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Frontrunning: November 3

  • To salvage his presidency, Obama faces pressure to reboot - but will he? (Reuters)
  • Pro-Russian separatist Zakharchenko wins Ukraine rebel vote (Reuters)
  • Russia's Recognition of Ukrainian Separatist Election Is 'Incomprehensible,' Germany Says (Moscow Times)
  • Man Running World’s Biggest Wealth Fund Tackles China Riddle (BBG)
  • Russian Supply Underpins Global Oil Glut (WSJ)
  • Argentina accuses Procter & Gamble of tax fraud, says suspends operations (Reuters)
  • ECB Skips Fireworks for Day One of New Role as Supervisor (BBG)
  • HSBC Hit by $1.7 Billion of Provisions (WSJ)
  • Boies Poised for Possible Upset in AIG $25 Billion Bailout Trial (BBG)
  • Portugal Sees Chinese Do 90% of Bids at Property Auction (BBG)
  • Islamic State says seizes second gas field in Syria (Reuters)
  • Casinos to Marijuana Questions Go Before State Voters (BBG)
  • Altice Offers $8.8 Billion for PT Portugal (WSJ)
  • Tomato Demand Spurs Record California Crop Amid Drought (BBG)
  • Strong dollar squeezes oil, China data limits stock gains (Reuters)
  • Wanted: 500,000 pilots for China aviation gold rush (Reuters)
  • Alibaba's first earnings to test mettle, investor enthusiasm (Reuters)
  • Dunkin’ Duels Starbucks With Snickerdoodle Latte (BBG)
  • At least 24 migrants die as boat sinks in Black Sea near Istanbul (Reuters)

 

 

Overnight Media Digest

WSJ

* Preliminary data suggest some type of violent structural failure, rather than an engine explosion, might be the likely cause of the crash of Virgin Galactic's experimental rocket ship on Friday. (http://on.wsj.com/10MfCw0)

* Exxon Mobil Corp, Royal Dutch Shell Plc and Chevron Corp have lower profit margins than a decade ago, according to a Wall Street Journal analysis, prompting them to shelve expansion plans and shed operations. (http://on.wsj.com/1vC9L44)

* Publicis Groupe SA is in talks to buy Sapient Corp, as the French advertising firm seeks to speed up its transformation into a digital-technology company. (http://on.wsj.com/1GcHJEE)

* Five days after the first U.S. Ebola case was confirmed, Massachusetts General Hospital deployed a new Ebola application made by QPID Health Inc that automatically matches a patient's travel and family history with medical symptoms. (http://on.wsj.com/1zqVdL8)

* Investors who bet on strong growth at Alibaba Group Holding Ltd when it went public in September, will soon get their first look at how well the Chinese e-commerce giant is meeting their expectations when it will report quarterly earnings on Tuesday for the first time since its record $25 billion debut on the New York Stock Exchange. (http://on.wsj.com/1GcYtvw)

* Diageo Plc is nearing an asset-swap deal with Jose Cuervo that would give the British liquor giant full ownership of a fast-growing tequila brand in exchange for its Bushmills Irish whiskey. (http://on.wsj.com/1yPj4Bh)

* Investors seeking higher returns are finding them in an unexpected place: the market for debt sold by states, cities and government-related entities. Municipal bonds have posted their longest string of monthly gains in more than two decades, outpacing gains this year in blue-chip U.S. stocks and corporate debt. (http://on.wsj.com/1pgwJkA)

 

FT

Sir Richard Branson's ambitious project to put tourists into space, Virgin Galactic, has come under scrutiny after accusations came out that the company had ignored safety warnings. George Whitesides, head of the company, denied accusations that the company had taken risks with a new rocket propulsion system and added that it could have a new spacecraft ready by the next year.

French advertising group Publicis Groupe SA is in talks to buy U.S. based consultancy-firm Sapient Corp to enter into the world's largest market, months after a merger deal with counterpart Omnicom Group Inc fell through.

A "contractual problem" has derailed one of the largest initial public offerings in Europe this year - the flotation of Spain's state-owned airport operator Aena. According to government estimates, the IPO, which was scheduled for Nov. 12, could be worth as much as 8 billion euros ($10.01 billion).

Despite an economy that is stagnating, an increasing number of European companies are reshoring their operations to the eurozone, a research by consultancy firm PwC suggests. About two-thirds of 381 non-financial companies in the eurozone said they had reshored some of their operations in the past one year.

 

NYT

* Italian bank Monte dei Paschi di Siena said it would ask investors to help it raise the money it needed to satisfy demands from the European Central Bank that it bolster its ability to survive an economic downturn or other crises. (http://nyti.ms/1ttLGy0)

* Monster Worldwide Inc, which revolutionized online job hunting in the 1990s, is trying to reinvent itself for the era of Twitter and Facebook with new products that capitalize on social media. (http://nyti.ms/1rPClwP)

* Product placement in a novel might strike some as unseemly, but "Find Me I'm Yours" is not like most novels. It is an ebook, a series of websites and web TV shows, and a vehicle for content sponsored by companies. And if it succeeds, it could usher in a new business model for publishers, one that blurs the lines between art and commerce in ways that are routine in TV shows and movies but rare in books. (http://nyti.ms/1ttH0Z3)

* A year after a grueling fight with the investor Carl Icahn, Michael Dell says he is very happy to have the computer company Dell Inc that bears his name back to himself. On Tuesday, Dell will show what he has been up to since the seven-month struggle with Icahn ended last year. (http://nyti.ms/1ufzwfd)

* Macy's Inc flagship Herald Square store has long tried to be everything to everyone. But in a $400 million renovation, it is taking sharper aim at millennials and free-spending tourists. (http://nyti.ms/1yPaWRk)

* More than a year before the first legal dose of marijuana will be dispensed in New York, a group of entrepreneurs gathered at the Marriott Marquis hotel in Times Square in late October to discuss strategy with an influential state lawmaker. (http://nyti.ms/1vC9Sg2)

* Public Broadcasting Service's "Masterpiece", the 43-year-old English drama franchise, is capitalizing on the runaway success of "Downton Abbey" by adding new shows and more airtime early next year. (http://nyti.ms/1s6cn9e)

* Americans are expected to buy a record $89 billion worth of gifts online this holiday season, according to a new report from Forrester Research. That's a 13 percent jump over last year, when hundreds of millions of gifts and bad weather overtaxed United Parcel Service Inc and FedEx Corp leading to shipping delays. (http://nyti.ms/1xR0KGE)

 

Canada

THE GLOBE AND MAIL

** Canada has made its mark on the battlefield in Iraq with CF-18 warplanes dropping their first bombs in Canada's combat mission there. Canadian fighter jets attacked Islamic State militant targets near the city of Fallujah on Sunday, Ottawa said. It's not clear how much damage the CF-18s caused. The military says it requires two days, until Tuesday, before it can tell Canadians what was achieved. (http://bit.ly/1qlZpDT)

** Canadian Prime Minister Stephen Harper heads to Beijing this week to try and set the China-Canada relationship on a more even keel after a rough couple of years. Harper, who has alternated as prime minister between a hawk on China who wouldn't sell out to "the almighty dollar" and a pragmatist calling for deeper economic ties, will now try to strike a rapport with Chinese President Xi Jinping. (http://bit.ly/1qm0DPn)

** Chevron Corp has welcomed the British Columbia government's plan to lighten the tax load on liquefied natural gas projects as the U.S. energy giant seeks Asian customers for Canadian LNG. (http://bit.ly/1qlZc3n)

NATIONAL POST

** Lawyers are openly questioning the Canadian Conservative Party, Tories over a provision in new victim's rights legislation that could allow witnesses to testify without identifying themselves in a broad range of criminal trials - including national security cases - warning that the measures are "unprecedented" and likely to be found unconstitutional. (http://bit.ly/1wWLRpN)

** Skyreader Media Inc, a Toronto-based interactive production studio and software provider, has inked a deal with Marvel and parent company Walt Disney Co to make its official interactive e-magazines for its film releases for the next two years - starting with its summer blockbuster "Guardians of the Galaxy". (http://bit.ly/1GetTBO)

 

China

PEOPLE'S DAILY

- The municipal government of Beijing has taken a slew of steps to ensure clean air during the Asia-Pacific Economic Cooperation (APEC) summit to be held in the city on Nov. 10 and 11 among other APEC activities around that time.

CHINA SECURITIES JOURNAL

- The Chinese government is expected to continue taking targeted easing steps to support the economy after an unexpected low reading in the official manufacturing Purchasing Managers' Index for October, economists say.

- Regulators will step up efforts to require listed firms to enhance their governance, including better corporate information disclosure, Zhuang Xinyi, vice chairman of the China Securities Regulatory Commission, told a forum over the weekend.

CHINA DAILY

- China's media watchdog has strengthened regulations for foreign television shows available on online streaming sites, saying such shows must be reviewed by the watchdog before being made available and have permits.

- China's box office revenues are forecast to hit 30 billion yuan ($4.9 billion) in 2014, according to the country's film association.

SHANGHAI SECURITIES NEWS

- China's pioneering experiment in financial reforms for the private sector kicked off in the eastern city of Wenzhou two-and-a-half years ago, has accumulated experiences to be copied to other regions and will benefit the development of the sector in the long term.

- Fresh funds are pouring into China's stock market after its recent strong technical rebound and analysts believe that the main Shanghai Composite Index may continue rallying in the near term as a result.

 

 

Britain

The Times

* Bosses on edge over holiday pay rulings

Businesses are facing a bill running to billions of pounds from employment law rulings this week in which workers claim they have been underpaid for annual statutory leave for years. (http://thetim.es/1yOVQLF)

* Terry Leahy offers reminder of what Tesco did best

Tesco Plc's lauded former chief executive has claimed that the supermarket chain ran into trouble because it forgot its sense of purpose. Addressing analysts in a private call last week, Terry Leahy said that the group had "focused too much on what it isn't, rather than remembering what it is and working with that". (http://thetim.es/1ueEYPo)

The Guardian

* Virgin Galactic was warned about potential instability of new fuel, experts say

Fifteen federal U.S. investigators have begun combing over the fatal crash site of the Virgin Galactic space plane in California's Mojave desert, as questions surfaced about the unconventional fuel propulsion system used to blast the craft up to space. (http://bit.ly/1tQtdx6)

* Alistair Darling to stand down at next year's general election

Alistair Darling, Labour's former chancellor, has revealed he will step down as an MP at the next election, warning that the issue of an EU referendum is a "boil that has to be lanced." (http://bit.ly/1o6LMfU)

The Telegraph

* Tesco eyes 1 bln pounds from bank sale

Tesco Plc has begun exploring the possible sale of a stake in its banking arm as it speeds up plans to raise billions of pounds in much-needed additional capital. (http://bit.ly/1zYhG3w)

* Britain blocking VAT red tape from Europe

Plans to impose a standard VAT return on all European companies have hit a brick wall after the UK and other countries refused to introduce extra paperwork for businesses. EU officials are expected to tell finance ministers this week that the reforms cannot go ahead in their current form, after a year of wrangling between the member states. (http://bit.ly/1yOXa0P)

Sky News

* 'Take Politics Out Of Child Abuse Inquiry'

Home Secretary Theresa May has been urged to look beyond Westminster to find someone to lead an inquiry into historical sexual abuse. It has also been suggested she establishes a forum made up of abuse survivors to run alongside the child abuse inquiry. (http://bit.ly/13wOHWh)

* New law plans to tackle mobile phone blackspots

Culture Secretary Sajid Javid wants to change the law to force networks to allow customers to switch providers when their phones cannot find a signal. The Government is expected to start a consultation process on the reforms this week. (http://bit.ly/1twTq3Z)

 

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Markit manufacturing PMI for October at 9:45--consensus 56.1
ISM manufacturing index for October at 10:00--consensus 56.0

ANALYST RESEARCH

Upgrades

AngloGold (AU) upgraded to Buy from Hold at Deutsche Bank
Arista Networks (ANET) upgraded to Buy from Hold at Stifel
BlackRock (BLK) upgraded to Buy from Neutral at Citigroup
Crown Castle (CCI) upgraded to Buy from Neutral at Goldman
Eastman Chemical (EMN) upgraded to Buy from Hold at Jefferies
Ellie Mae (ELLI) upgraded to Outperform from Market Perform at JMP Securities
Eni SpA (E) upgraded to Hold from Underperform at Jefferies
Heritage-Crystal Clean (HCCI) upgraded to Buy from Hold at Stifel
Legacy Reserves (LGCY) upgraded to Buy from Neutral at BofA/Merrill
NVIDIA (NVDA) upgraded to Sector Perform from Underperform at Pacific Crest
RealPage (RP) upgraded to Outperform from Market Perform at JMP Securities
Rockwell Collins (COL) upgraded to Outperform from Market Perform at Wells Fargo
Royal Gold (RGLD) upgraded to Buy from Neutral at Goldman
SPX Corp. (SPW) upgraded to Outperform from Neutral at Wedbush
Spirit AeroSystems (SPR) upgraded to Overweight from Neutral at JPMorgan
Statoil (STO) upgraded to Hold from Underperform at Jefferies
TD Ameritrade (AMTD) upgraded to Buy from Neutral at Citigroup
TJX (TJX) upgraded to Outperform from Neutral at Wedbush
WisdomTree (WETF) upgraded to Buy from Neutral at Citigroup

Downgrades

ATK (ATK) downgraded to Sector Perform from Outperform at RBC Capital
American Tower (AMT) downgraded to Neutral from Buy at Goldman
Barrick Gold (ABX) downgraded to Hold from Buy at Deutsche Bank
Digital Realty (DLR) downgraded to Sell from Hold at Cantor
Embraer (ERJ) downgraded to Sector Perform from Outperform at RBC Capital
Essex Property Trust (ESS) downgraded to Neutral from Buy at Mizuho
Francesca's (FRAN) downgraded to Neutral from Outperform at Wedbush
Home Depot (HD) downgraded to Market Perform from Outperform at Raymond James
ITC Holdings (ITC) downgraded to Hold from Buy at Deutsche Bank
Lincoln National (LNC) downgraded to Hold from Buy at Deutsche Bank
MB Financial (MBFI) downgraded to Neutral from Buy at Sterne Agee
MWI Veterinary Supply (MWIV) downgraded to Neutral from Buy at UBS
Matson (MATX) downgraded to Market Perform from Outperform at FBR Capital
MoneyGram (MGI) downgraded to Market Perform from Outperform at Wells Fargo
National Oilwell (NOV) downgraded to Neutral from Outperform at Credit Suisse
Newmont Mining (NEM) downgraded to Hold from Buy at BB&T
Sonic (SONC) downgraded to Neutral from Buy at Longbow
Tilly's (TLYS) downgraded to Hold from Buy at Stifel
TriCo Bancshares (TCBK) downgraded to Outperform from Strong Buy at Raymond James
WSFS Financial (WSFS) downgraded to Market Perform from Outperform at Keefe Bruyette
Yamana Gold (AUY) downgraded to Neutral from Buy at Goldman

Initiations

AES Corp. (AES) initiated with an Outperform at RBC Capital
CONSOL (CNX) initiated with a Buy at SunTrust
Citizens Financial (CFG) initiated with a Buy at Deutsche Bank
Citizens Financial (CFG) initiated with a Buy at Evercore
Citizens Financial (CFG) initiated with a Market Perform at Wells Fargo
Citizens Financial (CFG) initiated with a Neutral at Citigroup
Citizens Financial (CFG) initiated with a Neutral at Goldman
Citizens Financial (CFG) initiated with an Outperform at Keefe Bruyette
Citizens Financial (CFG) initiated with an Overweight at JPMorgan
Citizens Financial (CFG) initiated with an Overweight at Morgan Stanley
Contango Oil & Gas (MCF) initiated with an Accumulate at Global Hunter
Facebook (FB) initiated with an Overweight at Morgan Stanley
Google initiated with an Equal Weight at Morgan Stanley
HubSpot (HUBS) initiated with a Buy at UBS
HubSpot (HUBS) initiated with a Neutral at JPMorgan
HubSpot (HUBS) initiated with an Equal Weight at Morgan Stanley
HubSpot (HUBS) initiated with an Outperform at Pacific Crest
Israel Chemicals (ICL) initiated with an Overweight at Barclays
Keysight Technologies (KEYS) initiated with a Buy at Jefferies
Keysight Technologies (KEYS) initiated with a Neutral at Goldman
Nationstar (NSM) initiated with a Buy at UBS
New Residential (NRZ) initiated with a Buy at UBS
PGT, Inc. (PGTI) initiated with a Buy at KeyBanc
Smart & Final Stores (SFS) initiated with a Buy at Deutsche Bank
Smart & Final Stores (SFS) initiated with an Equal Weight at Barclays
Twitter (TWTR) initiated with an Equal Weight at Morgan Stanley
USD Partners (USDP) initiated with a Buy at Citigroup
USD Partners (USDP) initiated with an Overweight at Barclays

COMPANY NEWS

Publicis (PUBGY) said it would acquire Sapient (SAPE) for $25.00 per share, or $3.7B, in all-cash transaction
LabCorp (LH) is set to acquire Covance (CVD) for approximately $5.6B
Altice made a EUR 7.025B offer for Portugal Telecom (PT, OIBR)
Diageo (DEO) to take control of Don Julio brand from Cuervo. In return, Diageo reached an agreement to sell Bushmills to Jose Cuervo Overseas. The transaction will result in a net payment of $408M to Diageo upon completion, which is expected in early 2015 subject to certain approvals
HSBC (HSBC) said it took a $378M provision for foreign exchange investigation in Q3
Herbalife (HLF) entered into a settlement agreement regarding a class action lawsuit; the company denied any liability

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Orbotech (ORBK), Haemonetics (HAE), Sohu.com (SOHU), Changyou.com (CYOU), First Bancshares (FBMS)

Companies that missed consensus earnings expectations include:
PDI, Inc. (PDII), Loews (L), Enbridge Energy (EEP), Furmanite (FRM), Costamare (CMRE)

Companies that matched consensus earnings expectations include:
Boardwalk Pipeline (BWP), Covance (CVD)

NEWSPAPERS/WEBSITES

Apple (AAPL) may be planning bond offering, could hold investor call, WSJ reports
Argentina suspends P&G (PG) operations, accuses company of tax fraud, Reuters reports
Apple (AAPL) is reportedly planning a 12-inch "iPad Pro," Apple Insider reports
UPS (UPS), FedEx (FDX) taking steps to avoid shipping delays during holidays, NY Times says
Mining tycoon Mick Davis eyes Anglo American (AAUKY) assets, Sunday Times reports
Kimberly Clark (KMB) accused of misleading FDA over gown safety, LA Times reports
Visa (V), MasterCard (MA) could both climb 15% higher, Barron's says
Stanley Black & Decker (SWK) looks ready to rise, Barron's says
Rocket Fuel (FUEL) could be Facebook (FB) takeover target, Barron's says

SYNDICATE

American DG Energy  (ADGE)files to sell 1.88M shares for holders
Calavo Growers (CVGW) files to sell 1.397M shares for holders
Hilton (HLT) commences 90M share offering for The Blackstone Group LP
Prana (PRAN) files to sell $50M in ordinary shares, units and warrants