discovery and drug development partnership
Nintendo (NTDOY) received favorable ITC ruling
Cisco (CSCO), Innovid partner to create additional TV advertising revenue opportunities
Ingram Micro (IM) acquired Toronto-based SoftCom


Companies that beat consensus earnings expectations last night and today include:
Analogic (ALOG), United Natural Foods (UNFI), Ulta Salon (ULTA)


  • Two major bond-fund managers–Pacific Investment Management Co. and BlackRock (BLK)–purchased over a quarter of the debt sold in Verizon Communications’ (VZ) $49B bond offering, about $13B, sources say, the latest sign of the growing clout of large investment firms, the Wall Street Journal reports
  • The videogame industry (EA, ATVI, SNE, MSFT) showed some signs of life as August sales data signaled a reversal of more than a year of contracting sales at U.S. retail stores, just ahead of the planned launches of two new consoles later this year. Sales of new videogame hardware, software and accessories at U.S. retail shops was up 1% to $521M, according to NPD Group data, the Wall Street Journal reports
  • A retiree healthcare trust will force Chrysler Group LLC to go public unless Fiat SpA (FIATY) agrees to pay top dollar, over $5B, for the trust’s stake in the U.S. automaker, sources say, Reuters reports
  • Mall owners (SPG, GGP, TCO, (SKT) the best-performing U.S. property stocks for four years, have slid to the worst as sluggish retail sales and limited opportunities to expand drive investors to look elsewhere for earnings growth, Bloomberg reports
  • Gold is poised to extend declines as the Fed withdraws stimulus and economic data improve, according to Goldman Sachs Group (GS), which says that there’s a risk that gold may fall below $1,000 an ounce, Bloomberg reports


Arotech (ARTX) files to sell common stock
Chemical Financial (CHFC) 1.925M share Secondary priced at $26.00
DragonWave (DRWI) files to sell common units
Evertec (EVTC) 20M share Secondary priced at $22.50
EveryWare Global (EVRY) files to sell 4M shares of common stock for holders
Fleetmatics (FLTX) files to sell 5.98M ordinary shares for holders
Galena Biopharma (GALE) files to sell common stock and warrants
Hain Celestial (HAIN) files to sell 3.6M shares of common stock for holders
Marketo (MKTO) 6M share Secondary priced at $35.50
NXP Semiconductors (NXPI) files to sell 25M shares for selling stockholders
Nanosphere (NSPH) file to sell common stock
OvaScience (OVAS) files to sell 7.63M shares of common stock for holders
PVR Partners (PVR) files to sell 5.5M common units representing limited partners
Stratasys (SSYS) 4.5M share Secondary priced at $93.00
Summit Hotel Properties (INN) files to sell 15M shares of common stock
Twitter files S-1 with SEC for planned IPO

Your rating: None

Share This:
free vectors