Over a year ago, Zero Hedge published an expose in three parts (two of them in the form of direct letters to Andrew Cuomo) discussing the possibility that so-called "expert networks" are nothing less than legalized insider trading rings for the uber-wealthy, operating largely unsupervised, and leaking selective information to preferred clients. For those who may be new to this topic, we suggest catching up on Part 1, Part 2 and Part 3. Subsequently, we also suggested that expert networks would be implicated in the bust of Galleon Partners, the Goldman "Huddle", the collapse of FrontPoint Partners and, most recently, that expert networks may have been directly or indirectly involved in facilitating the record historical P&L of such hedge fund "titans" as SAC Capital. Today, via the Wall Street Journal, we realize that not only have the good folks at the SEC been diligently reading us for the past 13 months, but that we may have been right all along (once again). To wit: "Federal authorities, capping a three-year investigation, are preparing insider-trading charges that could ensnare consultants, investment bankers, hedge-fund and mutual-fund traders and analysts across the nation, according to people familiar with the matter. The criminal and civil probes, which authorities say could eclipse the impact on the financial industry of any previous such investigation, are examining whether multiple insider-trading rings reaped illegal profits totaling tens of millions of dollars, the people say. Some charges could be brought before year-end, they say." Good bye expert networks (and many, many hedge funds) - we hardly knew you. 

More from the WSJ:

The investigations, if they bear fruit, have the potential to expose a culture of pervasive insider trading in U.S. financial markets, including new ways non-public information is passed to traders through experts tied to specific industries or companies, federal authorities say.

One focus of the criminal investigation is examining whether nonpublic information was passed along by independent analysts and consultants who work for companies that provide "expert network" services to hedge funds and mutual funds. These companies set up meetings and calls with current and former managers from hundreds of companies for traders seeking an investing edge.

Among the expert networks whose consultants are being examined, the people say, is Primary Global Research LLC, a Mountain View, Calif., firm that connects experts with investors seeking information in the technology, health-care and other industries. "I have no comment on that," said Phani Kumar Saripella, Primary Global's chief operating officer. Primary's chief executive and chief operating officers previously worked at Intel Corp. (INTC), according to its website.

In another aspect of the probes, prosecutors and regulators are examining whether Goldman Sachs Group Inc. (GS) bankers leaked information about transactions, including health-care mergers, in ways that benefited certain investors, the people say. Goldman declined to comment.

Independent analysts and research boutiques also are being examined. John Kinnucan, a principal at Broadband Research LLC in Portland, Ore., sent an email on Oct. 26 to roughly 20 hedge-fund and mutual-fund clients telling of a visit by the Federal Bureau of Investigation.

"Today two fresh faced eager beavers from the FBI showed up unannounced (obviously) on my doorstep thoroughly convinced that my clients have been trading on copious inside information," the email said. "(They obviously have been recording my cell phone conversations for quite some time, with what motivation I have no
idea.) We obviously beg to differ, so have therefore declined the young gentleman's gracious offer to wear a wire and therefore ensnare you in their devious web."

The email, which Mr. Kinnucan confirms writing, was addressed to traders at, among others: hedge-fund firms SAC Capital Advisors LP and Citadel Asset Management, and mutual-fund firms Janus Capital Group (JNS), Wellington Management Co. and MFS Investment Management. SAC, Wellington and MFS declined to comment; Janus and Citadel didn't immediately comment. It isn't known whether clients are under investigation for their business with Mr. Kinnucan.

Some more on expert networks:The consultants typically earn several hundred dollars an hour for their services, which can include meetings or phone calls with traders to discuss developments in their company or industry. The expert-network companies say internal policies bar their consultants from disclosing confidential information.

And it is not only the SEC who reads us:

Another aspect of the probe is an examination of whether traders at a number of hedge funds and trading firms, including First New York Securities LLC, improperly gained nonpublic information about pending health-care, technology and other merger deals, according to the people familiar with the matter.

Some traders at First New York, a 250-person trading firm, profited by anticipating health-care and other mergers unveiled in 2009, people familiar with the firm say.

A First New York spokesman said: "We are one of more than three dozen firms that have been asked by regulators to provide general information in a widespread inquiry; we have cooperated fully." He added: "We stand behind our traders and our systems and policies in place that ensure full regulatory compliance."

When all is said and done, First New York will only be the beginning.

As for representative transactions, here are some of the initial ones that have been leaked:

Transactions being focused on include MedImmune Inc.'s takeover by AstraZeneca Plc (AZN, ANZ.LN) in 2007, the people say. MedImmune shares jumped 18% on Apr. 23, 2007, the day the deal was announced.

A spokesman for AstraZeneca and its MedImmune unit declined to comment.

Investigators are also examining the role of Goldman bankers in trading in shares of Advanced Medical Optics Inc., which was taken over by Abbott Laboratories (ABT) in 2009, according to the people familiar with the matter. Advanced Medical Optics's shares jumped 143% on Jan. 12, 2009, the day the deal was announced. Goldman advised MedImmune and Advanced Medical Optics on the deals.

A spokesman for AstraZeneca and its MedImmune unit declined to comment.

It appears that if and when the hammer comes down (or specifically if the SEC finally has the guts to file formal charges) those who will have a lot of explaining to do are the who's who in the hedge fund world.

In subpoenas, the SEC has sought information about communications-- related to Schering-Plough and other deals--with Ziff Brothers, Jana Partners LLC, TPG-Axon Capital Management, Prudential Financial Inc.'s (PRU) Jennison Associates asset-management unit, UBS AG's (UBS) UBS Financial Services Inc. unit, and Deutsche Bank AG (DB, DBK.XE), according to subpoenas and the people familiar with the matter.

Representatives of Ziff Brothers, Jana, TPG-Axon, Jennison, UBS and Deutsche Bank declined to comment.

Among hedge-fund managers whose trading in takeovers is a focus of the criminal probe is Todd Deutsch, a top Wall Street trader who left Galleon Group in 2008 to go out on his own, the people close to the situation say. A spokesman for Mr. Deutsch, who has specialized in health-care and technology stocks, declined to comment.

Could the hedge fund industry be about to experience its biggest insider trading bust? As much as we would like to believe so, the day when justice finally prevails over legal fees may still be far away. In the meantime, Zero Hedge is proud to have assisted in the exposure of this latest massive legal insider trading scam which favors the preferred and the wealthy over everyone else, precisely the kind of thing that makes investors hate the capital markets...

• Must be those evil speculators' fault: Oil price inflates as speculators bet on stimulus (Reuters)
• Need moar stimulus: UK Coalition plans housebuilding stimulus (FT)
• Paul Ryan brings fundraising prowess to Romney presidential bid (Reuters)
• Chinese serial killer shot dead after massive manhunt (Reuters)
• Silver Hoard Near Record As Hedge-Fund Bulls Recoil (Bloomberg)
• World powers eye emergency food meeting; action doubted (Reuters)
• Clegg Said to Have Role in Picking King Successor as BOE Chief (Bloomberg)
• Standard Chartered CEO takes charge of Iran probe talks (Reuters)
• Risks must not hide positive China trends (FT)
• BOJ should not rule out any policy options: July minutes (Reuters)
• India Says Growth Sacrifice Needed in Inflation Fight (Bloomberg)

Overnight Media Digest

WSJ

* Google Inc said it is acquiring the Frommer's travel-guide business from publisher John Wiley & Sons Inc in a bid to attract more advertising dollars tied to online-travel bookings and local-business information.

* Apple Inc rested its case against Samsung Electronics Co Ltd following testimony focusing on talks between the companies and calculations for how much Samsung should pay if found to infringe Apple patents.

* Federal regulators are preparing to clear Verizon Wireless's $3.9 billion deal to acquire airwaves from several cable companies including Comcast Corp according to people close to the negotiations, after the companies reached broad agreement to settle antitrust concerns.

* The head of Focus Media Holding Ltd and other investors are offering to take the Shanghai-based advertising company private in a $3.66 billion deal that would remove it from the skeptical eye of U.S. investors.

* BP Plc said it has agreed to sell its Carson refinery in southern California and related assets to Tesoro Corp for $2.5 billion.

* General Motors Co is bidding for the international arm of Ally Financial Inc, a move to rebuild its own lending operations and reacquire part of a business it sold more than six years ago.

* Bank of America Corp agreed to sell its overseas wealth-management operations to Swiss private-banking specialist Julius Baer Group AG.

* Eastman Kodak Co delayed disclosing the outcome of its patent auction, a few minutes before a deadline to select winning bidders, the company said.

* HSBC Holdings Plc is hiring a former U.S. government official, Robert Werner, who policed U.S. sanctions against narcotics traffickers and terrorists, following allegations that HSBC moved funds for drug cartels and other suspicious groups.

* Toshiba Corp said that it is in talks with multiple parties to sell some of its 67 percent stake in Westinghouse Electric Co, but the Japanese technology conglomerate will keep a majority stake in the United States nuclear power subsidiary.

* Groupon Inc once-torrid daily deals business slowed in its latest quarter, fueling investor concerns about the onetime web commerce star and sending shares to a new low.

* Hedge fund Jana Partners LLC that has shaken up large players from Marathon Petroleum Corp to McGraw-Hill Companies Inc has found its next target: Agrium Inc , a $15 billion Canadian fertilizer company.

FT

EMAILS TELL OF FEAR OVER EADS PAYMENTS

Senior EADS executives were alerted five years ago about questionable payments made to Cayman Island bank accounts and lavish gifts given to the Saudi Arabian royal family.

COALITION PLANS HOUSE-BUILDING STIMULUS

Britain's coalition is planning to unveil new measures next month to stimulate the construction sector.

SOCIAL MEDIA COULD TURN ATHLETE EARNINGS GOLD

Olympic athletes are returning from the Games hoping to extend their peak period for endorsement earnings through their increased popularity on social media.

JULIUS BAER TO BUY MERRILL LYNCH ARM

Swiss private bank Julius Baer has agreed to acquire Bank of America's Merrill Lynch non-U.S. wealth management business.

GOOGLE TO BUY FROMMER'S TRAVEL GUIDE

Google has struck a deal to buy Frommer's, the travel guides for the post-backpacking generation.

BP SELLS CALIFORNIA REFINERY FOR $2.5 BLN

BP is to sell a California oil refinery to Tesoro of the U.S. for $2.5 billion.

WEAK EXPORTS CURB JAPANESE GROWTH

Japan's economy grew at an annualised 1.4 percent in the second quarter against analysts' expectations of a 2.3 percent rise.

NYT

* Google Inc made another foray into producing original content when it announced its plans to buy the Frommer's brand of travel guides from John Wiley & Sons Inc to augment its local and travel search results.

* Yang Saixin, along with tens of millions of dollars in payments the Sands China Ltd made through him in China, is a focus of a wide-ranging federal investigation into potential bribery of foreign officials and other matters in China and Macau, according to people with direct knowledge of the inquiries.

* IBM Corp is opening a research center in Nairobi, adding an African lab to its global network.

* Shares of Groupon Inc, the daily-deals Internet company, fell sharply in after-hours trading on Monday as second-quarter revenue came in below expectations and investors focused on slower growth.

* A month after confessing to stealing from clients and defrauding banks, Russell Wasendorf Sr, the chief executive of the collapsed brokerage firm Peregrine Financial Group, was indicted by a federal grand jury.

* A new release of stolen corporate e-mails by WikiLeaks has set off a flurry of concern and speculation around the world about a counterterrorist software program called TrapWire, which analyzes images from surveillance cameras and other data to try to identify terrorists planning attacks.

Canada

THE GLOBE AND MAIL

* This week's visit by German Chancellor Angela Merkel is further proof that Canada is making its presence felt on the global stage for the first time in years. It follows intensive efforts to advance Canada's trade agenda, and builds upon Canada gaining admission to the Trans-Pacific Partnership (TPP) trade agreement negotiations in late June.

* Jean Charest is seeking to tap into Quebeckers' economic nationalism by promising a $1-billion fund to help companies finance foreign acquisitions.

But he is also promising a new law that would give Quebec companies more power to reject foreign takeovers without giving shareholders a say - a vague promise which the Quebec Liberal Leader and his finance minister described in very different terms.

Report in the business section:

* The auction of ING Bank of Canada, which could be the largest sale of retail banking assets of its kind in the country in more than a decade, presents a significant problem for the financial institutions seeking to snap up the business.

As prospective buyers submit bids, much of the value depends on a key question: How many ING Direct Canada customers will stick around if the business is swallowed up by a larger player.

* Canadian retailers are urgently moving to boost productivity amid mounting competitive pressure - and they are doing it with fewer employees.

More than 45,000 jobs were lost in the retail sector between 2008 and 2011, and modest hiring so far in 2012 has been outpaced by retail output.

FINANCIAL POST

* Peregrine Financial Group founder and Chief Executive Russell Wasendorf was indicted on charges of lying to regulators, a little over a month after he botched a suicide attempt and confessed to bilking customers of his brokerage for years.

Wasendorf "overstated the value of PFG's customer segregated funds by at least tens of millions of dollars" to the Commodity Futures Exchange Commission, according to the indictment, filed in federal court in Cedar Rapids, Iowa

European economic update:

• France CPI (Harmonized) -0.5% m/m 2.2% y/y – lower than expected. Consensus -0.5% m/m 2.3% y/y. Previous 0.1% m/m 2.3% y/y.
• France GDP (Q2) 0.0% q/q 0.3% y/y – higher than expected. Consensus -0.1% q/q 0.2% y/y. Previous 0.0% q/q 0.3% y/y.
• Germany GDP (Q2) 0.2% q/q 1.1% y/y – in line with expectations. Consensus 0.2% q/q 1.1% y/y. Previous 0.5% q/q 1.2% y/y.
• Sweden Industrial Production 0.4% m/m 1.1% y/y – higher than expected. Consensus -1.0% m/m -1.1% y/y. Previous 3.5% m/m -2.3% y/y.
• Sweden CPI -0.4% m/m 0.8% y/y – lower than expected. Consensus -0.3% m/m 0.8% y/y. Previous -0.3% m/m 0.9% y/y.
• UK CPI 0.1% m/m 2.6% y/y – higher than expected. Consensus -0.1% m/m 2.3% y/y. Previous -0.4% m/m 2.4% y/y.
• UK RPI 0.1% m/m 3.2% y/y – higher than expected. Consensus -0.2% m/m 2.8% y/y. Previous -0.2% m/m 2.8% y/y.
• Germany ZEW Survey (current situation) 18.2 – higher than expected. Consensus 17.5. Previous 21.1.
• Germany ZEW Survey (econ sentiment) -25.5 – lower than expected. Consensus -19.3. Previous -19.6.
• Euro Area GDP -0.2% q/q -0.4% y/y – in line with expectations. Consensus -0.2% q/q -0.4% y/y. Previous 0.0% q/q 0.0% y/y.
• Euro Area Industrial Production -0.6% -2.1% y/y – higher than expected. Consensus  -0.7% -2.1% y/y. Previous 0.9% -2.6% y/y.

• Germany Can Ratify ESM Fund With Conditions, Court Rules (Bloomberg)
• Obama Discusses Iran Nuclear Threat With Netanyahu (Bloomberg)
• Stocks, Euro Gain as Court Allows ESM; Irish Bonds Climb (Bloomberg)
• U.S. cautions Japan, China over escalating islands row (Reuters)
• Draghi alone cannot save the euro (FT)
• 'New York Post' Runs Boldest Anti-Obama Ad Yet (Bloomberg)
• Another urban legend: Fish Oil Pills Don’t Fix Heart Ills in 24-Year Data Review (Bloomberg)
• Troika Says Portugal’s Program is ‘On Track’ (Bloomberg)
• Russia Wants to Steer Clear of 'Gas War' (WSJ)
• U.S. Said Set to Target First Non-Bank Firms for Scrutiny (Bloomberg)
• Wen Says China’s Policy Strength Will Secure Growth Targets (Bloomberg)
• UK faces clash with Brussels on City (FT)

Overnight media digest:

WSJ

* A former UBS AG banker who helped the U.S. government unleash an international crackdown on tax evasion was awarded $104 million in what is believed to be the largest-ever whistleblower payout to an individual.

* The directors of Ford Motor Co meet on Thursday and are expected to discuss one of the most pressing issues facing the auto maker-the retirement of Chief Executive Alan Mulally.

* In his first public appearance since Facebook Inc's botched public offering in May, Mark Zuckerberg on Tuesday zoomed through a litany of the company's mobile efforts while admitting that the company's previous mobile strategy was wrong.

* John Compton, PepsiCo Inc president, is leaving the snack and drink company to head privately held Pilot Flying J, in the latest high-profile departure from PepsiCo.

* When Apple Inc introduces its latest device on Wednesday, everyone will be watching to see if it can maintain the place it has long held as top-selling smartphone in the U.S. Months of purportedly leaked parts and images have generated enthusiasm, driving up Apple's stock price.

FT

UK FACES CLASH WITH BRUSSELS ON CITY

Britain faces a fresh fight with Brussels over who has control over the City of London as new EBA reforms are unveiled on Wednesday.

BURBERRY ALERT DAMPS SECTOR SENTIMENT

Burberry issued a profit warning that wiped more than a fifth off its share price, sending shock waves through the luxury goods sector.

UBS WHISTLEBLOWER AWARDED $104 MLN

The whistleblower in a landmark tax-dodging case against Swiss bank UBS has won a record-setting $104 million reward from U.S. authorities.

DEUTSCHE VOWS SHAKE-UP OF BANK CULTURE

Deutsche Bank Co-Chief Executive Anshu Jain said he expected the lender to embark on deeper jobs cuts than the 1,900 already announced.

BLACKROCK FINED FOR CLIENT ASSET BREACH

BlackRock has been fined 9.5 million pounds ($15 million) by Britain's financial regulator for failing to adequately protect client deposits.

CITI TAKES $2.9 BLN HIT ON SMITH BARNEY SALE

Citigroup expects to report a non-cash charge of $2.9 billion after taxes to reflect a lower value for its brokerage joint venture with Morgan Stanley.

KREMLIN SHIELDS GAZPROM FROM EU PROBE

The Kremlin has moved to shield Gazprom from an EU anti-monopoly investigation in a deepening standoff over gas prices.

MOODY'S WARNS ON U.S. CREDIT RATING

Moody's said the U.S. may lose its top credit rating if next year's budget talks do not produce policies that decrease its debt.

APPLICATIONS SOUGHT FOR 'NEAR-IMPOSSIBLE JOB'

The Treasury will post an advertisement in the Economist magazine for the position of the next governor of the Bank of England.

NYT

* Bradley Birkenfeld, who got out of jail last month after serving time for helping Americans dodge taxes, received a lavish bonus for his role in exposing tax schemes at UBS.

* Morgan Stanley has reached an agreement to take full control of the Smith Barney retail brokerage joint venture, a business that it has called a crucial part of its future.

* Congressional leaders dug in their heels on Tuesday against any quick deal to resolve a looming fiscal disaster before the election, even as ratings agency Moody's warned that it would downgrade the government's debt if no solution was found by year's end.

* The Ford Motor Co's board will meet this week to consider possible succession plans for the company's chief executive, Alan R. Mulally, a person with knowledge of the meeting said on Tuesday.

Canada

THE GLOBE AND MAIL

* One week after Toronto Mayor Rob Ford testified under oath that he no longer uses taxpayer-funded staff and resources for football, fresh evidence has emerged that suggests he continues to do just that. Ford appears to have relied on at least two mayor's office employees and their taxpayer-funded cellphones to help administer the summer football teams he founded after winning Toronto's top political job.

* Spending restraints are fuelling labour unrest in two of Canada's largest provinces, with teachers' unions in Ontario threatening to withdraw from extracurricular activities and public auto-insurance workers in British Columbia getting set to walk off the job.

Reports in the business section:

* Quebecor Inc's campaign to kill BCE Inc's takeover of Astral Media Inc moved from public appeals to regulatory hearings Tuesday, as its chief Pierre Karl Péladeau warned the C$3.4-billion deal would create "a monster in front of us that will kill the business."

* A week after Alberta enacted hard limits on air and water pollutants in its oil sands-rich northeastern corner, Shell Canada published a document that predicts the industry will exceed some of those limits.

NATIONAL POST

* A group of northern Manitoba chiefs is complaining that some aboriginals are being chained up in a hockey arena dressing room instead of an RCMP holding cell because of scarce police resources.

* Canadian Prime Minister Stephen Harper is being hailed as "World Statesman of the Year" by an American organization that previously feted Jean Chretie, British prime minister Gordon Brown and Korean president Lee Myung-bak. The award, for his work as "a champion of democracy, freedom and human rights", comes from an organization called the Appeal of Conscience Foundation.

FINANCIAL POST

* Federal Natural Resources Minister Joe Oliver downplayed talk of drafting a formal national energy strategy Tuesday following a meeting with provincial energy and mining ministers. Oliver told a news conference in Charlottetown that he hadn't heard anything in proposals for a strategy that isn't being dealt with already.

* Royal Bank of Canada is among lenders bucking job-cutting trends in the United States and Europe as acquisitions help swell head counts at Canada's biggest banks.

European economic summary:

• France Harmonised CPI 2.4% y/y – higher than expected. Consensus 2.3% y/y. Previous +2.2% y/y.
• Germany Harmonised CPI 2.2% y/y – in line with expectations. Consensus 2.2% y/y. Previous +2.2% y/y.
• Italy Industrial Production -4.4% y/y – higher than expected. Consensus -0.40% m/m -7.60% y/y. Previous -1.4% m/m -8.2% y/y. 
• United Kingdom Average Weekly Earnings 1.5% 3m/yoy – lower than expected. Consensus 1.6% 3m/yoy. Previous 1.6% 3m/yoy.
• United Kingdom Claimant Unemployment -15k – lower than expected. Consensus 0k. Previous -6k.
• United Kingdom ILO Unemployment Rate 8.1% - higher than expected. Consensus 8.0%. Previous 8.0%.
• Euro area Industrial Production 0.10% m/m -3.30% y/y – in line with expectations. Consensus 0.10% m/m -3.30% y/y. Previous -0.6% m/m -2.2% y/y.

Fuly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Agrium (AGU) upgraded to Buy from Neutral at Citigroup
Black Hill (BKH) upgraded to Overweight from Neutral at JPMorgan
Federated Investors (FII) upgraded to Neutral from Sell at Goldman
Great Plains Energy (GXP) upgraded to Overweight from Neutral at JPMorgan
J.B. Hunt (JBHT) upgraded to Buy from Neutral at BofA/Merrill
Kinder Morgan (KMI) upgraded to Neutral from Underperform at BofA/Merrill
Kohl's (KSS) upgraded to Buy from Hold at Deutsche Bank
Rogers Communications (RCI) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Amgen (AMGN) downgraded to Neutral from Outperform at RW Baird
Automatic Data Processing (ADP) downgraded to Underperform from Hold at Jefferies
Cohen & Steers (CNS) downgraded to Sell from Neutral at Goldman
Exelon (EXC) downgraded to Sell from Neutral at UBS
Finish Line (FINL) downgraded to Underperform from Neutral at Sterne Agee
Holly Energy (HEP) downgraded to Underperform from Neutral at BofA/Merrill
Paccar (PCAR) downgraded to Underperform from Market Perform at Wells Fargo
Packaging Corp. (PKG) downgraded to Market Perform from Outperform at BMO Capital
Paychex (PAYX) downgraded to Underperform from Hold at Jefferies
Potash (POT) downgraded to Neutral from Buy at Citigroup
Standard Pacific (SPF) downgraded to Neutral from Buy at UBS
Synaptics (SYNA) downgraded to Hold from Buy at Needham

Initiations

Asbury Automotive (ABG) initiated with an Underweight at Morgan Stanley
CarMax (KMX) initiated with an Overweight at Morgan Stanley
Demandware (DWRE) initiated with a Buy at Janney Capital
Dollar General (DG) initiated with an Overweight at Piper Jaffray
Fortinet (FTNT) initiated with an Outperform at Northland Securities
Glu Mobile (GLUU) initiated with a Buy at B. Riley
Lithia Motors (LAD) initiated with an Overweight at Morgan Stanley
LivePerson (LPSN) initiated with a Buy at Benchmark Co.
MasterCard (MA) initiated with an Outperform at Pacific Crest
Renren (RENN) initiated with a Sell at Citigroup
Sohu.com (SOHU) initiated with a Buy at Citigroup
Sonic Automotive (SAH) initiated with an Underweight at Morgan Stanley
Standard Motor Products (SMP) initiated with a Buy at BofA/Merrill
Visa (V) initiated with an Outperform at Pacific Crest
Youku.com (YOKU) initiated with a Buy at Citigroup

HOT STOCKS

Moody's (MCO) raised FY12 guidance
Facebook's (FB) Zuckerberg said key over next 3-5 years is mobile, said no plans for FB phone. Said big opportunity in search
Texas Instruments (TXN) seeing growth in U.S., declines in Europe and Japan
Aetna (AET) said it’s confident in its FY12 commercial medical cost trend projections
KKR & Co. (KKR) to close Prisma Capital Partners acquisition in October
Acacia (ACTG) subsidiary acquired patents on gas modulation control technology
Casey's General Stores (CASY) to acquire 22 convenience stores from Kum & Go

EARNINGS/GUIDANCE

Companies that missed consensus earnings expectations include:
PMFG, Inc. (PMFG), Globecomm (GCOM)

NEWSPAPERS/WEBSITES

An increasing number of coal-fired plants that were built to run around the clock, seven days a week, now may run only occasionally because of soft demand for electricity and competition from gas-fired plants that are cheaper to run and cleaner to operate, the Wall Street Journal reports
Two public pension funds--the $13.7B Kentucky Retirement Systems and the $20B Alaska Retirement Management Board--have expressed concerns that KKR’s (KKR) upcoming takeover of Prisma Capital Partners LP might hurt the asset manager's returns, the Wall Street Journal reports
U.S. retail sales should increase 3.3% for the 2012 holiday season, on what is expected to be the first increase in shopper traffic since 2007, according to a forecast from research firm ShopperTrak released today, Reuters reports
Four major U.S. banks--JPMorgan Chase (JPM), Bank of America (BAC), Wells Fargo (WFC) and Citigroup (C)--are in talks to link their digital payment systems to allow more consumers to easily transfer money with mobile phone messages and emails instead of cash and checks, Reuters reports    
German government bonds declined as the country’s Constitutional Court allowed Europe’s permanent bailout fund to be ratified with conditions, curbing demand for the securities as a refuge, Bloomberg reports
Vodafone (VOD) investors waiting for Verizon Communications (VZ) to approve a dividend from their U.S. mobile-phone venture will have to hold out longer, sources say, as Verizon Wireless’s board doesn’t plan to discuss a potential dividend at a September 19 meeting, Bloomberg reports

SYNDICATE

ExactTarget (ET) 6.5M share Secondary priced at $22.50
Halcon Resources (HK) files to sell 35M shares for Encap Energy Capital
Palatin Tech (PTN) files to sell 35.86M shares of common stock for holders
Team Health (TMH) commences secondary offering of 8M shares of common stock
Teekay Offshore Partners (TOO) plans to offer 7M common units
Vanguard Natural (VNR) commences public offering of 6M common units
Western Asset Mortgage (WMC) files to sell $100M in common stock

ACTIVIST/PASSIVE FILINGS

Jana Partners liquidates stake in Barnes & Noble (BKS)
RCM Capital reports 18.8% passive stake in Yelp (YELP)

• RBA Cuts Rate to 3.25% as Mining-Driven Growth Wanes (Reuters)
• Republicans Not Buying Bernanke’s QE3 Defense (WSJ)
• Spain ready for bailout, Germany signals "wait" (Reuters)
• EU says prop trading and investment banking should be separated from deposit taking (Reuters)
• Call for bank bonuses to be paid in debt (FT)
• Spanish Banks Need More Capital Than Tests Find, Moody’s Says (Bloomberg) ... as we explained on Friday
• "Fiscal cliff" to hit 90% of US families (FT)
• The casualties of Chesapeake's "land grab" across America (Reuters)
• U.K. Government Needs to Do More to Boost Weak Economy, BCC Says (Bloomberg)
• World Bank Sees Long Crisis Effect (WSJ)
• UBS Co-Worker Says He Used Adoboli’s Umbrella Account (Bloomberg)
• And more easing: South Korea central bank switches tack to encourage growth (Reuters)

Overnight Media Digest:

WSJ

* New York's top prosecutor opened a new front in efforts to hold banks accountable for the financial crisis by filing a civil lawsuit against JPMorgan Chase & Co, alleging widespread fraud by the company's Bear Stearns unit in the sale of mortgage-backed securities.

* The judge overseeing the patent dispute between Apple Inc and Samsung Electronics Co in a California federal court lifted a sales ban on a Samsung tablet computer after a jury found in August that the product didn't infringe an Apple patent.

* EADS shareholder Lagardère SCA said the terms of the aerospace company's proposed merger with BAE Systems Plc are "unsatisfactory" and should be re-examined, throwing another wrench into negotiations to create the world's largest defense and aerospace conglomerate.

* American Express Co, the credit-card giant with a reputation for affluent customers and customer service, agreed to pay $112.5 million to resolve charges from banking regulators that it engaged in illegal card practices.

* Federal Reserve Chairman Ben Bernanke pushed back against criticism that the central bank's low-interest-rate policies are enabling bad fiscal policy in Washington, saying the Fed's approach could help shrink the federal budget deficit over time.

* U.S. manufacturers rebounded in September, with fresh data showing factory activity expanded for the first time in four months despite weakening economies around the globe.

* Euro-zone manufacturing activity shrank for the 14th-straight month in September and unemployment hit a fresh record in August, suggesting prospects are slim for a quick return to growth in the currency bloc.

* Greece's international lenders cast doubt on parts of Athens' plans to save billions of euros through new cutbacks and tax measures, throwing a potential wrench in the government's efforts to reach a quick deal to unlock new aid for the country.

* The former head of failed lender IndyMac Bancorp Inc will pay $80,000 to settle a charge he misrepresented the company's financial condition, after a judge dismissed other civil allegations against him.

* British authorities have charged four people, including a former executive at Deutsche Bank AG, in relation to an alleged insider-trading ring in the most high-profile U.K. case of its kind

FT

BANKS REAP PROFITS ON MORTGAGES AFTER QE3

Bank profits from new mortgages have soared since the Federal Reserve began its third round of bond purchases two weeks ago.

CALL FOR BANK BONUSES TO BE PAID IN DEBT

Banks should pay bonuses in debt, which would be wiped out if a bank failed, according to the Liikanen commission.

GOOGLE MARKET CAP TOPS MICROSOFT

Google's stock market value topped that of long-time rival Microsoft for the first time on Monday.

XSTRATA RECOMMENDS GLENCORE OFFER

Xstrata's novel structure for its long-awaited merger with Glencore has gained further shareholder support.

FOUR CHARGED IN INSIDER TRADING DEALING CASE

Four people have been charged with a 3 million pounds ($4.84 million) alleged conspiracy to commit insider dealing.

WORKDAY EYES $3.8 BLN VALUATION IN IPO

Workday, a lossmaking U.S. business software company, paved the way on Monday for the biggest technology IPO since Facebook's listing.

BAKRIES TO SELL ASSETS TO REPAY LOAN

Indonesia's Bakrie family have agreed to sell non-core assets to repay a loan that fell into default because of the share price collapse of Bumi.

FRANCE THROWS COLD WATER ON EADS DEAL

The two key French and German private sector shareholders in EADS are pressing for changes to its 34 billion euros proposal to merge with BAE Systems.

SAC PLACES TOP MANAGER ON LEAVE

SAC Capital has placed a top portfolio manager on paid leave after an analyst who reported to him pleaded guilty to insider trading last week.

NYT

* New York's attorney general, under the aegis of a federal mortgage task force, filed a civil suit against Bear Stearns, now part of JPMorgan Chase & Co, asserting that it defrauded investors who purchased mortgage securities.

* American Express Co will reimburse $85 million to about 250,000 customers to resolve accusations that the company violated federal law in its marketing, billing and debt collection practices, the company and the government said Monday.

* Greece's government submitted its 2013 draft budget on Monday, outlining enormous spending cuts as the country's foreign lenders returned to resume talks over a broader austerity package in exchange for the rescue money the country needs to meet expenses.

* Crédit Agricole, the big French bank, said Monday it had begun exclusive talks to sell its Greek unit, Emporiki, to Alpha Bank for a symbolic one euro.

* Unemployment in the euro zone hovered at a record 11.4 percent in August, according to data released on Monday, underscoring the pain inflicted by the slowing world economy and the financial problems plaguing many of the countries that share the euro.

* Softbank Corp, the cellphone service provider that brought Apple Inc's iPhone to Japan, said on Monday that it would buy a smaller rival, eAccess Ltd, for about $2.3 billion in stock, in the face of intensifying competition.

* Two of the largest economies in the world, China and Japan, presented fresh data on Monday that underscored the persistent economic drag on the global economy despite the efforts of policy makers and central bankers around the world.

* The U.S. Postal Service sank deeper into debt on Monday after the agency defaulted on a $5.6 billion payment due at the end of September, the second time it has missed a deadline this year to set aside money for its future retiree health benefits

Canada

THE GLOBE AND MAIL

* A witness before Quebec's corruption probe sketched out an elaborate portrait of bribes and kickbacks reaching from major Montreal construction firms to top city employees and into the political party of Mayor Gérald Tremblay.

Former construction boss Lino Zambito testified before the Superior Court that he paid 3 percent of city contracts' value through a middleman to the coffers of Mayor Tremblay's Union Montréal party.

* The federal government has been billed more than $3-million for its unsuccessful attempts to keep a high-stakes battle over first nations child welfare out of the courts.

Invoices obtained through the Access to

* A second abortion-related motion proposed by a backbench Conservative MP could trigger a new debate about the parameters of a woman's right to choose in Canada.

A day before, MPs voted down a separate motion to study whether a fetus should have rights before it is born. Pro-choice activists staunchly opposed MP Stephen Woodworth's fetus-rights motion, suggesting it could open a national debate on a woman's right to access abortion - something Prime Minister Stephen Harper promised not to do during the last federal election campaign.

Reports in the business section:

* Hedge fund Jana Partners unveiled a 41-page presentation suggesting there's $50 a share in Agrium Inc's stock if management agrees to carve up the company into a fertilizer producer and a retail farm store chain, revamps how it allocates capital, and cuts costs by closing stores and other measures.

As much as $20 would come from the split, $20 more from cost reductions and the rest from using capital more efficiently.

* New revisions show Canada's economy was sturdier than previously thought just before the last downturn - even as the U.S. was sputtering - but when the fall came, it was more painful than earlier data had indicated.

Though Canadian growth in the second and third quarters of 2008 has been revised upwards, the economy's slide in the next half year is more stark than prior estimates.

NATIONAL POST

* B.C. Premier Christy Clark met with her Alberta counterpart at the historic McDougall Centre in downtown Calgary on Monday, for the first time since Alison Redford stormed out of an all-premiers' meeting in Halifax two months ago. But the meeting did little to end the impasse over the Northern Gateway pipeline.

* A situation that officials described as volatile and dangerous began to ease late Monday as fire crews started to knock back a massive blaze at a Winnipeg warehouse holding highly explosive fuel used for car racing.

No one was hurt when fire and explosions rocked Speedway International, a company that boasts on its website it is "North America's No. 1 source for 99.99 percent racing methanol".

FINANCIAL POST

* The B.C. government has rejected plans for a copper and gold mine in the province's northwest, saying the project could endanger salmon in the Skeena River.

Pacific Booker Minerals Inc had proposed the mine at Morrison Lake, a 15-kilometre-long lake surrounded by Crown land near Smithers. The lake is at the headwaters of the Skeena River, which produces the second-largest amount of sockeye salmon in B.C.

* Ottawa is redefining and refocusing its immigration rules - expected to be in place next year - that are meant to attract workers between the ages of 18 to 35, a move the federal government argues is an essential shift to fill the tax-generating gap being left by the exodus of baby-boomers from the labor market.

The government argues that despite high youth unemployment, there are not enough skilled workers to fill the jobs that are available.

European economic summary:

• Hungary Trade Balance 431.0M. Previous 457.5M.
• United Kingdom Construction PMI 49.5 – lower than expected. Consensus 49.9. Previous 49.0.

Fly on the Wall 7:00 AM Market Recap

ANALYST RESEARCH

Upgrades

Citigroup (C) upgraded to Outperform from Market Perform at Keefe Bruyette
Kilroy Realty (KRC) upgraded to Hold from Sell at Cantor
Kinross Gold (KGC) upgraded to Outperform from Sector Perform at RBC Capital
Lennar (LEN) upgraded to Neutral from Sell at Citigroup
Liberty Media (LMCA) upgraded to Buy from Neutral at Citigroup
Microchip (MCHP) upgraded to Buy from Hold at ThinkEquity
ON Semiconductor (ONNN) upgraded to Buy from Hold at ThinkEquity
PNC Financial (PNC) upgraded to Buy from Hold at Deutsche Bank
Pan American Silver (PAAS) upgraded to Buy from Hold at Deutsche Bank
XL Group (XL) upgraded to Neutral from Sell at Goldman
Zoltek (ZOLT) upgraded to Buy from Hold at Needham

Downgrades

Baidu (BIDU) downgraded to Outperform from Strong Buy at Raymond James
BB&T (BBT) downgraded to Hold from Buy at Deutsche Bank
Barclays (BCS) downgraded to Neutral from Buy at UBS
Brooks Automation (BRKS) downgraded to Underweight from Equal Weight at Barclays
Consolidated Edison (ED) downgraded to Underperform from Neutral at Credit Suisse
Entropic (ENTR) downgraded to Underperform from Neutral at Credit Suisse
Fifth Third Bancorp (FITB) downgraded to Market Perform from Outperform at Wells Fargo
FormFactor (FORM) downgraded to Underweight from Equal Weight at Barclays
Goldcorp (GG) downgraded to Hold from Buy at Deutsche Bank
Healthcare Services (HCSG) downgraded to Hold from Buy at Benchmark Co.
IDEX Corp. (IEX) downgraded to Perform from Outperform at Oppenheimer
KB Home (KBH) downgraded to Sell from Neutral at Citigroup
Lloyds Banking (LYG) downgraded to Neutral from Buy at UBS
MKS Instruments (MKSI) downgraded to Underweight from Overweight at Barclays
Mondelez (MDLZ) downgraded to Hold from Buy at Jefferies
Old Dominion (ODFL) downgraded to Sector Perform from Outperform at RBC Capital
Parkway Properties (PKY) downgraded to Hold from Buy at Cantor
RenaissanceRe (RNR) downgraded to Neutral from Buy at Goldman
Royal Bank of Scotland (RBS) downgraded to Neutral from Buy at UBS
Safeway (SWY) downgraded to Underperform from Neutral at Credit Suisse
Southern Company (SO) downgraded to Underperform from Neutral at Credit Suisse
Travelers (TRV) downgraded to Buy from Conviction Buy at Goldman
W. R. Berkley (WRB) downgraded Sell at Goldman
Wells Fargo (WFC) downgraded to Hold from Buy at Deutsche Bank
Whiting Petroleum (WLL) downgraded to Neutral from Buy at SunTrust

Initiations

API Technologies (ATNY) initiated with a Buy at C.K. Cooper
Aruba Networks (ARUN) initiated with an Outperform at Wells Fargo
Cepheid (CPHD) initiated with an Outperform at Cowen
DealerTrack (TRAK) initiated with an Overweight at JPMorgan
Genomic Health (GHDX) initiated with an Outperform at Cowen
Hillshire Brands (HSH) initiated with a Market Perform at Wells Fargo
Hologic (HOLX) initiated with an Outperform at Cowen
Kraft Foods Group (KRFT) initiated with a Buy at Jefferies
Kraft Foods Group (KRFT) initiated with a Buy at UBS
Kraft Foods Group (KRFT) initiated with a Neutral at Citigroup
MYR Group (MYRG) initiated with a Buy at DA Davidson
Mead Johnson (MJN) initiated with an Outperform at Wells Fargo
Mondelez (MDLZ) initiated with a Hold at Deutsche Bank
Mondelez (MDLZ) initiated with an Outperform at RBC Capital
Myriad Genetics (MYGN) initiated with an Outperform at Cowen
Palo Alto (PANW) initiated with an Outperform at JMP Securities
Radware (RDWR) initiated with a Market Perform at Wells Fargo

HOT STOCKS

New York State sued JPMorgan (JPM) in state court over mortgage securities, Bloomberg reported. JPM said suit relates to Bear Stearns conduct before takeover
Metlife (MET) won new extension from Fed on stress test
Pershing Square: Procter & Gamble (PG) should hire new CEO from outside company
Ackman said General Growth (GGP) one of the "great stable businesses"
Boeing (BA), Gol Linhas Aereas (GOL) announced $6B order for 60 737 MAX planes
Dynegy (DYNIQ, DYN) emerged from Chapter 11 bankruptcy
Acacia Research (ACTG) subsidiary entered into a license agreement with IBM (IBM)
Core Laboratories (CLB) sees Q4 activity levels similar to Q3
Constellation Energy (CEP) engaged Lantana for possible sale of Black Warrior assets
POZEN (POZN) patents upheld in Treximet patent litigation appeal
Forum Energy (FET) acquired Syntech Technology
Measurement Specialties (MEAS) acquired RTD
LeMaitre (LMAT) to acquire XenoSure rights
Wabtec (WAB) acquired LH Group for about $48M

EARNINGS/GUIDANCE

Companies that missed consensus earnings expectations include:
Team (TISI)

NEWSPAPERS/WEBSITES

Fed Chairman Bernanke answered criticism that the central bank's low-interest-rate policies are enabling bad fiscal policy in Washington, saying the Fed's approach could help reduce the federal budget deficit over time, the Wall Street Journal reports
Facebook (FB) is looking at new ways to leverage its greatest asset—personal data on about 900M people—again raising concerns about privacy. The strategy: selling access to its users, the Wall Street Journal reports
ConocoPhillips (COP) will sell its 8.4% stake in Kazakhstan's giant Kashagan oilfield, and the Central Asian nation is eager to acquire this share, senior Kazakh officials said, Reuters reports
The Danish shipping group Torm A/S (TRMD) struck a deal with its banks that will see them take a majority stake in the firm in exchange for extending $1.8B of debt and giving it access to new funds, Reuters reports
Wall Street banks’ equities-trading units aren’t getting much relief from the strongest stock rally since 2009, as sinking volume and already thin margins threaten to make their annual performance the worst in six years. Q3 equities-trading revenue probably slid 14% from the same period in 2011, the fifth straight drop of more than 8%, according to estimates by JPMorgan Chase (JPM), Bloomberg reports
The SEC is playing catch up in its ability to analyze the computerized trading that has come to dominate American stock markets. Initiatives to increase the breadth of data received from exchanges and to record orders from origination to execution are at the center of the effort, Bloomberg reports

SYNDICATE

American Superconductor (AMSC) files to sell 10.26M shares of common stock for holders
Cynosure (CYNO) files to sell 2.94M shares of common stock for holders
DDR Corp. (DDR) files to sell 40.58M shares of common stock for holders
Genesis Energy (GEL) announces offering of 6M common units for holders
Gladstone Investment (GAIN) announces 4M share common stock offering
Laredo Petroleum (LPI) files to sell 12.5M shares for Warburg Pincus
SBA Communications (SBAC) announces offering of 4.59M shares of common for holders
Ship Finance (SFL) announces offering of 6M shares of common stock
Tesoro Logistics (TLLP) announces offering of 3.7M common units
Urstadt Biddle Properties (UBA) announces offering of 2.5M shares of common stock

ACTIVIST/PASSIVE FILINGS

Steadfast Capital reports 5.21% passive stake in Yelp (YELP)

• More QE could distort rather than deliver (FT)
• Soros Buying Gold as Record Prices Seen on Stimulus (BBG)
• EU Leaders Face Greek Aid Gap in Brinkmanship With IMF (BBG)
• Weak data point to bigger economic drag from Sandy (Reuters)
• Shirakawa Pushes Back With Criticism of Abe Unlimited Easing (BBG) But... but... Bernanke??
• French Downgrade Widens Gulf With Germany as Talks Loom (BBG)
• Japanese Poll Shows LDP Advantage Ahead of Election (WSJ)
• BOJ in the Balance as Next Government Picks Top Posts (BBG)
• Exchanges Get Closer Inspection (WSJ)
• Greece edges closer to €44bn bailout (FT)
• Japan Government to Spend 1 Trillion Yen on Next Stimulus (BBG)
• China’s Richest Woman Divorces Husband, Fortune Declines (BBG)
• Judge Tosses Suit Over AIG - Ex-CEO Claimed New York Fed Breached Fiduciary Duty to Insurer's Shareholders (WSJ)

Overnight Media Digest

WSJ

* Moody's stripped France of its triple-A rating, following in the footsteps of Standard & Poor's and delivering a stinging critique of President Hollande's attempts to turn the economy around.

* Intel Corp was hit with the surprise departure of its longtime Chief Executive Paul Otellini as the company, which makes most of the chips found in personal computers, pushes to restore its sway over the high-tech sector amid an industry shift to smartphones and other mobile devices.

* JPMorgan Chase named finance executive Marianne Lake to succeed Douglas Braunstein as chief financial officer of the largest U.S. bank. The appointment, effective early next year, makes Lake one of the most powerful women on Wall Street.

* Honeywell International Inc said on Monday it expects the bulk of looming U.S. defense cuts to be implemented, and in a sharp break with rivals said it welcomes the reductions.

* U.S. hedge fund Jana Partners LLC launched a proxy battle for change at Canada's Agrium Inc naming five candidates for election to the company's board, including Jana managing partner Barry Rosenstein.

FT

INTEL CHIEF OTELLINI TO RETIRE IN MAY

Paul Otellini is stepping down from the top job at Intel , leaving no clear successor in place for the first time at the world's biggest chipmaker.

TERRA FIRMA ADVANCE ON MOD LANDLORD

Buyout group Terra Firma agreed to buy Annington Homes from Nomura in a deal worth 3.2 billion pounds.

CAMERON TARGETS CULL OF EU CIVIL SERVANTS

The EU's much-maligned civil servants are facing a cull and renewed pay restraint as the price of possible British support for an agreement on the bloc's long-term budget.

OSBORNE CASTS EYES ON PENSIONS OF RICH

George Osborne is considering a new tax raid on the pension contributions of richer voters, after rejecting the idea of a "wealth tax."

JP MORGAN REPLACES CHIEF FINANCIAL OFFICER

JPMorgan Chase & Co on Monday named Marianne Lake, financial chief of its retail banking unit, as chief financial officer of the company.

MOODY'S DOWNGRADES FRANCE FROM TRIPLE A

France suffered the second downgrade of its sovereign debt rating this year when Moody's, the U.S. rating agency, removed its triple A ranking on Monday night.

US BANKS IN RUSH TO PLUG CAPITAL SHORTFALL

U.S. banks are racing to fill a little-noticed capital shortfall by issuing billions of dollars of preferred shares.

HSBC IN TALKS OVER SALE OF PING AN STAKE

HSBC is weighing a sale of its $9.5 billion stake in Ping An Insurance, as the bank withdraws from non-core businesses amid a global drive to improve profitability.

NYT

* The president and chief executive of Intel Corp, Paul Otellini, is retiring after 40 years with the company. Intel said it would prepare to transition to a new leader over the next six months.

* JPMorgan Chase named a new chief financial officer on Monday, the latest management shake-up by the bank after a multibillion-dollar trading blunder earlier this year. Marianne Lake, will replace Douglas Braunstein as CFO early next year.

* Moody's Investors Service downgraded France's sovereign debt rating by one notch, to Aa1 from Aaa, the agency said on Monday, citing the country's uncertain fiscal outlook as a result of "deteriorating economic prospects."

* News Corp is starting to look like its old self again. The media conglomerate, which had been on its heels for more than a year because of the phone hacking scandal in Britain, is looking to make acquisitions again.

Canada

THE GLOBE AND MAIL

* Three of Canada's largest provinces are leading a revived effort to create a single agency to oversee the country's securities markets, an initiative that comes nearly one year after the Supreme Court's rejection of a national regulator.

Ontario has long been the closest provincial ally of the federal government in its fight to reform the country's patchwork system of securities regulation. But British Columbia and Alberta are also expressing a new openness to replacing Canada's 13 provincial and territorial regulators with a single entity that would police the buying and selling of securities.

* The pressure is on Ontario's Education Minister to avert further labour strife and approve five tentative deals that secondary school teachers say are within the stringent financial parameters dictated by the province.

The agreements, which Laurel Broten insisted must be "substantively identical" to terms agreed with the English Catholic teachers' union in July, came this weekend after school boards asked the Minister to define the phrase.

Reports in the business section:

* A new private equity firm, backed by members of Atlantic Canada's McCain and Sobey families, looked at 100 Canadian companies in a search for its first investment - but, in the end, it didn't travel far for its inaugural deal.

The McCain-Sobey vehicle, SeaFort Capital Inc, is buying A.W. Leil Holdings Ltd, a crane rental business based in New Glasgow, Nova Scotia, the home community of the Sobey supermarket family and not far from the McCains' New Brunswick frozen food base.

* Agrium Inc says a U.S. hedge fund's efforts to replace much of its board and spin off its retail unit is not supported by most shareholders, and is doomed to failure.

"We listen to our shareholders and the overwhelming majority continue to support the company's position," Mike Wilson, Agrium's president and chief executive officer, said as Jana Partners LLC launched a proxy battle to replace five of the company's 11 board members.

NATIONAL POST

* Documents show the sister of Alberta Premier Alison Redford used her position as a health board executive to attend and hold Progressive Conservative party events on the taxpayers' dime. There was money for liquor, travel, hotels, flowers and bug repellent.

Wildrose party Leader Danielle Smith, while releasing the documents Monday, said a bigger investigation is needed since Lynn Redford and those who signed off on those expenses remain executives with Alberta's health superboard.

FINANCIAL POST

* Amid growing investor discontent at Rona Inc, its U.S. suitor is retreating backstage as the battle for control of the Canadian company plays out in the weeks ahead.

Lowe's Companies Inc on Monday reaffirmed its interest in a Canadian acquisition as a way to build size. The comment was important because it means it still wants to do a deal after failing to win the backing of Rona's board and withdrawing in September its C$14.50 ($14.56) per share offer.

* A decision that killed BCE Inc's multibillion dollar bid for Astral Media Inc may have, ironically, helped pave the way for the deal's completion.

The country's largest telecommunications and media company filed a fresh offer for Astral with broadcast regulators on Monday, outlining changes and concessions it will make in order to win approval. The amendments are based on the lengthy and detailed decision issued by the Canadian Radio-television and Telecommunications Commission on Oct. 18 that flatly rejected BCE's original C$3.38 billion offer.

China

SHANGHAI SECURITIES NEWS

-- China's large tyre companies are looking to create a stabilisation fund aimed at stabilising the prices of natural rubber, the Shanghai Securities News reported on Tuesday quoting sources from an official rubber industry body.

CHINA DAILY (www.chinadaily.com.cn)

-- The company that equipped China's first aircraft carrier is ready to build more seagoing carriers, said Hu Wenming, chairman of China State Shipbuilding Corp, during the 18th National Congress that ended last week.

-- Police from China and the United States have arrested 73 suspects for running a joint operation to sell fake bags internationally. The police seized more than 20,000 counterfeit bags with fake Louis Vuitton, Hermes and Coach tags and destroyed 37 production and sales sites in May. The gang was believed to have sold more than 5 billion yuan of fake bags.

PEOPLE'S DAILY

-- China's communist party must empathise with the people and adhere to the spirit of the 18th National Congress to promote social harmony and improve the livelihood of the people.

Fly On The Wall 7:00 am Market Recap

ANALYST RESEARCH

Upgrades

AK Steel (AKS) upgraded to Neutral from Sell at Goldman
American Axle (AXL) upgraded to Hold from Underperform at Jefferies
Archer Daniels (ADM) upgraded to Outperform from Market Perform at BMO Capital
Boardwalk Pipeline (BWP) upgraded to Outperform from Neutral at Credit Suisse
Expedia (EXPE) upgraded to Equal Weight from Underweight at Barclays
Joy Global (JOY) upgraded to Market Perform from Underperform at BMO Capital
Penn National (PENN) upgraded to Neutral from Sell at Goldman
Pentair (PNR) upgraded to Outperform from Neutral at RW Baird
Peoples Bancorp (PEBO) upgraded to Outperform from Market Perform at Raymond James
Realty Income (O) upgraded to Buy from Neutral at Janney Capital
Research in Motion (RIMM) upgraded to Hold from Underperform at Jefferies
SVB Financial (SIVB) upgraded to Buy from Neutral at Citigroup
Vantiv (VNTV) upgraded to Buy from Hold at Jefferies
Whiting USA Trust (WHZ) upgraded to Neutral from Underperform at RW Baird
Whole Foods (WFM) upgraded to Buy from Neutral at Goldman
Zipcar (ZIP) upgraded to Buy from Neutral at Goldman

Downgrades

Cliffs Natural (CLF) downgraded to Sell from Neutral at Goldman
Emerson (EMR) downgraded to Perform from Outperform at Oppenheimer
Greif (GEF) downgraded to Market Perform from Outperform at Wells Fargo
Intel (INTC) downgraded to Neutral from Buy at UBS
Laredo Petroleum (LPI) downgraded to Market Perform from Outperform at BMO Capital

Initiations

Aetna (AET) initiated with a Buy at Lazard Capital
Boston Scientific (BSX) initiated with a Buy at Stifel Nicolaus
CareFusion (CFN) initiated with a Buy at Stifel Nicolaus
Christopher & Banks (CBK) initiated with a Buy at Capstone
Coach (COH) initiated with an Outperform at Wells Fargo
Columbia Banking (COLB) initiated with an Outperform at Credit Suisse
Covidien (COV) initiated with a Buy at Brean Capital
Deckers Outdoor (DECK) initiated with an Outperform at Wedbush
Geospace (GEOS) initiated with a Buy at Dahlman Rose
Intuitive Surgical (ISRG) initiated with a Hold at Stifel Nicolaus
Johnson & Johnson (JNJ) initiated with a Hold at Stifel Nicolaus
MPLX (MPLX) initiated with a Neutral at UBS
MPLX (MPLX) initiated with an Overweight at Morgan Stanley
Millennial Media (MM) initiated with a Buy at Janney Capital
Realogy (RLGY) initiated with a Neutral at Goldman
Realogy (RLGY) initiated with an Outperform at Wells Fargo
Realogy (RLGY) initiated with an Overweight at JPMorgan
The Medicines Co. (MDCO) initiated with an Outperform at Oppenheimer
Umpqua Holdings (UMPQ) initiated with an Underperform at Credit Suisse
UnitedHealth (UNH) initiated with a Buy at Lazard Capital

HOT STOCKS

Bayer (BAYRY) won’t increase bid for Schiff Nutrition (SHF)
Schulze reportedly seeking 30-day extension for bid on Best Buy (BBY), Bloomberg reported
JPMorgan (JPM) named Marianne Lake CFO
Atlas Resource Partners (ARP) to acquire DTE (DTE) unit for $255M
SandRidge Energy (SD) adopted stockholder rights plan, issued share dividend
Credit Suisse (CS) to combine asset management unit with private bank
Quanta Services (PWR) announced agreement to sell telecom units to Dycom (DY) for $275M
UnitedHealth (UNH) acquired 60% of Amil's outstanding shares in October
SunCoke Energy (SXC) and VISA Steel announced Indian joint venture
Statoil (STO) and Wintershall signed strategic gas supply agreement
Syngenta (SYT) to acquire Sunfield Seeds, details not disclosed
CBRE Group (CBG) acquired EA Shaw
Valmont (VMI) acquired manufacturing assets of Katana Summit
Sunshine Heart (SSH) received unconditional FDA approval for U.S. pivotal trial
Jack in the Box (JACK) provided 2014-2016 long-term goals, including targeting SSS sales growth of 2% to 3% annually at JITB company restaurants and 3% to 4% annually at Qdoba company restaurants

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Hormel Foods (HRL), Dycom (DY), Krispy Kreme (KKD), Brocade (BRCD), Shoe Carnival (SCVL), Agilent (A)

Companies that missed consensus earnings expectations include:
ShangPharma (SHP), Trina Solar (TSL), Navios Maritime (NM), America's Car-Mart (CRMT), Jack in the Box (JACK), Xueda Education (XUE), Urban Outfitters (URBN), Bob Evans (BOBE)

NEWSPAPERS/WEBSITES

Federal labor officials said  their top priority is to decide whether to seek an injunction on behalf of Wal-Mart Stores (WMT) which filed a complaint last week to stop worker protests at its stores over the Thanksgiving holiday, the Wall Street Journal reports
The SEC is stepping up oversight of stock exchanges as they scramble to catch up to trading advantages that some say have developed for sophisticated clients at the expense of ordinary investors, the Wall Street Journal reports
Shareholders in commodity trader Glencore (GLNCY) voted overwhelmingly in favor of its  $31B takeover of miner Xstrata (XSRAY), Reuters reports
Germany and France reached agreement under which each government would hold a 12% stake in EADS (EADSY) moving forward, according German newspaper Handelsblatt, Reuters reports
Exxon Mobil (XOM), Royal Dutch Shell (RDS.A) and their partners in Kazakhstan’s Kashagan oil field face a delay of at least two years on a plan to boost output 20% percent, reducing the time they have to recoup costs in the $46B project that’s already running eight years late, sources say, Bloomberg reports
The 12 year rally in gold is set to continue next year as central bank stimulus spurs investors from John Paulson to George Soros to accumulate the highest combined bullion holdings ever, Bloomberg reports

SYNDICATE

Alon USA Partners (ALDW) 10M share IPO priced at $16.00
Atlas Resource Partners (ARP) commences offering of 6.8M common units
C&J Energy (CJES) files to sell 3.297M shares of common stock for holder
Martin Midstream Partners (MMLP) commences offering of 3M common units
Memorial Production (MEMP) files to sell $205M common units for limited partners
Northfield Bancorp (NFBK) commences stock offering
Primerica (PRI) files to sell 3.6M shares for Warburg Pincus
Superconductor Technologies (SCON) files to sell common stock

ACTIVIST/PASSIVE FILINGS

1Globe capital reports 7.09% passive stake in Aeterna Zentaris (AEZS)
Carl Icahn raises stake in Chesapeake (CHK) to 8.89%
Master Global Assets reports 5.35% passive stake in GAIN Capital (GCAP)
SAC Capital reports 5% passive stake in The Medicines Co. (MDCO)
Tiger Global reports 9.9% passive stake in Groupon (GRPN)

2012 is a year most asset managers would like to forget. With the S&P returning 16% and Russell 2000 up 16.3%, on nothing but multiple expansion in a world where risk has been eliminated despite persistently declining revenues and cash flows, a whopping 88% of hedge funds, as well as some 65% of large-cap core, 80% of large cap value, and 67% of small-cap mutual funds underperformed the market, according to Goldman's David Kostin. The ongoing absolute outperformance of mutual funds over their 2 and 20 fee sucking hedge fund peers is notable, as this is the second or perhaps even third year in a row it has happened. And while the usual excuse that hedge funds are not supposed to beat the market but a benchmark, and generally protect capital from downside risk is valid, it is irrelevant if any downside risk (see ongoing rout in VIX and net position in the VIX futures COT update) is now actively managed by central banks both directly and indirectly, their HF LPs no longer see the world in that way. In fact as Bloomberg Market's February issue summarizes, some 635 hedge funds closed in 2012, 8.5% than a year earlier, despite a far stronger year for the general indices. The reason: LPs and MPs have simply had enough of holding on to underperformers and get swept up in the momentum of performance chasing, and the result is redemption requests into funds who may have had a positive benchmark year, but underperform relative to the S&P for two or more years, which nowadays is the vast majority of funds.

Yet it is not fair to say that all hedge fund strategies have failed: the clear winner among them? Mortgages, driven by none other than the worst kept secret of 2012 - the arrival of QE3, and the $40 billion a month monetization in MBS. While at least QE3 and 4 once and for all sealed any debate over whether there is economic improvement in the US (there isn't, hence the Fed's monthly injection of $85 billion in flow), it was Pimco who was the beacon of what was to come as Zero Hedge readers were made well aware back in February with "Pimco Borrows A Record $88 Billion To Bet On Fed's Upcoming MBS Monetization." Anyone who piggy backed generated the highest Bernanke-assisted Alpha there was to capture in the past year.

Some other facts from Bloomberg Markets:

• Three of the top five funds invested in mortgage securities and two of them are run by the same company. Betting on mortgage securities outpaced every other strategy, with an average return of 20.2%, against an industry average of just 1.3%.
• Two of the top 10 funds are based in the UK.
• While Tiger Management Julian Robertson's "Tiger cub" funds dominated last year's top echelon (including Tiger Global fund at number 1), only one cracked the top 20 this year.
• Poor returns forced an estimated 635 hedge funds to close in the first nine months of 2012, 8.5% more than a year earlier. Even some big name managers threw in the towel.

While the bulk of hedge funds disappointed, the following were the Top 20 best performing hedge funds according to Bloomberg:

A quick video summarizing all of the above for the time-pressed:

There was the usual court intrigue involving the bad boys of the hedge fund world, fawned upon by what few investors are left, including David Einhorn, Dan Loeb, JANA Partners, Omega Advisors, Citadel (aka the NY Fed's right hand fund in times of need), and Och-Ziff, whose fares were best summarized by Reuters in the following piece.

Yet the overall theme is that it is becoming increasingly clear that the fundamental premise behind hedge funds is slowly but surely being eliminated by the central banks, who are doing all they can to remove all downside risk, a strategy that will inevitably blow up, yet which will mean that in the meantime, everyone will be forced to chase upside strategies, and with retail investors long gone, instead having handed over investment privileges to their deposit-holding banks who daytrade on their behalf (sometimes with JPM CIO consequences), very soon the only trade on the table will be one, and any hedges applied to it will merely serve to accelerate one's inbound redemption notices.

In other words, after destroying proper capital allocation, Ben Bernanke is also wreaking havoc with the fundamental premises of investing.

Goldman's David Kostin explains the return picture from his firm's perspective, and presents the firm's client view on why mutual funds have underperformed so severely:

2012 was a strong year for stock returns but a poor year for managers: Nearly two-thirds of US equity mutual funds lagged their benchmarks. Our analysis of $1.3 trillion in US equity mutual fund assets reveals that 65% of large-cap core, 51% of large-cap growth, 80% of large-cap value, and 67% of small-cap mutual funds underperformed their respective benchmarks, S&P 500 (16.0%), Russell 1000 Growth (15.3%), Russell 1000 Value (17.5%), and Russell 2000 (16.3%). See Exhibits 1 and 2.

Hedge funds also underperformed. 88% of hedge funds were lagging the S&P 500 as of December 21st. With one week remaining in 2012, the typical hedge fund was up 8.1%, with a standard deviation of 10 pp. Two reasons mutual funds lagged: Sector rotation and stock selection. Violent sector rotations proved challenging to navigate as evidenced by mutual fund sector tilts and securities holdings patterns during 2012.

S&P 500 transitioned through three distinct performance phases in 2012 (see Exhibit 3). The market posted a historically anomalous 1Q return and had surged 13% by April 2nd. Rising Europe risk then sparked a 10% decline during next two months. Finally, central bank statements and policy in both the US and Europe laid the foundation for a 13% rise between June 1st and year-end, despite short-lived weakness following the US election.

Below these index gyrations, sector performance showed considerabledifferentiation. Financials and Information Technology had each rallied 23% through April 2nd, exceeding beta implied returns, and collectively accounted for more than 50% of S&P 500 index gains. However, managers chasing momentum premised in increased regulatory clarity / firming housing data for Financials and stronger spending patterns for Info Tech then faced 15% and 13% declines through June 1st as risk sentiment fell precipitously. Ultimately, willingness to maintain a Financials overweight throughout the year afforded considerable relative returns (+13 pp over the index), while those managers maintaining overweight exposure to Tech past June generated considerable performance drag (-6 pp of relative return).

Generally, across S&P 500’s three performance phases in 2012, onlyConsumer Discretionary consistently outpaced the index. The other nine S&P 500 sectors shifted between over-and-underperformance.

Holdings data suggest large-cap core managers had mixed success in managing these sector rotations. Starting 2012 with an aggregate underweight position in Financials, many missed concentrated gains in 1Q. Boosting exposure by April was penalized by below-market returns through June. However, managers continued to add Financials exposure in the second half, enhancing performance. Financials massively outperformed the S&P 500 from June 1st onward (+24% vs. +13% for the index).

Mutual fund managers proved more capable of navigating Information Technology. Market weight exposure meant most funds failed to capture 1Q strength. Yet, shifts to a substantial Info Tech underweight position from 2Q onward (2nd largest behind Utilities by year-end) proved prescient given that the sector lagged during this time (-5% vs. S&P 500 +3%).

Managers maintained a consistently strong overweight position in Consumer Discretionary throughout the year. Funds benefitted from this allocation given the sector’s +790 bp of outperformance in 2012.

In terms of cyclical vs. defensive positioning, managers remained consistently underweight Telecom and Utilities throughout 2012. Although funds missed the 2Q flight to safety, the tilt away from defensives ultimately proved advantageous as Telecom only slightly outperformed the index in 2012 (+2 pp) while Utilities lagged substantially (-15 pp). In contrast, a steady move from a market weight to a substantial overweight in Consumer Staples by year-end proved misguided, as market returns in 1H were followed by 4 pp of underperformance in 2H. A year-long overweight in Health Care worked well after 1Q, and now represents large-cap core managers’ strongest overweight position.

More cyclically, slight overweight positions in Materials and Industrials both generated mild drag across the year as a whole, with the sectors each lagging the index by 1 pp. Finally, while managers benefited materially from an Energy underweight in 1H (-12 pp of relative underperformance vs. the index), further decreases in exposure in 2H yielded no advantage as Energy modestly outperformed.

Stock positions also mattered. In 2012 stable, beneficial overweights for large-cap core managers included NWSA, AMGN, BK, EBAY and GILD (in order of importance) while beneficial underweights included XOM, INTC, IBM, MCD and NEM. Alternatively, major overweights generating headwinds to performance included CHK, HPQ, DVN, MSFT and APOL, while underweights creating drag on a full year basis included BAC, AAPL, CMCSA, CRM, and AMZN. On net, our analysis suggests that timing sector and single-name rotations proved difficult given the market’s macro drivers.

* * *

Finally, for those curious how they placed, or how that fund next door did, here is the final HSBC report of 2012. On to 2013.

Wondering why AAPL is finally soaring after stagnating for days? Because the market finally knows that Whitney Tilson sold his handful shares of AAPL. We learn all this and much more in today's humorous interlude - the first annual letter out of Kase Capital. What is Kase Capital? "Now that I’m managing money solo, I’ve adopted the name “Kase”, so our fund is now doing business as the Kase Fund. The letters of “Kase” come from the four most important people in my life: my wife, Susan, and three daughters, Alison, Emily, and Katharine. May they bring all of us as much good fortune as they’ve brought me!" And yes, the always "imaginative" 13F-ghoster took that particular idea from Barry Rosenstein's Jana Partners.

The full letter is presented below, but the first two paragraphs are worth the price of admission alone:

After 11½ strong years, the fund has lagged badly over the last 2½ years. To turn things around, I’ve made many changes (discussed below), most importantly returning to my roots of managing money solo.

 

In June, Glenn and I decided to each run our own funds, and began doing so on July 1st. As part of this process, I took our fund to cash so that I could rebuild the portfolio from scratch. However, I wasn’t able to exit a handful of illiquid positions, most notably the Iridium warrants, which impacted performance in the second half of the year, but today I’m pleased to say that the portfolio is where I want it, conservatively positioned in my very best ideas. My mind is clear and focused on the long term, and I’m looking forward with confidence and optimism.

And the conclusion:

After a strong 12-year run, 2011 and 2012 were lost years. I feel very badly about this and apologize to you. But I know you don’t want an apology – you want performance! To that end, I’ve reflected on the mistakes I’ve made, learned from them, and taken significant steps to maximize our chances of success going forward: I’m now the sole portfolio manager and have dramatically simplified, focused, and de-risked the fund. I’m confident that my strategy is sound, I will execute it well going forward, and we will all profit.

 

I’m heartened and humbled that the vast majority of the fund’s partners have chosen to maintain their investment. I’m determined to reward your vote of confidence and want to thank you for your patience, confidence and support.

It is unclear just which extended family members he is referring to. And no, there is no mention of Tilson's recently favorite Herbalife short anywhere.

• Germany: Europe's... poorest? ECB Survey Puts Southerners on Top in Household Wealth, Germans Near Bottom (WSJ)
• Obama Proposes $3.77 Trillion Budget to Revive Debt Talks (BBG)
• China trade data raise accuracy worries (FT) ... but generates so much laughter
• such as this... China Exports Miss Forecasts as ‘Absurd’ Data Probed (BBG)
• S. Korea Braces for ‘Very High’ Chance of North Missile Test (BBG)
• Slovenia, Spain Warned of ‘Excessive’ Economic Imbalances by EU (BBG)
• G8 foreign ministers meet in London to address Syria, North Korea (Reuters)
• N. Korea Threats Boost First South Korea Rate Cut Odds Since October (BBG)
• China Bird Flu Outbreak May Stem From Numerous Sources (BBG)
• Spain Bailout Less Likely on Lower Funding Costs: Moody’s (BBG)
• BOE’s Haldane: Simplify Bank Rules to Strengthen Them (WSJ)
• Australia's Swan Backs Japan-to-U.S. Stimulus as G-20 Meets, Yen Slides (BBG)
• Japan’s unfinished policy revolution (FT)
• Fed’s Williams Sees Reduced Fed Bond Buying in Second Half of 2013  (WSJ)

Overnight Media Digest

WSJ

* German households are among the poorest - on paper, at least - in the euro zone, according to a study by the European Central Bank that adds a new twist to the debate over how far taxpayers in Northern Europe should go to support weaker countries.

* Fitch Ratings Inc lowered one of its key ratings on China's government debt, in one of the most prominent warnings to date over a credit buildup in the world's second-largest economy.

* A former KPMG LLP partner admitted passing on stock tips about clients to a friend who gave him cash and gifts, in a scandal that led the big accounting firm to resign as auditor for two companies, Herbalife Ltd and Skechers USA Inc .

* Yahoo Inc and Apple Inc have been discussing how more Yahoo services can play a prominent role on Apple's iPhone and iPad, people briefed on the matter said.

* European government policy makers are considering rules that would include short-term loans from other banks among the liabilities that could suffer losses when authorities close down failing banks, according to a document seen by The Wall Street Journal.

* Cablevision Systems Corp Chief Executive James Dolan is giving his wife wider responsibilities, including oversight of sales of cable TV, Internet and voice products in addition to product management and marketing.

* The European Union has opened an antitrust investigation into MasterCard Inc following concerns over some of the credit-card company's interbank fees.

FT

James Crosby, the boss of failed lender HBOS, requested to be stripped of his knighthood following a scathing report into the 2008 collapse of the bank he once presided over.

KPMG resigned as auditor to two US companies after accusing a former partner of engaging in insider trading.

Britain's financial watchdog is investigating last year's technology failures at state-backed Royal Bank of Scotland that left 17 million customers without access to their accounts for up to three weeks.

Global ratings agency Fitch cut China's long-term local currency credit rating to A-plus from AA-minus over concerns that the country's rising debt problems will require a government bailout. Austria and Luxembourg are set to ease longstanding bank secrecy rules in a move that will allow other Eurozone member states to access their depositors' account details amid pressure to crack down on tax evasion in Europe.

The European Union has opened an antitrust investigation into MasterCard Inc over concerns that some of the credit-card company's interbank fees are anticompetitive.

Brazil's state-controlled oil company Petrobras is considering possible business ventures with companies controlled by billionaire Eike Batista.

NYT

* KPMG resigned as auditor for Herbalife Ltd and Skechers USA Inc and withdrew audit reports after a KPMG employee was found to have given information on clients to a third party.

* President Obama announced three nominations to the National Labor Relations Board on Tuesday to complete a package of five nominees - three Democrats and two Republicans - that the administration hopes Senate Republicans will approve to end the board's unusual limbo.

* Months after brokering a multibillion-dollar settlement with banks over mortgage foreclosure abuses, the Federal Reserve and the Office of the Comptroller of the Currency are set to dole out roughly $1.2 billion in cash relief in the first batch of payments to troubled borrowers.

* James Crosby, a former chief executive of failed British bank HBOS, said on Tuesday that he would ask authorities to remove his knighthood in light of a damning report published last week that blamed him in part for the mortgage lender's 2008 collapse.

* Southeastern Asset management says that proposals from the Blackstone Group and Carl Icahn are superior to the $13.65-a-share offer for Dell Inc from Michael Dell and the private equity firm Silver Lake.

* Theme park operator SeaWorld Entertainment is seeking to raise up to $540 million in its initial public offering. Half of the shares sold will come from its owner, the Blackstone Group .

Canada

THE GLOBE AND MAIL

* Unionized employees of the Liquor Control Board of Ontario (LCBO) have overwhelmingly voted in favor of a strike should contract talks with the retail giant break down. The Ontario Public Service Employees Union, which represents more than 7,000 LCBO staff, says 95 percent of the members voted in favour of a walkout.

* Montreal is lifting its 65-year-old, Prohibition-style ban on street food, providing hope for sidewalk foodies and ending a quirky distinction for a city reputed to be among the gastronomic capitals of the continent.

Reports in the business section:

* An abundant supply of labour is the key ingredient that has allowed Canada to expand its economy over several decades despite disappointing productivity gains, a trio of economists from the U.S. Federal Reserve Board and the International Monetary Fund argue in a report to be published Wednesday in the International Productivity Monitor.

* Agrium Inc has defeated a boardroom challenge from dissident shareholder Jana Partners LLC, with investors choosing to back the company's board slate after an acrimonious months-long campaign that ended in a flurry of accusations of unfair play.

NATIONAL POST

* In its effort to get more people on public transit, Fort McMurray is unleashing an unlikely, yet powerful strategy: It's building the most tricked-out bus shelters Canada has ever seen.

By year's end, residents of the northern Alberta oil sands city will have 300 heated bus shelters to wait in, protected from a certain brand of Canadian winter that can whip winds as cold as 40 below.

China

CHINA SECURITIES JOURNAL

- A total of 4.7 million affordable houses are planned for construction this year, according to an official announcement released on Tuesday by Ministry of Housing and Urban-Rural Development.

- New medicine which can fight off bird flu, H7N9, has been authorized by China Food and Drug Administration and is expected to be introduced to the market in the first half on this year.

- Troubled solar panel manufacturer Suntech Power Holdings Co Ltd said on Tuesday they are consulting with several investors, including Buffett-led MidAmerican Energy Holdings Co.

CHINA DAILY

- The Chinese tourism authority said overseas tourist flows declined 1.8 percent in the first quarter due to concerns about environmental issues.

- The city of Guangzhou in southern Guangdong province will allow tourists to visit for 72 hours without a visa, following a similar program in Shanghai.

SHANGHAI SECURITIES NEWS

- The inspection of initial public offerings companies starts today in Shanghai National Accounting Institute and will last till the end of June.

PEOPLE'S DAILY

- China's economy growth will hit 8.2 in 2013 and 8.0 percent in 2014, supported by strong fiscal expenditures and consumption.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

American Eagle (AEO) upgraded to Overweight from Neutral at Piper Jaffray
AmerisourceBergen (ABC) upgraded to Buy from Neutral at Goldman
CYS Investments (CYS) upgraded to Outperform from Market Perform at Keefe Bruyette
Geo Group (GEO) upgraded to Overweight from Equal Weight at Barclays
IBM (IBM) upgraded to Buy from Neutral at UBS
Pacific Sunwear (PSUN) upgraded to Overweight from Neutral at Piper Jaffray
Siemens (SI) upgraded to Neutral from Underperform at Exane BNP Paribas
Starwood Property (STWD) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Aeropostale (ARO) downgraded to Sell from Neutral at Goldman
Agrium (AGU) downgraded to Neutral from Overweight at Piper Jaffray
Community Health (CYH) downgraded to Hold from Buy at Deutsche Bank
Expeditors (EXPD) downgraded to Buy from Conviction Buy at Goldman
France Telecom (FTE) downgraded to Conviction Sell from Sell at Goldman
Health Management (HMA) downgraded to Hold from Buy at Deutsche Bank
NetApp (NTAP) downgraded to Neutral from Buy at UBS
ONEOK Partners (OKS) downgraded to Sell from Neutral at Goldman
TE Connectivity (TEL) downgraded to Neutral from Buy at BofA/Merrill
Tenet Healthcare (THC) downgraded to Hold from Buy at Deutsche Bank

Initiations

H&R Block (HRB) initiated with an Outperform at Wedbush
Heartland Financial (HTLF) initiated with a Buy at DA Davidson
Hologic (HOLX) initiated with a Hold at Stifel
Icahn Enterprises (IEP) initiated with a Buy at Jefferies
MarkWest Energy (MWE) initiated with a Neutral at Goldman
Netflix (NFLX) initiated with an Underweight at Evercore
P.A.M. Transportation (PTSI) initiated with a Buy at Wunderlich

HOT STOCKS

Blackstone (BX) solicits partners, tech companies for Dell bid, DJ reports
W.R. Grace (GRA) sees FY13 adjusted EBITDA $665M-$685M
Sanofi (SNY), Pieris broaden existing collaboration, terms not disclosed

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Adtran (ADTN), SeaChange (SEAC), Healthcare Services (HCSG), PriceSmart (PSMT)

Companies that missed consensus earnings expectations include:
W.R. Grace (GRA)

NEWSPAPERS/WEBSITES

• Ron Johnson’s departure as CEO of  J.C. Penney (JCP) is a blow to hedge fund manager William Ackman, who set out to change the retailing world by revamping Penney and now is stuck with a large stake in a broken company run by the man he pushed out, the Wall Street Journal reports
• Nearly a year after walking away from Facebook (FB), GM (GM) said it has returned to advertising on the social network on a trial basis. GM executives are intrigued with Facebook's new audience targeting tools designed to deliver ads to consumers who are more likely to buy, the Wall Street Journal reports
• Thermo Fisher Scientific (TMO) made a binding offer for Life Technologies (LIFE) as private equity firms raced to finalize a consortium to take the genetic testing equipment maker private, sources say, Reuters reports
• Toyota Motor (TM) said its Corolla was the world's top selling car of 2012, contradicting rival  Ford (F) which claimed top spot for its Focus model, Reuters reports
• Home prices are climbing too fast relative to buyer incomes, signaling that property values may fall in some U.S. cities once mortgage rates rise and reduce affordability, according to a study by Zillow Inc. (Z), Bloomberg reports
• China’s yuan surged to a 19-year high after the central bank set a record reference rate for the currency amid speculation of rising capital inflows. The People’s Bank of China raised the fixing by 0.15%, the biggest increase since February 8, to 6.2548 per dollar, Bloomberg reports

SYNDICATE

Durata Therapeutics (DRTX) files to sell $50M of common stock
Infinity Pharmaceuticals (INFI) plans to sell 8.5M shares for holders
KNOT Offshore Partners (KNOP) 7.45M share IPO priced at $21.00
Realogy (RLGY) files to sell 35M shares of common stock for holders
Resource Capital (RSO) announces 16.25M share common stock offering
Rexnord (RXN) files to sell 67.9M shares of common stock for holders
Synergy Pharmaceuticals (SGYP) files to sell $90M of common stock
Taylor Morrison (TMHC) 28.57M share IPO priced at $22.00
Tornier (TRNX) files to sell 8M ordinary shares by holders

• Euro-Area Unemployment Increases to Record 12.1% Amid Recession (BBG)
• Fed faces calls for radical reform (FT) - Has Jamie Dimon approved of this message? No? Carry on then
• CEO Pay 1,795-to-1 Multiple of Wages Skirts U.S. Law (BBG)
• Ex-UBS Executive Convicted of Paid Sex With Underage Girl (BBG)
• Six months after Sandy, New York fuel supply chain still vulnerable (Reuters)
• Older, richer shoppers lead Japan’s surge in consumer spending (FT)
• Sharp euro zone inflation fall, joblessness point to ECB rate cut (G&M)
• Gold Rush From Dubai to Turkey Saps Supply as Premiums Jump (BBG)
• Japan Industrial Output, Retail Sales Disappoint (MW)
• Gunmen surround Libyan justice ministry (Reuters)
• Insider-Trading Probe Trains Lens on Boards (WSJ)
• Best Buy exits Europe (WSJ) ... now if only they exit America and the business will finally be fixed
• Banker Roommates Follow Zuckerberg Not Blankfein With IvyConnect (BBG)

Overnight Media Digest

WSJ

* Investigators have found female DNA on at least one of the bombs used in the Boston attacks, though they haven't determined whose DNA it is or whether that means a woman helped the two bomb attack suspects.

* Federal prosecutors launched a criminal investigation into whether corporate directors misused government-sanctioned trading plans to sell company shares for investment funds they run.

* The Service Employees International Union is locked in battle in California with an unusual opponent - another union - even as organized labor has withered in the U.S.

* Kodak will turn over its camera-film and other businesses to the UK retirees in exchange for wiping out a hefty pension obligation. Down the road the pension plan can sell the assets.

* Alfredo Sáenz, who helped turn Banco Santander from a provincial lender into a global banking power, quit his job as chief executive Monday after a legal and political controversy over his criminal conviction.

* Deutsche Bank, in a reversal, said it would raise $3.65 billion in fresh capital, giving in to months of pressure from investors and regulators to improve its capital base.

* Markets applauded political progress in Italy, extending a rally in stocks and allowing Rome to secure the lowest funding cost at a debt auction in over two years.

* The U.S. government said Monday it would pay down a small portion of the national debt this quarter for the first time in six years. The Treasury Department said it expected to retire a net $35 billion in bonds, notes and bills from April to the end of June.

* The Chicago Board Options Exchange said preparations to extend trading hours led to last week's shutdown of one of the largest U.S. stock options markets, even though staff were aware of potential problems ahead of time. The exchange operator said Monday in a note to clients that an internal review left it "fully confident" that it had addressed the software bug, though it would be assessing how it handled the three and an half hour outage last Thursday.

* Friday's settlement that ended lawsuits against two credit-rating firms and Morgan Stanley will cost the three companies $225 million, according to a person familiar with the matter. The settlement amount was divided evenly between Standard & Poor's Ratings Services, Moody's Investors Service and Morgan Stanley, this person said.

FT

Banco Santander Chief Executive Alfredo Saenz has resigned before Spain's financial regulator could decide whether he should be banned from the banking industry due to a criminal conviction.

In order to soothe shareholder concerns over its balance sheet, Deutsche Bank AG is raising 2.8 billion euros ($3.67 billion) by issuing 90 million shares.

The Petroleum Safety Authority of Norway has rebuked BP Plc for a leak at one of its North Sea oilfields that could have led to a "major accident" and caused "substantial material damage".

J Sainsbury, Britain's third largest grocer, is preparing for the resignation of Justin King, its chief executive of almost 10 years, according to people familiar with the situation.

Some Bank of England non-executive directors - who sit in the bank's 12-seat governing "court" - are calling for a hike in pay from their current salary of 15,000 pounds a year.

Lloyds Banking Group is offloading its weak Spanish retail lender onto Banco de Sabadell, a move that will cost the British bank about 250 million pounds. ($387.34 million)

Photography pioneer Eastman Kodak has agreed to sell its camera film business and other assets to UK pensioners in order to settle about $2.8 billion of claims.

NYT

* The most recent high-level exit at JP Morgan - that of the co-chief operating officer, Frank Bisignano, regarded within the bank as something of an operational wizard - has heightened worries about the persistent executive turnover at the bank and raised fresh questions about who is ready to succeed chief executive Jamie Dimon one day.

* The troubled European car market is now dragging down even Volkswagen, the region's leading automaker, as vehicle sales on the Continent have declined to their lowest levels in decades.

* Deutsche Bank, Germany's largest bank, moved Monday to address criticism that it has too thin a cushion against risk, announcing that it planned to issue $3.65 billion in new stock to increase its capital reserves.

* The European Commission will enact a two-year ban on a class of pesticides thought to be harming global bee populations, the European Union's health commissioner said Monday.

* Alfredo Sáenz resigned on Monday as chief executive of Banco Santander, Spain's largest bank, in a move that ends a period of uncertainty over the bank's leadership. Sáenz had been facing a possible ban from banking after a criminal conviction.

* The Chinese internet giant Alibaba, which was once known as China's answer to eBay, agreed on Monday to buy an 18 percent stake in the Sina Corporation's Weibo, the most popular of China's microblogging services, for $586 million. It has the right to raise its stake to 30 percent in the future.

* Kodak said on Monday that it would spin off its document and personal imaging units to its British pension plan for $650 million in cash and noncash considerations, a move that paves the way for Kodak's exit from bankruptcy protection.

Canada

THE GLOBE AND MAIL

* The union at the center of Alberta's illegal wildcat strike has been found in contempt of court and will face escalating fines if workers aren't back on the job quickly, a judge has ruled. The urgent hearing was called to consider whether the Alberta Union of Provincial Employees had followed a weekend order to end the strike, which began Friday with jail guards and expanded on Monday to include court sheriffs, clerks and social workers.

* Americans are being misled with an "overstimulated environmental argument" on the Keystone XL pipeline, according to former prime minister John Turner, who plans to visit Washington to lend his voice to ongoing Canadian lobby efforts in support of the controversial proposal. ()

Reports in the business section:

* Retailers controlled by Canada's Weston family are moving to compensate victims of a deadly building collapse in Bangladesh as reactions to the tragedy goad companies to take greater responsibility for far-flung global supply chains.

* Suncor Energy Inc on Monday announced a 54 percent dividend hike, a C$2 billion ($1.97 billion) share buyback and better first-quarter operating earnings that were boosted by strong oilsands production and refining margins.

NATIONAL POST

* Toronto's board of health is calling on Queen's Park to require chain restaurants to post calories and sodium content on their menus, and has signaled it intends to pursue such a rule within its city limits if the province does not.

FINANCIAL POST

* Montreal engineering firm Dessau has been black-listed in its home market, as part of a new edict by the City of Montreal that bans for five years any company that has admitted to taking part in collusion from bidding on public contracts. Montreal-based SNC Lavalin Group Inc and Genivar Inc are expected to get similar ban notices in coming days, along with a handful of other firms.

* Independent investment dealer Fraser Mackenzie Ltd is closing its doors after nine years in business, a move some industry players predict will presage the demise or consolidation of many small firms.

Corporate Finance

* KKR & Co is considering a bid for Rio Tinto's majority stake in an Australian copper-gold mine in a sign that private-equity firms are hunting for bargains among assets no longer wanted by major resources companies, the Wall Street Journal reported, citing people familiar with the matter.

* Deutsche Bank AG is raising 2.8 billion euros ($3.67 billion) by issuing 90 million shares to soothe shareholder concerns over its balance sheet after months of resisting calls to tap shareholders for fresh capital, the Financial Times reported.

* Japan's Fujitsu Ltd is in late-stage talks to sell its microcontroller chip business to Spansion Inc -- a deal that will broaden the U.S. semiconductor company product line-up so it can better cater to automotive clients, two sources familiar with the matter told Reuters on Tuesday.

* German media group Bertelsmann is poised to pocket 1.4 billion euros ($1.83 billion) from the partial sale of its stake in broadcaster RTL, making it the second-biggest new listing in Europe so far this year. This is based on a narrowed price range for the offered shares of between 55 euros and 56 euros a share, two people familiar with the proposed deal have confirmed, according to the Financial Times.

* Tele Columbus Group, Germany's third-biggest cable company, is reviving its search for a buyer to tap demand for cable assets in Europe's largest economy, Bloomberg reported citing three people familiar with the matter.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Best Buy (BBY) upgraded to Buy from Hold at Deutsche Bank
Boardwalk Pipeline (BWP) upgraded to Neutral from Underperform at Credit Suisse
Century Aluminum (CENX) upgraded to Buy from Hold at Cowen
Chart Industries (GTLS) upgraded to Overweight from Equal Weight at Morgan Stanley
Deutsche Bank (DB) upgraded to Neutral from Underperform at Credit Suisse
Deutsche Bank (DB) upgraded to Outperform from Sector Perform at RBC Capital
Deutsche Bank (DB) upgraded to Overweight from Neutral at JPMorgan
Kilroy Realty (KRC) upgraded to Buy from Neutral at BofA/Merrill
Occidental Petroleum (OXY) upgraded to Buy from Hold at Deutsche Bank
SINA (SINA) upgraded to Buy from Hold at Jefferies
Saia, Inc. (SAIA) upgraded to Buy from Hold at BB&T
Superior Energy (SPN) upgraded to Buy from Neutral at Sterne Agee
Synovus (SNV) upgraded to Buy from Neutral at BofA/Merrill
Wesco Aircraft (WAIR) upgraded to Neutral from Underperform at BofA/Merrill

Downgrades

Atlas Resource Partners (ARP) downgraded to Neutral from Outperform at RW Baird
Buffalo Wild Wings (BWLD) downgraded to Hold from Buy at KeyBanc
CapitalSource (CSE) downgraded to Market Perform from Outperform at FBR Capital
Five Star Quality (FVE) downgraded to Hold from Buy at Deutsche Bank
Greenway Medical (GWAY) downgraded to Neutral from Overweight at JPMorgan
LRR Energy (LRE) downgraded to Neutral from Outperform at RW Baird
Legacy Reserves (LGCY) downgraded to Neutral from Outperform at RW Baird
LinnCo (LNCO) downgraded to Neutral from Outperform at RW Baird
Mid-Con Energy (MCEP) downgraded to Neutral from Outperform at RW Baird
New Mountain Finance (NMFC) downgraded to Market Perform at Wells Fargo
PulteGroup (PHM) downgraded to Neutral from Overweight at JPMorgan

Initiations

Active Power (ACPW) initiated with a Buy at Ascendiant Capital
CIRCOR (CIR) initiated with a Neutral at Ascendiant Capital
CenterPoint Energy (CNP) initiated with a Buy at KeyBanc
Pandora (P) initiated with a Sector Perform at RBC Capital

HOT STOCKS

Best Buy (BBY) to sell stake in European business to Carphone Warehouse for $775M
Bow Tie Cinemas to acquire Clearview Cinemas from Cablevision (CVC)
Suncor (SU) increased dividend, to buy back additional C$2B of common shares
S&P lowered Allscripts Healthcare Solutions (MDRX) corporate credit rating to 'BB' from 'BB+'
Lloyds Banking (LYG) said on track to meet 2013 guidance
Magellan Health (MGLN) lowered FY13 EPS view to $3.27-$3.93, consensus $3.72
BP (BP) said on track for start-up of four new upstream projects in 2013

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Huntsman (HUN), BP (BP), Aetna (AET), Starwood Hotels (HOT), DHT Holdings (DHT), Ensco (ESV), Morgans Hotel (MHGC), Sturm, Ruger (RGR), Hartford Financial (HIG), Hertz Global (HTZ), Herbalife (HLF), Express Scripts (ESRX)

Companies that missed consensus earnings expectations include:
Jacobs Engineering (JEC), Republic Airways (RJET), Masco (MAS), Kaman (KAMN), Wausau Paper (WPP), Newmont Mining (NEM), Buffalo Wild Wings (BWLD)

Companies that matched consensus earnings expectations include:
CapitalSource (CSE), Datalink (DTLK), Bravo Brio Restaurant (BBRG), Integrated Device (IDTI)

NEWSPAPERS/WEBSITES

• Federal prosecutors launched a criminal investigation into whether corporate directors misused government-sanctioned trading plans to sell company shares for investment funds they run, the Wall Street Journal reports
• Nielsen (NLSN) is expected to announce today that it’s testing a tool to measure online viewing of TV shows, the latest step in the company's efforts to improve how it tracks digital audiences, the Wall Street Journal reports
• Inflation in the eurozone fell to a three-year low of 1.2% in April and unemployment is at a new record, new data shows, raising expectations of an interest rate cut by the ECB to reignite the economy, Reuters reports
• SoftBank (SFTBF) said there’s no need to improve its $20.1B bid for 70% of Sprint Nextel (S), which has been challenged by a counter-offer from Dish Network (DISH), Reuters reports
• US Airways Group (LCC) and AMR Corp.’s (AAMRQ) American Airlines are negotiating with banks including Barclays (BCS) and Citigroup (C) to provide a branded credit card once they complete a merger, Bloomberg reports

SYNDICATE

BG Medicine (BGMD) files to sell 4.11M shares of common stock for holders
Hydrogenics (HYGS) intends to offer common stock
Macquarie Infrastructure (MIC) to offer 3.04M LLC interests
NeoStem (NBS) intends to offer common stock
New York Mortgage (NYMT) plans to offer 13.6M shares of common stock
Northern Tier (NTI) commences offering of 10M common units for holders
Synthetic Biologics (SYN) files to sell 10.79M shares for holders

ACTIVIST/PASSIVE FILINGS
Eminence Capital reports 5.5% passive stake in Asbury Automotive (ABG)
JANA Partners reports 9.1% stake in Oil States (OIS), will continue talks with company
Park West reports 8.1% passive stake in Velti (VELT)
Starboard Value reports 7.8% stake in TriQuint (TQNT)

While Paul Singer, Kyle Bass, and Stan Druckenmiller got the headlines, there were in total 14 worthwhile speakers at yesterday's Ira Sohn conference. Though many of the themes were unsurprising, it is nonetheless useful to compare your own views to those of these professional money managers who are now bludgeoned daily by the 'idiot-maker' rally... of course, that is, until they are proved 100% correct.

Jones Trading Recap of Ira Sohn Conference  (Yousef Abbasi)

Paul Singer - Elliot Management

• Singer talks about the global banking environment, notes that it is opaque and very highly leveraged.
• He says that Value-at-Risk (VAR) is not the appropriate measure for a financial institution's health.
• He notes that the average person is not feeling the recent equity rally, says they are worried about jobs, paying more for life necessities.  This distortion is furthering class warfare.
• On bonds, they are mispriced in the US, UK and Japan.  He does not say short bonds, but says that there are distortions in the market.

Kyle Bass - Hayman Capital

• Stock Idea - Long DEXO - Company is a re-org but has a solid turnaround plan that should take shape over the next three years.  He says that it is a cheap option, although it is risky.  He says debt should trade to par and that shares could rise 5x.
• On Japan, he says the Yen will continue to weaken and the JPY could hit 120, he sees Japan CPI hitting 2% in the next couple of years.  He calls the current policy of QE in Japan "adding a ponzi scheme to a ponzi scheme."

Li Lu - Himalaya Capital

• Idea is South Korean preferred shares and mentions - Long Samsung, Hyundia.  Notes that these trade at a deep discount because of confusion around if they are debt or equity.

Keith Meister - Corvex Management

• Stock Ideas - Long LVLT, TWTC
• Says that spread between debt and equity is as wide as it has ever been and companies have plenty of options to make purchases and create growth.
• TWTC -Company is substantially under-levered.  He thinks TWTC can continue to grow organically and could be bought at the right time. Says company could be interesting for large Telecom or Cable operators.  He sees 40% upside to shares.
• LVLT - Company has been historically levered. He sees LVLT as a potential consolidator in the business. The company is a scale assets and a real estate play, says that it reminds him of Sprint when people look at the asymmetry in terms of risk/reward.

Bill Ackman - Pershing Square

• Stock Idea - Long PG
• He notes the company is a great business and its under-earnings relative to what he sees as its intrinsic earnings power.  He notes several underlying PG brands that could be stand-alone companies.
  Says that 40% of sales are coming from fast growing, emerging markets.
• Believes that the company under-earns because it has a bloated overhead cost structure, but that most of the issues the company suffers from are readily fixable.
• Says company should be able to generate 5% organic growth - emerging markets contributing 7%-10%.  Also believes that gross margins are 200bps below where they should be and that the company should be able to generate a 24% EBIT margin.
• On PG CEO, Bob McDonald - He notes that he sits on 21 other corporate board and could be "distracted" by these other interests.  He says they've made progress, but are still lagging some competitors - wants to see more improvement over next few quarters.
• Intrinsic value ofPG seen at $125, stock is trading at $78.

Stanley Druckenmiller - Duquesne Family Office

• Stock Idea - Long GOOG
• Commences by calling QE a nuclear weapon and believes that Bernanke has embarked on the wrong policy. But he notes that listening to Bernanke shows that he's not going "wobbly anytime."
• No condition of Bear market until Fed changes - so expect the market to continue to rise.
• On commodities, he says that the super-cycle is ending and believes that their a "poisonous cocktail" in commodities when it comes to China.
• He says he thinks the AUD will sell-off hard.
• He is bullish onGOOG  - says that its a great tech company and notes some of their new technologies pushing from glass to auto.

Mitchell Julis - Canyon Partners

• Stock Idea - Long CCO
• CCO -he sees it as a name that is trading at a depressed multiple.  Notes that although the stock is complex, it is interesting as leveraged equity and has been a good return for investors.

Steve Eisman - Emrys Partners

• Stock Ideas -Long LEN, SPF, PHM, FOR, CLNY, OCN. Short HCG.CN.
• US vs. Canadian Housing is the presentation and Eisman comes out bullish on US Housing saying that it is still near the bottom.  Although builders are NOT cheap, he notes improving fundamentals.
• FOR -He says is worth $30/shr as a land play - it owns 136k of undeveloped land.
• CLNY -Another small play on housing that has potential
• OCN -Says is perhaps the most powerful but counterintuitive pay on housing.  He says the stock is complete mis-priced as it is "undervalued by a lot."
• With regards to Canada, he notes that their banking system is holding higher leverage ratios and that the Canadian equivalent to our GSEs is insuring much of the mortgages.  Says he believes its too late for a soft-landing for housing in Canada.
• HCG.CN -The largest non-prime mortgage originator in Canada - it has been pretty aggressive with growth and will have problems if housing rolls over.

Jim Chanos - Kynikos

• Stock Ideas -Short WDC, STX.
• Chanos notes that PC sales continue to fall as tablets are taking over.  He also notes that the memory space is facing competition from the cloud.
• STX -he says that the company's management has been engaged in "opportunistic" sales and that insiders are selling out or leaving.

Tor Olav Troim - Golar Lng Energy

• Talks about the pros and cons of the shipping industry.

Jon Jacobson - Highfields Capital

• Stock Ideas -Short DLR.  He also says be wary of T and LINE.
• DLR -says dividend is unsustainable and that its different from any other REIT as its business has low barriers to entry - notes thatAMZN and MSFT are in the midst of a data center war as well.

Clifton Robbins - Blue Harbor Group

• Stock Idea - Long AKAM.
• Says that he sees the perfect storm brewing in M&A and is very bullish on it - noting cash on corporate balance sheets, etc.
• AKAM -15%-30% of the world's internet traffic is touched by the company, its a singularly unique business.

Jeff Gundlach - DoubleLine

• Stock Idea -Short CMG.
• Gundlach says that everything is backwards and that although he expects
  QE to continue - he thinks that the Fed Minutes show "talk" about ending
  QE, just for the illusion.
• He says investors should NOT be asking when QE is going to end, but they should be asking how to invest if it never does.
• He says short French bonds as France is a basketcase.

David Einhorn - Greenlight Capital

• Stock Idea -Long OIS.
• He notes its a low cost provider of oil rigs and that it has better margins than peers but is not getting credit for them.
• He notes that if Jana Partners gets its plan to spin certain operations off into a REIT, the company could be worth $155/shr.

(H/T Colin McFag)

• 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

• A U.S. Default Seen as Catastrophe Dwarfing Lehman’s Fall (BBG)
• Software, Design Defects Cripple Health-Care Website (WSJ)
• Gunmen kill 5 Egyptian soldiers near Suez Canal, 2 people die in blast (Reuters); Egypt death toll rises to 53, streets now calm (Reuters)
• Three retailers sell Apple iPhone 5C for $50 or less (Sun Sentinel)
• New American Economy Leaves Behind World Consumer (BBG)
• Dow's Exiles Often Have Last Laugh (WSJ)
• Macy's Puts China Online-Expansion Effort on Hold Amid Economic Slowdown (WSJ)
• Gold Befuddles Bernanke as Central Banks’ Losses at $545 Billion (BBG) - just ask the BIS gold selling team: they are unbefuffdled
• Markit Group Said to Avoid U.S. Antitrust Claims as EU Proceeds (BBG) - being owned by the banks has benefits
• Paulson leads charge into Greek banks (FT) - and scene for the Greek banking sector
• Workers Stay Put, Curbing Jobs Engine (WSJ)
• Is Obamacare's First Enrollee Bogus? (BBG)
• Airbus seals landmark deal with JAL (FT)

Overnight Media Digest

WSJ

* The government shutdown enters its second week with the two parties still bitterly divided and Republicans increasingly tying the fight to a fast-approaching deadline to avoid a default on U.S. debt. House Speaker John Boehner said he wouldn't bring up bills to fully reopen the government or raise the debt limit unless Democrats agree to broader talks aimed at trimming the deficit.

* Ireland's voters delivered a surprise rebuff to Prime Minister Enda Kenny in rejecting his proposal to close the upper house of the legislature, potentially weakening his ability to push through another round of tough spending cuts and tax increases when the government presents its 2014 budget this month.

* Warren Buffett tossed lifelines to a handful of bluechip companies during the financial crisis. Five years later the payoff on those deals is becoming clear: $10 billion and counting.

* With the government shutdown heading toward a second week, economists say it could hold back economic growth, business confidence and corporate earnings, but probably won't cause a recession. Many money managers doubt the damage will be lasting. Any stock selloff, they say, would be a great buying opportunity.

* In its IPO filing, Twitter Inc disclosed how much the microblogging platform earned from a lesser-known side business: $47.5 million came from selling off its data to a fast-growing group of companies that analyze the data for insights into news events and trends.

* Six days into the launch of insurance marketplaces created by the new healthcare law, the federal government acknowledged for the first time Sunday it needed to fix design and software problems that have kept customers from applying online for coverage.

* Star mutual-fund manager Bruce Berkowitz is opening up his nascent hedge fund to institutional investors. Berkowitz, the president of Fairholme Capital Management LLC, launched the fund on Jan. 1 and it has grown to $140 million. He is now seeking outside institutional investors and hopes the fund will grow to $1 billion in assets in a year.

* Dish Network Corp has again come under fire over its takeover bid for a telecommunications firm, a potential deal that could be personally lucrative for Dish Chairman Charlie Ergen.

* Wal-Mart Stores Inc's top executive for Asia said the company has revamped its practices and legal compliance in the region and is considering acquisitions in China, as the retailer faces headwinds in a cornerstone of its global expansion plans.

* Macy's Inc has shelved an online-expansion plan in China, the latest retailer to do so as economic growth slows in the world's second-largest economy. The company had planned to begin online sales of a private-label brand in China in the spring, after buying a minority stake last year in Chinese retail company VIPStore Co.

FT

UK Chancellor George Osborne sought clearance from EU officials for a possible split of Royal Bank of Scotland in order to avoid strict EU regulations on state supported banks.

Temasek and Sinopec have separately expressed interest in buying Repsol's 4.7 billion euro ($6.39 billion) domestic gas distributor business, Gas Natural

Hedge fund billionaire John Paulson's Paulson & Co and a number of other U.S. hedge funds are investing aggressively into Greece's struggling banking sector expecting it to turn a corner.

Shell's outgoing CEO Peter Voster said he was disappointed that the company's huge investment in Alaskan shale resources did not pan out as planned.

Jan Hommen the outgoing CEO of Dutch bancassurer ING has criticized the model combining insurance and banking, saying that his company had been "too big to manage"

France is stepping up efforts to trace the illegally funded French assets of foreign leaders after Syrian president, Bashir al-Assad's uncle was accused of having properties amassed through illegal means in France.

NYT

* Speaker John Boehner stood his ground on Sunday alongside the most conservative Republicans in Congress, insisting that the House would not vote to finance and reopen the government or raise the nation's borrowing limit without concessions from President Obama on the healthcare law.

* The Federal Reserve will begin circulating a new $100 bill on Tuesday with some modern and colorful anti-counterfeiting features, after overcoming problems that postponed its debut for more than two and a half years.

* On Monday Nielsen Holdings NV is introducing Twitter TV Ratings, a product announced last year that professes to measure all the activity and reach of Twitter conversation about shows, even if it has yet to be embraced by television executives and gain a broad client base.

* Ahead of its initial public offering, Twitter must prove it can fend off a younger generation of nimble social services that offer clever new ways for people to connect and share. Among these up-and-comers are Snapchat, WhatsApp, Line, Tumblr, Instagram, Pinterest, Kakao and Reddit.

* Michael Kors Holdings Ltd had extraordinary success with an initial public offering of his brand nearly two years ago, leading other designers to consider the same. On Wednesday, Marc Jacobs announced his departure from Louis Vuitton to focus on an initial public offering of his own brand.

* The largest banks on Wall Street are teaming up to join a network that could challenge an important part of Bloomberg's terminal business. The banks have all signed up for a messaging service that will be introduced on Monday and will allow finance industry employees to find and chat with one another quickly.

* The auction house Sotheby's announced on Friday that its board had adopted a shareholder rights plan, known as a poison pill, that is set off whenever an outsider acquires ownership of 10 percent or more of the company's stock. The company said that the rights will not prevent a takeover, but should encourage anyone seeking to acquire the company to negotiate with the board prior to attempting a takeover.

* Activist investor Carl Icahn is finally abandoning his battle against Dell Inc's sale to its founder Michael Dell. The billionaire investor disclosed on Friday that he is forgoing his right to have the Delaware Court of Chancery appraise the value of his shares in the computer company.

Canada

THE GLOBE AND MAIL

* More Canadians are joining the ranks of the self-employed, reflecting a reluctance among employers to make permanent hires, as well as the desire for some older workers to be their own bosses. The number of self-employed people grew by 95,600 between August and the same month last year - accounting for almost 40 per cent of new jobs created in that time.

* Canada has become an attractive pole for immigrants from around the world who are looking for a host country that will give them good opportunities. According to the Organization for Economic Co-operation and Development, Canada's annual immigration flow is now proportionately one of the highest among OECD members, at 0.7 percent of its population.

Reports in the business section:

* It has been half a decade since the crash of 2008, but only a minority of Canadian executives say their companies have fully recovered from the deep downturn that shocked the world. The latest C-Suite Survey of business executives shows that while the vast majority are optimistic about their company's prospects, the scars of 2008-2009 still remain.

* Tensions between new entrant carriers and some incumbent players are heating up as the federal telecom regulator scrutinizes domestic roaming rates. Wind Mobile is criticizing BCE Inc and Telus Corp for challenging the Canadian Radio-television and Telecommunications Commission's authority to regulate the wholesale fees that carriers pay each other for domestic roaming services, arguing those incumbents are being "disingenuous" and "absurd".

NATIONAL POST

* Malaysia's state-owned energy giant, Petronas, is to make a "gargantuan" investment of C$36 billion ($34.94 billion) in Canada to build a liquefied natural gas plant, and a pipeline from the plant that would be built by a Canadian company, Malaysian Prime Minister Najib Razak said on Sunday.

Hong Kong

SOUTH CHINA MORNING POST

-- The Hong Kong government is studying the feasibility of selling confiscated goods such as cars at "electronic auctions". Two mainland provinces already sell such items on the Taobao site and at least one police force in Britain is using eBay to sell goods seized from criminals. The government Logistics Department said the study was at a preliminary stage and it had not decided what platform to use. (link.reuters.com/fuj63v)

-- Mainland Chinese companies and individuals are ramping up purchases of property in California, accounting for an increasingly significant share of real estate deals in the Golden State. Property agents in San Francisco and Los Angeles fly in groups of Chinese investors to buy property, said Robert Pearce, a director of Blackfish, a company that markets United States real estate. (link.reuters.com/guj63v)

THE STANDARD

-- Hong Kong mattress maker Sinomax, which has some 500 shops and points of sale in Shenzhen, Guangzhou, Shanghai, and Beijing, is planning to raise HK$1.17 billion ($150.9 million) in an initial public offering on the local bourse, according to sources. Herbal tea chain operator Hung Fook Tong Holdings, which operates 120 shops in Hong Kong and the mainland, is also considering a listing on the Hong Kong stock exchange. (link.reuters.com/kuj63v)

-- Sun Hung Kai Properties is offering cash rebates ranging from HK$385,200 ($49,700) to several million dollars at luxury project The Cullinan, in yet another sign of a sluggish market. (link.reuters.com/muj63v)

HONG KONG ECONOMIC JOURNAL

-- At least 12 companies, including Chongqing Bank and Power Assets' Hongkong Electric, are aiming to seek a listing in the city before the end of 2013, raising up to an estimated HK$72.1 billion ($9.30 billion), according to market estimates.

MING PAO DAILY NEWS

-- Cruise ship leasing firm Success Universe Group Ltd plans to develop high end shopping mall in Macau in a bid to capture growth as the city further develops, according to deputy chairman Hoffman Ma.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Apple (AAPL) upgraded to Buy from Hold at Jefferies
AuRico Gold (AUQ) upgraded to Outperform from Neutral at Credit Suisse
BlackBerry (BBRY) upgraded to Neutral from Underperform at Macquarie
Citrix Systems (CTXS) upgraded to Overweight from Equal Weight at Barclays
Hain Celestial (HAIN) upgraded to Overweight from Neutral at Piper Jaffray
Lazard (LAZ) upgraded to Conviction Buy from Neutral at Goldman
MarineMax (HZO) upgraded to Buy from Neutral at B. Riley
MaxLinear (MXL) upgraded to Outperform from Market Perform at JMP Securities
Realogy (RLGY) upgraded to Buy from Neutral at Goldman
Signet Jewelers (SIG) upgraded to Buy from Hold at Deutsche Bank
Team (TISI) upgraded to Buy from Hold at BB&T
Umpqua Holdings (UMPQ) upgraded to Buy from Neutral at Sterne Agee
XL Group (XL) upgraded to Overweight from Equal Weight at Evercore

Downgrades

C.H. Robinson (CHRW) downgraded to Underperform from Neutral at Macquarie
EQT Corporation (EQT) downgraded to Equal Weight from Overweight at Morgan Stanley
Evercore Partners (EVR) downgraded to Neutral from Buy at Goldman
HollyFrontier (HFC) downgraded to In-Line from Outperform at Imperial Capital
IBM (IBM) downgraded to Equal Weight from Overweight at Barclays
Informatica (INFA) downgraded to Equal Weight from Overweight at Barclays
Liquidity Services (LQDT) downgraded to Underperform from Buy at BofA/Merrill
Qualcomm (QCOM) downgraded to Neutral from Buy at BofA/Merrill
Toll Brothers (TOL) downgraded to Neutral from Buy at Goldman

Initiations

Antero Resources (AR) initiated with a Buy at SunTrust
B2Gold (BTG) initiated with a Buy at BofA/Merrill
Facebook (FB) initiated with an Overweight at Atlantic Equities
Galectin Therapeutics (GALT) initiated with a Buy at Ascendiant
Garmin (GRMN) initiated with an Overweight at Atlantic Equities
General Electric (GE) coverage resumed with a Neutral at Goldman
ITC Holdings (ITC) initiated with an Overweight at Morgan Stanley
Spectrum (SPPI) initiated with a Buy at H.C. Wainwright
Tri-County Financial (TCFC) initiated with an Outperform at Keefe Bruyette

HOT STOCKS

EADS (EADSY) announced first Airbus order from Japan Airlines
Jana Partners to hold talks with Outerwall (OUTR) regarding strategic alternatives
Apollo Tyres said a reduction in price in Cooper Tire (CTB) deal is warranted
FMC Corp. (FMC) acquired CAEB from RTI International (RTI), terms not disclosed

NEWSPAPERS/WEBSITES

• Some money managers think the mess in Washington could be a blessing, at least for their investments. They doubt the damage will be lasting. Any stock sell off, they say, would be a great buying opportunity, the Wall Street Journal reports
• Warren Buffett (BRK.A) gave lifelines to a handful of blue-chip companies during the financial crisis. Now the payoff on those deals is becoming clear: $10B and counting, the Wall Street Journal reports
• Wal-Mart Stores (WMT) retail plans with India partner Bharti Enterprises are "not tenable" and both sides are looking for the best way to move forward, Reuters reports
• Apollo Tyres' $2.5B acquisition of Cooper Tire & Rubber (CTB) become a war of words as the two companies fight over the price of the deal plagued by labor issues in the U.S., where Cooper is based, and in China, Reuters reports
• Moody’s Investors Service (MCO) said it sees a “very low” chance the U.S. will default on its debt payments as a stalemate between President Obama and House Republicans showed little sign of changing, Bloomberg reports
• Beneath the bad news in Blackberry’s (BBRY) latest quarterly results was a 32% increase in companies installing its servers. That gain may hold the key to the company’s survival, whether or not a tentative $4.7B offer to take the smartphone maker private succeeds, Bloomberg reports

BARRON’S

Amazon.com (AMZN) shares look pricey
Penn National (PENN) split could bring 30% more value
LATAM Airlines (LFL) could climb 20% or more
PICO Holdings (PICO) could rise 50% or more
Weatherford (WFT) could gain 25% or more
Twitter looks pricey but investors will probably overlook it

SYNDICATE

Acorn Energy (ACFN) files to sell $15M in common stock
American DG Energy (ADGE) files to sell $50M of common stock, warrants
DryShips (DRYS) announces $200M ATM equity offering
Gaiam (GAIA) files to sell 5M shares of Class A common stock
Gigamon (GIMO) files to sell 5.1M shares of common stock
Oxygen Biotherapeutics (OXBT) files to sell 630,000 common shares for holders

ACTIVIST/PASSIVE FILINGS

Jana Partners reports 13.5% stake in Outerwall (OUTR), pushes for strategic alternatives
RA Capital reports 14.96% passive stake in Achillion (ACHN)

• Dot Com part deux: Investors are showing increasing hunger for initial public offerings of unprofitable technology companies  (WSJ)
• Poll Finds GOP Blamed More for Shutdown (WSJ)
• House, Senate Republicans Offer Competing Plans on Debt-Limit, Government Shutdown (WAPO)
• Obama, Republicans aim to end crisis after meeting, hurdles remain (Reuters)
• US Rethinks How to Release Sensitive Economic Data (WSJ)
• Chinese East Oil Fuels Fresh China-US Tensions (WSJ)
• ECB Agrees on Swap Line With PBOC as Trade Increases (BBG)
• China September Auto Sales Surge 21% on Japanese Rebound (BBG)
• JPMorgan Taps Taxpayer-Backed Banks for Basel Rules (BBG)
• Malala, survivor of Taliban, resented in Pakistan hometown (Reuters)
• Twitter Said to Pay 3.25% Bankers’ Fee for Market Debut (BBG)
• Brevan Howard unchanged YTD (Reuters), Said to Start Fund With Ex-Deutsche Bankers (BBG)

Overnight Media Digest

WSJ

* President Obama held talks with House Republicans on a GOP proposal to extend the nation's borrowing authority for six weeks, marking a new opening in the stalemate. Until now, Obama had refused to negotiate until the government was reopened and the debt ceiling raised. Republicans, in turn, said those steps must be paired with a deficit-reduction plan and changes to the 2010 health care law that they knew Obama wouldn't accept.

* China is overtaking the United States as a buyer of Middle East oil, adding fuel to diplomatic tension between the nations over security in the region.

* Federal officials are discussing changes to how the government releases sensitive economic data, seeking to bring the system in line with fast-moving financial markets.

* A Tesoro Logistics crude pipeline spilled about 20,000 barrels of oil in a rural field in northwest North Dakota, in what appears to be the largest spill in the Bakken shale formation to date.

* Clothing exports from Bangladesh soared over the summer because global retailers expanded orders despite a string of deadly industrial accidents.

* Auction house Christie's is branching out to attract less wealthy customers, while Sotheby's has targeted millionaires. The differences also show up in Sotheby's lagging sales. The divergent results have prompted investors and collectors to look more closely at the auctioneers' game plans.

* BlackBerry Ltd co-founder Mike Lazaridis has hired bankers to explore a joint bid for the smartphone company that forced him out as co-chief executive less than two years ago.

* Alibaba Group Holding Ltd has led a $206 million investment in a rival to Amazon.com Inc one of its biggest U.S. moves as the Chinese e-commerce giant considers an initial public offering here.

* Teva Pharmaceutical Industries Ltd plans to reduce its global workforce by 10 percent, or 5,000 employees, underscoring growing competitive pressures in the generic-drug industry.

FT

The United States seems to have staved off a debt default after the White House and Republicans moved towards a temporary agreement on a short-term extension of the U.S. debt limit.

Google saved billions in tax last year by channeling royalty payments to Bermuda, which helped it reduce its overseas tax rate by 5 percent.

CEO of energy company SSE, Alistair Phillips-Davies, has blamed the rising cost of green policies for the price rise and has called for a government rethink on the green policy.

British politicians are close to agreement with the British press over an revised royal charter over the press regulation.

Royal Mail has turned back people who bid for more than 10,000 pounds of shares in its over-subscribed IPO leading to institutional allocations having been severely scaled back.

A report says the peripheral eurozone's small- and medium-sized businesses are paying bank loan interest rates that are up to three times higher than German SMEs.

Aluminium smelters such as Alcoa and Rusal are up in arms against a proposal by the London Metals Exchange which will cause the price of aluminium to fall.

Chrysler Chief Executive Sergio Marchionne denied reports that he had warned off potential investors in the U.S. carmaker's forthcoming IPO as the battle over the future of Chrysler turned increasingly complex and bitter.

NYT

* President Obama and House Republicans failed to reach an agreement on a six-week extension of the nation's borrowing authority during a meeting on Thursday, but the two sides kept talking, and the offer from politically besieged Republicans was seen as an initial step toward ending the budget standoff.

* In the exchanges created by the Affordable Care Act, Blue Cross and Blue Shield plans offer name recognition and price advantages. Blue Cross and Blue Shield plans have typically been the largest insurers providing coverage primarily to individuals and small businesses, and they remain a staple on the new exchanges. What is not yet clear is whether the Blues plans are offering low prices to gain customers, only to raise prices in later years.

* With enthusiastic backing from state officials and an estimated seven million uninsured, California is a crucial testing ground for the success of President Obama's health care law. California is building the country's largest state-run health insurance exchange and has already expanded Medicaid coverage for the poor.

* A lawsuit accuses Warner Brothers of stealing the screenplay of its 2012 movie "Trouble With the Curve" and of manufacturing evidence in their defense. In an unusually sharp response to a lawsuit filed last week, the studio publicly called the accusations of script theft "reckless and false".

* Carmen Segarra, a former bank examiner for the New York Federal Reserve, claims in a suit that she was fired by the Fed for refusing to back down on a plan to downgrade Goldman Sachs Group Inc for its conflict-of-interest policy.

* Investors embraced signs of a political compromise that could avert a default on government debt, sending stocks surging on Thursday, but the air quickly went out of Wall Street's balloon after it remained clear that a deal was not yet at hand.

* The two men who founded the company that became BlackBerry Ltd may now try to save it. In a regulatory filing on Thursday, Mike Lazaridis and Douglas Fregin said that they were considering a bid for the 92 percent of the company that they do not own. They also said they had hired Goldman Sachs Group Inc and Centerview Partners as advisers.

* The Securities and Exchange Commission says that Rodrigo and Michel Terpins acted on inside information about the H.J. Heinz Co takeover to turn $90,000 into $1.8 million. After receiving a confidential tip that the Heinz deal was looming, Michel Terpins alerted his brother, who then served as the trader, the SEC said. The Terpins brothers routed their trades through a Goldman Sachs account in Zurich, where laws largely shield the account holder's identity.

* The Delaware Supreme Court on Thursday unanimously reversed a lower court ruling on Activision Blizzard Inc's move to buy back most of Vivendi SA stake in the video game maker for $8.2 billion, letting the transaction move forward. The deal is now expected to close next week.

* A jury in Los Angeles cleared Toyota Motor Corp of fault on Thursday in a fatal 2009 accident in which a 66-year-old woman crashed her Camry. The case is the first of about 85 personal injury and wrongful death lawsuits brought against Toyota in the California state court because of complaints related to sudden, unintended acceleration and the resulting wave of recalls in 2009 and 2010.

Canada

THE GLOBE AND MAIL

* The head of Ontario's horse racing regulator has stepped down on the eve of a major restructuring of the industry and the unveiling of a new formula for how public money is funneled to tracks. Ontario Premier Kathleen Wynne will release the new blueprint on Friday at the Grand River Raceway north of Guelph, Ontario.

* Rogers Communications Inc said a software glitch created a big spike in "signaling traffic" that caused one of the worst wireless network outages in the company's history. Canada's largest wireless carrier determined that root cause on Thursday roughly 18 hours after implementing a fix that restored voice and text services for customers across the country.

Reports in the business section:

* BlackBerry Ltd's co-founders say they may launch a takeover bid for the beleaguered smartphone maker, intensifying a battle over whether the company survives as a stand-alone entity or is carved into pieces.

* The days of Ontario bragging about being the largest auto-making jurisdiction in Canada and the United States are coming to an end. Michigan has roared into first place in vehicle manufacturing among states and provinces this year, knocking Ontario off the perch it has enjoyed since 2004.

NATIONAL POST

* Canada's aerospace industry could lose about C$10.5 billion ($10.11 billion) worth of contracts over several decades if the federal government ultimately decides not to purchase the controversial F-35 Stealth Fighter, says a senior executive at Lockheed Martin Corp.

FINANCIAL POST

* Jana Partners, the New York activist hedge fund that waged a proxy fight against Agrium Inc, said on Thursday that it has reduced its stake in the fertilizer giant. Still, the fund will remain among Agrium's biggest shareholders with a 2.7 percent stake, down from its previous 7.6 percent position.

* Enbridge Inc is working to open a major new pathway to the U.S. Gulf Coast for Alberta bitumen, solidifying a commercial link between the world's No. 3 crude deposit and the Texas refining corridor that has so far eluded industry planners.

China

CHINA SECURITIES JOURNAL

- Pci-Suntek Technology Co Ltd plans to open a private bank in Guangzhou in a collaboration with other private enterprises. The company is currently soliciting opinion on the venture from collaborating firms.

21ST CENTURY BUSINESS HERALD

- Subsidiaries of Chinese funds are suffering amid a tighter regulatory environment, according to sources. Regulators asked Minsheng Royal Asset Management Co Ltd to suspend cash pooling activities, which it was engaged in on a large scale, they said.

CHINA DAILY

- South China Sea disputes between China and members of ASEAN should not be dealt with during public forums, the paper said in an editorial. They should instead be resolved peacefully between the countries involved, it added.

PEOPLE'S DAILY

- The Chinese government's crackdown on excessive spending was apparent during the National Day holiday, said an editorial.

7:00 AM Fly On The Wall Market Snapshot

ANALYST RESEARCH

Upgrades

Assurant (AIZ) upgraded to Neutral from Underperform at BofA/Merrill
BNP Paribas (BNPQY) upgraded to Outperform from Neutral at Macquarie
Citrix (CTXS) upgraded to Neutral from Underweight at JPMorgan
Digital Realty (DLR) upgraded to Buy from Hold at Cantor
J.B. Hunt (JBHT) upgraded to Buy from Neutral at BofA/Merrill
Johnson & Johnson (JNJ) upgraded to Neutral from Sell at Goldman
LG Display (LPL) upgraded to Buy from Neutral at Citigroup
Pharmacyclics (PCYC) upgraded to Buy from Neutral at Goldman
Philips (PHG) upgraded to Buy from Neutral at Goldman
Safeway (SWY) upgraded to Overweight from Neutral at JPMorgan
Spirit Airlines (SAVE) upgraded to Buy from Neutral at Citigroup
Texas Industries (TXI) upgraded to Buy from Neutral at Longbow

Downgrades

Annie's (BNNY) downgraded to Neutral from Buy at SunTrust
AstraZeneca (AZN) downgraded to Underperform from Hold at Jefferies
Corning (GLW) downgraded to Neutral from Overweight at Piper Jaffray
Deutsche Bank (DB) downgraded to Underperform from Neutral at Macquarie
Dr Pepper Snapple (DPS) downgraded to Market Perform from Outperform at Wells Fargo
Eli Lilly (LLY) downgraded to Underperform from Hold at Jefferies
Intel (INTC) downgraded to Neutral from Outperform at Macquarie
Iron Mountain (IRM) downgraded to Underweight from Equal Weight at Barclays
L Brands (LTD) downgraded to Neutral from Outperform at Credit Suisse
Merck (MRK) downgraded to Hold from Buy at Jefferies
Micron (MU) downgraded to Underperform from Market Perform at Wells Fargo
Sonoco Products (SON) downgraded to Sell from Neutral at Goldman
Synaptics (SYNA) downgraded to Neutral from Overweight at JPMorgan
Walter Investment (WAC) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

Apollo Global (APO) initiated with an Overweight at Evercore
Becton Dickinson (BDX) initiated with a Buy at SunTrust
Blackstone (BX) initiated with an Equal Weight at Evercore
Carlyle Group (CG) initiated with an Overweight at Evercore
Cepheid (CPHD) initiated with a Neutral at SunTrust
Crestwood Midstream (CMLP) initiated with an Outperform at Wells Fargo
Given Imaging (GIVN) initiated with a Buy at SunTrust
Hawaiian Electric (HE) initiated with an Outperform at Wells Fargo
KKR & Co. (KKR) initiated with an Equal Weight at Evercore
Manpower (MAN) initiated with a Buy at Jefferies
Myriad Genetics (MYGN) initiated with a Reduce at SunTrust
NGL Energy Partners (NGL) initiated with a Hold at Deutsche Bank
On Assignment (ASGN) initiated with a Buy at Jefferies
Robert Half (RHI) initiated with a Hold at Jefferies
Sinclair Broadcast (SBGI) initiated with an Outperform at Credit Suisse
UMB Financial (UMBF) initiated with a Buy at BofA/Merrill
Vantiv (VNTV) initiated with an Outperform at Oppenheimer
Western Gas Equity (WGP) initiated with an Outperform at Credit Suisse

HOT STOCKS

Westpac (WBK) agreed to buy Lloyds (LYG) Australian assets for A$1.45B
Osiris (OSIR) sold stem cell business to Mesoblast (MBLTY) for up to $100M plus royalties
Federal Reserve Board said it reached accord with SunTrust (STI)
Safeway (SWY) to exit Chicago market
GenCorp (GY) filed to delay Form 10-Q
Chemtura (CHMT) to sell consumer products business to KIK Custom Products for $315M
USA Truck (USAK) filed breach of contract suit against Knight Transportation (KNX)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Bank of the Ozarks (OZRK), E2open (EOPN), Safeway (SWY), AngioDynamics (ANGO)

Companies that missed consensus earnings expectations include:
Silicon Graphics (SGI)

NEWSPAPERS/WEBSITES

• Investors are showing increasing hunger for IPOs of unprofitable technology companies and the potential for big gains that they bring. Sixty-eight percent of U.S.-listed technology debuts this year, or 19 out of 28 deals, have been companies that lost money in the prior fiscal year or past 12 months, the Wall Street Journal reports
• Federal officials are discussing changes to how the government releases sensitive economic data, seeking to bring the system in line with fast-moving financial markets, the Wall Street Journal reports
• While officials of the Fed have disagreed over whether the U.S. central bank should continue full-bore with its massive bond-buying stimulus, two Fed presidents with differing policy views, San Francisco’s John Williams and St. Louis’s James Bullard, agreed that a national debt default could have devastating effects, Reuters reports
• The Pentagon said it would stop work on a second pilot helmet being developed for the F-35 fighter jet by Britain's BAE Systems (BAESY), and focus exclusively on the main helmet built by Rockwell Collins (COL) and Israel's Elbit Systems (ESLT), Reuters reports
• France’s constitutional court upheld a ban on hydraulic fracturing, the energy exploration technique known as fracking. The 2011 law “conforms to the constitution,” the court said, Bloomberg reports
• Toyota Motor (TM) has long held out hydrogen as the ultimate alternative to gasoline for powering autos. Soon, consumers will be able to kick the tires of its fuel cell-powered car and those of other automakers, Bloomberg reports

SYNDICATE

Apricus Biosciences (APRI) files to sell 395,018 shares of common stock for holders
Buckeye Partners (BPL) 7.5M share Secondary priced at $62.61
Envestnet (ENV) 5.045M share Secondary priced at $29.25
Lexington Realty (LXP) files to sell 10M shares of common stock
New Mountain Finance (NMFC) files to sell 6M shares of common stock
Seaspan (SSW) terminates public offerings of common shares and convertible notes

• Emerging market sell-off raises specter of contagion (Reuters)
• China Bank Regulator Said to Issue Alert on Coal Mine Loans (BBG)
• Argentina to Ease FX Controls After Peso Devaluation (BBG)
• Pimco's Gross problem: who can succeed the 'Bond King'? (Reuters)
• Ukraine protesters seize building, put up more barricades (Reuters)
• Mideast Turmoil Dominates Gathering of Business Elite (WSJ)
• Central Banks Withdraw Dollar Funding (WSJ) - oh really?
• Samsung warns of weak earnings growth this quarter (FT)
• Three explosions rock Cairo, killing 5 (USA Today)
• Vitol to Trafigura Chasing U.S. NGLs as Traders Cash In (BBG)
• EBay reliance on PayPal for growth lowers chances of spinoff (Reuters)
• Pentagon report faults F-35 on software, reliability (Reuters)

Overnight Media Digest

WSJ

* Carl Icahn says he's prepared for a proxy fight to win two seats on the board of eBay Inc and push the company to calve off its PayPal unit.

* Investors dumped currencies in emerging markets, underscoring growing anxiety about the ability of developing nations to prop up their economies as they face uneven growth.

* The turmoil of the Middle East descended on this Swiss Alpine town of Davos, where Iranian, Israeli and American leaders laid out often competing visions of the region's future during a conference for the world's business elite.

* Some former securities brokers who lost their licenses have found a creative way to keep selling investments to their clients: by using insurance licenses.

* Hedge fund managers are roiling the clubby art market -seeking 'distressed' artists, paying record sums and dumping those who don't pay off.

* The U.S. Food and Drug Administration took another action against India's Ranbaxy Laboratories Ltd on Thursday, prohibiting it from making or selling drug ingredients from its Toansa, India, plant for the U.S. market.

* Google Inc has been working hard to change its profile as an ally of the Democratic Party, courting Republicans and building alliances with conservatives at a time when regulators and Congress are considering issues affecting its business interests.

* Microsoft Corp, in the midst of major change, said its fiscal second-quarter profit climbed 2.8 percent, bolstered by strong demand for the company's new Xbox videogame console.

* Microsoft Corp's foray into making smartphones was dealt a setback as Nokia Corp said sales of its Lumia Windows line posted a sales decline for the fourth quarter.

* International Business Machines Corp has agreed to sell its low-end server business to Chinese computer maker Lenovo Group Ltd after talks broke down last spring. Now the companies face a new challenge: convincing U.S. security agencies to bless the transaction.

* Facing competition from rivals offering smartphones with bigger screens, Apple Inc is planning larger displays on a pair of iPhones due for release this year, people familiar with the situation said.

* General Motors Co newly appointed Chief Executive Mary Barra said she intends to accelerate the auto maker's ongoing push to expand profit margins in North America while increasing its global market share.

* Starbucks Corp reported slightly lower-than-expected revenue and same-store sales growth in its fiscal first quarter due, in part, to consumers' shift to online shopping during the holidays.

* Under a new policy being formulated, Goldman Sachs Group Inc won't allow communication over third-party instant-messaging services created by Bloomberg, Yahoo and others in a bid to protect proprietary information.

* The software behind the attack at Neiman Marcus Group lurked in the luxury retailer's payment system undetected for months, scraping data from as many as 1.1 million accounts and ending its mission before it was discovered.

* The U.S. energy boom is curtailing the country's demand for imported oil, and Mexico's Pemex is being forced to look farther afield.

* Samsung Electronics Co forecast a weak first half after releasing fourth-quarter earnings that showed growth slowed sharply.

* Target Corp's massive data breach piles another weight on Chief Executive Gregg Steinhafel, who is already under pressure to stem losses from the chain's venture into Canada and to keep local-store shoppers from defecting to online rivals.

* Online lender Western Sky Financial LLC has agreed to pay a $1.5 million fine and refund interest payments to borrowers under an agreement reached with New York Attorney General Eric Schneiderman.

* Jana Partners LLC owns a big stake in Juniper Networks Inc making it the second major shareholder activist to invest in the networking-gear company recently.

* The Obama administration is set to complete a critical phase of its Keystone XL pipeline review next month, setting the stage for President Barack Obama to make a call on the politically charged decision in the thick of the midterm campaign season.

* The National Transportation Safety Board has issued recommendations to the Department of Transportation asking for a series of actions to address the risks of transporting crude by rail.

FT

Bank of England Governor Mark Carney said in an interview to the BBC on Thursday that there was no immediate need to raise interest rates, and that decisions over its unemployment threshold were a matter for the Monetary Policy Committee.

A Goldman Sachs official said about 25 London-listed initial public offerings are expected in the second half of 2014. Alasdair Warren, Goldman Sach's head of financial sponsors coverage in Europe, said "the desire to increase exposure to equities is accelerating".

Business Secretary Vince Cable will investigate Labour party's allegations of unnecessary selling of personal accident insurance to workers by six recruitment firms, namely Blue Arrow, Staffline, Acorn, Taskmaster, Randstad and Meridian.

British department store chain House of Fraser is pushing ahead with a return to the stock market after talks about a sale to its French counterpart Galeries Lafayette ended, according to sources.

Cambridge Satchel Company, which makes leather bags and has 10 stores across the UK, raised $21 million from private equity group Index Ventures.

NYT

* In her first extended public comments since taking over General Motors Co, Mary T. Barra vowed to quicken the company's comeback from bankruptcy with improved products, better brands and consistently profitable operations around the world.

* Whistle-blower lawsuits claim Health Management Associates Inc tried to inflate its Medicare and Medicaid payments by admitting more patients.

* The theft of consumer data from luxury retailer Neiman Marcus Group LLC appears to have involved 1.1 million credit and debit cards.

* Coca-Cola and other corporations are starting to see global warming as an economically disruptive force affecting commodity costs and supply chains.

* Attorney General Eric H. Holder Jr. said that lawful marijuana businesses should have access to the American banking system and that the government would soon offer rules to help them gain it.

* Senator Edward J. Markey asked regulators to look into Herbalife Ltd, the company that has been in the cross hairs of hedge fund manager William A. Ackman.

* Sidney Gilman, the prosecution's top witness in Mathew Martoma's insider trial, said F.B.I. agents told him that the government's true target was Steven A. Cohen, SAC's billionaire founder.

* William S Simon, chief executive of Walmart for the United States, said on Thursday at the United States Conference of Mayors that the company was providing a $10 million fund to promote manufacturing in a public push to sell more American-made products.

* A year after an embarrassing trading blowup led to millions of dollars being docked from Jamie Dimon's paycheck, the chairman and chief executive of JPMorgan Chase is getting a raise.

Canada

THE GLOBE AND MAIL

* Canadian Prime Minister Stephen Harper arrived at a massive refugee camp in Jordan just a day after enjoying the comforts of a presidential palace. Harper, on the final day of his visit to Israel and Jordan, was touring the Za'atari refugee camp in Jordan, just 12 kilometres from the Syrian border.

* A horrific fire that ripped through a seniors' home in rural Quebec has left a tiny community reeling from what is feared to be the worst tragedy of its kind in decades. The blaze broke out in the bitter-cold early hours of Thursday in L'Isle-Verte, a Lower St. Lawrence village 230 kilometres downriver from Quebec City. Wind gusts spread it quickly through the 52-unit home. At least five people were killed and as many as 30 are unaccounted for.

Reports in the business section:

* Corporate Canada is beginning to feel the effects of a plunging Canadian dollar, with some businesses raising prices - or making plans to do so - to account for the higher cost of U.S. goods.

* Barrick Gold Corp warned it plans to cut gold reserves, take another impairment charge on its troubled Pascua Lama mine and produce less precious metal this year.

NATIONAL POST

* The first case of a deadly pig virus that has killed millions of baby pigs in the U.S. has been confirmed in Canada, but authorities say there is no risk to human health or food safety. However, there are fears that it could drive up the price of pork.

* When a coalition of Arab nations convinced UNESCO to abruptly quash an exhibition on Jewish history in the Middle East this month, it was Canadian diplomats who led the campaign to have the decision overturned, the Simon Wiesenthal Center revealed this week.

FINANCIAL POST

* The Canadian dollar has been a target of debate, and much angst, since it was last above parity with the U.S. currency 11 months ago. Ever since, the Bank of Canada has been under the gun to bring it even closer to Earth to help fire up the economy.

* The deputy chairman at Rogers Communications Inc , Edward Rogers, warned that opening up the telecommunications market fully to foreign ownership could leave Canada as nothing more than a "branch plant" when it comes to investment in innovation and rural coverage.

China

SHANGHAI SECURITIES NEWS

- China's retail sales are expected to grow around 13 percent this year, according to Fang Aiqing, vice-head of the commerce ministry.

- China's state assets watchdog has urged state-owned companies to step up the fight against corruption.

China Securities Journal

- U.S. luxury electric car maker Tesla plans to set up a network of power charging stations in China.

CHINA BUSINESS NEWS

- China's top five state-owned banks have all set their deposit rates to the maximum allowed by regulators to compete for deposits, according to unidentified sources.

Britain

The Telegraph

MARK CARNEY: NO NEED FOR AN IMMEDIATE RATE RISE

Bank of England Governor Mark Carney has pledged there will be no "immediate" increase in interest rates as unemployment nudges closer to the 7 percent threshold in an apparent softening of his forward guidance policy.

BANKERS IN DRIVE TO BOOST SME LOAN APPLICATIONS

If all businesses that required finance went ahead with their applications, based on the current approval rates, there would be a significant economic uplift, said the BBA.

"Businesses are more likely to get finance than they think," said BBA chief executive Anthony Browne.

The Guardian

OUTGOING LLOYDS CHAIRMAN TO HEAD UK ACCOUNTING REGULATOR

The retiring chairman of state-backed Lloyds, Sir Win Bischoff, has been named as the next head of Britain's accounting regulator, days after being drawn into controversy over the bank's handling of the proposed sale of more than 600 branches to the Co-op.

INTEREST RATE RISE WOULD UNDERMINE RECOVERY, WARNS MPC MEMBER

A leading Bank of England policymaker, Paul Fisher, a member of the central bank's monetary policy committee, warned on Thursday that a rise in interest rates risked undermining the recovery and the cost of credit should remain low until living standards begin to rise.

The Times

FALLON SET TO HAND OVER THE DEEDS TO THE LAND REGISTRY

Land Registry, which holds the titles to most of the land in England and Wales could be sold or part-privatised in the latest move by the Government to raise billions from state assets. Michael Fallon, the Business Minister, laid out the options for the Land Registry yesterday as he kick-started a consultation on the 150-year-old organisation.

TEMPERATURES SOAR AS 'CONCERNED' SSE PREDICTS PROFITS RISE

SSE has been accused of hypocrisy after claiming that bill-payers are "at the heart of the debate" about energy, while it is forecasting a near-9 per cent rise in profits. On Thursday, the company forecast pre-tax profits for the year to the end of March of more than 1.5 billion pounds, an 8.8 per cent rise on the previous year's profit of 1.4 billion pounds, and will boost the dividend by 3 per cent.

Sky News

HIGH STREET CHAIN BATHSTORE GROOMED FOR SALE

Sky News understands that Endless, the investment fund that acquired Bathstore in May 2012, has decided to explore a sale of the company, which operates more than 150 shops across the country. Rothschild, the investment bank, has been appointed to sound out interest from potential buyers.

ENERGY BOSS ATTACKS PRICE COMPARISON WEBSITES

The boss of Co-operative Energy has accused price comparison websites of misleading customers and pushing up energy bills. Group General Manager Ramsay Dunning has called on the likes of uSwitch, MoneySupermarket.com and Energy Helpline to disclose how much they charged in commission each time a business or household moves supplier.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include weekly export sales of various commodities, due at 8:30 am ET.

ANALYST RESEARCH
 

Upgrades

Alumina (AWC) upgraded to Neutral from Underperform at BofA/Merrill
Angie's List (ANGI) upgraded to Buy from Neutral at B. Riley
BancorpSouth (BXS) upgraded to Buy from Hold at Wunderlich
Harman (HAR) upgraded to Overweight from Equal Weight at Barclays
Jacobs Engineering (JEC) upgraded to Buy from Hold at Jefferies
Juniper (JNPR) upgraded to Outperform from Market Perform at William Blair
Juniper (JNPR) upgraded to Overweight from Equal Weight at Barclays
Nokia (NOK) upgraded to Buy from Hold at Societe Generale
SVB Financial (SIVB) upgraded to Overweight from Equal Weight at Evercore

Downgrades

Arctic Cat (ACAT) downgraded to Market Perform from Outperform at Raymond James
Autoliv (ALV) downgraded to Underweight from Equal Weight at Barclays
Citigroup (C) downgraded to Neutral from Overweight at Atlantic Equities
Cleveland BioLabs (CBLI) downgraded to Hold from Buy at Cantor
Cleveland BioLabs (CBLI) downgraded to Perform from Outperform at Oppenheimer
Coach (COH) downgraded to Hold from Buy at Cantor
Fairchild Semiconductor (FCS) downgraded to Underperform from Neutral at BofA/Merrill
FireEye (FEYE) downgraded to Equal Weight from Overweight at Barclays
Mellanox (MLNX) downgraded to Underweight from Equal Weight at Barclays
TRW Automotive (TRW) downgraded to Equal Weight from Overweight at Barclays
Walter Energy (WLT) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

CBS (CBS) initiated with a Buy at Topeka
ChannelAdvisor (ECOM) initiated with a Market Perform at BMO Capital
Chipotle (CMG) initiated with an Outperform at Oppenheimer
Commercial Metals (CMC) initiated with a Neutral at Credit Suisse
Corrections Corp. (CXW) initiated with a Fair Value at CRT Capital
Demandware (DWRE) initiated with a Market Perform at BMO Capital
Diana Shipping (DSX) initiated with an Equal Weight at Evercore
Discovery Communications (DISCK) initiated with a Buy at Topeka
Discovery (DISCA) initiated with a Buy at Topeka
Disney (DIS) initiated with a Hold at Topeka
Geo Group (GEO) initiated with a Buy at CRT Capital
Jive Software (JIVE) initiated with a Market Perform at BMO Capital
Navios Maritime Partners (NMM) initiated with an Equal Weight at Evercore
NetSuite (N) initiated with a Market Perform at BMO Capital
Pandora (P) initiated with an Outperform at Oppenheimer
Safe Bulkers (SB) initiated with an Overweight at Evercore
Scorpio Bulkers (SALT) initiated with an Overweight at Evercore
Tangoe (TNGO) initiated with an Outperform at BMO Capital
Tempur Sealy (TPX) initiated with a Buy at BofA/Merrill
Time Warner Cable (TWC) initiated with a Hold at Topeka
Viacom (VIAB) initiated with a Hold at Topeka
Viasystems (VIAS) initiated with a Buy at Canaccord

HOT STOCKS

Qualcomm (QCOM) acquired patent portfolio from Hewlett-Packard (HPQ)
McKesson (MCK) to acquire Celesio for EUR 23.50 per share
Microsoft (MSFT) expects Nokia (NOK) deal to close this quarter
GlaxoSmithKline (GSK) received positive CHMP opinion for diabetes drug
Juniper (JNPR) CEO says to announce new operational plan within weeks
Williams (WMB) expects to boost FY dividend by 20% in 2014, 2015
Stanley Black & Decker (SWK) committed to returning $1.5B-$2B to stakeholders over two years

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Covidien (COV), Stanley Black & Decker (SWK), Western Alliance (WAL), Celanese (CE), Compuware (CPWR), KLA-Tencor (KLAC), E-Trade (ETFC), Dolby (DLB), ShoreTel (SHOR), Leggett & Platt (LEG), Juniper (JNPR), Intuitive Surgical (ISRG), Discover (DFS), Microsoft (MSFT), Starbucks (SBUX)

Companies that missed consensus earnings expectations include:
Matthews (MATW), ResMed (RMD), Delta Apparel (DLA), Synaptics (SYNA), Digi International (DGII), International Game (IGT),  TESSCO (TESS)

Companies that matched consensus earnings expectations include:
Cathay General (CATY), Applied Micro Circuits (AMCC), Open Text (OTEX), Hexcel (HXL), Covisint (COVS)

NEWSPAPERS/WEBSITES

CNN (TWX) says some social media accounts compromised, Bloomberg reports
FBI to retailers: More credit card breaches (TGT) will happen, Reuters reports
Boeing (BA): Dreamliner reliability improving but not satisfactory, Reuters reports
Boeing (BA), General Dynamics (GD) reach $400M settlement with U.S. Navy, Reuters reports
T. Rowe Price (TROW) encourages Time Warner Cable (TWC) to talk to Charter (CHTR), FT reports
Liberty Global (LBTYA), Ziggo talks continue, WSJ reports
Goldman (GS) to limit traders' use of chat services, WSJ reports
Chrysler (FIATY) plans to expand global Jeep sales, Detroit News reports

SYNDICATE

American Midstream Partners (AMID) 3.4M share Secondary priced at $26.75
Ashford Hospitality Prime (AHP) 8M share Secondary priced at $16.50
Atossa Genetics  (ATOS) files to sell common stock and warrants, no amount given
Care.com (CRCM) 5.35M share IPO priced at $17.00
Derma Sciences (DSCI) files to sell common stock
E2open (EOPN) 4.661M share Secondary priced at $25.0030
Independence Realty Trust (IRT) 7M share Secondary priced at $8.30
Kips Bay Medical (KIPS) 5.25M share Secondary priced at $.70
NanoString (NSTG) 2.88M share Secondary priced at $18.50
Progenics (PGNX) files $150M mixed securities shelf
Rice Energy (RICE) 44M share IPO priced at $21.00
Tonix Pharmaceuticals (TNXP) files to sell common stock
XenoPort (XNPT) 10M share Secondary priced at $6.00

• Russia says expects answers on NATO troops in eastern Europe (Reuters)
• Dealers say GM customer anxiety rising, sales may take hit (Reuters)
• China Unveils Mini-Stimulus Measure (WSJ)
• Londoners Priced Out of Housing Blame Foreigners (BBG)
• New earthquake in Chile prompts tsunami alerts (Reuters)
• Ukrainian Billionaire Charged by U.S. With Bribe Scheme (BBG)
• Chinese Investments in U.S. Commercial Real Estate Surges (BBG)
• Old Math Casts Doubt on Accuracy of Oil Reserve Estimates (BBG)
• US secretly created 'Cuban Twitter' to stir unrest (AP)
• Gazprom’s $910 Billion Gaffe Shows Putin Economy Waning (BBG)
• Same old song:  Apple Bulls Bet New Products Will Bring Stock Revival  (BBG)
• ECB seen as unlikely to act despite deflation fears (FT)

Overnight Media Digest

WSJ

* General Motors Co Chief Executive Mary Barra withstood a second day of withering attacks from lawmakers, with one senator saying the nation's largest auto maker should face criminal liability and another saying she needed to fix its "culture of coverup." (http://link.reuters.com/sys28v)

* Mary Barra learned late about faulty ignition switches. The larger an organization gets, the less likely it is that bad news will travel smoothly up the chain. At big corporations, say organizational experts, doing the right thing is often incompatible with pleasing the boss. (http://r.reuters.com/pys28v)

* Boeing Co said it will try to sell its new aerial refueling tanker to South Korea as its long-running battle with Airbus Group NV expands from commercial jets into specialized military aircraft. (http://link.reuters.com/wys28v)

* Investors are snapping up low-rated securities backed by companies, home mortgages and car loans at a clip rarely seen since the financial crisis, as fund managers and others tire of paltry yields on safer assets. (http://link.reuters.com/tys28v)

* Juniper Networks Inc is slashing its global workforce by 6 percent. The job cuts that will mostly occur immediately and largely affect middle-management roles. Activist shareholders Jana Partners and Elliott Management Corp have pushed for the network-gear company to make large cuts to costs and enact programs to return capital to shareholders. (http://link.reuters.com/bat28v)

* The Internal Revenue Service's plan to tax virtual currencies could crimp their use as an alternative to cash or credit for retail transactions. The IRS, in a ruling last week, said under existing law bitcoin and its brethren are property, not currency. That means anyone who spends bitcoin, even on a $2 cup of coffee, may have to pay taxes based on any "gain" over that bitcoin's original value. (http://link.reuters.com/hat28v)

* Wausau Paper Corp said President and CEO Henry Newell has stepped down and Chairman Thomas Howatt plans to retire as the tissue company faces pressure from activist investors. (http://link.reuters.com/jat28v)

* Frank Perkins Hixon pleaded guilty to insider trading on Wednesday, punctuating the downfall of the former senior deal maker at Evercore Group Llc. Hixon admitted he used confidential information from his job working on mergers and acquisitions at the investment bank in trades that netted himself more than $700,000. (http://r.reuters.com/kat28v)

* Pacific Investment Management Co's mutual funds suffered a 10th straight month of redemptions in March, although Pimco's chief executive said there is no link between the firm's management turmoil and the outflows. Investors pulled $7.3 billion out of Pimco last month, following outflows of $2.5 billion in February and $5.7 billion in January, to lift the first-quarter total to more than $15 billion, according to fund tracker Morningstar Inc. (http://link.reuters.com/pat28v)

* Accounting giant PricewaterhouseCoopers is expected to complete its acquisition of management-consulting firm Booz & Co Thursday and is renaming Booz "Strategy&." The deal, announced last fall, is among the most prominent acquisitions by an accounting firm in years, and it furthers PwC's recent push into the consulting field. (http://link.reuters.com/qat28v)

* Zillow Inc said it would begin providing real-estate listings for a Chinese real-estate portal, giving Chinese investors more access to the U.S. housing market. (http://link.reuters.com/sat28v)

FT

The first quarterly figures show London's house rates rose twice as fast as the rest of UK according to a property survey by Nationwide.

A study by Deloitte shows management shareholding in listings over the last three years was much higher than established listed companies.

A legal opinion by law firm Slaughter and May says that the Financial Conduct Authority could face three potential allegations of market abuse in the wake of a controversy over the leak of market sensitive probe by the regulator that led to a sell-off of insurers' shares.

Danish bank Saxo Bank is set to back social trading, and argue that investors in the UK want to interact with others and share information.

U.S. investment bank Goldman Sachs Group Inc was fined 37 million euros ($50.94 million) by European regulators for running a cartel along with 11 other subsea power cable firms.

NYT

* Just as Citigroup Inc was putting a troubled past of taxpayer bailouts and risky investments behind it, the bank now finds itself in the government's cross hairs again. Federal authorities have opened a criminal investigation into a recent $400 million fraud involving Citigroup's Mexican unit, according to people briefed on the matter. (http://link.reuters.com/rat28v)

* After facing a House subcommittee investigating General Motors Co's ignition-switch recall a day earlier, GM's Chief Executive Mary Barra was bombarded with a more aggressive line of questioning by senators on Wednesday. (http://link.reuters.com/tat28v)

* Amazon.com Inc is a retailer that makes and sells entertainment. On Wednesday, it took a big step toward a future in which shopping and video are tightly linked, perhaps even inseparable. The company began selling a device, Amazon Fire TV, that lets consumers watch Amazon's extensive video library as well as play a wide array of games on their television sets. (http://link.reuters.com/wat28v)

* A prominent executive is leaving JPMorgan Chase & Co as her powerful trading operation has stopped performing up to expectations. The departure of Blythe Masters, the head of JPMorgan's giant commodities unit, comes as the bank completes a sale of crucial parts of that business. (http://link.reuters.com/xat28v)

* Chrysler, a unit of Fiat Chrysler Automobiles, is recalling more than 850,000 sport utility vehicles because of a possible braking problem. The recall covers the 2011 to 2014 Jeep Grand Cherokee and Dodge Durango models, including about 644,000 in the United States. (http://link.reuters.com/bet28v)

Canada

THE GLOBE AND MAIL

* The political future of Toronto-area Conservative MP Eve Adams is uncertain after Prime Minister and Conservative party leader Stephen Harper ordered a party investigation into the power struggle that went behind an Ontario nomination. (http://link.reuters.com/qyt28v)

* Two new cases of measles in Calgary area have taken the total number of infected people to five. The two individuals are from the Western Canada High School in Calgary, which was warned in late January of a measles exposure. (http://link.reuters.com/fuv28v)

Reports in the business section:

* In an effort to block Goldcorp Inc's hostile bid, Osisko Mining Corp cut a complicated deal with Yamana Gold Inc and two Canadian pension funds. Toronto-based Yamana will use cash and its stock to buy a 50 percent interest in Osisko's mining and exploration assets. (http://link.reuters.com/vyt28v)

NATIONAL POST

* Toronto mayor Rob Ford was the sole vote against the city council's motion on naming a city street in honor of Nelson Mandela. The decision surprised many members of the Toronto city council and ensued a huge commotion on social media. When reporters approached Ford on his surprising decision, he stood up in city council to say he voted the wrong way and asked for a re-vote. (http://link.reuters.com/cav28v)

* An Alberta court has ruled against a constitutional challenge that opposes the provincial government's monopoly on health care. Alberta Court of Queen's bench ruled against a claim to obtain private health insurance, saying that an Albertan can't rely on the Supreme Court's 2005 Chaoulli decision because provincial law bans private health insurance. (http://link.reuters.com/jav28v)

FINANCIAL POST

* Imperial Oil Ltd is struggling to work out manufacturing and installation-related defects at its $12.9 billion Kearl oil sands mine nearly one year after production began. (http://link.reuters.com/tav28v)

* Home sales in the Vancouver region picked up in March compared to a year earlier. However, they were still well below the long-term average for the month, according to the city's real estate board. (http://link.reuters.com/xav28v)

China

CHINA SECURITIES JOURNAL

- China will accelerate urbanisation in shanty towns to promote investment and consumption, Premier Li Keqiang said in the weekly State Council meeting. The move also aims to help boost the broader economy.

- Local securities firm Sealand Securities Co announced it will raise under 5 billion yuan ($805.72 million) via private placements. It will also issue corporate bonds for under 2 billion yuan.

SHANGHAI DAILY

- Shanghai will become the second city in the country after Beijing to introduce the China V-emission standards for new vehicles, starting April 30, in a bid to tackle air pollution.

21st CENTURY BUSINESS HERALD

- The National Development and Reform Commission has approved raising of transport fees by private-owned commercial rail operators such as Shenhua Energy. Shenhua will be able to charge a fee of 0.20 yuan per tonne, from 0.15 yuan per tonne, from April 1 for its Inner Mongolia-Shaanxi rail road.

CHINA DAILY

- China lacks a new engine of economic growth and is still in the process of developing news ways to stimulate the economy, said Guo Tianyang, director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics in Beijing, while other analysts said the country's bad debt is expected to increase.

- China may sell debt and is considering other ways to raise funds for combating climate change, an official at the country's top economic planner said on Tuesday.

Britain

The Telegraph

SSE BOSS ATTACKS 'SCAREMONGERING' OVER ENERGY COMPETITION PROBE

(http://link.reuters.com/cas28v)

Energy companies should not "scaremonger" over the impact of a competition probe, the chief executive officer of SSE has said, in a thinly veiled attack on rival Centrica Plc .

BIDS FOR CHANNEL 5 EXPECTED TO BE LESS THAN HALF 700 MLN STG ASKING PRICE

(http://link.reuters.com/fas28v)

The sale of Channel 5 is expected to attract bids of less than half the 700-million pound price tag attached to the broadcaster by its owner Richard Desmond, it can be disclosed.

The Guardian

MONEY SHOP OWNER DOLLAR FINANCIAL TO BE SOLD TO LONE STAR FOR $1.3 BLN

(http://link.reuters.com/has28v)

Dollar Financial, the U.S. short-term lending specialist behind the Money Shop, Britain's largest high-street payday lender, is to be sold to private equity house Lone Star for $1.3 billion.

LORD MYNERS FACES STRUGGLE TO OVERHAUL CO-OPERATIVE GROUP BOARD

(http://link.reuters.com/jas28v)

Lord Myners is facing an uphill struggle in the coming days to persuade members of the loss-making Co-operative Group Ltd to endorse his plans to overhaul its board and replace it with a plc-style structure.

The Times

GOOD NEWS AS ACCENTURE GOES ON HIRING SPREE

(http://link.reuters.com/mas28v)

One of the world's biggest management consultants, Accenture Plc, is to hire 2,000 people in the United Kingdom this year in a move hailed by the prime minister as "more good news for the British economy."

GLENCORE, GERTLER AND CONGO'S LOST MILLIONS

(http://link.reuters.com/nas28v)

Glencore Xstrata helped to pave the way for a cut-price deal that has led to $71 million in mining royalties going to its joint venture partner instead of the world's poorest country.

Sky News

COWDERY NETS 200,000 STG PROFIT AFTER FCA FIASCO

(http://link.reuters.com/pas28v)

The founder of the closed life insurer Resolution has netted a profit of almost 200,000 pound on shares he bought after last week's botched launch of a probe into the sector by the City regulator.

NATIONWIDE - HOME PRICES UP 10 PCT IN LAST YEAR

(http://link.reuters.com/qas28v)

Average house prices have risen by nearly 10 percent in the last year, according to a property survey. Nationwide said year-on-year prices were up 9.5 percent in March, the biggest annual jump since mid-2010

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Jobless claims for week of March 29 at 8:30--consensus 320K
International Trade Balance for February at 8:30--consensus -$38.8B
March ISM non-manufacturing index for March at 10:00--consensus 53.3

ANALYST RESEARCH

Upgrades

Acuity Brands (AYI) upgraded to Buy from Hold at Canaccord
Eli Lilly (LLY) upgraded to Outperform from Market Perform at Cowen
Intel (INTC) upgraded to Overweight from Neutral at Piper Jaffray
Monsanto (MON) upgraded to Overweight from Neutral at JPMorgan
Newfield Exploration (NFX) upgraded to Buy from Neutral at UBS
OpenTable (OPEN) upgraded to Buy from Neutral at Citigroup
Sun Bancorp (SNBC) upgraded to Neutral from Underperform at Sterne Agee
Willis Group (WSH) upgraded to Buy from Neutral at Nomura

Downgrades

BB&T (BBT) downgraded to Outperform from Strong Buy at Raymond James
Broadcom (BRCM) downgraded to Neutral from Overweight at Piper Jaffray
CF Industries (CF) downgraded to Neutral from Buy at Citigroup
CSX (CSX) downgraded to Equalweight from Overweight at Barclays
Cheniere Energy (LNG) downgraded to Neutral from Outperform at Credit Suisse
Citigroup (C) downgraded to Neutral from Buy at Sterne Agee
Deutsche Bank (DB) downgraded to Neutral from Overweight at JPMorgan
G&K Services (GK) downgraded to Neutral from Outperform at RW Baird
Marcus (MCS) downgraded to Neutral from Buy at B. Riley
National Retail Properties (NNN) downgraded to Sell from Neutral at UBS
Norfolk Southern (NSC) downgraded to Neutral from Overweight at Atlantic Equities
Orion Energy (OESX) downgraded to Hold from Buy at Ascendiant
VIVUS (VVUS) downgraded to Underweight from Neutral at Piper Jaffray

Initiations

Altera (ALTR) assumed with an Overweight at Piper Jaffray
Apollo Global (APO)initiated with an Outperform at Bernstein
BP (BP) initiated with a Market Perform at Cowen
Blackstone (BX) initiated with an Outperform at Bernstein
Cavium (CAVM) assumed with a Neutral at Piper Jaffray
Chevron (CVX) initiated with a Market Perform at BMO Capital
Chevron (CVX) initiated with an Outperform at Cowen
China Mobile Games (CMGE) initiated with an Overweight at Barclays
ConAgra (CAG) initiated with an Equal Weight at Morgan Stanley
ConocoPhillips (COP) initiated with a Market Perform at BMO Capital
ConocoPhillips (COP) initiated with a Market Perform at Cowen
Dollar General (DG) initiated with a Hold at Jefferies
Exxon Mobil (XOM) initiated with an Outperform at Cowen
Exxon Mobil (XOM) initiated with an Underperform at BMO Capital
J.M. Smucker (SJM) initiated with an Equal Weight at Morgan Stanley
KKR (KKR) initiated with an Outperform at Bernstein
Occidental Petroleum (OXY) initiated with an Outperform at Cowen
Petrobras (PBR) initiated with a Market Perform at BMO Capital
Royal Dutch Shell (RDS.A) initiated with a Market Perform at Cowen
Royal Dutch Shell (RDS.A) initiated with an Outperform at BMO Capital
Total (TOT) initiated with an Outperform at BMO Capital
Total (TOT) initiated with an Outperform at Cowen

COMPANY NEWS

Yahoo (YHOO) said all traffic between data centers now encrypted
Novartis (NVS) appointed Dirk Koshce as head of Novartis Pharmaceuticals, announced a third-party internal review of IITs, placed a temporary moratorium on all IIT funding in Japan
Credit Suisse (CS) announced charge of CHF 468M for litigation provision
Plug Power (PLUG) acquired ReliOn, which develops hydrogen fuel cell stack technology and fuel cell systems, for $4M
Fusion-io (FIO) announced a collaboration with Oracle (ORCL) on the development of flash-aware interfaces for MySQL
Cypress Semiconductor (CY) announced that CFO Brad Buss will retire later this year and said it sees Q1 revenue exceeding the high end of its previous $169M-$171M range

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Resources Connection (RECN)

Companies that missed consensus earnings expectations include:
Greenbrier (GBX), Texas Industries (TXI), Dominion Diamond (DDC), Mitcham Industries (MIND), National American University (NAUH)

NEWSPAPERS/WEBSITES

Federal authorities open up criminal probe of Citigroup's (C) Mexican unit, NY Times reports
Boeing (BA) to cut as many as 300 Australian contrators, WSJ reports
RBS (RBS) to close 44 branches, Reuters says
Yelp (YELP) receives subpoenas monthly over users, WSJ reports
Sanofi (SNY) on lookout for acquisitions, expects growth in Africa, Reuters says
Google (GOOG) could ship up to 11M Chromebooks worldwide by 2019, DigiTimes says
Yahoo's (YHOO) goal of raising encryption could clash with advertising, WSJ reports
Google's (GOOG) LeBeau hired by Facebook (FB), TechCrunch reports

SYNDICATE

BG Medicine (BGMD) files to sell common stock
Catalyst Pharmaceutical (CPRX) files to sell common stock
Exact Sciences (EXAS) files to sell $125M in common stock
Kindred Biosciences (KIN) 3M share Secondary priced at $18.00
LDR Holding (LDRH) to sell 3.8M shares for holders
Tarena (TEDU) 15.3M share IPO priced at $9.00
Venaxis (APPY) files to sell common stock

• FHFA Is Said to Seek at Least $6 Billion From BofA for MBS Sales (BBG)
• Record Pact Is on the Table, But J.P. Morgan Faces Fight (WSJ)
• Magnetar Goes Long Ohio Town While Shorting Its Tax Base (BBG)
• Mini-Wall Street' Rises in Hamptons (WSJ)
• Obama to call healthcare website glitches 'unacceptable' as fix sought (Reuters)
• Starbucks Charges Higher Prices in China, State Media Says (WSJ)
• Cruz Is Unapologetic as Republicans Criticize Shutdown (BBG)
• Berlusconi struggles to keep party united after revolt (Reuters)
• SAC Defections Accelerate as Cohen Approaches Settlement (BBG)
• Some Liberal Groups, Lawmakers Worry About Cuts to Social Security, Other Entitlements (WSJ)
• McConnell: Shutdown Bad Idea, Won’t Happen Again (WSJ)
• US asks top court not to take case on NSA cyber-snooping (AP)

Overnight Media Digest

WSJ

* JPMorgan Chase & Co reached a tentative deal this weekend to pay $13 billion to end a number of civil investigations into its sale of mortgage securities before the 2008 financial crisis, but a separate and potentially more serious criminal probe into the bank and its executives will continue.

* Cracks are showing in the Democratic coalition as the next round of budget talks gets under way, hurting the chances for progress toward a broad deal that changes the tax code and significantly narrows future deficits.

* U.S. candy makers are expanding production in other countries as federal price supports and a global glut of the sweet stuff give an ever-greater advantage to foreign rivals.

* Sotheby's and Christie's are invading the turf of high-end art galleries, as a boom in the contemporary art market and pressures in the auction business disrupt what had long been a symbiotic relationship.

* Despite the market disruptions Washington's mess caused over the past few weeks, analysts who have studied past market behavior say that the current backdrop - moderate economic growth with low inflation and strong central bank backing - is excellent for stocks.

* As rivals scale back their research-and-development spending to appease investors, Chief Executive John Lechleiter says Eli Lilly & Co is staying the course, despite the drug maker's relatively large R&D budget.

* Raoul Weill, the former No. 3 official at UBS, has been arrested in Italy based on an Interpol notice requested by U.S. authorities, according to a U.S. official. The United States plans to seek his extradition from Italy to face charges of helping conceal billions of dollars from U.S. tax authorities.

* Manufacturing of new business jets isn't likely to recover to pre-recession levels for at least another decade, according to a closely watched forecast that trimmed the number of aircraft deliveries over the next 10 years by about 8 percent from the year-earlier projection.

* In the next few weeks, the Chinese government is expected to release the results of an ambitious effort to calculate a seemingly simple figure: just how much the country's local governments have borrowed from banks and investors in the past few years.

* The planned merger of Office Depot Inc and OfficeMax Inc is on track to receive antitrust clearance from the Federal Trade Commission after a lengthy government review, according to people familiar with the matter.

* AT&T Inc plans to lease a portfolio of cell towers, and sell some others, to Crown Castle International Corp for about $4.85 billion as the telecom giant cashes in on consolidation among tower operators and seeks to spend its money elsewhere.

* Level 3 Communications Inc said it fixed an Internet service outage that left users from Brooklyn to Philadelphia with slow to nonexistent service for nearly 24 hours Saturday after equipment at a New York-area network hub broke down.

FT

Overview

U.S. housing regulators are looking to fine Bank of America more than $6 billion for its role in misleading mortgage agencies during the housing boom, compared with the $4 billion to be paid by JPMorgan Chase & Co.

Opinions are divided in the U.S. regarding the $13 billion settlement JPMorgan Chase has agreed to pay to state and federal authorities.

Aluminum producer Alcoa has attacked the London Metal Exchange as "short-sighted and misguided" and called on the UK Financial Conduct Authority and the U.S. Commodity Futures Trading Commission to intervene in a row about metals warehousing.

AT&T said it would lease the rights to about 9,100 of its wireless network towers to Crown Castle International and sell another 600 towers to the tower operator for about $4.9 billion.

Terra Firma, the buyout group run by dealmaker Guy Hands, is set to launch a 1 billion pound ($1.62 billion) float of Infinis, a British wind power company, on Monday in a comeback signal to prospective new investors.

NYT

* A tentative $13 billion settlement between JPMorgan and the Justice Department was a result of extensive personal negotiations involving Attorney General Eric Holder and Jamie Dimon, the bank's chief executive.

* Mounting legal problems have so far left Jamie Dimon unscathed at the helm of JPMorgan Chase. On Sunday, several JPMorgan executives said, as they have for months, that the bank's board remains firmly behind Dimon, who is both chairman and chief executive.

* Norway's sovereign wealth fund is preparing to raise its voice on a sensitive topic: the increasing computerization of the stock markets and the costs it has imposed on big long-term investors. "The U.S. market has gone through a lot of changes and has become quite complicated - and this complexity of the market creates a lot of challenges for a large investor like us," said Oyvind Schanke, the global head of stock trading for the fund, Norges Bank Investment Management.

* Crown Castle International Co will buy the rights to run 9,100 towers for an average lease of 28 years, with the right to acquire the towers outright from AT&T Inc in the future for about $4.2 billion. Crown Castle will also buy about 600 towers outright.

* The producer Jason Blum's winning movie formula relies on profit-sharing, and he's thinking about applying it to television. Over the last five years, for production costs totaling a mere $27 million, his company, Blumhouse Productions, has churned out eight hit horror films - including "Paranormal Activity", "Sinister" and "The Purge" - that have taken in $1.1 billion at the worldwide box office.

* Genetic engineering to produce products that now come from rare plants holds great promise, but critics warn of harm to small farmers, among others.

* Experts involved in fixing the online health insurance marketplace say the technological problems are extensive.

* The intense competition in the market for tablets will be highlighted on Tuesday, as Apple Inc, Nokia and Microsoft Corp each introduce new devices.

* Ignazio Angeloni, a top European Central Bank official, has a leading role in reviewing euro zone banks to determine which are sound and which are not.

* Music industry's total digital sales are down almost 1 percent so far this year, and some in the industry cite the rise of streaming music services like Spotify and Pandora Media Inc .

Canada

THE GLOBE AND MAIL

* Native leaders are warning that the violent clash between Royal Canadian Mounted Police and the Elsipogtog First Nation - which last week saw police vehicles torched, rubber bullets fired and rocks thrown - is just the tip of the iceberg.

The protest against shale-gas exploration near the village of Rexton, New Brunswick, took place as some aboriginal groups across the country are expressing frustration over being excluded from consultations, especially when it comes to resource development.

* The Conservative government is seeking to give victims of crime a more active role in the legal process. A bill will be put forward this fall that extends victim involvement "from the time of the offence to the final disposition of the sentence," Justice Minister Peter MacKay told The Globe and Mail.

* The Canadian Food Inspection Agency has issued an alert over another beef product because of possible E. coli contamination. The federal food safety watchdog is warning the public not to consume uncooked lean ground beef from Belmont Meats of Toronto, distributed at Loblaw stores.

Reports in the business section:

* Corporate Canada is expected to raise spending in 2014 to take advantage of a global economic recovery. CIBC World Markets Inc Deputy Chief Economist Benjamin Tal said Canadian companies are well-positioned to increase capital expenditures, particularly if the U.S. economy gets rolling.

* Canadian National Railway Co and Canadian Pacific Railway Ltd both experienced weak grain shipments in the third quarter, although shipments are expected to rise in the fourth quarter due to a bumper crop in Canada.

NATIONAL POST

* A free trade deal linking Canada and Europe, even in the absence of a final text, is a historic win for the federal Conservative party and for Prime Minister Stephen Harper personally. It could not have come at a better time, from a Tory political perspective.

* A probe by the auditor general into spending in the Senate has prompted senators and the chamber's administration to start creating paper trails for decisions that previously weren't documented.

FINANCIAL POST

* Even amid a slowdown in hiring across Canada, small businesses continue to face difficulties recruiting and keeping the best employees.

* Northwest Territories village Inuvik's untapped resources, and non-existent infrastructure to develop or deliver them is becoming a metaphor for Canada itself. The latest, most egregious example of this problem revolves around the lack of strategy, politics and recurring media flashpoints concerning pipelines and, to a lesser extent, power generation infrastructure.

China

CHINA SECURITIES JOURNAL

- The People's Bank of China is likely to keep monetary policy neutral or even make it slightly tighter in the fourth quarter, Song Guoqing, an adviser to the Chinese central bank forecast.

- The China Securities Regulatory Commission recently said that it will support the Shanghai Pilot Free Trade Zone in launching an international crude oil futures trading platform, heralding a new stage for the rapid expansion of China's commodity futures market.

SHANGHAI SECURITIES NEWS

- E-Fund 120 ETF, the first exchange-traded fund (ETF) to invest in stocks dual listed on mainland Chinese and Hong Kong bourses, will be listed on the Hong Kong stock exchange on Monday.

- The slowdown of China's growth due to the country's efforts to adjust and improve its economic structure will help end a decade-long bull run in global commodity prices, economists participating in a seminar in the eastern Chinese city of Wuxi on Sunday forecast.

CHINA DAILY

- A report citing a senior security official said China sees an extradition treaty with the United States as "essential to capture and repatriate economic fugitives," including corrupt officials. The official blamed U.S. lack of understanding of Chinese human rights protections as a barrier to progress.

PEOPLE'S DAILY

- China will continue to use Marxist theory as the key guideline to boost efforts to build a socialist society with Chinese characteristics, the newspaper, the mouthpiece of the Chinese Communist Party, said in a commentary.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Apple (AAPL) upgraded to Buy from Hold at Societe Generale
ArcelorMittal (MT) upgraded to Buy from Hold at Deutsche Bank
Archer Daniels (ADM) upgraded to Buy from Underperform at BofA/Merrill
Bunge (BG) upgraded to Buy from Neutral at BofA/Merrill
Dean Foods (DF) upgraded to Outperform from Market Perform at BMO Capital
Delek US (DK) upgraded to Buy from Neutral at Goldman
Horizon Pharma (HZNP) upgraded to Overweight from Neutral at Piper Jaffray
Mead Johnson (MJN) upgraded to Buy from Neutral at Citigroup
ProAssurance (PRA) upgraded to Buy from Neutral at Janney Capital
Salesforce.com (CRM) upgraded to Strong Buy from Outperform at Raymond James

Downgrades

ARIAD (ARIA) downgraded to Perform from Outperform at Oppenheimer
Capital Bank (CBF) downgraded to Neutral from Buy at Compass Point
Celestica (CLS) downgraded to Hold from Buy at Canaccord
Empresas ICA (ICA) downgraded to Neutral from Buy at BofA/Merrill
First Horizon (FHN) downgraded to Neutral from Overweight at JPMorgan
First Horizon (FHN) downgraded to Sector Perform from Outperform at RBC Capital
General Mills (GIS) downgraded to Neutral from Buy at BofA/Merrill
Goodyear Tire (GT) downgraded to Hold from Buy at Deutsche Bank
Kaiser Aluminum (KALU) downgraded to Hold from Buy at KeyBanc
Kellogg (K) downgraded to Underperform from Buy at BofA/Merrill
Luxottica (LUX) downgraded to Sell from Neutral at Goldman
Magna (MGA) downgraded to Hold from Buy at Canaccord
Myriad Genetics (MYGN) downgraded to Underperform from Neutral at Credit Suisse
Reinsurance Group (RGA) downgraded to Market Perform at Keefe Bruyette
Senomyx (SNMX) downgraded to Neutral from Buy at Roth Capital
U.S. Silica (SLCA) downgraded to Market Perform from Outperform at Wells Fargo
VimpelCom (VIP) downgraded to Hold from Buy at Deutsche Bank

Initiations

Activision Blizzard (ATVI) initiated with an Overweight at Barclays
Applied Optoelectronics (AAOI) initiated with an Outperform at Cowen
Applied Optoelectronics (AAOI) initiated with an Overweight at Piper Jaffray
ArrowHead Research (ARWR) initiated with an Overweight at Piper Jaffray
Capitala Finance (CPTA) initiated with a Buy at Deutsche Bank
Capitala Finance (CPTA) initiated with an Overweight at Barclays
Covisint (COVS) initiated with an Outperform at Credit Suisse
Foundation Medicine (FMI) initiated with a Neutral at Goldman
Foundation Medicine (FMI) initiated with a Neutral at JPMorgan
Foundation Medicine (FMI) initiated with an Outperform at Leerink
Montage Technology (MONT) initiated with a Buy at Deutsche Bank
Montage Technology (MONT) initiated with an Outperform at Wells Fargo
Montage Technology (MONT) initiated with an Overweight at Barclays
Norwegian Cruise Line (NCLH) initiated with an Outperform at Credit Suisse
Ophthotech (OPHT) initiated with an Outperform at Leerink
Premier (PINC) initiated with a Buy at BofA/Merrill
Premier (PINC) initiated with a Neutral at Piper Jaffray
Premier (PINC) initiated with an Outperform at Raymond James
Premier (PINC) initiated with an Overweight at JPMorgan
Xoom (XOOM) initiated with a Buy at SunTrust

HOT STOCKS

Goldman Sachs Asset Management (GS) to acquire RBS' (RBS) money market funds
NTS, Inc. (NTS) to be acquired by Tower Three Partners for $2.00 per share
Crown Castle (CCI) announced $4.85B AT&T (T) tower transaction
Prudential (PRU) won’t seek to rescind designation as non-bank systemically important financial institution by Financial Stability Oversight Council
U.S. Steel (X) to take $1.8B goodwill impairment charge in Q3
Teradata (TDC) signed multi-year agreement with Procter & Gamble (PG)
Hasbro (HAS) targets $100M in annual savings by 2015

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Hasbro (HAS), Check Point (CHKP), Celanese (CE), MetroCorp (MCBI)

Companies that missed consensus earnings expectations include:
Crown Castle (CCI), Republic First Bancorp (FRBK)

NEWSPAPERS/WEBSITES

• The five largest U.S. defense contractors (LMT, GD, RTN, COL, UTX) release Q3 earnings this week, in what's likely to be an even more pivotal period for sector sentiment than a year ago, the Wall Street Journal reports
• As his competitors scale back their R&D spending to appease investors, Eli Lilly (LLY) CEO John Lechleiter says the company is staying the course, despite the drug maker's relatively hefty R&D budget, the Wall Street Journal reports
• Global shares hovered at five-year highs this morning while the dollar edged up against the yen as investors looked to U.S. data for clues on when the Fed will begin scaling back its stimulus. Many in the markets think the Fed will be wary of trimming its  bond-buying program until the economic impact of a 16-day partial U.S. government shutdown becomes clearer, Reuters reports
• Starbucks (SBUX) has been charging customers in China higher prices than other markets, helping the company realize thick profit margins, a report by the official China Central Television said, Reuters reports
• JPMorgan Chase’s (JPM) tentative agreement to pay a record $13B to end civil claims over its sales of mortgage bonds, a deal that won’t absolve the bank of potential criminal liaability, hasn’t shaken some investors’ faith in Chairman and CEO Jamie Dimon, Bloomberg reports
• Netflix (NFLX) is poised to pass HBO (TWX) in paid U.S. subscribers, showing CEO Reed Hastings is making progress toward a goal of transforming the streaming service to a Web-based television network, Bloomberg reports

BARRON’S

AT&T (T) could rise to around $40
Accenture (ACN), Aetna (AET), Western Union (WU), Raytheon (RTN) have regular buybacks
Jana Partners could bring more capital returns to Outerwall's (OUTR) holders
Questcor (QCOR) could be trouble for investors
Uncertainty about Amazon's (AMZN) Kindle sales a risk to investors
Amazon's (AMZN) new Kindle Paperwhite is nearly perfect for reader

SYNDICATE

Luna Innovations (LUNA) files to sell 2.64M shares for holders
Mazor Robotics (MZOR) offers to sell 2M American depositary shares

• EU Works to Punish Russia as MH17 Bodies Leave Rebel Area (BBG)
• Bodies From Malaysia Airlines Flight Begin Long Trip to Netherlands (WSJ)
• Israel pounds Gaza as Kerry arrives (Reuters)
• U.S. judge dismisses Republican lawsuit over Obamacare subsidy for Congress (Reuters)
• Israel Soldier Missing Amid Assault on Hamas in Gaza (WSJ)
• Detroit Retirees Vote in Favor of Pension Cuts (WSJ)
• Russia Axes 1st Bond Sale in 3 Months as Ukraine Drives Up Yield  (BBG)
• Wall Street Cut From Guest List for Jackson Hole Fed Meeting (BBG)
• Credit Suisse to Exit Commodities, Posts Big Quarter Loss (BBG)
• Draghi Cedes Euro Control to Yellen on Fed Rate Wagers (BBG)
• Turkish Businesses Boycotting Israeli Products Because of Gaza (INN)
• Soros Chart Shows Euro-Yen Reaching 2008 High (BBG)
• Next iPhone Will Offer Bigger Screens; Apple Tells Suppliers to Gear Up for 4.7-inch and 5.5-Inch Screen Sizes (WSJ)
• Sterling Trust Could Face Default on Loans if Clippers Aren't Sold, CFO Says (WSJ)
• Saudi to Open Up $531 Billion Stock Market to Foreigners (BBG)

Overnight Media Digest

WSJ

* Separatists in Ukraine released the bodies of victims in the downing of Malaysia Airlines Flight 17 and agreed to hand over the aircraft's data recorders, allowing the focus to tighten on establishing who brought the jetliner down. (http://on.wsj.com/Uoe1bR)

* Workers and retirees approved pension cuts in Detroit's bankruptcy, the city said Monday, a crucial step to emerging from the largest municipal insolvency in U.S. history. The city disclosed results from two months of balloting, which ended July 11. (http://on.wsj.com/1wTrViJ)

* European ministers are expected to approve sanctions that will target Russian oligarchs in response to the suspected downing of a Malaysian jetliner by Moscow-backed rebels in eastern Ukraine. (http://on.wsj.com/1nvUB1w)

* Apple Inc is preparing for its largest initial production run of iPhones this year, betting that larger-screen models will lure consumers now attracted to similar phones from Samsung Electronics Co. The company is asking suppliers to manufacture between 70 million and 80 million units, larger than the initial order last year of 50 million to 60 million versions of the iPhone 5S and 5C. (http://on.wsj.com/1qZBAm3)

* The U.S. owner of a meat supplier in Shanghai apologized and promised a swift response after McDonald's Corp and Yum Brands Inc suspended purchases in China in the wake of allegations it sold expired chicken and beef to restaurants. China's Food and Drug Administration halted on all business activities of Shanghai Husi and launched a nationwide investigation of the company. (http://on.wsj.com/1jSycdP)

* Washington's regulatory machine is altering Wall Street in fundamental ways, four years after the Dodd-Frank financial law became reality. Banks are selling off profitable business lines, pulling back from the short-term funding market, cutting ties with businesses that could attract extra regulatory scrutiny, and building up defenses to help weather future crises. (http://on.wsj.com/1ua2Eoi)

* Spending on mobile ads is expected to jump 83 percent this year, but given how much time Americans spend on their devices, mobile-ad spending could be much higher. (http://on.wsj.com/1loxQqs)

* The family trust that owns the Los Angeles Clippers is in danger of defaulting on loans if a planned sale of the NBA team doesn't go through, an executive testified Monday. (http://on.wsj.com/Wuj8sv)

* Allergan, which is trying to avoid being acquired by Valeant Pharmaceuticals International Inc, said it would cut 13 percent of its work force and reduce drug research, to boost its profits over the next six years. Valeant also had similar plans of restructuring, if it acquired Allergan. (http://on.wsj.com/WzRuuz)

* Netflix Inc said its second quarter earnings more than doubled as it added 1.7 million subscribers world-wide but cautioned that a more aggressive international expansion would hurt profits in third quarter. (http://on.wsj.com/1wTaZc1)

* Venezuela's auto industry, once the third largest in South America, is seizing up as manufacturers struggle to produce a few vehicles a day. Car makers like Ford Motor Co, Fiat Chrysler Automobiles, General Motors and Toyota Motor Corp, have cut output by more than 80 percent in the first six months of the year, due to lack of dollars to pay part suppliers. (http://on.wsj.com/1nv5BMM)

* Activist investor Jana Partners LLC has built a stake worth more than $1 billion in Apache Corp and is calling on the oil and gas producer to sell off its international holdings to drill exclusively on American soil. It also wants the company to exit some projects to free up cash flow. (http://on.wsj.com/UkTOUB)

* Crocs is trimming jobs and reducing the number of stores as the maker of colorful plastic clogs said it needs to get smaller to improve profitability. (http://on.wsj.com/1u9SQuJ)

FT

Time Warner Cable Inc, which owns cable networks TNT and CNN, scrapped a rule that allows investors to call a shareholder meeting in a bid to block a potential hostile takeover by Rupert Murdoch's Twenty-First Century Fox.

Portugal's largest-listed lender, Banco Espirito Santo is to appoint a special financial adviser to help improve its balance sheet days after one of its holding companies filed for creditor protection.

Barclays Plc U.S. dark pool slips from second to 12th place in terms of volumes traded as customers flee following a lawsuit that alleged the lender misled clients about frequency activity in its private trading venue.

China's MMG Ltd shareholders approve purchase of the Las Bambas copper project in Peru from Glencore Plc for $5.85 billion.

British engineering contractor Babcock International's order book for the coming year rose to 13.5 billion pounds ($23.1 billion), helped by recent contract wins and its acquisition of helicopter transport firm Avincis.

NYT

* Netflix Inc reported its business grew in the second quarter thanks to international customers and little adverse effect from an announced price increase. The company said it surpassed 50 million total members for its streaming service, including free trial memberships, in the second quarter of this year. Netflix has announced plans to introduce its service to a number of European markets in September, including Austria, Belgium, France, Germany, Luxembourg and Switzerland. (http://nyti.ms/1lodcae)

* In response to an article about the political connections of some of its shareholders, Alibaba Group Holding Ltd <IPO-BABA.N> discounted the notion that their backgrounds helped drive its business. In a strongly worded statement on Monday in Chinese on its account on Weibo, a Twitter-like social media network, Alibaba said The Times article "mistakenly described" Alibaba's relationship with the investors. (http://nyti.ms/1n7qLzq)

* Yahoo Inc announced Monday that it had agreed to acquire Flurry, a mobile ad and analytics company. Flurry's advertising expertise could help Yahoo as it tries to build a meaningful mobile ad business. Although more than half of Yahoo's monthly audience visits come on mobile devices, revenue from mobile ads is still so small that the company does not break it out. (http://nyti.ms/Ul2utY)

* Time Warner Inc on Monday amended its corporate bylaws and removed a provision that allowed shareholders to call a special board meeting. In a filing with the Securities and Exchange Commission, Time Warner said the change was effective immediately. Without the ability to call a special meeting, shareholders supportive of a Twenty-First Century Fox offer would not be able to replace Time Warner's board of directors before the company's next annual meeting, which would likely come next June. (http://nyti.ms/UodPcn)

* Malaysia Airlines' two crashes in less than five months are sending tremors through the aviation insurance market - not least because the carrier's $2.25 billion overall liability policy is mysteriously missing a standard clause that usually limits insurers' payments for search-and-rescue costs. (http://nyti.ms/1wTlbS7)

* A Senate investigation has found that hedge funds - in particular, James Simons' Renaissance Technologies - used complex financial structures to claim billions of dollars in tax savings. Between 1998 and 2013, more than a dozen hedge funds conducted hundreds of billions of dollars in trades using hundreds of structures, known as "basket options," created by Barclays Plc and Deutsche Bank AG, the Senate Permanent Subcommittee on Investigations said in a report on Monday. (http://nyti.ms/1n7EsOT)

* Goodwill Industries International, a nonprofit agency that operates thrift stores around the country, said on Monday that it was investigating a potential security breach that may have led to the theft of customers' credit card data. (http://nyti.ms/1qZZ5vl)

* Hedge funds are not new to farmland. For nearly a decade they have scoured the corners of the globe for cheap land as food prices have soared, positioning themselves to profit from the growing demand. Hedge funds now have $14 billion invested in farmland, according to the data provider Preqin. With its steady income stream, farmland is proving to be a ripe offering for sophisticated investors. (http://nyti.ms/1nPkbc0)

Canada

THE GLOBE AND MAIL

* A Chinese man accused of being the "directing mind" behind a corporate-espionage conspiracy to steal jet-fighter secrets from Pentagon contractors is a Canadian immigrant who is being stripped of his residency status. (http://bit.ly/1n8LvH3)

* The mysterious shooting death of a respected Florida law professor originally from Toronto took a sinister turn on Monday as investigators revealed that Dan Markel was the victim of a targeted attack. (http://bit.ly/1A0wwEi)

Reports in the business section:

* Mark Brock has been growing corn near London, Ontario, for decades but he has never seen a market quite like this with prices plummeting so fast he may not even try to sell some of his crop this year. Like many farmers, Brock has been trying to protect his profits by forward selling as much of his corn as possible. (http://bit.ly/1uaPR4Z)

NATIONAL POST

* The New Democratic Party is vigorously defending allegations it improperly put parliamentary staff in so-called satellite offices in Quebec before a meeting by the House of Commons panel that monitors spending by members of parliament. (http://bit.ly/WvqFqU)

* Senator Mike Duffy allegedly charged the Senate for personal travel to funerals, and disbursed money to three people for illegitimate expenses under the guise of a consulting contract. The allegations are contained in newly released court documents. The documents were made public on Monday, several days after the Royal Canadian Mounted Police announced that it was charging the suspended senator with 31 criminal counts. (http://bit.ly/1lppSgW)

FINANCIAL POST

* Rogers Publishing announced a small shakeup to its magazine mastheads on Tuesday, with three top editors cut loose, as part of an effort to streamline its editorial structure. According to an internal staff memo, the position of editor-at-large, held by Dianne de Fenoyl, would be eliminated, and de Fenoyl would be leaving after nearly a decade with the company. (http://bit.ly/1n8QZ4q)

* Fashion industry veteran Mario Grauso has been promoted to president of Loblaw Companies Ltd's in-house apparel brand Joe Fresh. The move comes as part of a major management shuffle at the country's biggest grocery chain last week, which saw Galen Weston named president of the retailer and the exit of president Vicente Trius. (http://bit.ly/1kONJqg)

China

SHANGHAI DAILY

- New residential property sales remained sluggish in Shanghai, staying below the 150,000-sq. m. threshold for the second straight week. In the nearby city of Hangzhou, home buyers remain reluctant to buy property even though housing prices have started to fall, as they expect prices to decline further.

CHINA DAILY

- China Mobile Ltd, the world's No. 1 telecom carrier by subscriber numbers, said on Monday it was removing its premium customer lounges at the nation's airports in a bid to cut back on operating expenses. The firms also plans to close down the majority of its customer clubs, a type of value-added service introduced a few years ago to lure new subscribers.

- China's railway track should total more than 200,000 km by 2030, in line with the nation's economic goals, and at least 10 percent of it will be for high-speed rail, the former chairman of China South Locomotive and Rolling Stock Co Ltd, and an adviser to the China Institute for Innovation and Development Strategy, said. China had 103,144 km of track, including 11,028 km for high-speed rail, the longest in the world.

CHINA SECURITIES JOURNAL

- China Financial Futures Exchange Board Chairman Zhang Shenfeng wrote an article advocating further reform and technical improvements to the market interest rate system.

Hong Kong

SOUTH CHINA MORNING POST

-- Hong Kong does not need a controversial HK$30 billion ($3.87 billion) upgrade of its centralised wastewater treatment system as the water in the harbour is clean enough, at least for now, the city's environment officials say. (bit.ly/1rlh3uf)

-- The chief executive of the Hong Kong Monetary Authority, Norman Chan Tak-lam, defended the city's strict banking rules as some of the best in the world, amid a flurry of recent international concern over the territory's banking system. (bit.ly/1jSmZKm)

THE STANDARD

-- Health and wellness products retailer OTO Holdings has been censured by the Hong Kong stock exchange for breaching the bourse's listing rules of twice failing to timely disclose its weaker results, along with its executive directors neglecting their undertaking to the bourse. (bit.ly/1rwQHHv)

-- Electronic books could soon turn a page to greater popularity in Hong Kong, says an e-book provider. Sino United Electronic Publishing content director Ivan Tsoi Yiu-ming said he is optimistic about e-books due to the popularity of tablet computers and smartphones. (bit.ly/UnUCHM)

-- Tissue paper firm Vinda International said net profit fell 21.8 percent in the first half to HK$222.18 ($28.66) million, from a year earlier, due to foreign exchange losses as the yuan weakened against the U.S. dollar. (bit.ly/1qZjEYT)

HONG KONG ECONOMIC JOURNAL

-- Morgan Stanley has raised its stake in Wing Hang Bank to 5.03 percent from 4.84 percent, according to data from the Hong Kong stock exchange.

HONG KONG ECONOMIC TIMES

-- HK Electric Investments Ltd posted a profit of HK$967 million ($124.75 million) for the first half of 2014 while distributable income amounted to HK$1.46 billion.

MING PAO DAILY NEWS

-- The average monthly rental of Hong Kong's 85 major residential developments stood at HK$23.2($2.99) per square foot in June, the highest monthly rental in 19 years, according to a report from property agent Centaline.

Britain

The Times

RBS PAYS 900,000 POUNDS FINE FOR AUSTRALIAN RATE-RIGGING

(http://thetim.es/1pxlC1F) Australian regulators have fined Royal Bank of Scotland nearly 900,000 pounds after the bank admitted its role in attempts to manipulate the country's equivalent of the Libor benchmark borrowing rate.

BANK OF ENGLAND'S COURT OPENS DOOR TO WOMEN CHIEFS

(http://thetim.es/1p3Lpgp)

The female chief executives of the telecoms company TalkTalk and the Yorkshire-based power plant Drax are among the new appointees to the board of the Bank of England, which was heavily criticised for having insufficient women in senior positions.

The Guardian

HEDGE FUNDS USED 'DUBIOUS' MEANS TO BYPASS TAX RULES, SENATORS SAY

(http://bit.ly/1sH5Wh8)

More than a dozen hedge funds, with assistance of Barclays and Deutsche Bank, used "dubious" financial products to claim billions in unjustified tax savings and circumvent rules meant to limit risky bets, a Senate subcommittee investigation has found.

COMPETITION REGULATOR MUST FORCE BANKS TO IMPROVE SERVICE, MPS SAY

(http://bit.ly/1ySroAs)

MPs have called on the competition watchdog to force high street banks to improve standards and the way they treat their customers after the Competition and Markets Authority signalled it would investigate the industry.

The Telegraph

ESPIRITO SANTO CRISIS COULD AFFECT PORTUGAL'S ECONOMY, WARNS PRESIDENT ANIBAL CAVACO SILVA

(http://bit.ly/Wt84vU)

The president of Portugal has warned that the financial crisis gripping the Espirito Santo family could affect the country's economy.

JUNCKER FACES POLITICAL TEST AS FINES LOOM ON ILLEGAL GERMAN TRADE SURPLUS

(http://bit.ly/UnMual)

Germany's current account surplus is the largest ever recorded in proportional terms and far above the threshold for EU sanctions, posing a major political test for the incoming commission of Jean-Claude Juncker.

Sky News

GLENFIDDICH EYES 100 MLN STG DRAMBUIE SCOTCH MERGER

(http://bit.ly/1p8mlrp)

The family-owned business behind Glenfiddich and Grant's is examining a 100 million pound takeover of Drambuie, the liqueur reputed to be made from a recipe concocted by Bonnie Prince Charlie.

BBA IN TALKS ABOUT PAYMENTS COUNCIL MERGER

(http://bit.ly/1wQFvUa)

The banking industry's main lobbying group, British Bankers' Association, is considering proposals to merge with at least two of its peers amid pressure from leading members to reduce costs levied by trade organisations.

Fly On The Wall Pre-Market Buzz

ANALYST RESEARCH

Upgrades

Allergan (AGN) upgraded to Buy from Neutral at UBS
American Axle (AXL) upgraded to Neutral from Underweight at JPMorgan
Diamondback Energy (FANG) upgraded to Buy from Neutral at Roth Capital
Digital Realty (DLR) upgraded to Buy from Hold at Deutsche Bank
Five Below (FIVE) upgraded to Outperform from Market Perform at Wells Fargo
Gas Natural (EGAS) upgraded to Buy from Hold at Wunderlich
Hasbro (HAS) upgraded to Overweight from Equal Weight at Barclays
Huntington Bancshares (HBAN) upgraded to Outperform at Keefe Bruyette
Realogy (RLGY) upgraded to Buy from Neutral at Citigroup
Sanmina (SANM) upgraded to Hold from Sell at Deutsche Bank
Trex Company (TREX) upgraded to Buy from Hold at Stifel
VCA Inc. (WOOF) upgraded to Hold from Sell at Stifel
Valspar (VAL) upgraded to Conviction Buy from Neutral at Goldman

Downgrades

Amazon.com (AMZN) downgraded to Neutral from Buy at Citigroup
Arcos Dorados (ARCO) downgraded to Underweight from Neutral at HSBC
Cadence Design (CDNS) downgraded to Neutral from Overweight at JPMorgan
Matador (MTDR) downgraded to Hold from Buy at Stifel
SunTrust (STI) downgraded to Equal-Weight from Overweight at Evercore

Initiations

Abengoa Yield (ABY) initiated with an Equal Weight at Morgan Stanley
Actinium Pharmaceuticals (ATNM) initiated with a Buy at Canaccord
Chambers Street Properties (CSG) initiated with a Neutral at SunTrust
Minerals Technologies (MTX) initiated with an Outperform at Wedbush
NextEra Energy Partners (NEP) initiated with a Buy at BofA/Merrill
NextEra Energy Partners (NEP) initiated with a Hold at Deutsche Bank
NextEra Energy Partners (NEP) initiated with a Hold at KeyBanc
NextEra Energy Partners (NEP) initiated with a Neutral at Goldman
NextEra Energy Partners (NEP) initiated with a Neutral at UBS
NextEra Energy Partners (NEP) initiated with an Equal Weight at Morgan Stanley
NextEra Energy Partners (NEP) initiated with an Outperform at BMO Capital
QIWI (QIWI) initiated with a Positive at Susquehanna
Quality Systems (QSII) initiated with a Buy at Topeka
Trinseo S.A. (TSE) initiated with a Buy at Deutsche Bank
Trinseo S.A. (TSE) initiated with a Buy at Goldman
Trinseo S.A. (TSE) initiated with a Buy at Jefferies
Trinseo S.A. (TSE) initiated with a Neutral at Citigroup
Trinseo S.A. (TSE) initiated with an Equal Weight at Morgan Stanley
Trinseo S.A. (TSE) initiated with an Outperform at Wells Fargo
Washington Prime Group (WPG) initiated with a Neutral at SunTrust

COMPANY NEWS

Johnson & Johnson (JNJ) announced a $5B share repurchase program
Credit Suisse (CS) said it will exit commodities trading business
CIT Group (CIT) to acquire OneWest Bank for $3.4B in cash and stock
Time Warner (TWX) amended by-laws to block holders ability to call special meeting (FOXA)
TG Therapeutics announced preliminary clinical results from its ongoing Phase I study of TG-1101, and said 100% of CLL/SLL patients had significant nodal reduction with either a normalization of or greater than or equal to 80% reduction in Blood Lymphocyte Count.
Kindred Healthcare (KND) offered to acquire Gentiva Health (GTIV) for $17.25 per share. Kindred said it is willing to consider further increasing its offer for Gentiva
Netflix reported Q2 total streaming net additions of 1.69M. Said policy goal is for DOJ/FCC to block Comcast (CMCSA), TWC (TWC) deal

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Verizon (VZ), Polaris Industries (PII), Signature Bank (SBNY), New Oriental Education (EDU), PLX Technology (PLXT), Crocs (CROX), First Interstate (FIBK), First Defiance Financial (FDEF), Helix Energy (HLX), Crown Holdings (CCK), Ultra Clean (UCTT), Texas Instruments (TXN), Artisan Partners (APAM), Zions Bancorp (ZION), PolyOne (POL), Waste Connections (WCN), Woodward (WWD), Rambus (RMBS), Cadence Design (CDNS), Sanmina (SANM), Trustco Bank (TRST), Chipotle (CMG), MainSource Financial (MSFG)

Companies that missed consensus earnings expectations include:
Carlisle (CSL), Del Frisco's (DFRG), Brown & Brown (BRO), BBCN Bancorp, Inc. (BBCN), Old Line Bancshares (OLBK), AptarGroup (ATR), EMC Insurance (EMCI), TG Therapeutics (TGTX), Wilshire Bancorp (WIBC), Washington Trust Bancorp (WASH), Netflix (NFLX)

Companies that matched consensus earnings expectations include:
Regions Financial (RF), DuPont (DD), BancorpSouth (BXS), Steel Dynamics (STLD), Consumer Portfolio (CPSS), Healthstream (HSTM), Rent-A-Center (RCII), Hexcel (HXL)

NEWSPAPERS/WEBSITES

Apple (AAPL) asking suppliers to produce 80M large-screen iPhones, WSJ reports
JANA investor letter discloses $1B position in Apache (APA), Bloomberg says
China food scandal spreads, drags in Starbucks (SBUX), Burger King (BKW) and McDonald's (MCD) products in Japan, Reuters reports
Yahoo (YHOO) paying over $200M for Flurry, TechCrunch reports
Viacom's (VIA) music group and Spotify form music streaming partnership, WSJ reports
Global notebook shipments to increase 4.3% in Q3, DigiTimes Research says
McDonald's (MCD) stock doesn't look ready for gains, Barron's says

SYNDICATE

Blue Hills Bank (BHBK) 27.8M share Secondary priced at $10.00
Diamondback Energy (FANG) 5M share Secondary priced at $87.00
FBR & Co. (FBRC) announces self-tender offer to purchase up to 1M shares
Pretium Resources (PVG) files to sell $60M in common stock
Regency Energy Partners (RGP) files to sell 8.3M units for limited partners
Tallgrass Energy (TEP) files to sell 7M units representing limited partners

• Just how many rats are there? Steven Cohen's Firm Loses Another Top Executive (WSJ)
• Iceland Sees a Potential Volcanic Eruption, and Airlines Cower (Bloomberg)
• Iraqi forces battle to drive jihadists from Saddam's home town (Reuters)
• Israel, Palestinians Agree to Extend Gaza Truce for 24 Hours (BBG)
• Pimco now buying junk (BusinessWeek)
• Pakistan arrests 147 in Punjab towns as protests in capital continue (Reuters)
• Ex-Rabobank Employee Pleads Guilty in Libor-Rigging Probe (BBG)
• BHP Billiton to Spin Off Some Assets (WSJ)
• Ebola Orphans Targeted by Aid Groups as Newest Victims (BBG)
• Two California youths accused of plotting high school shooting spree (Reuters)
• Only Rich Know Wage Gains With No Raises for U.S Workers (BBG)
• In Phoenix, a Realty Check as Market Moderates (WSJ)
• Selling the Plaza Hotel, From an Indian Jail Cell (BBG)
• Celebrities in firing line as China steps up drug war (Reuters)
• U.S. Orange-Juice Sales Fall to Record Low (WSJ)

Overnight Media Digest

WSJ

* Tensions flared Monday night as a large contingent of police confronted demonstrators in Ferguson after hours of peaceful marching to protest the fatal shooting of Michael Brown. (http://on.wsj.com/1mfpRNq)

* Ukraine accused pro-Russian separatists of killing dozens of civilians by firing on a refugee convoy, the latest example of residents caught in the line of fire of a four-month-old war that has caused more than 2,000 deaths. Rebels denied any role in the attack, or that an attack had taken place. The U.S. State Department condemned the "shelling and rocketing" of the convoy but said it couldn't confirm who was responsible. (http://on.wsj.com/1oVPZg4)

* Dollar General Corp offered to pay $9 billion in cash for Family Dollar Stores Inc, the latest in a wave of retail mergers that comes as companies struggle with weak traffic and a glut of stores. The offer is an attempt to elbow out the smallest of the three rivals, Dollar Tree Inc, which signed an agreement to acquire Family Dollar three weeks ago. (http://on.wsj.com/1pEFv9K)

* U.S. orange-juice retail sales fell to the lowest level on record as the formerly popular American breakfast beverage continued to fall out of favor with consumers. (http://on.wsj.com/1mft5Ak)

* Point72 Asset Management said Thomas Conheeney, who rose over 15 years to become president of Cohen's giant hedge-fund firm, resigned on Monday, capping a tenure as head of the firm during which eight current or former employees were convicted on criminal charges related to insider trading. (http://on.wsj.com/1qllTUu)

* Treasury Department officials are assembling a list of administrative options for Secretary Jacob Lew to consider for ways to deter or prevent U.S. companies from reorganizing overseas primarily to avoid paying federal taxes, an agency official said on Monday. (http://on.wsj.com/1w2tMGV)

* Aeropostal Inc said on Monday Chief Executive Thomas Johnson and the board mutually agreed that he would step down from the post, and Julian Geiger has rejoined the company as chief executive, effective immediately. Johnson was one of the two CEOs who replaced Geiger in 2010. (http://on.wsj.com/Ys7oYp)

* Verizon Communications Inc last week added many new routes to a dataset called the Border Gateway Protocol routing table. The telecom company consolidated its routes back into a smaller list within minutes, pushing the size of the database back below the red zone, but the spike had already caused ripples in the Internet's fabric. (http://on.wsj.com/1pGyyFa)

* SoftBank Corp gave a glimpse of its plans to tackle the U.S. cellphone market, unveiling a deal to develop low-cost smartphones for its Sprint Corp unit and a new service that would allow unlimited downloads from select applications. (http://on.wsj.com/1riwFkN)

* Continental AG, one of the world's largest automotive parts makers, picked a Google Inc self-driving-car executive Seval Oz to lead a new Silicon Valley-based operation aimed at intelligent transportation efforts. (http://on.wsj.com/1o7YIvo)

* Until now, Roku has only offered streaming video through its own hardware, either a set-top box or a dongle. Next month, Roku - which has grown into a household name - becomes the operating system for TVs from TCL and Hisense, two big TV makers that are largely unknown in the United States. (http://on.wsj.com/1pXg42i)

FT

Standard Chartered Plc is in talks to pay up to $300 million to U.S. authorities to settle allegations the bank failed to identify suspicious transactions, despite promising to improve its procedures after it was fined for violating U.S. sanctions two years ago.

Kremlin-controlled Rosneft will start drilling its first oil well in Norway with the help of Norwegian state-backed Statoil despite the Russian oil industry facing extensive European sanctions.

The British government has been ordered to pay 224 million pounds ($374.66 million) to U.S. weapons maker Raytheon for unlawfully terminating a border security deal with the company in 2010.

British insurer Amlin Plc is predicting a fresh wave of consolidation in the insurance industry as growing competition eats into returns.

German lender Deutsche Bank AG hired one executive each from Goldman Sachs Group Inc and Royal Bank of Scotland Group Plc to bolster its IT compliance and security

Avangardco, Ukraine's largest egg producer, plans to challenge the forced nationalisation of its assets in Crimea by local officials.

NYT

* Although the United States has yet to significantly embrace e-bikes, they are catching on in countries that already have a strong bicycle culture. (http://nyti.ms/1BvJeeU)

* Dollar General Corp offered to buy Family Dollar Stores Inc for $8.9 billion, hoping to break up its fellow deep-discount retailer Dollar Tree's agreed-upon $8.5 billion merger with Family Dollar. (http://nyti.ms/1p5uNJt)

* Steven Cohen announced the departure of Thomas Conheeney, president of Point72 Asset Management and a top lieutenant, on Monday. Conheeney will be replaced by Douglas Haynes, 48, a former McKinsey & Company director. (http://nyti.ms/1uPLtbg)

* Bitcoin's price has been noticeably falling in recent weeks after a period of relative stability, though those who trade in the virtual currency say the drop is par for the course. (http://nyti.ms/VAWk9s)

* With American Apparel Inc and its newly restructured management facing intense investor scrutiny, the company's earnings for the second quarter reinforced the retailer's troubled financial footing. (http://nyti.ms/1qlebJU)

* An academic paper argues that the American tax code's loopholes result in effective rates that make U.S. corporations more competitive than their competitors based overseas, not less. (http://nyti.ms/1leeev2)

* The activist hedge fund Jana Partners LLC has added an anonymous package to its arsenal in a campaign for change at PetSmart Inc. The multibillion-dollar hedge fund disclosed on Monday that it had received an anonymous package containing a sensitive internal presentation outlining how the company planned to improve its results over the next two quarters. (http://nyti.ms/1pGqiFd)

* Community Health Systems, a publicly traded hospital operator based in Franklin, Tennessee, said that personal data, including names, social security numbers and addresses for 4.5 million patients had been compromised in a Chinese cyber attack on its systems from April to June. (http://nyti.ms/1oVSEX5)

* Uber is back in business in Berlin, at least for now. The smartphone-based car service won a reprieve on Monday when a local court suspended a ban from the city's authorities, who had ruled that Uber did not comply with passenger safety standards. (http://nyti.ms/1qlnRUW)

Canada

THE GLOBE AND MAIL

* Canada's Transportation Safety Board will release the final results of a year-long investigation into the Lac-Megantic train disaster on Tuesday, offering the first definitive account of the series of events that led to the worst rail accident in modern Canadian history. (http://bit.ly/1oMm8MQ)

* Toronto City Council's licensing and standards committee has moved one step closer toward resolving a liquor-licence dispute between the city and the province that left restaurateurs caught in the middle. The committee voted on Monday to remove a new condition it had imposed on businesses seeking a new liquor license to have a letter of recommendation from their local Member of Provincial Parliament. (http://bit.ly/VC8gbm)

Reports in the business section:

* The Canada Revenue Agency's small list of approved foreign charities has been whittled down to zero, meaning Canadian donors hoping to give money to former U.S. president Bill Clinton's foundation, for example, are out of luck if they were banking on a tax credit. The CRA says foreign charities that receive a donation must then apply to the CRA to be registered as a qualified foreign charity, and they must either be involved in disaster relief, humanitarian aid or "activities in the national interest of Canada." (http://bit.ly/1uQDvi7)

NATIONAL POST

* Three Manitoba border guards have been suspended without pay for leaving their posts and helping the Royal Canadian Mounted Police to corral a local fugitive, according to their union. As per the union, two Emerson RCMP officers had zeroed in on a local hotel containing a man wanted on outstanding warrants and suspected of being armed. (http://bit.ly/1vbt06g)

* According to a joint report published by the CBC and the Swiss public broadcaster on Monday, Ben Aissa, former SNC-Lavalin Group Inc executive, suspected of participating in a bribery scheme connected to the McGill University Health Centre super hospital project, has now agreed to plead guilty to charges of bribery, money laundering and corruption in exchange for a sentence recommendation that could see him liberated from Swiss prison by April. (http://bit.ly/VBuk5z)

FINANCIAL POST

* Global investors cut their holdings of Canadian federal government bonds by a record in June, Statistics Canada said on Monday. The net divestment of C$9.42 billion came from both sales and bonds reaching maturity, the agency said from Ottawa. (http://bit.ly/1kQULAl)

China

- China's real estate market will not collapse because fundamental demand is rigid, said the chief economist of the State Information Center, a unit of the National Development and Reform Commission, at a forum.

SHANGHAI SECURITIES NEWS

- The Shenzhen Stock Exchange will start testing a stock option trial programme on Sept. 9.

CHINA DAILY

- Chinese President Xi Jinping said on Monday China would build new classes of more credible and competitive media and integrate traditional media with new media.

SHANGHAI DAILY

Shanghai's consumer watchdog found high levels of cancer-causing formaldehyde in children's Arena brand swimwear made by Shanghai Decente Business Co Ltd.

PEOPLE'S DAILY

- Communists need to conduct reform with courage. If the Party cannot reform, then it will find itself in a blind alley, the newspaper said in a commentary.

Britain

The Times

TAXPAYER MUST PAY 224 MLN STG TO U.S. FIRM OVER BORDER 'MESS'

The taxpayer has been lumbered with a bill of nearly a quarter of a billion pounds after Theresa May, the home secretary, unlawfully sacked a U.S. firm tasked with building an IT system to control immigration.

HOUSE PRICES FALL BY 8,000 STG IN A MONTH

The housing market frenzy ground to a halt in August, with asking prices across England and Wales falling by almost 8,000 pounds in just one month.

The Guardian

DAVID CAMERON REBUKED OVER JOBS CLAIM Prime Minister claimed majority of new jobs created last year were taken by UK nationals, but no official figures for new jobs are collected.

The Telegraph

CHALLENGER BANK ALDERMORE GEARING UP FOR FLOAT

Challenger bank Aldermore is gearing up for a stock exchange listing that is likely to make it one of the first major companies to debut on London's markets after a summer lull.

PUNCH TAVERNS IN LAST DITCH PUSH FOR DEBT-FOR-EQUITY SWAP One of Britain's largest pub companies unveils restructuring plans in a bid to get backing for their attempts to reduce 2.3 billion pounds of debt

Sky News

WSP GLOBAL LEADS RACE FOR 700 MLN STG BALFOUR ARM

A Canadian engineering consultancy has moved into pole position to acquire a division of Balfour Beatty, the British construction company, as rival Carillion decides whether to sweeten a 3 billion pound proposal to merge the two companies.

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
ICSC-Goldman Store Sales at 7:45am
Consumer Price Index for July at 8:30am -- consensus: CPI M/M change: 0.1%; CPI less food & energy: 0.2%
Housing starts for July at 8:30am -- consensus 0.963M
Redbook at 8:55am

ANALYST RESEARCH

Upgrades

Almost Family (AFAM) upgraded to Buy from Hold at Jefferies
Brinker (EAT) upgraded to Buy from Hold at Wunderlich
Family Dollar (FDO) upgraded to Equal Weight from Underweight at Barclays
Heartland Payment (HPY) upgraded to Outperform from Market Perform at Keefe Bruyette
MedAssets (MDAS) upgraded to Outperform from Market Perform at Leerink
Teekay (TK) upgraded to Strong Buy from Outperform at Raymond James
Urban Outfitters (URBN) upgraded to Outperform from Neutral at RW Baird
Wolverine World Wide (WWW) upgraded to Buy from Hold at KeyBanc

Downgrades

CNOOC (CEO) downgraded to Hold from Buy at Jefferies
Guess (GES) downgraded to Neutral from Overweight at Piper Jaffray
Monster Beverage (MNST) downgraded to Neutral from Buy at SunTrust
Saint Joe Co. (JOE) downgraded to Market Perform from Outperform at Raymond James
SolarCity (SCTY) downgraded to Neutral from Outperform at RW Baird

Initiations

Autohome (ATHM) initiated with a Buy at Brean Capital
Bitauto (BITA) initiated with a Buy at Brean Capital
El Pollo Loco (LOCO) initiated with a Hold at Jefferies
El Pollo Loco (LOCO) initiated with an Underweight at Morgan Stanley
Fiat (FIATY) initiated with an Underperform at Credit Suisse
Innocoll (INNL) initiated with an Overweight at Piper Jaffray
North Atlantic Drilling  (NADL) initiated with a Neutral at Goldman
Ocular Therapeutix (OCUL) initiated with an Outperform at Oppenheimer
Ocular Therapeutix (OCUL) initiated with an Outperform at RBC Capital
Performance Sports Group (PSG) initiated with an Overweight at Morgan Stanley

COMPANY NEWS

Home Depot (HD) reported Q2 SSS up 5.8%; U.S. comp sales up 6.4%
BHP Billiton (BHP) to create an independent metals and mining company. BHP said it continues to review Nickel West, smaller assets
Sprint (S) introduced Sprint Family Share Pack data plan, doubles high-speed data
PDL BioPharma (PDLI) said it delivered a notice of default to Wellstat Diagnostics
Aeropostale (ARO), which raised its Q2 EPS view, said Julian Geiger will rejoin the company as CEO
Skilled Healthcare (SKH) said it will combine with Genesis HealthCare in 100% stock deal
WPX Energy (WPX) announced the sale of mature coalbed methane holdings in the Powder River Basin for $155M in cash

EARNINGS

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

Home Depot (HD), Perfect World (PWRD), Jumei (JMEI), PDL BioPharma (PDLI)

Companies that missed consensus earnings expectations include:

American Apparel (APP)

Companies that matched consensus earnings expectations include:

Urban Outfitters (URBN)

Home Depot (HD) raises FY14 EPS to $4.52 from $4.42, consensus $4.41
BHP Billiton (BHP) reports FY14 underlying profit $13.45B vs. $12.21B last year
Ohr Pharmaceutical (OHRP) reports Q3 EPS (9c), one estimate (10c)
American Apparel (APP) sees FY14 adjusted EBITDA $40M-$45M
Perfect World (PWRD) sees Q3 revenue RMB 956M-RMB 1B
Aeropostale (ARO) sees Q2 adjusted EPS (45c)-(42c), consensus (58c)

NEWSPAPERS/WEBSITES

General Electric (GE) in talks with Electrolux (ELUXY) to sell appliance business, WSJ reports
Google (GOOG) to offer accounts to children under 13, WSJ reports
Standard Chartered (SCBFF) in talks to pay up to $300M to settle U.S. allegations, FT reports
Wal-Mart (WMT) not likely to bid for Family Dollar (FDO), Bloomberg reports
PG&E (PCG) enters not guilty plea to obstructing San Bruno blast probe, Bloomberg says
Apache (APA) looks cheap, Barron's says

SYNDICATE

American Midstream Partners (AMID) revises private placement to $120M from $200M
CTI Industries (CTIB) files to sell 700,000 shares of common stock
Extra Space Storage (EXR) files to sell 3.9M shares for selling holders
Tesoro Logistics (TLLP) files to sell 2.1M common units for limited partners
UR-Energy (URG) files $100M mixed securities shelf

• Ferguson at Turning Point After Night of Relative Calm (BBG)
• Gaza war rages on, Hamas says Israel tried to kill its military chief (Reuters)
• Surge in Putin Patriotism Masks Pain of Sanctions (BBG)
• Bank of England splits over rate hike for first time in 3 years (Reuters)
• Putin Meeting Leaves Kiev With Tough Choices (WSJ)
• European Gas Reverses Biggest Drop Since 2009 on Ukraine (BBG)
• "Isolation"  Mongolia Seeks Economic Lifeline With Pivot to China, Russia (BBG)
• Uber Picks David Plouffe to Wage Regulatory Fight (NYT)
• China Levies Record Antitrust Fine on Japanese Firms (BBG)
• Jackson Hole Rally at Risk as Investors Preempt Yellen (BBG)
• Standard Chartered to pay $300 million for oversight shortfalls (Reuters)
• HeidelbergCement Says House Boom Fails to Cure UK Market (BBG)
• Sprouts Fights Whole Foods Putting Organic Kale on Sale (BBG)
• Australia Review Chills $20 Billion Clean-Energy Industry (BBG)
• Walgreen Shakeup Followed Bad Projection (CFO)
• Rating agencies under fire for 'unjustified' Greek downgrades (Kathimerini)... except for the whole "default" thing of course
• Secretive Army of Hamas Emerges From Shadows in Gaza (WSJ)

Overnight Media Digest

WSJ

* U.S. retailer Walgreen Co pressured its Chief Financial Officer Wade Miquelon and pharmacy chief Kermit Crawford to leave after a bungled forecast of pharmacy profits related to its Medicare prescription-drug business. (http://on.wsj.com/VEh0xC)

* Schools in Ferguson, Missouri, have canceled classes, business owners face broken windows and falling revenue, and police forces are strained after more than a weak of violent protests. (http://on.wsj.com/1kTuGAF)

* The U.S. military's recent success in weakening Islamic State extremists and pushing them away from a key dam in Iraq is creating momentum for a broader campaign that could take American air power to the militant group's heartland northwest of Baghdad. (http://on.wsj.com/1AwOGNh)

* The conflict in the Gaza Strip has brought the secretive guerrilla army of Hamas out of the shadows and into battle against Israel's military for only the second time. When the brigade's fighters are killed, Hamas street organizers eulogize them as heroes, posting images of them in fatigues and toting rockets. And families in the Gaza Strip are coming to terms with never-before-discussed identities of sons and neighbors. (http://on.wsj.com/1oYq8UK)

* Argentine President Cristina Kirchner said on Tuesday night that her administration will seek congressional approval to make payments on its international bonds in Argentina after a creditor dispute in U.S. courts led the country to default on some of its debt last month. The Kirchner administration will deposit payments on restructured bonds in an account at the central bank, Kirchner said on national television. (http://on.wsj.com/1pcmbAM)

* AT&T Inc is bringing its ultrafast Internet service to Apple Inc's hometown and a few miles from Google Inc's doorstep. The carrier plans to make Cupertino the first city in California to receive its up to one gigabit service U-verse fiber optic broadband service. Service in Cupertino would begin in coming months, AT&T said. (http://on.wsj.com/1n87NVE)

* Former Microsoft Corp Chief Executive Steve Ballmer quit his post as a company director after 14 years, giving CEO Satya Nadella an even freer hand to reshape the company. Ballmer, fresh off his $2 billion purchase of the Los Angeles Clippers basketball franchise, indicated that his duties as team owner, among other interests, wouldn't leave enough time to stay on Microsoft's board. (http://on.wsj.com/1vdJw5C)

* Standard Chartered Plc will pay a $300 million penalty to New York's financial regulator and impose measures to correct lapses in its anti-money-laundering procedures, the New York State Department of Financial Services said on Tuesday, as part of a settlement with the British lender. (http://on.wsj.com/1pIay4D)

* BHP Billiton Plc said it would spin off nickel, aluminum and other properties into a new company that could be valued at up to $12 billion, in what would be one of the biggest asset sales in mining history. (http://on.wsj.com/VCRpoo)

* South Korea's LG Chem Ltd has secured a deal to supply electric vehicle batteries to Audi AG, a unit of German auto maker Volkswagen AG. LG Chem didn't disclose details of the deal, but said the contract would help Volkswagen's efforts to revive the sluggish growth of emission-free vehicles globally. (http://on.wsj.com/1pJk9rA)

* Lear Corp is nearing a deal to acquire Eagle Ottawa LLC, the world's largest supplier of premium automotive leather, for more than $800 million, according to people familiar with the matter. (http://on.wsj.com/VEcPlu)

* Penske Media Corp, the owner of Hollywood trade publications Variety and Deadline, will acquire Women's Wear Daily and other fashion-industry publications from Conde Nast, the companies said Tuesday. The sale price is close to $100 million, said a person with knowledge of the deal. (http://on.wsj.com/1sTkkDE)

* Wells Fargo aims to double the size of its asset-management unit to $1 trillion over the next decade through acquisitions and more aggressive sales to big investors, according to executives carrying out the plan. (http://on.wsj.com/1sTjQNR)

* Citigroup Inc is considering the sale of its retail-banking business in Japan, where the U.S. financial giant has had a presence for decades as a leading Western bank, people familiar with the matter said. (http://on.wsj.com/1w5dTiN)

* Allergan Inc approached Salix Pharmaceuticals Ltd and at least one other company about a potential acquisition, as the Botox maker seeks to fend off a $53 billion hostile takeover from Valeant Pharmaceuticals Inc. (http://on.wsj.com/Xy8EJx)

* Rockwell Collins Inc and other cockpit-equipment makers are developing technologies to combat a major source of frustration for airline passengers: flights that are canceled or diverted due to poor visibility at their scheduled destinations. Using computer-generated color images, and sometimes infrared-enhanced views of runways and their surroundings, Rockwell, Honeywell International Inc and other suppliers are seeking to reduce such schedule disruptions and lost revenue for carriers. (http://on.wsj.com/1oYjxcP)

* Canada's transportation safety agency said on Tuesday that inadequate Canadian government oversight and a railway company's "weak safety culture" were among a host of factors that led to last year's devastating oil-train derailment in Quebec. It also recommended even more measures to strengthen safety in a North American rail network dealing with a surge in the transportation of crude by rail. (http://on.wsj.com/1pJphMn)

FT

As part of its $300 million settlement with U.S. authorities Standard Chartered Plc will be barred from processing transactions for some high risk clients.

British construction company Carillion raised its offer for Balfour Beatty Plc for the third time, ramping up pressure on its larger UK construction rival to reopen merger talks.

Miner BHP Billiton , will spin off businesses worth an estimated $16 billion, signalling an end to years of deals and expansion fuelled by the commodities boom.

The world's largest fixed income manager, Pimco, made a clutch of new hires for its equity business as it tries to ease the pressure on its troubled bond operations.

Taxi-hailing app creator Uber has hired David Plouffe, U.S. President Barack Obama's 2008 campaign advisor, to devise and run its global political and branding strategy.

NYT

* Uber, a fast-growing start-up that promotes private car sharing, announced on Tuesday that it had hired the political strategist David Plouffe to be its senior vice president of policy and strategy. (http://nyti.ms/1tep0Cs)

* Radio Shack's ubiquitous stores flourished when consumers fixed their own gadgets. Now, the chain is trying out brighter, more inviting stores to lure shoppers. (http://nyti.ms/1oPFwss)

* Steve Ballmer, Microsoft Corp's former chief executive, resigned on Tuesday as a member of Microsoft's board, his primary remaining affiliation with the company after leaving the top job in February. (http://nyti.ms/1tk73Sg)

* In a settlement announced on Tuesday by New York State's financial regulator, Standard Chartered Plc will pay a $300 million fine and suspend an important business activity because of its failure to weed out transactions prone to money-laundering, a punishing reminder of settlements in 2012. (http://nyti.ms/XzgORQ)

* Condé Nast announced on Tuesday the sale of Fairchild Fashion Media, a group of trade publications including Women's Wear Daily and Footwear News, to Penske Media. The sale price was about $100 million, according to a person briefed on the deal. (http://nyti.ms/1n84Bcz)

* After an 18-month investigation, Macy's Inc has agreed to pay a $650,000 fine and hire an independent monitor to address complaints that minority shoppers faced heightened surveillance and, in some cases, wrongful detention at its flagship store in Midtown Manhattan. (http://nyti.ms/1oPNvpp)

* Square, the e-commerce start-up, announced on Tuesday that it would broaden the scope of its cash advance program through a multimillion-dollar deal with Victory Park Capital, a Chicago-based firm known for backing small-business financing ventures. (http://nyti.ms/1pZlTMs)

* After more than a month of pressure from the activist investor Jana Partners, PetSmart Inc has publicly acknowledged that it is up for sale. (http://nyti.ms/1AwU8j1)

* The owner of the Winn-Dixie and Bi-Lo supermarket chains disclosed on Tuesday that it had canceled its forthcoming initial public offering, nearly a year after the company first registered for a stock sale. (http://nyti.ms/YxAF4f)

* The impending shutdown of Atlantic City's newest casino, after little more than two years in business, will be another blow to what used to be the unchallenged gaming Mecca of the East Coast. (http://nyti.ms/1kTAVUY)

* Elizabeth Arden Inc, the beauty company, blamed its celebrity fragrance lines featuring Justin Bieber and Taylor Swift, among others, for a steep drop in sales in the fiscal fourth quarter. (http://nyti.ms/1oPQk9Y)

* Ocwen Financial Corp, a mortgage servicing firm that promised to improve on the loan-modification process for struggling homeowners, faces new regulatory scrutiny. (http://nyti.ms/1yYvftV)

Canada

THE GLOBE AND MAIL

* The fallout from the Mount Polley spill has reached other mines in British Columbia. The province has suspended the environmental assessment of the proposed Morrison copper and gold mine, pending the final report into Mount Polley. A review is also under way at the Red Chris mine, owned by Imperial Metals Corporation - which also owns the Mount Polley mine. (http://bit.ly/1oYMnK6)

* Winnipeg's Red River has become ground zero in the ongoing fight for a national inquiry into Canada's missing and murdered aboriginal women, its muddy waters the site of a grim discovery by police divers who were actually looking for another person's body when they happened upon the remains of Tina Fontaine. (http://bit.ly/1rWQ1aQ)

Reports in the business section:

* Industry Canada said it will hold a consultation on the future of a band of airwaves used for rural Internet access and reiterated a commitment it made last year to force telecommunications providers to "use it or lose it" when it comes to spectrum licenses. The department added that it hopes to re-purpose some of that band of spectrum for cellular use in urban areas. That has left New Brunswick-based Xplornet Communications Inc, one major provider of rural Internet services, worried about the impact on its customers. (http://bit.ly/YyautZ)

NATIONAL POST

* The Royal Canadian Mounted Police is investigating two more men with suspected ties to Calgary who allegedly left Canada to participate in the Syrian civil war, according to community members. Both men are from Windsor, Ontario, but are believed to have spent time in Calgary, where counter-terrorism investigators have been asking questions about at least ten jihadist recruits. (http://bit.ly/1qoY91N)

* Mayor Rob Ford says if re-elected, he will move to reduce crowding on buses and streetcars and establish new express bus routes without adding to the ranks of the Toronto Transit Commision. (http://bit.ly/1qp0dH3)

FINANCIAL POST

* Hedge funds, mostly American, seem to have their fingerprints all over the Canadian oil patch these days. Orange Capital LLC emerged on Tuesday as the latest to take a position in a Canadian oil and gas company. The New York-based fund has built a 5.3 percent stake in Calgary-based Bellatrix Exploration Ltd since July 2, according to regulatory filings.(http://bit.ly/1ocB94z)

* Toronto startup Vantage Analytics has raised C$1.1 million in its first round of funding from Real Ventures and a number of angels with e-commerce and retail expertise. (http://bit.ly/1rWWyCm)

China

SECURITIES TIMES

- The Shenzhen stock exchange and Shenzhen Securities Communication Co Ltd jointly said they would lower various service fees to improve the trading environment of the Shenzhen bourse.

CHINA SECURITIES JOURNAL

- Chinese e-commerce giant Alibaba Group signed a cooperation agreement with car dealer China Grand Auto on Tuesday to establish an online second-hand car trading platform, the official paper said.

- China Railway Corp, the country's railway operator, said on Tuesday it would auction a total of 17 billion yuan ($2.77 billion) of seven-year railway construction bonds on Aug. 20.

CHINA DAILY

- The average monthly salary for university graduates in China is around 2,443 yuan ($398), according to a survey by Peking University of 350,000 graduates across the country. A third of graduates have to rely on their parents.

SHANGHAI DAILY

- China has detained three people in Shanghai for forging and selling fake press cards, police in the city's Hongkou district said on Tuesday.

PEOPLE'S DAILY

- China should increase restrictions on drug use, the newspaper which acts as a mouthpiece for the ruling Communist Party said. A number of high-profile celebrities have been caught in a recent crackdown on drug use in China.

Britain

The Times

STANDARD CHARTERED FACES U.S. ACCOUNT BAN

Standard Chartered has been banned from opening new U.S. dollar bank accounts without the explicit permission of American regulators, amid a series of extraordinary restrictions, after officials warned the lender that it could be used as a conduit for illegal transactions.

MARK CARNEY IN MPS' SIGHTS OVER GEORGE OSBORNE 'PACT'

Bank of England Governor Mark Carney is expected to be questioned by MPs next month over his political neutrality in the wake of accusations that he has a secret pact with the chancellor to keep interest rates on hold until after the general election.

The Guardian

INCOME FROM PRIVATE PATIENTS SOARS AT NHS HOSPITAL TRUSTS

Some of Britain's leading hospitals stand accused of exploiting the coalition's controversial lifting of the cap on the number of private patients they can treat to increase their income as part of a "creeping privatisation" of the National Health Service.

RAIL FARES TO RISE BY AVERAGE OF 3.5 PCT IN JANUARY

Rail fares will rise by an average of 3.5 percent in January, with some increasing by up to 5.5 percent, adding hundreds of pounds to the cost of commuters' season tickets.

The Telegraph

TESCO-BACKED COFFEE CHAIN HARRIS + HOOLE CLOSES STORES

Harris + Hoole, the coffee shop chain backed by Tesco , is to close six stores, raising questions about its performance.

Sky News

MINISTERS FACE NEW ROYAL MAIL SELL-OFF ROW

Ministers considered selling the government's entire stake in Royal Mail when the shares were trading close to their post-privatisation peak earlier this year - but decided against doing so because it risked antagonising investors.

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
MBA purchase applications at 7am
EIA Petroleum status report at 10:30am
FOMC minutes at 2pm

ANALYST RESEARCH

Upgrades

Delek Logistics (DKL) upgraded to Outperform from Market Perform at Wells Fargo
Dunkin' Brands (DNKN) upgraded to Overweight from Equal Weight at Barclays
F5 Networks (FFIV) upgraded to Strong Buy from Buy at ISI Group
JetBlue (JBLU) upgraded to Outperform from Market Perform at Cowen
Panera Bread (PNRA) upgraded to Overweight from Equal Weight at Barclays
Siemens (SIEGY) upgraded to Buy from Neutral at Goldman
Tsakos Energy (TNP) upgraded to Overweight from Equal Weight at Morgan Stanley
United Community Banks (UCBI) upgraded to Buy from Neutral at SunTrust

Downgrades

BHP Billiton (BHP) downgraded to Underperform from Neutral at Credit Suisse
Hertz (HTZ) downgraded to Hold from Buy at Deutsche Bank
Hertz (HTZ) downgraded to Neutral from Overweight at JPMorgan
Real Goods Solar (RGSE) downgraded to Neutral from Buy at Roth Capital

COMPANY NEWS

Microsoft's (MSFT) former CEO Steve Ballmer announced his intention to step down immediately from the company's board
Hertz (HTZ) withdrew FY14 financial guidance and said it expects to be "well below" the low end of FY14. The company cited operational challenges in the rental car and equipment segments as well as the associated costs related to the accounting review previously disclosed
PetSmart (PETM) said it will explore strategic alternatives, including potential sale
PETA said it acquired more SeaWorld (SEAS) shares to be able to ask questions
Standard Chartered (SCBFF) to pay $300M penalty to settle allegations with New York DFS
Real Goods Solar (RGSE) promoted Dennis Lacey to CEO
Lowe's CEO said home improvement spending 'will continue to progress'

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Lowe's (LOW), Staples (SPLS), PetSmart (PETM), Tarena (TEDU), Phototronics (PLAB)

Companies that missed consensus earnings expectations include:
RGS Energy reports Q2 EPS (46c), La-Z-Boy (LZB)

Companies that matched consensus earnings expectations include:
E-House (EJ), LightInTheBox (LITB)

Lowe's (LOW) sees FY14 EPS approximately $2.63, consensus $2.61
Staples (SPLS) sees Q3 non-GAAP EPS 34c-39c, consensus 37c
PetSmart (PETM) backs FY14 EPS $4.29-$4.39, consensus $4.32
PetSmart (PETM) sees Q3 EPS 93c-97c, consensus 94c

NEWSPAPERS/WEBSITES

Apple (AAPL) could delay iWatch until 2015, FT Alphaville reports
Citigroup (C) has approached Mitsubishi UFJ (MTU), Mizuho Financial Group (MFG) Sumitomo Mitsui (SMFG) as well as regional banks regarding a sale of its Japanese retail banking unit, Reuters reports
Cisco (CSCO) COO says annual layoffs 'wrong way to do it,' Business Insider reports
Walgreen (WAG) CFO, pharmacy chief may have bee pressured to leave, WSJ reports
Netflix (NFLX) signs paid peering deal with Time Warner Cable (TWC), GigaOM reports
GE (GE) plans to invest $3.5B in aircraft engine unit, Nikkei says
Home Depot (HD) still looks undervalued, Barron's says

SYNDICATE

Cosi (COSI) says Janus to buy 3.89M shares at $1.15 per share
Real Goods Solar (RGSE) files to sell 5.02M shares of Class A common stock
Wheeler REIT (WHLR) files to sell 120K units

• Scotland split jitters send sterling to 10-month low (Reuters)
• S&P 500 Beating World Most Since 1969 Doesn’t Spark Flows (BBG)
• Happy ending guaranteed: Vietnam building deterrent against China in disputed seas with submarines (Reuters)
• China Posts Record Surplus as Exports-Imports Diverge (Bloomberg)
• Russia, U.S. to hold talks on 1987 arms accord (Reuters)
• Halcon’s Wilson Drills More Debt Than Oil in Shale Bet (BBG)
• Deadly Disappointment Awaits at Ebola Clinics Due to Lack of Space (WSJ)
• Latinos furious at Obama on immigration delay, vow more pressure (Reuters)
• Japan GDP Shrinks at Fastest Pace in More Than Five Years (WSJ)
• U.S. air strikes target insurgents near Iraq's Haditha Dam (Reuters)
• SEC Preps Mutual Fund Rules (WSJ)
• China's Use of Antimonopoly Law May Violate Its WTO Commitments (WSJ)
• U.K.’s Big Banks Cut Lending by $595 Billion, KPMG Says (BBG)
• Should Venezuela Default? (ProSyn)
• Zoolander Was Wrong: Why Phones Are Getting Bigger, Not Smaller (BBG)
• Former New Orleans Mayor to start jail sentence for graft (Reuters)

Overnight Media Digest

WSJ

* President Barack Obama will lay out plans this week for expanding the U.S. military campaign against the extremist group Islamic State, including the possibility of airstrikes on the militants in their Syrian strongholds, U.S. officials said. (http://on.wsj.com/1lQa9NW)

* Can the U.S. compete internationally? Its companies can. Its workers cannot. That is the key finding from a new survey of Harvard Business School alumni that delves into their views of the U.S. business environment to see where the nation thrives and where it falters. (http://on.wsj.com/1rs8jiE)

* In recent years, Americans have been spared the sticker shock of paying full price for a new iPhone because wireless operators offered upfront discounts approaching $500 a phone. But Apple Inc faces an uncertain new environment this week as it prepares to unveil new- and what are expected to be more expensive-iPhones. Carriers have been weaning consumers off subsidies and getting them to pay full price for new devices. (http://on.wsj.com/1quAMrS)

* The Securities and Exchange Commission is preparing new rules to boost oversight of mutual funds, hedge funds and other firms as part of an effort to gain insight into whether the $50 trillion asset-management industry poses risks to the financial system, according to people familiar with the discussions. (http://on.wsj.com/1qyKj13)

* A fast-growing Virginia laboratory has collected hundreds of millions of dollars from Medicare while using a strategy that is now under regulatory scrutiny: It paid doctors who sent it patients' blood for testing. (http://on.wsj.com/1ohdXDd)

* Those hoping for a Goldilocks economy (not too hot, not too cold) got a boost from Friday's softer-than-expected August jobs numbers. Concerns had been spreading that strong job creation would push the Federal Reserve to raise interest rates as soon as March 2015, instead of June or September as most forecasters currently expect. Strong job creation is good for the public, but rate increases are bad for stocks and bonds, so the soft report was a relief to Wall Street. (http://on.wsj.com/1rrVNj2)

* Alibaba Group Holding Ltd <IPO-BABA.N> and its bankers have been talking with investors about the Chinese e-commerce giant's potentially $24 billion initial public offering for over a year. But this week, as they begin the formal sales pitch, they will seek to resolve a crucial question: How much stock do investors want to own, and what will they pay for it? (http://on.wsj.com/1quZ9Wu)

* General Motors Co plans to launch by 2016 cars with a hands-free automated driving system and Wi-Fi-enabled vehicle-to-vehicle communications systems designed to help avoid collisions, intensifying the race among the world's auto makers to build cars that can partially drive themselves and avoid crashes without the help of their human drivers. (http://on.wsj.com/1w5yXVz)

* Japan's biggest online shopping mall, Rakuten Inc , has reached a basic agreement to buy U.S. cashback-shopping website operator Ebates for about 100 billion yen ($951.75 million) to better access U.S. consumers and grow abroad, a person familiar with the matter said Sunday. (http://on.wsj.com/1rs2X6U)

* When top Netflix Inc executives arrived in Paris earlier this year to help prepare a European expansion, they were greeted with an open letter from a group of French film producers warning of an "implosion of our cultural model." Netflix's response was a charm offensive. In a series of meetings with French government officials, executives said they planned to inject tens of millions of euros into France by marketing the Netflix service, striking deals for older French movies and TV shows and eventually shooting an original, French-language TV series set in the country, according to people who attended the meetings. (http://on.wsj.com/1uFxUYE)

* While BP Plc has pledged to fight a federal judge's ruling that it acted recklessly in the fatal 2010 Deepwater Horizon explosion and spill, Thursday's decision may ratchet up pressure for it to pursue a different tack: settle. A federal judge's ruling that BP recklessly failed to heed warning signs ahead of the Deepwater Horizon disaster may ratchet up pressure on the oil giant to settle rather than face an up to $18 billion fine. (http://on.wsj.com/1udznXN)

* Walgreen Co, facing mounting pressure from analysts and shareholders, said it is giving activist investor Jana Partners LLC two board seats, a relatively large say for a shareholder with a little more than 1 percent of the company's stock. (http://on.wsj.com/1udzH91)

FT

The UK government sent a filing to the U.S. Supreme Court arguing over the $18 billion fine imposed on BP PLC. The UK government said, the company was being forced to pay a huge sum of money to individuals and businesses who were not particularly affected by the spill.

Michel Barnier, the European Union commissioner said that the bankers' cash allowances were wrongly classified as fixed pay as they are paid selectively to senior staff, and are limited in duration and get cancelled sometimes.

European oil group Royal Dutch Shell Plc and a sovereign wealth fund from Oman are investing $53 million into California based Glasspoint, a small solar power company that increases crude oil production using renewable energy.

Vodafone has developed a mobile wallet service with Visa Inc, and plans to launch it in the UK next month. This service works with a special SIM card embedded with near field communication technology and can be used to swipe for payments at contactless tills.

Mark Cutifani, chief executive of Anglo American Plc ruled out BHP Billiton Plc's restructuring methods and said he preferred piece-by-piece asset sales in restructuring the mining group.

NYT

* After General Motors emerged from bankruptcy and a government bailout five years ago, the board of directors of the "new G.M." was expected to keep a more watchful eye on a company that had gone seriously off track. But on the issue of vehicle safety, the board until recently took a mostly hands-off approach, rarely even discussing the topic beyond periodic reviews of product quality with company executives, according to interviews with current and former board members. (http://nyti.ms/Ww1XX2)

* Just as the iPod's appeal relied in part on Apple Inc's music industry relationships, the future of its new wrist device may rest on courting health companies. (http://nyti.ms/1rSRbc8)

* Hourly workers often face unpredictable schedules and fluctuating hours each week, but at a Macy's Inc in Manhattan, a union has made a difference. (http://nyti.ms/1tDHj62)

* Alibaba <IPO-BABA.N>, started by Jack Ma in 1999, is about to sell shares in the United States that could value the company at about $160 billion. (http://nyti.ms/1uFwDAI)

* Public health experts say hundreds of children under 16 continue to work in America's tobacco fields, where they are exposed to harmful chemicals like nicotine. (http://nyti.ms/1CHlKUI)

* Stronger computing power, improved satellite and radar technology and more sophisticated scientific models give airlines a greater understanding of flying conditions. This means they can better plan their operations before flights - for instance by canceling flights early and avoiding stranding passengers at airports.(http://nyti.ms/1rSPafV)

Canada

THE GLOBE AND MAIL

** Lawyers for 182 former General Motors Co car dealers across Canada will face off with General Motors of Canada Ltd in a Toronto courtroom this week, as a trial begins in a C$750 million ($687 million) class action alleging the car maker unfairly pressured the dealers to give up their businesses as it sought a government bailout during the financial crisis. (http://bit.ly/1lQyG5N)

** Toronto Mayor Rob Ford's office asked city staff to look into using one of their most coercive powers - the expropriation of privately owned land - to help a client of the mayor's family business add more parking spaces. Mayor Ford's relationship with Apollo Health and Beauty Care, a soap manufacturer that contracts the Ford family's printing company to make labels for its products, is the focus of an ongoing investigation by Toronto's integrity commissioner. (http://bit.ly/1uFSx6T)

** Canada is experiencing a serious shortage of an essential drug for the treatment of bladder cancer. The shortfall, which is due to manufacturing problems at plants operated by two different pharmaceutical companies, could have major consequences for patients. (http://bit.ly/1xx3dKF)

NATIONAL POST

** With use of drones for commercial uses illegal in the United States, startups are popping up in Canada that offer services from monitoring crops to selling real estate. (http://bit.ly/1CIgKzf)

** Quebec Premier Philippe Couillard is now downplaying his desire to have Quebec sign the Canadian Constitution. A day after suggesting he'd like the province to do so by 2017 for the 150th anniversary of Confederation, Couillard told reporters on Sunday that his top priority is the economy. (http://bit.ly/1lMDoRx)

** As potential jurors enter a Montreal courtroom on Monday for jury selection in the first-degree murder trial of Luka Magnotta, few will encounter a complete stranger in the defendant. Accused in the brutal murder of Chinese university student Lin Jun, Magnotta, 32, who changed his name from Eric Clinton Kirk Newman, is already infamous. (http://bit.ly/1qGSVS0)

Hong Kong

SOUTH CHINA MORNING POST

* Zhang Yaqin, the man who helped build Microsoft's biggest technology research operation outside of the United States, is leaving the software giant to join Chinese online search powerhouse Baidu. Sources close to Baidu said Zhang would report directly to Robin Li Yanhong, the co-founder of Baidu. (http://bit.ly/1w5CkMd)

* The gutter oil scare deepened in Hong Kong and Macau after it emerged that another importer in the city and 21 businesses in the former Portuguese enclave had purchased oil from the Taiwanese supplier at the centre of the scandal. The Hong Kong importers include Dah Chong Hong Holdings Ltd. (http://bit.ly/1wdzF0i)

* Sun Hung Kai Properties Ltd is likely to become Hong Kong's biggest supplier of small flats once its application to convert four luxury residential projects in the northeast New Territories into 4,000 tiny apartments wins approval, according to industry observers. (http://bit.ly/1ogDgVY)

THE STANDARD

* China Auto Rental opens the retail book for its HK$3.62 billion ($467 million) initial public offering in Hong Kong, with 426 million new shares in a range of HK$7.50-HK$8.50 each. Shares of the country's largest auto rental firm, which aims to double the size of its fleet, start to trade on September 19. (http://bit.ly/1uFpdgU)

* A much-hyped idea to link bourses in Hong Kong and Shenzhen is not in the pipeline, China's securities watchdog said, saying one of its current priorities is to hammer out taxation issues for the upcoming Shanghai-Hong Kong Stock Connect program. (http://bit.ly/1tjjuwd)

HONG KONG ECONOMIC JOURNAL

* Chinese shipbuilder China Rongsheng Heavy Industries Group said an independent third party is considering to initiate a potential restructuring involving its unit Jiangsu Rongsheng Heavy Industries Co Ltd. The unit contributed a respective 89 percent and 91.4 percent of China Rongsheng's total revenue for 2013 and for six months ended in June 2014.

HONG KONG ECONOMIC TIMES

* Yuzhou Properties Co Ltd has earmarked 3 billion yuan ($488 million) to replenish landbank in China in the second half of 2014, according to chairman Lam Lungon.

Britain

The Times

PARTIES UNITE IN LAST-DITCH BID TO SAVE THE UNION

David Cameron and Ed Miliband will unite this week to make a last-ditch attempt to save the union by publishing a government paper that commits to handing more powers to Scotland within days of a "no" vote. (thetim.es/1oVKrT7)

ALIBABA TO HELP UK FIRMS FIGHT THE FAKES

British brands fighting the onslaught of Chinese counterfeiters have secured a landmark agreement from Alibaba Group Holding Ltd <IPO-BABA.N> , the internet commerce titan whose imminent listing in New York will vie to be the largest flotation in corporate history. (thetim.es/1pF40Pp)

The Guardian

SCOTTISH INDEPENDENCE: POUND COULD DROP 10 PCT IN VALUE

Scottish independence is expected to knock up to 10 percent off the value of sterling, taking it back to levels last seen when Britain was in recession. Nervous traders have already begun to sell the pound in response to narrowing polls. The currency suffered its worst week in more than a year last week. (bit.ly/1w5olWN)

NORTHERN COMMUTERS FACE BIG RISE IN FARES FOR EVENING TRAVEL

Rail passengers in the north of England are facing large increases in the cost of travel after the introduction of peak evening fares on train services from Monday. (bit.ly/1oVMp5I)

The Telegraph

RYANAIR POISED FOR HUGE BOEING AIRCRAFT ORDER

Ryanair Holdings Plc will on Monday announce a major order for Boeing Co's new 737 MAX jetliner as the colourful low cost airline seeks to boost passenger numbers by almost half to 120 million over the next decade. (bit.ly/1xv0CAR)

MPs WILL GET 10 PERCENT PAY RISE, EXPENSES WATCHDOG SAYS

MPs' pay will rise by 10 percent next year, taking their salaries to 74,000 stg ($120,000), the new head of parliament's expenses watchdog has said, despite warnings from David Cameron that such an increase would be "simply unacceptable". (bit.ly/1rRL0VF)

Sky News

EUROPE AGREES ON FRESH RUSSIAN SANCTIONS

European leaders have agreed to hit Russia with a fresh round of sanctions - despite Moscow signing up to a ceasefire in Ukraine. The sanctions include credit restrictions on Russian companies, export bans, travel bans and asset freezes on a new set of officials. (bit.ly/1lLzJ6u)

EXODUS OF BRITS FROM ECONOMIC WOES IN CYPRUS

British expats are packing up and leaving Cyprus as the effects of the financial meltdown continue to be felt. Removals firms on the island have seen huge demand from people moving back to the UK, with immigration from the east helping replace those on their way out. (bit.ly/1qyo770)

The Independent

CALAIS TO BE OFFERED 9FT-HIGH NATO SUMMIT STEEL SECURITY FENCE TO DETER MIGRANTS

Ministers have approved giving Calais the 9ft-high "Ring of Steel" security fence that had been used at the NATO summit, to help tackle the issue of migrants seeking to illegally board ferries and trucks bound for the UK. (ind.pn/1ofZWWq)

FOUNDER PETER CRUDDAS SIGNALS 1 BLN STG FLOAT AFTER CMC STORMS INTO PROFIT

CMC Markets founder Peter Cruddas today flagged up a 1 billion stg float as he put his spread betting firm back into the black. The former Conservative co-treasurer, who resigned from the party two years ago after a cash-for-access sting, unveiled pre-tax profits of 32.8 million stg in the year to 31 March, turning around a 4 million stg loss in the prior year. (ind.pn/1AeRBYW)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Consumer credit for July at 3:00 pm ET--consensus up $17.3B

ANALYST RESEARCH

Upgrades

Bank of America (BAC) upgraded to Buy from Neutral at Goldman
FireEye (FEYE) upgraded to Buy from Neutral at UBS
Infinera (INFN) upgraded to Buy from Hold at Jefferies
L-3 Communications (LLL) upgraded to Outperform from Perform at Oppenheimer
Matrix Service (MTRX) upgraded to Buy from Hold at KeyBanc
Pinnacle West (PNW) upgraded to Outperform from Market Perform at Wells Fargo
Ternium (TX) upgraded to Overweight from Neutral at JPMorgan

Downgrades

Bonanza Creek (BCEI) downgraded to Outperform from Strong Buy at Raymond James
Fairchild (FCS) downgraded to Neutral from Positive at Susquehanna
Ford (F) downgraded to Underweight from Equal Weight at Morgan Stanley
Keryx (KERX) downgraded to Underperform from Market Perform at FBR Capital
Portland General Electric (POR) downgraded to Market Perform at Wells Fargo

Initiations

AIG (AIG) initiated with a Buy at Citigroup
C1 Financial (BNK) initiated with a Buy at Wunderlich
C1 Financial (BNK) initiated with an Outperform at Keefe Bruyette
Enable Midstream (ENBL) initiated with an Equal Weight at Morgan Stanley
Enservco (ENSV) initiated with an Outperform at Northland
Gulfport Energy (GPOR) initiated with an Equal Weight at Morgan Stanley
Husky Energy (HUSKF) initiated with a Buy at Citigroup
Illumina (ILMN) initiated with an Equal Weight at Morgan Stanley
Otonomy (OTIC) initiated with an Overweight at Piper Jaffray
PerkinElmer (PKI) initiated with an Overweight at Morgan Stanley
Thermo Fisher (TMO) initiated with an Overweight at Morgan Stanley
Waters (WAT) initiated with an Underweight at Morgan Stanley
Westlake Chemical Partners (WLKP) initiated with a Buy at Deutsche Bank
Westlake Chemical Partners (WLKP) initiated with a Neutral at BofA/Merrill
Whiting Petroleum (WLL) initiated with an Equal Weight at Morgan Stanley

COMPANY NEWS

General Electric (GE) to sell appliances business to Electrolux AB (ELUXY) for $3.3B
FMC Corporation (GMC) to acquire Cheminova for $1.8B
Walgreen (WAG) appointed JANA's Barry Rosenstein to board of directors
Fossil (FOSL), Intel (INTC) announced collaboration to develop innovation in wearable tech
TriQuint (TQNT) shareholders approved merger-of-equals with RF Micro Devices (RFMD)
Amazon.com (AMZN) secured $2B credit arrangement

EARNINGS

Companies that missed consensus earnings expectations include:
Piedmont Natural Gas (PNY)

Douglas Emmett (DEI) lowers FY14 FFO view by 5c to $1.53-$1.57, consensus $1.61
Piedmont Natural Gas (PNY) reaffirms FY14 EPS $1.80-$1.90, consensus $1.89

NEWSPAPERS/WEBSITES

GM (GM) to introduce hands free Cadillac model in two years, Bloomberg reports
CenturyLink (CTL) said to seek Rackspace (RAX) acquisition, Bloomberg reports
Ryanair (RYAAY) could place $10B Boeing (BA) order, Reuters says
Sharp (SHCAY) aims to sell U.S. solar-energy development division, Bloomberg reports
T-Mobile (TMUS) files suit against China's Huawei , Re/code says
Discovery (DISCA): Comcast (CMCSA)-TWC (TWC) merger gives unfair advantage, NY Post reports
lululemon (LULU) expected to report sharply lower profit, WSJ reports
United Technologies (UTX) could return 20%, Barron's says
Boeing (BA) shares could climb 20%, Barron's says
Multimedia Games (MGAM) looks inexpensive, Barron's says

SYNDICATE

Ascent Solar (ASTI) files to sell 1M shares for holders
Sequential files to sell 14.33M shares of common stock
Uranium Energy (UEC) files to sell 1.86M shares of common stock