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Frontrunning: October 22

  • ECB Haunted by Paradox as Draghi Weighs Risk of QE Signaling (BBG)
  • At odds with Republicans, Hillary Clinton to testify on Benghazi (Reuters)
  • House tees up conservative plans to raise debt limit (Hill)
  • U.S., Russia to Meet at Syria Conference to Discuss Crisis (WSJ)
  • Putin Gains Record Support Among Russians Over Syria, Poll Shows (BBG)
  • China Plans 2020 Deadline for Dismantling Capital Controls (BBG)
  • Nyrstar Drops the Most on Record as Mining Hit by Metal Rout (BBG)
  • U.N. criticizes Czech detentions, strip-searches of refugees (Reuters)
  • Brazil's Ex-Guerrilla-in-Chief Isn't Going Down Without a Fight (BBG)
  • VW's Emissions Retrofit May Be Among Costliest Recalls Ever (BBG)
  • U.S. Investigates Venezuelan Oil Giant (WSJ)
  • China's Stocks Rebound from Biggest Loss in Month Before Plenum (BBG)
  • EU's Top Court Rules That Bitcoin Exchange Is Tax-Free (BBG)
  • Taliban insurgents active close to Kabul, threat level disputed (Reuters)
  • The Strongest El Nino in Decades Is Going to Mess With Everything (BBG)
  • Five Injured, One Dead in Sword Attack at Swedish School  (The Local)
  • German Companies Predict Growth Slowdown for 2016 (Dow Jones)

 

Overnight Media Digest

WSJ

- U.S. authorities have launched a series of wide-ranging investigations into whether Venezuela's leaders used Petróleos de Venezuela, or PdVSA, to loot billions of dollars from the country through kickbacks and other schemes.(http://on.wsj.com/1jUQ8pe)

- Approval of a four-year labor contract with Fiat Chrysler Automobiles NV appeared headed for victory Wednesday night after United Auto Workers members at the auto maker's larger plants voted in favor of the deal.(http://on.wsj.com/1KpxhIq)

- Western Digital Corp agreed to buy SanDisk Corp for about $19 billion in cash and stock, a deal that moves the disk drive maker into a faster-growing business that uses chips to store data. (http://on.wsj.com/1W5IFFr)

- The United States and Russia will meet at an international conference on Syria this week, in their first face-to-face talks on the crisis since Russian warplanes began combat missions over Syria. (http://on.wsj.com/1KpuAGA)

- Valeant Pharmaceuticals International Inc defended its relationship with a specialty pharmacy that distributes some of its drugs, following a critical report by a short-selling research firm that wiped as much as $20 billion from its market value on Wednesday. (http://on.wsj.com/1RpAFID)

 

FT

The European Commission ruled on Wednesday that Starbucks Corp and Fiat Chrysler Automobiles NV benefited from illegal tax deals with the Dutch and Luxembourg authorities. Antitrust commissioner Margrethe Vestager said all firms must pay a "fair share" and ordered the Netherlands to recover 20 million euros to 30 million euros ($22.68 million to $34.02 million) in back taxes from the U.S. coffee shop chain. Luxembourg must recover a similar amount from Italian-U.S. carmaker Fiat.

Hard-disk drive maker Western Digital Corp said it agreed to buy SanDisk Corp in a $19 billion deal that will increase its ability to make flash memory storage chips used in smartphones and tablets.

YouTube will launch a $10-a-month subscription option in the United States on Oct. 28 that will allow viewers to watch videos from across the site without interruption from advertisements, the company said on Wednesday.

 

NYT

- The U.S. Treasury on Wednesday urged Congress to help debt-stricken Puerto Rico, saying the U.S. commonwealth needs the ability to file for bankruptcy protection, changes to Medicaid funding and access to the Earned Income Tax Credit. (nyti.ms/1kttkgZ)

- A report from Citron Research, which all but called Valeant the pharmaceutical equivalent of Enron, set in motion a tidal wave of selling on Wednesday. At one point, shares of Valeant were down as much as 40 percent. (nyti.ms/1RpzZTE)

- In an important breakthrough for Chinese industry and global influence, the British and Chinese governments agreed on Wednesday to give China a substantial stake in the British nuclear industry, both as an investor and as a contractor. (nyti.ms/1GVkfCc)

- Buyout firm Kohlberg Kravis Roberts is taking part in a $50 million investment led by KKR & Co in Cohera Medical, a Pittsburgh-based start-up focused on creating adhesives that can replace surgical sutures. As part of the investment, Ali Satvat, a director at KKR who led the transaction, will join Cohera's board. (nyti.ms/1OJSioU)

 

Canada

THE GLOBE AND MAIL

** The Alberta government, which campaigned on balancing the provincial budget by 2018-19, now says it will miss its target by a year. On Wednesday, Finance Minister Joe Ceci blamed slumping oil prices and previous Progressive Conservative governments in Alberta for the decision to break a major election promise. (http://bit.ly/1GrMCwQ)

** A new premium online fresh-food business is quietly emerging from the unlikely location of a mall parking lot. Penguin Fresh, which bills itself as selling farm-fresh food, is run not by a retailer, but by mall developer Mitchell Goldhar, founder of SmartCentres and chairman of Smart Real Estate Investment Trust, which acquired SmartCentres this year. (http://bit.ly/1NVEo2U)

** The Ontario government secretly paid $1 million to the Catholic teachers' union and $500,000 to the French teachers' union to buy labor peace. This means three unions have now received payments totaling $2.5 million from the government in this year's round of bargaining. (http://bit.ly/1jVsBVe)

NATIONAL POST

** Valeant Pharmaceuticals International Inc has been a hedge fund darling in recent years, a hot stock that has won over some of the most high-profile players, including Bill Ackman's Pershing Square Capital Management <IPO-PERS.L> and John Paulson's Paulson and Co. (http://bit.ly/1LO6jiT)

** Bombardier Inc could be banned from bidding on future Toronto Transit Commission contracts as early as next week, when an exasperated Toronto Transit Commission board will decide how to punish the company for its streetcar production delays. (http://bit.ly/1PCbwNu)

** When prosecutor Milan Rupic said earlier this week of the Toronto Police shooting of Sammy Yatim that "virtually every event of consequence was recorded on video", he wasn't kidding. On Wednesday at the trial of James Forcillo, who is pleading not guilty to second-degree murder and attempted murder in Yatim's July 27, 2013 death on a downtown streetcar, jurors got their first look at some of it. (http://bit.ly/1LpszOM)

 

Hong Kong

SOUTH CHINA MORNING POST

- One in every four cigarettes smoked in Hong Kong last year was illicit, costing the government HK$2.5 billion ($323 million) lost in tax revenues, according to a study conducted by UK-based Oxford Economics and funded by tobacco giant Philip Morris. Concern groups have called for stronger action against organised smuggling gangs and syndicates. (bit.ly/1OTGQWi)

- Two of the four men who allegedly attacked and killed a mainland tourist at a jewellery shop in Hung Hom on Monday may have fled across the border, police sources said. The incident prompted a rare call from China's tourism authority for Hong Kong to protect the rights of mainland travellers, while several mainland media outlets rekindled anti-Hong Kong sentiment. (bit.ly/1GUPyNy)

- CLSA has joined the chorus of investment banks predicting that Hong Kong will run into a bear property market as it forecast a 17 percent price drop in the next 27 months. In a research report, CLSA said buying power in the property market had been exhausted as developers rushed to dispose of their assets. (bit.ly/1NV0XVA)

THE STANDARD

- The Hong Kong government supported a 3 percent pay rise for senior public doctors, saying the issue could be settled with the Hospital Authority footing the HK$200 million ($25.8 million) annual bill. Funding approval is expected to be discussed at the authority's board meeting on Thursday. (bit.ly/1NoxmAP)

- Hong Kong recorded a 30 percent fall in the number of home sales in the primary market in the third quarter with total value down 20 percent quarter on quarter, according to Land Registry. But this has not put a dampener on project launches as developers, including Cheung Kong Property and Sun Hung Kai Properties, keep up the pace of putting new homes on the market. (bit.ly/1MU5PbU)

HONG KONG ECONOMIC JOURNAL

- Bank of China Hong Kong Ltd will tap the fast-growing private banking business in Asia, in particular China, aiming to manage U.S.$60-70 billion worth of assets in the region in three years, according to Wendy Tsang Kam Yin, general manager of private banking.

 

Britain

The Times

- Credit Suisse Group AG said it could eliminate nearly 2,000 jobs in London, adding to nervousness among financiers and their support staff who fear there will be cuts at other groups. (http://thetim.es/1LMKBvR)

- Banks that raise charges or cut interest rates will be forced to help customers to shop around for a better deal under sweeping proposals unveiled today. Serious IT glitches, branch closures and major disputes with customers will also act as triggers forcing banks to tell savers that they could benefit by switching accounts. (http://thetim.es/1QUYyYu)

The Guardian

- Mark Carney, the governor of the Bank of England, has said that EU membership opened up the United Kingdom economy and made it more dynamic, but also left it more exposed to financial shocks. (http://bit.ly/1NUX3fh)

- Work on the first new nuclear power plant in the United Kingdom for 20 years is set to begin within weeks after the French energy company EDF and China's main nuclear operator agreed a deal on building the 18 billion pounds ($27.75 billion)project. (http://bit.ly/1W4dqoQ)

The Telegraph

- Britain's biggest banks will not be broken up by the regulators, the competition authorities are expected to say, arguing it would do little to encourage customers to shop around. (http://bit.ly/1MEZf4L)

- Britain's financial stability could be threatened by closer eurozone integration unless the United Kingdom secures safeguards from Brussels that protect the interests of non-members, the Governor of the Bank of England has warned. (http://bit.ly/1RWzlxF)

Sky News

- David Cameron pledged action to help Britain's struggling steel industry as he was tackled in the Commons by Jeremy Corbyn. Cameron said the government would do what it could, but warned that global factors were making it challenging for steel producers. (http://bit.ly/1Xl0Nbs)

- Bank current account customers could save an average of 70 pounds annually by switching providers, regulators will say later as they rule out radical structural changes to the industry. The regulator will also say that broader structural remedies such as breaking up big banks or forcing them to sell branches would not address the concerns identified by its inquiry team. (http://bit.ly/1jBHIUk)