• Obama to report to his bosses today: Obama Meets With Blankfein, Dimon and Moynihan Today (BBG)
• 2007 is here all over again: Seeking Relief, Banks Shift Risk to Murkier Corners (NYT)
• Kuroda Calls BOJ Inflation Target 'Flexible' (WSJ)
• Lagarde warns over three-speed world (FT)
• N. Korea’s Retro Propaganda Calls U.S. Boiled Pumpkin (BBG)
• Luxembourg To Ease Bank Secrecy Rule, Share Data In 2015 (BBG)
• Bank of Korea Keeps Policy Steady (WSJ)
• BOE Stimulus Dilemma Persists as Inflation Seen Higher (BBG)
• EU Sounds Alarm on Spain (WSJ)
• Qatar gives Egypt $3bn aid package (FT)
• RBNZ Says Deposit Insurance May Increase Risk of Bank Failure (BBG)
• Plosser Calls for Reducing QE Pace Citing Gains in Labor Market (BBG)
• Obama budget aims to kick start deficit-reduction talks (Reuters)

Overnight Media Digest

WSJ

* Luxembourg has shifted its banking policy, saying it would exchange information with the rest of the European Union about EU holders of bank accounts in the country, another step in Europe's crackdown on tax evasion.

* The European Union proposed an expansion of the bloc's powers to protect companies in Europe against unfair competition from abroad, a sign of an increasingly combative stance seen aimed at checking China's rising export power.

* Some of the biggest banks and investment firms on Wall Street were among those that received minutes of the Federal Reserve's latest policy meeting 19 hours before the market-sensitive document was released.

* JPMorgan Chase & Co's Chief Executive James Dimon, renewed his apologies to shareholders for last year's multibillion-dollar trading fiasco, and an investor that has pushed for corporate-governance changes at large financial firms said it would focus this proxy season on changing the bank's board.

* U.S. President Barack Obama took a political gamble Wednesday by proposing to curb the growth of Social Security and Medicare, hopeful that the concessions would draw rank-and-file Senate Republicans into a budget deal that has so far proven elusive.

* Changes in Cyprus's bailout made last month to win approval from its parliament increased the rescue's price tag to 23 billion euros ($30.1 billion) through the end of 2016 from an originally estimated 17 billion euros, according to draft documents prepared by the European Commission and the European Central Bank and reviewed by The Wall Street Journal.

* Deutsche Telekom AG sweetened its offer for U.S. wireless carrier MetroPCS Communications Inc, hoping to save a merger that shareholders had threatened to reject.

* Microsoft Corp is developing a new lineup of its Surface tablets, including a 7-inch version expected to go into mass production later this year, said people familiar with the company's plans.

* Federal law-enforcement authorities have reversed course and revived an insider-trading probe into how media companies transmit government data to investors, according to people familiar with the matter.

FT

Overview The European Union's largest tax haven-Luxembourg has agreed to start easing its bank secrecy rules from 2015, amid growing international pressure to tackle tax evasion.

Cyprus has agreed to sell excess gold reserves to raise around 400 million euros and help finance its part of its bailout, in a move rattling precious metal markets as investors fear it could set a precedent for other troubled eurozone countries.

IMF Managing Director Christine Lagarde warned of a three-speed global economy, with the world dividing into three groups - some countries doing well, some on the mend and some still in trouble.

A boardroom rift with executives could see Mehmet Dalman, the chairman brought in to clean up ENRC, quit the FTSE 100 miner.

Trafigura raised $500 million through its perpetual bond, as the world's second-largest independent metals trader after Glencore taps into new sources of funding. Some of the biggest shareholders in Marks and Spencer are seeking greater clarity on Chief Executive Marc Bolland's strategy to stem the chronic decline in sales at the high street retailer. Goldman Sachs fended off a shareholder proposal that would lead to stripping Chief Executive Lloyd Blankfein of his chairmanship, by offering concessions to a shareholder activist group.

NYT

* The Federal Reserve alerted bank officials on Tuesday that policy makers were considering a shift on when to begin easing back on stimulus efforts, a day before the news was released publicly, but it insisted there was no evidence traders on Wall Street had benefited from what was called an error.

* Deutsche Telekom AG sweetened a bid by its T-Mobile USA unit for MetroPCS Communications Inc on Wednesday, after running into fierce resistance from shareholders of the target company.

* Goldman Sachs reached a deal with the CtW Investment Group, an organization that advises union pension funds, to halt a vote on a proposal to split the roles of chairman and chief executive. The proposal, which was sent to Goldman in January, is being withdrawn.

* U.S. federal agents secretly photographed a former senior KPMG executive accepting a cash payment in exchange for secret information about the companies he audited, according to a person with direct knowledge of the case.

* Under President Obama's budget proposal, deductions for tax breaks like mortgage interest and contributions to charities would be capped at a maximum rate of 28 percent.

* Global growth is likely to remain tepid this year and central banks should keep their easy monetary policies in place, the head of the International Monetary Fund said on Wednesday.

* On Wednesday, the research firm IDC reported that worldwide PC shipments declined 13.9 percent during the first three months of the year compared with the same period a year earlier.

Canada

THE GLOBE AND MAIL

* The Parti Québécois is setting aside its many long-standing differences with Ottawa in a bid to help collect billions of dollars in taxes hidden offshore.

Quebec Premier Pauline Marois said she supports "without any reservation" the federal government's effort to obtain a list of those who allegedly use offshore accounts to avoid paying income taxes - and is working out a way to team up with Ottawa if and when it launches legal action.

* Passport Canada, the agency that issues passports to Canadians, is projecting a quarter of its work force could be cut as it rolls out new chip-embedded, 10-year travel documents.

Reports in the business section:

* Barrick Gold Corp has suspended construction in Chile on its massive Pascua-Lama gold and silver project, responding to a court order that further delays work on a mine already a year behind schedule and billions of dollars over budget.

* Suncor Energy Inc spilled roughly 225 barrels of a renewable diesel product at a West Coast terminal Saturday, with a small amount of fuel reaching the waters of Burrard Inlet.

The facility is near Port Moody, British Columbia, and most of the fuel spilled on the ground, Suncor spokeswoman Sneh

NATIONAL POST

* A co-founder of iconic Canadian rock band Bachman-Turner Overdrive had a sexual relationship with a girl between the age of 11 and 14, a British Columbia (B.C.) judge was told this week.

FINANCIAL POST

* If the Obama administration rejects the Keystone XL pipeline, it would be a significant thorn in Canadian-U.S. relations, Alberta's premier said. Premier Alison Redford was in Washington for her fourth trip to lobby on behalf of a pipeline that Canada sees as critical to its economic well-being.

* The political will is high to conclude a free trade deal between Canada and the European Union, even if negotiations to resolve outstanding issues are taking longer than expected, Maurizio Cellini, the head of the economic and trade section of the EU's delegation in Canada, said.

China

CHINA SECURITIES JOURNAL

- Guangzhou, the capital and largest city of the Guangdong province in the south of China, will raise the minimum downpayment on second home purchases to 70 percent of the value from 60 percent if house prices rise over 2 percent in April, unnamed sources told the newspaper.

- The Ministry of Science and Technology and the Health and Family Planning Commission set up a science research project on Wednesday to prevent H7N9, also known as bird flu, infecting human beings, and expect to develop a preventive vaccine for it in seven months.

SHANGHAI SECURITIES NEWS

- The willingness among Shanghai residents to buy a car dropped 12.4 percent last quarter due to surging prices for a Shanghai licence plate, according to a report released by a local university on Wednesday.

- Shanghai will start a carbon-trading trial before the end of June as part of efforts to reduce energy intensity and emissions and hence, regulations for the trading on the Shanghai Environment and Energy Exchange will be issued within this year, according to Shanghai Development and Reform Commission.

- At a price of more than 3.7 billion yuan ($594 million), a land parcel in Tangzhen in the Pudong New Area became the most expensive residential plot sold in Shanghai in over two years on Wednesday.

CHINA DAILY

- Senior health officials in Shanghai on Wednesday denied media reports that the city might have delayed reporting the outbreak of the previously lesser-known H7N9 bird flu to the national health authorities.

Fly On The Wall 7:00 Am Market Snapshot

ANALYST RESEARCH

Upgrades

Adobe (ADBE) upgraded to Neutral from Sell at Goldman
Boyd Gaming (BYD) upgraded to Overweight from Equal Weight at Morgan Stanley
LabCorp (LH) upgraded to Neutral from Sell at Goldman
Lam Research (LRCX) upgraded to Outperform from Neutral at Cowen
Provident New York (PNBY) upgraded to Outperform from Market Perform at Keefe Bruyette
Sterling Bancorp (STL) upgraded to Outperform from Market Perform at Keefe Bruyette

Downgrades

Family Dollar (FDO) downgraded to Neutral from Buy at Goldman
Fortinet (FTNT) downgraded to Equal Weight from Overweight at Morgan Stanley
Fortinet (FTNT) downgraded to Hold from Buy at Needham
Fortinet (FTNT) downgraded to Market Perform from Outperform at Wells Fargo
Fortinet (FTNT) downgraded to Neutral from Buy at BofA/Merrill
Mettler-Toledo (MTD) downgraded to Neutral from Buy at Goldman
Microsoft (MSFT) downgraded to Neutral from Buy at Nomura
Microsoft (MSFT) downgraded to Sell from Neutral at Goldman

Initiations

Adobe (ADBE) initiated with an Overweight at Evercore
Brown Shoe (BWS) initiated with a Buy at Brean Capital
General Growth (GGP) initiated with an Outperform at BMO Capital
Kraft Foods (KRFT) initiated with a Market Perform at Wells Fargo
Macerich (MAC) initiated with a Market Perform at BMO Capital
Mondelez (MDLZ) initiated with an Outperform at Wells Fargo
Simon Property (SPG) initiated with a Market Perform at BMO Capital
SourceFire (FIRE) initiated with a Market Perform at JMP Securities
Xerox (XRX) initiated with an Overweight at Piper Jaffray

HOT STOCKS

Protective Life (PL) to acquire MONY (AXAHY) and reinsure certain policies of MLOA for $1.06B
Blackstone (BX), KKR (KKR) in group that bid $65 per share for Life Technologies (LIFE), DJ reports
Deutsche Telekom (DTEGY) submitted best, final offer to MetroPCS (PCS). MetroPCS postponed shareholder meeting to consider revised proposal
Crest Financial filed proxy statement to oppose Sprint, Clearwire (S, CLWR) merger
Fitch affirmed Regency Centers (REG) at 'BBB', outlook stable
SEC said won't pursue enforcement action against Netflix (NFLX) CEO Hastings
Barrick Gold (ABX) to suspend construction on Chilean side of Pascua-Lama
Roche (RHHBY) reaffirmed 2013 targets, expects to increase dividend
Netflix (NFLX) said it may use Facebook (FB), Twitter to disclose material information

EARNINGS

Companies that missed consensus earnings expectations include:
Apogee Enterprises (APOG), Fortinet (FTNT)

Companies that matched consensus earnings expectations include:
Pier 1 Imports (PIR), Bed Bath & Beyond (BBBY), Ruby Tuesday (RT)

NEWSPAPERS/WEBSITES

• Major buyout firms have been unloading a record amount of shares in companies they have taken public. Bain Capital, KKR (KKR) Apollo Global (APO) and other private-equity firms sold $20.5B of stock through 50 follow-on offerings during the first three months of 2013. That’s twice as many deals as in the year-earlier period and the highest quarterly pace on record, according to Dealogic, the Wall Street Journal reports
• The PC business is at a crossroads, and Microsoft (MS) is developing a new lineup of its Surface tablets, including a 7-inch version expected to go into mass production later this year, sources say, the Wall Street Journal reports
• The Bank of Japan's massive stimulus to pull the economy out of two decades of malaise has altered the outlook for Japanese assets, according to a Reuters snap poll of analysts conducted after the central bank shocked markets with its radical shift in policy, Reuters reports
• The Fed should start cutting back on purchases of housing bonds as soon as its next meeting, said Dallas Fed President Richard Fisher, hours after Atlanta Fed President Dennis Lockhart said talk of trimming the central bank's bond buys was "premature," Reuters reports
• Economists are lowering forecasts for how much Treasury yields will rise this year as the U.S.economy shows signs of slowing. U.S. 10-year yields will be 2.25 percent by Dec. 31, based on the average forecast among banks and securities companies surveyed by Bloomberg News

SYNDICATE

Chimerix (CMRX) 7.32M share IPO priced at $14.00
Chuy's (CHUY) plans to sell 3M shares of common stock for holders
Fifth Street Finance (FSC) files to sell 13.5M shares of common stock
InspireMD (NSPR) 12.5M share Secondary priced at $2.00
Performant Financial (PFMT) files to sell 6M shares for holders
Realogy (RLGY) 35M share Secondary priced at $44.00
Synergy Pharmaceuticals (SGYP) 16.375M share Secondary priced at $5.50

Quick video recap of European news via dpa-AFX

• Apple Bonds Stick Buyers With $280.6 Million Loss as Rates Climb (BBG)
• Iceland Freezes EU Plans as New Government Shuns Euro Crisis (BBG)
• "Transparent Fed" - Ben Bernanke meets privately with Darrell Issa (Politico)
• Bank of Japan vows market steps to curb bond turbulence (Reuters) holds policy (FT)
• Stockholm riots spread in third night of unrest (FT)
• Dudley Says Decision on Taper Will Require 3-4 Months (BBG)
• Senate panel passes immigration bill; Obama praises move (Reuters)
• Italy to outline youth jobs plan as government struggles (Reuters)
• Apple CEO Tim Cook, Lawmakers Square Off Over Taxes (WSJ)
• Google Joins Apple Avoiding Taxes With Stateless Income (BBG)
• Sony Board Discussing Loeb’s Entertainment IPO Proposal (BBG)
• Vote Strengthens Dimon's Grip (WSJ), Dimon performance well choreographed (FT)

Overnight Media Digest

WSJ

* Federal investigators apparently accessed records of calls to and from a phone number at Fox News Channel in their leak investigation of a former state department contractor, according to a court document.

* Insecticide sales are surging after years of decline, as American farmers plant more corn and a genetic modification designed to protect the crop from pests has started to lose its effectiveness.

* Starwood Capital Group is in talks to buy seven U.S. shopping malls from Westfield Group for more than $1 billion, a deal that would mark the latest in a flurry of big ticket acquisitions of retail property. Starwood's talks with Westfield aren't yet in the final stages and still could collapse, according to people familiar with the matter.

* A lawsuit brought by auto dealers has put a chill on the potential sale of R.L. Polk & Co, owner of the used-car shopping tool Carfax, according to people familiar with the matter. Polk, which provides car companies and consumers with data on autos, attracted interest from some potential corporate buyers as well as a host of private equity firms, including buyout giants Carlyle Group LP and KKR & CO LP, the people said.

FT

Apple Inc Chief Executive Tim Cook defended the technology company's tax practices, saying Apple did not depend on "tax gimmicks" as U.S. senators grilled him over charges that the company avoided billions of dollars in taxes on international profits.

A majority of JPMorgan Chase & Co shareholders voted to let Jamie Dimon keep his chairman title, handing him a decisive victory over shareholder activists who wanted to strip him of the role.

BP has stepped up appeals against what it says are unjustified compensation payments under the settlement it reached with those affected by the 2010 Gulf of Mexico oil spill.

Europe's banking regulator has broadened its bonus cap rules to bring in far more bankers within the scope of the regulation.

G4S Chief Executive Nick Buckles has stepped down with a 16 million pound package following a series of embarrassments, raising shareholder fears over the future direction of the company.

Some of Royal Dutch Shell's shareholders called for a rethink of the company's Alaska plans amid questions over the company's troubled drilling programme there.

NYT

* Other countries have long been annoyed by Irish tax laws, but the benefit to the struggling country's economy means the rules are unlikely to change.

* Tim Cook came to Capitol Hill prepared to face down senators furious over evidence that Apple Inc had avoided paying billions in taxes, but he left having won many of them over.

* James Bullard, a member of the Federal Reserve's policy committee, warned Europe of becoming trapped in the economic stasis from which Japan is only now emerging.

* Microsoft's new Xbox game console also serves as a home entertainment hub, a response to the rising popularity of mobile devices for playing games.

* A lawyer argued that Rajat Gupta, found guilty of leaking boardroom discussions, should be granted a new trial because a judge erroneously admitted wiretapped conversations.

Canada

THE GLOBE AND MAIL

* Civic leaders are adding to a chorus of calls on Toronto Mayor Rob Ford to clear the air about allegations of drug use amid growing concern that the scandal has derailed council's business of governing.

* Without more support for industry investment in research and development, Canada will be hard-pressed to keep up with international competitors and will risk an erosion of its economic wellbeing, a report on the state of the nation's science and technology landscape by the Science, Technology and Innovation Council has revealed.

Reports in the business section:

* The damage to the ground immediately surrounding an oil car that derailed on Tuesday and spilled some of its contents in rural Saskatchewan is apparently contained. On Tuesday morning, five tank cars carrying crude oil and operated by Canadian Pacific Railway Ltd derailed outside the town of Jansen, Saskatchewan.

NATIONAL POST

* Federal NDP Leader Tom Mulcair says he was contacted by the provincial police anti-corruption squad in Quebec to discuss a suspected 17-year-old bribe offered to him. Mulcair says he never reached out to the police himself because he had no proof a bribe was actually being offered at a 1994 meeting with the now controversial ex-mayor of Laval, Quebec, Gilles Vaillancourt.

* Canada is investigating allegations that Eritrea's diplomatic mission in Toronto has continued soliciting money for the East African regime's military despite being warned by the Department of Foreign Affairs to stop.

FINANCIAL POST

* Gold mining stocks have been decimated in recent months, but Jamie Sokalsky does not think investors should expect any corresponding uptick in merger and acquisition activity. Speaking at the Bloomberg Canada Economic Summit, the chief executive of Barrick Gold Corp said there is a general "anti-M&A" mood in the gold space right now, and that investors don't even ask him about it much anymore.

* Concerns are being raised that efforts to improve efficiency at Canadian Pacific Railway are contributing to a series of accidents at the railroad in recent months, including two more this week.

China

CHINA SECURITIES JOURNAL

-- The China Securities Regulatory Commission should focus on its key duties of regulating the market and delegate unnecessary duties to other departments gradually, its Chairman Xiao Gang said on Tuesday.

SHANGHAI SECURITIES NEWS

-- A major gold deposit with estimated reserves of 53 tonnes was discovered in Yili Valley of China's northwestern Xinjiang province, government data showed. Total gold resources at the field are expected to exceed 100 tonnes, with a potential value of about 20 billion yuan ($3.26 billion).

CHINA DAILY

-- Local government officials said Dongguan in Guangzhou province remains a top destination for processing trade businesses, despite recent closures in the city being blamed on the continued strength of the yuan.

-- The Shanghai government plans to allow cold-processed poultry meat to return to the market by the end of May as there have been no new confirmed cases of the H7N9 virus in China for more than a week, giving the poultry industry a chance to recover.

SHANGHAI DAILY

-- Cosco Pacific Ltd, the container-terminal arm of China's biggest shipping group, agreed to sell its stake in the world's largest shipping-container manufacturer to its parent for $1.22 billion, according to a Hong Kong Stock Exchange filing.

-- Three rice mills in central China's Hunan province are being investigated after cadmium was found in their rice last week, local authorities said last week. The mills were ordered to recall their products and suspend business operations, according to a statement released by the county government.

Corporate Finance

* Australia's Westfield Group is in talks to sell seven U.S. shopping malls to private real estate investment company Starwood Capital Group for more than $1 billion, a source said on Wednesday.

* Roche Holding AG teamed up with Sigma-Aldrich Corp to make an unsuccessful bid for Life Technologies Corp earlier this year, people familiar with the matter said.

* U.S. prosecutors are considering charging Steven Cohen's SAC Capital Advisors as a criminal enterprise engaged in a long pattern of insider trading in stocks, according to a person familiar with the matter.

* Telecom Italia SpA is mulling spinning off its mobile unit along with its fixed-line network to bring new investors on board, three people, including a senior political source, told Reuters on Tuesday.

* Singapore state investor Temasek Holdings Pte Ltd has paid $500 million for a stake of around 10 percent stake in financial data provider Markit Group, a person familiar with the transaction said.

* Britvic Plc's new chief executive is set to lay out plans for the soft drinks maker to continue as a standalone company, casting further doubt on its proposed merger with A.G. Barr Plc, Sky News reported, citing people close to Britvic.

* A boutique carmaker led by former General Motors Co executive Bob Lutz and China's largest auto parts supplier made an offer this month to buy cash-strapped "green" car company Fisker Automotive, people familiar with the matter said.

* Chevron Corp is in advanced talks to sell most of its downstream assets in Egypt and Pakistan, three sources said, with the planned disposals seen raising around $300 million for the U.S. oil major.

* Finnish paper firm Ahlstrom Oyj is set to secure European Union approval for the merger of its label unit with Munksjo to form the world No. 1 speciality paper maker after agreeing to sell a German business, a person familiar with the matter said on Tuesday.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Bristol-Myers (BMY) upgraded to Buy from Neutral at Citigroup
CVR Energy (CVI) upgraded to Neutral from Underperform at Macquarie
Cree (CREE) upgraded to Buy from Neutral at Sterne Agee
Roche (RHHBY) upgraded to Buy from Neutral at Citigroup
Terex (TEX) upgraded to Overweight from Equal Weight at Barclays
Volcano (VOLC) upgraded to Overweight from Equal Weight at First Analysis

Downgrades

Caesar's Entertainment (CZR) downgraded to Neutral from Outperform at Credit Suisse
Carnival (CCL) downgraded to Neutral from Overweight at HSBC
Chart Industries (GTLS) downgraded to Hold from Buy at BB&T
Dick's Sporting (DKS) downgraded to Market Perform from Outperform at BMO Capital
EPIQ Systems (EPIQ) downgraded to Market Perform from Outperform at William Blair
EQT Corporation (EQT) downgraded to Hold from Buy at Societe Generale
InterXion (INXN) downgraded to Neutral from Buy at Goldman
Joy Global (JOY) downgraded to Equal Weight from Overweight at Barclays
Newcastle (NCT) downgraded to Market Perform from Outperform at Keefe Bruyette
Rosetta Resources (ROSE) downgraded to Neutral from Outperform at Cowen
SodaStream (SODA) downgraded to Neutral from Overweight at JPMorgan
UBS (UBS) downgraded to Underperform from Market Perform at Keefe Bruyette
Warner Chilcott (WCRX) downgraded to Market Perform from Outperform at Leerink

Initiations

Chart Industries (GTLS) initiated with an Outperform at Raymond James
Coca-Cola (KO) initiated with a Market Perform at BMO Capital
Cott Corp. (COT) initiated with a Market Perform at BMO Capital
Dr Pepper Snapple (DPS) initiated with a Market Perform at BMO Capital
Galena Biopharma (GALE) initiated with an Outperform at JMP Securities
Monster Beverage (MNST) initiated with an Outperform at BMO Capital
PepsiCo (PEP) initiated with an Outperform at BMO Capital
Popular (BPOP) initiated with an Outperform at Wells Fargo

HOT STOCKS

Saks (SKS) rallied after NY Post reported Goldman Sachs (GS) hired for possible sale
Merck (MRK) announced $5B share repurchase
Moody's placed Carnival's (CCL) A3 rating on review for possible downgrade
Ford (F) raised North American capacity by 200,000 units, reduced summer shutdown, added jobs
NetApp (NTAP) reducing workforce by 900, expects $50M-$60M charge
BNY Mellon (BK) plans to increase Wealth Management sales force by 50%

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Toll Brothers (TOL), Dycom (DY), NetApp (NTAP), Intuit (INTU)

Companies that missed consensus earnings expectations include:
Staples (SPLS)

Companies that matched consensus earnings expectations include:
Compuware (CPWR), Analog Devices (ADI)

NEWSPAPERS/WEBSITES

• Since the financial crisis, bonds backed by a single loan have been less common than securities made up of a group of unrelated loans. But the market for loans on commercial properties has changed in recent months and is booming again--$12.1B so far this year--the Wall Street Journal reports
• Big phone companies (SAP, T, TEF, VZ, VOD, CCO) have begun to sell the vast amounts of data they gather about their subscribers' locations, travels and Web-browsing habits. The information provides a powerful tool for marketers but raises new privacy concerns, the Wall Street Journal reports
• Apple's (AAPL) ability to shelter billions of dollars of income from tax has depended on an unusual loophole in the Irish tax code that helps the country compete with other countries for investment and jobs. Apple channeled profits into Irish-incorporated subsidiaries that had no declared tax residency anywhere in the world, Reuters reports
• The dollar languished well below last week's 4 1/2-year high against the yen today, ahead of testimony from the Fed Chairman Bernanke after two regional Fed presidents hinted that the central bank will continue its bond-buying scheme, Reuters reports
• Samsung (SSNLF) and LG Electronics are reworking their strategies for high-end TVs after spending billions of dollars on a new display technology that’s behind schedule and costs nearly $10,000 a set. The misstep has created an opening for Sony (SNE), Sharp (SHCAY) and Chinese maker Skyworth Digital, Bloomberg reports
• Apple’s (AAPL) bonds have lost $280.6M of market value since buyers snapped up $17B of the iPhone maker’s debt last month, declining as yields climb from record lows, Bloomberg reports

SYNDICATE

Aeterna Zentaris (AEZS) may sell up to 2.5M common shares for up to $4.6M
Alcobra (ADHD) 3.125M share IPO priced at $8.00
Baltic Trading (BALT) files to sell common stock
CVR Partners (UAN) files to sell 12M shares for CVR Energy interests
Cadiz (CDZI) files to sell 9.69M shares of common stock for holders
Ironwood (IRWD) 10.5M share Secondary priced at $13.00
M/A-COM (MTSI) files to sell 9.24M shares of common stock for holders
NPS Pharmaceuticals (NPSP) 6M share Secondary priced at $14.53
PGT (PGTI) 11M share Secondary priced at $7.75
Portola Pharmaceuticals (PTLA) 8.423M share IPO priced at $14.50
Sensata (ST) announces 12.5M common share offering by selling holders

• Record unemployment, low inflation underline Europe's pain (Reuters)
• The ponzi gets bigger and bigger: Spanish banks up sovereign bond holdings by more than 10% (FT)
• China’s Growing Ranks of Elderly Beset by Depression, Study Says (BBG)
• Tokyo Prepares for a Once-in-200-Year Flood to Top Sandy (BBG)
• Morgan Stanley Cutting Correlation Unit Added $50 Billion (BBG)
• IMF warns over yen weakness (FT)
• Rising radioactive spills leave Fukushima fishermen floundering (Reuters)
• California Lawmakers Turn Down Moratorium on Fracking (BBG)
• India records slowest growth in a decade (FT)
• What’s Inside the Government’s Deal With Citigroup? (BBG)
• Three more coronavirus deaths in Saudi Arabia (Reuters)

Overnight Media Digest

WSJ

* Analysts differ on whether a sharp May rise in long-term interest rates signals a bursting bond bubble, the aftereffect of clumsy Fed communication or a welcome sign the U.S. economy is, at last, on the mend.

* The top-selling class of blood pressure drugs is under attack from an unusual source: a senior regulator at the Food and Drug Administration. Bucking his bosses, Thomas Marciniak is seeking stronger warnings about the drugs known as angiotensin receptor blockers, or ARBs, according to internal documents reviewed by The Wall Street Journal.

* China already owns ThinkPad laptops, Volvo cars and AMC movie theaters. Can it sell Smithfield Ham? A look at past Chinese purchases suggests that the answer is likely, "Yes." Chinese companies have stumbled in efforts to build homegrown brands in areas ranging from autos to tennis shoes. But with a few hitches - notably Volvo's in the sputtering European car market - the companies have managed to keep existing global brands healthy by investing and persuading senior managers to stay on board.

* Blackstone Group LP backed out of the bidding for Dell Inc last month. Yet many of the buyout firm's investors still are part of the tussle. One of them is the New Jersey Division of Investment, an agency managing money for seven state pension funds. It committed $50 million to the investment fund Blackstone would have tapped to finance a bid for the computer maker.

* Corporate profits declined and the government pulled back even more than first thought early this year, but consumers showed resiliency despite higher taxes. U.S. gross domestic product, a measure of all goods and services produced in the economy, advanced at a 2.4 percent seasonally adjusted annual rate between January and March, a small downward revision from last month's 2.5 percent reading, the Commerce Department said on Thursday. Consumers were the overwhelming driver of the moderate growth in the quarter. Personal consumption expenditures were revised up to a 3.4 percent gain - the largest increase in the category since the fourth quarter of 2010.

FT

The British government will next month announce 15 billion pounds ($22.82 billion) extra spending for infrastructure projects in the future, as part of new capital expenditure plans to stimulate the economy and revive growth.

Royal Bank of Scotland has narrowed a list of prospective bidders for hundreds of branches it must sell, and informed Apollo and JC Flowers that their bid was unsuccessful, according to people familiar with the matter.

British engineering company Smiths Group is in early-stage talks to sell its medical division, which played a role in the first successful IVF treatment, for potentially more than 2 billion pounds, said people familiar with the talks.

Major consumer products groups such as Johnson & Johnson and Anheuser-Busch InBev are delaying payments to advertisers and commodity producers leading to supply chain issues and constricted cash flows.

Google Inc has made a $12 million investment in a solar power project in South Africa, highlighting the attractiveness of Africa's largest economy to global investors.

Singapore Airlines Ltd said it would spend more than $17 billion to buy 30 Airbus and 30 Boeing Co aircraft, representing one of the biggest orders ever placed by the airline.

NYT

* After several deadly factory disasters in Bangladesh, Obama administration officials remain conflicted over what measures would work best to improve labor conditions there.

* The initiative began two decades ago, with the best of intentions, after apartheid fell and southern Africa's future brightened. Today that program, the Southern Africa Enterprise Development Fund, is in its death throes, apparently victimized by mismanagement, insider dealings and a lack of oversight by federal officials.

* The U.S. Transportation Department made its first formal policy statement on autonomous vehicles on Thursday. In a nonbinding recommendation to the states, it said that driverless cars should not yet be allowed, except for testing. But it said that semiautonomous features, like cars that keep themselves centered in lanes and adjust their speed based on the location of the car ahead, could save lives.

* Dr Peter Butler, chairman of endocrinology at the University of California, Los Angeles, who initially declined a request to test drugmaker Merck's new diabetes drug Januvia, found worrisome changes in the pancreases of rats, that could lead to pancreatic cancer. The discovery, in early 2008, turned Dr Butler into a crusader whose follow-up studies now threaten the future of not only Januvia but all the drugs in its class, which have sales of more than $9 billion annually and are used by hundreds of thousands of people with Type 2 diabetes.

* Japan inched closer to the end of deflation and factory output picked up, government data showed Friday, offering proof that the real economy is slowly catching up to the high expectations set by its recent bold economic policies.

* The health care law is injecting more competition into insurance markets nationwide, drawing additional companies into states long dominated by a few carriers, Obama administration officials said on Thursday.

* Newly minted university graduates who have landed coveted jobs on Wall Street may have impressive resumes and sought-after references. But often, nuts-and-bolts skills like spreadsheet building and database extraction are not part of university curriculums. When millions of dollars can be won or lost on one calculation, firms are finding it essential that their new hires can tell the difference between a pivot table and a header row. Enter specialized boot camps where - for fees that sometimes exceed $1,000 a day - would-be masters of the universe can perfect Excel modeling techniques and financial analysis.

Canada

THE GLOBE AND MAIL

* Toronto Mayor Rob Ford, the embattled leader who has now seen five of his employees depart since he was accused of using crack cocaine, has vowed to remain at Toronto City Hall, guaranteeing his name will be on next year's election ballot. Ford spoke with reporters about the two latest employee resignations on Thursday. He spent 90 seconds reading a prepared statement, then about 2 minutes fielding questions, five times swatting away inquiries about the drug scandal with the phrase: "Anything else?"

* The Harper government was forced to put further distance between itself and Senator Mike Duffy after an email surfaced suggesting the Prince Edward Island politician, under fire for illegitimate expense claims, had lobbied for a cabinet post and more compensation given his role as a fundraising star for the Tories. "Duffy has never held a cabinet position and has never been considered for cabinet," Andrew MacDougall, director of communications for Prime Minister Stephen Harper, said in a bluntly worded statement on Thursday.

Reports in the business section:

* Chile President Sebastian Pinera says Barrick Gold Corp must follow 23 steps to comply with orders from his country's environmental regulator, a message that underscores the tough road ahead for the company to get its crucial Pascua-Lama gold project back on track. Pinera, in Ottawa to discuss Canada-Chile economic relations, admonished Barrick for its handling of the $8.5 billion mine development so far.

* About 700 protesters, some on horseback, besieged a gold mine run by Canada-based miner Centerra Gold Inc in Kyrgyzstan, demanding its nationalization and more social benefits, officials said on Thursday. As part of the protest that has been going on for several days, the demonstrators earlier this week cut road access leading to the Kumtor mine operated by Centerra.

NATIONAL POST

* The negotiations over the free trade deal between Canada and the European Union offer plenty of fresh evidence that Canada's own worst enemy is its unwieldy constitutional structure. Ottawa is set to sign a free trade deal with the EU when Stephen Harper visits Europe for the G8 conference next month. But there are fears that Newfoundland and Labrador may walk away from any agreement that does not protect its fish processing industry.

* With serious accusations being hurled throughout the media and mass resignations hitting Rob Ford's office, a senior Ford staffer said the mayor's former chief of staff is out to "kill the mayor, politically and otherwise." The source said Mark Towhey, who was fired by the mayor last week, has an "axe to grind" with the mayor's office and accused him of leaking "revisionist history" in the Toronto Star.

FINANCIAL POST

* China is counting on "breakthroughs in energy trade" with Canada to help fuel economic growth in the world's most populous country, one of the country's top diplomats said on Thursday. Speaking to a Calgary business crowd, Zhang Junsai, China's ambassador to Canada, said his country is prepared to "deepen" ties with Canada on infrastructure development to help move the country's oil and natural gas to the West Coast for export.

* The lengthy battle by Bre-X investors to recover billions in Canada's largest mining fraud appears to be over in what one of the original plaintiff lawyers in the case called a "sad day" for accountability in Canada. Under a settlement approved on Thursday by the Alberta Court of Queens Bench, the remaining class action suits were dismissed against the main defendants in the case, the estate of Bre-X's late founder and chief executive, David Walsh, and Chief Geologist John Felderhof.

China

PEOPLE'S DAILY

-- President Xi Jinping's forthcoming visit to the United States and three other American countries in early June will help create favourable external conditions for a new round of China's economic growth, this newspaper, which reflects views of the ruling Chinese Communist Party, said in a commentary.

SHANGHAI SECURITIES NEWS

-- There are still doubts about whether China's Shuanghui International Holdings Ltd could successfully acquire U.S. Smithfield Foods Inc as some foreign experts believe Shuanghui's bid price at $4.7 billion was relatively low.

-- Assets managed by China's trust industry are poised to exceed 10 trillion yuan ($1.63 trillion) in the first half of this year from 7.47 trillion yuan at the end of last year, with risk mounting due to the extraordinary expansion of the sector.

CHINA SECURITIES JOURNAL

-- China will step up reforms this year to liberalise its interest rates and to make the yuan fully convertible under the capital account, Xu Shaoshi, head of the National Development and Reform Commission, the top economic planner, told the annual meeting of economic structure reforms opened in Beijing on Thursday.

-- China's central bank is likely to keep liquidity in the country's money markets relatively tight next month.

CHINA BUSINESS NEWS

-- A new round of urbanisation in China may mean that regulators would loosen tight grip on debt issuance by local government financing vehicles even after warnings of high risk involved in such debt.

CHINA DAILY

-- More European companies are planning further investment in China amid signs that the country will carry out more economic reforms, the paper said, citing the European Union Chamber of Commerce in China.

SHANGHAI DAILY

-- China is studying the possibility of joining the U.S.-led Trans-Pacific Partnership trade talks, Shen Danyang, a spokesman for the Ministry of Commerce, said.

ANALYST RESEARCH

Upgrades

CME Group (CME) upgraded to Market Perform from Underperform at Keefe Bruyette
Calpine (CPN) upgraded to Buy from Hold at Deutsche Bank
HomeAway (AWAY) upgraded to Overweight from Neutral at Piper Jaffray
Morgan Stanley (MS) upgraded to Buy from Hold at Deutsche Bank
NorthWestern (NWE) upgraded to Outperform from Neutral at RW Baird
Oaktree Capital (OAK) upgraded to Outperform from Market Perform at Keefe Bruyette

Downgrades

Aon plc (AON) downgraded to Market Perform from Outperform at Keefe Bruyette
CIBC (CM) downgraded to Neutral from Buy at BofA/Merrill
Cepheid (CPHD) downgraded to Hold from Buy at Jefferies
Charles River (CRL) downgraded to Underperform from Market Perform at Raymond James
Golar LNG Partners (GMLP) downgraded to Sector Perform from Outperform at RBC Capital
Mellanox (MLNX) downgraded to Neutral from Buy at UBS
Myriad Genetics (MYGN) downgraded to Hold from Buy at Jefferies
Panera Bread (PNRA) downgraded to Neutral from Buy at Lazard Capital
Scotts Miracle-Gro (SMG) downgraded to Underperform from Market Perform at BMO Capital

Initiations

Alexion (ALXN) initiated with a Neutral at Credit Suisse
Balchem (BCPC) initiated with an Overweight at Piper Jaffray
BioMarin (BMRN) initiated with a Neutral at Credit Suisse
Boston Scientific (BSX) initiated with a Neutral at Wedbush
CVS Caremark (CVS) initiated with an Outperform at Wells Fargo
Catamaran (CTRX) initiated with a Market Perform at Wells Fargo
Dynegy (DYN) initiated with a Neutral at Goldman
Express Scripts (ESRX) initiated with a Market Perform at Wells Fargo
Haemonetics (HAE) initiated with a Neutral at Goldman
Medtronic (MDT) initiated with a Neutral at Wedbush
Melco Crown (MPEL) initiated with an Outperform at Oppenheimer
RPM (RPM) initiated with an Overweight at Piper Jaffray
SeaWorld (SEAS) initiated with an Overweight at Barclays
St. Jude Medical (STJ) initiated with an Outperform at Wedbush
Tiffany (TIF) initiated with an Outperform at Credit Suisse
Valeant (VRX) initiated with an Outperform at BMO Capital

HOT STOCKS

DISH (DISH) commenced tender offer of $4.40 for outstanding Clearwire (CLWR) shares 
Crest sent letter to Clearwire (CLWR) urging repeal of recommendation of Sprint (S) merger
Clearwire's (CLWR) special committee to review unsolicited DISH (DISH) offer 
Dell (DELL) recommended shareholders vote for transaction with Michael Dell, Silver Lake
Samsung (SSNLF) selected Intel (INTC) "Clover Trail" processor to be in upcoming Galaxy 3 Tablet, Reuters reports
American Realty (ARCP) acquired $807M GE Capital (GE) portfolio of 471 net lease properties
Ford (F) surpassed previous hybrid sales record in first five months of FY13
Acacia Research (ACTG) entered into license agreements with Costco (COST), Target (TGT)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Pall Corp. (PLL), OmniVision (OVTI), Krispy Kreme (KKD), Envivio (ENVI), Guess (GES), Palo Alto (PANW), Lionsgate (LGF)

Companies that missed consensus earnings expectations include:
Copart (CPRT), Uroplasty (UPI), Esterline (ESL)

Companies that matched consensus earnings expectations include:
Splunk (SPLK)

NEWSPAPERS/WEBSITES

• A group of top government officials is expected to decide Monday whether several large, nonbank financial firms should be designated as "systemically important" and subjected to increased government scrutiny, sources say. Prudential Financial (PRU), AIG (AIG) and GE Capital (GE) are being considered, the Wall Street Journal reports
• Boeing (BA) is powering up efforts to put the three-month long grounding of its Dreamliner behind it, re-focusing on increasing production and accelerating a spate of new jets it hopes to design, build and deliver before the end of the decade, the Wall Street Journal reports
• Carlyle Group (CG) and Blackstone Group (BX) as well as Indian outsourcers L&T Infotech and Tech Mahindra Ltd, are lining up bids for Hewlett-Packard’s (HPQ) $1B stake in India's MphasiS Ltd, sources say, Reuters reports
• Toyota Motor (TM) has a "good chance" of selling a record number of luxury Lexus vehicles this year, an executive said, as a weaker yen adds to the brand's allure globally and in its biggest market the U.S., Reuters reports
• California lawmakers rejected a bill that would have stopped drillers from using hydraulic fracturing to free oil and natural gas from shale beds until state regulators implement rules for the controversial practice, Bloomberg reports
• Armour Residential REIT (ARR) has about $22.5B of government-backed home-loan debt, and has lost 13% this year, including reinvested dividends. It’s now leading the declines in mortgage REITs as concern grows that the Fed will slow its bond-buying program as soon as June, Bloomberg reports

SYNDICATE

Air Lease (AL) 8M share Secondary priced at $26.75
Epizyme (EPZM) 5.142M share IPO priced at $15.00
Graphic Packaging (GPK) files to sell 15M shares of common stock for holders
Magnegas (MNGA) to offer common stock and warrants

Today’s AM fix was USD 1,283.25, EUR 978.98 and GBP 836.21 per ounce.
Friday’s AM fix was USD 1,290.25, EUR 976.28 and GBP 833.33 per ounce.

Gold climbed $15.50 or 1.21% on Friday and closed at $1,294.00/oz. Silver reached a high of $20.121 and finished up 2.19%. Gold and silver were both down on the week -6.93% and -9.07% respectively.

Gold has fallen another 1% this morning and remains at its lowest level since September 2010.

While gold rose over 1% on Friday, it recorded its worst weekly performance - down nearly 7% - since September 2011.

Support & Resistance Chart – (GoldCore)

Traders are the most bearish in 3 1/2 years, with 15 analysts surveyed by Bloomberg expecting prices to fall this week. Six were bullish and five neutral, the largest proportion of bears since January 2010. Gold rose in February 2010 and was 27% higher by year end 2010. 

Sentiment is as bad as we have seen it in many years which is bullish from a contrarian perspective.

Weak hands have been washed out of the market and strong hands are accumulating again on this dip and will continue to do so in the coming weeks.

Gold, May-June 2013 – (GoldCore)

Gold’s 14-day relative strength index remains near the level of 30 that indicates to many technical analysts that a rebound may be imminent.

Falling gold prices are beginning to impact the gold mining sector in a big way. Newcrest Mining Ltd.’s decision to write down the value of its mines by as much as A$6 billion ($5.5 billion) will lead to the biggest one-time charge in gold mining history. It also heralds pain for competitors.

Barrick Gold Corp., the world’s biggest producer, Newmont Mining Corp. and Gold Fields Ltd. may be next, according to Jefferies International Ltd.

Canadian miner Barrick Gold will announce more job cuts and potentially the closure of mines in Western Australia. Barrick, the world's largest gold miner, has already trimmed its WA staff by 60 people this month. Around 100 jobs are set to be cut from the group's regional head office in Perth, with more losses - or potentially partial closures – likely at Barrick's five mining operations in WA. 

This will lead to a decline in mining supply which will support prices.

Cross Currency Table – (Bloomberg)

Gold jewellers and bullion dealers in India, soon to be the world’s second largest buyer after China, will be asked to suspend sales of gold bullion bars and coins to retail investors to support government efforts to narrow a record current-account deficit that’s pushed the currency to an all-time low.

The All India Gems & Jewellery Trade Federation, a group that represents about 300,000 gold jewelers, manufacturers, wholesalers, retailers and distributors, will send notices to members asking them to halt sales.

Ron Paul still likes gold. In fact, he thinks it could go to "infinity." Below is his interview with CNBC's Jackie DeAngelis and the Futures Now Traders from June 18th.

CNBC's Jackie DeAngelis:
"Looking sort of at our economy and at the global economy, and were watching the situation in Japan closely as well, Why isn't gold responding more?"

Ron Paul: 
"Well you know if you look at the last 13 years it was up 12 out of 13 and this year isn't even over yet, so I would say its responded pretty well.  But you might say well yeah what about in the last year why hasn’t it? Well, markets do these things they go up sharply and sometimes they take a rest.  But the long term is something you can get a handle on, but I was never very good on short term, whether it’s the stock market or whatever, or what government will do, they are just all over the place.

I think If you look at the record of the value of the dollar since the Fed's been in existence we have about a 2 cent dollar where gold was worth $20/oz. 

I would say the record is rather clear on the side of commodity money.

And history is on our side, 6,000 years of history shows it maintains value while paper money self destructs.

I would say that long term as long as we have excessive spending and excessive computerized money you're going to see gold go up and eventually if we're not careful it could go to infinity while dollar could collapse totally.”

NEWS
Gold inches up after biggest weekly fall in two years - Reuters

Gold Extends Rebound on Demand After Drop to Lowest Since 2010 - Bloomberg

Gold Wagers Slump as $54 Billion Erased From Funds - Bloomberg

Barrick To Cut WA Jobs: Report – Business Spectator

COMMENTARY
Video: Ron Paul: Gold Could Go to 'Infinity' - CNBC

"Fundamental Case For Gold Is Growing, Not Diminishing" – Zero Hedge

Video: Marc Faber: "I Buy Gold Regularly" – Casey Research

Credit Ratings Agencies: 'You F--ked Up, You Trusted Us' - RollingStone

For breaking news and commentary on financial markets and gold, follow us on Twitter.

• Here come the rolling blackouts: Obama takes on power plant emissions as part of climate plan (Reuters)
• Walking Back Bernanke Wished on Too Much Information (BBG)
• As previewed last week: Bridgewater "All Weather" is Mostly Cloudy, down 8% YTD (Reuters)
• U.S. Said to Explore Possible China Role in Snowden Leaks (BBG)
• Coeure Says No Doubt ECB Loose Monetary Policy Exit Distant (Bloomberg)... so a "recovery", but not at all
• U.S. steps up pressure on Russia as Snowden stays free (Reuters)
• Texas' Next Big Oil Rush: New Pipelines Ferrying Landlocked Crude Expected to Boost Gulf Coast Refiners (WSJ)
• Singapore Offsets Bankers as Vacancies Fall (BBG)
• Asian Stocks Fall as China Sinks Deeper Into Bear Market (BBG), European Stocks Rally With Bonds as Metals Advance (BBG)
• Qatar emir hands power to son, no word on prime minister (Reuters)
• Toyota President Delivers Highest Returns for Lowest Pay (BBG)

Overnight Media Digest

WSJ

* The U.S. Supreme Court avoided a sweeping ruling on affirmative action in a closely watched case involving the University of Texas, sending the case back to a lower court for review.

* Students attending charter schools posted slightly higher learning gains overall in reading than their peers in traditional public schools and about the same gains in math, but the results varied drastically by state.

* The recession ended four years ago, and the job market is recovering. But for many job seekers, it hasn't felt like much of a recovery.

* The rout in the credit markets has gotten so messy some investors are having trouble finding people willing to buy what they are selling. From municipal bonds to corporate debt to mortgage-backed securities, prices fell sharply again Monday, extending big declines that began last week.

* Bridgewater Associates, which built a $150 billion hedge-fund empire with the promise of strong performance even in turbulent markets, is suffering from the market's recent convulsions.

* New pipelines are beginning to carry a glut of domestic crude from the middle of the country to Texas' Gulf Coast, boosting the fortunes of the area's big refineries.

* The sharp weakening of the South African rand spells more bad news for precious-metal investors, who already are reeling from the fall in gold prices.

* John Hammergren, current chairman and CEO of drug distributor McKesson, would have received a record pension benefit of $159 million in a lump-sum payment had he voluntarily departed on March 31.

* The co-founder of Specialty Medical Supplies has been held since Friday in his factory on the outskirts of Beijing, he said, as about 80 employees are refusing to let him go until they get severance packages.

* Oracle and Microsoft agreed to allow pieces of Oracle's software more closely mesh with Microsoft's software and online services in a nod to their role in customers' Web-accessed "cloud services."

* Angry Birds maker Rovio said its U.S.-based head of strategic partnerships, Andrew Stalbow, has decided to leave the company, marking the latest in a string of high-level management changes at the company.

* KKR has agreed to buy clinical-research firm PRA International in a deal that shows private equity's ongoing interest in research-for-hire firms that cater to drug developers.

FT

Silvio Berlusconi was handed a seven-year jail sentence and banned from holding public office for life on Monday for abuse of office and paying for sex with a minor, further complicating relations between the two main parties in Italy's fragile left-right government.

Spanish oil major Repsol SA is under increasing pressure from Catalan savings bank La Caixa, its largest shareholder, and Pemex, the Mexican state oil group and number-three investor, to accept a non-cash compensation offer from Argentina over the expropriation of its majority stake in energy firm YPF, several people close to the talks in Spain and Argentina said.

Dublin is facing fresh calls for a full inquiry into the collapse of Ireland's financial system on Monday, after recordings of talks between Anglo Irish Bank executives about a bailout were revealed. The recordings suggest the bank deliberately misled regulators as it sought help during the financial crisis.

A $4.7 billion bid by the founders of Eurasian Natural Resources Corporation to buy out the Kazakh miner has gained the support of the board of its largest shareholder Kazakhmys Plc, even as an independent committee set up by the company said it could not recommend their new offer.

Vodafone Group Plc has agreed to buy Germany's largest cable operator Kabel Deutschland Holding AG for 7.7 billion euros ($10 billion), which will turn the mobile operator into a combined TV, internet and telecoms group with more customers and higher margins.

Insurers have warned that the speed at which oceans are warming increasingly around the world is threatening their ability to sell affordable policies.

NYT

* A warning from the central bank against excessive lending worried investors overseas and brought fears of economic slowdown in China. The People's Bank of China, the central bank, let the world know on Monday that it was putting the nation's banks on notice: the loose money and the speculation it fed had to stop.

* In two decisions issued on Monday, the Supreme Court effectively made it harder for workers to prove that they had suffered employment discrimination. One ruling narrows the definition of what constitutes a supervisor in racial and sexual harassment cases, while the other adopts a tougher standard for workers to prove that they had faced illegal retaliation for complaining about employment discrimination.

* The Supreme Court ruled on Monday that generic drug manufacturers could not be sued by patients who claim that the drugs they took were defectively designed. The decision is a significant victory for the generic drug industry, but further narrows the recourse for people who are injured by such drugs.

* The news on Monday that Weil, Gotshal & Manges, among the nation's most prestigious and profitable law firms, was laying off a large number of lawyers and support staff while also reducing the pay of some of its partners, sent shock waves through the industry and underscored the financial difficulties facing the legal profession.

* Courts must take a skeptical look at affirmative-action programs at public colleges and universities, the Supreme Court ruled Monday, in a decision that is likely to set off a wave of challenges to race-conscious admissions policies nationwide.

* Richard Baker, a shopping mall developer who emerged as a major player in the department store business with his purchases of Lord & Taylor and Hudson's Bay, is now exploring a bid for Saks Inc, according to a person briefed on the matter.

* Warner Brothers on Monday announced a new leadership team for its film division while informing the staff that Jeff Robinov was leaving as the motion picture group's president. Combined with a shake-up at its television unit, the moves greatly concentrate power at Hollywood's largest studio in the hands of one executive.

* A federal appeals court has upheld the conviction of Raj Rajaratnam, the former hedge fund manager who was charged with orchestrating a vast insider trading conspiracy.

* Federal regulators are poised to sue Jon Corzine over the collapse of MF Global and the brokerage firm's misuse of customer money during its final days, a blowup that rattled Wall Street and cast a spotlight on Corzine, the former New Jersey governor who ran the firm until its bankruptcy in 2011.

* Two of Dell Inc's biggest outside investors on Monday laid out the most comprehensive defense of their plan for the company to date, while attacking the company's planned $24.4 billion sale to Michael Dell and the investment firm Silver Lake.

Canada

THE GLOBE AND MAIL

* Weeks before rising floodwaters devastated Calgary and other municipalities along the Bow River, a hint of the impending disaster was apparent in data from a pair of NASA satellites. Observations by the Gravity Recovery and Climate Experiment show groundwater in the region has been at progressively higher levels than average - leaving the land with little extra capacity to take up additional water coming in from rainfall and melting snow.

* The Canadian government, trying to balance its books, is cracking down on tax evasion by forcing taxpayers to reveal more details of foreign holdings. National Revenue Minister Gail Shea will unveil new reporting requirements Tuesday that will apply to taxpayers with more than C$100,000 ($95,000) of offshore assets.

* Seven Conservative MPs are seeking a combined C$355,907 from a group of voters who went to court and lost their bid to overturn election results in their federal ridings because of misleading robocalls. A document recently filed in Federal Court says the Tories are asking for a "modest fixed amount" in legal fees plus disbursements.

Reports in the business section:

* Barrick Gold Corp plans to overhaul its board of directors in the wake of a backlash from powerful shareholders. Two of Barrick's independent directors, Donald Carty and Robert Franklin, recently met or telephoned officials from eight major Canadian pension funds that spearheaded a revolt by shareholders complaining about lavish compensation practices.

* Ernst & Young LLP is facing allegations from the Ontario Securities Commission that it failed to properly audit the books of a small Chinese athletic-shoe manufacturer Zungui Haixi Corp.()

* Estimates of the size of a pipeline spill in northern Alberta have grown dramatically, causing concern among area aboriginals. Penn West Petroleum says between 400,000 and 600,000 litres of salty waste water escaped from the pipeline in addition to 5,000 litres of oil initially reported.

NATIONAL POST

* Alberta is handing out pre-loaded debit cards to displaced people and pledging C$1 billion in reconstruction cash to affected communities after the worst flooding in the province's history.

* Immigration authorities are concerned that Iranians with "sinister motives" may enter Canada along with the flow of undocumented refugees, according to a declassified government report obtained by the National Post. The Canada Border Services Agency intelligence report said 19 Iranian nationals, most of whom had arrived in the country without legitimate travel documents, had been found "inadmissible" on security grounds since 2008.

FINANCIAL POST

* The worst flooding in Alberta's history could knock C$2 billion off the Canadian economy in June, according to BMO Capital Markets.

* The Ontario government is investigating a Toronto-based web development bootcamp that it believes has been operating as an unregistered school - a violation of the Private Career Colleges Act, 2005 - leaving its founders no choice but to temporarily shut the program down

China

CHINA SECURITIES JOURNAL

- The London Metal Exchange is considering yuan settlement for transactions at its exchange, according to an official at Hong Kong stock exchange.

SECURITIES TIMES

- China's Ministry of Land and Resources and National Energy Administration are working on an industrial policy for shale gas and plan to invite tenders for projects, an official said.

SHANGHAI SECURITIES NEWS

- The liquidity squeeze in China's interbank market is leading to large-scale redemptions by investors in money-market mutual funds, forcing fund managers to sell bonds at steep discounts to meet redemption demand.

SHANGHAI DAILY

- Excessive use of toxic pesticides in traditional Chinese herb farming is endangering health and the environment, according to a report by the campaign group Greenpeace.

PEOPLE'S DAILY

- A bailout of the stock market is not beneficial to the development of a sound capital market, although some analysts are suggesting the China Securities Regulatory Commission and the People's Bank of China should intervene, the newspaper said in an editorial.

7:00 AM Fly On The Wall Market Snapshot

ANALYST RESEARCH

Upgrades

CEMEX (CX) upgraded to Overweight from Equal Weight at Morgan Stanley
CME Group (CME) upgraded to Neutral from Underweight at JPMorgan
Hercules Offshore (HERO) upgraded to Strong Buy from Buy at ISI Group
Hittite Microwave (HITT) upgraded to Neutral from Sell at Goldman
Kinder Morgan Energy (KMP) upgraded to Buy from Neutral at BofA/Merrill
Marvell (MRVL) upgraded to Buy from Hold at Brean Capital
Royal Dutch (RDS.A) upgraded to Neutral from Underperform at Exane BNP Paribas
TE Connectivity (TEL) upgraded to Conviction Buy from Buy at Goldman
Valero Energy (VLO) upgraded to Neutral from Sell at Goldman
Waters (WAT) upgraded to Buy from Neutral at Goldman

Downgrades

Agilent (A) downgraded to Neutral from Buy at Goldman
Allergan (AGN) downgraded to Market Perform from Outperform at Wells Fargo
American Vanguard (AVD) downgraded to Neutral from Overweight at Piper Jaffray
Demand Media (DMD) downgraded to Hold from Buy at Stifel
Demand Media (DMD) downgraded to Market Perform from Outperform at JMP Securities
Genomic Health (GHDX) downgraded to Sell from Neutral at Goldman
IPC The Hospitalist Co. (IPCM) downgraded to Neutral from Overweight at Piper Jaffray
Keynote Systems (KEYN) downgraded to Neutral from Buy at B. Riley
Melco Crown (MPEL) downgraded to Hold from Buy at Deutsche Bank
Pan American Silver (PAAS) downgraded to Market Perform from Outperform at Cowen
QIWI (QIWI) downgraded to Neutral from Overweight at JPMorgan
Sunoco Logistics (SXL) downgraded to Neutral from Buy at BofA/Merrill
Western Gas Partners (WES) downgraded to Neutral from Buy at BofA/Merrill

Initiations

Becton Dickinson (BDX) initiated with a Buy at ISI Group
Blackhawk (HAWK) initiated with a Buy at Jefferies
Clovis (CLVS) initiated with a Buy at Mizuho
Encore Wire (WIRE) initiated with a Neutral at DA Davidson
Epizyme (EPZM) initiated with a Buy at Citigroup
Francesca's (FRAN) initiated with an Outperform at William Blair
Jarden (JAH) initiated with a Neutral at Goldman
Kamada (KMDA) initiated with a Buy at Jefferies
Kamada (KMDA) initiated with an Outperform at Oppenheimer
Liberty Global (LBTYA) initiated with an Outperform at Macquarie
Magellan Health (MGLN) initiated with a Hold at Jefferies
Mast Therapeutics (MSTX) initiated with an Overweight at Piper Jaffray
Merrimack (MACK) initiated with a Buy at Mizuho
Michael Kors (KORS) initiated with a Buy at Deutsche Bank
NCI Building Systems (NCS) initiated with a Neutral at DA Davidson
Newell Rubbermaid (NWL) initiated with a Neutral at Goldman
Nike (NKE) initiated with a Buy at Deutsche Bank
Ralph Lauren (RL) initiated with a Buy at Deutsche Bank
Synthetic Biologics (SYN) initiated with a Buy at Ascendiant
Tesaro (TSRO) initiated with a Buy at Mizuho
Under Armour (UA) initiated with a Hold at Deutsche Bank
VF Corp. (VFC) initiated with a Buy at Deutsche Bank
William Lyon Homes (WLH) initiated with a Buy at Citigroup
William Lyon Homes (WLH) initiated with a Neutral at JPMorgan
William Lyon Homes (WLH) initiated with an Outperform at Credit Suisse
lululemon (LULU) initiated with a Hold at Deutsche Bank

HOT STOCKS

Meade Instruments (MEAD) said considering $3.65/share tender offer from
MIT Capital subsidiary VictoryOne
Cimarex Energy (XEC) announced joint development agreement with Chevron (CVX)
Demand Media (DMD) acquired Society6 for $94M in cash and common stock
Polypore (PPO) to divest Microporous assets following Supreme Court decision
Bascom filed patent infringement suit against salesforce.com (CRM)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Mitel (MITL)

Companies that matched consensus earnings expectations include:
Sonic (SONC)

NEWSPAPERS/WEBSITES

• As President Obama plans a trip to Africa, U.S. companies such as GE (GE), GM (GM) and Procter & Gamble (PG) are expanding in the long-neglected frontier market of Africa, the Wall Street Journal reports
• Amazon (AMZN) has made itself known as one of the most formidable competitors in business, but after getting into video streaming, it has yet to unseat Netflix (NFLX) as king of the hill, the Wall Street Journal reports
• Two top Fed officials--Minneapolis Fed President Kocherlakota and Dallas’ Richard Fisher-- downplayed the notion of an imminent end to monetary stimulus and said the market reaction was not yet cause for concern, Reuters reports
• The Financial Stability Board, which sets rules for global banks, will set up a taskforce to look at reform of Libor after a scandal in which three banks were fined for rigging the global interest rate benchmark, Reuters reports
• Dish Network (DISH) Chairman Charlie Ergen may have one last shot at being a hunter before he’s forced to turn his company into prey, with T-Mobile US (TMUS) as his last shot at buying a national wireless carrier, Bloomberg reports
• Google (GOOG) can’t be forced to remove material from its search engine that was legally posted on other websites, an adviser to the EU’s top court said in a case that may set boundaries between free speech and data-protection rights, Bloomberg reports

SYNDICATE

Flotek (FTK) files to sell 3.28M shares of common stock for holders
Investors Real Estate (IRET) files to sell 927,626 common shares
Mitek Systems (MITK) files to sell common stock

• Egypt Girds for Muslim Brotherhood Protests (WSJ)
• SAC Capital's Steven Cohen Expected to Avoid Criminal Charges (WSJ)
• SAC insider-trading probe could last years (Reuters)
• RBI seen selling dollars around 60.59 levels: dealers (Reuters)
• China signals will cut off credit to rebalance economy (Reuters)
• Egypt army arrests key Muslim Brotherhood figures (BBC)
• Rise in Steel Prices Alarms Buyers (WSJ)
• Draghi-Carney Seek Independence Day Break From Bernanke (BBG)
• Samsung Warns Results Will Miss Forecasts (WSJ)
• Russia Prosecutor Seeks 6 Years in Jail for Putin Critic Navalny (BBG)

Overnight Media Digest

WSJ

* The leader of Egypt's military ousted President Mohammed Morsi from office and replaced him with the head of the country's constitutional court-a move the presidential palace quickly branded a "complete military coup.

* Egypt's swift political turn cast sudden scrutiny on the country's new interim president - Adly Mansour, the head of Egypt's Supreme Constitutional Court, a position he assumed just two days earlier.

* The Obama administration's surprise decision to delay penalties for some employers who don't offer health insurance led to a new debate Wednesday over whether the move could undermine efforts to expand access to health insurance for individuals.

* The Securities and Exchange Commission has frozen the assets of a group of unnamed traders who earned $4.6 million in potentially illegal profits by trading in Onyx Pharmaceuticals Inc before the cancer drug-maker rejected an unsolicited acquisition offer from rival Amgen Inc

* Portuguese political leaders worked to preserve the country's strained governing coalition late Wednesday, after the resignations of a pair of key ministers touched off a deep swoon in European financial markets and hinted at a reawakening of the euro zone's debt crisis.

* Four months after Samsung Electronics launched the Galaxy S4 smartphone, brokerages are downgrading the company's stock and cutting their shipment and earnings forecasts, noting that sales of Samsung's high-end smartphone are expected to be disappointing based on component orders placed for the third quarter.

* Two gauges of the labor market showed steady, if unspectacular, strength Wednesday, ahead of a payroll report Friday that could signal the immediate future of one of the Federal Reserve's easy-money policies.

* The Food and Drug Administration plans to issue a new rule by September that would allow generic-drug companies to make changes in their labeling, a step that could open the generic drug makers up to liability if their drugs injure patients.

* Stadium food vendor Aramark Corp is preparing to return to the public markets with an initial public offering, according to people familiar with the company's thinking, paving the way for one of the country's largest closely held companies to return to public ownership.

FT

Both the European Central Bank and the Bank of England on Thursday gave markets guidance on low future interest rates.

New car sales in Britain posted their sixteenth straight monthly increase in June as strong consumer confidence fuelled private demand.

Former UBS trader Tom Hayes, at the center of a global probe into the manipulation of Libor, will indicate how he wishes to plead to eight criminal charges as early as October.

The Labour party's election coordinator, Tom Watson, quit his post on Thursday in a dispute over an attempt by union Unite to influence candidate selection.

Barclays Chief Executive Antony Jenkins has sought to mend ties with regulators after appearing last week to threaten to cut lending if they persisted with new leverage demands.

Two ex Rolls-Royce employees in the United States are challenging a court order holding them back from releasing information which, according to them, exposes potentially serious defects in the company's engine manufacturing process.

NYT

* Answering critics who said they were running out of ways to promote growth and lending, the European Central Bank and the Bank of England on Thursday did something neither had done before, committing themselves to keeping interest rates low indefinitely.

* After years of lowering book prices, Amazon is offering smaller discounts on some books. Authors and small publishers said this put some books beyond an audience's reach.

* The first Soviet republic to reclaim its independence was Lithuania. But more than two decades later, the energy industry of this European Union member still feels like an outpost of a creaking empire run from Moscow.

* China wants to use Shanghai as a platform for financial overhauls, including interest rate liberalization and full convertibility of China's currency.

* The International Monetary Fund and Pakistan reached a provisional agreement on Thursday on a $5.3 billion bailout package that aims to bolster Pakistan's flagging economy and its perilously low foreign exchange reserves.

* Nestlé and Danone will trim their prices on some infant formula after China began an investigation of price fixing by sellers of the milk.

Canada

THE GLOBE AND MAIL

* A man charged in connection with a terrorist plot on Canada Day wrote increasingly vitriolic messages over the past year, including anti-Semitic conspiracy theories and violent threats in defense of Islam. Online messages by John Stewart Nuttall, who was arrested with Amanda Korody on July 1 in Abbotsford, British Columbia, appear to begin in September, 2012, and continue over the following months.

* A memorial garden dedication takes place Sunday at the site of one of Canada's worst aviation disasters, a former farm field that for decades continued to yield bits of human remains and wreckage. On Sunday, July 5, 1970, an Air Canada Flight 621 en route from Montreal to Los Angeles crashed near Toronto's international airport just northwest of the city, killing all 100 passengers and nine crew.

Reports in the business section:

* Prices for cellphone services - including voice and data - have decreased since last year in Canada, a new study says. A typical package of mobile phone services - including voice, text, call display and voice mail features - has fallen by about 13 per cent year over year, said the study, commissioned by Industry Canada and the CRTC.

NATIONAL POST

* Staunch Quebec independentiste Michel Brule announced on Thursday his long-shot candidacy for the November election. The book publisher, writer, and ex-bar owner says he doesn't expect English-speaking Montrealers to vote for him - and says he isn't working to get their support, anyway.

* A young Canadian woman, Tasha Brown, and eight other boaters who were rescued Wednesday far off the coast of Honduras spent days adrift, thinking no one was looking for them, the woman's mother said.

FINANCIAL POST

* Alberta is putting its money where its mouth is, agreeing to pay up to C$5 billion ($4.76 billion) over 20 years to get crude to Canada's East Coast.

* Housing sales in the Greater Toronto Area were down by less than 1 percent in June compared with the same month a year ago, while the average selling price was up by 4.7 percent at $531,374, according to a report by Toronto Real Estate Board.

China

CHINA SECURITIES JOURNAL

- China's central government has earmarked 100 million yuan ($16.3 million) for the development of food safety monitoring projects in 24 regions including Shanxi, Inner Mongolia, Chongqing and Sichuan in 2013, which follows Beijing's recent decision to allocate 2.579 billion yuan for agricultural development loans this year.

SHANGHAI SECURITIES NEWS

- China is studying measures, including an expansion of the property tax pilot programme, setting up of a nationwide information network and a uniform real estate registration system as part of efforts to control home prices in the long run.

SECURITIES TIMES

- China's A share IPO market will, at the earliest, restart at the end of August, said Zhaofeng, greater China managing partner of international accounting firm Ernst & Young, after discussions with customers.

CHINA DAILY

- Swedish furniture group Ikea has teamed up with Chinese solar firm Hanergy Holdings Group on a grid-connected solar power generation project for all of Ikea stores. The move is part of Ikea's plan to promote energy efficiency and reduce emissions.

SHANGHAI DAILY

- Sales of medium to high-end homes in Shanghai rose significantly in the first half of the year although prices were relatively stable. Purchases of homes costing more than 30,000 yuan per square metre rose 84 percent in the first six months of the year, compared with the period year, according to Shanghai Deovolente Realty Co.

Fly On The Wall 7:00 Am Market Snapshot

ANALYST RESEARCH

Upgrades

African Barrick Gold (ABGLY) upgraded to Buy from Reduce at Nomura
Randgold Resources (GOLD) upgraded to Neutral from Reduce at Nomura
SABMiller (SBMRY) upgraded to Buy from Hold at Societe Generale
Seadrill (SDRL) upgraded to Buy from Neutral at BofA/Merrill
Unilever (UN, UL) upgraded to Buy from Hold at Societe Generale
Zoetis (ZTS) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Mead Johnson (MJN) downgraded to Equal Weight from Overweight at Morgan Stanley
SAP (SAP) downgraded to Hold from Buy at Deutsche Bank

HOT STOCKS

Brookfield Infrastructure (BIP) sold its 42% interest in Australasian distribution business for about $410M
Acacia Research (ACTG) CEO Paul Ryan to retire, Matthew Vella named successor

NEWSPAPERS/WEBSITES

• Steel prices (X, AKS)  in the U.S. are rising and not necessarily because the market is improving. Unforeseen events have unexpectedly helped boost prices 10% in recent weeks to their highest levels since early January, and have taken an estimated 4% of total U.S. supply off the market in the last three months, the Wall Street Journal reports
• Pressured to find new sources of revenue as ticket prices remain depressed, airlines (AAMRQ, UAL, DAL, JBLU, LUV) for years have been tacking on baggage fees and charging for meals that used to be free. Now, the fees are continuing to multiply and increase, the Wall Street Journal reports
• Telecom Italia (TI) ended contacts with Hutchison Whampoa (HUWHY) on merging their Italian mobile businesses, and will focus on a plan to spin off its fixed-line network, Reuters reports
• GM (GM) is banking on a no-frills "people mover," the Chevrolet Spin,  to help it make inroads into the Japanese-dominated Indonesian car sector, one of Asia's hottest auto markets, Reuters reports
• Citigroup (C) won dismissal of a Hong Kong lawsuit by former private banking client Natamon Protpakorn seeking $17.9M for damages from currency bets liquidated when the bank closed her positions, Bloomberg reports
• In the contest to land NBA star  Dwight Howard, it’s not just the Houston Rockets versus the Los Angeles Lakers, it’s Comcast (CMCSA)  against Time Warner Cable (TWC), giving the winner a boost to their sports networks, Bloomberg reports

SYNDICATE

Restoration Hardware (RH) files to sell 10M shares of common stock
lululemon (LULU) files automatic mixed securities shelf

In a day in which there was and will be virtually no A-list macro data (later we get the FHFA and Richmond Fed B-listers), the inevitable low volume centrally-planned levitation was attributed to news out of China, namely that Likonomics has set a hard (landing) floor of 7% for the GDP, and that just like other flourishing economies (Spain, Italy, California) China would invest in "monorails"to get rid of excess capacity, as well as a smattering of European M&A activity involving Telefonica Deutscheland and KPN. In Japan, the government upgraded its economic view for the 3rd straight month and also raised its view on capex for the 1st time in 4 months: who says the (negative Sharpe ratio) PenNikkeistock market is not the economy? All this led to a 2% rise in the Shanghai Composite - the most in 2 weeks - and the risk on sentiment also resulted into tighter credit spreads in Europe, with the iTraxx Crossover index falling 4bps and sr. financial also declining by around 4bps, with 5y CDS rates on Spanish lenders down by over 10bps. Naturally, US futures wouldn't be left far behind and took today's first major revenue miss of the day, that of DuPont, which beat EPS and naturally missed revenue estimates, as bullish and a signal to BTFATH (all time high). On the earnings side, in addition to Apple, other notable companies reporting include Lockheed Martin, Altria, AT&T and UPS.

Overnight bulletin highlights from Bloomberg:

• Treasury yields rise overnight, U.S. stock futures higher before today’s FHFA Home Price Index, Richmond Fed index.
• U.S. Treasury will auction $35b 2Y at 1pm ET; last auction on June 25 saw stopout yield at 0.43%, the highest since May 2011
• Chairman Bernanke will trim the Fed’s monthly bond buying to $65b from the current pace of $85b in September, according to a growing number of economists surveyed by Bloomberg News
• Volatility in the foreign-exchange, bond and equity markets dropped to the lowest levels in about two months as policy makers from China to the U.S. pledged to support global growth
• A Muslim Brotherhood leader has called on Egyptians to lay siege to the U.S Embassy in Cairo to protest what he said was American support for the ouster of Islamist President Mohamed Mursi
• Goldman Sachs pared its 12-month commodity return forecast to almost flat after oil rallied, keeping a neutral recommendation on raw materials while  predicting losses for gold and gains for base metals
• Sovereign yields little changed. Nikkei +0.82%, Shanghai +1.95%. European stocks up, U.S. index futures rise. WTI crude, gold rise; copper all drop

WHAT TO WATCH:

• 9:00am: FHFA House Price Index, May, est. 0.8% (prior 0.7%)
• 10:00am: Richmond Fed Manufacturing Index, July, est. 9 (prior 8)
• POMO - 11:00am: Fed to purchase $3b-$3.75b notes in 2019-2020 sector
• 1:00pm: U.S. to sell $35b 2Y notes

Market Re-Cap

In terms of notable stock movers, KPN shares rose 5% after agreeing to sell E-Plus unit to Telefonica Deutschland for EUR 5bln in cash and a 17.6% stake in Telefonica Deutschland post-transaction. Swiss watch maker Swatch also saw its shares rise by over 2% after reporting better than expected H1 net sales and also forecast a strong end to the year.

Going forward, market participants will await earnings report releases from Apple, UPS, Lockheed Martin, as well as digest the first of this week’s scheduled auctions by the US Treasury who is due to sell USD 35bln in 2y notes.

Asian Headlines

China Premier Li Keqiang said China's GDP growth bottom line is 7% and that China's economy is at a reasonable level.

The Chinese government is relying on railways investment as a method to boost economic growth and solve overcapacity problems in steel and cement production, according to sources close to the government. The report said the state council is expected to review plans to build the world's longest undersea tunnel across Bohai Strait with a total investment of CNY 260bln and also plans for an industry fund for the railway industry as early as September. Japan's government upgraded its economic view for the 3rd straight month and also raised its view on capex for the 1st time in 4 months.

EU & UK Headlines

IWH Halle institute expects the German economy to grow 0.7% this year. The institute adds that Germany may need a separate fund to assist economically weaker regions nationwide after the aid programme for Eastern states ends in 2019.

Spain tapped its social security reserve fund for the second time in a month to help with extra summer pension payments as unemployment and retirement costs deplete government funds, according to Labour Ministry.

Spain sells EUR 3.52bln vs. Exp. EUR 2.5-3.5bln in 3- and 9-Month T-Bills.

- Sells EUR 2.6bln in 3-month, b/c 4.03 (prev. 2.94), avg. yield 0.442% (prev. 0.869%)

- Sells EUR 0.92bln in 9-month, b/c 2.27 (prev. 2.42), avg. yield 1.152% (prev. 1.441%)

US Headlines

Senate Republicans, including two members of the leadership, are coalescing around a proposal to block any government funding resolution that includes money for the implementation of the 2010 Affordable Care Act.

But such a move is a nonstarter for President Obama and congressional Democrats. Republicans have tried this maneuver in Obama’s first term, only to back off later to the chagrin of Tea Party leaders.

Equities

Stocks traded higher in Europe, buoyed by the latest M&A activity involving Telefonica Deutschland and KPN, as well as comments by the Chinese Premier Li Keqiang, who said that China's GDP growth bottom line is 7%, which is the clearest indication yet that the nation will act to support expansion if needed.

KPN shares rose 5% after agreeing to sell E-Plus unit to Telefonica Deutschland for EUR 5bln in cash and a 17.6% stake in Telefonica Deutschland post-transaction. Swiss watch maker Swatch also saw its shares rise by over 2% after reporting better than expected H1 net sales and also forecast a strong end to the year.

FX

In spite of trading sideways overnight and failing to benefit from China driven optimism, USD/JPY broke out of its tight range to the upside and edged back above the 50DMA line at 99.41 during early stages of trade in Europe. Consequent USD strength weighed on both EUR/USD and GBP/USD, even though implied vols traded heavy.

Commodities

Goldman Sachs kept its neutral recommendation on commodities on both a near and 12 month horizon.

Goldman Sachs added that the oil market is to be amply supplied in H2 amid weak demand and forecasts WTI to average USD 8-9/BBL below Brent crude in 2014.

The Chinese government is relying on railways investment as a method to boost economic growth and solve overcapacity problems in steel and cement production, according to sources close to the government. The report said the state council is expected to review plans to build the world's longest undersea tunnel across Bohai Strait with a total investment of CNY 260bln and also plans for an industry fund for the railway industry as early as September.

India gold imports are to fall on RBI restrictions according to All India Gems & Jewellery trade confederation's Bamalwa. Bamalwa said gold premiums in India will climb on shortage and that India needs 250-300T of gold in the October - December festival season. He also said that the cost for Indian gold jewellery consumers are to increase and that India's gold imports may drop to 175T in H2. He added that India may have a shortage during festivals.

* * *

DB's Jim Reid recaps the overnight action:

Aside from the arrival of the royal baby, markets had a few other pieces of good news to cheer. The European trading session started on the front foot helped by the weekend news that the Portuguese President had ruled out snap elections in favour of letting the current government see out its term. Portuguese yields finished a 41bp firmer at 6.39% in its best one day performance since October. UBS’s above-consensus earnings pre-release certainly helped sentiment as did data showing that inflows into U.S. funds and ETFs in the month-to-date ($29.6bn) were the seventh-highest on record. Despite all that, equities on both sides of the Atlantic were range bound for much of the session. The release of lower-than-expected US home sales gave risk markets a small boost as tapering probabilities eased slightly. Existing home sales for June fell unexpectedly to 5.08M from last month’s 5.18M and were lower than the 5.26M expected. Reasons for the fall were varied with some attributing it to the recent increase in mortgage rates while others pointed to tightness in supply. Still, DB’s economists point out that existing home sales are up +15.2% compared to the same period last year—the highest growth rate since August 2011 (+19.8%). In addition, the current level of home affordability (172.7) remains well above its long term average (+114) from 1971 to 2000. The other interesting snippet was that distressed housing sales as a percentage of existing home sales fell to 15%, the lowest level since tracking started in October 2008. Shares in US homebuilders finished the day down 1.8%, underperforming the S&P500 which posted a 0.2% gain.

On the fixed income side, UST 10yr yields spent the 6th consecutive day in the 2.45%-2.55% range (2.48% this morning) which has helped credit markets grind tighter over the same time period. Indeed, the European iTraxx (97bp) cracked the 100bp mark yesterday for the first since May as the European Crossover index tightened further below the 400bp mark closing at 392bp. The CDX IG index was unchanged yesterday at 73bp as it consolidated near YTD tights. The firmer price action in secondary credit trading has buoyed primary markets. New issuance over the last week or so has been led by the US banks which recently exited earnings blackouts. Yesterday saw Wells Fargo and JPMorgan tap the debt markets to raise more than $6bn combined. In commodites, gold (+3.1%) had its best day in a year as it moved back above the $1330/oz mark amid reports of short covering. Silver (+5.3%) finished the session back above the $20/oz mark. A number of gold miners including Barrick Gold (+6.2%) and Newmont (+5.8%) were fairly well bid as a result, albeit rising from a very low base.

We had a relatively quiet start to the week in the world of earnings. Out of 8 companies that reported, 5 of them did come ahead of EPS estimates although 6 of them actually fell short of top line expectations. As we've been flagging for some time now top line disappointments seem to be an increasing theme with more and more non-financial results feeding through. We've been trying to tease out some of the commentaries from corporates that have a global presence to test the pulse of the world economy and the interesting takeaway from yesterday was perhaps McDonald's. The company missed both earnings and revenue estimates in Q2. A stronger USD was a drag to earnings (2cps negative impact) but sales performance was also sluggish in key markets. Breaking same store sales performance down by region, management noted that revenues were +1% in US but down -0.1% in Europe and down -0.3% in Asia/Pac, Middle East and Africa (APMEA). APMEA in particular was primarily affected by negative results in China, Australia and Japan. Management's tone for July sales was also soft with a flat number expected and based on the recent sales trends McD expects the results for the rest of the year to remain challenged. McD's shares fell -2.68% yesterday, its worst daily performance since October 2012.

Today sees Apple Inc report Q3 results after the US market close. Despite its 40% drop in share price since the September peak, the company remains the
second largest company on the S&P500 index with a market cap of $400bn. In terms of what to expect, analysts are estimating zero year-on-year growth in revenues ($35bn) and a -21% year-on-year change in EPS ($7.30). This would be the company’s lowest revenue and EPS result since Q4 2011. Over the past week or so, a consistent theme has been that of softer demand for IT hardware so it will be interesting to see whether this is borne out in today’s Apple result and guidance.

In Asia, markets are trading firmer led by gains on the Hang Seng (+2.1%), Nikkei (+0.7%) and KOSPI (+1.2%). The Shanghai Composite (+2.2%) is headed for its biggest gain in almost two weeks after Beijing News reported that Premier Li Keqiang’s government sees 7% GDP growth as the “bottom line”. The article suggested that Li said that a rate below 7% won’t be tolerated because China needs to achieve a moderately prosperous society by 2020. The comments have boosted a number of Chinese cyclicals in the mining (+3.7%), construction (+3.6%) and financial services (+2.2%). Japanese equities also trading firmer despite a stronger yen (+0.2%), with the main laggard being Tokyo Electric Power (-7.8%) after management said that radioactive water from damaged reactors at the Fukushima nuclear plant has been escaping into the Pacific Ocean. The company doesn’t yet know when the leaks started or how much of the water has escaped into the ocean. Elsewhere Asian credit markets are off to a strong start this morning led by strong demand for cash bonds and the Australian dollar is trading 0.2% firmer against the greenback.

Looking at the day ahead, we have another relatively light day for data ahead of us. Eurozone consumer confidence for July, French business confidence and the US house price index are the main economic reports. In addition to Apple, the other corporate results that may be of interest today include Lockheed Martin, AT&T and UPS.

• Ackman Says Pershing Square Takes 9.8% Stake in Air Products (BBG) - So is APD Carl Icahn's biggest ever short yet
• Latest Hilsenplant: Summers Hedges His Doubts on Fed's Bond Buying (WSJ)
• China Stocks World’s Worst Losing $748 Billion on Slump (BBG)
• U.S. Spy Program Lifts Veil in Court (WSJ)
• Abenomics on the rock again: Japan July manufacturing PMI shows growth at 4-month low (Reuters)
• EADS to be renamed Airbus in shake-up (FT)
• Goldman's GSAM has significantly increased its exposure to European equities (FT) - there is a reason why this is Goldman's worst division
• Japanese Megabanks Post Mega Profit Gains (WSJ) - when one excludes MTM impact from rate surge of course
• Ex-workers sue Apple, seek overtime for daily bag searches (Reuters)
• Following Bernanke Means Using Precedent of Unprecedented Policy (BBG)
• Hong Kong Yuan Deposits Snap Eight-Month Increase on Cash Crunch (BBG)
• Corporate sleuths on edge after China detains foreign consultants (Reuters)
• Downtown NYC Landlords Remake Offices in Shift From Banks (BBG)

Overnight Media Digest

WSJ

* BP Plc said it has allocated nearly all of a $20 billion compensation fund for the 2010 Deepwater Horizon oil spill, raising fears that the still-mounting costs of the spill may take a bigger-than-expected bite out of future profits. Though the fund still contains about $7 billion, a spokesman said, all but $300 million has been earmarked for various types of injury claims from governments and businesses.

* Management consulting firm Accenture Plc is in talks to acquire rival Booz & Co, a deal that would beef up its strategy and operations consulting services. It isn't clear if they will reach a deal or if Booz has other suitors.

* Alcatel-Lucent USA Inc is selling a small stake to U.S.-based chip maker Qualcomm Inc and hopes to attract other technology investors in order to boost its research budget.

* Cummins Inc's second-quarter earnings fell 12 percent, but the engine maker raised its sales outlook on rising demand for exhaust-treatment systems from truck maker Navistar International Corp.

* The European Union on Tuesday gave approval for a financial guarantee from the French state for PSA Peugeot Citroën's in-house banking unit, saying the aid is essential to help the ailing auto maker return to health.

* Mining-company CEOs who were recently sent packing are beating a trail back to the industry, and two have already established investor funds and are looking for backers. Aaron Regent, the former CEO of Barrick Gold Corp, started a Toronto-based fund this year mainly to buy mines in the Americas. Mick Davis, credited with building Xstrata into the world's fifth largest miner, started a London-based investment fund named X2 Resources.

* Indigo Partners LLC, the investment firm of William Franke, who announced plans on Monday to resign as chairman of Spirit Airlines Inc, is in exclusive talks with Republic Airways Holdings Inc to purchase its Frontier Airlines unit. Franke plans to turn the airline into an ultra low-cost carrier like Spirit.

* Take-Two Interactive Software Inc reported a narrower loss in its latest quarter on lower revenue, as the videogame maker relied on older products while preparing to release its next "Grand Theft Auto" title. Chief Executive Strauss Zelnick said the company didn't have any blockbuster releases during the quarter.

FT

The Bank of England helped facilitate the sale of gold looted by the Nazis following their invasion of Czechoslovakia in 1939, according to a history of the central bank's activities in and around the second world war.

The U.S. Securities and Exchange Commission is suing a former high-ranking Santander executive and a former Spanish judge, charging them with insider trading ahead of BHP Billiton's failed bid for Potash Corp.

Russia's Uralkali has pulled out of one of the two big cartels controlling the potash market in a move the company predicted would bring potash prices down 25 percent.

Barclays and Deutsche Bank have both revealed plans to bolster their balance sheets and meet regulatory demands that they increase the level of equity they hold compared with their overall assets.

BP's chief executive said the company was digging in and was well prepared for a long legal battle to fight damages claims related to the Deepwater Horizon disaster.

U.S. Securities and Exchange Commission lawyers accused former Goldman Sachs trader Fabrice Tourre of lying under oath.

NYT

* Chevron Corp has set its lawyers against Steven Donziger, who won an $18 billion case over oil spills in the Ecuadorean jungle, accusing him of manipulating evidence and bribing judges.

* In a significant victory for law enforcement, a federal appeals court on Tuesday said that government authorities could extract historical location data directly from telecommunications carriers without a search warrant.

* Barclays Plc, which has faced several scandals, has come under pressure from British authorities to improve its capital position. The bank said it plans to raise up to $12 billion in new capital.

* Federal authorities, continuing their campaign against insider trading, announced criminal charges on Tuesday against Sandeep Aggarwal, a former technology stocks analyst at the research firm Collins Stewart, in a case connected to last week's indictment of the hedge fund SAC Capital Advisors.

* JP Morgan Chase & Co struck a $410 million settlement with the Federal Energy Regulatory Commission (FERC), which had accused the bank of devising "manipulative schemes" to transform "money-losing power plants into powerful profit centers". JPMorgan is bracing for an even larger penalty stemming from shoddy mortgage securities it sold to the government.

* Fabrice Tourre, the former Goldman Sachs trader, was either a greedy scheming liar or a bright young executive just trying to do his job, according to dueling portraits presented during closing arguments Tuesday in the most prominent case from the financial crisis to go to trial. The trader is accused of scheming with a big hedge fund to defraud investors in connection with a 2007 trade.

* The long-running trade conflicts over solar panels between China and the United States and Europe have sown dissatisfaction all around. But Taiwan, not involved in the disputes, has gained from a U.S. tariff ruling against China, which has created a loophole benefiting Taiwanese manufacturers.

* A report by the Government Accountability Office found that the Agriculture Department lacked the proper controls to make sure the money it sent was going to the right people, with millions in U.S. subsidies going to deceased farmers.

Canada

THE GLOBE AND MAIL

* The Vancouver Island Health Authority says the stomach flu-causing norovirus has claimed nine lives and made 100 patients and 50 staff members sick this month at a seniors' home in Victoria, British Columbia, according to a report from Vancouver radio station News 1130.

* The economics of BHP Billiton Ltd's proposed C$14 billion ($13.60 billion) Jansen potash mine, near a tiny Saskatchewan town, have suddenly been thrown into disarray with the collapse of one of the world's two potash cartels. Russia's Uralkali OAO dropped out of Belarus Potash Co, marking a major shift in the global potash industry. Saskatchewan's royalties, incoming investment dollars, and employment rate are set to feel the pinch from potash prices that are expected to tumble because of the cartel's demise.

* Miami-based oil logistics company World Fuel Services Corp is objecting to a Quebec government order to assist with the cleanup of the train derailment and fiery crude-oil explosion in Lac-Megantic. In its statement, World Fuel said it did not expect to be named by the province or in any other government action because "MMA has assumed responsibility for the accident."

Reports in the business section:

* BlackBerry Ltd announced that its brand-new mid-tier phone, the Q5, is coming to Canada on Aug. 13. Previously, the lower-priced version of BlackBerry's Q10 was only available in certain overseas markets. By bringing the Q5 to Canada, BlackBerry joins the list of companies hoping to capitalize on two market trends -- the commoditization of smartphones and the end of three-year contracts.

* TransCanada Corp's proposed Energy East pipeline could give western oil producers back-door access to Asian markets at a reasonable transportation cost if it reaches Saint John. Saint John's ice-free, deep-water port would allow crude to be loaded onto the largest tankers, providing an economical route to India at least, and perhaps China, Bank of Nova Scotia senior economist Patricia Mohr said Tuesday.

* Marcel Coutu will retire as chief executive of Canadian Oil Sands Ltd after 12 years in the position, the company said Tuesday as it reported a more than doubling of second-quarter profit. Coutu, who oversaw the company's expansion to one with a market value of C$10 billion, a fivefold increase from his appointment in 2001, will retire on Jan. 1.

NATIONAL POST

* Concerns over the aging population and the rising cost of pharmaceuticals may be distracting from one of the fastest-growing healthcare expenditures in Canada -- doctors' pay. A report released by the University of Calgary School of Public Policy estimates the average paycheck earned by a typical Canadian physician has risen by about 30 percent over the past decade.

* A struggle is raging behind the scenes as the needs of Canada's military smack up against the Conservative government's desire to turn billions of dollars in planned defense spending into jobs and economic benefits. Last November, then-defense minister Peter MacKay was warned in a briefing note that a policy of always buying military equipment and services from Canadian companies would likely short-change Canada's men and women in uniform.

* Ontario's opposition parties proposed different strategies on Tuesday to get to the bottom of what they say was an attempt by former premier Dalton McGuinty's office to pressure the Speaker of the legislature to change a ruling against the government. Newly released emails show senior Liberals in McGuinty's office tried to get Speaker Dave Levac to change his preliminary finding that then-energy minister Chris Bentley was in contempt for not releasing all documents on two cancelled gas plants.

FINANCIAL POST

* Saskatchewan will feel the impact of a global potash price war triggered by Russia but the blow will be softened by industry efficiencies and continuing growth in other sectors such as oil and uranium. The price showdown was initiated by Uralkali OAO, the world's largest potash producer, which quit a marketing venture on Tuesday that controlled about 43 percent of global exports and signaled prices may fall by as much as a quarter.

* In addition to transforming the moribund department store sector in Canada, Chief Executive Richard Baker's vision for Hudson's Bay Co has long involved doing the same for Internet retail, and experts say buying Saks Inc could help him achieve it. Experts say the $2.9 billion deal is also going to force retailers to evaluate their online strategies and reach in Canada.

* WestJet Airlines Ltd Chief Executive Gregg Saretsky shrugged off concerns that the carrier's aggressive growth ambitions would undercut its profit, pointing to the company's record second-quarter earnings as evidence his plan is working. Saretsky said WestJet's growth strategy was aimed at narrowing the gap between its market share and that of rival Air Canada, in part by making it more attractive to business travelers.

China

CHINA SECURITIES JOURNAL

-- The China Banking Association revealed in a report released on Tuesday that the profit growth of listed banks this year is likely to fall to roughly 8 percent, amid a fluctuating and complex economic environment and tighter regulatory control.

-- China's property prices are not determined by the money supply, but rather the supply and demand of real estate, according to Shengsong Cheng, head of the People's Bank of China's statistics division.

-- Sinopec plans to invest 22.87 billion yuan ($3.73 billion) in environment protection measures in the next two years, putting into effect 803 projects.

SHANGHAI SECURITIES NEWS

-- China will expand simulation testing for listed domestic brokerages to include small and medium-sized institutions in August, with a threshold tentatively set at 500,000 yuan, according to various sources with knowledge of the matter.

CHINA DAILY

-- An explosion at a chemical plant in Fujian province will renew public fear of chemical projects, experts said. A cracked hydrogen pipeline caused fire during a pressure test at a paraxylene factory in Zhengzhou, destroying pipelines but no casualties or pollution has been reported.

PEOPLE'S DAILY

-- The State Administration of Industry and Commerce released a report on Wednesday which showed that at the end of 2012, almost 50 percent of China's 13 million private enterprises were five years old or less.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Alcatel-Lucent (ALU) upgraded to Buy from Neutral at Nomura
Compass Minerals (CMP) upgraded to Market Perform from Underperform at BMO Capital
Compass Minerals (CMP) upgraded to Neutral from Underweight at JPMorgan
General Growth (GGP) upgraded to Sector Perform from Underperform at RBC Capital
Lin TV (TVL) upgraded to Outperform from Market Perform at Wells Fargo
MeadWestvaco (MWV) upgraded to Sector Perform from Underperform at RBC Capital
ONEOK Partners (OKS) upgraded to Outperform from Neutral at RW Baird
Open Text (OTEX) upgraded to Buy from Hold at Benchmark Co.
Owens & Minor (OMI) upgraded to Neutral from Underperform at RW Baird
Symantec (SYMC) upgraded to Outperform from Neutral at RW Baird

Downgrades

Agree Realty (ADC) downgraded to Hold from Buy at Wunderlich
Agrium (AGU) downgraded to Neutral from Buy at Citigroup
Barclays (BCS) downgraded to Hold from Buy at Societe Generale
BioCryst (BCRX) downgraded to Underperform from Neutral at BofA/Merrill
Chart Industries (GTLS) downgraded to Equal Weight from Overweight at Morgan Stanley
Donaldson (DCI) downgraded to Underperform from Market Perform at BMO Capital
EverBank Financial (EVER) downgraded to Sell from Neutral at Compass Point
Ignite Restaurant (IRG) downgraded to Market Perform from Outperform at Raymond James
Intrepid Potash (IPI) downgraded to Underweight from Equal Weight at Barclays
Jacobs Engineering (JEC) downgraded to Market Perform from Outperform at FBR Capital
Jive Software (JIVE) downgraded to Neutral from Outperform at RW Baird
Mosaic (MOS) downgraded to Equal Weight from Overweight at Morgan Stanley
NVIDIA (NVDA) downgraded to Market Perform from Outperform at Wells Fargo
Northern Tier (NTI) downgraded to Neutral from Outperform at Macquarie
Potash (POT) downgraded to Neutral from Buy at UBS
R.R. Donnelley (RRD) downgraded to Hold from Buy at Benchmark Co.
Rockwell Automation (ROK) downgraded to Market Perform at Wells Fargo
SanDisk (SNDK) downgraded to Underperform from Market Perform at BMO Capital
Sociedad Quimica (SQM) downgraded to Neutral from Buy at Citigroup
Sociedad Quimica (SQM) downgraded to Neutral from Outperform at Credit Suisse
Xylem (XYL) downgraded to Neutral from Overweight at Atlantic Equities

Initiations

Cablevision (CVC) initiated with an Underweight at Barclays
Charter (CHTR) initiated with an Equal Weight at Barclays
Comcast (CMCSA) initiated with an Overweight at Barclays
DISH (DISH) initiated with an Overweight at Barclays
DirecTV (DTV) initiated with an Equal Weight at Barclays
Goodrich Petroleum (GDP) initiated with a Buy at SunTrust
Intelsat (I) initiated with an Equal Weight at Barclays
Liberty Media (LMCA) initiated with an Overweight at Barclays
Sirius XM (SIRI) initiated with an Overweight at Barclays
Susser Petroleum Partners (SUSP) initiated with a Buy at Benchmark Co.
Time Warner Cable (TWC) initiated with an Equal Weight at Barclays

HOT STOCKS

Ackman’s Pershing Square acquired 9.8% of Air Products (APD) worth $2.2B, CNBC reports
Cubist (CBST) to acquire Optimer (OPTR) for $10.75 per share in cash
Cubist (CBST) to acquire Trius Therapeutics (TSRX) for $13.50 per share in cash
Accenture (ACN) in talks to acquire Booz & Co., WSJ reports
NuVasive (NUVA) received federal administrative subpoena from HHS Office of the Inspector General
Kinder Morgan (KMP, KMI, KMR, EPB), Keyera to construct crude oil rail loading terminal in Edmonton
Oil States (OIS) to spin-off Accommodations business
Buffalo Wild Wings (BWLD) sees FY13 net earnings growth 17%
Wabash (WNC) CEO sees "significant increase" in Q3 trailer shipments
Teleflex (TFX) subsidiary gets FDA clearance to market ARROW catheter

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Humana (HUM), Anthera Pharmaceuticals (ANTH), Orient-Express (OEH), PolyOne (POL), Wabash (WNC), Convergys (CVG), Arthur J. Gallagher (AJG), Aflac (AFL), Take-Two (TTWO), QIAGEN (QGEN), Buffalo Wild Wings (BWLD), NeuStar (NSR), Amgen (AMGN), Fiserv (FISV), Symantec (SYMC)

Companies that missed consensus earnings expectations include:
Buenaventura (BVN), Regal-Beloit (RBC), NewMarket (NEU), Genworth (GNW), RenaissanceRe (RNR), Jones Lang LaSalle (JLL), NuVasive (NUVA), XPO Logistics (XPO), AXIS Capital (AXS), Cloud Peak Energy (CLD), CAI International (CAP)

Companies that matched consensus earnings expectations include:
Huntsman (HUN), SM Energy (SM), Weatherford (WFT), Mueller Water (MWA)

NEWSPAPERS/WEBSITES

• Bill Ackman's firm, Pershing Square Capital Management, acquired a 9.8% stake in Air Products & Chemicals (APD) valued at $2.2B and is his largest investment by cost,  CNBC reports, citing Ackman. Ackman said he thinks Air Products is "a great business that is undervalued" and has "some ideas on how to add value."
• There are signs Google (GOOG) is feeling increased pressure to calibrate how much emphasis it puts on user privacy. Executives are engaged in wide-ranging internal debates and in some cases slowing product launches to address privacy concerns, sources say, the Wall Street Journal reports
• Apple (AAPL) CEO Tim Cook met with the head of China Mobile (CHL) Chairman Xi Guohua in Beijing, the world's largest mobile carrier by subscribers and the only Chinese carrier that doesn't offer iPhones and iPads. The meeting was to discuss matters of cooperation, Reuters reports
• Wall Street banks (JPM, GS) face the prospect of increased scrutiny of their commodity businesses as U.S. regulators and lawmakers pressed for a closer look at their roles in owning warehouses and in trading everything from oil, Reuters reports
• Facebook (FB) attracts more 18- to 24-year-old people during prime-time viewing hours than any of four major television networks (CBS, FOX, CMCSA, DIS), a study from Nielsen found, Bloomberg reports
• Fiat (FIATY) failed to persuade a Delaware judge to set the value of some Chrysler Group LLC shares now owned by a union health-care fund, delaying a plan to combine the two companies, Bloomberg reports

SYNDICATE

BioCryst (BCRX) files to sell up to $20M in common stock
Cousins Properties (CUZ) 60M share Secondary priced at $10.00
Scorpio Tankers (STNG) files to sell 20M shares of common stock
TriMas (TRS) files to sell 1M shares of common stock for holders
Trovagene (TROV) raised $15M in a registered direct offering

• Low Wages Work Against Jobs Optimism (WSJ)
• Tourre’s Junior Staff Defense Seen Leading to Trial Loss (BBG)
• Russia gives Snowden asylum, Obama-Putin summit in doubt (Reuters)
• Fortress to Blackstone Say Now Is Time to Sell on Surge (BBG)
• Brazil backs IMF aid for Greece and recalls representative (FT), previously Brazil refused to back new IMF aid for Greece, says billions at risk (Reuters)
• Google unveils latest challenger to iPhone (FT)
• Swaps Probe Finds Banks Manipulated Rate at Expense of Retirees (BBG)
• Academics square up in fight for Fed (FT)
• Potash Turmoil Threatens England’s First Mine in Forty Years (BBG)
• Dell Deal Close but Not Final (WSJ)
• Corporate Bond Yield Premiums Fall in Europe as Offerings Slow (BBG)
• Apple Stores Glow Less Brightly (WSJ)

Overnight Media Digest

WSJ

* Russia granted asylum to National Security Agency leaker Edward Snowden, defying and embarrassing an Obama administration that threatened to scale back diplomatic relations between the two countries.

* A jury found former Goldman Sachs Group Inc trader Fabrice Tourre liable for misleading investors in a mortgage-linked deal that collapsed during the financial crisis, delivering a big win for the Securities Exchange Commission out to prove its mettle inside the courtroom.

* Intensifying a dispute within his own party, Senate Majority Leader Harry Reid issued a warning on Thursday to Senator Max Baucus, the Democrats' lead tax-law writer in the senate, not to proceed with an overhaul of the tax code unless there is "significant revenue" to be generated from the effort.

* Baxter International Inc investigated a joint venture in China and discovered expense violations there last year. The drug and medical-device maker said it conducted the investigation and "took actions in a prompt and responsible manner" after employees of the venture, Guangzhou Baxter Qiaoguang Healthcare Co, reported problems internally in July 2012. The disclosure comes amid heightened attention on how multinational drug makers sell in China.

* In the wake of the financial crisis, global financial regulators implemented a labyrinth of new rules to constrain banks. Now, regulators in the United States and Europe are starting to conclude the way they currently measure banks' exposure to risk may be too elaborate.

* As Google Inc pushes deeper into hardware, the Internet search giant is pulling Motorola Mobility closer even as it tries to assure device partners that the phone maker won't have an unfair advantage. Google is forming tighter connections with the cellphone maker, even debating whether it could be used to produce products like Google Glass, the company's wearable computer.

* The pain reliever acetaminophen, often sold as Tylenol, can cause rare but serious skin diseases, the Food and Drug Administration said on Thursday. The FDA said that in searching its database of adverse events, it found 107 such cases between 1969 and 2012.

* Sprouts Farmers Market Inc's shares more-than-doubled after the specialty grocery chain's initial public offering, the latest sign of healthy demand for natural-foods retailers. Sprouts' stock rose 123 percent to close at $40.11 on the Nasdaq on Thursday, from an offering price of $18, the largest first-day pop for a U.S.-listed IPO since March 2011.

* Carl Icahn has filed a lawsuit against Dell Inc and its board to prevent the computer maker from further delaying a vote scheduled on Friday or changing the voting rules for a proposed buyout by Michael Dell.

* Chesapeake Energy Corp's shares jumped 7 percent on Thursday to the highest level in more than a year, as the energy producer reported rising oil output and its new chief executive Doug Lawler pledged to close a persistent gap between its spending and cash flow by next year.

FT

Lloyds Banking Group shares rose above the price the government paid for its 21 billion pound ($31.84 billion)stake after the bank swung back to profit in the first half, fuelling hopes that taxpayers would make a profit on the bank's rescue.

Former Goldman Sachs trader Fabrice Tourre was found liable for fraud by a jury for his role in a derivatives deal, following a trial stemming from the financial crisis.

Britain's manufacturing activity grew at its fastest pace in almost two and a half years in July, the purchasing managers index published on Thursday showed.

Britain's top accounting watchdog has decided not to continue with a long-running probe examining the auditing of commissions paid by BAE Systems, claiming it would have to delve too far back into the past.

Tour operator Thomas Cook, which was on the brink of collapse two years ago, cut its net debt and made a profit on an underlying basis in its third quarter.

Ian Andrews has stepped down as chairman of Britain's Serious Organised Crime Agency after failing to register his role as director of a management consultancy.

AIG announced its first dividend and share buyback since the insurer was bailed out in 2008, as the company reported improved results for the second quarter.

NYT

* Fabrice Tourre, the former Goldman Sachs Group Inc trader at the center of a toxic mortgage deal sold to investors, was found liable on six of the seven civil charges against him, giving the Securities Exchange Commission its first significant courtroom victory in a case stemming from the financial crisis.

* President Barack Obama is said to be considering three people to replace Ben Bernanke as Federal Reserve chairman- Lawrence Summers, President Obama's former economic policy adviser; Janet Yellen, the vice chairwoman at the Federal Reserve; and Donald Kohn, a former Fed vice chairman. Summers appears to be the strongest contender.

* Management and financial turmoil has plagued J.C. Penney in recent months, unfolding along with a trial over whether the company could sell Martha Stewart's goods. By this Thursday, when closing arguments for the trial wrapped up, Penney appeared to be in an even worse position, also being forced to dispute reports that lender CIT Group Inc had stopped financing its shipments by small vendors.

* New York's top prosecutor, attorney general Eric Schneiderman is investigating some of the nation's largest banks in connection with their use of credit-reporting databases that disqualify people seeking to open checking or savings accounts - an inquiry that has gained urgency as the ranks of the un-banked has swelled in the aftermath of the financial crisis.

* Regulators are investigating Bank of America Corp and Merrill Lynch as both companies try to move past the problems of the financial crisis. Bank of America disclosed on Thursday that the Justice Department was weighing whether to bring a civil complaint against it over claims that the bank had improperly handled securities backed by jumbo loans.

* American automakers, buoyed this year by robust sales in pickups, said on Thursday that smaller cars and midsize sedans were helping spur growth in the industry to levels not seen since before the recession. Over all, it was the strongest July since 2006 for the industry, with sales rising 14 percent, to 1.3 million vehicles.

* Sony Corp said on Thursday that it was weighing "carefully" shareholder Daniel Loeb's proposal to spin off part of its entertainment arm, but executives said signs of a turnaround in the company's long suffering electronics business showed that their strategy was on track.

* The growth of tests for painkillers has led to concerns about their accuracy and whether some companies and doctors are exploiting them for profit. In 2013, sales at such companies are expected to reach $2 billion, up from $800 million in 1990, according to consulting company Frost & Sullivan.

Canada

THE GLOBE AND MAIL

* The federal investigation into the fatal Lac-Mégantic train derailment and fiery crude oil explosion, after a runaway train carrying 72 cars of crude crashed into the small town's center in early July, has shifted from Quebec to North Dakota, where the oil was drilled, purchased and loaded onto rail cars. A team of investigators was recently dispatched to North Dakota after experts confirmed that the oil reacted "in a way that was abnormal".

* Ontario Premier Kathleen Wynne was dealt a setback in her first electoral test as leader, with the opposition parties chipping away at her government's hold on the province in the by-elections. Progressive Conservatives won in Etobicoke-Lakeshore, giving the party its first seat in Toronto in a decade. But they failed to win any of the other four races.

Reports in the business section:

* TransCanada Corp and Irving Oil Ltd are joining forces to market Canada's crude oil to the world, officially launching the proposed C$12 billion ($11.62 billion) Energy East pipeline and a C$300 million deep-water marine terminal to be built off Saint John, New Brunswick. The pipeline, subject to regulatory approval, promises to unlock new markets for landlocked Western Canadian suppliers by giving them access to eastern refineries and global export markets through ports at Quebec City and Saint John.

* After its second major writedown in just six months, Barrick Gold Corp is trying to woo back shaken investors by focusing on assets closer to home. The world's largest gold miner announced a hefty $8.7 billion after-tax impairment charge, leaving the company with a second-quarter loss of $8.6 billion. In response to the losses, the Toronto-based company plans to shed, suspend or shut high cost mines and continue to cut costs.

NATIONAL POST

* Mayor Rob Ford lost an important ally at City Hall, but gained one at Queen's Park, as Etobicoke-Lakeshore sent Deputy Mayor Doug Holyday to the provincial legislature Thursday. The decision to install a Progressive Conservative in a seat long held by the Liberals is a major Toronto breakthrough for the PC's and a vote of confidence for Mayor Rob Ford, who campaigned tirelessly on behalf of his longtime friend.

* In the hunt for evidence about Senator Mike Duffy, Nigel Wright and a backroom deal struck in the Prime Minister's Office to repay Duffy's expenses, the Royal Canadian Mounted Police has repeatedly tried to glean information from a senior television journalist. CTV Ottawa bureau chief Robert Fife's name appears in a court document filed by the RCMP in June.

* Senator Patrick Brazeau claimed a home he didn't own as his primary residence, didn't stay there even when he visited, and may never have lived there over the last two years, the Royal Canadian Mounted Police (RCMP) allege in court documents made public on Thursday. The RCMP say Brazeau claimed as his primary residence a home his father owns in Maniwaki, Quebec, far enough from Parliament Hill to qualify the senator for a $22,000 a year housing allowance from the Senate.

FINANCIAL POST

* Canada's government has begun a search for investment banks to sell its 10 percent, $5.1 billion stake in General Motors Co, but hasn't decided on the timing of any sale. ()

* Canadian auto sales hit a record in July as cars and trucks continue to fly off dealership lots at a blistering pace in 2013. Chrysler Canada took the sales title in July in this country with sales up 8.4 percent year-over-year during the month to 26,066 units. The Detroit automaker said it was its best July on record, driven by a 20 percent increase year over year in passenger car sales.

China

SHANGHAI SECURITIES NEWS

- China needs to firm up its capital market regulation and avoid the tendency to focus on stringent approval processes, while maintaining light supervision, said Xiao Gang, chairman of the China Securities Regulatory Commission.

- Minsheng Bank has registered an e-commerce subsidiary, according to sources with knowledge of the matter.

- The China Insurance Regulatory Commission will resume granting life insurers approval to open new subsidiaries after a two-year hiatus, potentially benefiting well-capitalized players.

CHINA DAILY

- Shanghai High People's Court on Thursday ordered Johnson & Johnson Medical China Ltd to pay 530,000 yuan ($86,500) to a former dealer for engaging in a monopoly, in the first case of a Chinese court ruling a Fortune 500 firm to be contravening anti-monopoly legislation.

SHANGHAI DAILY

- China's average new-home prices in 100 cities rose 0.87 percent in July from June to 10,347 yuan per square meter, marking the 14th consecutive month of increase, said the China Index Academy on Thursday.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Ferro (FOE) upgraded to Buy from Hold at Deutsche Bank
FleetCor (FLT) upgraded to Overweight from Equal Weight at Barclays
Groupon (GRPN) upgraded to Equal Weight from Underweight at Evercore
ITT Corp. (ITT) upgraded to Market Perform from Underperform at FBR Capital
LinkedIn (LNKD) upgraded to Buy from Hold at Cantor
Mohawk (MHK) upgraded to Outperform from Market Perform at Raymond James
Mylan (MYL) upgraded to Overweight from Equal Weight at Morgan Stanley
Pacific Biosciences (PACB) upgraded to Neutral from Underweight at Piper Jaffray
ResMed (RMD) upgraded to Buy from Hold at Deutsche Bank
Time Warner Cable (TWC) upgraded to Outperform from Market Perform at Raymond James

Downgrades

ADP (ADP) downgraded to Neutral from Positive at Susquehanna
Applied Industrial (AIT) downgraded to Hold from Buy at Wunderlich
BRE Properties (BRE) downgraded to Neutral from Buy at UBS
Broadcom (BRCM) downgraded to Neutral from Buy at UBS
Cbeyond (CBEY) downgraded to Market Perform from Outperform at FBR Capital
DirecTV (DTV) downgraded to Neutral from Buy at Guggenheim
Edison International (EIX) downgraded to Neutral from Outperform at Credit Suisse
Flow International (FLOW) downgraded to Neutral from Buy at Roth Capital
Fly Leasing (FLY) downgraded to Market Perform from Outperform at Wells Fargo
GameStop (GME) downgraded to Neutral from Outperform at Credit Suisse
Guidance Software (GUID) downgraded to Sell from Hold at Benchmark Co.
Halozyme (HALO) downgraded to Equal Weight from Overweight at Barclays
Ligand (LGND) downgraded to Sell from Hold at Cantor
Linear Technology (LLTC) downgraded to Neutral from Buy at UBS
MRC Global (MRC) downgraded to Market Perform from Outperform at Raymond James
Marathon Petroleum (MPC) downgraded to Neutral from Outperform at Macquarie
Mosaic (MOS) downgraded to Neutral from Buy at UBS
Onyx Pharmaceuticals (ONXX) downgraded to Hold from Buy at Jefferies
Protective Life (PL) downgraded to Outperform from Strong Buy at Raymond James
Select Income REIT (SIR) downgraded to Sector Perform from Outperform at RBC Capital
Selective Insurance (SIGI) downgraded to Market Perform at Keefe Bruyette
Taminco (TAM) downgraded to Neutral from Buy at UBS
United Stationers (USTR) downgraded to Hold from Buy at Wunderlich
ValueClick (VCLK) downgraded to Hold from Buy at Needham
ValueClick (VCLK) downgraded to Underperform from Market Perform at Raymond James
ViroPharma (VPHM) downgraded to Market Perform from Outperform at Leerink

Initiations

Calpine (CPN) initiated with a Hold at Drexel Hamilton
Dynegy (DYN) initiated with a Buy at Drexel Hamilton
Electronic Arts (EA) initiated with a Buy at Benchmark Co.
NRG Energy (NRG) initiated with a Buy at Drexel Hamilton

HOT STOCKS

AIG (AIG)  declares dividend of 10c per share, to buy back up to $1B shares
Active Network (ACTV) received expressions of interest, exploring alternatives
BAE Systems (BAESY) awarded $534M contract to sustain U.S. ICBMs by U.S. Air Force
Bank of America (BAC) says DoJ intends to file charges related to securitizations
Credit Suisse (CS) divests CFIG to Grosvenor Capital Management
ImmunoGen (IMGN) announces FDA acceptance of IND for novel EGFR-targeting ADC
Lockheed Martin (LMT) awarded $223.31M government contract
Novartis (NVS) says FDA expands Menveo use for infants, toddlers
Pacira Pharmaceuticals (PCRX) Exparel Phase 3 trial did not meet primary endpoint
ResMed (RMD) increases dividend 47% to 25c
Royal Bank of Scotland (RBS) names Ross McEwan as Chief Executive
Tesoro (TSO) raises quarterly dividend by 25% to 25c
Theravance (THRX) announces FDA Advisory Committee to review Anoro Ellipta
Universal American (UAM) declares $1.60 special cash dividend
Weight Watchers (WTW) names James Chambers as President and CEO, cuts outlook

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

ImmunoGen (IMGN), Alliant Energy (LNT), Consolidated Edison (ED), LRR Energy (LRE), Approach Resources (AREX), Tellabs (TLAB), PerkinElmer (PKI), MasTec (MTZ), ZAGG (ZAGG), Globus Medical (GMED), AVG Technologies (AVG), Cubic (CUB), Synaptics (SYNA), SciQuest (SQI), Move, Inc. (MOVE), MRC Global (MRC), Southwestern Energy (SWN), Addus HomeCare (ADUS), Alaska Communications (ALSK), SS&C Technologies (SSNC), Audience (ADNC), MaxLinear (MXL), ResMed (RMD), Entravision (EVC), Cascade Microtech (CSCD), Active Network (ACTV), Autobytel (ABTL), OpenTable (OPEN), Hercules Technology (HTGC), Vistaprint (VPRT), ServiceSource (SREV), PerkinElmer (PKI), PC Connection (PCCC), Virtusa (VRTU), Quantum (QTM), Kodiak Oil & Gas (KOG), AIG (AIG), CEC Entertainment (CEC), Weight Watchers (WTW), AMN Healthcare (AHS), Guidance Software (GUID), FEI Company (FEIC), YY Inc. (YY), AtriCure (ATRC), Web.com (WWWW), Skullcandy (SKUL), PROS (PRO), HCI Group (HCI), Eastern Insurance (EIHI), Activision Blizzard (ATVI), FleetCor (FLT), Silver Spring Network (SSNI), LeapFrog (LF), Pacific Biosciences (PACB), DXP Enterprises (DXPE), LinkedIn (LNKD), MercadoLibre (MELI), Omnicell (OMCL), Edison International (EIX), Fluidigm (FLDM), FBL Financial (FFG), NIC Inc. (EGOV)

Companies that missed consensus earnings expectations include:

Eaton (ETN), Portland General Electric (POR), Liberty Global (LBTYA), Berry Plastics (BERY), Harris Teeter (HTSI), Universal American (UAM), Arbitron (ARB), North American Energy (NOA), Mercer (MERC), TG Therapeutics (TGTX), Erie Indemnity (ERIE), Inphi (IPHI), TTM Technologies (TTMI), Uroplasty (UPI), Westport Innovations (WPRT), Leap Wireless (LEAP), Rockwell Medical (RMTI), SBA Communications (SBAC), eMagin (EMAN), Endocyte (ECYT), Bill Barrett (BBG)

Companies that matched consensus earnings expectations include:
Sierra Wireless (SWIR), Immersion (IMMR), Kemper (KMPR), ICF International (ICFI), ON Semiconductor (ONNN), Ellie Mae (ELLI), RealPage (RP), Rudolph Technologies (RTEC), Spansion (CODE), Clear Channel Outdoor (CCO), Chef's Warehouse (CHEF), Financial Engines (FNGN), Einstein Noah (BAGL)

NEWSPAPERS/WEBSITES

Michael Dell, Silver Lake close to deal with Dell (DELL) board, WSJ reports
Apple (AAPL) decision in Samsung case delayed until August 9, Bloomberg reports
Hewlett-Packard (HPQ) developing smartphones with Taiwan makers, DigiTimes says
ICU Medical (ICUI) in exclusive talks on sale, Bloomberg says
Panel to develop new gainful employment rule, Politico reports
Sony (SNE) Mobile may be only Japan-based handset vendor left, DigiTimes says
Yahoo (YHOO) CEO Mayer, activist Loeb parted on bad terms, NY Post says

SYNDICATE

Athlon Energy (ATHL) 15.79M share IPO priced at $20.00
Boyd Gaming (BYD) 16.5M share Secondary priced at $12.00
Control4 (CTRL) 4M share IPO priced at $16.00
Generac (GNRC) files to sell 7.03M shares of common stock for holders
Liberty Property (LRY) 21M share Secondary priced at $36.00
Marrone Bio (MBII) 4.75M share IPO priced at $12.00
Organovo (ONVO) files to sell common stock
Pure Cycle (PCYO) files $15M mixed securities shelf, 1.98M shares of stock for holders
Vantiv (VNTV) files to sell 20M shares of common stock for holder
Williams Partners (WPZ) files to sell 21.5M common units

• Washington Post Company Chairman and CEO Donald Graham talks about the sale, what it means for the future of The Post (WaPo)
• Private-equity firms are adding debt to companies they own to fund payouts to themselves at a record pace (WSJ)
• U.S., U.K. Urge Citizens to Leave Yemen (WSJ)
• India Names Rajan Central Bank Governor as Rupee Plunges (BBG)
• Family Offices Chasing Wealthy’s $46 Trillion in Assets (BBG)
• UK 'bad bank' repays $2.9 billion to taxpayers in first half (Reuters)
• Sony rebuffs Daniel Loeb’s push for entertainment spin-off (FT)
• Public Pensions Up 12% Get Most in 2 Years as Stocks Soar (BBG)
• Hidden Billionaire Found With Food Fortune in California (BBG)
• Fonterra under fire over milk scare; more product recalls (Reuters)
• Crédit Agricole Profit Rises After Greek  (WSJ)
• Four jailed for neo-Nazi killing spree that terrified Hungary's Roma (Reuters)
• Australia PM Rudd criticizes Rupert Murdoch role in election race (Reuters)
• Goldman to Axa Ride London’s Crossrail Office Boom (BBG)

Overnight Media Digest

WSJ

* Jeff Bezos, Amazon.com Inc's Chief Executive, is buying the Washington Post for $250 million in an out-of-the-blue deal that captures the newspaper industry's economic decline and the shift of power from old media to Silicon Valley.

* International Business Machines Corp has enlisted Google Inc, chip maker Nvidia Corp and some other high-tech allies for a collective effort to catapult an IBM chip technology out of a shrinking niche. The alliance, which the companies plan to announce on Tuesday, would allow many companies to license IBM microprocessor designs.

* Neiman Marcus Group Inc has hired Credit Suisse Group AG , J.P. Morgan Chase & Co and Bank of America Merrill Lynch as lead underwriters for a planned public stock offering, after the luxury retailer spent the summer exploring a sale to a sovereign wealth fund.

* Sony Corp rejected hedge fund investor Daniel Loeb's proposal to sell part of its entertainment business through a public offering, saying that holding full ownership of its movies and music divisions are fundamental to the company's future.

* Carl Icahn bought four million more shares of Dell Inc last week, according to a securities filing, upping his stake slightly in an ongoing fight against the technology company's buyout. Icahn now holds 8.9 percent of the company and is the largest shareholder after founder and Chief Executive Michael Dell.

* Time Warner Cable Inc proposed an end to the three day old blackout of CBS Corp on the cable operator's TV channel lineup, suggesting that viewers could pay a la carte for the network, in other words, allowing cable subscribers the freedom to pick CBS individually. CBS called the proposal a "sham."

* The South Korean government on Monday expressed concern over the Obama administration's decision to veto an import ban on some Apple Inc products in the United States, saying the decision may negatively affect Samsung Electronics Co's patent rights.

* Private equity firm Hellman & Friedman LLC agreed to acquire insurance brokerage Hub International Ltd for more than $4 billion from a rival buyout firm, in a deal that will help the Chicago broker continue its rapid expansion, including a bigger move into Latin America.

* The Federal Bureau of Investigation has discovered vulnerabilities in the government's system for preventing market-moving economic reports from leaking to traders before public release.

FT

HSBC on Monday said it may have to pay $1.6 billion in damages to the U.S. government over bad mortgages, higher than originally forecast.

A US regulator has accused a trading team at BP of manipulating gas prices in the aftermath of a 2008 hurricane by moving natural gas through a pipeline linking two Texas hubs.

French bank Credit Agricole - accidentally - published better than expected quarterly results on its website on Monday, ahead of its scheduled results announcement on Tuesday.

Private equity group Hellman & Friedman said it would pay $4.4 billion to buy Hub International from Apax Partners in the biggest ever takeover in the insurance broking industry.

Amazon.com founder Jeff Bezos plans to buy the Washington Post for $250 million, ending an era of family control at the newspaper that struggled in an age of online media.

NYT

* The Washington Post, the newspaper whose reporting helped topple a president and inspire a generation of journalists, is being sold for $250 million to Amazon.com Inc founder Jeffrey Bezos, in a deal that has shocked the industry.

* After gun laws were strengthened in several states in the wake of the Newtown, Connecticut, school shooting, some manufacturers are relocating to more gun-friendly states. Governors and politicians from states eager to embrace the industry have descended on places where they are not so popular - like Connecticut, Maryland, New York and Colorado - offering tax breaks and outright cash grants to persuade gun manufacturers to relocate.

* Government authorities are homing in on a lucrative loophole that allows online lenders to offer short-term loans at interest rates that often exceed 500 percent annually, the latest front in a crackdown on the payday lending industry.

* Sony Corp said late on Monday that it planned to keep all of its vast entertainment arm, rejecting a proposal to spin off the unit by one of its biggest investors, activist hedge fund manager Daniel Loeb. The decision, announced in a publicly disclosed letter to Loeb, raises questions about whether he will now stage a public fight with Sony.

* The reinsurance arm of Third Point, the hedge fund run by Daniel Loeb, disclosed on Monday that it is seeking to raise up to $370.6 million from its forthcoming initial public offering. Third Point Reinsurance said that it planned to sell 22.2 million shares at $12.50 to $14.50 a share.

* New Zealand dairy producer Fonterra apologized on Monday for the contamination of an infant milk formula ingredient with a potentially toxic strain of bacteria. The contamination could hurt sales of dairy products, the leading export of New Zealand, to its most crucial market, China.

* European Aeronautic Defense and Space Co (EADS), the parent company of Airbus, confirmed on Monday that it had received a letter from hedge fund TCI, urging it to sell its 46 percent stake in Dassault Aviation, the French maker of the Rafale fighter and the popular Falcon business jet

Canada

THE GLOBE AND MAIL

* The federal Conservative government consulted with both environmental organizations and industry associations before making controversial changes to the Fisheries Act last year, but listened primarily to industry. Documents released recently to The Globe and Mail under federal access to information laws suggest that the wording of a significant change was offered by industry associations.

Reports in the business section:

* Barrick Gold Corp is facing yet another class action lawsuit from a group of investors in the Canadian mining giant as it struggles to adjust to faltering metal prices. The suit alleges Barrick violated federal securities laws by making false and misleading statements, and by concealing information related to the cost and development schedule for its Pascua-Lama project, one of Barrick's South American mines.

* Bombardier Inc says it can still maintain its position by year end as the world's largest business aircraft manufacturer despite falling behind U.S. rival Gulfstream Aerospace Corp in terms of the value of planes shipped in the second quarter. U.S.-based Gulfstream shipped 36 aircraft worth $1.83 billion in the quarter, compared with 45 planes valued at $1.59 billion for Bombardier.

NATIONAL POST

* Days after a deadly Toronto shooting sparked debate, Alberta's police watchdog is looking into three incidents that saw Royal Canadian Mounted Police officers use their firearms or a Taser, resulting in two dead and two wounded.

* An intercepted secret message between al-Qaeda chief Ayman al-Zawahri and his deputy in Yemen about plans for a major terror attack was the trigger that set off the current shutdown of many U.S. embassies, two officials told The Associated Press on Monday.

* Canada's high commission in Dhaka, Bangladesh, reopened its doors on Monday after a "security precaution" resulted in one-day closure of the embassy on Sunday, according to the Foreign Affairs Department.

FINANCIAL POST

* Even if Canadian home sales continues to slide, it could take some time before home ownership rates are actually impacted. However, the risk to the Canadian economy is the buyers entering the market today are on the fringe, much the way they were in the United States before the housing market crashed there.

* At least three governments and two energy industry groups are leading what they hope will be a "pan-Canadian" approach to find ways to improve the country's pipelines. Alberta, British Columbia and Natural Resources Canada, as well as the Canadian Association of Petroleum Producers and the pipeline association are setting up the collaborative, which is expected to be operational by late fall.

* TransCanada Corp's planned 2,700 mile pipeline, which will bring crude from Alberta to refineries and ports on the East Coast, has the potential to upturn the dynamics of the North Atlantic oil trade squeezing out some imported crude to North America and revitalizing once ailing refineries.

* From recent initiatives targeting offshore tax havens and multi-millionaire tax cheats, the Canada Revenue Agency (CRA) has now been cracking its disciplinary whip on middle-income operators, including waitresses, used car salesmen, and even maple syrup producers. Dozens of cross country pilot projects were ordered by the CRA to help develop techniques for eradicating the underground economy, and indicates a change in agency priority to spotlight middle-income tax avoiders, according to a Canadian tax expert

China

CHINA SECURITIES JOURNAL

- China should persevere with policies to regulate and control the property market amid the complex domestic economic environment, said Xu Shaoshi, director of the National Development and Reform Commission (NDRC) at a conference held on Monday.

SHANGHAI SECURITIES JOURNAL

The ministry of environment will toughen environmental protection standards for six base metals industries as part of the government's anti-pollution efforts, the paper said, citing unidentified sources. The ministry will set emission standards for industrial pollutants and the plan will help accelerate the consolidation of the industry.

CHINA DAILY

- China is drafting detailed measures to promote growth in cross border e-commerce that will likely take effect later this year, as outbound shipments through the internet are increasingly important for Chinese exporters and manufacturers, said a source from the ministry of commerce.

SHANGHAI DAILY

- China will continue to introduce policies and take measures to encourage private investment to spur economic development and create jobs, said the National Development and Reform Commission. Private investment accounted for 64 percent of the total fixed-asset investment in China, compared to 61.4 percent by the end of last year, the NDRC said.

- There has been a sharp decrease in Chinese household confidence in the economy, amid slower growth in business activity and income, according to a survey released by the China Wealth Index on Monday.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Audience (ADNC) upgraded to Buy from Hold at Benchmark Co.
Fiserv (FISV) pgraded to Overweight from Equal Weight at First Analysis
Meadowbrook (MIG) upgraded to Sector Perform from Underperform at RBC Capital
Old Dominion (ODFL) upgraded to Outperform from Sector Perform at RBC Capital
FreightCar America (RAIL) upgraded to Neutral from Underperform at Longbow
Responsys (MKTG) upgraded to Outperform from Neutral at Credit Suisse
SurModics (SRDX) upgraded to Outperform at Barrington citing market share
Vocera (VCRA) upgraded to Outperform from Market Perform at Wells Fargo
Volcano (VOLC) upgraded to Buy from Hold at Canaccord

Downgrades

American Eagle (AEO) downgraded to Hold from Buy at Brean Capital
American Eagle (AEO) downgraded to Neutral from Buy at Janney Capital
Cardtronics (CATM) downgraded to Neutral from Buy at Compass Point
Chico's FAS (CHS) downgraded to Neutral from Buy at Janney Capital
DSW (DSW) downgraded to Hold from Buy at BB&T
Deere (DE) downgraded to Underperform from Market Perform at William Blair
First Financial (FFIN) downgraded to Underperform from Neutral at Sterne Agee
Fresenius Medical (FMS) downgraded to Hold from Buy at Societe Generale
GlaxoSmithKline (GSK) downgraded to Neutral from Buy at Citigroup
IBM (IBM) downgraded to Underperform from Neutral at Credit Suisse
Kosmos (KOS) downgraded to Neutral from Buy at Citigroup
McDermott (MDR) downgraded to Hold from Buy at BB&T
NIC Inc. (EGOV) downgraded to Market Perform from Outperform at Barrington
Strategic Hotels (BEE) downgraded to Neutral from Overweight at JPMorgan
Titan Machinery (TITN) downgraded to Underperform from Market Perform at William Blair
Unilever (UN) downgraded to Neutral from Overweight at JPMorgan
Web.com (WWWW) downgraded to Neutral from Buy at Roth Capital

Initiations

Acuity Brands (AYI) initiated with a Neutral at Goldman
CDW Corporation (CDW) initiated with a Buy at Deutsche Bank
CDW Corporation (CDW) initiated with a Buy at Goldman
CDW Corporation (CDW) initiated with a Neutral at RW Baird
CDW Corporation (CDW) initiated with an Overweight at JPMorgan
Fifth Street Senior (FSFR) initiated with a Buy at Deutsche Bank
HD Supply (HDS) initiated with a Buy at UBS
HD Supply (HDS) initiated with a Neutral at Goldman
HD Supply (HDS) initiated with an Outperform at Credit Suisse
HD Supply (HDS) initiated with an Outperform at RW Baird
HD Supply (HDS) initiated with an Outperform at Wells Fargo
TTM Technologies (TTMI) initiated with a Buy at Canaccord

HOT STOCKS

Carl Icahn bought 4M shares of Dell (DELL) on August 1
Chesapeake Lodging (CHSP) raises quarterly dividend by 8.3% to 26c per share
Chevron (CVX) to pay $2M for Richmond refinery fire
Codexis (CDXS) receives notice alleging breach of Dyadic license agreement
Cutera (CUTR) authorizes $10M repurchase plan in addition to 10b5-1 plan
Emerson (EMR) to sell 51% stake in embedded computing and power business
Guggenheim reports 15% stake in Diamond Resorts (DRII), to nominate directors
JA Solar (JASO) to supply solar modules to Phoenix Solar for Simon Solar Farm
Jeff Bezos to purchase Washington Post (WPO) newspaper publishing business for $250M
Kindred Healthcare (KND) initiates quarterly cash dividend of 12c per share
MFP Investors reports 8.1% stake in ALCO Stores (ALCS), says $14 offer 'inadequate'
Monarch reports 18.63% stake in Star Bulk Carriers (SBLK), seeks board seat
National Healthcare (NHC) authorizes $25M share repurchase program
Quidel (QDEL) gets FDA clearance for Sofia hCG fluorescent immunoassay
Regeneron (REGN), Bayer report positive results from two Phase 3 trials of Eylea
SAC Capital reports 5.1% passive stake in Children's Place (PLCE)
Siemens (SI) announces $966.8M order from Saudi Aramco
Sony (SNE) says spinning off entertainment assets not consistent with strategy
Spectra Energy Partners (SEP) to acquire Spectra (SE) assets for partner units, $2.2B cash
Spectrum Brands (SPB) board approves new $200M common stock repurchase program
The Medicines Co. (MDCO) reports positive results from Phase III trial

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

Pacira Pharmaceuticals (PCRX), Dawson Geophysical (DWSN), Cognizant (CTSH), Global Geophysical (GGS), Bristow Group (BRS), Endurance Specialty (ENH), Legacy Reserves (LGCY), Hillenbrand (HI), DealerTrack (TRAK), GT Advanced (GTAT), PAA Natural Gas Storage (PNG), Alleghany (Y), Fidelity National (FNF), Vocera (VCRA), QCR Holdings (QCRH), Ducommun (DCO), Stone Energy (SGY), Entercom Comm (ETM), PDI, Inc. (PDII), American Science & Engineering (ASEI), Hologic (HOLX), BroadSoft (BSFT), Black Diamond (BDE), Sykes Enterprises (SYKE), Emergent BioSolutions (EBS), RigNet (RNET), Unum Group (UNM), Qualys (QLYS)

Companies that missed consensus earnings expectations include:

Spectra Energy (SE), Cinemark (CNK), Spectrum Brands (SPB), EchoStar (SATS), PetroQuest Energy (PQ), Commtouch (CTCH), Zebra Technologies (ZBRA), Allot Communications (ALLT), Endeavour (END), Skilled Healthcare (SKH), Otter Tail (OTTR), Alon USA Partners (ALDW), Kindred Healthcare (KND), Preferred Apartment (APTS), Ellington Financial (EFC), Atlas Pipeline Partners (APL), Midstates Petroleum (MPO), Anaren (ANEN), McDermott (MDR), Morgans Hotel (MHGC), EXCO Resources (XCO), Capital Senior Living (CSU), Rosetta Resources (ROSE), Black Hill (BKH), FairPoint (FRP), ProAssurance (PRA), BMC Software (BMC), Synageva (GEVA), Plains All American (PAA), American Vanguard (AVD), Hill International (HIL), Jamba (JMBA), Cutera (CUTR), ArthroCare (ARTC), SIGA Technologies (SIGA), Wright Medical (WMGI), Nautilus (NLS)

Companies that matched consensus earnings expectations include:

Vitamin Shoppe (VSI), RDA Microelectronics (RDA), Tesoro Logistics (TLLP)

NEWSPAPERS/WEBSITES

Alliant Techsystems (ATK) in talks on Bushnell buy, Reuters says
GM (GM) slashes Chevy Volt price by $5,000 to boost sales, Bloomberg says
IBM (IBM) furloughs hardware staff to cut costs, Bloomberg says
Morgan Stanley (MS) exploring options for commodities unit, Reuters reports
NAND flash prices to return to growth in September, October, DigiTimes says

SYNDICATE

Advent Software (ADVS) files to sell 7.26M shares for SPO Advisory
Allison Transmission (ALSN) files to sell 16.6M shares of common stock for holders
Capital Product (CPLP) files to sell 11.9M common units representing limited partners
Einstein Noah (BAGL) files to sell 1.5M shares of common stock for holders
Northstar Realty (NRF) files to sell 35M shares of common stock
PDC Energy (PDCE) raises stock offering to 4.5M shares from 3.75M shares
TRW Automotive (TRW) files to sell 10.9M shares of common stock for holders

The good, if fake, Chinese "data" releases continued for a second day in row, dominating the overnight headlines with a barrage that included CPI, PPI, retail sales, industrial production, fixed investment, money growth, car sales, and much more (summary recap below). Needless to say, all the data was just "good enough" or better than expected. Yet judging by both the Chinese market (which is barely up, following the drop on yesterday's "surge" in made up trade data) and the US futures, not even algos are dumb enough to fall for the goalseek function in China_economy.xls. Either that, or traders are taking the "rebound" in the Chinese economy as a further indication that the Taper (which will  take place in September), will take place in September. And since global risk sentiment continues to be driven by the USDJPY, the Yen pushing to overnight highs is not helping the "China is bullish" narrative.

For those who take Chinese data seriously (which would mean not China's Premier Li), below Follow a quick recap of the main Chinese data via BofA:

CPI inflation remains unchanged in July

The 2.7% CPI inflation reading in July is slightly below the market expectation of 2.8% and unchanged from June. PPI inflation rose to -2.3% yoy in July from -2.7% in June, but the -2.3% reading is also below market expectation at -2.1% (and of course is negative). Since CPI inflation is still not close to the 3.5% cap set by premier Li, today's inflation data should be positive for markets as the muted inflation reading should provide the necessary room for implementing a mini fiscal stimulus and avoiding monetary tightening

CPI inflation remains unchanged in July

The 2.7% CPI inflation reading in July is slightly below the market expectation of 2.8% and unchanged from June. PPI inflation rose to -2.3% yoy in July from -2.7% in June, but the -2.3% reading is also below market expectation at -2.1% (and of course is negative). Since CPI inflation is still not close to the 3.5% cap set by premier Li, today's inflation data should be positive for markets as the muted inflation reading should provide the necessary room for implementing a mini fiscal stimulus and avoiding monetary tightening. To get a comprehensive view of current policy stance and policy framework, see Dust finally settles on Premier Li's "Growth floor", 23 July.

Li's Phillips Curve and CPI inflation in 2H13

Note China's premier Li set 3.5% CPI inflation as the cap of his "appropriate zone" of macro economy (meaning that he will take actions to cool down the economy if CPI inflation exceeds 3.5%). By analyzing the current momentum, we predict that though monthly yoy CPI inflation will quite likely exceed 3.0% yoy in the remainder of this year, we believe the chance of surpassing 3.5% is small. And even though for some individual months CPI inflation could be quite close to 3.5% (especially in November), this might be mainly due to a low comparison base and it's likely CPI inflation would dip below 3.5% again. What's more relevant is that average CPI inflation in both 3Q13 and 4Q13 is likely to be below 3.5%, in our view. That said, though we don't expect tightening of monetary policies, we believe the chance of rate cuts is extremely small. The PBoC at present will likely aim to cap interbank rates (especially 7-day repo at below 4.0%) with short-term tools (such as reverse repo, SLO and SLF). 

Data details: Flat food prices

By breakdown, food inflation in yoy terms edged up slightly to 5.0% in July from 4.9% in June. In particular, vegetable prices rose by 11.8% yoy after increasing 9.7% in June, contributing 32bp to the 2.7% CPI, and meat prices increased by 5.9% after rising 4.8%, contributing 42bp to CPI. Within the meat category, pork prices rose by 3.0% after rising 1.1% in June. Non-food yoy CPI inflation remained flat at 1.6% in July. 

In month-on-month terms (not seasonally adjusted), food prices were flat in July from June while non-food prices increased by 0.2%. Vegetable prices rose by 2.2% in July after dropping 5.2% in June, and pork increased by 1.7% after rising 4.6% in June. On the other hand, fruit and egg prices dropped by 6.5% and 1.4%, respectively, offsetting the higher vegetable and meat prices. How about sequential data with seasonal adjustment? A rudimentary way is to just check readings a year ago. Since food prices declined by 0.1% from June to July in 2012, it seems that food prices rose more this year. We believe the record hot weather in July contributed a bit to the rise of vegetable and meat prices. 

Regarding PPI, it edged up to -2.3% yoy in July from -2.7% in June. In mom terms, it rose to -0.3% in July from -0.6% in June. The % mom PPI inflation may rise to positive territory in coming months with the help of improving investment demand and inventory restocking, in our view. In response, PPI in % yoy terms will also likely continue recovering. 

July macro data came in stronger than expected

Industrial production (IP) growth jumped to 9.7% yoy in July from 8.9% in June and was significantly above market consensus at 8.9%. Output growth of major products has quickened, with that of steel products, nonferrous metals, power and cement up to 10.9%, 9.8%, 8.1% and 9.1% yoy from 7.2%, 6.7%, 6.0% and 8.8% respectively in June. Fixed asset investment (FAI) growth remained unchanged at 20.1% yoy in Jan-July from Jan-June, but monthly FAI growth rose to 20.1% yoy in July from 19.3% in June. 

IP growth strengthened in July

In July (from June), headline IP growth accelerated to 9.7% yoy from 8.9%. The output growth of major products has quickened, with that of steel products, nonferrous metals, power and cement up to 10.9%, 9.8%, 8.1% and 9.1% yoy from 7.2%, 6.7%, 6.0% and 8.8% respectively in June. Meanwhile, crude oil output growth moderated to 7.1% yoy from 10.8% in June. Auto output growth in volume terms increased to 15.4% yoy from 13.5% in June.

Retail sales growth remained decent 

Retail sales growth edged down to 13.2% yoy in July from 13.3% in June. In real terms, it moderated to 11.3% from 11.7%. Gold/jewelry sales remained a major driver for retail sales, by up 41.7% yoy in July after growing 30.2% in June. Food & beverage sales growth accelerated to 16.0% from 12.9%, while restaurant revenue softened to 9.1% from 9.5%. Sales growth of auto in value terms slowed to 9.1% from 11.4%.

FAI growth picked up its pace in July

Headline year-to-date FAI growth stayed at 20.1% yoy in July. In the month alone, it rebounded to 20.1% from 19.3% in June. Considering that PPI inflation was still quite negative at -2.3% yoy in July, FAI growth in real terms could be above 22.0%. Going forward, we expect the central government will quicken fund allocation to accelerate investment in urban infrastructure and railway project, which will likely support a small rebound in

Strong new loans vs. weak headline TSF in July

New loans dropped to RMB700bn in July from RMB861bn in June, but the RMB700bn reading is well above market expectation at RMB640bn. New MLT (medium to long term) corporate loans increased to RMB243bn in July from RMB194bn in June, suggesting improved funding for FAI. YoY loan growth ticked up to 14.3% in July from 14.2% in June, while yoy change of outstanding total social financing (TSF) slowed to 21.2% in July from 21.5% in June. 

Why shall we not be too worried about "credit tightening"? 

We do see some negative impact of the June interbank liquidity crunch on credit availability for the real economy as evidenced by the sharp fall in corporate bond issuance and bills, but we believe the impact is muted as Premier Li Keqiang's team has taken decisive measures to calm the interbank market and to support growth. Note the PBoC in the past two weeks has conducted several reverse repos to inject liquidity and the 7-day repo rate has declined to below 4.0% again. We understand investors care about the declining TSF, but TSF double-counted credit in the past and some types of credit in TSF are merely intermediate goods anyway, so some "deleveraging" may not significantly affect the availability of credit for the real economy. 

New loans and bonds to stay supported; no rate or RRR cuts

Looking forward, we expect bond issuance to recover and annual new loans to exceed Rbm9.0tn. We don't expect rate cuts or hikes, and the government might choose other tools instead of RRR cut to inject liquidity. We believe that, as the central government taps an increasing amount of its own savings at the PBoC, even a slowing system-wide credit growth could deliver a growth around 7.5% yoy in 2H13. The chance of hard landing is extremely small despite many of China's ills, and what happened in June most likely won't be repeated. We are confident to maintain our 7.6% yoy GDP growth forecasts for 3Q13 and 7.5% for 4Q13, and we expect our competitors to revise up their growth forecasts in the next couple of weeks.

And so on

* * *

A news bulletin of key overnight data from Bloomberg:

• Treasuries steady, 10Y yields little changed on the week after U.S. sells $72b 3Y, 10Y and 30Y debt in quarterly refunding and four Fed presidents expressed willingness to reduce QE purchases this year, possibly as soon as September.
• Sales of floaters in the U.S. have more than doubled from last year’s pace with investors seeking protection from rising rates as the Fed considers curtailing stimulus
• China’s industrial production rose 9.7% in July, more than forecast, while retail sales advanced 13.2%
• China’s broadest measure of new credit fell to a 21-month low as Premier Li Keqiang extended a campaign to curb a record expansion of lending that’s added risks to the nation’s financial system
• The Reserve Bank of Australia lowered its growth outlook as the economy transitions from mining investment, a process that may be aided by the currency falling further from its still “high level”
• Japan’s national debt exceeded 1 quadrillion yen for the first time, underscoring the case for Prime Minister Abe to proceed with a sales-tax increase to shore up government finances
• German regulators will review how the country’s banks made loans that didn’t appear on their balance sheets, obscuring the risk to investors, said two people briefed on the talks
• JPMorgan is negotiating final terms of a deal with U.S. securities regulators to end a yearlong probe of “London Whale” trades that led to the bank’s biggest trading loss ever, two people briefed on the talks said
• The State Department warned U.S. citizens to defer non-essential travel to Pakistan and pulled most American diplomats from its consulate in Lahore because of security threats posed by extremist groups in the region.
• Sovereign yields mostly higher. Nikkei little changed as JPY holds near June highs vs USD; Shanghai Composite +0.36%. European stocks mixed, U.S. equity-index futures lower. WTI crude, copper gain, gold little changed

Market Re-Cap via RanSquawk

Encouraging set of macroeconomic data from China, as well as M&A related news flow, saw stocks in Europe open higher, though the momentum was not sustained and as the session progressed, stocks edged into minor negative territory. Still, basic materials and telecommunications sectors outperformed, where KPN shares surged 19% after America Movil announced a public offer for the company.

There was little in terms of EU specific news flow, but data released by the ONS showed that the trade deficit narrowed to its lowest level in nearly a year, supported by a bigger than expected rise in UK exports. Going forward, market participants will get to digest the release of the latest jobs report from Canada and US Wholesale Inventories.

Asian Headlines

Chinese CPI (Jul) Y/Y 2.7% vs. Exp. 2.8% (Prev. 2.7%)
- July food inflation rises 5.0% Y/Y; unchanged M/M
- July non-food inflation rises 1.6% Y/Y; 0.2% M/M
PPI (Jul) Y/Y -2.3% vs. Exp. -2.1% (Prev. -2.7%)
Chinese Industrial Production (Jul) Y/Y 9.7% vs. Exp. 8.9% (Prev. 8.9%)
- Industrial Production YTD (Jul) Y/Y 9.4% vs. Exp. 9.2% (Prev. 9.3%)
- Fixed Assets Excluding Rural YTD (Jul) Y/Y 20.1% vs. Exp. 20.0% (Prev. 20.1%)
Chinese Retail Sales (Jul) Y/Y 13.2% vs. Exp. 13.5% (Prev. 13.3%)
- Retail Sales YTD (Jul) Y/Y 12.8% vs. Exp. 12.8% (Prev. 12.7%)

EU & UK Headlines

UK Visible Trade Balance GBP/mln (Jun) M/M -8082 vs. Exp. -8350 (Prev. -8491 , Rev. to -8668)
- Trade Balance Non EU GBP/mln (Jun) M/M -2646 vs. Exp. -3800 (Prev. -4093 , Rev. to -4019 )
- Total Trade Balance GBP/mln (Jun) M/M -1548 vs. Exp. -2200 (Prev. -2435 , Rev. to -2612 )

UK Construction Output (Jun) M/M -0.8% vs. Exp. -1.9% (Prev. 0.0%, Rev. 0.2%)
- UK Construction Output (Jun) M/M 1.2% vs. Exp. 0.2% (Prev. -4.8%)
- ONS says Q2 Construction Output +1.4% Q/Q implies no change to Q2 GDP to one decimal place

Norway's USD 760bln oil fund increased its holdings of stocks in the Q2 , sharply reduced its British bond holdings and picked up more Japanese government debt.

LCH.Clearnet revises margin parameters on some French and Spanish debt with the changes set to come into effect on 12 August 2013 and will be reflected as margin calls on the 13 August 2013.

The BoE's MPC held three votes on Aug 1st meeting according to an official. The official said the MPC had a one-off vote on adopting guidance.

Equities

Encouraging set of macroeconomic data from China, as well as M&A related news flow, saw stocks in Europe open higher, though the momentum was not sustained and as the session progressed, stocks edged into minor negative territory. Still, basic materials and telecommunications sectors outperformed, where KPN shares surged 19% after America Movil announced a public offer for the company.

Commodities

IEA cuts forecast for global oil demand growth in 2014 by 100,000 BPD to 1.11mln BPD according to the monthly oil market report.
- Strong growth in North America to help lift non-OPEC oil supply by 1.4mln BPD in 2H on year.
- Saudi oil production hit 12-month high of 9.8mln BPD in July.

China's July implied oil demand up 5.5% Y/Y.
Taiwan eases China investment curbs in trade zones

*  *  *

Finally, the traditional conclusion comes from the market recap of DB's Jim Reid

Markets have got 'China in their hands' over the last 24 hours with a lot of focus on their fresh data splurge. The stronger Chinese trade data yesterday boosted sentiment and it will be interesting to see whether this will be followed up in today’s monthly data download from the Chinese National Bureau of Statistics (scheduled for release as we go to print this morning). Today’s data will include an update on China’s industrial production (consensus: +8.9%yoy), retail sales (+13.5%yoy) and fixed asset investment (+20%yoy). While we wait for those numbers, China’s July inflation numbers, which were published overnight, showed CPI remained at +2.7% yoy in July which is unchanged on the June print and is slower than the +2.8% expected. The PPI also printed below expectations (-2.3% vs -2.1% expected) and has remained in negative territory for 17 straight months. The subdued inflation data has sparked some calls for rate cuts. On the downside it may reflect the continued problem with overcapacity but for now the market want to see the positive. Heading into today’s data, Asian equities are trading with a touch weaker led by the Shanghai Composite (-0.6%).

It feels likes it been a long time since markets have received a boost from Chinese data surprises. After a poor run in Q2 this year, a period which included a spike in SHIBOR at the end of June, the Chinese dataflow has shown some tentative signs of stabilising in the last month or so. It’s still very early days, but yesterday’s above-consensus trade report does follow last week’s better than expected official manufacturing PMI (50.3 vs 49.8 expected).

On a wider scale, the Citi Economic Surprise Index for China has shown some signs of bottoming in June/July and has trended upward over the last month or so. In terms of the market, Chinese growth related assets such as the Hang Seng Chinese Enterprises Index (+6% from the June lows) and the Shanghai Composite (+5% from the June lows) have also followed a similar trend. On the anecdotal side, there were reports (Bloomberg) that Caterpillar’s excavator sales in China jumped 14%yoy in July versus down 1% in June. Iron-ore giant Vale SA said yesterday that they haven't seen a significant deterioration in demand despite headlines about slowing economic growth and they expect a 17% increase in Chinese steel production this year. China’s customs ministry said yesterday that July iron ore imports were 17% higher than the previous month and we note that iron ore import prices are 20% higher now than in June. So it’s fair to say that there is some positive news amongst the pessimism. However this morning's upcoming numbers will have a big say in whether this will be sustained.

The better China trade data sparked a broad-based rally in mining stocks yesterday. The S&P500 metals and mining index closed at +4.7% (vs S&P500 at +0.4%) in its best gain in almost a year. Amongst the miners, gold companies had a very strong day possibly helped by short covering. Stocks in gold companies such as Barrick Gold (+10%) and Newmont (+8.6%) were up sharply, and spot gold was up 2% partially reversing what had been a weak fortnight. Other China-beta stocks such as Alcoa and Caterpillar were among the best performers. On the data front, US initial jobless claims for the week ending August 3 increased a less than expected 5k to 333k which had the effect of lowering the 4-week moving average by 6k to 336k. DB’s US economists note that this is the lowest reading since November 17, 2007, before the onset of recession in the following month. Dallas Fed president Richard Fisher, one of the more outspoken and hawkish of Fed officials, said yesterday that Fed representatives seem to be “all singing from the same song book” and that the Fed will dial-back QE if “things go as the FOMC expects”.

US rates were little changed yesterday with 10yr yields closing flat at 2.59%. The US dollar continued to struggle against major currencies yesterday and the dollar index had its longest losing streak (five days) in two months. The euro had another strong day against the USD (+0.3%) amid a higher than expected German trade balance (EUR16.9bn vs 15.0 expected) for June. EURUSD is bumping up against the top of its recent trading range (1.338 as we type).

In other news, ahead of the Bank of England meeting minutes to be released next week, Bloomberg is reporting that the Bank’s MPC held three votes for the first time during their last meeting on August 1st as they debated introducing forward rate guidance. The vote was a one-off and won’t be repeated at every MPC meeting according to an unnamed official cited by Bloomberg.

Turning to the day ahead, the immediate focus will be on the Chinese data. In Europe, dataflow includes French industrial production and Italian/UK  trade. Wholesale inventories are the main highlight on the US data calendar.

• BOE Leaves Policy Unchanged as Carney’s Guidance Assessed (BBG)
• Surprise or not, U.S. strikes can still hurt Assad (Reuters)
• Samsung Gear: A Smartwatch in Search of a Purpose (BusinessWeek)
• 'Jumbo' Mortgage Rates Fall Below Traditional Ones  (WSJ)
• Capital Unease Again Bites Deutsche Bank  (WSJ)
• Technical snafus confuse charges for Obamacare plans (Reuters)
• JPMorgan subject of obstruction probe in energy case (Reuters)
• U.S. Car Sales Soar to Pre-Slump Level (WSJ) - i.e., to just when the market crashed
• China Urges U.S. to Limit Global Risks From Fed Policy Shifts (BBG)
• BoJ lifts assessment of Japan’s economic health (FT)
• Dead Dog in Reservoir Helps Drive Venezuelans to Bottled Water (BBG)
• Russia Boosts Mediterranean Force as U.S. Mulls Syria Strike (BBG)

Overnight Media Digest

WSJ

* Interest rates on mortgages for pricey homes have dropped below those on smaller mortgages, an event that lending executives say has never happened before. Borrowing rates for so-called jumbo mortgages, which are too big for government backing, historically have been set higher than rates on what are known as conforming loans, which are backed by Fannie Mae , Freddie Mac or government agencies.

* The U.S. auto industry has shifted into high gear with new-car buyers snapping up vehicles last month at a pace not seen since before the financial crisis. Low interest rates and slow-but-steady job growth are encouraging consumers to trade in cars and trucks that average about 11 years old, say auto makers, which are adding production capacity and overnight shifts to satisfy demand.

* Just ahead of a meeting Wednesday to discuss last month's unprecedented three-hour trading outage, Nasdaq officials got another unexpected jolt: The main data feed for Nasdaq Stock Market-listed stocks went down again. While the hiccup was far less severe than the Aug. 22 outage the latest issue with the system again spotlighted exchanges' reliance on just a handful of data feeds to disseminate securities prices and quotations.

* Bond investors could get their first taste of Verizon Communications Inc's new debt to fund its $130 billion wireless acquisition as early as next week, according to people familiar with the matter.

* The Madison Square Garden Co said it was paying $125 million to create a new joint venture with music mogul Irving Azoff that would manage artists, own music-publishing rights and dabble in marketing and television production.

* Beleaguered BlackBerry Ltd intends to run a fast auction process that could be wrapped up by November, according to people familiar with the matter.

* Delta Air Lines Inc placed an order for 40 Airbus jetliners in a deal valued at up to $5.6 billion at list prices, a victory for the European plane maker because the airline has mainly bought planes from rival Boeing Co in the past.

* Green Mountain Coffee Roasters Inc is betting consumers want to get soup from the same machine that brews their morning joe. The company Wednesday announced a deal with Campbell Soup Co to sell K-Cups for Green Mountain's Keurig machines that will brew a cup of chicken broth.

* Ministry of Sound Group Ltd, a U.K. record label, is suing Spotify AB for using playlists from some of its dance music compilation albums, posing new questions for online streaming services as they look to gain a bigger role in the music industry.

FT

Samsung Electronics Co Ltd unveiled a smartwatch on Wednesday, leaping ahead of rivals Apple Inc, Google Inc and Microsoft Corp in the "wearable technology" market. Galaxy Gear, with a small screen, offers basic functions like photos, hands-free calls and instant messaging.

Apple Inc has invited Chinese media to an event in Beijing next week, just hours after it is widely expected to unveil its newest iPhone models in the United States, sparking hopes among investors for a long-awaited iPhone partnership with China Mobile.

The 1.5 billion pound ($2.34 billion) redevelopment of Royal Dutch Shell's new British headquarters in London has been thrown into doubt after the government ministers decided to review plans already approved by local officials.

Shares in Europe's biggest budget airline Ryanair Holdings Plc closed down 11 percent on Wednesday after it warned it could miss its annual profit target as it cut fares in response to increasing competition and weakening demand.

India's new central bank chief, Raghuram Rajan, kicked-off his term by announcing a spate of measures to support the embattled rupee and unveiling moves to liberalise banking and spread services across the country.

Investment manager Hargreaves Lansdown Plc posted record full-year profits on Wednesday as more Britons turn to DIY investing to bolster their savings and pensions.

NYT

* Administration officials said that while they expected the full Senate to vote next week on the resolution granting President Obama authority for a strike, they were girding for a prolonged debate in the House.

* Sprint Nextel on Wednesday sold $6.5 billion worth of high-yield bonds, breaking the record for the single biggest noninvestment-grade offering ever sold directly to investors. The sale comes only days after Verizon said it had taken out $61 billion in financing to support its mammoth deal to buy full control of its wireless unit.

* Common Sense Investment Management, a $2.9 billion fund of funds based in Oregon, sought to distance itself from a prostitution scandal involving its chief executive. The firm said Bisenius's "recent personal transgressions bear no reflection on this outstanding team of professionals or the quality of the portfolio management."

* A federal judge dismissed a lawsuit brought by Bank of America against two former Bear Stearns executives that accused the two men of lying about the health of their hedge funds, which had invested heavily in subprime mortgages.

* General Motors, Ford and Chrysler all had strong months as lower lease payments helped dealers move the inventory of new cars and trucks.

* The Federal Trade Commission said TRENDnet, which makes digitally connected devices, had advertised its webcams as secure, but last year some users found out otherwise.

* Jeffrey Bezos assured editors and reporters of his commitment to preserving quality journalism at Washington Post, which he is buying for $250 million.

* Microsoft said on Wednesday that a jury in federal court had decided in its favor in a dispute over Motorola Mobility's licensing of so-called standard, essential patents used in Microsoft products.

* Researchers at Toshiba's European research laboratory in Cambridge, England, have figured out a way to allow a group of users to exchange encryption keys through an experimental technique known as quantum key distribution. The new technique is believed to be more practical and less expensive than existing technologies.

* Aboutthedata.com, a website introduced on Wednesday by a leading marketing technology firm called the Acxiom Corp , is offering individual consumers a glimpse of some of the details the company has collected about them.

Canada

THE GLOBE AND MAIL

* Federal officials have revoked a pardon that was granted years ago to Raed Jaser, who now stands accused of an "al-Qaeda-inspired" plot to kill train passengers crossing the Canada-U.S. border. Jaser, who had arrived in Toronto as an asylum seeker, has been jailed on terrorism charges since April in connection with an alleged plot to derail a train traveling from New York. (http://link.reuters.com/ceh82v)

* Ontario Transportation Minister Glen Murray said he wants to end the "unrelenting squabbling" over rapid transit in Toronto and build a subway to Scarborough in Ontario. After three years of shifting proposals and endless point scoring over what sort of transit to build and where to build it, we can all go along with that. (http://link.reuters.com/feh82v)

Reports in the business section:

* Canada's merchandise trade deficit widened to almost C$1 billion ($954 million) in July on an unexpectedly sharp drop in exports, Statistics Canada reported on Wednesday. The central bank left its key overnight rate unchanged on Wednesday at 1 percent - the same level it has been at since September 2010. (http://link.reuters.com/zeh82v)

* DDB Canada announced on Wednesday that it would lead Nordstrom Inc's marketing push in Canada. Two other agencies also pitched to become the agency of record for Nordstrom Canada. The agency will be in charge of helping Seattle-based Nordstrom to build its brand among Canadian shoppers. (http://link.reuters.com/buh82v)

* An Indianapolis-based hedge fund is turning up the volume in its campaign to shake things up at Barrick Gold Corp , and has sent the company 78 pages of ideas it says will help boost the stock price of the world's largest gold miner. (http://link.reuters.com/duh82v)

NATIONAL POST

* In a blistering performance on the roof of a Scarborough parking garage on Wednesday, Ontario's transport minister Glen Murray sought to position his Liberal government as the sole savior of rapid transit in the city's east end. He vowed to extend the Bloor-Danforth subway two stops to the Scarborough Town Centre. (http://link.reuters.com/cuh82v)

* The President of Porter Airlines stressed on Wednesday that the company isn't pushing for a longer than previously requested runway extension at the island airport, and that either expansion plan suits its needs.(http://link.reuters.com/fuh82v)

FINANCIAL POST

* Although Canada's global competitive ranking remains unchanged from last year, the country is languishing behind in innovation due to too little being spent on research and development, says a Conference Board report released on Wednesday. (http://link.reuters.com/huh82v)

* British Columbia's government has staked its future on natural gas exports, banking on a revenue windfall of at least C$100 billion ($95 billion). The province says it is on track to have three export facilities up and running on its northwest coast by 2020. (http://link.reuters.com/guh82v)

* After years of delays and political turbulence, Gabriel Resources Ltd may finally be on the cusp of building Europe's biggest gold mine. The Whitehorse-based company has been trying to develop the Rosia Montana gold project in Romania since the 1990s, but has faced vicious opposition from anti-mining activists, which spread rhetoric against the project. (http://link.reuters.com/muh82v)

China

CHINA SECURITIES JOURNAL

- The China Securities Regulatory Commission has published guidelines for the upcoming government bond futures. The commission said fund companies should use the futures contract solely for hedging purposes and has set out an investment ratio for funds to curb speculation.

- The conditions and timing for China to accelerate the liberalisation of its capital account is ripe. The move is necessary for China to integrate into the world economy, said Sheng Song, head of statistics research department, the People's Bank of China.

SECURITIES TIMES

- Vanke, the biggest property company in China, said its total sales reached 15.3 billion yuan ($2.50 billion) in August, up 9.4 percent from month ago.

- China will encourage members of the Association of Southeast Asian Nations (ASEAN) to invest in the Chinese bond market, said Yi Gang, Vice President of the People's Bank of China.

SHANGHAI SECURITIES NEWS

- Small and medium-sized enterprises registered on the National Share Transfer system will soon have more financing options, such as equity financing and the ability to issue bonds, said an official from the Naitonal Equities Exchange and Quotation Centre.

- The China Securities Regulatory Commission will issue new rules on refinancing for property developers in the next two to three weeks, the paper said, citing unidentified sources.

PEOPLE'S DAILY

- Chinese President Xi Jinping met his Mexican counterpart Enrique Pena Nieto ahead of the Group of 20 (G20) summit to be held on Sept. 5-6. During the meeting, Xi said the two countries should take solid steps to advance their cooperation in various fields to enrich the comprehensive strategic partnership between them.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Banco Bilbao (BBVA) upgraded to Outperform from Neutral at Credit Suisse
Extra Space Storage (EXR) upgraded to Buy from Hold at Jefferies
Groupon (GRPN) upgraded to Overweight from Equal Weight at Morgan Stanley
HSN, Inc. (HSNI) upgraded to Buy from Neutral at Citigroup
Intercontinental Hotels (IHG) upgraded to Buy from Neutral at UBS
Louisiana-Pacific (LPX) upgraded to Buy from Hold at Deutsche Bank
RRsat Global (RRST) upgraded to Outperform from Perform at Oppenheimer
Siemens (SI) upgraded to Overweight from Equal Weight at Barclays
Transocean (RIG) upgraded to Outperform from Neutral at Credit Suisse

Downgrades

Lockheed Martin (LMT) downgraded to Sector Perform from Outperform at RBC Capital
Newmont Mining (NEM) downgraded to Equal Weight from Overweight at Barclays
OpenTable (OPEN) downgraded to Underweight from Equal Weight at Morgan Stanley
Viacom (VIAB) downgraded to Neutral from Buy at B. Riley
Zillow (Z) downgraded to Underweight from Equal Weight at Morgan Stanley

Initiations

AGCO (AGCO) initiated with an Overweight at Morgan Stanley
Advanced Energy (AEIS) initiated with an Outperform at Raymond James
Allscripts (MDRX) initiated with a Hold at KeyBanc
Caterpillar (CAT) initiated with an Equal Weight at Morgan Stanley
Deere (DE) initiated with an Underweight at Morgan Stanley
Greenway Medical (GWAY) initiated with a Buy at KeyBanc
Jones Energy (JONE) initiated with a Buy at Jefferies
Jones Energy (JONE) initiated with a Buy at SunTrust
Joy Global (JOY) initiated with an Equal Weight at Morgan Stanley
Manitowoc (MTW) initiated with an Equal Weight at Morgan Stanley
Parker-Hannifin (PH) initiated with an Underweight at Morgan Stanley
Starbucks (SBUX) initiated with an Outperform at Wedbush
Stock Building Supply (STCK) initiated with an Overweight at Barclays
Terex (TEX) initiated with an Overweight at Morgan Stanley
Trimble Navigation (TRMB) initiated with an Outperform at RW Baird
United Rentals (URI) initiated with an Equal Weight at Morgan Stanley
Universal Truckload (UACL) initiated with a Buy at Citigroup

HOT STOCKS

SKF (SKFRY) will acquire Kaydon (KDN) in an all-cash transaction valued at about $1.25B, including $95M of net debt
Louisiana-Pacific (LPX) acquired Ainsworth Lumber in a deal valued at about $1.1B
Astex (ASTX) to be acquired by Otsuka Pharmaceutical for $8.50 per share or $886M cash
Sanofi (SNY), POZEN (POZN) signed commercialization agreement
Assurant (AIZ) acquired Lifestyle Services Group from 4u Finance for about $160M cash
Tenneco (TEN) closes, decomplexes plants in Europe, eliminates 480 jobs
Boeing (BA) sees China's fleet tripling over next 20 years

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Bazaarvoice (BV), NCI Building Systems (NCS)

Companies that missed consensus earnings expectations include:
Descartes Systems (DSGX), JoS. A. Bank (JOSB), Greif (GEF)

Companies that matched consensus earnings expectations include:
FuelCell (FCEL), Exa Corp. (EXA)

NEWSPAPERS/WEBSITES

• The U.S. auto industry (GM, F, NSANY, HMC, TM) moved into high gear with new-car buyers snapping up vehicles last month at a pace not seen since before the financial crisis. Buyers purchased 1.5M vehicles, up 17% from a year ago, with nearly all major automakers reporting double-digit sales gains, the Wall Street Journal reports
• Bond investors could get their first taste of Verizon Communications (VZ) new debt to fund its $130B wireless acquisition as early as next week, sources say, the Wall Street Journal reports
• San Francisco Fed President John Williams said he was open-minded about reducing stimulus this month, as investors largely expect the central bank to do, while Narayana Kocherlakota, his counterpart in Minneapolis, said the U.S. central bank should actually do more for the economy, Reuters reports
• Canadian Imperial Bank of Commerce (CM) said it was seeking acquisitions valued at more than C$1B, mostly from the U.S., as it tries to boost the amount of profit it generates from wealth management, Reuters reports
• Apple (AAPL) is used to dictating terms to carriers for its iPhone. As it seeks a deal with  China Mobile (CHL) to sell the handsets, it’s the operator that’s in command, and Apple needs an agreement with them, Bloomberg reports
• Privacy groups asked the FTC to prevent Facebook (FB) from changing its data use policies on concern with how the social network operator handles user information for advertising, Bloomberg reports

SYNDICATE

Jarden (JAH) 15M share Secondary priced at $47.00
LinkedIn (LNKD) 5.38M share Secondary priced at $223.00
Matador (MTDR) 8.5M share Secondary priced at $15.25
Timberline Resources (TLR) files to sell common stock

• Less Tapering Becomes Tightening Credit No Matter What Fed Says (BBG)
• Yellen Is Now Top Fed Hopeful (WSJ)
• Syria - A chemical crime, a complex reaction (Reuters)
• More ECB collateral: Wrecked cruise ship Costa Concordia raised off rocks in Italy (Reuters)
• Aging Boomers Befuddle Marketers Eying $15 Trillion Prize (BBG)
• Abe Turns Pitchman, Says Japan Is Now A Buy (WSJ)
• Ex-JPMorgan Employees Indicted Over $6.2 Billion Loss (BBG)
• Barack Obama blinked first in battle for Lawrence Summers (FT)
• Berlusconi to support Italian government in video message: sources (Reuters)
• How China Lost Its Mojo: One Town's Story (WSJ)
• Citigroup must pay couple $3.1 million for not overseeing broker (Reuters)
• Researcher Puts China's Local Government Debt at $3.3 Trillion (WSJ)
• Ex-Soviet Programmers Take On India in $48 Billion Market (BBG)
• Goldman Names New Tech Chief (WSJ)

Overnight Media Digest

WSJ

* Fed Vice Chairwoman Janet Yellen emerged as the front-runner to become President Obama's nominee to lead the central bank after Lawrence Summers pulled out of the contest. President Barack Obama hasn't made a final decision, a senior administration official said. The process for selecting a nominee isn't starting over, senior administration officials said Monday, and no new candidates have been added to the mix.

* The White House and its allies said a U.N. report on last month's chemical attack in Syria added evidence to their view that regime forces fired sarin filled rockets.

* JPMorgan Chase is expected to take a big step toward resolving the "London whale" trading fiasco, agreeing to pay at least $800 million in penalties and admit wrongdoing as part of a broad regulatory settlement over its handling of the matter.

* Natural gas drillers aren't leaking as much of a greenhouse gas as the federal government has estimated, according to a new study by researchers at the University of Texas.

* The chief executive of LPL Financial created a self-imposed rule: He must respond to any email from one of the firm's 13,400 financial advisers within two hours, even on weekends and holidays. It is one piece of a much larger effort Casady is making to redeem LPL after a rocky few years that were capped in May by a $7.5 million fine levied on the firm by regulators who cited "systemic" failures in its email system tied to mismanaged growth, the largest-ever such fine.

* Investors are increasing the pressure on Barrick Gold to shake up its board and quicken founder Peter Munk's exit from the world's largest gold miner, according to people familiar with the matter.

* Goldman Sachs Group Inc picked equities executive R. Martin Chavez as its new chief information officer, a month after a software glitch sent waves of errant orders into the stock-options market, roiling prices at exchanges and triggering an internal review.

* Pandora Media said it plans to offer 10 million shares and that a stakeholder would offer an additional four million shares.

* Bombardier's CSeries jet made its maiden flight on Monday, a major milestone in the Canadian company's bid to take on giants Boeing and Airbus in the market for small passenger jets.

* Kennametal agreed to buy Allegheny Technologies' tungsten business for $605 million, a deal that sheds light on an obscure but important part of the metals business. The two western Pennsylvania companies buy scrap and other raw materials and process them into powder coatings, alloys and tools used by manufacturers of everything from mining drills to airplanes.

FT

JPMorgan Chase is in talks with securities and bank regulators to settle investigations into its $6 billion London Whale trading loss, expecting to pay about $800 million, people familiar with the matter said.

Barclays said it was contesting a British watchdog's 50 million pound ($79.68 million) fine for behaving "recklessly" when it failed to disclose 322 million pounds worth payments to Qatari investors during its emergency cash call in 2008.

Britain's Vodafone is about to go face-to-face with hedge funds over the mobile network's buyout of minority investors in Kabel Deutschland, having only narrowly secured the approval from three-quarters of shareholders needed for the 7.7 billion euro ($10.28 billion) deal.

Britain's accounting watchdog has launched a probe into whether PriceWaterhouseCoopers was acting independently when it audited the books of housebuilder Berkeley Group last year.

Danske Bank ousted Eivind Kolding after his 18-month stint as the chief executive of Denmark's biggest bank - his tenure there saw a fierce clash with the Danish regulator, a marketing campaign that ended in a public apology, and the loss of tens of thousands of customers.

NYT

* Janet Yellen told friends in recent weeks that she did not expect to be nominated as the next chairman of the Federal Reserve. Now, awkwardly, it appears that President Obama may have to circle back to Yellen after Lawrence Summers withdrew from consideration on Sunday, bowing to the determined opposition of at least five Senate Democrats. On Monday, Yellen became the front-runner by elimination, officials close to the White House said.

* JPMorgan Chase & Co has agreed to pay about $800 million to a host of government agencies in Washington and London - and make a groundbreaking admission of wrongdoing - to settle allegations stemming from a multibillion-dollar trading loss, people briefed on the matter said.

* American farmers are getting an unexpected windfall from a contentious fight between Russia and Belarus, a former Soviet splinter state. The subject of the fight is potash, a fertilizer. The score so far: One imprisoned Russian business executive, the disintegration of a once-effective cartel that kept world potash prices high and political tension between the two countries.

* Citing concerns about drug quality, the U.S. Food and Drug Administration on Monday announced a ban on imports of any products made at the generic drug maker Ranbaxy Laboratories Ltd's newest factory in India. The move is the third time Ranbaxy imports have been blocked in the United States since 2008.

* The British government announced on Monday that it was selling part of its stake in Lloyds Banking Group Plc. The decision to sell 6 percent of the bank's shares comes five years after Lloyds received a multibillion-pound bailout from taxpayers and is an effort to take advantage of the firm's improving fortunes since the financial crisis.

* Factory output surged in August as the pace of motor vehicle production jumped to a six-year high, a hopeful sign for the economy after a slow start to the third quarter. Although another report on Monday showed a slight slowdown in factory activity in New York State this month, new orders and shipments in the state rose, all pointing to an increase in manufacturing after weakening in the spring.

* Morgan Creek Capital Management has started a mutual fund, offering individual investors a chance to invest as they would in a hedge fund. The new fund, called the Tactical Allocation Fund, will allow average stock and bond investors to get a taste of the exclusive world of hedge funds, traditionally reserved for pension funds, charities, big institutions and the ultra wealthy.

* Spain is on track to meet the 2013 budget deficit target it agreed on with its European Union partners and should emerge from recession before the end of the year, the country's economy minister said on Monday. The minister, Luis de Guindos, also said the government would not require additional one-time austerity measures as part of the 2014 budget that it will present this month.

* Two years after Chipotle Mexican Grill Inc introduced to widespread acclaim an animated commercial with a pointed message about sustainable farming, the company is back with another animated spot on the subject of food production. The new commercial takes swipes at giant companies that treat food like another product to process and contrasts that with food made in sustainable ways that is fresh and wholesome.

Canada

THE GLOBE AND MAIL

* The Quebec Liberal Party has confirmed anti-corruption investigators raided party headquarters this summer while the province's attention was riveted on a succession of resignations and arrests of big-city mayors.

* As many as two Coast Guard icebreakers may be dispatched to the site of a deadly helicopter crash in the remote western Arctic to hunt for answers hundreds of meters below the surface of the Northwest Passage. The Canadian government is still reviewing options before green-lighting a trip but advance planning is already under way that could send the Amundsen and Henry Larsen to the spot, about 670 kilometers west of Resolute, Nunavut, where three died on Sept. 9 in a tragedy that has shaken Arctic researchers.

Reports in the business section:

* Wind Mobile plans to participate in the auction of Canadian wireless spectrum, making it the first new-entrant carrier to confirm its intentions to bid. Chief Executive Anthony Lacavera gave that confirmation on Monday, ending speculation about whether the startup carrier would compete in the auction of the 700-megahertz frequency. Carriers face a Tuesday deadline to file their applications and put down a 5 percent deposit to secure a place in the auction.

* Betting that consumers are willing to pay for instant gratification, Canada Post is teaming up with Wal-Mart Canada Corp, Best Buy Canada Ltd, and Indigo Books & Music Inc in the first major Canadian rollout of same-day online shopping.

* With the maiden flight of the C Series, Bombardier Inc has officially ascended into commercial airspace ferociously guarded by industry giants Airbus SAS and Boeing Co . About 2,700 employees and 300 Bombardier guests cheered loudly as the plane took off from a Mirabel runway for a 2-1/2-hour flight over the Lower Laurentians.

NATIONAL POST

* Canada's prime minister, Stephen Harper, spoke out against Quebec's controversial proposed Charter of Values on Monday, saying he doesn't expect the current proposal to pass the province's legislature, but said the federal government will "take whatever action is necessary" if it does.

FINANCIAL POST

* The Aeroplan credit card business is one of the crown jewels of Canadian banking, and Toronto-Dominion Bank could have had the whole thing to itself, but chief executive Ed Clark said that at the end of the day it was smarter to split the prize with rival Canadian Imperial Bank of Commerce. "In a sense, we get the best of both worlds," Clark said in a telephone interview on Monday.

China

CHINA SECURITIES JOURNAL

- China may introduce property trusts this year, giving developers a much needed new source of funding. The move could come as part of a government change of tack to ease tight monetary policies, the paper said, citing industry sources.

CHINA BUSINESS NEWS

- Bankruptcy proceedings for China's Suntech Power Holdings' Wuxi unit will likely be delayed by three months to the end of December as the company and creditors have yet to submit a plan to restructure its debt obligations, the paper said, citing unidentified court officials.

SHANGHAI SECURITIES NEWS

- Chinese banks may be locked out from participating in the government bond futures market for the first year, according to industry insiders. The market launched in early September for the first time after a trading scandal caused the government to shut it 18 years ago.

SHANGHAI DAILY

- The Zhabei District government urged people to call a hotline and report instances of government cars being used for private purposes, in a bid to halt abuse of privileges, an official said on Monday. Official vehicles will be marked to identify them.

PEOPLE'S DAILY

- China's publishing associations should assist the Central Propaganda Department's bid to strengthen the management of children's publishing, according to an editorial in the paper which acts as the government's mouthpiece. Currently, children's publications have vulgar content and are of poor quality.

Fly On The Wall 7:00AM Market Snapshot

ANALYST RESEARCH

Upgrades

American States Water (AWR) upgraded to Buy from Hold at Brean Capital
Apache (APA) upgraded to Outperform from Perform at Oppenheimer
Avago (AVGO) upgraded to Outperform from Market Perform at JMP Securities
BB&T (BBT) upgraded to Buy from Neutral at Goldman
Banco de Chile (BCH) upgraded to Buy from Hold at Deutsche Bank
Broadcom (BRCM) upgraded to Positive from Neutral at Susquehanna
Chico's FAS (CHS) upgraded to Buy from Hold at KeyBanc
Church & Dwight (CHD) upgraded to Buy from Hold at Deutsche Bank
Comerica (CMA) upgraded to Neutral from Sell at Goldman
Delta Air Lines (DAL) upgraded to Overweight from Neutral at JPMorgan
Deutsche Bank (DB) upgraded to Buy from Neutral at UBS
Guidance Software (GUID) upgraded to Hold from Sell at Benchmark Co.
Mead Johnson (MJN) upgraded to Overweight from Neutral at JPMorgan
PSEG (PEG) upgraded to Buy from Hold at Jefferies
Santander Chile (BSAC) upgraded to Buy from Hold at Deutsche Bank
US Airways (LCC) upgraded to Overweight from Neutral at JPMorgan
Umpqua Holdings (UMPQ) upgraded to Neutral from Underperform at Credit Suisse
Verizon (VZ) upgraded to Outperform from Sector Perform at RBC Capital
Volcano (VOLC) upgraded to Outperform from Market Perform at BMO Capital

Downgrades

BRE Properties (BRE) downgraded to Sell from Neutral at Goldman
Big 5 Sporting (BGFV) downgraded to Neutral from Overweight at Piper Jaffray
Boise (BZ) downgraded to Neutral from Buy at Longbow
ConAgra (CAG) downgraded to Neutral from Overweight at JPMorgan
EverBank Financial (EVER) downgraded to Neutral from Buy at Goldman
Extra Space Storage (EXR) downgraded to Buy from Conviction Buy at Goldman
Fifth Third Bancorp (FITB) downgraded to Neutral from Buy at Goldman
IAC (IACI) downgraded to Sector Perform from Outperform at RBC Capital
Kellogg (K) downgraded to Underweight from Neutral at JPMorgan
Kennametal (KMT) downgraded to Neutral from Buy at BofA/Merrill
National Bank (NBHC) downgraded to Sell from Buy at Goldman
Werner (WERN) downgraded to Hold from Buy at KeyBanc
Werner (WERN) downgraded to Neutral from Buy at BofA/Merrill
Werner (WERN) downgraded to Sector Perform from Outperform at RBC Capital

Initiations

3D Systems (DDD) initiated with an Outperform at Credit Suisse
ARMOUR Residential (ARR) initiated with a Buy at MLV & Co.
Albany International (AIN) initiated with a Buy at DA Davidson
Amarin (AMRN) initiated with a Neutral at Goldman
Auxilium (AUXL) initiated with a Buy at Goldman
Charles River Labs (CRL) initiated with a Neutral at UBS
Covance (CVD) initiated with a Buy at UBS
Dynex Capital (DX) initiated with a Buy at MLV & Co.
Endo Health (ENDP) initiated with a Buy at Goldman
Envision Healthcare (EVHC) initiated with an Overweight at Piper Jaffray
ExOne (XONE) initiated with an Underperform at Credit Suisse
Franklin Covey (FC) initiated with a Buy at B. Riley
Hatteras Financial (HTS) initiated with a Buy at MLV & Co.
ICON plc (ICLR) initiated with a Buy at UBS
Ironwood (IRWD) initiated with a Sell at Goldman
Jazz Pharmaceuticals (JAZZ) initiated with a Buy at Goldman
Kythera (KYTH) initiated with a Neutral at Goldman
MGIC Investment (MTG) initiated with a Market Perform at JMP Securities
Mallinckrodt (MNK) initiated with a Neutral at Goldman
PAREXEL (PRXL) initiated with a Buy at UBS
PerkinElmer (PKI) initiated with an Overweight at Piper Jaffray
Perrigo (PRGO) initiated with a Buy at CRT Capital
Questcor (QCOR) initiated with a Neutral at Goldman
Quintiles (Q) initiated with a Buy at UBS
Radian Group (RDN) initiated with an Outperform at JMP Securities
Rally Software (RALY) initiated with a Buy at Wunderlich
Salix (SLXP) initiated with a Neutral at Goldman
Stratasys (SSYS) initiated with a Neutral at Credit Suisse
Valeant (VRX) initiated with a Conviction Buy at Goldman

HOT STOCKS

Huntsman (HUN) to acquire Rockwood (ROC) for $1.1B plus pension liabilities
Synergy Resources (SYRG) said majority of existing production unaffected by Colorado floods
Philips (PHG) announced new buyback program of EUR 1.5B
James River Coal (JRCC) idled production, furloughed 525 employees
Outerwall (OUTR) lowered FY13 EPS view to $4.72-$5.12 from $5.76-$6.26, consensus $5.91; lowered FY13 core adj EBITDA view to $451M-$471M from $507M-$538M

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Coty (COTY), Student Transportation (STB), Oclaro (OCLR)

Companies that matched consensus earnings expectations include:
Cvent (CVT)

NEWSPAPERS/WEBSITES

• The largest U.S. banks (JPM, BAC, C, GS) say they would be able to weather a severe economic crisis with higher capital levels than previously estimated, bolstering the notion that financial institutions have made headway in their quest to minimize risk and shore up their balance sheets, the Wall Street Journal reports
• An early forecast predicts the holiday-shopping season will be the worst since 2009, mirroring the concerns of some retailers who are stepping up discounts and pushing earlier for what they fear will be hard-fought sales, according to ShopperTrak, the Wall Street Journal reports
• Natural-gas drilling sites aren't leaking as much methane into the atmosphere as the federal government and critics of hydraulic fracturing had believed, according to the first study of emissions at multiple drilling sites, led by researchers at the University of Texas at Austin and published by the Proceedings of the National Academy of Sciences, the Wall Street Journal reports
• The U.K. will consider offering shares to private retail investors when it offloads more of its stake in Lloyds Banking Group (LYG), said Finance Minister George Osborne, Reuters reports
• Total (TOT) is in talks to join "tight" or hard to access oil projects in Russia, which by some estimates hold the world's largest unconventional oil reserves, Reuters reports
• Fed Vice Chairman Janet Yellen is President Obama’s top candidate to lead the central bank even after her supporters helped force his initial favorite to withdraw, sources say, Bloomberg reports

SYNDICATE

Chef's Warehouse (CHEF) files to sell 3.3M common shares
EPAM Systems (EPAM) files to sell 1.125M shares for stockholders
JinkoSolar (JKS) files to sell 3.5M American Depositary Shares
Pandora (P) files to sell 14M shares of common stock
SB Financial (SBFG) files to sell $30M of common, preferred stock
Shutterstock (SSTK) files to sell 3M shares, including 2M for holders
Textura (TXTR) amends share offering to 4.59M shares from 4M shares

ACTIVIST/PASSIVE FILINGS

Sycamore Partners reports 7.96% stake in Aeropostale (ARO)
Biglari says Cracker Barrel (CBRL) should declare $20/share special dividend

• Fed likely to reduce bond buying, pass policy milestone (Reuters)
• Fall in Home Loans Pushing Fed Away From Taper in Mortgage Bonds (BBG)
• Russia says U.N. report on Syria attack preconceived, political (Reuters)
• China House Price Surge Raises Prospect of Steps to Cool Market (FT)
• Cyprus Plans to Complete End of All Capital Controls... some time in 2014 (FT)
• GOP Reworks Budget Terms (WSJ)
• U.S. Navy was warned that Washington shooter 'heard voices' (Reuters)
• Berlusconi Impeachment Vote Looms (WSJ)
• Ageing could weaken central banks, spur rate volatility (Reuters)
• India brings in new rules to reduce transfer pricing tax disputes (Reuters)
• BOE Officials See No More Case for More Stimulus (BBG)
• Split on Germany's Left Boosts Merkel's Re-Election (WSJ)
• Wharton Puts First-Year MBA Courses Online for Free (BusinessWeek)
• SNB Evolves Franc Cap Rationale as Crisis Risks Recede (BBG)
• Obama to Face Fresh Test of Resolve Over Budget Talks (FT)

Overnight Media Digest

WSJ

* Some investors are betting stock and bond prices will stay steady even as the Federal Reserve prepares to potentially trim its monetary stimulus. Despite widespread expectations that the Fed will announce a trimming of a bond-buying program aimed at pushing down interest rates and propping up the economic recovery, fund managers have been in a buying mood lately.

* Walgreen is set to become one of the largest employers yet to make sweeping changes to company-backed health programs. On Wednesday, the drugstore giant is expected to disclose a plan to provide payments to eligible employees for the subsidized purchase of insurance starting in 2014. The plan will affect roughly 160,000 employees, and will require them to shop for coverage on a private health-insurance marketplace

* JPMorgan Chase is preparing to pay at least $800 million in fines related to the "London whale" trading fiasco, but that won't solve all the bank's problems with regulators and prosecutors over the matter.

* The British government notched a small profit selling part of its 39 percent stake in Lloyds Banking Group, marking a turnaround not just for Lloyds, which was nearly capsized by bad loans during the financial crisis, but also for CEO António Horta-Osório.

* Microsoft moved to share more of its cash hoard with shareholders, boosting its quarterly dividend by 22 percent and renewing a $40 billion authorization to buy back its shares. The announcement comes two days before a highly anticipated meeting with financial analysts.

* A software problem that briefly halted U.S. options trading Monday originated from a system update rolled out earlier that day, according to officials for NYSE Euronext which manages the system. Monday's problem struck the Options Price Reporting Authority, or OPRA, which provides the benchmark data feed for U.S. options trading, delivering to traders quotes and prices from all 12 options exchanges.

* The head of operations at NYSE Euronext, which manages the data feed that brought down the options market for a brief period of time on Monday, says that market participants can and should do a better job of managing technological change. The public should not, however, expect market technology to function perfectly-a goal that would be too expensive to implement even if it were technically feasible.

* JPMorgan Chase already refunded credit card customers for missteps that are expected to be part of a settlement with regulators later this week, according to people familiar with the situation.

* Companies are increasingly choosing to generate their own power, rather than buying it from a utility, spurred by falling prices for solar panels and natural gas, and fears of outages.

FT

JPMorgan Chase Chief Executive Jamie Dimon told staff in a memo on Tuesday that getting rid of non-core business units, especially those with legal or regulatory risks, was currently a "key initiative" in simplifying the bank's structure.

German automaker Volkswagen said it was going to invest about 150 million euros ($200.23 million) in Brazil by 2015, targeting the nation's increasingly affluent consumers with plans to build its luxury Audi cars there.

A South Korean official said Boeing's F-15 Silent Eagle was the only aircraft with a low enough price-tag to make it eligible to win the country's largest-ever defence import programme, its 8.3 trillion won ($7.66 billion) fighter jet tender.

Tesla's billionaire Chief Executive Elon Musk said the electric carmaker was joining the bandwagon to building cars that can drive themselves.

Electronic Arts, the video games publisher that made Fifa Soccer and Madden NFL, has named the head of its sports unit, Andrew Wilson, as its new chief executive, replacing John Riccitiello who stepped down in March.

NYT

* Among the most troubling questions facing consumers as they shop for insurance under the Obama administration's new health care law is whether the plans will cover the drugs they take - and how much they will have to pay for them. But with less than two weeks remaining until enrollment opens on Oct. 1, the answers are still elusive and anxiety is growing for consumers whose well-being depends on expensive medications.

* With federal prosecutors in Manhattan facing a December deadline to bring additional charges connected to Bernard Madoff's multibillion-dollar Ponzi scheme, they are weighing criminal charges against several people connected to the case, said people briefed on the investigation. Among those still under scrutiny are Shana Swanson, a senior executive at the firm, and Paul Konigsberg, a longtime accountant in Madoff's inner circle.

* The Obama administration announced on Tuesday that it was extending minimum wage and overtime protections to the nation's nearly two million home-care workers. Advocates for low-wage workers have pushed for this change, asserting that home-care workers, who care for elderly and disabled Americans, were wrongly classified into the same "companionship services" category as baby sitters - a group that is exempt from minimum wage and overtime coverage.

* Federal prosecutors have portrayed Julien Grout as the quintessential Wall Street criminal, accusing the former JPMorgan Chase & Co trader of "systematically and fraudulently" masking losses to protect his bonus. His lawyer found another way to describe him: as a scapegoat.

* As the White House and Congress careen toward another fiscal showdown, the nonpartisan Congressional Budget Office warned on Tuesday that President Obama and lawmakers have been cutting the wrong kind of federal spending as they try to avoid the unsustainable buildup of debt that is projected in the coming decades.

* Volkswagen AG, the largest of the European automakers, will bring its first electric car to the United States in two years, joining an increasingly crowded field of battery-powered vehicles on the market. A Volkswagen official said on Tuesday that the e-Golf - an electrified version of the company's subcompact car - would go on sale in 2015 as part of a broader plan to introduce more alternative-fuel models.

* Grocer Safeway Inc has gone on the defense days after activist hedge fund Jana Partners declared a 6.2 percent stake in the company. Safeway said on Tuesday that it had put into place a poison pill plan to prevent investors from acquiring more than 10 percent of the company.

* DE Shaw & Co and Deerfield Management are among a large group of investment firms that have agreed to pay $14.4 million to settle market manipulation charges by the U.S. Securities and Exchange Commission. The regulator accused 23 firms of obtaining "illicit profits" by improperly buying and selling shares, in what is the commission's biggest crackdown since it strengthened a ban on certain short-selling in 2007.

* As the price tag swells for JPMorgan Chase's multibillion-dollar trading loss, Jamie Dimon, the bank's chief executive, offered an unvarnished message to employees on Tuesday. JPMorgan, which is poised to pay roughly $800 million to a host of government agencies, is working to "face our issues, roll up our sleeves, and fix" the compliance and control problems throughout the bank, Dimon said in a company-wide memo on Tuesday.

* The SEC, which has actively pursued actions by American banks and other financial institutions overseas, is broadening its reach by asserting its purview to foreign hedge fund managers. Agency employees are set to pay visits to more than a dozen hedge fund managers registered with the SEC to determine whether they are in compliance with American regulations.

Canada

THE GLOBE AND MAIL

* Quebec's intense debate over restrictions on religious minorities was supposed to peel the blue paint off the walls of the National Assembly to start the fall sitting. But instead of pressing the issue on Tuesday, the three main provincial parties pulled back to survey the changing political landscape.

* The British Columbia New Democratic Party is already debating questions over leadership succession even as it awaits word, expected as early as Wednesday, from Adrian Dix about whether he will step down as party leader. The party, weighed down by debt and still torn apart over its dismal showing in the May provincial election, appears to be far from ready for an expensive and likely divisive leadership contest.

* Toronto is scaling back plans to hike development fees on new homes in a move that will delay the full impact of rate increases and ward off a battle with the development industry. The compromise, outlined in a staff report released Tuesday, would see the fees for a single home or semi jump to C$34,482 ($33,500) from C$19,412. That's a 78 percent increase, but less than the C$37,457 fee proposed in June.

Reports in the business section:

* Some of Canada's biggest retailers are warning that a foreign retail invasion signals what one executive calls a "bloodbath" in Ontario that threatens to spill over into the rest of Canada. Ontario has been ground zero of the retail battle after U.S. discounter Target Corp opened its first Canadian store in the province in March, before moving on to Western provinces.

* Barrick Gold Corp has confirmed plans to add independent directors to its board and review how much it pays its executives amid increased shareholder pressure. The gold producer has faced months of criticism over its weak financial performance, extravagant compensation and the lack of independent mining experts in its boardroom.

* Industry Canada is cracking the whip on wireless carriers, warning them not to talk openly about their strategies for buying spectrum in an upcoming federal auction. Carriers had until noon on Tuesday to submit application papers and a 5 percent deposit to qualify to bid in the auction of the 700 megahertz frequency.

NATIONAL POST

* Federal bureaucrats highlighted negative media coverage as they pressed the Harper government to act quickly on the rapid deterioration of the Champlain Bridge uncovered by inspections warning about the risks of a collapse.

* It has been a week since the Parti Quebecois (PQ) government made public its proposed Charter of Quebec Values, and so far things are not exactly going as planned. On Tuesday, Jean-François Lisee, the PQ minister responsible for Montreal, admitted as much when he invited the public to submit ideas on how the charter - a year in the making - could be made more palatable. "We're looking at ways to improve the proposal," he said.

* On Monday, staffers in the offices of Liberal MPs across the country started tracking their bosses' travel and hospitality expenses, preparing to post them online this time next month.

FINANCIAL POST

* The Ontario Teachers' Pension Plan Board is among 23 firms caught in a targeted sweep by the U.S. Securities and Exchange Commission for short-selling violations ahead of public offerings. The specific rules at the heart of the SEC sweep are aimed at preventing short selling that can artificially depress the market price in the days ahead of the pricing and, therefore, reduce proceeds from public offerings.

* One of Canada's best-known mining executives, Goldcorp Inc chairman Ian Telfer, is seeking to settle allegations brought against him by the Ontario Securities Commission. Telfer was not accused of insider tipping or trading. Instead, the OSC alleged that he acted "contrary to the public interest" by helping an old friend, the executive assistant to the chairman of GMP Securities LP, disguise her scheme.

* Barely a dozen years ago, Alberta was producing so much natural gas the resource was the mainstay of the provincial economy and a big reason Canada was the second-largest natural gas exporter on the planet. Today, Alberta gas is dirt cheap and is struggling to find a home, pushed to the sidelines by shale gas discoveries in the United States and competition from British Columbia.

China

SHANGHAI SECURITIES NEWS

- The China Securities Regulatory Commission approved a house price refinancing programme submitted by a developer last week, according to sources with knowledge of the matter. A number of other developers have also submitted materials in support of similar refinancing programmes and are awaiting approvals.

- The China Securities Regulatory Commission launched a rating system to rate financial advisers engaged in mergers, acquisitions and restructurings.

SHANGHAI DAILY

- Ge Wenyao, chairman of Shanghai Jahwa United Co Ltd resigned on Tuesday following a dispute with the firm's major shareholder Ping An Insurance Group Co of China Ltd , which rejected Ge's proposal to invest in Seagull Watch.

CHINA DAILY

- Yiwu's government on Tuesday released financial reform plan that aims to develop the city into a financial trading hub for local exporters. The plan includes a trial programme for individual cross-border yuan trade settlements.

PEOPLE'S DAILY

- Role models are important as they help set high standards, said an editorial in the paper that acts as the government's mouthpiece.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Becton Dickinson (BDX) upgraded to Overweight from Neutral at Piper Jaffray
Cognizant (CTSH) upgraded to Overweight from Equal Weight at Barclays
Colgate-Palmolive (CL) upgraded to Overweight from Equal Weight at Barclays
Consolidated Edison (ED) upgraded to Neutral from Sell at Goldman
Federal Realty (FRT) upgraded to Buy from Hold at Jefferies
HCA Holdings (HCA) upgraded to Buy from Neutral at Mizuho
Interpublic Group (IPG) upgraded to Hold from Underperform at Jefferies
Maxwell (MXWL) upgraded to Overweight from Neutral at Piper Jaffray
Nationstar (NSM) upgraded to Buy from Hold at Jefferies
Nokia (NOK) upgraded to Outperform from Neutral at Credit Suisse
Oil States (OIS) upgraded to Market Perform from Underperform at BMO Capital
PSEG (PEG) upgraded to Outperform from Sector Perform at RBC Capital
Responsys (MKTG) upgraded to Overweight from Equal Weight at Morgan Stanley
Sabra Health Care (SBRA) upgraded to Buy from Hold at Jefferies
ServiceNow (NOW) upgraded to Overweight from Equal Weight at Morgan Stanley
Synchronoss (SNCR) upgraded to Neutral from Sell at Goldman
Tilly's (TLYS) upgraded to Overweight from Neutral at Piper Jaffray
Vipshop (VIPS) upgraded to Buy from Hold at Deutsche Bank
Weatherford (WFT) upgraded to Outperform from Market Perform at Wells Fargo

Downgrades

Acuity Brands (AYI) downgraded to Neutral from Buy at UBS
ArQule (ARQL) downgraded to Neutral from Buy at Citigroup
BioMarin (BMRN) downgraded to Hold from Buy at Stifel
Caterpillar (CAT) downgraded to Neutral from Outperform at RW Baird
Clorox (CLX) downgraded to Underweight from Equal Weight at Barclays
Exelon (EXC) downgraded to Sector Perform from Outperform at RBC Capital
GAMCO Investors (GBL) downgraded to Underperform from Neutral at BofA/Merrill
Intuit (INTU) downgraded to Underweight from Equal Weight at Morgan Stanley
James River Coal (JRCC) downgraded to Underweight from Hold at BB&T
Joy Global (JOY) downgraded to Neutral from Outperform at RW Baird
NRG Energy (NRG) downgraded to Neutral from Conviction Buy at Goldman
Procter & Gamble (PG) downgraded to Equal Weight from Overweight at Barclays
Tanger Factory (SKT) downgraded to Hold from Buy at Jefferies
Tower Group (TWGP) downgraded to Market Perform from Outperform at FBR Capital
TransDigm (TDG) downgraded to Sector Perform from Outperform at RBC Capital
ViroPharma (VPHM) downgraded to Neutral from Buy at BofA/Merrill

Initiations

AT&T (T) initiated with an Outperform at Credit Suisse
Approach Resources (AREX) initiated with an Outperform at Northland Securities
Aruba Networks (ARUN) initiated with an Overweight at Piper Jaffray
Diamondback Energy (FANG) initiated with an Outperform at Northland Securities
Frank's International (FI) initiated with a Buy at Citigroup
Frank's International (FI) initiated with a Buy at UBS
Frank's International (FI) initiated with a Neutral at Goldman
Northstar Realty (NRF) initiated with an Outperform at Keefe Bruyette
Phillips 66 Partners (PSXP) initiated with a Neutral at Citigroup
QEP Midstream Partners (QEPM) initiated with a Neutral at Citigroup
Resolute Energy (REN) initiated with an Outperform at Northland Securities
SAExploration (SAEX) initiated with a Buy at Canaccord
SolarCity (SCTY) initiated with a Neutral at RW Baird
Sprint (S) initiated with an Underperform at Credit Suisse
T-Mobile (TMUS) initiated with an Outperform at Credit Suisse
Verizon (VZ) initiated with a Neutral at Credit Suisse
World Point Terminals (WPT) initiated with a Neutral at Citigroup

HOT STOCKS

Dollar Tree (DLTR) adopted $2B share repurchase plan, $1B accelerated repurchase
Fitch upgraded CNA Financial's (CNA) rating to 'A' from 'A-', outlook stable
Apache (APA) to sell Canadian oil and gas assets for $112M
Siemens (SI) proposed naming SAP (SAP) co-CEO Snabe to succeed Ackermann on board, Bloomberg reports
Dolan Co. (DM) adopted rights agreement to protect net operating losses
Camelot Information (CIS) entered into merger agreement for 'going private' transaction
Tower Group (TWGP) delayed Q2 results to week of October 7

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
InspireMD (NSPR)

Companies that missed consensus earnings expectations include:
Digital Cinema (DCIN), Adobe (ADBE)

NEWSPAPERS/WEBSITES

• From big-box retailers to high-tech manufacturers, more companies across the country are producing their own power, sending a shudder through the utility industry (AEP, DUK, EXC, ETR), threatening its revenues and growth prospects. State and federal regulators say they are worried that utilities could end up with fewer customers to pay for costly transmission lines and power plants, the Wall Street Journal reports
• Rising healthcare costs and a climate of change brought about by the new federal health law are prompting American corporations to revisit the pact they've long had with employees over medical benefits. Walgreen (WAG) will today become one of the largest employers yet to make sweeping changes to company-backed health programs, the Wall Street Journal reports
• A crackdown on corruption in China's pharmaceutical sector has hurt sales at international (GSK) and local firms, with many doctors at Chinese hospitals refusing to see drug representatives for fear of being caught up in the widening scandal, Reuters reports
• Buick customers in the U.S. and China could see more European design and engineering in an expanded range of new models by 2020, as GM (GM) more closely integrates global product development between Buick and GM's German brand Opel, Reuters reports
• The Fed today is expected to begin its long retreat from ultra-easy monetary policy by announcing a small reduction in its bond buying, while stressing that interest rates will remain near zero for a long time to come, Reuters reports
• Wall Street banks, facing a drop in Q3 trading revenue, are counting on today’s Fed announcement to spark a surge in volume. Banks including JPMorgan Chase (JPM) and Barclays (BCS) have indicated to investors that trading revenue for the period probably will be down from a year earlier, Bloomberg reports

SYNDICATE

Benefitfocus (BNFT) 4.935M share IPO priced at $26.50
CombiMatrix (CBMX) files to sell $10M of Class A, Class B units
Five Below (FIVE) files to sell 7.1M shares of common stock for holders
Five Prime (FPRX) 4.8M share IPO priced at $13.00
Marriott (MAR) offers 23.41K shares of Class A common stock directly to consultant
Prothena (PRTA) files to sell 5M ordinary shares
QIWI (QIWI) files to sell 8.2M American Depositary Shares for holders
RTI Surgical (RTIX) files to sell 15.34M shares of common stock for holders
Sangamo BioSciences (SGMO) files to sell common stock
Volaris (VLRS) 28.8M share IPO priced at $12.00

Back in October of 2012, Hugh Hendry proposed a simple investment thesis: '"I am long gold and I am short gold mining equities. There is no rationale for owning gold mining equities. It is as close as you get to insanity. The risk premium goes up when the gold price goes up. Societies are more envious of your gold at $3000 than at $300. And there is no valuation argument that protects you against the risk of confiscation. And if you are bullish gold why don’t you buy gold ETFs, gold futures or gold bullion." Since then, anyone who listened to Hendry has made a substantial double digit return (yes, one can make double digits returns on gold even when gold is sliding: such is the "magic" of long gold, short GDX pair trades). However, following a massive, 50%+ selloff, there comes a time when even gold miner stocks become attractive to those with deep pockets filled with reserve fiat. For someone like China, that time may be now. The WSJ reports that China's largest gold company, China National Gold Group Corp., has talked to Ivanhoe Mines "about buying a stake in or asset from the company."

It is unclear where talks stand, but, if completed, such an investment would mark another step into international markets for the Beijing-based miner and further Chinese investment in African mining. It could also entail Mr. Freidland's taking on a major international partner not long after he lost control of a major mining company to London-listed giant, Rio Tinto PLC.

The WSJ adds "on Monday, Toronto-listed Ivanhoe said it is selling $100 million worth of stock at $2 a share, a sharp discount to Friday's closing price of $2.56. The stock fell 11% as investors digested news of the dilution and analysts said that the total falls short of the money that Ivanhoe needs to raise. In a release Ivanhoe said that it is in discussions with a number of international, private and state-owned mining companies about raising further funds through investments in its projects and the company. "Ongoing talks could lead to the formation of a significant strategic corporate partnership or syndicate for continued exploration and development of the company's discoveries and associated infrastructure," Chief Executive Lars-Eric Johansson said Monday. A spokesman for the company declined to comment on whether it had held talks with China National Gold."

It probably had: while we have reported previously how over the past few years, China quietly but purposefully taken over Africa and its resources, we have still to find any indication that China was willing to spend any nominal amount of fiat to begin procuring gold miners - a step, which if and when confirmed, would rejuvenate the gold mining sector to an extent not seen in years. Suddenly China would become the buyer of first, and last, resort, and following a year long plunge in GDX, the long awaited surge would finally arrive over "fears" which gold miner would be taken over by China next.

Ivanhoe Mines has projects to mine copper and zinc in the Democratic Republic of Congo and gold, nickel and copper in South Africa.

 

Though China National Gold focuses on gold projects, it has looked at different arrangements with Ivanhoe, according to one of the people familiar with the matter. That included, at one stage, taking a stake in Ivanhoe or taking over one part of its operations, that person said.

 

China National Gold is also talking to other companies, including several who operate in Africa, another person familiar with the matter said. Last year, the company was in talks with Barrick Gold Corp. to buy its stake in African Barrick Gold PLC but pulled out in January.

 

...

 

China National has already bought one company from Mr. Friedland, when an earlier incarnation of Ivanhoe Mines sold a controlling stake in Jinshan Gold Mines Inc. in 2008.

The big question then, the one that everyone has wanted an answer to, is the following: is Ivanhoe the proverbial toehold that China wishes to establish in Africa, and in gold. Because the two go hand in hand. And if indeed China is finally in an expansionary phase, one which will see to acquire not only gold, but gold miners, first in Africa and then everywhere else, which other massively oversold gold miner will the likes of China National Gold go after? The answer is still unknown.

What is known is that China has and continues to important unprecedented amounts of gold. If indeed China is so intent on sequestering all the world's physical gold, surely it is only a matter of time before it begins to purchase the very miners of production. Especially since countries hostile to US-based miners, in a world in which US geopolitical influence is rapidly waning, may prove quite supportive of Chinese equity ownership in a local mine or two.

And how long before the US antitrust commission is brought to the supreme test: will the US or won't it approve a transaction in which none other than China is granted permission to purchase a US-based mining operation.

We may get the answer quite soon.

• Iran Icebreaker Set at U.N.  (WSJ)
• Chrysler Feud Triggers IPO Filing  (WSJ)
• JPMorgan Chase, 12 More Banks Said to Be Sued Over Libor (BBG)
• Regulator sues Morgan Stanley, eight others over faulty securities (Reuters)
• Monte Paschi Seen Boosting Cost Goals to Meet EU Demands (BBG)
• Here we go again - "not enough funds": CFTC chair Gary Gensler warns on fund cuts to police derivatives (FT)
• Congress Fuels Private Jails Detaining 34,000 Immigrants (BBG)
• KKR, Sycamore looking to buy Jones Group this week (NYPost) - take with lots of salt
• Fiat rethinks alliance with Chrysler after IPO filing (Reuters)
• Young Invincibles Caught in Crossfire Over Obamacare Cost (BBG)
• Mayfair Office Squeeze Spawns New London Real Estate Hubs (BBG)
• Tokyo Electron, Applied Materials Agree to Merge (WSJ)
• Chinese Court Rejects Request to Move Cooper Case to Hong Kong (BBG)
• Microsoft, BesTV to Invest up to $237 Mln in China Venture (WSJ)
• Lennar Third-Quarter Profit Beats Estimates on House Price Gain (BBG)

Overnight Media Digest

WSJ

* BlackBerry struck a preliminary deal in which a group led by a former board member would take the company private for about $4.7 billion after an effort to stay competitive in the smartphone market failed.

* Chrysler Group filed for an initial public offering, a move forced by the failure of the auto maker's Italian majority owner and its main union to agree on the company's value.

* Two former traders at JPMorgan Chase accused of overstating the value of their group's positions are pointing the finger at Bruno Iksil, the so-called London whale, claiming that Iksil was the one responsible for valuing the group's positions, not the two men, according to people close to the matter.

* The end of the refinancing boom continues to shake up the U.S. banking sector, as Citigroup Inc said Monday it laid off 1,000 workers in its mortgage business. Citi is the latest bank to cut back on its mortgage workforce in the wake of rising interest rates, which have curbed consumer interest in purchasing new homes and refinancing mortgages.

* Five years after the financial crisis, 113 small to midsize U.S. banks still owe taxpayers about $2.7 billion, turning what was supposed to be a short-term government lifeline into a long-term source of capital.

* Lenders to LightSquared Inc on Monday questioned the selection of an independent director to help oversee a sale of the wireless telecom company. The lenders claim the director, Donna Alderman, isn't independent because she previously sparred with Dish Network Corp, which is offering $2.22 billion for LightSquared.

* Air France KLM's board discussed whether to increase the airline's stake in struggling Alitalia or to bail out but said it wanted more information from the Italian carrier.

* Activision Blizzard and parent Vivendi filed an emergency appeal of a ruling that blocked Vivendi's $8.2 billion sale of most of its controlling stake in the videogame maker.

* Microsoft unveiled the second generation of its Surface tablets in New York on Monday, tweaking them with faster speeds and better battery life.

FT

U.S. authorities are planning to file civil charges against JPMorgan Chase & Co as early as Tuesday alleging the bank misled investors in mortgage-backed securities sold in the lead-up to the financial crisis.

BlackBerry on Monday agreed to be acquired by a consortium of Canadian investment companies, led by its biggest shareholder, for $4.7 billion in cash, in a last-ditch move to ensure the survival of one of the pioneers of the global smartphone industry.

Citigroup Inc said it would eliminate about 1,000 jobs in its U.S. home mortgage business, as higher interest rates hurt refinancing volumes.

Apple Inc beat analysts' expectations as it sold 9 million new iPhones during their first three days in stores, prompting it to upgrade its fourth-quarter financial guidance and pushing shares up in early trading.

The International Air Transport Association, aviation industry's main representative body, cut its 2013 combined profit forecast for global airlines by 8 percent to $11.7 billion on Monday, citing a dip in demand for air travel due to slowing economic growth in emerging markets.

UK-listed African Barrick Gold's chief executive Brad Gordon said the struggling gold miner could be independent of Barrick Gold Corp within 12 to 18 months, if the 74 percent parent restarted attempts to divest the company.

NYT

* JPMorgan Chase & Co paid $1 billion to resolve an array of government investigations last week. But its biggest battles with federal authorities may still lie ahead. The nation's largest bank is bracing for a lawsuit from federal prosecutors in California who suspect that the bank sold shoddy mortgage securities to investors in the run-up to the financial crisis, according to people briefed on the matter.

* Chrysler filed for a public stock offering on Monday, acting only under pressure from its second-largest shareholder, a trust set up to provide medical coverage for 115,000 retired autoworkers and their relatives. Ordinarily, Chrysler's plan would be cause to celebrate the automaker's comeback from its government bailout and bankruptcy in 2009.

* Detroit had a bit of rare good fortune as it hurtled toward bankruptcy last summer - a couple of banks were willing to let it out of some expensive financial contracts, called interest-rate swaps, without paying in full the usual steep termination fees. But since then, an insurance company, Syncora Guarantee, has been seeking to block the deal, lining up allies among Detroit's other creditors.

* While French fries are a staple of the fast-food burger business, they have long been vilified by nutrition experts as little more than vehicles for adding fat, salt and calories to diets. Now Burger King Worldwide Inc has come up with a fry that it says delivers about 40 percent less fat and 30 percent fewer calories than the fries sold by its archenemy McDonald's.

* Robert Cohen, the founder of the Hudson Media empire, whose last wishes are at the center of nasty legal battle, was either a gravely ill old man unable to speak in his final years, or an opinionated octogenarian who enjoyed attending family bar mitzvahs. Those were the clashing portraits presented in state court on Monday of the man, who died in 2012, leaving behind a fortune that is now the subject of a bitter fight that has drawn in some of the ultrawealthy of New York society.

* BlackBerry Ltd said on Monday that it had signed a letter of intent from a group led by Fairfax Financial Holdings Ltd, a Canadian insurance and investment company, to pay shareholders $9 a share in cash, pending a variety of conditions, taking the company private. The $4.7 billion offer from Fairfax, which already owns about 10 percent of BlackBerry, is a powerful symbol of the phone maker's decline.

* Weak reaction to important new Microsoft Corp products rarely discourages the company - instead, it usually tweaks the products over and over. So it goes with the Surface, Microsoft's poorly selling answer to the iPad. On Monday, Microsoft introduced a second generation of Surface tablets with only subtle adjustments from the originals, a sign that the company still believes in its vision of devices that blend the benefits of tablets and laptop computers.

Canada

THE GLOBE AND MAIL

* A new coalition in favor of Quebec's Charter of Values says it has gained the support of former Supreme Court justice Claire L'Heureux-Dubé, a figure who stands to offer high-profile legal heft to proponents of the ban on religious headgear in the public service.

* Two Toronto-born teenagers have been identified as the Canadians injured in an attack on a Nairobi mall, with a relative saying one of them remains in critical condition. The girls are Fardosa Abdi, 17, and Dheeman Abdi, 16, who were shopping Saturday when the attack on the mall began, their aunt told the Associated Press.

* Insurance companies have dished out about C$1.7 billion ($1.65 billion) worth of claims related to the floods in southern Alberta, and the high price tag will likely mean changes to the insurance business - with customers paying more for coverage.

Reports in the business section:

* Fairfax Financial Holdings Ltd's preliminary offer to buy BlackBerry Ltd for $4.7 billion sets out a potential rescue plan for a company that is losing the fight for smartphone customers. The $9-a-share bid puts at least a temporary halt to the deluge of bad news surrounding the Waterloo, Ontario-based company.

* The number of new condos that sold in the Greater Toronto Area during August dropped to 633, the lowest level for that month in a decade, according to RealNet Canada Inc. The figure is 18 percent lower than the 772 sales that occurred in August 2012. There were 1,923 sales in August 2011.

* Ottawa's failure to entice a large foreign wireless company to bid in an upcoming spectrum auction is threatening the government's effort to create a stable fourth player in Ontario, Alberta and British Columbia. No foreign carriers were included on a list of applicants for the auction of 700 megahertz frequency, despite a major push by Ottawa to relax foreign investment restrictions for small telecoms and provide incentives for new players to acquire wireless licences.

NATIONAL POST

* New Democrat MP Pat Martin accepted a personal loan from the New Democratic Party and numerous donations from labor unions to help pay down debt incurred in a defamation lawsuit over the robocalls case. Documents filed with the federal ethics commissioner by the Manitoba MP earlier this month show he accepted contributions to a legal defense fund from the Canadian Labour Congress, the United Steelworkers and the Canadian Union of Public Employees, and 14 other unions or locals.

* Canada's federal finance minister, Jim Flaherty, announced on Monday that his government will put up C$660 million to build a subway in Scarborough, in what Mayor Rob Ford called a "historic day" for Toronto.

FINANCIAL POST

* The health of the Canadian economy relies on the development and operation of a vigorous resources sector. As the country forges into the 21st century, eyes are increasingly turning to Canada's north as a storehouse of resources ranging from oil and gas, to gold, diamonds and other mineral deposits from the Yukon to Ontario's Ring of Fire and east to Newfoundland and Labrador.

Hong Kong

SOUTH CHINA MORNING POST

-- The experiment in full yuan convertibility through the new free-trade zone in Shanghai will boost transaction volumes in offshore foreign exchange centres like London and Hong Kong that have been accumulating yuan deposits, according to City of London Lord Mayor Roger Gifford. (link.reuters.com/hex33v)

THE STANDARD

-- Tsingtao Brewery Co Ltd plans to boost annual sales to 10 million kiloliters by 2014, said vice president and executive director Sun Yuguo, adding that it is seeking to outperform the industry by two percentage points in the coming three to five years. (link.reuters.com/jex33v)

HONG KONG ECONOMIC JOURNAL

-- Nexteer Automotive Group Ltd, a supplier of steering systems which shelved its listing plan due to a volatile market, reopens the retail book for its initial public offering, aiming to raise up to HK$2.57 billion ($331.47 million) to boost production.

SING TAO DAILY

-- Ai Baojun, deputy mayor of Shanghai, will head the management committee of Shanghai's free trade zone, which will officially open on Sept. 29, sources said.

APPLE DAILY

-- Hang Seng Bank Ltd Vice-Chairman and Chief Executive Rose Lee said the bank will fully support the development of Shanghai's pilot free trade zone and is preparing to set up a network in the zone.

ORIENTAL DAILY

-- Rosewood Hotel Group, the hotel management arm of New World Development Co Ltd, would focus on expanding in Asia and Europe in the next five years, said Chief Executive Officer Sonia Cheng. It is estimated the investment will be about $500 million.

TA KUNG PAO

-- Beijing-based LeTV Information Technology Co announced a strategic tie-up with Chinese internet giant Tencent Holdings Ltd hoping to increase sales of its smart televisions. This is the first time LeTV will sell smart TVs on a third-party online platform.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Apple (AAPL) upgraded to Positive from Neutral at Susquehanna
BlackBerry (BBRY) upgraded to Hold from Sell at Canaccord
CIT Group (CIT) upgraded to Buy from Hold at Jefferies
Cbeyond (CBEY) upgraded to Outperform from Market Perform at Raymond James
Elizabeth Arden (RDEN) upgraded to Buy from Neutral at SunTrust
Facebook (FB) upgraded to Buy from Neutral at Citigroup
Hanover Insurance (THG) upgraded to Outperform from Market Perform at JMP Securities
Hologic (HOLX) upgraded to Strong Buy from Buy at ISI Group
Microchip (MCHP) upgraded to Buy from Neutral at Goldman
Rovi (ROVI) upgraded to Buy from Neutral at B. Riley
SandRidge Energy (SD) upgraded to Neutral from Sell at Goldman
Sotheby's (BID) upgraded to Buy from Neutral at Citigroup
Total (TOT) upgraded to Equal Weight from Underweight at Barclays
Webster Financial (WBS) upgraded to Buy from Neutral at Sterne Agee

Downgrades

ADP (ADP) downgraded to Sector Perform from Outperform at RBC Capital
Albemarle (ALB) downgraded to Neutral from Overweight at Piper Jaffray
athenahealth (ATHN) downgraded to Market Perform from Outperform at Leerink
Calumet Specialty (CLMT) downgraded to Underperform from Neutral at Credit Suisse
EMC (EMC) downgraded to Equal Weight from Overweight at Barclays
Envestnet (ENV) downgraded to Sector Perform from Outperform at RBC Capital
Equifax (EFX) downgraded to Sector Perform from Outperform at RBC Capital
F5 Networks (FFIV) downgraded to Neutral from Buy at Goldman
MetroCorp (MCBI) downgraded to Market Perform from Outperform at Raymond James
NetApp (NTAP) downgraded to Equal Weight from Overweight at Barclays
NeuStar (NSR) downgraded to Sector Perform from Outperform at RBC Capital
PHH Corp. (PHH) downgraded to Market Perform from Outperform at Keefe Bruyette
Prosensa (RNA) downgraded to Neutral from Overweight at JPMorgan
Red Hat (RHT) downgraded to Neutral from Overweight at Piper Jaffray

Initiations

ADP (ADP) initiated with a Neutral at UBS
Approach Resources (AREX) initiated with a Buy at Goldman
Athlon Energy (ATHL) initiated with a Neutral at Goldman
Bonanza Creek (BCEI) initiated with a Buy at Goldman
Charles River Labs (CRL) initiated with a Neutral at Credit Suisse
Church & Dwight (CHD) initiated with a Buy at Jefferies
Continental Resources (CLR) initiated with a Buy at Goldman
Covance (CVD) initiated with an Outperform at Credit Suisse
Denbury Resources (DNR) initiated with a Neutral at Goldman
EchoStar (SATS) initiated with an Outperform at Wells Fargo
Energizer (ENR) initiated with a Hold at Jefferies
Goodrich Petroleum (GDP) initiated with a Neutral at Goldman
Gulfport Energy (GPOR) initiated with a Buy at Goldman
Infinity Pharmaceuticals (INFI) initiated with a Market Perform at William Blair
Intelsat (I) initiated with a Market Perform at Wells Fargo
Jarden (JAH) initiated with a Buy at Jefferies
Kodiak Oil & Gas (KOG) initiated with a Neutral at Goldman
Magnum Hunter (MHR) initiated with a Neutral at Goldman
New Residential (NRZ) initiated with an Outperform at FBR Capital
Oasis Petroleum (OAS) initiated with a Conviction Buy at Goldman
PAREXEL (PRXL) initiated with an Outperform at Credit Suisse
Pharmacyclics (PCYC) initiated with an Outperform at William Blair
Prestige Brands (PBH) initiated with a Hold at Jefferies
Quintiles (Q) initiated with an Outperform at Credit Suisse
Rosetta Resources (ROSE) initiated with a Neutral at Goldman
Suncor (SU) initiated with a Neutral at Citigroup
T-Mobile (TMUS) initiated with an Outperform at Cowen
ViaSat (VSAT) initiated with a Market Perform at Wells Fargo
WPX Energy (WPX) initiated with a Sell at Goldman
Whiting Petroleum (WLL) initiated with a Neutral at Goldman

HOT STOCKS

Telefonica (TEF) reached deal to boost stake in Telecom Italia (TI), Bloomberg reports
Applied Materials (AMAT), Tokyo Electron announced merger, $3B share repurchase
Fiat (FIATY) reiterated desire to acquire Chrysler in filing, Bloomberg reports
DISH (DISH): United States District Court, Central District of California denied preliminary injunction motion filed by Fox Broadcasting (NWSA)
AT&T (T), Fon signed strategic global Wi-Fi agreement
BNY Mellon (BK) won tax case over interest deductions, Bloomberg reports
KKR (KKR), CDH Modern Dairy partner to build farms in Shandong Province

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Lennar (LEN), Red Hat (RHT)

Companies that matched consensus earnings expectations include:
S&W Seed (SANW)

NEWSPAPERS/WEBSITES

• KKR (KKR), Sycamore look to buy Jones Group (JNY), New York Post reports
• Health insurers (HUM, AET) are pushing to hold onto their policyholders ahead of new government-run exchanges expected to roll out next week, but state regulators have accused some of misleading those customers in the process, the Wall Street Journal reports
• Microsoft (MSFT) and Chinese Internet TV company BesTV New Media plan to invest up to $237M in a joint venture in China to develop "family games and related services" as the videogame industry continues to wait for a loosening of restrictions blocking the sale of videogame consoles in the country, the Wall Street Journal reports
• Chrysler Group LLC was forced to file paperwork for an IPO by its second-biggest shareholder yesterday, escalating a fight with main owner Fiat SpA (FIATY) which said it could scale back its commitment to the U.S. automaker, Reuters reports
• Facebook (FB), Twitter and other websites deemed sensitive and blocked by the Chinese government will be accessible in a planned free-trade zone in Shanghai, according to the South China Morning Post, Reuters reports
• South Korea failed to choose a supplier for an $7.7B fighter-jet order, a setback for Boeing Co. (BA). The Defense Ministry and the arms procurement office decided against Boeing’s F-15SE fighter, signaling that the jet wasn’t advanced enough, Bloomberg reports

SYNDICATE

Adecogro (AGRO) files shelf for sale of up to 55.82M shares by holders
Altisource Residential (RESI) files to sell 10M shares of common stock
Arbor Realty (ABR) files to sell 6M shares of common stock
Chrysler Group files for IPO
Emerald Oil (EOX) files to sell 15M shares of common stock
Synageva (GEVA) files to sell 2.75M shares of common stock
Westar Energy (WR) files to sell 8M shares of common stock

ACTIVIST/PASSIVE FILINGS

Carlson Capital reports stake in Boise (BZ), sees value above merger price

• US admits surveillance on foreign governments ‘reached too far’ (FT)
• He must be so proud: Obama halted NSA spying on IMF and World Bank headquarters (RTRS)
• Obamacare website gets new tech experts; oversight pressure grows (Reuters)
• R.B.S. to Split Off $61 Billion in Loans Into Internal ‘Bad Bank’ (NYT)
• Draghi’s Deflation Risk Complicates Recovery (BBG)
• Abenomics: Nissan slashes full-year profit forecast 15% (FT)
• Credit Suisse Dismisses London Trader Over 'Unusual Trading' Losses (WSJ)
• RBS avoids break-up with 38 billion pounds 'internal bad bank' (Reuters)
• Twitter Said to Attract More Than Enough Interest for IPO (BBG)
• Canceled U.S. health plans are disruptive part of reform -Cigna CEO (Reuters)
• J.P. Morgan, Regulators Wage War of Wording (WSJ)
• Brooks, Coulson Oversaw Hacking in ’Secret’ Relationship (BBG)
• Islamist Rebels Take Fight to Suburbs of Syrian Capital (WSJ)

Overnight Media Digest

WSJ

* Before JPMorgan acquired the banking operations of Washington Mutual, the bank's lawyers tangled with regulators over the wording of the agreement. Five years later, JPMorgan and the Federal Deposit Insurance Corp are still fighting over the meaning of those words. The question of who bears responsibility for Washington Mutual's legal liabilities is taking on increasing urgency as J.P. Morgan negotiates a pact with the Justice Department that would end probes of soured mortgage bonds issued by J.P. Morgan and Washington Mutual during the housing boom.

* By the year-end, most airline passengers will be able to use their tablets, e-readers and other gadgets during all stages of flight. The Federal Aviation Administration's decision, its first big shift on electronic devices since it restricted their use in flight in 1966, caps years of debate over whether electronic emissions from devices can interfere with cockpit instrument.

* The CFTC is so cash starved that it is being forced to delay cases, shelve certain probes and decided not to file charges against two men in the "London whale" trading mess, a top official said.

* Euro-zone inflation fell to its lowest in almost four years, raising pressure on the ECB to ease money supply and support the recovery.

* Germany described as "incomprehensible" U.S. criticism of its export-led economic policies, saying the country's domestic economy is the main pillar of its growth.

* Goldman Sachs Group Inc scored some points with regulators with a loan to a New York City bicycle-sharing program named after rival Citigroup Inc. The $41 million loan to the Citigroup bike program was part of $2 billion in loans and investments made by the Wall Street bank from October 2010 until December 2012 to comply with U.S. rules designed to ensure financial services reach low- and middle-income neighborhoods, according to a recent regulatory review of the bank's adherence to the Community Reinvestment Act.

* The way things are going, the term "cable TV" may have to be replaced by "phone TV." Nearly a decade after Verizon Communications Inc and AT&T Inc began building pipelines to carry TV service to U.S. homes, they are nearing the market share of cable operators in areas where they operate, according to third-quarter results released by cable and phone companies in recent days.

* In the wake of a major immigration-law violation case involving Indian outsourcing giant Infosys Ltd, federal agents are investigating other companies for possible similar alleged misdeeds, according to an official with the Department of Homeland Security.

* Fannie Mae sued nine of the world's largest banks over alleged manipulation of interest rates, joining the legal battles in the rate-rigging scandal. The lawsuit, filed Thursday in U.S. District Court in Manhattan, said that the mortgage-finance giant sustained an estimated $800 million in damages from banks that allegedly manipulated the London interbank offered rate and other financial benchmarks. Fannie also sued the British Bankers' Association, a private association of large British banks.

FT

The Royal Bank of Scotland has suspended two traders in its foreign exchange division amid global investigations into the possible manipulation of the $5.3 trillion-a-day forex market, sources said.

Wells Fargo, the fourth-largest U.S. bank, has settled claims with the U.S. Federal Housing Finance Agency over bad mortgages the bank sold ahead of the financial crisis, according to sources.

Insurer American International Group said it had completed its first share buyback since its $182 billion government bailout during the financial crisis.

Japanese consumer electronics company Sony on Friday morning slashed its full-year profit forecast by 26 percent, hit by weakness in its struggling TV operation.

NYT

* Google has spent months and millions of dollars encrypting email, search queries and other information flowing among its data centers worldwide. Facebook's chief executive said at a conference this fall that the government "blew it." And though it has not been announced publicly, Twitter plans to set up new types of encryption to protect messages from snoops.

* In an announcement at the company's office on Thursday, Google showed off an updated version of its Android mobile operating system, called "KitKat 4.4," that can search for information both on the web and some smartphone apps.

* Now that new insurance marketplaces are opening under the Affordable Care Act, insurance companies are canceling millions of individual plans that fail to meet minimum standards.

* Time Warner Cable lost 306,000 television subscribers in the third quarter, hurt by a contract dispute that resulted in a blackout of CBS programming.

* Rebuffing a strategy of diversification, the venture capital firm XPV Capital believes it can find success by developing expertise in one area.

* Riding a surge in demand for new fuel-efficient planes, Boeing said on Thursday that it would increase production of its top-selling 737 jets to 47 a month by 2017, from 38 now.

* The Container Store has raised $225 million in its initial public offering, after demand from potential shareholders prompted the company to seek even more in its market debut.

* A majority of Oracle shareholders demonstrated their opposition to the compensation of chief executive Lawrence Ellison on Thursday, voting against a non-binding resolution on the company's pay practices.

* Citigroup's financial strategy and solutions group takes stock of the growing wave of shareholder activism, and concludes that what was once primarily an American phenomenon is spreading abroad.

* Fannie Mae sued nine of the world's largest banks on Thursday, accusing them of colluding to manipulate interest rates and seeking more than $800 million of damages. In a complaint filed in Federal District Court in Manhattan, Fannie Mae, the government-controlled mortgage company, accused the banks of conspiring for many years to suppress the Libor, including during the 2008 financial crisis.

Canada

THE GLOBE AND MAIL

* A new environmental study into Taseko Mines Ltd's billion-dollar New Prosperity mine proposal in British Columbia says it would pose "several significant adverse environmental effects."

* Singing superstar Shania Twain and the late Saskatchewan curler Sandra Schmirler are among the notable Canadians who will be celebrated with postage stamps in 2014.

Reports in the business section:

* Barrick Gold Corp is moving aggressively to slash costs and deal with a debt hangover, halting construction at its expensive Pascua Lama mine and raising billions in one of Canada's biggest stock sales.

* Some of the world's largest energy companies have unleashed a torrent of oil sands spending, despite industry concerns about access to export markets, soaring costs and volatile Canadian heavy crude prices.

NATIONAL POST

* Toronto Police Chief Bill Blair announced on Thursday that investigators have found a video of Toronto Mayor Rob Ford that allegedly depicts him smoking a crack pipe and charged his friend with extortion, leading a defiant mayor to insist he has "no reason to resign."

* If there were any doubts about the oil sands industry's resolve to expand amid growing protests, escalating costs and volatile oil prices, they were put to rest Thursday by mega announcements by Canadian and global oil companies that they are pushing forward with a new generation of projects.

FINANCIAL POST

* Two years after losing out on a bid to buy rival Prime Restaurants, Cara Operations has reached a deal with Fairfax Financial Holdings Ltd to merge the two food service giants.

* The Toronto stock market ended October trading sharply lower Thursday, amid major announcements from the oilpatch, earnings disappointments and uncertainty about the Federal Reserve's next move.

China

SHANGHAI SECURITIES NEWS

- The management committee of the pilot Free Trade Zone in Shanghai plans to implement 19 of the 23 measures designed to expand the service industry by the end of this year.

CHINA DAILY

- The Ministry of Public Security released a circular on Thursday directing police departments across the country to crack down on crimes targeting medical workers, following a spate of incidences leading to the death or injury of hospital staff.

- A policeman was detained for allegedly shooting and killing a pregnant woman in Guangxi Zhuang in the south of China, according to authorities. The case is the fourth incident in two years of a police officer killing innocents with an issued firearm.

PEOPLE'S DAILY

- Leading government officials in China need to put themselves in the position of the masses to understand what people want, where there is public distress and hardship, said a commentary in the paper that acts as the government's mouthpiece.

SHANGHAI DAILY

- China will extend its European polysilicon anti-dumping investigation by half a year, delaying the imposition of tariffs on imports, the Ministry of Commerce said on Thursday, without elaborating on the reasons for the extension.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Alpha Natural (ANR) upgraded to Market Perform from Underperform at Raymond James
General Growth (GGP) upgraded to Buy from Neutral at BofA/Merrill
Green Dot (GDOT) upgraded to Overweight from Neutral at JPMorgan
Greenbrier (GBX) upgraded to Buy from Underperform at BofA/Merrill
ITT Corp. (ITT) upgraded to Outperform from Neutral at RW Baird
Netflix (NFLX) upgraded to Outperform from Neutral at RW Baird
PACCAR (PCAR) upgraded to Hold from Sell at McAdams Wright
Penn Virginia (PVA) upgraded to Outperform from Neutral at Credit Suisse
Quintiles (Q) upgraded to Outperform from Neutral at RW Baird
Siliconware Precision (SPIL) upgraded to Buy from Sell at UBS
Valero Energy (VLO) upgraded to Outperform from Market Perform at Cowen

Downgrades

ARIAD (ARIA) downgraded to Hold from Buy at Jefferies
ARIAD (ARIA) downgraded to Market Perform from Outperform at Leerink
Advance Auto Parts (AAP) downgraded to Hold from Buy at Deutsche Bank
Alamos Gold (AGI) downgraded to Market Perform from Outperform at Raymond James
Alamos Gold (AGI) downgraded to Sector Perform from Outperform at RBC Capital
Avon Products (AVP) downgraded to Market Perform from Outperform at BMO Capital
bebe stores (BEBE) downgraded to Neutral from Buy at Janney Capital
Chart Industries (GTLS) downgraded to Neutral from Overweight at Piper Jaffray
Craft Brew (BREW) downgraded to Neutral from Buy at Citigroup
Education Management (EDMC) downgraded to Underperform at BMO Capital
Hornbeck Offshore (HOS) downgraded to Hold from Buy at Wunderlich
Monotype Imaging (TYPE) downgraded to Neutral from Overweight at JPMorgan
PetSmart (PETM) downgraded to Neutral from Buy at BofA/Merrill
Provident Financial (PROV) downgraded to Market Perform at Raymond James
Royal Dutch Shell (RDS.A) downgraded to Hold from Buy at Societe Generale
Royal Dutch Shell (RDS.A) downgraded to Neutral from Outperform at Macquarie
Santander Mexico (BSMX) downgraded to Hold from Buy at Deutsche Bank
Solar Capital (SLRC) downgraded to Market Perform from Outperform at Wells Fargo
Sony (SNE) downgraded to Hold from Buy at Jefferies
Strayer Education (STRA) downgraded to Underweight from Equal Weight at Morgan Stanley
Taubman Centers (TCO) downgraded to Neutral from Buy at BofA/Merrill
TeleTech (TTEC) downgraded to Equal Weight from Overweight at First Analysis
Vertex (VRTX) downgraded to Market Perform from Outperform at Bernstein
Volcano (VOLC) downgraded to Market Perform from Outperform at BMO Capital
Weight Watchers (WTW) downgraded to Equal Weight from Overweight at Barclays

HOT STOCKS

Wal-Mart (WMT), Green Dot (GDOT) expanded debit card pact
Republic Services (RSG) authorized additional $650M for stock repurchases
Fluor (FLR) sees FY14 revenues 'flattish' at consolidated level with improving margins
Starwood Property (STWD) to spin-off single-family residential business

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Orient-Express (OEH), Minerals Technologies (MTX), MasTec (MTZ), Amerisafe (AMSF), Southwestern Energy (SWN), Republic Services (RSG), Newmont Mining (NEM), American Vanguard (AVD), Kemper (KMPR), Trimble Navigation (TRMB), Standard Pacific (SPF), AMN Healthcare (AHS),  Fluor (FLR), Callidus Software (CALD), Green Dot (GDOT), AIG (AIG)

Companies that missed consensus earnings expectations include:
Genesee & Wyoming (GWR), Portland General Electric (POR), Hutchinson Technology (HTCH), Tellabs (TLAB), LRR Energy (LRE), Bill Barrett (BBG), Ellie Mae (ELLI), CEC Entertainment (CEC), MRC Global (MRC)

Companies that matched consensus earnings expectations include:
Dresser-Rand (DRC), Spansion (CODE), Chef's Warehouse (CHEF), Clovis (CLVS)

NEWSPAPERS/WEBSITES

• Verizon (VZ) and AT&T (T) are nearing the market share of cable operators in areas where they operate. Both phone companies have shown a greater willingness than their cable rivals, such as Comcast (CMCSA) and Time Warner Cable (TWC), to experiment with delivering movies and TV programming over the Internet outside the traditional pay-TV bundle, the Wall Street Journal reports
• After years of grooming customers to expect a few thousand dollars off sticker prices on even its latest models, GM (GM) said it is changing course and promising to shun lavish discounts when it comes to selling its newest pickup trucks, the Wall Street Journal reports
• As U.S. retailers face the shortest holiday season in years, they’re preparing to assail customers with deals and promotions this week. Wal-Mart Stores (WMT) is kicking off its online deals today, underscoring concerns that intense discounting aimed at luring budget-conscious shoppers could result in the most tepid holiday spending rise in four years, Reuters reports
• Hilton Worldwide, owned by Blackstone Group (BX), is aiming to launch its IPO the week of December 2, sources say, Reuters reports
• Shares of U.S. homebuilding companies (LEN, KBH, DHI) have fallen over 20% since May, even as home-improvement retailers rose to a record high, a sign some investors are too pessimistic that higher mortgage rates could derail new construction, Bloomberg reports
• Tesla Motors (TSLA) suffered its biggest one-month loss of market value in October, a 17% decline, amid concern among some investors that a fivefold stock-price surge outpaced the growth prospects for the electric-car company, Bloomberg reports

SYNDICATE

Artisan Partners (APAM) 4.8M share Secondary priced at $56.00
Barrick Gold (ABX) 163.5M share Spot Secondary priced at $18.35
Container Store (TCS) 12.5M share IPO priced at $18.00
Ikanos Communications (IKAN) files to sell 22.5M shares of common stock
Intermountain Community Bancorp (IMCB) files $377.68M mixed securities shelf
LyondellBasell (LYB) to sell 15M shares for holders
Pebblebrook Hotel (PEB) files to sell 2.2M shares of common stock
Streamline Health Solutions (STRM) files $37.5M mixed securities shelf
Tower International (TOWR) files to sell 2.58M shares of common stock for holders
Western Digital (WDC) 10.87M share Secondary priced at $67.00

Government data in the U.S. showed that the pace of business activity in the U.S. Midwest jumped in October, exceeding expectations and U.S. jobless claims declined somewhat last week.

Other real world facts regarding the very poor state of the U.S. economy are being ignored for now. One such important indicator regarding the health of the U.S. economy continues to flash red.

There are a record 47.6 million Americans, representing 23.1 million households, on food stamps today. The cost of the program will hit $63.4 billion in 2013 - less than what the Federal Reserve is printing every single month today. Yet, very tough benefit cuts to food stamp recipients kick in today. The move by Congress will siphon $5 billion from a program that helps one in seven Americans put breakfast, lunch and dinner on the table.

“If you look across the world, riots always begin typically the same way: when people cannot afford to eat food,” Margarette Purvis, the president and CEO of the Food Bank for New York said.

More ‘irrationally exuberant’ market participants are ignoring the poor fundamentals of the U.S. economy. Most market participants fear an improving economy could prompt the U.S. central bank to cut back its, very bullion friendly, money printing measures. This remains highly unlikely and far more likely is a double dip recession - potentially a very sharp one which will lead to even more quantitative easing and currency debasement.

The head of the eurozone finance ministers Jeroen Dijsselbloem said yesterday that governments need to prepare legislation for bail-ins. His important comments were not widely picked up, but they are important as they are another sign that bail-ins and deposit confiscation will be seen when banks get into difficulty. 
 

Gold Seasonal - Monthly Performance and Average (10 Years)

China bought more than 100 tonnes of gold from Hong Kong for a fifth straight month in September as demand for bullion bars and jewellery stayed strong. Chinese demand appears to have fallen marginally in recent days but remains on track to overtake India as the world's biggest store of wealth gold buyer this year.

Other News
* Barrick Gold Corp said it would stop development of its Pascua-Lama mine in South America indefinitely, a surprise reversal on a project that has already cost the world's largest gold producer more than $5 billion. (Reuters)

* The volume of gold transferred between accounts held by bullion clearers fell 16.3 percent in September to an average 18.5 million ounces a day, its lowest since August 2012, the London Bullion Market Association said. (Reuters)

* South Africa's AMCU union declared a wage dispute on Thursday with platinum producer Lonmin . The union also said its members in the gold sector were voting on whether or not to strike over wages and could do so from next week. (Reuters)

* American Eagle gold coin sales climbed from 13,000 oz in September, and they fell from 59,000 oz a year earlier, according to data today on the U.S. Mint website.

  -July sales were 50,500 oz

  -In the 10 months ended today, sales rose to 752,500 oz, compared with 753,000 oz for   all of 2012

  -American Eagle silver-coin sales were 3.087m oz in Oct., up from 3.01m oz last month and 3.153m a year earlier

  -In the 10 months ended today, sales were 39.175m oz, compared with 33.743m for all of 2012. (Bloomberg)

* Dow Jones-UBS Commodity Index Boosts 2014 Weighting for Gold.

Gold will be the heaviest-weighted component next yr, making up 11.5% of the index, up from 10.8% in 2013, S&P Dow Jones Indices and UBS Investment Bank said in a statement today.
  
   -Silver 2014 weighting 4.1% vs 3.9%
   -WTI crude weighting cut to 8.5% vs 9.2%
   -Natural gas weighting cut to 9.4% vs 10.4%
   -Brent oil weighting raised to 6.5% vs 5.8%. (Bloomberg)

* World Gold Council Says Private Gold Stock Worth $1.8 Trillion

That compares with $90 trillion for debt markets, and $51 trillion for equity markets, World Gold Council says in report on website today.

   -Debt markets grew threefold from 2000 to 2012 and equities increased from $20 trillion (Bloomberg)

* Global Gold Hedge Book Was 96 Tons by June, Lowest Since 2002
Net dehedging totaled 16t in 2Q, Societe Generale SA and Thomson Reuters GFMS say in report e-mailed today.
   -Gold hedge book lowest since quarterly records began in 2002
   -“Evidence of new hedging activity subsequent to the end of Q2 has been limited so     far; producers have instead been seeking to protect margins through cost-containment measures”
   -Says dehedging may persist through the rest of this year (Bloomberg)

Gold Is Seasonally Very Strong In November, Strong In January and February

Gold is range bound between $1,250/oz and $1,450/oz. The fundamentals including the current macroeconomic, systemic, geo-political and monetary conditions are positive for gold. These fundamentals in conjunction with the strong seasonals suggest higher gold prices are likely in the coming months.

Seasonally, the months of November, December and January are positive months for gold and October is seasonally a weak month for gold. October often sees declines in the gold price followed by strong gains in November, December, January and February (see tables).

Yesterday saw the end of October trading.  November is, after September, one of the strongest months to own gold. This is seen in the charts showing gold’s monthly performance over different time frames - 1975 to 2011, 2000 to 2011 and our Bloomberg Gold Seasonality table  from 2003 to 2013 (10 years is the maximum that can be used).

November is gold’s strongest month in the last ten years and it has returned 4.93% on average since 2003. Since 1975, gold has returned nearly 1.5% on average in November.

December is a mixed month for gold in the last 10 years but since 1975, December has returned more than 1% on average. 
January and February have also been gold for gold. Gold has returned 3.14% and 1.15% on average in January and in February respectively, in the last 10 years.

Over the longer time frame, since 1975, gold also shows seasonal strength in November, December and January.  

Autumn and winter is the seasonally strong period for the precious metals. This is believed to be due to robust physical demand internationally and especially in Asia for weddings and festivals and into year end for Chinese New Year stocking up.

It may also be related to traders being aware of the seasonals and therefore contributing to price gains or price falls in certain months.

Given the bullish fundamentals and the fact that gold already looks oversold with very poor sentiment today, any further weakness is likely to be short term.

Ultra loose monetary policies are set to continue for the foreseeable future which is highly supportive of gold and should lead to new real record highs over $2,400/oz in the coming years.

Download GoldCore’s Essential Guide To Silver Eagles here. 

Like Our Facebook Page For Interesting Breaking News, Insights, Blogs, Prizes and Special Offers

• China premier warns against loose money policies (Reuters)
• Brussels forecasts tepid Eurozone growth (FT)
• SAC Case Began With Informant’s Tips on Cohen, Rajaratnam (BBG)
• Dirty Munich Home’s Nazi Loot Estimated at $1.35 Billion (BBG)
• Mortar hits Vatican embassy in Damascus, no casualties (Reuters)
• India Launches Mars Mission (WSJ)
• Lael Brainard to leave Treasury, heading to Fed (FT)
• U.S. Takes Aim at 'Forced' Insurance (WSJ)
• Wife of Jeff Bezos attacks book about Amazon (FT)
• Fall of Brazil’s Batista embarrasses President Dilma Rousseff (FT)
• The One Thing People Still Really Like About BlackBerry (BusinessWeek)
• Twitter IPO More Expensive Than Facebook Without Profits (BBG)
• Cash floods into property as investors seek alternative or safety (Reuters)
• Fired Deutsche Bank Rates Traders Said to Return to Work (BBG)
• Italy eyes 'Google Tax' to help fix public finances (RTRS)

Overnight Media Digest

WSJ

* SolarCity said Monday that it intends to privately place $54 million of securities backed by a pool of solar-power systems, leases and electricity contracts.

* Investment in the medical-device and equipment industry is on pace to fall to $2.14 billion this year, down more than 40 percent from 2007 and the sharpest drop among the top five industry recipients of venture funding, according to an analysis of data compiled by PricewaterhouseCoopers and the National Venture Capital Association.

* Twitter Inc, riding a wave of strong demand for initial public offerings, sharply increased the price range of its shares three days before its stock is expected to begin trading. San Francisco-based Twitter increased its proposed share-price range to between $23 and $25 a share, up from between $17 and $20 a share.

* Tencent Holdings Ltd is vying to lead a $200 million fundraising in Snapchat, the latest effort by one of China's Internet giants to gain a foothold in the United States.

* BlackBerry has abandoned a plan to sell itself and instead will sell $1 billion of convertible debt to its major shareholder and other investors, and said it would replace CEO Thorsten Heins.

* Kellogg plans to cut its workforce by 7 percent as part of a four-year cost-cutting campaign, as the cereal maker posted higher earnings on flat sales.

* Allen Edmonds Corp, a maker of high-end men's shoes that generated some takeover interest from Men's Wearhouse Inc , itself a takeover target, has revealed it has agreed to be sold to another buyer.

* U.S. Attorney General Eric Holder said the government is willing to settle its antitrust lawsuit against the merger of AMR and US Airways if the airlines agree to broad concessions.

* Network-gear maker Alcatel-Lucent said Monday that it plans to raise about $2.7 billion to cut its debt and finance its turnaround plan, taking advantage of a rebound in shares to unveil a capital increase.

* TRI Pointe Homes has clinched a $2.7 billion deal to merge with timber conglomerate Weyerhaeuser's home-building division.

FT

Twitter Inc IPO-TWTR.N increased its IPO price range by 25 percent after strong investor demand, putting the microblogging network on course to secure a valuation of over $17 billion at its stock market debut later this week.

Johnson & Johnson will pay $2.2 billion in fines to U.S. federal and state authorities for kickbacks to pharmacists and the marketing of pharmaceuticals for diseases beyond their approved uses over more than a decade.

BlackBerry Ltd abandoned its plan to sell itself and removed its chief executive on Monday, sending the share price of the one-time market leader down 16.4 percent to its lowest in a decade.

Britain's Co-operative Group has detailed a rescue plan for its banking arm, under which it will hand control of 70 percent of the unit to a group of bondholders, and warned it would take up to five years to fix the troubled lender.

Budget airline Ryanair Holdings Plc issued its second profit warning in two months on Monday, citing aggressive fare cuts in response to increased competition and weak economic conditions.

Loss-making telecom equipment maker Alcatel-Lucent said on Monday it plans to raise 955 million euros ($1.3 billion) from shareholders and $750 million from a high-yield bond to shore up its balance sheet.

NYT

* While the hedge fund SAC Capital has put the government's criminal case behind it, Steven Cohen remains the focus of a criminal investigation and a SEC administrative complaint.

* Federal officials said Johnson & Johnson promoted the anti-psychotic drug as a way to treat dementia patients for many ailments, when it was only approved for schizophrenia.

* Twitter has raised the price range for its initial public offering to $23 to $25, signaling the company's bullish outlook ahead of its trading debut on Thursday.

* Netflix said on Monday that starting early next year it will be the exclusive streaming distributor for "The Square," an Arabic documentary about the Egyptian protest centered in Tahrir Square, which is considered a leading contender for an Oscar nomination.

* A tentative takeover bid for BlackBerry Ltd from its largest shareholder collapsed on Monday, clouding the immediate future of the company. Fairfax Financial Holdings of Toronto, the insurance and investment company, had made a conditional, non-binding offer to buy the 90 percent of BlackBerry shares it does not own for $9 each, valuing the company at about $4.7 billion.

* Tom Wheeler was sworn in on Monday as chairman of the Federal Communications Commission and promptly named to his senior staff Gigi Sohn, one of the agency's most outspoken critics but a supporter of the new leader.

* A measure that would outlaw workplace discrimination against gay men, lesbians and transgender people overcame a significant obstacle in the Senate as seven Republicans voted to begin debate on the bill.

* The Carlyle Group has hired Kewsong Lee away from his post as managing director at Warburg Pincus, an unusually high-level transition within private equity's executive ranks.

* Tri Pointe Homes, the West Coast builder controlled by Barry Sternlicht's Starwood Capital, is merging with the home-building subsidiary of Weyerhaeuser, a large owner of timberlands.

* Two activist hedge funds, the Clinton Group and Cannell Capital, have joined forces to mount a proxy battle for control of the Internet and television shopping network ValueVision Media.

Canada

THE GLOBE AND MAIL

* A meeting between British Columbia Premier Christy Clark and her Alberta counterpart Alison Redford scheduled for Tuesday has been canceled as talks between the two provinces on pipeline development in British Columbia have reached a tense stalemate.

* The number of Canadians using food banks fell 4.5 percent this year from 2012, reflecting improvement in some regions, particularly the Prairies.

Reports in the business section:

* Beijing-based computer manufacturer Lenovo Group Ltd actively considered a bid for BlackBerry Ltd, but the Canadian government told the smartphone company it would not accept a Chinese takeover because of national security concerns, according to sources familiar with the situation.

* Canadian manufacturers and steel producers are urging Ottawa to channel tens of billions of dollars in planned federal spending their way over the next decade.

NATIONAL POST

* Liberal leader Justin Trudeau is walking an intentionally fine line following two high-profile expressions of support in recent weeks for the oilsands and the controversial Keystone XL pipeline.

* Transport Canada has told its minister, Lisa Raitt, that it is gathering evidence that could lead to federal prosecution against Montreal, Maine and Atlantic Railway Inc, the company involved in the Lac-Megantic disaster, for allegedly failing to comply with safety regulations.

FINANCIAL POST

* Bankers still have a lot of work to do to sell all of Barrick Gold Corp's $3 billion equity offering, but sources maintained on Monday that there is no talk of re-pricing the deal.

* The Ontario government is considering the introduction of new tax incentives in hopes of boosting the level of investment in research and development within the province.

China

CHINA SECURITIES JOURNAL

- China may allow private banks to be launched early next year under a pilot scheme, the newspaper reported without citing sources.

- Egg futures will be listed on Nov. 8 on the Dalian Commodity Exchange, according to a notice published by the exchange on Monday.

- China's National Energy Administration said in a notice it plans to increase the country's photovoltaic capacity by 20 percent to 12GW in 2014, under certain circumstances.

SECURITIES TIMES

- China should expand the testing areas for property tax as soon as possible, said Ren Xingzhou, leader of the economics institute in the State Council's Development Research Center, a government think tank.

PEOPLE'S DAILY

- China is experiencing severe overcapacity in crude steel, electrolytic aluminium, cement and flat glass, which will lead to vicious competition and a waste of resources, said a commentary in the paper that acts as the government's mouthpiece.

CHINA DAILY

- China will increase efforts to tackle the overcapacity problem in the cement, electrolytic aluminium, sheet glass, shipping and steel industries, the newspaper said in an editorial. Shang Fulin, chairman of the China Banking Regulatory Commission, called for green loans to curb overcapacity, it added.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

BlackBerry (BBRY) upgraded to Hold from Sell at Deutsche Bank
BlackBerry (BBRY) upgraded to Hold from Sell at Societe Generale
Energen (EGN) upgraded to Buy from Neutral at ISI Group
GT Advanced (GTAT) upgraded to Buy from Neutral at BofA/Merrill
GT Advanced (GTAT) upgraded to Overweight from Neutral at Piper Jaffray
HSBC (HBC) upgraded to Buy from Neutral at Mizuho
Holly Energy (HEP) upgraded to Neutral from Sell at Goldman
MGIC Investment (MTG) upgraded to Outperform from Market Perform at Keefe Bruyette
Safe Bulkers (SB) upgraded to Buy from Neutral at Citigroup
SunEdison (SUNE) upgraded to Overweight from Neutral at Piper Jaffray
TTM Technologies (TTMI) upgraded to Overweight from Neutral at JPMorgan

Downgrades

BlackBerry (BBRY) downgraded to Underperformer from Sector Performer at CIBC
ExlService (EXLS) downgraded to Market Perform from Outperform at Wells Fargo
ExlService (EXLS) downgraded to Perform from Outperform at Oppenheimer
Halcon Resources (HK) downgraded to Market Perform from Outperform at Wells Fargo
Kellogg (K) downgraded to Hold from Buy at Deutsche Bank
LINN Energy (LINE) downgraded to Neutral from Buy at Goldman
LinnCo (LNCO) downgraded to Neutral from Buy at Goldman
Ocwen Financial (OCN) downgraded to Market Perform from Outperform at Keefe Bruyette
Pearson (PSO) downgraded to Neutral from Buy at Goldman
RBS (RBS) downgraded to Underperform from Neutral at Exane BNP Paribas
Rovi (ROVI) downgraded to Sell from Neutral at Goldman
Siemens (SI) downgraded to Neutral from Buy at UBS
St. Jude Medical (STJ) downgraded to Market Perform from Outperform at Bernstein

Initiations

AmBev (ABV) initiated with an Overweight at Barclays
Antero Resources (AR) initiated with a Buy at Citigroup
BancorpSouth (BXS) initiated with an Overweight at Evercore
Cinemark (CNK) initiated with an Outperform at FBR Capital
Duke Energy (DUK) initiated with a Buy at CRT Capital
FactSet (FDS) initiated with an Equal Weight at Barclays
Forum Energy (FET) initiated with an Overweight at Morgan Stanley
Gannett (GCI) initiated with an Outperform at FBR Capital
HSN, Inc. (HSNI) initiated with a Market Perform at FBR Capital
Lamar Advertising (LAMR) initiated with an Outperform at FBR Capital
Liberty Interactive (LINTA) initiated with an Outperform at FBR Capital
Liberty Ventures (LVNTA) initiated with an Outperform at FBR Capital
New York Times (NYT) initiated with a Market Perform at FBR Capital
News Corp. (NWSA) initiated with a Market Perform at FBR Capital
QTS Realty Trust (QTS) initiated with a Hold at Deutsche Bank
Regal Entertainment (RGC) initiated with a Market Perform at FBR Capital
SCANA (SCG) initiated with a Fair Value at CRT Capital
Southern Company (SO) initiated with a Fair Value at CRT Capital
Spectral Diagnostics (SDI) initiated with an Outperform at Wedbush
Stonegate Mortgage (SGM) initiated with an Outperform at Keefe Bruyette
Superior Energy (SPN) initiated with a Buy at Deutsche Bank
TECO Energy (TE) initiated with a Fair Value at CRT Capital
Thomson Reuters (TRI) coverage assumed with an Equal Weight at Barclays
Twitter (TWTR) initiated with a Buy at CRT Capital
Valassis (VCI) initiated with a Market Perform at FBR Capital
Wisconsin Energy (WEC) initiated with a Buy at CRT Capital

HOT STOCKS

Endo Health (ENDP) to acquire Paladin Labs for $1.6B in stock, cash
Ford (F) to launch 17 vehicles to accelerate growth in Middle East, Africa
AIG (AIG) may file lawsuit against Morgan Stanley (MS) over mortgage securities
Monsanto (MON) announced $1B debt issuance
Becton Dickinson (BDX) announced plan to repurchase about $450M of stock in FY14

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
R.R. Donnelley (RRD), Vitamin Shoppe (VSI), Becton Dickinson (BDX), Ashland (ASH), Regis (RGS), Hertz (HTZ), Consolidated Edison (ED), Tidewater (TDW), EarthLink (ELNK), Plains All American (PAA), XPO Logistics (XPO), Dun & Bradstreet (DNB), Marathon Oil (MRO), U.S. Auto Parts (PRTS), LeapFrog (LF), Hill International (HIL), Newfield Exploration (NFX)

Companies that missed consensus earnings expectations include:
NYSE Euronext (NYX), McDermott (MDR), Owens & Minor (OMI), Atlas Pipeline Partners (APL), Jamba (JMBA), Skilled Healthcare (SKH), Luminex (LMNX), Halcon Resources (HK), Tutor Perini (TPC), Polypore (PPO), BroadSoft (BSFT)

Companies that matched consensus earnings expectations include:
PAA Natural Gas Storage (PNG), Acura Pharma (ACUR), Tenet Healthcare (THC), Synchronoss (SNCR), Chemtura  (CHMT), Pioneer Southwest (PSE), Nautilus (NLS)

NEWSPAPERS/WEBSITES

• The Federal Housing Finance Agency is moving ahead with a ban on fees for "force-placed" insurance policies, expensive coverage that is thrust upon borrowers whose regular homeowners' policy has lapsed, despite industry objections that such a move encroaches on state regulators (FNMA, FMCC, AIZ), the Wall Street Journal reports
• Attorney General Eric Holder said the government is willing to settle its antitrust lawsuit against the merger of AMR Corp. (AAMRQ) and US Airways (LCC) if the airlines agree to broad concessions that would preserve competition, the Wall Street Journal reports
• Apple (AAPL) will open a manufacturing facility in Mesa, AZ in partnership with mineral crystal specialist GT Advanced technologies (GTAT) to make sapphire materials for Apple's popular electronic devices, Reuters reports
• Lael Brainard, the Treasury Department’s top international official, is likely to be nominated to the Federal Reserve Board, sources say, Bloomberg reports
• Cooper Tire & Rubber’s (CTB) dispute with India’s Apollo Tyres over a $2.5B buyout goes before a judge in a non-jury trial set to begin today in Delaware Chancery Court with no compromise in sight, Bloomberg reports

SYNDICATE

Boise Cascade (BCC) files to sell 8M shares of common stock for holder
CST Brands (CST) files to sell 13.1M shares of common stock for Valero Energy
Carrizo Oil & Gas (CRZO) files to sell 3.75M shares of common stock
Constellium (CSTM) files to sell 17.5M shares of common stock
Enterprise Products (EPD) files to sell 7.5M units for limited partners
Extra Space Storage (EXR) files to sell 4.5M shares of common stock
Integra LifeSciences (IART) files to sell 3.5M shares of common stock
InterMune (ITMN) files to sell 6.5M shares of common stock
PS Business Parks (PSB) files to sell 1.3M shares of common stock
Tableau Software (DATA) files to sell 6.5M shares of common stock for holders
Vantiv (VNTV) files to sell 15M shares of common stock for holder

• EU Fines Financial Institutions Over Fixing Key Benchmarks (Reuters)
• Euro-Area Economic Growth Slows as Exports, Consumption Cool (BBG) - someone has a very loose definition of growth
• Ukraine Officials Scour Globe for Cash as Protests Build (BBG)
• Oops: Franklin Boosted Ukraine Bet to $6 Billion as Selloff Began (BBG)
• Japan Plans 18.6 Trillion Yen Economic Package to Support Growth (BBG) - or about 2 months of POMO
• How Peugeot and France ran out of gas (Reuters)
• Iran threatens to trigger oil price war (FT)
• Abe Vows to Pass Secrecy Law That Hurts Cabinet’s Popularity (BBG)
• Brazil economy turns in worst quarter for 5 years (FT)
• Australia’s Slowdown Suggests RBA May Need to Do More (BBG)
• Biden calls for trust with China amid airspace dispute (Reuters)
• Al Qaeda now America's friend? U.S., Allies Reach Out to Syria's Islamist Rebels (WSJ)
• Heavy Inventories Threaten to Squeeze Clothing Stores (WSJ)
• Budget Negotiators Seen Near to Deal to Ease U.S. Cuts (BBG)
• Regulators Set to Approve Toughened 'Volcker Rule' (WSJ)
• Brisk Demand Lifts U.S. Auto Sales (WSJ)

Overnight Media Digest

WSJ

* U.S. Vice President Joe Biden's visit to Beijing on Wednesday was long intended to boost trade but instead has become an urgent diplomatic mission.

* Federal regulators are expected next week to approve a toughened version of the so-called Volcker rule, opening a new phase of stricter oversight for Wall Street.

* Forget Internet IPOs: One of the best investments of the past couple of years was a bankrupt airline.

* Big banks have been retrenching from the mortgage business recently, leaving smaller players to pick up larger chunks of business. The midsize and smaller players have grown despite tightening their underwriting standards, much like larger banks have since the financial crisis. But the smaller banks' capital rules aren't as stringent as those that make mortgages a costly enterprise for the biggest firms.

* European antitrust authorities are set to hit several banks with heavy fines as soon as Wednesday for allegedly colluding to rig interbank lending rates, people familiar with the matter said.

* Former Tyco CEO Dennis Kozlowski is set for parole early next year following his 2005 criminal conviction and imprisonment for looting the company.

* Apparel chains have heavy inventory loads, raising concern their weak Thanksgiving showing will force bigger markdowns that could hurt fourth-quarter profits.

* November U.S. auto sales ran at their strongest pace in more than six years, aided by sales promotions, but there were also signs that competitive pressure is ratcheting up on Detroit's auto makers.

FT

Brussels is expected to levy fines on Wednesday
on 10 global banks charged with fixing Euribor, Yen Libor or both. The
EU competition commissioner will announce a decision on the allegedly
formed cartels to rig two global interest rate benchmarks.

The
British government backed BP in a U.S. ban, which bars the company from
government contracts, calling it "excessive". The decision in the 2010
Deepwater Horizon oil spill case, affects jobs and pensions of workers
in the United Kingdom, the United States, and elsewhere, it said.

The
Financial Policy Committee said the Bank of England could ask banks to
disclose capital ratios using standardised risk weights, along with the
ratio based on their internal models.

A high court ruling on
Tuesday said HTC will have to stop the sale of its "One Mini" brand in
the UK as the Taiwanese company was found guilty of infringing Finnish
counterpart Nokia's patents.

French phone company Iliad is set to
prolong a two-year price war with its rivals by providing 4G services
for 19.99 euros per month, similar to its 3G offers.

Asda
has spent 25 million pounds in cutting prices before Christmas, and will
spend a further 50 million in the first quarter of 2014 -- a move that
is expected to put pressure on the Big Four supermarkets.

NYT

* In a ruling that could reverberate far beyond Detroit, a federal judge held on Tuesday that this battered city could formally enter bankruptcy and asserted that Detroit's obligation to pay pensions in full was not untouchable.

* At a picturesque century-old factory, Count Anton-Wolfgang von Faber-Castell is the eighth in a long line carrying on the family name in the pencil business. Faber-Castell, the largest maker of wood-encased pencils in the world, illustrates how midsize companies - which account for about 60 percent of the country's jobs - are able to stay competitive in the global marketplace.

* The FDA allows the sale of some devices to treat small groups of patients without requiring proof that the devices work, or any rigorous study of the medical results.

* Testimony to Parliament from the top editor of The Guardian illustrated the aggressive investigative and spying tactics increasingly faced by news organizations.

* Newsweek, the struggling weekly magazine that ceased print publication last year, plans to turn the presses back on. The magazine expects to begin a 64-page weekly edition in January or February.

* The Illinois legislature on Tuesday ended a day of emotional debate and fierce back-room arm-twisting by passing a deal to shore up the state's debt-engulfed pension system by trimming retiree benefits and increasing state contributions.

* Jon Horvath has been positioned as a star witness for federal prosecutors in the insider trading trial of Michael Steinberg, his former boss at SAC Capital Advisors. But under questioning by the defense on Tuesday, Horvath, a former analyst at SAC, acknowledged having some memory lapses, potentially undercutting some of his credibility.

* Edward Lampert, the hedge fund manager who serves as Sears Holdings' chief executive, remains struggling retailer Sears' biggest shareholder. But his firm, ESL Partners, has cut the size of its stake, disclosing in a regulatory filing on Tuesday that it now owns 48.4 percent of its shares, down from 55.4 percent.

Canada

THE GLOBE AND MAIL

* Conservative
senators are blocking Liberal efforts to hear the testimony of an
auditor, a partner at Deloitte, who is alleged to have intervened in a
review of Senator Mike Duffy's expenses at the behest of the Prime
Minister's Office.

* Toronto Mayor Rob Ford says he had
no idea three men he posed with for a picture at last weekend's Buffalo
Bills football game had ties to the Hells Angels.

Reports in the business section:

*
Potash Corp of Saskatchewan is laying off staff and slashing output
capacity in a bid to become a lower-cost producer amid falling prices
and slumping demand from key customers.

* CNOOC Ltd's
financial performance is being hurt by its purchase of Nexen Inc, a
situation exacerbated by its pledge to Ottawa that it will not reduce
its newly-acquired Canadian staff, the Chinese company's own leading
analyst says.

* Bank of Montreal's latest quarterly
results served as a sharp pinch for those who had been lulled into a
slumber by the recent rally in bank stocks.

Despite strong wealth
management earnings, encouraging Canadian loan growth and a solid profit
of $1.1 billion for the quarter, BMO's results included rising
provisions for bad loans and a deteriorating outlook for U.S. personal
and commercial banking.

NATIONAL POST

* As
Detroit finalizes the terms of the largest public bankruptcy in U.S.
history this week, its across-the-river Canadian neighbor, the city of
Windsor, is boasting a fiscal record the envy of any city its size on
the continent: five years without a tax hike, an eight-figure paydown of
municipal debt, all while weathering the effects of Ontario
manufacturing's collapse.

FINANCIAL POST

*
Before embarking on a controversial expansion of the Canada Pension
Plan, the Canadian government should consider Australia's successful
experience closing gaps in retirement savings through mandatory
workplace pensions, according to the authors of a paper published on
Tuesday by the Fraser Institute.

Canada's finance ministers will
be meeting this month to discuss whether there is consensus to move
ahead with expansion of the Canada Pension Plan.

*
Tax-loss selling opportunities are slim heading into the last month of
the year, resulting in an especially potent headwind for those unlucky
stocks that have not participated in this year's market rally.

BlackBerry
Ltd, Potash Corp and Barrick Gold Corp are among 10 Canadian stocks
that are bound for bruising in tax-loss selling, according to Pierre
Lapointe, head of global strategy and research at Pavilion Capital
Markets in Montreal.

China

SECURITIES TIMES

- The Chinese government will strengthen the position of foreign-invested enterprises by simplifying the examination and approval process for investing abroad, Zhang Xiaoqiang, deputy director of the National Development and Reform Commission, said on Tuesday.

CHINA DAILY

- China will reveal a new national urbanisation plan next year, according to a statement from the Politburo. The plan has reportedly met resistance from local governments as it touches on the redistribution of land revenue between farmers and governments.

- Courts in Central China's Henan province will end the handcuffing and caging of suspects during trials. Suspects should also be allowed to wear normal clothes rather than prison uniforms while on trial, said Zhang Liyong, president of Henan High People's Court.

PEOPLE'S DAILY

- For a political party, suggesting a strategic vision is important, but of greater importance is a party's ability to implement that vision, said the paper that acts as the party's mouthpiece. Concrete steps should be taken to promote reform, said the paper.

UK

The Telegraph

RICHARD BRANSON ATTACKS QANTAS BOSSES AS FOREIGN OWNERSHIP ROW HEATS UP

The British billionaire's outburst on his Virgin website follows Qantas' backing of a plan suggested by Australian Treasurer Joe Hockey that foreign ownership rules concerning the country's flag carrier should be relaxed.

UK HOUSEBUILDING COMES OUT 'ALL GUNS BLAZING' WITH FASTEST GROWTH IN A DECADE

Housebuilding in November rose at the strongest pace since 2003, according to Markit, as rising confidence and improving credit conditions helped to boost activity across the sector.

The Guardian

YOUNG WORKERS' PAY HAS TUMBLED SINCE FINANCIAL CRASH, SAYS THINKTANK

The Resolution Foundation said younger workers faced an almost unprecedented squeeze on both the wages and employment chances four years after the financial crash. The pay of workers in their 20s has tumbled by almost 12 percent since the peak of the recession, according to the thinktank.

OSBORNE STATIONERS GOES INTO ADMINISTRATION

Osborne Stationers, a high street chain founded nearly two centuries ago, has gone into administration placing 140 jobs at risk. Directors at the Birmingham-based company took the decision amid the tough retail conditions it has faced since the start of the downturn in 2008.

The Times

PUBLIC'S 40 PERCENT HOLDING IN EUROSTAR WILL BE SOLD OFF

The Government is to sell off its 40 percent stake in Eurostar, the operator of high-speed passenger trains between London, Paris and Brussels.

KPMG WAS LOCKED OUT OF BRITANNIA'S BOOKS DURING CO-OP TAKEOVER

KPMG was blocked from examining Britannia Building Society's loss-making corporate loan book during due diligence of the lender on behalf of the Co-operative Bank, it emerged on Tuesday.

Sky News

RIVAL LLOYDS BRANCH BIDDER URGED TO SUE BANK

The bidder which lost out to the Co-operative Group in the auction of 632 Lloyds Banking Group branches is being urged to consider legal action to recover the 30 million pounds it spent on its bid.

MOULTON SIZES UP BID FOR AILING PAWNBROKER

Sky News has learnt that Better Capital, Mr Moulton's investment firm, is among a pack of suitors examining offers for the company after it was forced to put itself up for sale.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

BB&T (BBT) upgraded to Overweight from Equal Weight at Morgan Stanley
Owens Corning (OC) upgraded to Buy from Neutral at SunTrust
Premiere Global (PGI) upgraded to Strong Buy from Outperform at Raymond James
Sonic (SONC) upgraded to Outperform from Market Perform at William Blair
U.S. Bancorp (USB) upgraded to Conviction Buy from Neutral at Goldman

Downgrades

AT&T (T) downgraded to Neutral from Overweight at JPMorgan
Bank of Kentucky (BKYF) downgraded to Neutral from Outperform at RW Baird
ChemoCentryx (CCXI) downgraded to Neutral from Buy at Citigroup
Citigroup (C) downgraded to Neutral from Conviction Buy at Goldman
eBay (EBAY) downgraded to Equal Weight from Overweight at Evercore
Flextronics (FLEX) downgraded to Sell from Neutral at Goldman
Old Line Bancshares (OLBK) downgraded to Neutral from Outperform at RW Baird

Initiations

Agrium (AGU) initiated with an Outperform at RBC Capital
Allegion (ALLE) initiated with a Market Perform at Bernstein
CF Industries (CF) initiated with a Sector Perform at RBC Capital
CommScope (COMM) initiated with a Buy at Deutsche Bank
CommScope (COMM) initiated with a Buy at Goldman
CommScope (COMM) initiated with a Buy at Mizuho
CommScope (COMM) initiated with a Hold at Jefferies
CommScope (COMM) initiated with an Outperform at Credit Suisse
CommScope (COMM) initiated with an Outperform at Raymond James
CommScope (COMM) initiated with an Outperform at Wells Fargo
CommScope (COMM) initiated with an Overweight at Evercore
CommScope (COMM) initiated with an Overweight at JPMorgan
CommVault (CVLT) initiated with a Perform at Oppenheimer
DDR Corp. (DDR) initiated with an Outperform at Imperial Capital
JGWPT Holdings (JGW) initiated with a Buy at Deutsche Bank
JGWPT Holdings (JGW) initiated with a Buy at Jefferies
JGWPT Holdings (JGW) initiated with an Outperform at Keefe Bruyette
JGWPT Holdings (JGW) initiated with an Overweight at Barclays
MacroGenics (MGNX) initiated with an Outperform at Wedbush
Mosaic (MOS) initiated with an Outperform at RBC Capital
Potash (POT) initiated with a Sector Perform at RBC Capital
Splunk (SPLK) initiated with an Outperform at Oppenheimer
Sprague Resources (SRLP) initiated with a Buy at BofA/Merrill
Sprague Resources (SRLP) initiated with an Equal Weight at Barclays

HOT STOCKS

European Commission fined eight banks (DB, SCGLY, JPM, C) EUR 1.71B over interest rates
JPMorgan (JPM) reached EUR 79M settlement with EC related to Libor matter
Deutsche Bank (DB) confirmed EUR 725M settlement with EC
CF Industries (CF) said intends to raise up to $1.5B in long-term debt in early 2014
“Cyber Monday” saw an online spending increase of 18% vs. 2012 (AMZN, EBAY, BBY, WMT), comScore reports
Lennar (LEN) awarded $1B in damages in defamation and extortion case
Kinder Morgan (KMI, KMP, KMR, EPB) raised FY14 dividend 10% to $1.72 per share, sees $6.4B in business segment earnings before DD&A in FY14
Yahoo (YHOO) acquired Ptch, terms not disclosed
Universal Technical Institute (UTI) sees high single digit applications growth in FY14

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Powell (POWL), OmniVision (OVTI), Guidewire Software (GWRE), United Natural Foods (UNFI)

Companies that missed consensus earnings expectations include:
Descartes Systems (DSGX), Bob Evans (BOBE), Golub Capital (GBDC), Universal Technical Institute (UTI)

NEWSPAPERS/WEBSITES

• Apparel retail chains including Abercrombie & Fitch (ANF), Chico's FAS (CHS), Gap (GPS) and Victoria's Secret came into Q4 with heavy inventory loads. The concern now is the retail industry's weak showing over Thanksgiving weekend will force them to take bigger markdowns that could hurt their Q4 profits, the Wall Street Journal reports
• U.S. auto sales (F, GM, TM, NSANY, HMC, DDAIF, VLKAY) in November ran at the strongest pace in more than six years, aided by Black Friday sales promotions, but there were also signs that competitive pressure is ratcheting up on Detroit's automakers, the Wall Street Journal reports
• Just a few years ago, Morgan Stanley (MS) lacked the expertise, infrastructure or desire to do a lot of lending, but today it is making a big push into loans to bridge a profit gap with rivals, Reuters reports
• Toshiba Corp. (TOSBF) will tie up with German real estate company Gagfah SAS to sell energy directly to residents in Germany, sources say, beginning in March, Reuters reports
• InterContinental Hotels (IHG) plans to open “at least the same” number of hotels in China next year--17--as 2013, even as growth in room revenue slows, Bloomberg reports

SYNDICATE

Access Midstream (ACMP) files to sell 6M units representing limited partners
American DG Energy (ADGE) files to sell 633K shares for holders
Celldex (CLDX) files to sell 6.5M shares of common stock
Clovis (CLVS) 2M share Secondary priced at $57.50
Del Frisco's (DFRG) files to sell 5.39M shares for holders
EVERTEC (EVTC) files to sell 15.29M shares for holders
Norwegian Cruise Line (NCLH) 22M share Secondary priced at $33.25
Oasis Petroleum (OAS) files to sell 7M shares of common stock