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Frontrunning: September 17

  • -0.07%: Germany Secures Record Low Funding Cost at Bond Auction (WSJ)
  • Pentagon Sees Possible Role for U.S. Ground Forces Against Islamic State Militants (WSJ)
  • China Joins ECB in Adding Stimulus as Fed Scales Back (BBG)
  • Stealthy or Normal? Analysts Diverge on PBOC’s Action (BBG)
  • Sony Forecasts Massive $2B Loss as Smartphones Lag (AP)
  • Islamic State campaign tests Obama's commitment to Mideast allies (Reuters)
  • Brent Crude Rebounds as Libya’s Sharara Oilfield Shut (BBG)
  • Market calm over Scottish vote at odds with disaster warnings (Reuters)
  • Citigroup Embraces Derivatives as Deals Soar After Crisis (BBG)
  • Russia’s MTS Sinks on Billionaire Owner’s Sudden Arrest  (BBG)
  • European Shares Advance on Stimulus as Dollar Gains (BBG)
  • New data shows Americans' incomes still stagnant after recession (Reuters)
  • GM Slashes Jobs and Output in Russia (WSJ)
  • Goldman Trader Swaps Financial Services for Speedy Food Delivery (BBG)
  • Credit Suisse Loans Draw Fed Scrutiny (WSJ)

 

Overnight Media Digest

WSJ

* America's top military officer raised the prospect that limited U.S. ground forces would be needed to battle Islamic State militants if fighting in Iraq grows more difficult. That prospect could test President Barack Obama's strict ban on deploying ground troops. (http://on.wsj.com/XzN1rx)

* Credit Suisse Group AG is under fire from U.S. regulators over concerns the bank isn't heeding warnings to stop making loans regulators see as risky, according to a person familiar with the matter. (http://on.wsj.com/1qKXnBH)

* China's central bank is injecting 500 billion yuan ($81.40 billion) into the country's five major state-owned banks as it moves to counter slower-than-expected growth in the world's No. 2 economy, according to a senior Chinese banking executive. (http://on.wsj.com/YQXUGM)

* National Aeronautics and Space Administration (NASA) has awarded Boeing Co a contract worth as much as $4.2 billion and rival Space Exploration Technologies Corp a separate pact valued at up to $2.6 billion to develop, test and fly space taxis to carry U.S. astronauts into orbit. (http://on.wsj.com/1qKXptm)

* General Motors Co is slashing production in Russia and appointing new management to oversee operations there in the latest sign that weakening sales in the country threaten GM's European turnaround. (http://on.wsj.com/1u5sBRF)

* Airbus Group NV on Tuesday said it would sell defense assets as the company increasingly focuses on its commercial-airplane business. Airbus will get out of the secure-communications business and drop other lines including its holding in the Atlas Elektronik naval-technology joint venture with ThyssenKrupp AG, the company said in a statement. (http://on.wsj.com/YR0EE0)

 

FT

Airbus Group said on Tuesday it would sell its non-core businesses with revenues of more than 2 billion euros ($2.59 billion) to focus on its defence and space division on military aircraft, missiles and satellites.

Mobile operators EE and Vodafone Group Plc which withdrew their business with Phones 4u last few weeks are in talks individually with the administrator to acquire parts of Phones 4u's business, including some of its stores, employees and shares across Britain.

The Frankfurt regional court reversed a countrywide ban on Uber's ride-sharing service in Germany, saying the taxi drivers had waited too long before seeking an emergency injunction.

Hong Kong business tycoon Stephen Hung has made an order to purchase 30 Rolls-Royce motor vehicles for $20 million to ferry guests at his new Macau gaming complex.

A British public pension fund has criticised hedge fund fees as unjustifiable, adding to industry tensions a day after California-based public pension fund Calpers said it had terminated its hedge fund programme.

NYT

* Federal auto safety regulators came under scrutiny in a Senate hearing on Tuesday for their role in General Motors' failure to promptly report and recall cars with defective parts. (http://nyti.ms/1DgiCzv)

* A Frankfurt judge granted a reprieve to Uber, the online transportation service, setting aside a temporary injunction issued two weeks ago restricting the company from operating a novel car-sharing service across Germany. (http://nyti.ms/1s5XZDf)

* A federal judge on Tuesday upheld the Obama administration's effort to rein in the sort of overseas trading that imploded in the financial crisis, upending Wall Street's plan to roll back the regulatory overhaul. The overseas trading case centers on the Commodity Futures Trading Commission's so-called cross-border guidance, a July 2013 document that outlined how to apply United States regulations to foreign banks and American banks doing business abroad.(http://nyti.ms/1r7hwBe)

* David Tovar, the vice president for corporate communications at Walmart, was forced to resign after the retailer discovered that he had lied about receiving an art degree from the University of Delaware. (http://nyti.ms/1r7ieyt)

* The Massachusetts Gaming Commission on Tuesday chose Wynn Resorts as the winner of the sole license for a casino in the lucrative Boston area. Wynn's proposal for a $1.6 billion glassy casino at a chemical landfill in the blue-collar town of Everett beat out a proposal by Mohegan Sun for a project in nearby Revere at the fading Suffolk Downs thoroughbred raceway. (http://nyti.ms/1BKZfg6)

* China became on Wednesday the latest country to embrace economic stimulus measures, as its central bank reportedly agreed to lend 100 billion yuan ($16.28 billion) apiece, to each of the country's five main banks. (http://nyti.ms/1DhEbjb)

 

Canada

THE GLOBE AND MAIL

** United States Steel Corp could sell all or part of the assets of U.S. Steel Canada Inc as it restructures its Canadian unit, which was granted protection from creditors on Tuesday under the Companies' Creditors Arrangement Act. (bit.ly/XAWsaf)

** British Columbia's 40,000 public school teachers will vote on Thursday on a proposed contract that could see most schools reopen on Monday, ending a strike that spanned two school years and shuttered classrooms for five weeks. (bit.ly/1DipUCN)

** Crews are currently working to clear a Canadian National train derailment just outside of Slave Lake, Alta. No injuries have been reported. The Transportation Safety Board says four engines and three cars came off the tracks on Tuesday about 10 kilometers east of Slave Lake, near Mitsue. (bit.ly/1oZQfvQ)

NATIONAL POST

** In the final weeks of Toronto's mayoral race, John Tory has gathered a significant lead over candidates Olivia Chow and Doug Ford, according to a new poll. (bit.ly/1u0qkLg)

** In his first news conference as premier of Alberta, Jim Prentice said he'd reach out to Alberta aboriginals involved in oil production to help him make the case for greater market access to the West Coast. (bit.ly/1uG6Nyr)

** All eyes will be trained on Mount Sinai Hospital on Wednesday, as the city awaits an update on ailing Mayor Rob Ford, diagnosed with a tumour last week and having, according to his brother, "a tough go of it right now". The mayor has been hospitalized since last Wednesday, when a CT scan discovered a tumour in his lower abdomen. (bit.ly/1BLy19k)

 

Hong Kong

SOUTH CHINA MORNING POST

-- The mainland is speeding up liberalisation of its gold market, granting approval to the Hong Kong-based gold bourse to establish a HK$1 billion ($129 million) metals vault in Qianhai while moving forward the launch date of its Shanghai international gold market to tomorrow. (bit.ly/1uS35QH)

-- Property speculators are back. The recent sales of new residential projects found up to 90 per cent of the buyers were investors. (bit.ly/XyVJX8)

-- Inflated mainland export figures last year due to fake invoicing have led to slower growth rates in trade data this year, economists said, and that might cause Beijing to miss its full-year external trade growth target of 7.5 per cent. (bit.ly/1uGcRpD)

-- Hoardings have been put up around the public passageway around HSBC headquarters in Central, a move an Occupy Central organiser says has narrowed the physical space for people to make themselves heard. (bit.ly/1ARyMeF)

THE STANDARD

-- MTR Corp and the government have tempered the terms of the second tender for Tai Wai residential project, in an apparent bid to prevent another failure. The government slashed land premium for the plot by 19 percent to HK$10.3 billion, within surveyors' estimates of between HK$9.5 billion to HK$10.8 billion. (bit.ly/1BKp8g7)

-- About 57 percent of local female financial professionals believe gender discrimination exists in the industry, though the figure has fallen from 64 percent a year ago, the latest survey by efinancialcareers shows. (bit.ly/1wBhwfW)

APPLE DAILY

-- Soy milk maker Vitasoy International Holdings Ltd said it would invest 500 million yuan ($81.4 million) to build a manufacturing facility in China's Wuhan as it speed up development outside southern part of China.

 

Britain

The Times

TUI TRAVEL'S MERGER PLAN WILL 'RELEASE TRAPPED VALUE' The FTSE 100 travel group behind Thomson and First Choice has finalised the terms of a 6.5 billion euros ($8.42 billion) merger with its German parent company that will deliver 167.5 million euros of cost and synergy benefits. TUI Travel, which is 54 percent-owned by TUI AG, said the all-paper, nil-premium merger would create "the world's No 1 integrated leisure tourism business" to the benefit of both companies. (http://thetim.es/1qZOqSG)

CONOCOPHILIPS SPARKS RUSH FOR CLAIR OILFIELD WITH SALE The ownership of one of Scotland's most valuable oilfields is up for grabs after an American oil company put its stake up for sale. ConocoPhillips has appointed banks to find buyers for its 24 percent share in the Clair oilfield west of Shetland, which could fetch between 1.2 billion pounds ($1.95 billion) and 1.8 billion pounds.

The Guardian

THOMAS COOK EXPERIENCES SLOWDOWN IN GERMAN HOLIDAY BOOKINGS Thomas Cook Group Plc has been hit by weakening consumer confidence in Germany, as political uncertainty weighs on its crucial continental Europe business. The travel agent said German holiday bookings had slowed, "reflecting a less optimistic consumer climate due to geopolitical events, as well as a more subdued economic outlook as the EU considers adopting further sanctions against Russia". (http://bit.ly/1ARwgF3)

The Telegraph

BP CAUGHT USING 'COLLEGE' TRICKS TO CHEAT PAGE COUNT A U.S. judge has reprimanded BP Plc for using tactics that would "not be appropriate for a college term paper" after the oil giant tried to sneak six extra pages into a court filing by manipulating line spacings. (http://bit.ly/1qVQD2T) WALK AWAY FROM DEBT AND LOSE POUND WITHIN A YEAR, SCOTS TOLD An independent Scotland would collapse within a year if it kept the pound and walked away from its share of the national debt, according to a respected think tank. The National Institute of Economic and Social Research said reneging on its debt obligations would simultaneously freeze Scotland out of the European Union and international markets, forcing it to return "to a fiscal surplus and therefore unprecedented austerity", and ultimately its own currency within a year. (http://bit.ly/1t9qUEX)

Sky News

SANTANDER UK TO NAME BOSTOCK AS NEW CHIEF Former finance director of Royal Bank of Scotland Group Plc, Nathan Bostock, is poised to be named as the new chief of Santander UK Plc, Britain's fifth-biggest lender. Bostock will replace Ana Botin, who was last week elevated to become group executive chairman of Banco Santander following the death of her father, Emilio Botin. (http://bit.ly/1ydWdmd)

The Independent

MODERATING INFLATION CUTS LIKELIHOOD OF BANK RATE RISE Another fall in inflation during August has pushed back the likelihood of the Bank of England raising interest rates, City analysts said on Tuesday. (http://ind.pn/1qVXpWg)

SCOTTISH INDEPENDENCE: BETFAIR PAYS OUT 'NO' BETS IN REFERENDUM- EVEN THOUGH VOTE IS DAYS AWAY Betfair Group Plc has started to pay out bets to punters who have staked their money on a "No" result in the Scottish independence referendum - even though the result of the vote is three days away. The online gaming firm said customers who placed bets with its bookmaking business, Betfair Sportsbook, will get their winnings now. (http://ind.pn/1qZN4Y6)

 

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Consumer Price Index for August at 8:30--consensus flat
Current account balance of Q2 at 8:30--consensus ($114.0B)
NAHB housing market index for September at 10:00--consensus 56
FOMC rate decision and policy statement at 14:00

ANALYST RESEARCH

Upgrades

AB InBev (BUD) upgraded to Hold from Sell at Societe Generale
Bill Barrett (BBG) upgraded to Buy from Neutral at Mizuho
Extra Space Storage (EXR) upgraded to Buy from Hold at Jefferies
Mondelez (MDLZ) upgraded to Buy from Hold at Societe Generale
Radian Group (RDN) upgraded to Buy from Neutral at Compass Point
Skullcandy (SKUL) assumed with a Overweight from Neutral at Piper Jaffray
Under Armour (UA) assumed with an Overweight from Neutral at Piper Jaffray

Downgrades

BHP Billiton (BHP) downgraded to Underperform from Neutral at Exane BNP Paribas
DaVita (DVA) downgraded to Hold from Buy at KeyBanc
Eaton (ETN) downgraded to Hold from Buy at Stifel
Essent Group (ESNT) downgraded to Neutral from Buy at Compass Point
FactSet (FDS) downgraded to Neutral from Overweight at Piper Jaffray
General Mills (GIS) downgraded to Sell from Hold at Societe Generale
Hibbett Sports (HIBB) assumed with a Neutral from Overweight at Piper Jaffray
Kellogg (K) downgraded to Hold from Buy at Societe Generale
L Brands (LB) downgraded to Neutral from Overweight at Piper Jaffray
Mobile TeleSystems (MBT) downgraded to Neutral from Overweight at JPMorgan
Nestle (NSRGY) downgraded to Hold from Buy at Societe Generale

Initiations

3M Company (MMM) initiated with a Hold at Stifel
Ann Inc. (ANN) initiated with a Neutral at Wedbush
Barracuda Networks (CUDA) initiated with a Neutral at DA Davidson
Boston Properties (BXP) initiated with an Outperform at Wells Fargo
C&J Energy (CJES) initiated with a Buy at KeyBanc
CARBO Ceramics (CRR) initiated with a Hold at KeyBanc
Dresser-Rand (DRC) initiated with a Buy at KeyBanc
Emerson (EMR) initiated with a Buy at Stifel
Forum Energy (FET) initiated with a Buy at KeyBanc
Frank's International (FI) initiated with a Buy at KeyBanc
General Electric (GE) initiated with a Buy at Stifel
Helmerich & Payne (HP) initiated with a Buy at KeyBanc
Ingersoll-Rand (IR) initiated with a Hold at Stifel
Medidata Solutions (MDSO) initiated with an Overweight at JPMorgan
Mellanox (MLNX) initiated with a Neutral at Sterne Agee
Nabors Industries (NBR) initiated with a Buy at KeyBanc
Norsk Hydro (NHYDY) initiated with an Underperform at Credit Suisse
Patterson-UTI Energy (PTEN) initiated with a Hold at KeyBanc
Radware (RDWR) initiated with a Buy at DA Davidson
Rockwell Automation (ROK) initiated with a Buy at Stifel
Ryerson (RYI) initiated with a Buy at Jefferies
Ryerson (RYI) initiated with an Outperform at Wells Fargo
Ryerson (RYI) initiated with an Overweight at JPMorgan
Superior Energy (SPN) initiated with a Hold at KeyBanc
Tesco (TESO) initiated with a Buy at KeyBanc
Tyco (TYC) initiated with a Hold at Stifel
U.S. Silica (SLCA) initiated with a Buy at KeyBanc
United Technologies (UTX) initiated with a Hold at Stifel

COMPANY NEWS

Endo (ENDP) delivered proposal to acquire Auxilium (AUXL) for $2.2B in cash, stock
Rackspace (RAX) said it will remain independent, and ended review of alternatives. The company also named Taylor Rhodes as CEO
Microsoft (MSFT) raised its dividend 11% to 31c per share, to add Kraft (KRFT) CFO Teri List-Stoll, Visa (V) CEO Charles Scharf to board
Trian Partners said DuPont's (DD) structure 'destroying shareholder value,' wants DuPont to split into GrowthCo - Agriculture, Nutrition and Health, Indstrial Biosciences -- and CyclicalCo/CashCo -- Performance Materials, Safety and Protection, Electronics and Communications
NY Attorney General Schneiderman announced NYC bank identity-theft ring takedown. Five individuals were arrested for running an alleged identity-theft ring targeting customers of local banks; the tellers indicted worked for branches of Bank of America (BAC), JP Morgan Chase (JPM), HSBC (HSBC), TD Bank (TD) and Wachovia in the Bronx
Wal-Mart (WMT) to pay $66,000 to settle false advertising investigation with NY AG (KO)
NASA awarded Boeing (BA) $4.2B contract for commercial space flight to ISS
InspireMD (NSPR) announced 'positive' trial results for its CGuard EPS

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Lennar (LEN), Apogee Enterprises (APOG), Adobe (ADBE)

Sony (SNE) lowers FY14 net loss estimate to 230B from 50B yen
U.S. Steel (X) sees Q3 ex-items EPS 'significantly higher' than current consensus
Phibro Animal Health (PAHC) sees FY15 adjusted EPS $1.46-$1.51, consensus $1.46
Phibro Animal Health (PAHC) reports Q4 adjusted EPS 22c vs. 29c prior year
YRC Worldwide (YRCW) sees Q3 operating income $22M-$27M

NEWSPAPERS/WEBSITES
Credit Suisse (CS) under fire from regulators over leveraged lending, WSJ reports
Microsoft (MSFT) planning new wave of layoffs for this week, ZDNet reports
Apple (AAPL) supplier Foxconn reportedly struggling to meet iPhone demand, WSJ reports
Perion Network (PERI) receives takeover offer of over $500M from IAC (IACI), Calcalist says
United Technologies (UTX) seeks big deals but says pipeline 'not robust,' Reuters reports
Time to buy Apple (AAPL), Barron's says
PepsiCo (PEP), Molson Coors (TAP) still look inexpensive, Barron's says

SYNDICATE
Aratana Therapeutics (PETX) files to sell common stock
Blueknight Energy 8.5M share Secondary priced at $7.61
Celsion (CLSN) files to sell 3.38M shares for holders
QAD Inc files $125M mixed securities shelf, 2M shares for holders
Sunoco Logistics (SXL) 7.7M share Spot Secondary re-offered at $48.46