Zero Hedge - Merrill

Obama orders U.S. airstrikes in Syria against Islamic State (Reuters)
Obama Relying on Mideast Allies to Counter Islamic State (BBG)
Scotland Nationalists Claim U.K. Oil in 40-Year Campaign (BBG)
Scottish Polls Embolden Catalans Pushing Rajoy for Vote (BBG)
Royal Bank of Scotland: RBS will leave Scotland if voters back independence (Guardian)
Most Hedge-Fund Managers Are Overpaid, Unigestion Says (BBG)
China Inflation Softens to Four-Month Low (WSJ)
Australian Employers Add Record Jobs as Currency Jumps (BBG)... of which 87% were part-time
Munger Hosts Groupies, Mocks Wall Street, Praises Buffett (BBG)
RadioShack posts tenth straight quarterly loss, prepares bailout loan (Reuters, Bloomberg)
Said loan is basically a pre-petition DIP: RadioShack Says It’s Seeking Ways to Boost Cash as Losses Mount (BBG)
Manhattan’s Rent Gains Send Queens Leasing Deals Surging (BBG)
Washington Trading Probe Broadens to Hedge Funds (WSJ)
U.S. lawmakers embrace fight against Islamic State, some question Obama plan (Reuters)
Lawmakers Seek to Smooth Banks' Path Through Bankruptcy (WSJ)

Overnight Media Digest

WSJ

* President Barack Obama authorized the start of U.S. air strikes in Syria and expanded a month-long bombing campaign in Iraq to "degrade and ultimately destroy" Islamic militants who recently beheaded two Americans. (http://on.wsj.com/1p97F8h)

* The National Football League said Wednesday night that it is appointing former FBI Director Robert Mueller to conduct an investigation into the league's "pursuit and handling of evidence" in the Ray Rice domestic violence incident. The investigation will be supervised by New York Giants owner John Mara and Pittsburgh Steelers President Art Rooney. (http://on.wsj.com/1tLZCWt)

* Investigators are examining communications between research firm Height Securities and several hedge funds, opening a new front in an insider-trading probe focused on the firm's 2013 investor alert about a change in health-care policy. (http://on.wsj.com/1tzuV2V)

* Fifteen years ago, Ana Patricia Botín was pushed out of her senior job at Banco Santander SA by the bank's chairman, who also happened to be her father. On Wednesday Botín's Shakespearean career came full circle, with her being named chairman after her father's death. (http://on.wsj.com/1qEWKIJ)

* A bipartisan bill approved by a congressional committee to amend the U.S. bankruptcy code underscores a post-crisis conundrum: Big banks must demonstrate they can be dismantled in bankruptcy, but experts and some lawmakers say the current code is inadequate to handle the failure of a major financial firm. (http://on.wsj.com/1nMQObQ)

* The Securities and Exchange Commission is stepping up its scrutiny of corporate executives who sell shares in their own companies, announcing a raft of cases Wednesday against insiders for allegedly breaking rules on disclosing stockholdings and trades. (http://on.wsj.com/Zhuwte)

* Twitter Inc plans to raise as much as $1.5 billion in the social-media company's first sale of debt to support its growing business. The San Francisco company said it is offering convertible bonds in two chunks of $650 million, according to a securities filing on Wednesday. (http://on.wsj.com/1lV9Wsx)

* Sony Corp said it reached an agreement for its planned Web-based TV service to carry MTV, Nickelodeon and 20 other Viacom Inc channels and offer access to streaming Viacom programming on mobile devices. (http://on.wsj.com/1qHHdIm)

* JDS Uniphase Corp said it plans to split into two publicly traded companies, separating its optical components business from its networking operations. The fiber-optic communications company plans to spin off its communications and commercial optical products segment into a separate company by the third quarter of next year. (http://on.wsj.com/Zhvdmn)

Banco Santander SA names Ana Patricia as its chairperson. Patricia succeeds her father Emilio Botin, who died of a heart attack on Tuesday night.

Ferrari's chairman for 23 years, Luca Cordero di Montezemolo, said he will quit as chairman, a move that was expected after being questioned by Fiat SpA over Formula One team's poor performance. Sergio Marchionne, chief executive of Fiat, will replace him.

Veronique Laury has been appointed as the chief executive of Kingfisher Plc. Laury, who currently runs the company's France division, replaces Ian Cheshire.

U.S. Bitcoin company Coinbase said it plans to start its consumer service across a large part of the eurozone.

JPMorgan Chase & Co is set to propose in its next paper a better framework to deal with failing clearing houses, calling the current method brittle and opaque.

NYT

* Making global e-commerce available to Chinese shoppers is a key aim of Alibaba Group Holding Ltd, and the strategy could help put a dent in American trade deficits. (http://nyti.ms/1pRl0lK)

* On Wednesday, Dollar General Corp said it was going hostile and taking its $9.1 billion offer for Family Dollar directly to shareholders after being rebuffed. The move further complicates Family Dollar's agreed-upon deal, announced in July, to sell itself to Dollar Tree for $8.5 billion. (http://nyti.ms/1tLYXEs)

* Syncora Guarantee Inc, Detroit's most vociferous adversary in bankruptcy, is close to a breakthrough settlement with the city, but before it can close the deal it must resolve a related dispute with two big banks, Bank of America Corp and UBS AG. The bankruptcy judge, Steven Rhodes, has adjourned a trial in the case until Monday. If Syncora cannot reach an agreement with the banks by then, it will face a breakdown of its whole deal with Detroit. (http://nyti.ms/1qMCVOc)

* Coinbase is taking its bitcoin services to Europe in a move that could help expand the virtual currency's reach. The company, one of the most popular digital wallet providers, said on Wednesday that it was expanding to 13 European countries, including France, Italy and the Netherlands, by allowing those with authorized European bank accounts to buy and sell bitcoins in exchange for euros. (http://nyti.ms/1nMkYMr)

* The Coleman Company, a manufacturer of camping and other outdoor equipment, has agreed to take more than 20,000 of its inflatable rubber tubes off the shelves at Wal-Mart Stores Inc . Two dozen consumers reported skin irritation from the 36-inch-wide black Sevylor River Racer tubes, intended for one person to sit in and float in the water. (http://nyti.ms/1wgIgiA)

* France's economic recovery will be much more fragile this year than originally thought, and the government will not be able to meet targets for reducing the deficit for at least another two years in the face of sputtering growth, the French Finance Ministry announced on Wednesday. (http://nyti.ms/1ung3Hz)

Canada

THE GLOBE AND MAIL

** Much of the local television programming that Canadians cherish won't survive without a new revenue stream for broadcasters, BCE Inc is warning, while pleading with the federal TV regulator to be measured in its efforts to boost consumer choice. On Wednesday, a phalanx of executives from Bell Media, which is owned by BCE, spent more than five hours arguing the company's case on a range of issues at Let's Talk TV, a regulatory hearing exploring a sprawling list of proposals that could dramatically reshape the TV landscape in Canada. (http://bit.ly/1nNp07d)

** The Canadian government will announce on Thursday that it is lowering Employment Insurance premiums in an effort to boost hiring at a time of sluggish job growth - the first of an expected series of tax cuts as Ottawa moves out of deficit and prepares to face voters in next year's federal election. (http://bit.ly/1rXzrwf)

** Toronto Mayor Rob Ford has been admitted to hospital with a tumour, throwing his high-profile re-election efforts into question with the months-long campaign in its final stretch. (http://bit.ly/1qMm9Pn)

NATIONAL POST

** With the recent spate of disappointing Canadian economic data, momentum is growing for a new round of bearish bets on the Canadian dollar's fall, particularly as the American economy - and with it, the U.S. dollar - gains greater strength relative to Canada. (http://bit.ly/1whUE4Q)

** After being expelled from Germany and banned from the United States, United Kingdom and Australia, Canadian Muslim preacher Bilal Philips was detained in the Philippines on Wednesday for "inciting and recruiting people to conduct terrorist activities." (http://bit.ly/1squAlj)

** Parks Canada's underwater archaeologists return to the Arctic on Thursday with their diving equipment, hoping to reach out and touch the wreck of a Franklin expedition ship before the ice moves in. The divers urgently want to answer some pressing questions before summer ends and ice prevents further exploration. (http://bit.ly/YzqSed)

China

CHINA SECURITIES JOURNAL

- Stocks traded on China's Nasdaq-style ChiNext market for more than three years will be included as components for the country's blue-chip stock indexes, such as CSI300 Index and SSEF 500 Index for the first time from December, exchange officials said.

- China's agriculture-related insurance should deepen its connections with the credit and futures products, said Chen Wenhui, vice chairman of the China Insurance Regulatory Commission (CIRC), at the 2014 China agriculture insurance seminar on Wednesday.

- A working group of the State Council plans to loosen its control over more than 200 items of administrative examination and approval procedures for new business and investment mode this year, said the group's spokesperson during the State Council's press conference on Wednesday.

SECURITIES TIMES

- Ebay Inc has established cooperation with CreditEase company from China to launch its wealth management product Shangtongdai, a product resembling Alibaba's Yuebao platform, the newspapers reported on Thursday.

CHINA DAILY

- China will maintain its current pace of reform, and putting its large market under better governance will be the country's best contribution to the rest of the world, the paper said in an editorial.

Britain

The Times

BRITISH NOMINEE SECURES ECONOMIC POST IN EU COMMISSION

United Kingdom Prime Minister David Cameron's hopes of securing a better deal from the European Union were given a boost today when Britain won control of the key Brussels job of regulating the financial sector. Jean Claude Juncker, named Lord Hill of Oareford as Commissioner for Financial Stability, Financial Services and Capital Markets Union.(thetim.es/WVMe3P)

FINANCIAL TURMOIL HITS SCOTLAND OVER REFERENDUM

Scotland was facing financial turmoil yesterday, with banks and insurers reporting a growing number of customers worried about their cash as leading business figures warned against the consequences of separation. (thetim.es/1p8U7cZ)

The Guardian

SCOTTISH INDEPENDENCE: NEW POLL GIVES NO VOTE SIX-POINT LEAD

A new opinion poll on Scottish independence has found the no vote back in the lead at 53 percent of voters, suggesting the sudden surge in backing for independence has subsided. (bit.ly/Yy0QYG)

FRANCE TO MISS EU BUDGET DEFICIT TARGET

France has admitted it will overshoot the European Union's 3 percent budget deficit target this year, putting the eurozone's second-biggest economy on a collision course with Brussels. (bit.ly/1Bt7DRm)

The Telegraph

PENSIONS FIRM STANDARD LIFE THREATENS TRANSFER TO ENGLAND IF SCOTLAND VOTES FOR INDEPENDENCE

Standard Life PLC, the pensions and insurance company, has said it is planning to shift large parts of its business to England in the event of a "Yes" vote in next week's Scottish referendum. (bit.ly/1sisJil)

ALL EU COUNTRIES WANT BRITAIN TO STAY - EXCEPT FRANCE

In a new poll published on Wednesday by the German Marshall Fund think tank, people in the major EU countries were asked for the first time whether Britain should leave the bloc. In all countries surveyed, except France, more people said the EU should accommodate Britain's concerns about the bloc rather than see it leave. (bit.ly/1smLgKe)

Sky News

SCOTTISH VOTE: BP SAYS NO TO INDEPENDENCE

BP Plc has weighed into the Scottish independence debate by declaring its support for the "integrity of the United Kingdom." (bit.ly/1xKG4oi)

SANTANDER CHAIRMAN EMILIO BOTIN DIES AGED 79

The death from a heart attack of Santander's Chairman Emilio Botin - known as "El Presidente" - has raised the prospect of his eldest daughter Ana Botin being handed the role. Ana Botin, who currently heads Santander UK, is understood to be in line to succeed her father. (bit.ly/1wgwrZX)

The Independent

FOREIGN INVESTORS DESERT BRITISH ECONOMY AMID FEARS OF YES VOTE

Major global investors have been pulling billions of pounds out of the British economy due to fears that Scotland could vote Yes to independence. (ind.pn/YvEjfh)

VERONIQUE LAURY TO BECOME FIFTH FTSE 100 FEMALE BOSS AS HEAD OF B&Q OWNER KINGFISHER

The FTSE 100 is to get its fifth female boss after B&Q owner Kingfisher PLC today replaced Chief Executive Officer Ian Cheshire with the head of its struggling French DIY business, Veronique Laury. (ind.pn/ZgHiIu)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of September 6 at 8:30--consensus 300K
Treasury budget for August at 14:00--consensus deficit $130.0B

ANALYST RESEARCH

Upgrades

Atlas Air (AAWW) upgraded to Outperform from Market Perform at FBR Capital
CRH Plc. (CRH) upgraded to Buy from Neutral at BofA/Merrill
JDSU (JDSU) upgraded to Outperform from Sector Perform at RBC Capital
Jones Lang LaSalle (JLL) upgraded to Overweight from Neutral at JPMorgan
Omnicare (OCR) upgraded to Buy from Neutral at Goldman
SeaWorld (SEAS) upgraded to Outperform from Neutral at Macquarie
Tenaris (TS) upgraded to Overweight from Equal Weight at Morgan Stanley
Vera Bradley (VRA) upgraded to Outperform from Neutral at RW Baird
WESCO (WCC) upgraded to Overweight from Neutral at JPMorgan
Wet Seal (WTSL) upgraded to Buy from Neutral at B. Riley

Downgrades

E2open (EOPN) downgraded to Market Perform from Outperform at Northland
E2open (EOPN) downgraded to Sector Perform from Outperform at Pacific Crest
Express Scripts (ESRX) downgraded to Neutral from Buy at Goldman
Macy's (M) downgraded to Neutral from Buy at Sterne Agee
Veolia Environment (VE) downgraded to Sector Perform from Outperform at RBC Capital

Initiations

Aerohive Networks (HIVE) initiated with an Outperform at Macquarie
Amphenol (APH) initiated with an Equal Weight at Morgan Stanley
Athlon Energy (ATHL) initiated with a Buy at Deutsche Bank
CBOE Holdings (CBOE) initiated with a Buy at Deutsche Bank
CME Group (CME) initiated with a Buy at Deutsche Bank
Callon Petroleum (CPE) initiated with an Outperform at Cowen
Edwards Lifesciences (EW) initiated with a Buy at Sterne Agee
Energen (EGN) initiated with a Buy at Deutsche Bank
Globus Medical (GMED) initiated with an Outperform at JMP Securities
Goodrich Petroleum (GDP) initiated with an Outperform at Cowen
Healthcare Realty Trust (HR) initiated with a Neutral at Mizuho
Healthcare Trust (HTA) initiated with a Neutral at Mizuho
IntercontinentalExchange (ICE) initiated with a Hold at Deutsche Bank
JD.com (JD) initiated with a Buy at Brean Capital
Live Nation (LYV) initiated with a Buy at Jefferies
Medtronic (MDT) initiated with a Neutral at Sterne Agee
Midstates Petroleum (MPO) initiated with a Market Perform at Cowen
NASDAQ (NDAQ) initiated with a Hold at Deutsche Bank
Nationstar (NSM) initiated with an Equal Weight at Barclays
Nuverra Environmental (NES) initiated with a Buy at Stifel
Ocwen Financial (OCN) resumed with an Equal Weight at Barclays
Orion Engineered (OEC) initiated with a Neutral at Macquarie
Palo Alto (PANW) initiated with a Buy at Roth Capital
Petrobras (PBR) initiated with an Outperform at Cowen
PharMerica (PMC) initiated with a Neutral at Goldman
RSP Permian (RSPP) initiated with a Hold at Deutsche Bank
Sensata (ST) initiated with an Equal Weight at Morgan Stanley
Stage Stores (SSI) initiated with a Neutral at Credit Suisse
Synergy Resources (SYRG) initiated with an Outperform at Cowen
TE Connectivity (TEL) initiated with an Overweight at Morgan Stanley
Twitter (TWTR) initiated with a Buy at Canaccord
Walter Investment (WAC) initiated with an Underweight at Barclays
Yandex (YNDX) initiated with a Buy at Canaccord

COMPANY NEWS

Twitter (TWTR) said it will offer $1.3B in convertible notes
JDSU (JDSU) said it will separate into two publicly traded companies
RBS (RBS) confirmed re-domicile plans ahead of Scottish referendum vote
T-Mobile (TMUS) extended 'Wi-Fi Un-leashed' with Gogo (GOGO) partnership
FDA approved weight management drug Contrave (TKPYY, OREX)
Starboard Value said Darden (DRI) has not fully complied with Florida court’s order

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
lululemon (LULU), Men's Wearhouse (MW), Sigma Designs (SIGM), Restoration Hardware (RH), Five Below (FIVE)

Companies that missed consensus earnings expectations include:
First Marblehead (FMD), Wet Seal (WTSL), LifeVantage (LFVN)

Companies that matched consensus earnings expectations include:
Pike Electric (PIKE)

NEWSPAPERS/WEBSITES

RadioShack (RSH) loan being prepped by UBS (UBS), Standard General, Bloomberg reports
Apple (AAPL) consumers in China unable to buy new iPhones this month, Reuters reports
Time Warner (TWX) not planning HBO IPO, says took 21st Century Fox's (FOXA) offer "seriously," NY Post reports
Deal.com says Energy XXI (EXXI) hires adviser for GOM sale, Bloomberg reports
Muddy Waters founder says Alibaba (BABA) could defraud investors, NY Times reports
Lloyds (LYG), RBS (RBS) to relocate to England if Scots vote yes, Bloomberg says
Starbucks (SBUX) to sell single-origin coffees in supermarkets, WSJ reports
Spirit Airlines (SAVE) looks expensive, Barron's says

SYNDICATE

Hilton (HLT) files to sell 90M in common stock for holders
Identiv Group (inve) files to sell common stock
PrivateBancorp (PVTB) 1.3M share Block Trade, price range $30.07-$30.28
Twitter (TWTR) to offer $1.3B in convertible notes

Thank you market Chief Risk Officer Bernanke/Yellen: Calpers to Exit Hedge Funds, Divest $4 Billion Stake (BBG)
World stocks hit one-month low, caution ahead of Fed (Reuters)
U.S. Efforts to Build Coalition Against Islamic State in Iraq, Syria Are Hampered by Sectarian Divide (WSJ)
Wildfires rage in California drought, hundreds forced to flee (Reuters)
Time to throw away some more good money: Sears Borrows $400 Million From Lampert’s ESL Investments (BBG)
United Offers $100,000 Buyouts to Flight Attendants (BBG)
Biggest Banks Said to Overhaul FX Trading After Scandals (BBG)
You mean you have to pay? Administration threatens to cut off ObamaCare subsidies to 360,000 (The Hill)
RBS Said to Dismiss Most of Team Overseeing Central Europe Debt (BBG) they will be hired by the ECB
Boeing-Lockheed venture said teaming with Bezos on rocket engine (Reuters)
German Investor Confidence Falls to Weakest Since 2012 (BBG)
Blackstone Group seeks to raise $16 billion for its latest fund (WSJ)
U.K. Inflation Slows to Match 5-Year Low on Food Prices (BBG)
Ditching Monarchy Is Step Too Far for Scots Nationalists (BBG)
European Stocks Fall to Two-Week Low Before Fed Meeting (BBG)
How a Facebook Group Persuaded Coca-Cola to Rerelease Surge (BBG)

Overnight Media Digest

WSJ

* The U.S. military will deploy about 3,000 personnel to West Africa to coordinate international aid, build treatment centers and train health-care workers as part of President Barack Obama's offensive against a rapidly worsening Ebola outbreak, a senior administration official said Monday. (http://on.wsj.com/1sdLCzh)

* Anheuser-Busch InBev NV is talking to banks about financing a potential megadeal, perhaps reaching 75 billion pounds ($121.67 billion), to buy global beer rival SABMiller Plc , according to a person familiar with the matter. (http://on.wsj.com/1m9VAon)

* Citigroup Inc released more details about what a severe recession might look like in coming years and how it could affect the firm, as large U.S. banks run themselves through tests to prepare for next year's Federal Reserve checkup. (http://on.wsj.com/1wn0LlK)

* It's no secret that many physicians hate the electronic-medical-records systems they use, saying they are cumbersome, poorly designed and detract from patient care. Amplifying those concerns, the American Medical Association on Tuesday is calling for a major overhaul of EMR systems to make usability and high-quality patient care a higher priority. (http://on.wsj.com/1tZAFTO)

* The largest U.S. public pension plan is getting out of hedge funds as part of an effort to simplify its assets and reduce costs, a retreat that could prompt other cities and states to consider similar moves. The California Public Employees' Retirement System said Monday it would shed its entire $4 billion investment in hedge funds over the next year. (http://on.wsj.com/1DdcZ57)

* Microsoft Corp is hoping a cult videogame built around virtual blocks will help fix the company's real-world problems, even if the brains behind the brand aren't sticking around. The software giant's $2.5 billion deal to buy Mojang AB, maker of the Minecraft videogame, gives Microsoft an entertainment property whose devoted fans dress up like game characters, pack YouTube with how-to guides and rush to sign up for Minecraft-themed summer camps. (http://on.wsj.com/1BHM1km)

* Sears Holdings Corp is borrowing $400 million from Chief Executive Edward Lampert's hedge fund, giving the retailer an infusion for the holidays after it burned through cash over the summer. (http://on.wsj.com/1BHNIyc)

* Alibaba Group Holding Ltd <IPO-BABA.N>, which is in the middle of marketing what could be the world's largest initial public offering, now thinks it could do a little better. The Chinese e-commerce firm has raised the deal's price range to $66 to $68 per share, up from the current $60 to $66 a share. Alibaba didn't increase the number of shares that can potentially be sold. (http://on.wsj.com/1uAhfrf)

Alibaba Group Holding Ltd <IPO-BABA.N> has considerably boosted the amount it plans to raise in its listing on Friday to $66 to $68 after high investor demand in the Chinese e-commerce company.

The largest U.S public pension fund Calpers said it plans to terminate its hedge fund programme, due to a severe blow to a sector that has brought increasing scepticism over its returns. At a time when the future of North Sea oil has become a significant battleground on account of the debate on Scottish independence, ConocoPhillips, the U.S. energy group is looking to sell its stake in the United Kingdom's largest oilfield. Berlin is pushing Google Inc to disclose the details of the search engine company's secret formula that has allowed it to monopolise web search in Europe, in a move that is likely to be welcomed by competitors and firmly repelled by the U.S tech company.

Microsoft Corp Chief Executive Officer Satya Nadella's plans to buy Swedish games company Minecraft for $2.5 billion, his first big acquisition, was probably not what the investors at Wall Street had in mind when they were looking for a statement about Nadella's plans for his company.

NYT

* The California Public Employees' Retirement System, United States' largest pension fund, will eliminate all of its hedge fund investments over the next year on concerns that investments are too complicated and expensive. The pension fund, which oversees $300 billion, said on Monday that it would liquidate its positions in 24 hedge funds and six hedge fund-of-funds - investments that total $4 billion and more than 1 percent of its total investments under management. (http://nyti.ms/1tZbfpm)

* The Federal Communications Commission will hold a round-table discussion on Tuesday to examine whether proposed net neutrality rules should cover mobile broadband. The battle lines will probably be clear: the cellphone companies against nearly everyone else. (http://nyti.ms/1phqEh9)

* The death toll from General Motors Co faulty ignition switch is rising. From the time it began recalling cars for the defect over the winter, G.M. has never publicly revised its original assessment that 13 people died in accidents linked to the problem, saying only that the number could rise. But on Monday, the lawyer GM hired to develop a program to compensate victims raised the automaker's tally by nearly 50 percent. (http://nyti.ms/1AQQKxD)

* With demand for the Alibaba Group Holding's stock market debut proving even stronger than expected, the Chinese e-commerce giant has done the only logical thing: set its fund-raising sights even higher. The company raised the price range for its initial public offering to $66 to $68 for each American depositary share, up from $60 to $66, according to a regulatory filing on Monday, pushing up its potential haul from the stock sale to as much as $21.8 billion. (http://nyti.ms/1r1oHuI)

* New York State's attorney general filed an antitrust lawsuit on Monday seeking to stop Actavis Plc from forcing patients with Alzheimer's disease to switch to a new version of a widely used drug. The lawsuit contends that the switch is designed to blunt competition from low-priced generic versions of the medication. (http://nyti.ms/YN5QJ1)

* As the city announced a final settlement on Monday with Syncora Guarantee Inc, a creditor that had been one of its chief adversaries, other creditors pressed their opposition to Detroit's plans to emerge from bankruptcy. (http://nyti.ms/ZnvoMZ)

* Miscues by university management and more tepid investment returns have pulled down Harvard's results over the last decade, culminating in the June resignation of Jane Mendillo, the chief executive of the Harvard Management Company, who started just before the market collapse in July 2008. Medillo's performance illustrates not only the vicissitudes of investing but also the revolving-door aspect of an operation like the Harvard endowment, where retaining top talent can be difficult because of the intense scrutiny and the availability of bigger paychecks elsewhere. (http://nyti.ms/ZnvyUu)

Canada

THE GLOBE AND MAIL

** Prime Minister Stephen Harper is promising tax cuts for Canadians in a matter of months, using an election-style rally to fire up conservative troops as Parliament returns and signalling the campaign to win in 2015 has begun in earnest. (bit.ly/XtYZmB)

** Canada is donating C$2.5 million worth of the specialized medical gear used to protect health-care workers who are treating Ebola patients in West Africa, the federal government announced late Monday. (bit.ly/1uCxELH)

** Wind Mobile is poised to announce a deal that will give it the financial backing it needs to become a viable fourth player in Canada's wireless industry. The company's Canadian founder is set to buy out Wind's foreign owner and recapitalize the wireless carrier with the backing of several financial players. (bit.ly/1mamnkA)

NATIONAL POST

** Newly sworn-in Alberta Premier Jim Prentice has appointed a new but smaller cabinet, including two people who aren't members of the legislature. The new cabinet has 16 ministers and three associate ministers, in addition to the premier, down from 19 ministers and 10 associate ministers under former premier Alison Redford. (bit.ly/1uF0477)

** John Tory announced on Monday he is pulling out of three mayoral debates this week, as his campaign re-calibrates with Doug Ford in the race. (bit.ly/1DdYIoP)

** Nathan Jacobson, the self-described "radioactive" businessman close to senior conservatives, cleared his name Monday in a San Diego courtroom. Justice Janis Sammartino accepted a deal reached between federal prosecutors and Jacobson's lawyer allowing Jacobson to withdraw his 2008 guilty plea for money laundering in connection with an online pharmacy. (bit.ly/1nZGddT)

China

SECURITIES TIMES

- China's securities regulator plans to allow asset management units of brokerages to sell products that channel money into private equity.

- Nine government-owned companies in Yunnan province, including Yuntianhua Group and Yunnan Coal Chemical Industry Group Co, have publicly solicited outside investment into 33 subsidiary projects, as part of China's efforts to diversify the ownership structure of state-owned enterprises.

CBN

- Chinese film producer Huayi Brothers Media Corp said it would invest $130 million to set up a unit in the United States.

CHINA SECURITIES NEWS

- The China Securities Regulatory Commission has approved 11 companies to pursue initial public offerings.

SHANGHAI DAILY

- Officials from China's government departments and state-owned firms have been withdrawing from executive MBA programmes after the government banned pricey training courses in July.

Britain

The Times

FRENCH TV FURY OVER ASSAULT BY NETFLIX France's heavily regulated television industry was in uproar yesterday amid the launch of Netflix Inc, the American video streaming service. Critics say the service threatens to destroy France's so-called cultural exception - the notion that it is resistant to Anglo-Saxon entertainment. (http://thetim.es/1BHdxhX)

MCDONALD'S EASES MCMUFFIN RULES AMID SALES DECLINE The world's biggest fast-food chain, McDonald's Corp is considering a new menu segment to lure customers during a time of day, between the breakfast rush and lunch hour, when its restaurants often are quiet. The idea has arisen after the company's worst global same-store sales drop in 10 years, in which Britain provided a single glimmer of hope. (http://thetim.es/1wmFZ5B)

The Guardian

OECD SLASHES GROWTH FORECASTS FOR LEADING ECONOMIES

The global economy faces headwinds from a sluggish eurozone and rising political tensions, including the uncertain outcome of Scotland's independence referendum, a leading thinktank has warned. The Organisation for Economic Co-operation and Development slashed its growth forecasts for advanced economies and called on the European Central Bank to use quantitative easing to shore up the eurozone. (http://bit.ly/1s41wSx)

COCA-COLA TO SPONSOR LONDON EYE The Coca-Cola Co is to become the new sponsor of the London Eye after signing a deal to replace France's EDF Energy Plc. The capital's giant ferris wheel has been a leading tourist attraction since it was introduced in 2000, when it was known as the Millennium Wheel. It was previously sponsored by British Airways before becoming the EDF Energy London Eye in 2011. (http://bit.ly/1q9iKXd)

The Telegraph SCOTTISH REFERENDUM: DAVID CAMERON BEGS SCOTS NOT TO LEAVE THE UK British Prime Minister David Cameron begged the people of Scotland not to leave the United Kingdom as he promised them that he "won't be here forever." In a final plea before Thursday's referendum, the prime minister warned Scottish voters in a speech in Aberdeen that separation would be a "painful divorce." (http://bit.ly/1uEheli)

ROW BETWEEN PHONES 4U AND VODAFONE OVER CAUSE OF COLLAPSE A bitter row over the collapse of Phones 4U broke out on Monday when Vodafone Group Plc strongly rejected claims it acted improperly in pulling out of the chain, pinning the blame instead on the decision by its private equity owners to load it with high-interest debt and collect a 200 million pounds ($324.54 million) windfall. (http://bit.ly/1m9phWx)

Sky News CBI DENIES GOVT PRESSURE ON SCOTLAND VOTE The president of the Confederation of British Industry, Michael Rake, has insisted no pressure has been exerted on businesses by the government to speak out on the Scottish referendum debate. (http://bit.ly/1qEorT8)

ALIBABA FLOTATION ON COURSE FOR WORLD RECORD China's biggest online retailer appears on course to break the record for the biggest share sale of all time this week. Expectations are growing that Alibaba Holding Group Ltd <IPO-BABA.N> will raise its price target above the planned $60 to $66 per-share range - with sources, said to be familiar with the deal, telling Reuters there was "overwhelming" demand for the stock. (http://bit.ly/1tYuC1S)

The Independent

MICROSOFT BUYS MINECRAFT STUDIO MOJANG FOR $2.5 BLN Microsoft Corp has announced that it has purchased Mojang, the Swedish studio behind the popular game Minecraft, for $2.5 billion (http://ind.pn/1AQQ6An)

SCOTTISH INDEPENDENCE: COMMERZBANK SAYS WORST CASE ECONOMIC SCENARIOS 'EXAGGERATED' Days after Deutsche Bank reignited the Scottish "no" campaign with terrifying fears that a vote for independence would plunge Scotland back into a 1930s style depression, a rival German financial company, Commerzbank AG, has said such speculation has been overdone. (http://ind.pn/1AQQdMq)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Producer Price Index for August at 8:30--consensus flat with prior month

ANALYST RESEARCH

Upgrades

21Vianet (VNET) upgraded to Outperform from Sector Perform at Pacific Crest
Anglo American (AAUKY) upgraded to Buy from Hold at Deutsche Bank
AngloGold (AU) upgraded to Overweight from Neutral at HSBC
Approach Resources (AREX) upgraded to Neutral from Underperform at Sterne Agee
Athlon Energy (ATHL) upgraded to Buy from Neutral at BofA/Merrill
BE Aerospace (BEAV) upgraded to Overweight from Neutral at JPMorgan
Duke Energy (DUK) upgraded to Outperform from Market Perform at Wells Fargo
Microsoft (MSFT) assumed with an Outperform from Sector Perform at RBC Capital
Pearson (PSO) upgraded to Overweight from Equal Weight at Morgan Stanley
SYNNEX (SNX) upgraded to Buy from Hold at Stifel
Tableau (DATA) upgraded to Outperform from Neutral at Credit Suisse
Terex (TEX) upgraded to Buy from Hold at Stifel

Downgrades

Adobe (ADBE) assumed with a Sector Perform from Outperform at RBC Capital
Analogic (ALOG) downgraded to Hold from Buy at Brean Capital
Bankrate (RATE) downgraded to Sell from Hold at Topeka
Con-way (CNW) downgraded to Neutral from Outperform at RW Baird
Cummins (CMI) downgraded to Market Perform from Outperform at Wells Fargo
Laredo Petroleum (LPI) downgraded to Neutral from Buy at BofA/Merrill
Occidental Petroleum (OXY) downgraded to Equal Weight from Overweight at Barclays

Initiations

ACI Worldwide (ACIW) initiated with a Neutral at Sterne Agee
Ardmore Shipping (ASC) initiated with a Buy at MLV & Co.
Benefitfocus (BNFT) initiated with an Outperform at RBC Capital
Boston Beer (SAM) initiated with an Outperform at Cowen
Brown Forman initiated with an Outperform at Cowen
Capital Product (CPLP) initiated with a Buy at Deutsche Bank
Coca-Cola (KO) initiated with a Market Perform at Cowen
Concur (CNQR) initiated with an Outperform at RBC Capital
Constellation Brands (STZ) initiated with a Market Perform at Cowen
Craft Brew (BREW) initiated with an Outperform at Cowen
Diana Shipping (DSX) initiated with a Buy at Deutsche Bank
Dr Pepper Snapple (DPS) initiated with a Market Perform at Cowen
DryShips (DRYS) initiated with a Buy at Deutsche Bank
Dynagas LNG (DLNG) initiated with a Buy at Deutsche Bank
Global Payments (GPN) initiated with a Neutral at Piper Jaffray
Heartland Payment (HPY) initiated with a Buy at Sterne Agee
Intuit (INTU) initiated with an Outperform at RBC Capital
Lionsgate (LGF) initiated with a Buy at ISI Group
MasterCard (MA) initiated with a Buy at Sterne Agee
MasterCard (MA) initiated with an Overweight at Piper Jaffray
Molson Coors (TAP) initiated with an Outperform at Cowen
Monster Beverage (MNST) initiated with a Market Perform at Cowen
Navios Acquisition (NNA) initiated with a Buy at Deutsche Bank
Net 1 UEPS (UEPS) initiated with a Buy at Sterne Agee
NetSuite (N) initiated with an Outperform at RBC Capital
Oracle (ORCL) assumed with a Sector Perform at RBC Capital
PepsiCo (PEP) initiated with an Outperform at Cowen
SAP (SAP) initiated with a Sector Perform at RBC Capital
SEI Investments (SEIC) initiated with a Buy at Sterne Agee
Scorpio Bulkers (SALT) initiated with a Buy at Deutsche Bank
Seaspan (SSW) initiated with a Buy at Deutsche Bank
StealthGas (GASS) initiated with a Buy at Deutsche Bank
Teekay Tankers (TNK) initiated with a Buy at Deutsche Bank
Tesla (TSLA) initiated with a Buy at ISI Group
Textainer (TGH) initiated with a Hold at Deutsche Bank
Total System (TSS) initiated with a Neutral at Sterne Agee
Tsakos Energy (TNP) initiated with a Buy at MLV & Co.
Ultimate Software (ULTI) initiated with an Outperform at RBC Capital
Ultratech (UTEK) initiated with an Outperform at Imperial Capital
Vantiv (VNTV) initiated with a Buy at Sterne Agee
Visa (V) initiated with a Buy at Sterne Agee
Visa (V) initiated with an Overweight at Piper Jaffray
WEX Inc. (WEX) initiated with a Buy at Sterne Agee
Western Union (WU) initiated with a Neutral at Sterne Agee
Workday (WDAY) initiated with an Outperform at RBC Capital
Yelp (YELP) initiated with a Neutral at RW Baird
zulily (ZU) initiated with an Outperform at RW Baird

COMPANY NEWS

Valeant (VRX), Pershing Square, Allergan (AGN) settled pending litigation before DE Court. Pursuant to the settlement, Allergan has agreed to unconditionally call and hold a special meeting of its shareholders on December 18
Humana (HUM) announced $2B share repurchase authorization
Airbus (EADSY) Defense, Space said it will sell some divisions, including Fairchild Controls, Rostock System-Technik, AvDef, ESG and Atlas Elektronik
In a severely adverse scenario Citigroup's (C) total risked based capital ratio would be 10.9% through Q216; For projected stressed capital ratios, JPMorgan (JPM) reported that Tier 1 common ratio would be a minimum of 8.4%, Tier 1 leverage ratio would be a minimum of 6.4%, and Tier 1 risk-based capital ratio would be a minimum of 8.7%
AstraZeneca (AZN), Eli Lilly (LLY) to jointly develop, commercialize AZD3293

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Analogic (ALOG)

Companies that missed consensus earnings expectations include:
Full Circle Capital (FULL), Ixia (XXIA), Student Transportation (STB), Majesco (COOL)

Espey Mfg (ESP) reports Q4 EPS (31c) vs. $1.02 a year ago
Analogic (ALOG) sees FY15 revenue to grow mid single-digits , consensus $572.12M

NEWSPAPERS/WEBSITES

Actavis (ACT), Forest Labs subsidiary sued by NY attorney general, Reuters says
Google (GOOG) called on by Berlin to disclose search engine formula, FT reports
Boeing (BA), Lockheed (LMT) ally with Amazon (AMZN) CEO on rocket engine, Reuters says
Boeing (BA) may beat out SpaceX for NASA contract to ferry astronauts, WSJ reports
Qualcomm (QCOM) accused of bribing Chinese official, WantChinaTimes reports
ConocoPhillips (COP) auctioning 24% stake in the Clair oilfield, FT reports
Pratt & Whitney (UTX) close to engine supply deal with Pentagon, WSJ reports (LMT, NOC, BAESY)
iPhone 6/6 Plus may suffer similar iPhone 5s/5c inventory issues, DigiTimes says (AAPL)

SYNDICATE

Alcoa (AA) announces proposed offering of 25M depositary shares
Blueknight Energy Partners (BKEP) files to sell 8.5M shares
Gastar Exploration (GST) offers 17M shares of common stock
Lehigh Gas (LGP) files to sell 3.6M common units representing limited partners
Viper Energy (VNOM) 3.5M share Secondary priced at $28.50

Despite celebrations of de-escalations and truce in US equity markets (by asset-gathering commission-takers), the situation continues to go from bad to worse in the nation almost forgotten now that ISIS is stealing American headlines. The Hryvnia plunged 7.5% this morning - its biggest single-day drop on record - following the release of a scathing IMF letter and devaluation warnings from BofA. The IMF blasted Ukraine's "premature emission of extra money," and demanded it "immediately halt these gross abuses," as BofA warns of risk of "10-20% devaluation" in the next year is high given reserves are at a "critical level."

UAH plunges 7.5% to record lows this morning...

As far as the truce is concerned, we leave it to Bloomberg's Richard Breslow to explain the idiocy...

For a truce that people keep celebrating -- the 11th day -- there seem to be a lot of people still dying, troops moving around, still questions about more sanctions, ultimate effects on Russia eco, the local markets look quite ill.

Russia itself has put out dire f/casts, growth down 3%-4% and recession;

RUB made yet another all-time low, seems to have quieted, Micex is up, hryvnia getting pole-axed

Additionally Luhansk Rebels Would Like to Switch to Ruble, RIA Says

Self-proclaimed Luhansk People’s Republic hopes it won’t have to use Ukraine’s hryvnia much longer, RIA Novosti reports, citing republic’s leader Igor Plotnitskiy.

Plotnitskiy says political issues complicate matter, though he doesn’t expect hryvnia to be used for much longer: RIA

Luhansk still must resolve many economic, financial issues, including development of banking system: RIA

And then there is the IMF! (Source: e-news)

Which likely confirms BofA's warning of the potential for a Hyrvnia devaluation...

Central bank may have to further deplete FX reserves, now near “critical level” of $15b, Bank of America Merrill Lynch economist Vadim Khramov says in report

Natural gas purchases for winter to widen current-account deficit: Khramov

“We see risks of 10%-20% hryvnia devaluation from the current level within a year": Khramov

* * *

But apart from that, everything is under control in Ukraine. Given the extent to which the UAH is falling and the strong language from the IMF, one could be mistaken for thinking the USA is pushing for another leader to be put in place once again...

Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

Christopher Helin Franklin car on slope, San Francisco. 1920

A few days ago, I wrote an essay about how ECB head Mario Draghi seeks to redefine the definitions of certain words and terms, like the one that define financial instruments, because he needs to find hundreds of billions in new spending money in Europe without adding to the behemoth existing debt (Germany won’t let him do that). And yes, that is indeed as impossible and meaningless as you think it is. But these are desperate times.

Thing is, I called that essay Draghi To Save Europe With Semantics , and maybe I shouldn’t have, because it’s obviously not the most sexy and catchy title on the planet, but my problem there was, it captures what I was talking about. And it’s all much broader and bigger than that, but then that’s what the article tries to explain.

Moreover, the financial press also catches up. To the fact that semantics and re-defining are the flavor du jour, once again, just like they were in 2005-6-7. When ratings agencies used the confusion about what things actually mean to stamp AAA ratings on everything including your kids’ snot nose tissues and toilet paper. And that is an important development, if you care about preserving some of your remaining wealth. Which I think you’d like to do, so please bear with me.

Three months ago, Tracy Alloway stated the obvious at FT:

Doubts Raised Over Rating Agency Reform

Fitch, one of three big rating agencies, this week criticised credit ratings given by its competitors to a securitisation containing a loan secured by the Westin – the latest instance of agencies sparring with each other over so-called structured finance deals. Such deals bundle together a wide variety of loans into bonds that can be sold to large fund managers who use the evaluations of credit rating agencies to help inform their investment decisions.

Typically, these opinions are paid for by the financial firms that create the deals. But, since the financial crisis, regulators have encouraged credit rating agencies to give “unsolicited” opinions on deals that they are not hired to evaluate, as part of an effort to avoid the “ratings shopping” that proliferated before 2008.

However, as the rating agencies trade public barbs amid a resurgence of certain types of structured products, questions are being raised as to whether these unsolicited opinions actually have much effect on investors’ thinking. And are the banks that securitise loans simply taking their deals to the agencies likely to give them the highest ratings?

Translation: nothing has changed. The ratings agencies are too powerful, because the parties that pay them to issue ratings pay them too much to get rid of or even reform.

Which seamlessly takes us to Tracy Alloway today:

‘Ratings Shopping’ Makes A Comeback In The US

Sales of subprime mortgage bonds have withered since the financial crisis, but fresh concerns are arising as issuance of some other types of securitisations surges. Sales of bonds backed by loans used to finance car purchases undertaken by the least creditworthy borrowers have reached pre-crisis levels in the US, prompting a Department of Justice investigation. While losses on subprime auto asset-backed securities (ABS) remained low during the crisis, there are concerns that new specialised lending companies are making riskier loans which are then being bundled into the bonds.

Fitch Ratings has been hired to rate only four of the 29 subprime auto ABS deals sold so far this year, after telling issuers that the vast majority of the bonds did not deserve the triple-A ratings reserved for the highest-quality credits. Fitch – one of the “big three” agencies alongside Moody’s and Standard & Poor’s – warns that a flood of new entrants into the subprime auto lending market are lending to riskier borrowers as they seek to establish a foothold in the market. The creators of such securitisations typically pad the debt with extra cash or introduce other safety features – known as “credit enhancement”– to generate higher ratings on bonds comprised of riskier loans.

“The idea that recent loss history plus credit enhancement ‘heals all wounds’ can be short-sighted,” said Kevin Duignan, global head of securitisation at Fitch. “It’s often last one in, first one out in subprime.” He added: “We believe the risks associated with small lender sustainability are being underestimated by the market and some other rating agencies.”

US sales of commercial mortgage-backed securities, or CMBS, have also staged a recovery with $102bn worth of the deals sold last year – the highest amount since the $231bn issued in 2007, according to Dealogic data. At the same time, some market participants have been warning that the quality of the loans that underpin the bonds – typically secured by shopping malls, office buildings and other commercial properties – has been slipping.

You don’t have to be particularly smart to see here this is going. The floodgates are open, once more, and nothing at all, other than semantics and lip service, has been done to make them more secure. Because that would risk the flow of credit, which is the same as debt, and today gets habitually mistaken for money.

The boys in the banks are at it again, and this time their biggest supporters, if not clients, are central banks and treasury departments. If they can bring down investment requirements for pension funds enough from AAA, and they can at the same time – once again – label mezzanine (aka subprime) tranches of complex instruments ‘AAA’, they got it made. How can you go wrong when you have Mario Draghi himself begging you to to play this game?

Germany refuses to allow Draghi to buy sovereign bonds and add to the taxpayers’ risk, but what if you can simply shift it all to pension funds by moving the goalposts on what AAA really means?

We went through this 2007-8, and it ended badly, but apparently it’s just too tempting to leave alone. What is there to say? Insanity takes on entirely new proportions. It’s not just doing the same thing time and again, and expecting a different outcome, it’s doing the same thing and pretend it’s something new, because you give it a different name.

So now we get this concerted effort, the central banks are involved, the ratings agencies are too, to just about force pensions funds, the only store of real wealth left on the planet, to put their trillions into opaque and extremely risky instruments. Because Mario Draghi needs to find money, or whatever we should label it.

Draghi’s ABS-Market Revival Set for Boost From Global Regulators

Mario Draghi is trying to rebuild the market for asset-backed securities in Europe. Global regulators are set to lend him a hand. The International Organization of Securities Commissions will present criteria for marketable ABS to finance ministers from the Group of 20 nations this week, said Chairman Greg Medcraft.

Iosco wants to help create standards that would encourage non-bank investors to buy. A broader ABS market could improve companies’ access to financing and spur growth. That’s the goal behind the European Central Bank’s plan to purchase “simple and transparent” bundled securities with underlying assets including residential mortgages, Draghi said this month.

“What we’ve done is develop criteria of what we consider to be simple, transparent and consistent securitization,” Medcraft said. “We’re looking at providing a framework that actually assists the market.”

The European market for ABS, like that in the U.S., was brought close to extinction in the financial panic of 2008, which was fueled in part by banks taking heavy losses on securitized U.S. subprime mortgage debt even though the tranches they held had been considered high quality. It has been slow to recover. Draghi said on Sept. 4 that the ECB will buy senior tranches – the least risky – of simple and transparent packaged securities. “We want to make sure that these ABS are being used to extend credit to the real economy,” he said.

[..] Medcraft said ABS in the right hands is a “fabulous technology.” “You look at the U.S., the auto-loan sector is booming in securitization,” he said. “I think the market is maturing, but it’s about winning back investors. We don’t want to regulate it. We want to provide a nudge.”

“ABS is a fabulous technology”. As we saw in 2008. Absolutely Fabulous. “The auto-loan sector is booming in securitization”, says one of the Three Stooges. And yes, US subprime auto loans are way up. True enough. Whether we should be happy about that is an entirely different story. It’s still subprime, homes or cars. You’re still lending to people with a huge risk that they can’t pay you back. Because they may be fired from their jobs as burger flippers. But yeah, until they are, the numbers look good.

That’s what Draghi’s policy is, going forward: squeeze the money Merkel won’t let him create out of thin air, out of fixed income, by moving the goalposts on definitions and semantics. It’s a poor man’s game played by one of the world’s post eminent central bankers, and all the rest, the ratings agencies and Wall Street banks, just play along. Draghi gives credence to anything they do. He’s a desperate man.

And by the way, the excesses and insanity of cheap credit don’t stop there either.

Banks See ‘Art of Possible’ in $100 Billion Deal

One year after pulling off the largest bond offering ever, Wall Street debt underwriters are pitching their clients on the possibility of something even bigger.

With investors clamoring for higher-yielding assets and companies on the biggest acquisition spree since 2007, bankers are talking up the ability of credit markets to fund a “mega deal” that Citigroup Inc. says could be backed by $100 billion or more of financing. That’s stoking speculation debt investors stand ready to fund potential takeovers such as a purchase by Anheuser-Busch InBev of rival beermaker SABMiller.

“We are prompting issuers to think outside of the box – in terms of the art of the possible,” said Tom Cassin, co-head of investment-grade finance at JPMorgan, the biggest underwriter of corporate bonds worldwide. “We have got clients that are certainly intrigued by it and interested in it.”

Bankers are pitching the “mega deal” even as investors brace for the 30-year rally in bonds to come to an end. They are telling companies that after fueling $18 trillion in corporate bond sales globally the past six years, including single deals bigger than the gross domestic product of countries from Slovenia to Iceland, appetite isn’t tapering.

Investors have poured about $49.4 billion into mutual funds that buy taxable bonds this year after pulling $20.6 billion in 2013, according to the Investment Company Institute. The added cash has helped shrink the extra yield that investment-grade debt worldwide pays above government securities by 15 basis points to 109 basis points, or 4 basis points from a seven-year low, according to Bank of America Merrill Lynch index data.

I doubt that anyone will have any trouble understanding what this is, and where it goes. The whole shebang is busy re-interpreting and re-defining until there are no more legal barriers for your pension money to be ‘invested’ in subprime loans packaged in ‘securities’ of whatever shape and from. So some trader in the Hamptons can make more wads of cash, through ultra low rates, off of beer brewers buying each other where they would never even have thought of that that at normal interest rates.

This is where our economies are perverted. It’s the final excesses and steps of a broke society. It’s madness to the power of infinity. The only thing that’s certain is that in the end, your money will all be gone. That’s how Mario Draghi ‘saves’ the EU for a few more weeks, and that’s how the big boys of finance squeeze more from what little you have left (which is already much less than you think).

A world headed for nowhere.

Wolf Richter www.wolfstreet.com www.amazon.com/author/wolfrichter

The word “gloomier” inconveniently showed up in a Reuters headline that described how the CEOs of the Business Roundtable – one of the thermometers into the brains of corporate America – felt about sales, employment, and capital expenditures. Yet, “gloomier” or not, these CEOs run companies that have been spending near record amounts, not on productive uses such as capital expenditures or hiring more people to push revenues to the next level, but on buying back their own shares.

The Business Roundtable is an association of CEOs of the largest corporations in the US that account for “more than a third of the total value of the US stock market,” according to its website. On its agenda: lower corporate taxes (tax credits!), more immigration of cheap labor, and trade – the big trade agreements currently being negotiated in all secrecy [my take from late last year, though resistance has grown since.... Coming Soon: Corporate Tools To Hollow Out National Sovereignty].

Or, as it says so eloquently, “working to promote sound public policy and a thriving US economy.”

But the BRT results didn’t speak of a thriving US economy. “CEO plans for investment, hiring and sales over the next six months decreased, with employment plans declining the most,” the survey stated. It wasn’t pretty:

The least bad was the sales index, which dropped 4.5 points to 116.4, with 20% of the CEOs expecting sales to stagnate and with 7% expecting sales declines.
Capital expenditures looked worse. They would increase at only 39% of the companies, down from 44% in the prior quarter; they’d stagnate at 51% of the companies, up from 41% in Q2; and they’d get slashed at 10% of the companies, up from 8%. It dragged the cap-ex index down by 6.8 points to 79.1.
And US employment? Only 34% expected to increase employment in the US, down sharply from 43% in Q2; but 20% would slash payrolls, up from 14% in Q2. And the sub-index plunged 15.7 points to 63.5.

What would it take to reverse the slide? At this point, BRT becomes a lobbying group. “We believe Congress and the Administration must focus on policies that drive economic growth, including tax reform, immigration reform, trade expansion, and long-term fiscal stability,” BRT Chairman and AT&T CEO Randall Stephenson said in the statement, directed straight at Washington.

But what are these CEOs doing instead of hiring and training people and investing in capital expenditures, crucial and sorely missing ingredients in the economy?

Turns out, 740 corporations have authorized share buyback programs through August, the most for this period since 2008, just before the whole construct collapsed. And according to research cited by the Wall Street Journal, they spent $338 billion during the first half on buying back shares, the most since 2007.

As overall trading volume is getting more and more anemic, these buybacks make up an ever larger proportion of total trading.

IBM, the second most prolific buyback hero after Apple, spent $8.2 billion to buy back 45.2 million shares during the first quarter, or over 13% of IBM shares traded during that time. It had its reasons; it needed to prop up its stocks as it was wearing investors ragged with its declining revenues. And it worked. Share price during the quarter rose, despite the dark clouds hanging over IBM, by 2.5% while the S&P 500 rose a mere 1.3%.

The buyback program of Illinois Tool Works made up 18% of the volume of its shares in May and 15% in June. In late February and in March, Oplink Communications bought back enough shares to account for over 30% of the trading volume.

And it worked. According to an analysis by Barclays cited by the Wall Street Journal, companies that spent the most on buybacks outperformed the stock market by 20%.

And now we know who has been buying every tiny dip: companies! When their shares head south, “companies get more aggressive,” explained Chip Gibbs, head of the buyback business at Bank of America Merrill Lynch.

In this environment, buybacks have outsized impact on volume, and therefore on price. Companies are blowing real cash on manipulating their own shares. Sure, stockholders might be happy in the short run. But unlike investments in productive assets and in people, the effect of this corporate “relentless bid” fades as soon as the buybacks fade. They’re a vicious treadmill, gobbling up ever larger amounts of real cash as stock prices rise.

A very capital-intensive way of financially engineering EPS, which is what every analyst on Wall Street is genetically programed to look at. But only part of the buybacks end up reducing share count. The rest are used to hide the dilution from executive stock compensation plans and stock-based acquisitions. Buybacks are a way to pull a bag over investors’ heads.

In the end, they accomplish nothing for the company’s operations – nor for the real economy. And when the cheap cash runs out to do these buybacks, a vacuum opens up under those shares, and under the market in general. That’s one of the things that happened in 2008 after all the craziness had peaked.

Oh, and FactSet just released its report on buybacks for Q2: share repurchases plunged 23% from Q1 to $124 billion, the worst such decline since Q4 2011. But it was still a lot of cash, and down only 1.1% year-over-year. Given the surge in past quarters, for the trailing 12 months, buybacks still rose 29% to $539.3 billion. Alas, free cash flow declined 0.5%, and the ratio of buybacks to free cash flow continued to rise, hitting 82%, the highest level since, well, Q3 2008. But this time, of course, it will be different.

At this confluence of excess and exuberance on one side and the spreading sub-surface carnage in smaller stocks on the other side, even venture capital begins to fret. Read… “Excessive Amounts of Capital” Doom Startup Bubble

House votes to arm Syrian rebels (Reuters).... aka ISIS
Fed Plots Cautious Course on Rate Rises (Hilsenrath)
Scots vote in independence referendum to seal the United Kingdom's fate (Reuters)
Yes or No, the Winner of the Referendum Is Brand Scotland (BBG)
Draghi Loan Plan Missing Estimates Hampers ECB Stimulus (BBG) - get with the spin, it simply means "Moar QE"
Obama Plans to Tightly Control Strikes on Syria (WSJ)
IMF warns of risks from 'excessive' financial market bets (Reuters)
Russia Praises Ukraine's Autonomy Law for Rebel Areas (WSJ)
Dollar hits six-year peak versus yen, ECB aims cash hose (Reuters)
Missing Men in U.S. Workforce Risk Permanent Separation (BBG)
What Lockup? Alibaba IPO Gives Insiders Rare Chance to Sell Early (WSJ)
May I Borrow Your Shower? Ukraine Braces for Winter Cold (BBG)
UBS in $1.4 Billion Test of French Tax-Evasion Crackdown (BBG)
Apple to unveil new iPads, operating system on Oct. 21 (Reuters)
Boeing-Lockheed Venture to Develop Rocket Engine With Bezos Startup (WSJ)

Overnight Media Digest

WSJ

* Federal Reserve officials plan to end the bond-buying program known as quantitative easing after October, hoping to finally stop expanding a six-year experiment in monetary policy that has left the Fed holding more than $4 trillion of Treasury and mortgage bonds. (http://on.wsj.com/1u1ZJO3)

* The U.S. military campaign against Islamist militants in Syria is being designed to allow President Barack Obama to exert a high degree of personal control, going so far as to require that the military obtain presidential signoff for strikes in Syrian territory, officials said. (http://on.wsj.com/1r0GWAe)

* A swath of early investors in Alibaba Group Holding Ltd will be able to sell more than $8 billion worth of shares on the day the Chinese e-commerce company goes public, an unusual arrangement that is influencing how bankers price the offering. (http://on.wsj.com/1mdxLMP)

* The Pentagon's premier satellite-launch provider has joined forces with Blue Origin, a space startup run by Amazon Inc CEO Jeff Bezos, to jointly develop a new rocket engine intended to eventually replace a Russian-built engine that now powers Atlas V rockets. (http://on.wsj.com/1r2kSUo)

* A few weeks after it became embroiled in a hacking scandal that resulted in the leak of nude celebrity photos, Apple Inc launched a campaign to explain how it handles users' personal information and to provide guidelines on protecting online accounts. (http://on.wsj.com/1r0IVo0)

* Tesla Motors Inc Chief Executive Officer Elon Musk said the technology to make a fully autonomous car will be ready in five or six years, and the result will be vehicles far less likely to harm occupants and others on the road. (http://on.wsj.com/1Dli2R3)

* The Justice Department has been unable to recover $97 billion arising from enforcement actions and other criminal cases, an amount that has tripled since 2004, highlighting prosecutors' challenges in tracking down money stolen from investors and others. The uncollected debts-which include criminal fines owed to the Justice Department from companies and individuals and restitution payable to investor victims-have grown because judgments have steadily increased but the percentage collected hasn't. (http://on.wsj.com/1rd2XvS)

A European Central Bank led probe of the euro area banking sector has been billed as a once-and-for-all opportunity to kill the impending crisis of confidence that is hindering lending in the region.

A bug in HealthKit, Apple Inc's new health and fitness tracking software app, threatened to overshadow the launch of the company's new iOS 8 iPhone operating system on Wednesday. Many app developers found that their apps had been removed from Apple's App Store due to the unspecified bug.

Banks and insurers in Europe are bracing for extra value added tax bills that could run into billions of euros after an unexpected ruling by the European Court of Justice over a dispute between Skandia America Corporation and the Swedish tax authority.

The U.S. Department of Justice on Wednesday made its strongest warning yet to corporate America, signalling that it is preparing charges against individuals while also asking Congress to increase rewards for the co-operation of insiders. Wells Fargo & Co, the largest U.S. mortgage lender, said it would simplify lending requirements for people buying certain types of homes - a move to ramp up new mortgage lending.

NYT

* An expert panel voted overwhelmingly on Wednesday for the Food and Drug Administration to impose strict new limitations on the multibillion-dollar testosterone drug industry, recommending that the agency tighten labels for the medicines so they are not prescribed to men who only have problems related to aging, such as low energy and libido. (http://nyti.ms/1p1W1Ni)

* As hospitals merge and buy up physician practices, creating new behemoths, one federal agency is raising a lonely but powerful voice, suggesting that consumers may be victimized by the trend toward consolidation. The Federal Trade Commission says that mergers tend to reduce competition, and that doctors and hospitals can usually achieve the benefits of coordinated care without a full merger. (http://nyti.ms/1o4Pp0r)

* Blue Origin, a private space company owned by Amazon.com founder Jeff Bezos, said on Wednesday that it had agreed to work with a joint venture run by Boeing Co and Lockheed Martin Corp to build new engines for their Atlas 5 rockets. (http://nyti.ms/1yi5HNe)

* The Justice Department has a suggestion for banks hoping to avoid criminal charges: Rat out your employees. Marshall Miller, the No 2 official in the Justice Department's criminal division, detailed in a speech on Wednesday how banks would either earn credit for exposing nefarious individuals or face charges for protecting them. (http://nyti.ms/1mdJkUj)

* The U.S. Federal Reserve is in no hurry to raise interest rates. The economic recovery has stayed on course in recent months, and the Fed's policy-making committee said on Wednesday that it saw no reason to change its own plans, rejecting calls for a faster retreat from its long-running stimulus campaign. (http://nyti.ms/1s7JUFs)

Canada

THE GLOBE AND MAIL

** The Ontario government faces a potential bill of C$400 million ($364 million) to bail out U.S. Steel Canada Inc pensioners if the steel maker's pension plans are not restructured, the company's chief executive, Michael McQuade, warned in a court filing. (bit.ly/1ASPOsJ)

** Toronto Mayor Rob Ford, the controversial leader who captured international headlines for his admitted drug use and the devotion of his Ford Nation supporters, has been diagnosed with a malignant tumour in his abdomen identified as liposarcoma by the senior doctor in charge of his care. (bit.ly/1wr0dLB)

** More than 40,000 teachers will vote on Thursday on whether to accept a tentative six-year deal with the province of British Columbia. The agreement, reached between the provincial government and the B.C. Teachers' Federation early Tuesday morning, remains emotional for many educators, coming after five weeks of cancelled classes and all of summer school lost to one of the longest strikes in years. (bit.ly/1meumxb)

NATIONAL POST

** Monday's New Brunswick election is quickly becoming a debate on Canada's most restrictive abortion laws. Rookie Liberal leader Brian Gallant, whose party has advocated easing access to abortion but has himself tried to walk a fine line on the issue, was forced this week to address it head-on. (bit.ly/1ucdWEh)

** Quebecor Inc said it is open to joining forces with investors in Wind Mobile SA as the media company feels out potential partners for an effort to expand its wireless footprint across Canada. (bit.ly/1BP8jRi)

** Statistics Canada published its latest population projections on Wednesday. According to the report, Canada's population is projected to continue growing over the next 50 years. Under a medium-growth scenario, the population - 35.2 million in 2013 - is projected to reach 43.5 million in 2028 and 51 million in 2063. (bit.ly/1p28v7E)

China

CHINA SECURITIES JOURNAL

- China needs to speed up the development of futures management institutions to make the futures market more competitive, said Jiang Yang, vice-president of the China Securities Regulatory Committee (CSRC), at a seminar on Wednesday.

SECURITIES TIMES

- China will launch 12 new stock indexes on Oct. 17, including two indexes measuring the health of 400 and 1,000 Shanghai- and Shenzhen-listed companies respectively, according to an announcement by the China Securities Index Co., Ltd published on Thursday.

SHANGHAI DAILY

- The State Council, China's cabinet, said at a meeting on Wednesday that from Oct. 1 to the end of 2015, any firm with a monthly revenue of less than 30,000 yuan ($4,887.19) will be exempt from value-added tax (VAT) and business tax.

CHINA DAILY

- China should plan an integrated renminbi clearing facility with the Association of Southeast Asian Nations to encourage regional trade and investment, said Cao Tong, the vice-president of the Export-Import Bank of China on Wednesday.

Britain

The Times

ED BRAMSON UNLEASHES BROADSIDE AT ELECTRA TRUST AND ITS BOARD Ed Bramson, the corporate raider laying siege to the 1.1 billion pounds ($1.79 billion) Electra Private Equity investment trust, has broken his silence to accuse the company of a string of shortcomings. Bramson, whose Sherborne Investors (Guernsey) B group began to build a stake in Electra in February, accused the company of flattering its investment performance, botching its balance sheet management and paying excessive fees to its external fund manager. (http://thetim.es/1qM1U74)

BSKYB OFFER TOO LOW, SAYS SKY DEUTSCHLAND The board of Sky Deutschland has recommended that minority shareholders vote against BSkyB's offer to buy a controlling stake in the German pay TV operator, claiming that the 6.75 pounds per share offer is too low. Sky Deutschland's board said that BSkyB's offer, at a 40 cent premium to the share price before the deal was revealed, undervalues the company. However, they did not object to the rationale for the deal, saying that the companies "ideally complement each other". (http://thetim.es/1BNGQzm)

The Guardian EUROZONE INFLATION HIGHER THAN ESTIMATED Inflation across the euro currency area was higher than previously estimated in August, according to revised data from the EU's statistics office. Consumer inflation across the 18 countries using the euro rose 0.1 percent month-on-month in August to give a 0.4 percent year-on-year increase, Eurostat said, following a first estimate of 0.3 percent last month. (http://bit.ly/1sqlFwr) UK UNEMPLOYMENT RATE FALLS TO LOWEST LEVEL SINCE 2008 FINANCIAL CRISIS The City is ruling out a rise in interest rates this year amid evidence that a fresh fall in unemployment to its lowest levels since the height of the financial crisis has failed to reignite pay growth. Data from the Office for National Statistics showed that joblessness on the internationally agreed yardstick was 468,000 lower in the three months to July than in the same quarter of 2013 - the biggest annual decline since the Lawson boom was raging in 1988. (http://bit.ly/XBijOQ)

The Telegraph EUROPEAN COURT ADDS HUNDREDS OF MILLIONS TO UK BANK TAXES Banks operating in the UK face extra tax payments worth hundreds of millions of pounds under rules enforced by Europe's top court. The European Court of Justice dictated on Wednesday that VAT must be charged on services provided to companies by their overseas offices. (http://bit.ly/1o4bCvO)

SALMOND'S OIL BOOM CLAIMS BLOWN APART BY SCOTTISH ENERGY CONSULTANT Scottish First Minister Alex Salmond's claim that an independent Scotland could expect 1.5 trillion pounds ($2.44 trillion) of revenue from the North Sea's remaining oil and gas reserves have been shot down in the final hours of the referendum campaign by one of Scotland's most respected energy consultants. (http://bit.ly/1BMuV4K)

Sky News

ALEX SALMOND: NO ONE CAN STOP SCOTLAND USING POUND

Scottish National Party leader Alex Salmond has insisted an independent Scotland could not be prevented from using the pound. Salmond reiterated his desire to hold on to sterling, saying: "It's sensible - England is our biggest trading partner, and Scotland is England's second-biggest trading partner after the US. There will be a common sense agreement for a common currency." (http://bit.ly/1wF0Lk1)

The Independent

SCOTTISH INDEPENDENCE: BANK OF ENGLAND 'MUST BE ON ALERT FOR NORTHERN ROCK STYLE DEPOSIT FLIGHT IF YES WINS' The Bank of England will need to be on guard against a possible "deposit flight" from Scotland similar to Northern Rock after tomorrow's referendum vote, John Gieve, deputy governor for financial stability of Bank of England said. (http://ind.pn/1p1ywUJ)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of September 13 at 8:30--consensus 305K
Housing starts for August at 8:30--consensus down 5.2% to 1.038M rate
Housing permits for August at 8:30--consensus down 1.6% to 1.055M rate

ANALYST RESEARCH

Upgrades

ArcelorMittal (MT) upgraded to Buy from Neutral at BofA/Merrill
Boston Properties (BXP) upgraded to Buy from Hold at Stifel
DuPont Fabros (DFT) upgraded to Overweight from Equal-Weight at Evercore
DuPont (DD) upgraded to Overweight from Neutral at JPMorgan
Kohl's (KSS) upgraded to Buy from Neutral at Citigroup
Medivation (MDVN) upgraded to Buy from Hold at Canaccord
Monsanto (MON) upgraded to Buy from Hold at Stifel
Partner Communications (PTNR) upgraded to Neutral from Sell at Goldman

Downgrades

Auxilium (AUXL) downgraded to Market Perform from Outperform at Leerink
Denbury Resources (DNR) downgraded to Sector Perform from Outperform at RBC Capital
Owens-Illinois (OI) downgraded to Neutral from Outperform at RW Baird
Peabody (BTU) downgraded to Sell from Neutral at Goldman
Pier 1 Imports (PIR) downgraded to Equal Weight from Overweight at Barclays
Pier 1 Imports (PIR) downgraded to Market Perform from Outperform at Wells Fargo
Siemens (SIEGY) downgraded to Neutral from Outperform at Exane BNP Paribas
Southwestern Energy (SWN) downgraded to Sector Perform from Outperform at RBC Capital

Initiations

Alibaba (BABA) initiated with a Buy at CRT Capital
Boulder Brands (BDBD) initiated with a Neutral at Piper Jaffray
Cogent (CCOI) initiated with an Overweight at JPMorgan
Coty (COTY) coverage assumed with an Overweight at Piper Jaffray
Estee Lauder (EL) coverage assumed with a Neutral at Piper Jaffray
FCB Financial (FCB) initiated with a Market Perform at Keefe Bruyette
Helen of Troy (HELE) initiated with an Overweight at Piper Jaffray
Inter Parfums (IPAR) coverage assumed with a Neutral at Piper Jaffray
InterOil (IOC) initiated with an Outperform at Credit Suisse
Jarden (JAH) initiated with an Overweight at Piper Jaffray
Level 3 (LVLT) initiated with an Overweight at JPMorgan
Parker-Hannifin (PH) initiated with a Hold at Deutsche Bank
Rentrak (RENT) initiated with a Buy at Wunderlich
SFX Entertainment (SFXE) initiated with a Buy at Maxim
Sprouts Farmers Markets (SFM) initiated with a Neutral at Piper Jaffray
Tornier (TRNX) coverage assumed with an Overweight at Barclays
Vince Holding (VNCE) initiated with a Buy at B. Riley
WhiteWave Foods (WWAV) initiated with an Overweight at Piper Jaffray

COMPANY NEWS

Bayer (BAYRY) to float MaterialScience as separate company
Toshiba (TOSBF) said it would reduce PC division workforce by 900 employees
Amazon (AMZN) introduced the Kindle Voyage and $79 Kindle, as well as new Fire HD and Fire HD Kids Edition
Apple (AAPL) said it will never allow government access to servers
World Wrestling Entertainment (WWE) announced a partnership with FOX Sports Latin America (FOXA)
Flexion (FLXN) announced that the FDA put a clinical hold on Phase 2b FX006 trial enrollment
Agilent (A) board approved separation of Keysight. The company also said Mike McMullen would succeed Bill Sullivan as CEO in March 2015 and declared a special dividend

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
IHS Inc. (IHS), Clarcor (CLC), United Natural Foods (UNFI)

Companies that missed consensus earnings expectations include:
Five Star Quality (FVE), Pier 1 Imports (PIR)

Companies that matched consensus earnings expectations include:
Herman Miller (MLHR)

NEWSPAPERS/WEBSITES

Boeing (BA), Lockheed Martin (LMT) to team with Bezos firm on rocket engine, WSJ reports (AMZN)
CBS (CBS) CEO looks to reduce radio assets within 12 months, Reuters reports
Report says one iPhone 6 Chinese license approved, Reuters says (AAPL)
Tesla (TSLA) CEO sees self-driving car technology ready in five or six years, WSJ reports
Warner Bros. (TWX) could cut up to 1,000 jobs, Variety reports
Apple (AAPL) wants to sell 50M Apple Watches in 2015, DigiTimes reports
FedEx (FDX) could reach new highs, Barron's says

SYNDICATE

Diamondback Energy (FANG) files to sell 2.5M shares for holders
EPR Properties (EPR) files to sell 3.2M shares of common stock
New Media (NEWM) files to sell 6.5M shares of common stock
Oncothyreon (ONTY) fiels to sell common stock, convertible preferred stock
Sun Communities (SUI) files to sell 6M shares of common stock

In 2011, the New York Times wrote:

“Money is pouring in” from investors even though shale gas is “inherently unprofitable,” an analyst from PNC Wealth Management, an investment company, wrote to a contractor in a February e-mail. “Reminds you of dot-coms.”

“The word in the world of independents is that the shale plays are just giant Ponzi schemes and the economics just do not work,” an analyst from IHS Drilling Data, an energy research company, wrote in an e-mail on Aug. 28, 2009.

***

“And now these corporate giants are having an Enron moment,” a retired geologist from a major oil and gas company wrote in a February e-mail about other companies invested in shale gas.

***

Deborah Rogers, a member of the advisory committee of the Federal Reserve Bank of Dallas, [and a] former stockbroker with Merrill Lynch ... showed that wells were petering out faster than expected.

“These wells are depleting so quickly that the operators are in an expensive game of ‘catch-up,’ ” Ms. Rogers wrote in an e-mail on Nov. 17, 2009, to a petroleum geologist in Houston, who wrote back that he agreed.

***

A review of more than 9,000 wells, using data from 2003 to 2009, shows that — based on widely used industry assumptions about the market price of gas and the cost of drilling and operating a well — lessthan10percent of the wells had recouped their estimated costs by the time they were seven years old.

***

“Looks like crap,” the Schlumberger official wrote about the well’s performance, according to the regulator, “but operator will flip it based on ‘potential’ and make some money on it.”

In 2012, the New York Times pointed out:

The gas rush has ... been a money loser so far for many of the gas exploration companies and their tens of thousands of investors.

***

Although the bankers made a lot of money from the deal making and a handful of energy companies made fortunes by exiting at the market’s peak, most of the industry has been bloodied— forced to sell assets, take huge write-offs and shift as many drill rigs as possible from gas exploration to oil, whose price has held up much better.

***

Now the gas companies are committed to spending far more to produce gas than they can earn selling it. Their stock prices and debt ratings have been hammered.

Rolling Stone reported the same year:

Fracking, it turns out, is about producing cheap energy the same way the mortgage crisis was about helping realize the dreams of middle-class homeowners. For Chesapeake, the primary profit in fracking comes not from selling the gas itself, but from buying and flipping the land that contains the gas. The company is now the largest leaseholder in the United States, owning the drilling rights to some 15 million acres – an area more than twice the size of Maryland. McClendon [the CEO of fracking giant Chesapeake] has financed this land grab with junk bonds and complex partnerships and future production deals, creating a highly leveraged, deeply indebted company that has more in common with Enron than ExxonMobil. As McClendon put it in a conference call with Wall Street analysts a few years ago, "I can assure you that buying leases for x and selling them for 5x or 10x is a lot more profitable than trying to produce gas at $5 or $6 per million cubic feet."

According to Arthur Berman, a respected energy consultant in Texas who has spent years studying the industry, Chesapeake and its lesser competitors resemble a Ponzi scheme, overhyping the promise of shale gas in an effort to recoup their huge investments in leases and drilling. When the wells don't pay off, the firms wind up scrambling to mask their financial troubles with convoluted off-book accounting methods. "This is an industry that is caught in the grip of magical thinking," Berman says. "In fact, when you look at the level of debt some of these companies are carrying, and the questionable value of their gas reserves, there is a lot in common with the subprime mortgage market just before it melted down."

***

In February, Chesapeake announced that, because of low gas prices, its revenues will fall $3.5 billion short of its expenses this year.

Jim Quinn noted last year:

Royal Dutch Shell is one of the biggest corporations in the world, with financial resources greater than 99% of all the organizations on earth. Their CEO [Peter Voser] probably knows a little bit more about oil exploration than the Wall Street systers and CNBC bimbos. His company has poured $24 billion into shale exploration in the U.S. It has been a huge failure. They have already written off $2.1 billion. They are trying to sell huge swaths of land in the Eagle Ford area. They are losing money in the shale oil and gas business. If Shell can’t make it profitable, who can?

Bloomberg noted in February:

Independent producers will spend $1.50 drilling this year for every dollar they get back.

Oil Price reported in March:

Shell’s new boss, Ben van Beurden, said bets on U.S. shale plays haven’t worked out for his company.

***

“Some of our exploration bets have simply not worked out,” Shell’s Chief Executive Officer Ben van Beurden said. It was bad management policy to commit close to $80 billion in capital on its North American portfolio and still lose money. Now, he said, it’s time to cut the loss and slash exploration and production investments by 20 percent for 2014.

***

Shell’s problems say more about the difficulties of shale exploration than they do about the company itself.

The Wall Street Journal pointed out this April:

These newly public companies are spending more than they make ....

Bloomberg wrote in May:

Shale debt has almost doubled over the last four years while revenue has gained just 5.6 percent, according to a Bloomberg News analysis of 61 shale drillers. A dozen of those wildcatters are spending at least 10 percent of their sales on interest compared with Exxon Mobil Corp.’s 0.1 percent.

“The list of companies that are financially stressed is considerable,” said Benjamin Dell, managing partner of Kimmeridge Energy, a New York-based alternative asset manager focused on energy. “Not everyone is going to survive. We’ve seen it before.”

***

In a measure of the shale industry’s financial burden, debt hit $163.6 billion in the first quarter, according to company records compiled by Bloomberg on 61 exploration and production companies that target oil and natural gas trapped in deep underground layers of rock.

***

Drillers are caught in a bind.They must keep borrowing to pay for exploration needed to offset the steep production declines typical of shale wells. At the same time, investors have been pushing companies to cut back. Spending tumbled at 26 of the 61 firms examined. For companies that can’t afford to keep drilling, less oil coming out means less money coming in, accelerating the financial tailspin.

***

“Interest expenses are rising,” said Virendra Chauhan, an oil analyst with Energy Aspects in London. “The risk for shale producers is that because of the production decline rates, you constantly have elevated capital expenditures.”

And Tim Morgan - former global head of research at Tullett Prebon - explained last month at the Telegraph:

We now have more than enough data to know what has really happened in America.

***

If a huge number of wells come on stream in a short time, you get a lot of initial production. This is exactly what has happened in the US.

The key word here, though, is "initial". The big snag with shale wells is that output falls away very quickly indeed after production begins. Compared with “normal” oil and gas wells, where output typically decreases by 7pc-10pc annually, rates of decline for shale wells are dramatically worse. It is by no means unusual for production from each well to fall by 60pc or more in the first 12 months of operations alone.

Faced with such rates of decline, the only way to keep production rates up (and to keep investors on side) is to drill yet more wells. This puts operators on a "drilling treadmill", which should worry local residents just as much as investors. Net cash flow from US shale has been negative year after year, and some of the industry’s biggest names have already walked away.

The seemingly inevitable outcome for the US shale industry is that, once investors wise up, and once the drilling sweet spots have been used, production will slump, probably peaking in 2017-18 and falling precipitously after that. The US is already littered with wells that have been abandoned, often without the site being cleaned up.

Meanwhile, recoverable reserves estimates for the Monterey shale – supposedly the biggest shale liquids play in the US – have been revised downwards by 96pc. [Background; and see this.] In Poland, drilling 30-40 wells has so far produced virtually no worthwhile production.

In the future, shale will be recognised as this decade's version of the dotcom bubble. In the shorter term, it's a counsel of despair as an energy supply squeeze draws ever nearer.

U.S., backed by Arabs, launches first strikes on fighters in Syria (Reuters, BBG)
But not all all back: Turkey Bars Kurds From Entering Syria to Fight Islamic State (BBG)
Dollar Weakens on Airstrikes; Europe Stocks Drop (BBG)
Ready for Rate Riot? Emerging Markets Set to Follow Fed (BBG)
El-Erian "would have done things differently" (Reuters)
White House fence jumper had ammunition, machete in car, prosecutors say (WaPo)
Eurozone business growth slows in September, PMI survey finds (BBC)
Shrinking Bond Desks Taken by Journeymen as Masters Fade (BBG)
Manufacturing Rebound Relieves Growth Concerns in China (BBG)
Former Trader Quits Playboy Club to Open Own Restaurant (BBG)
Allergan Rejected Offer From Actavis (WSJ)
Norway's Yara, CF in talks to create $27 billion global fertilizer producer (Reuters)
FTC Considers Challenge to Food Merger (WSJ)
Bandits Steal Berlin IPhone Cash, Showing Payment Hurdle (BBG)
Argentina's Fernandez to meet billionaire investor Soros in New York (Reuters)

Overnight Media Digest

WSJ

* The U.S. and several Middle Eastern allies struck Islamic State militants in Syria, the Pentagon said on Monday night, expanding a U.S.-led campaign into a country that has been a haven for the extremist group. Four or more Arab countries, including Jordan, the United Arab Emirates, Bahrain and Saudi Arabia, signed up to take part in strikes in Syria, with some flying alongside the U.S. warplanes, according to an allied official. (http://on.wsj.com/1qoFNxf)

* The Treasury Department tightened tax rules on Monday to deter U.S. companies from moving their legal headquarters to lower-tax countries, part of a White House effort to slow a wave of so-called corporate inversions that effectively reduce federal revenues. (http://on.wsj.com/1C7RZep)

* Pharmaceutical company Actavis PLC recently made a bid for Allergan Inc but the Botox-maker rejected the proposal and is closing in on its own takeover. Allergan is now in advanced talks to buy Salix Pharmaceuticals Ltd, said people familiar with the matter. (http://on.wsj.com/1pbdxyT)

* A court ruling in the Lehman Brothers Holding claims case hurt a swath of managers, including some of the biggest firms in the industry, that have in recent years enjoyed a steady stream of profits from the claims. The losses are among the first for hedge funds due to Lehman claims, managers and investors in hedge funds say. (http://on.wsj.com/XZoMn5)

* The Federal Trade Commission is considering a possible antitrust lawsuit to block the planned merger of Sysco Corp and US Foods Inc, concerned that combining the nation's two biggest food suppliers to restaurants, schools and other institutions could threaten competition, according to people familiar with the matter. (http://on.wsj.com/1B2FD4U)

* Arab Bank PLC, the largest financial institution in Jordan, was found liable for providing assistance to Hamas in the first U.S. jury verdict against a bank in a civil terrorism-finance case. The verdict in U.S. District Court in Brooklyn potentially opens the door to more litigation under the Antiterrorism Act of 1990, which gives U.S. victims of international terrorism recourse in federal court. (http://on.wsj.com/1qoF4w7)

* As the housing recovery continues in fits and starts, black and Hispanic borrowers are receiving a smaller share of mortgage loans, according to Federal Reserve data. The report, released on Monday, comes as some lenders face lawsuits alleging they aren't making enough loans to minority borrowers. (http://on.wsj.com/1wI6DWO)

German drugs and chemicals maker Merck KGaA agreed to buy U.S.-based Sigma-Aldrich Corp for $17 billion, hoping to better focus on specialty chemicals and laboratory supplies and depend less on its pharmaceuticals business.

Apple Inc sold a record 10 million of its latest phones, iPhone 6 and iPhone 6 plus, in their weekend debut. Barclays Plc will be fined close to 38 million pounds ($62.19 million) for failing to safeguard clients' funds. Britain's Financial Conduct Authority could announce the fine as early as Tuesday. Britain's biggest grocer Tesco Plc said its first-half profits were overstated by about 250 million pounds, calling on Deloitte to conduct a "comprehensive review" of its accounts. Four senior directors have been suspended while the investigation is completed.

British challenger bank Aldermore <IPO-ALDE.L>, owned by private equity group AnaCap, said it planned to float on the London Stock Exchange next month. The move follows that of OneSavings Bank, which in June became the first bank to list in London in more than a decade. (1 US dollar = 0.7786 euro) (1 US dollar = 0.6111 British pound)

NYT

* U.S. Treasury Secretary Jacob J. Lew announced rules on Monday that are aimed at making it more difficult for American companies to lower their tax bills by relocating overseas and that would wipe out the benefits for those that do. The changes will only affect deals that were completed starting Monday.(http://nyti.ms/1mFQUqP)

* Two Federal Reserve officials who have warned loudly and persistently that the Fed is overreaching in its economic stimulus campaign plan to retire next year after completing terms on the Fed's policy-making committee. The two men, and a handful of like-minded officials, have been marginalized in recent years as their warnings that inflation would accelerate have failed to materialize. (http://nyti.ms/1wHYHVB)

* An online report on Monday by the technology news site TechCrunch claimed that Apple Inc would "shut down" Beats' streaming service, Beats Music, citing anonymous sources. That report quickly ricocheted around the Internet, but in a rare public statement, an Apple spokesman flatly denied it. But the company's plans for the Beats Music brand are unclear. (http://nyti.ms/1mFSUj0)

* Tesco Plc, the large British grocery retailer, disclosed on Monday that it had overstated its expected half-year profit by about $400 million and that it had suspended four senior executives. (http://nyti.ms/Zbzecn)

* As hotels in the United States continue on a surge in spending on renovations, an ever-more-important factor driving this investment is the growing clout of review sites like TripAdvisor Inc and Yelp Inc, and booking sites like Hotels.com. Hotel brands are reading what travelers say about them - and their competitors - and planning their investments accordingly. (http://nyti.ms/1x4c4SP)

* The Securities and Exchange Commission announced on Monday that it had approved a payment of between $30 million and $35 million, to an unnamed individual who lives in a foreign country, for providing information that helped federal authorities "detect an ongoing fraud". This is the largest ever reward given by the SEC under the whistle-blower law. (http://nyti.ms/1mGfd86)

Canada

THE GLOBE AND MAIL

** John Tory has opened up a 22-point lead in the race to be Toronto mayor, with last-minute addition Doug Ford in second and Olivia Chow in third, new polling numbers show. (http://bit.ly/1rkuOKu)

** Netflix Inc is refusing to provide the national broadcast regulator, Canadian Radio-television and Telecommunications Commission (CRTC), with a range of sensitive data about its online streaming operations in Canada, citing concerns the data might not be kept confidential. (http://bit.ly/1C8K1BQ)

** U.S.-based Target Corp may finally be making some headway in Canada. After launching in Canada last year with prices that consumers found too high, it is now starting to offer prices that beat those at discount archrival Wal-Mart Canada Corp, a new study finds. (http://bit.ly/ZbGwN0)

NATIONAL POST

** The Liberals have won a majority government in New Brunswick on a promise to rebuild the province's roads and bridges to create jobs, turfing the Progressive Conservatives from power after one term in office. At 32, Brian Gallant is slated to become the country's youngest premier and leads the Liberals to their fourth straight election victory in the past year in Eastern Canada after wins by the party in Ontario, Quebec and Nova Scotia. (http://bit.ly/1qpdVsZ)

** Three Afghanistan National Army officers who disappeared during a break from military training at a U.S. military base in Massachusetts are now in custody at the Canadian border, authorities confirmed on Monday. (http://bit.ly/1qppEYq)

** Competing groups of creditors at the Nortel Networks Corp bankruptcy trial are focusing on the legal interpretation of a 10-year-old agreement to determine how to divide billions of dollars in proceeds from the sale of Nortel's patents and intellectual property. (http://bit.ly/1wIWTeO)

China

CHINA DAILY

- Beijing will adhere to its Hong Kong policy and will continue its support for advancing democracy in the special administrative region.

CHINA SECURITIES JOURNAL

- China Vanke Co Ltd is seeking shareholder authorisation to raise up to 15 billion yuan ($2.44 billion) through debt financing.

SHANGHAI SECURITIES NEWS

- The China Securities Regulatory Commission, the country's stock market regulator, will normalise its inspection of the underwriting process in initial public offerings.

- The Dalian Commodity Exchange said it is preparing for the launch of corn starch futures.

People's Daily

- The anti-corruption campaign is a war China must win in a bid to purify the political eco-system, the paper said in a commentary.

Britain

The Guardian

PHONES 4U: 2,400 STAFF SET TO LOSE JOBS AS MOBILE PHONE RETAILER SHUTS UP SHOP

More than 2,400 Phones 4u staff are to lose their jobs after plans to wind up the stricken mobile phone retailer were announced on Monday. (http://bit.ly/1pp1ZqW)

HINKLEY NUCLEAR REACTOR PROJECT GAINS EU APPROVAL, LEAK REVEALS British plans for a nuclear renaissance centred on a nuclear reactor in Somerset, England achieved a breakthrough when a nine-month European Union state aid investigation ended with a call for Brussels to approve the project. (http://bit.ly/1rs0mOU)

The Telegraph TESCO CHAIRMAN RICHARD BROADBENT UNDER PRESSURE TO RESIGN OVER ACCOUNTING CHAOS Tesco Plc Chairman Richard Broadbent is under pressure to resign after it emerged that the company's board dismissed warnings from its own auditor about how it was accounting for commercial deals with suppliers, months before a dramatic profit warning. (http://bit.ly/1DtXANQ)

Sky News

BARCLAYS HIT BY 38 MLN STG FINE OVER CLIENT ASSETS

Barclays Plc will be hit by the latest in a string of financial penalties this week when the financial regulator hands out a 38 million pound ($62.19 million) fine for failing to ensure adequate protection for clients' funds. (http://bit.ly/1x1BNvc)

CARPHONE PRESSES ON WITH PHONES 4u REPAIR JOB Dixons Carphone Plc plans to make a statement on Tuesday that it is still interested in acquiring between 50 and 100 shops from Phones 4u's, according to sources close to the matter. (http://bit.ly/1tVVYbE)

The Independent

ALDERMORE BANK HEADS FOR LONDON FLOAT British challenger bank Aldermore <IPO-ALDE.L> has announced plans to float on the London Stock Exchange, which could see the bank valued at up to 900 million pounds. (http://ind.pn/1uTxwaX) (1 US dollar = 0.6110 British pounds)

Fly on the Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:

FHFA house price index for July at 9:00--consensus up 0.5%
Markit manufacturing PMI for September at 9:45--consensus 58.0
Richmond Fed manufacturing index for September at 10:00--consensus 10

ANALYST RESEARCH

Upgrades

Apogee Enterprises (APOG) upgraded to Outperform from Market Perform at Northland
Ferro (FOE) upgraded to Buy from Hold at KeyBanc
Garrison Capital (GARS) upgraded to Outperform from Neutral at RW Baird
SVB Financial (SIVB) upgraded to Overweight from Equal Weight at Barclays
ShoreTel (SHOR) upgraded to Buy from Neutral at SunTrust
Teck Resources (TCK) upgraded to Outperform from Market Perform at Bernstein

Downgrades

Analog Devices (ADI) downgraded to Neutral from Overweight at JPMorgan
Bed Bath & Beyond (BBBY) downgraded to Market Perform from Outperform at William Blair
Cameco (CCJ) downgraded to Neutral from Buy at BofA/Merrill
City National (CYN) resumed with a Market Perform from Outperform at Wells Fargo
Clorox (CLX) downgraded to Neutral from Buy at Citigroup
Clorox (CLX) downgraded to Sell from Neutral at B. Riley
Dick's Sporting (DKS) downgraded to Market Perform from Outperform at William Blair
Equinix (EQIX) downgraded to Market Perform from Outperform at Wells Fargo
Fluor (FLR) downgraded to Market Perform from Outperform at Wells Fargo
Gordmans Stores (GMAN) downgraded to Hold from Buy at Canaccord
Nanometrics (NANO) downgraded to Hold from Buy at Canaccord
ON Semiconductor (ONNN) downgraded to Neutral from Overweight at JPMorgan
Siemens (SIEGY) downgraded to Equal Weight from Overweight at Barclays

Initiations

BankUnited (BKU) resumed with an Outperform at Wells Fargo
Cenovus Energy (CVE) initiated with an Overweight at JPMorgan
Chevron (CVX) initiated with a Neutral at JPMorgan
Continental Resources (CLR) initiated with a Buy at Canaccord
EverBank Financial (EVER) initiated with an Outperform at Wells Fargo
Exxon Mobil (XOM) initiated with a Neutral at JPMorgan
First Interstate (FIBK) initiated with an Outperform at Wells Fargo
First Niagara (FNFG) initiated with a Market Perform at Wells Fargo
First Republic Bank (FRC) resumed with an Outperform at Wells Fargo
HollyFrontier (HFC) initiated with a Neutral at JPMorgan
Immunomedics (IMMU) initiated with a Buy at Jefferies
Intuitive Surgical (ISRG) initiated with a Sector Perform at RBC Capital
Investors Bancorp (ISBC) initiated with an Outperform at Wells Fargo
Laredo Petroleum (LPI) initiated with an Outperform at Raymond James
Marathon Petroleum (MPC) initiated with an Overweight at JPMorgan
Phillips 66 (PSX) initiated with an Overweight at JPMorgan
Progenics (PGNX) initiated with a Hold at Jefferies
Rexnord (RXN) initiated with an Outperform at Oppenheimer
SVB Financial (SIVB) resumed with an Outperform at Wells Fargo
Sangamo (SGMO) initiated with a Buy at Jefferies
Signature Bank (SBNY) resumed with a Market Perform at Wells Fargo
Tesoro (TSO) initiated with a Neutral at JPMorgan
Ultragenyx (RARE) initiated with a Buy at Jefferies
Valero (VLO) initiated with a Neutral at JPMorgan
Webster Financial (WBS) initiated with an Outperform at Wells Fargo

COMPANY NEWS

Treasury, IRS announced plans to reduce inversion tax benefits (MYL, ABT, MDT, COV, VRX, AGN)
Philips (PHG) said it will separate Lighting, HealthTech into two companies
FCA fined Barclays (BCS) GBP 37.75M for putting assets at risk
Wells Fargo Advisers (WFC) fined $5M by SEC for failing to maintain controls
Adobe (ADBE) acquired privately held Aviary, a developer of mobile Software Development Kits for the delivery of creative apps
Tekmira (TKMR) to collaborate with international consortium researching Ebola
Supernus (SUPN) reaffirmed that it is on track to become cash flow breakeven by year-end and that the company will explore a broad range of strategic opportunities
McGraw Hill Financial (MHFI) to sell McGraw Hill Construction to Symphony Tech Group for $320M in cash

EARNINGS

Companies that missed consensus earnings expectations include:
Ascena Retail (ASNA)

WABCO (WBC) sees FY14 EPS $5.45-$5.75, consensus $5.62

Papa John's (PZZA) backs FY14 EPS view, including FOCUS, $1.64-$1.72, consensus $1.72
Ascena Retail (ASNA) sees FY15 adjusted EPS 90c-$1.00, consensus $1.25

NEWSPAPERS/WEBSITES

Allergan (AGN) rejected buyout bid from Actavis (ACT), in advanced talks for Salix (SLXP), WSJ reports (VRX)
Apple (AAPL) denies shutdown of Beats Music, Re/code reports
HP (HPQ) was primarily interested in EMC's (EMC) VMware (VMW) stake, Re/code reports
Almunia: Google (GOOG) must improve EU settlement or will face charges, WSJ says
Sysco (SYY), US Foods merger could be blocked by FTC, WSJ reports
Barclays (BCS) CEO defends bank against dark pool allegations, CNBC reports
Icahn has not sold any of Herbalife (HLF) position, FBN's Gasparino says

SYNDICATE

Alimera Sciences (ALIM) enters $35M at-the-market agreement with Cowen
Genesis Energy (GEL) files to sell 4M common units representing limited partners
Grupo Aval (AVAL) 73.529M share IPO priced at $13.50
Parkway Properties (PKY) 10M share Secondary priced at $18.60
SB Financial (SBFG) files to sell 1.5M depositary shares
W.P. Carey (WPC) files to sell 4M shares of common stock

Where Is Venezuela's 366 Tonnes Of Gold?

* Where is Venezuela's 366 tonnes of gold?

* Does Venezuela still control and own unencumbered it’s own gold reserves?

Former President Hugo Chavez and a London Good Delivery Gold Bar (400 oz)

* Is any of the country's gold encumbered, loaned or leased to Goldman Sachs or other banks?

* Bank of America economist on visit to Venezuelan central bank last week was allowed to view the bank's gold vault and the gold repatriated by Former President Hugo Chavez

* Is there a possibility of this given the Venezuelan economy's weak position?

* An arbitration court of the World Bank ruled that Venezuela needs to immediately repay $740 million to US mining company 'Gold Reserve'.

* Repayment is connected to Venezuela having terminated Gold Reserve's gold and copper mining project in 2009 as part of Chavez's nationalisation of energy and mining projects

* This ruling could set a precedent for other companies to seek compensation from Venezuelan government during a time in which Venezuelan economy is weak and heavily indebted
* Venezuela's international credit ratings will now be in an even worse state, as will its international bond servicing situation

* Chinese have also lent to Venezuela in return for ongoing deliveries of oil. Could Venezuela now need to mobilise more of its gold again to help finance its debts? Will China seek to use its considerable financial and economic power to build a stronger economic and political relationship with Venezuela?

* The confiscation also highlights the risks to precious metals mining companies operating in politically unstable countries and the stock specific risk of investing in mining shares

Former President Hugo Chavez and a London Good Delivery Gold Bar (400 oz)

Venezuela's gold reserves are back in focus after Francisco Rodríguez, a Bank of America economist, revealed in a client note yesterday that while on a visit to the Central Bank of Venezuela last week, his party was given a tour of the central bank's underground gold vault in Caracas and allowed to view the bank's considerable gold holdings.

This includes the sizeable quantities of Venezuela's gold reserves that were very publically repatriated back to Caracas by President Chavez in 2011 and 2012.

Rodríguez covers the economies of Venezuela, Columbia and Peru on behalf of Bank of America Merrill Lynch (BAML), and is a native of Venezuela, having also previously been head of Venezuela's Congressional Budget Office.

Rodríguez was in Caracas last week for meetings with government and central bank officials including Nelson Merentes, the president of the country's central bank, the Banco Central de Venezuela (BCV).

According to the latest figures published by the World Gold Council (WGC), Venezuela holds 367.6 tonnes of gold in its reserves, representing 70.6% of its official reserves of foreign exchange and gold.

At current market prices, the official gold holdings are worth nearly $14.5 billion. Venezuela is one of the few large holders of gold whose gold holdings represent such a high percentage of total foreign exchange and gold reserves, the other countries being the US, Germany, Italy, France and Portugal.

Unlike the US, Germany and Italy, and possibly Portugal, Venezuela actually has the majority of its gold in its own vaults and not stored abroad. As to whether any of Venezuela's gold reserves are leased, loaned, collateralised or otherwise encumbered is another question.

In August 2011, the Venezuelan government surprised the gold market when it announced that it would seek to repatriate, at short notice, 160 tonnes of its foreign held gold reserves back to Venezuela for safekeeping. The government also revealed at that time where its gold was located and in what form it was held.

Celebrations as Venezuela’s gold is repatriated to Caracas in 2011

Of the 366 tonnes held at that time, 154 tonnes was already stored in Venezuela, 99 tonnes were in custody at the Bank of England, 12 tonnes in custody with the Bank of International Settlements, and 17 tonnes in custody with JP Morgan. Another 82 tonnes of gold was held in term deposits with a group of bullion banks consisting of HSBC, Barclays, Standard Chartered, the Bank of Nova Scotia and BNP Paribas.

Gold on term deposit earns interest for the central bank but the bullion banks that either accepted the original deposit or took over an existing term deposit would likely have sold or lent the gold in the market. Yet, they would be obliged to return the same amount of gold when the Venezuelans requested that it be repatriated.

The Venezuelan significant repatriation request, in the summer of 2011 may have been a contributing factor to gold's strong price appreciation at that time, as market participants were forced to find 160 tonnes of physical gold bullion at short notice.
The 160 tonnes of gold was transported back to Caracas with much fanfare in a series of flights from late 2011 to early 2012, with the last flight carrying 14 tonnes of gold from Paris. The fact that this gold was sourced in Paris suggests the possibility that it was sourced from the Banque de France, meaning that the Banque de France may also have been involved in helping to secure the necessary physical to transfer to Venezuela.

Wherever the repatriated gold came from, it is now residing in a vault in Caracas.
Before the 2011/2012 repatriation, Venezuela held 211 tonnes of its gold reserves abroad. After bringing back 160 tonnes, this still leaves 51 tonnes outside the country. This remaining foreign stored gold is, according to Bank of America’s Francisco Rodríguez now held at the Bank of England.

Rodríguez also revealed that the gold held in Banco Central de Venezuela vault is in approximately 5 smallish compartments, and that in his view, all the gold that would be expected to be in the vault is in fact in the vault.
This would be about 316 tonnes of gold, which is just over 25,000 good delivery gold bars. With 5 compartments, that would be about 5,000 bars per compartment.

In November 2013, Bloomberg revealed that both Goldman Sachs and Bank of America had proposed loan deals to Venezuela. Bank of America's proposal was said to involve the bank acting as an intermediary to facilitate up to $3 billion in payments for Venezuelan companies seeking US dollars.

Goldman Sach's proposal was said by Bloomberg to involve a loan or swap of $1.68 billion in US dollars but collateralised by $1.85 billion of the Venezuelan central bank’s gold. That would have been about 47 tonnes of gold at the time.

Banco Central de Venezuela denied that it was considering the Goldman Sachs deal, but its unclear if this swap was ever implemented.
If it was, then part of the Banco Central de Venezuela's gold is currently spoken for. This would more likely be gold stored at the Bank of England than in Caracas.

With the Venezuelan economy remaining weak and Venezuelan bonds dropping sharply in value, it may be just a matter of time before Venezuela needs to use some of its gold for borrowing purposes.

Last week, S&P cut Venezuela’s credit rating from B - to CCC+. S&P said that they “assign CCC+ ratings in instances where we assess that issuers face at least a one-in-two likelihood of default over the next two years.”
Hedge funds are said to have started looking at Venezuela’s debt with a view to possible default.

On Monday in other gold developments in Venezuela, the International Centre for Settlement of Investment Disputes (ICSID), an arbitration court of the World Bank for investment disputes, ruled that Venezuela needs to immediately repay $740 million to a US mining company called 'Gold Reserve'. This repayment is connected to Venezuela having terminated Gold Reserve's Las Brisas gold concession project in 2009 as part of the then President Hugo Chavez's nationalisation of Venezuelan energy and mining projects.

This ICSID ruling could now set a precedent for other companies to seek compensation from the Venezuelan government during a time in which Venezuelan economy remains weak and heavily indebted. The ruling and earlier confiscation also highlights the stock specific risk inherent in precious metals mining stocks and the risks that these companies face when operating in politically unstable countries.

As the Venezuelan currency and bond market lurches into another possible crisis, it looks like the large international investment banks are waiting to provide increased financing or restructuring while the hedge funds look to profit on the sovereign debt.

The Chinese also supply financing to Venezuela on the understanding of getting continuous oil deliveries in return. Just last weekend the Joint Chinese - Venezuela Fund got an inflow of $2 billion from China to help with Venezuelan infrastructure and housing spending.

With China on one side and US banks on the other, it will be interesting to see who ends up financing the lions share of any needed Venezuelan sovereign financing packages.
Venezuela’s gold reserves may then come into play in some way or another.

by Ronan Manly , Edited by Mark O’Byrne

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* Sign Up For Breaking News And Research Here

Hong Kong protesters stockpile supplies, fear fresh police advance (Reuters)
Protesters stay out on Hong Kong streets, defying Beijing (Reuters)
Traders Turn Up Grilling Sausages at Hong Kong Protests (BBG)
Ukraine Army Sees Worst Day Since Truce as Battles Flare (BBG)
Islamic State uses grain to tighten grip in Iraq (Reuters)
For Putin Ally, U.S. Sanctions Only Add to Anti-Russia Conspiracy Theory (WSJ)
Coinbase Leads Move to Bring Bitcoin to Masses (BBG) - good luck
Austria Cracks Down on Spies -- and Jihadis (BBG)
EU Believes Apple, Fiat Tax Deals Broke Rules (WSJ); Apple’s Irish Tax Deal ‘Engineered’ to Boost Employment, EU Says (BBG)
IPO Markets Don’t Need Alibaba for Best Quarter Since 2010 (BBG)
From Africa to Ukraine, Deal Police Proliferate (WSJ)
U.S.-led air strikes pose problem for Assad's moderate foes (Reuters)
North Korea’s Kim Said Hospitalized After Ankle Surgery (BBG)
Europe Ticking All the Wrong Boxes Starts Mirroring Japan (BBG)
Death on the Highway Leaves Dozing Trucker Angry at Widower and God (BBG)
Russian Billionaire Rybolovlev Must Face Ex-Wife’s Suit (BBG)
U.K. Risks Return to 1974 as Splintered Politics Hurts Stability (BBG)

Overnight Media Digest

WSJ

* The intruder who scaled a White House fence earlier this month and darted across the lawn got much farther into the executive mansion than previously disclosed, according to a congressman. (http://on.wsj.com/1mJbV3K)

* As the United States gears up for deeper military involvement in the Middle East, many Chaldeans are in a wrenching debate: Either get as many people out of Iraq as possible, or stay and fight a militant ISIL. (http://on.wsj.com/1u7AIQb)

* Personality tests in the hiring process have sparked scrutiny, with some companies scaling back and civil-rights groups claiming the tests could constitute workplace discrimination. (http://on.wsj.com/1rAml60)

* Ford Motor Co warned operating profit this year would be sharply below its earlier estimate, citing higher than expected costs of auto-safety recalls in the United States and economic weakness in Europe. (http://on.wsj.com/1pD6Sg3)

* Banks outside the Unites States have been unlikely beneficiaries of the Federal Reserve's interest-rate policies, and they are likely to do even better as the Fed changes the way it controls interest rates. (http://on.wsj.com/1rymeXd)

* Executives at Pacific Investment Management Co hit the phones Monday in a campaign to persuade clients to stick with the firm, even as Wall Street traders placed bets against its holdings, seeking to exploit the sudden departure of co-founder Bill Gross. (http://on.wsj.com/1uxV46J)

* The SEC's tally of cases is the first year-over-year increase since 2011. But some say the heightened activity masks a scarcity of the blockbuster actions that should be a feature of an effective Wall Street cop. (http://on.wsj.com/1nCMAt3)

* A closely watched gauge of China's manufacturing activities showed sluggish growth for a second straight month, indicating that the world's second-largest economy still faces downward pressure. (http://on.wsj.com/1wSWZAP)

* SoftBank Corp's discussions to acquire DreamWorks Animation SKG Inc have cooled, according to people familiar with the matter, less than two days after word first emerged of the talks. (http://on.wsj.com/1mJjZRT)

* Supervalu Inc said Monday it discovered a second data breach into its customer payment system, just weeks after catching one that hit its grocery stores earlier in the summer. (http://on.wsj.com/1DTRAyf)

* Lloyds Banking Group said on Monday it had dismissed eight of its staff and recouped 3 million pounds ($4.87 million) of their bonuses after finding them responsible for attempting to manipulate benchmark interest rates between 2006 and 2009.

* The UK government's plan to get rid off tax levied on pension funds at death would lead to potential opportunities for the wealthy to protect their assets from inheritance tax, wealth planners said on Monday.

* UBS AG on Monday said that it could face "material" fines as authorities around the globe go ahead with their probe into alleged manipulation of the foreign exchange market.

* Two of the world's largest securities depositories, Belgium's Euroclear and U.S. based Depository Trust and Clearing Corporation, confirmed they had agreed on a joint venture which would be called DTCC-Euroclear Global Collateral Ltd.

* BAE Systems Plc cautioned of some trading disruption in the United States in the next three months because of government spending constraints but said this would be "limited."

* The incoming EU digital commissioner Guenther Oettinger warned that any settlement with Google Inc over the antitrust case could "cement its strength in the market rather than diluting it".

* Italian luxury fashion group Prada SpA said on Monday its co-chief executives Miuccia Prada and Patrizio Bertelli, are being investigated by Italian authorities over past taxes.

* Santander UK appointed Nathan Bostock, a former Royal Bank of Scotland finance director, as its chief executive officer. Bostock replaces Ana Patricia Botin, who was appointed executive chairman of the bank's Spanish parent Santander Group following the death of her father Emilio Botin earlier this month.

NYT

* In a first deal of its kind, Netflix Inc and the Weinstein Company said Monday that they planned to release next year's sequel to the movie "Crouching Tiger, Hidden Dragon" simultaneously across the globe on Netflix and a select number of Imax theaters. (http://nyti.ms/1pn3ua3)

* As the Obama administration tries to stop companies from avoiding taxes by moving their headquarters overseas, pharmaceutical companies such as Gilead Sciences Inc, Pfizer Inc and AbbVie Inc are using another tactic to reduce their payments to the government. (http://nyti.ms/1sLpzWG)

* Qatar Petroleum, along with its partner Exxon Mobil Corp , is now requesting permission to export American gas from the Golden Pass terminal to Asian and European markets. The additional estimated cost: $10 billion, if not more. (http://nyti.ms/1DTNar0)

* The number of deaths linked to General Motors Co's defective ignition switch has risen again - to 23, according to new figures posted on Monday by the program set up to compensate victims. (http://nyti.ms/1xvJE4w)

* The troubled retailer American Apparel named a new interim chief executive, Scott Brubaker, on Monday in a bid to move on from a public battle with its founder and former chief, Dov Charney. (http://nyti.ms/1pD6nTd)

* Bank of America Corp has agreed to pay $7.65 million to settle federal charges that it violated record keeping and internal rules in overstating its capital levels. (http://nyti.ms/1DTNTIS)

* Maurice Greenberg, the former American International Group chief executive who through his company Starr International continues to hold a major stake in the insurance company and who sued the government on behalf of fellow shareholders, is seeking more than $40 billion in compensation. (http://nyti.ms/1pD6CxK)

* The Encana Corporation, one of Canada's biggest producers of natural gas and oil, agreed on Monday to buy Athlon Energy Inc for $5.9 billion in a move to gain a foothold in one of North America's most oil-rich regions. (http://nyti.ms/1pD6Qos)

* Banco Santander SA has named a new head for its business in Britain. Nathan Bostock will follow Ana Patricia Botín, who succeeded her father as the Spanish bank's executive chairwoman after his death this month. (http://nyti.ms/1rGRmWm)

* Tibco Software Inc, an enterprise software company based in Silicon Valley, has agreed to sell itself to Vista Equity Partners for $4.3 billion in the largest buyout in the technology industry this year. (http://nyti.ms/1BycwXn)

Canada

THE GLOBE AND MAIL ** Ottawa's apparent refusal to grant visas to the most senior Russian and Chinese delegates at a prestigious international astronautical conference on Monday blindsided the head of Canada's space agency, who was left struggling to come up with an explanation. (http://bit.ly/1BydUcA)

** The Canadian government will pay for maintenance and upgrades to extend the life of the country's aging CF-18 fighters so they last until about 2025, sources say - a strong sign that Ottawa is far from ready to pick a new warplane. (http://bit.ly/1uykO2O)

** Faced with a challenge to its authority from Netflix Inc and Google Inc, Canada's broadcast regulator CRTC has reacted by striking the two companies' evidence from a major public hearing, seeking to reassert its powers over companies that broadcast in the country. (http://bit.ly/1uZlLxr)

NATIONAL POST ** Albertans will go to the polls in four byelections on Oct. 27, after two more Calgary MLAs announced on Monday they are resigning. Calgary-Foothills MLA Len Webber said he is stepping down to focus on his looming campaign for federal office, clearing the way for a byelection run by Premier Jim Prentice. A short time later, Calgary-West MLA Ken Hughes also announced he would also step down to help with the renewal of the Progressive Conservative party. (http://bit.ly/1rpNNEO) ** Quebec's premier says Parti Quebecois heavyweight Pierre Karl Peladeau should get a grip on reality after he compared the repatriation of the Constitution to the imposition of communist rule in East Germany. (http://bit.ly/1qQWuS7)

** Canada's Big Three incumbent wireless providers Rogers Communications Inc, BCE Inc and Telus Corp are cashing in by muscling out new entrants with prohibitively high rates to use their infrastructure, the Competition Bureau charged on Monday. (http://bit.ly/1vtjFaB)

China

CHINA SECURITIES JOURNAL

- The vice chairman of the China Banking Regulatory Commission said joint-stock banks have to make an effort to defuse credit risks from sensitive industries to reduce bad loans.

SHANGHAI SECURITIES NEWS

- The China Insurance Regulatory Commission (CIRC) said in an announcement on Monday that it will raise the hurdle for insurance firms to invest in trust funds amid concerns over venture capital trusts.

CHINA DAILY

- The "Occupy Central" movement does not promote democratic development as it distorts the political reform for the 2017 election of Hong Kong's top official while hurting people's livelihoods, China Daily said in an editorial.

PEOPLE DAILY

- The Shanghai Free Trade Zone differentiates itself from other economic development zones in that it has specific policies to lure investors, the paper said in a commentary.

Britain

The Times

** Benefits will be frozen for two years should the Conservatives win the May general election, George Osborne announced today. The chancellor said that the move will save 3 billion pounds and make a "serious contribution to reducing the deficit". (http://thetim.es/1uXnZNP)

** Fee rises at leading independent schools will continue to outpace inflation for years to come to fund improvements aimed at attracting overseas pupils, headmasters said yesterday. Top private schools will continue to push up fees but also put more money aside to fund means-tested places for children from lower-income families, they said. (http://thetim.es/1xuZDjo)

The Guardian

** Fresh waves of pro-democracy protesters have swept into the heart of Hong Kong, as a leader of the civil disobedience movement urged them to keep the momentum going until Wednesday's national holiday. Crowds blocked one of the city's main roads on Monday from the financial area of Central to the bar district of Wanchai in what appeared to be the largest demonstration yet. (http://bit.ly/1pmPg8Z)

** Hundreds of young women and girls are leaving their homes in western countries to join Islamic fighters in the Middle East, causing increasing concern among counter-terrorism investigators. Girls as young as 14 or 15 are travelling mainly to Syria to marry jihadis, bear their children and join communities of fighters, with a small number taking up arms. Many are recruited via social media. (http://bit.ly/1uWZvo3)

The Telegraph

** Islamist terrorists have released a third video of John Cantlie, a British journalist held prisoner for two years, in which he delivers a scripted propaganda attack against Barack Obama's strategy in Iraq and Syria. Cantlie, wearing an orange Guantanamo-style jumpsuit, delivers the words directly to the camera using a sing-song tone as if to undermine the message. (http://bit.ly/1BxpkgR)

** Children as young as 11 are becoming victims of an alarming rise in so-called revenge pornography, new figures have revealed. The sinister practice, in which highly personal and sometimes explicit images are posted on the Internet, often by disgruntled ex-lovers, has become increasingly widespread in recent years. (http://bit.ly/1vqq717)

Sky News

** The UK Foreign Office said it was "concerned" by the heavy response in its former colony Hong Kong, but China has warned the international community not to "interfere." Chinese Foreign Ministry spokesman Hua Chunying said: "Hong Kong is China's Hong Kong. Hong Kong is purely our internal affair." (http://bit.ly/1orLM4W)

** There is "immense fear among everybody" in Baghdad with some too frightened to leave their homes due to the threat from Islamic State, according to a vicar in the city. Canon Andrew White spoke to Sky News as IS militants were reportedly only a mile away from the capital amid clashes with Iraqi soldiers. (http://bit.ly/YDXkLP)

The Independent

** The world's wildlife population is less than half the size it was just four decades ago, with unsustainable human consumption and damage from climate change destroying valuable habitats at a faster rate than previously thought, a new report has warned. (http://ind.pn/1xuY5py)

** Police were called to investigate an EU flag flying in a Northern Irish town, after a resident reportedly mistook the well-known emblem for an "Arabic flag." The flag was flying in celebration of the Ryder Cup outside a house in Holywood - the hometown of golfer Rory McIlrory who went on to help Europe win the trophy. (http://ind.pn/YI7hYl)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
S&P Case-Shiller home price index for July at 9:00--consensus flat m/m
Chicago PMI for September at 9:45--consensus 62.0
Consumer confidence for September at 10:00--consensus 92.5

ANALYST RESEARCH

Upgrades

AMAG Pharmaceuticals (AMAG) upgraded to Outperform from Market Perform at FBR Capital
Addus HomeCare (ADUS) upgraded to Outperform from Perform at Oppenheimer
Alcoa (AA) upgraded to Buy from Neutral at BofA/Merrill
Associated British Foods (ASBFY) upgraded to Outperform from Neutral at Credit Suisse
CSC (CSC) upgraded to Outperform from Market Perform at Raymond James
Century Aluminum (CENX) upgraded to Buy from Neutral at BofA/Merrill
Flagstar Bancorp (FBC) upgraded to Neutral from Sell at BTIG
Lockheed Martin (LMT) upgraded to Buy from Hold at Stifel
Mellanox (MLNX) upgraded to Overweight from Neutral at Piper Jaffray
NiSource (NI) upgraded to Outperform from Neutral at Credit Suisse
NuVasive (NUVA) upgraded to Buy from Hold at Brean Capital
Patterson-UTI Energy (PTEN) upgraded to Equal Weight at Morgan Stanley
Raytheon (RTN) upgraded to Buy from Hold at Stifel
Seventy Seven Energy (SSE) upgraded to Buy from Hold at Jefferies
TIBCO (TIBX) upgraded to Equal Weight from Underweight at Barclays
Teekay (TK) upgraded to Buy from Hold at Deutsche Bank
Toyota (TM) upgraded to Overweight from Neutral at JPMorgan

Downgrades

CARBO Ceramics (CRR) downgraded to Underweight from Equal Weight at Morgan Stanley
Einstein Noah (BAGL) downgraded to Hold from Buy at Jefferies
Endocyte (ECYT) downgraded to Hold from Buy at Brean Capital
Kellogg (K) downgraded to Underweight from Equal Weight at Morgan Stanley
Seattle Genetics (SGEN) downgraded to Underperform from Neutral at BofA/Merrill
Vitamin Shoppe (VSI) downgraded to Neutral from Overweight at Piper Jaffray

Initiations

Apple (AAPL) initiated with a Hold at Jefferies
CDW Corporation (CDW) initiated with an Outperform at RBC Capital
EPAM Systems (EPAM) initiated with a Positive at Susquehanna
Kirby (KEX) initiated with a Neutral at Goldman
Nxt-ID (NXTD) initiated with an Outperform at Northland
ORBCOMM (ORBC) initiated with a Buy at CRT Capital
Range Resources (RRC) initiated with an Outperform at Imperial Capital
US Ecology (ECOL) initiated with an In-Line at Imperial Capital

COMPANY NEWS

EU says Apple (AAPL) tax deal with Ireland not at arm's length
News Corp (NWSA) to acquire Move, Inc. (MOVE) for $21 per share, or approximately $950M
Ford (F) announced that it won't achieve FY14 profit goals
Apple (AAPL) iPhone 6, iPhone 6 Plus to be available in China on Friday, Oct. 17
Alibaba (BABA) subsidiary invested RMB 2.81B in Beijing Shiji Information Technology
Catalyst Pharmaceutical (CPRX) said results from Phase 3 trial of Firdapse met co-endpoints
Ballard Power (BLDP) received ElectraGen fuel cell system order
Energy XXI (EXXI) forecast Q1 production at mid-point of guidance

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Cintas (CTAS), Cintas (CTAS), SYNNEX (SNX)

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

NEWSPAPERS/WEBSITES

Softbank (SFTBF), DreamWorks (DWA) discussions may have slowed, WSJ reports
As DreamWorks (DWA) talks slow, Softbank (SFTBF) mulls investment in Legendary, Hollywood Reporter says
GM (GM) CEO to unveil strategy to deliver profit, quality goals, WSJ reports
AstraZeneca (AZN) shifting focus to cancer, diabetes, Nikkei reports
AMC Networks (AMCX) in talks to buy 50% stake in BBC America, Bloomberg reports

SYNDICATE

Fidus Investment (FDUS) files automatic common stock shelf
Lentuo International (LAS) files $300M mixed securities shelf
RCS Capital (RCAP) files to sell 464K shares for holders
Sabra Health Care (SBRA) 6M share Secondary priced at $24.25
Trina Solar (TSL) announces offering of 7M American depositary shares

Junk bond investors suffered their biggest quarterly loss since 2011, losing 1.7% in Q3 pushing yields up to one-year highs (despite Treasury yield compression). Managers, knowing full well the underlying liquidity to handle any further selling is not there are out en masse explaining that "high-yield should bounce back in the fourth quarter," relying on the fact that 'historical' defaults are still low and the economy is recovering (as if that's not priced in already). The worst hit segment of the junk market is CCCs and below - at 22-month lows - as Bernanke and Yellen forced investors ever further along the risk spectrum for yield. Of course, equity markets (Russell 2000 aside) have ignored much of this decline until recently, but the plunge in leveraged loan issuance suggests all that cheap-buy-back-funding is rapidly disappearing (even for the best credits and biggest names).

As Bloomberg reports,

High-yield bond investors worldwide have been hurt by the biggest quarterly losses in three years as geopolitical tensions and the threat of a U.S. interest-rate increase curbed risk appetite.

Speculative-grade notes forfeited 1.7% in the last three months, the most since the third quarter of 2011, according to Bank of America Merrill Lynch index data; the average yield on the debt climbed to a one-year high of 6.26% on Sept. 29, the data show

The junkiest of the junk was worst hit... after being driven to that insanity by The Fed...

And stocks are starting to catch on...

And issuance is plunging...

removing the buyback-funding that "fundamentals" need to engineer reality for stocks.

Source: Bloomberg

As we warned in May 2013... Gross Exposes $42 Trillion Bond Market’s Key Flaw in Exit (BBG).... hint: no liquidity
WTI Crude Slips Below $90 for First Time in 17 Months (BBG)
Traders Thank Fed for Once-in-Decade Surge in Profit (BBG)
Islamic State committing 'staggering' crimes in Iraq: U.N. report (Reuters)
Philippine Islamist militants threaten to behead German on October 17 (Reuters)
Draghi’s Buying Spree for the ECB Might Start Modestly (BBG)
Russian Officials Say No Plans for Capital Controls (WSJ)
Indians Join the Wave of Investors in Condos and Homes in the U.S. (NYT)
Leader of Mexican drugs cartel captured (FT)
Dallas Ebola patient vomited outside apartment on way to hospital (Reuters)
Goldman chat room a message to Wall St (FT)
Angry former workers: Angry Birds Maker Rovio to Cut up to 130 Jobs in Finland (WSJ)
Steven Cohen Urges Court to Dismiss Ex-Wife’s Fraud Suit (BBG)
As PIMCO bleeds assets, Gross shows risk of star culture (Reuters)
Caltech Leads World University Rankings for Fourth Year (BBG)
U.S. Apartment Vacancies Rise for First Time Since 2009 (BBG)
Commodity ETF Outflows Reach Highest This Year on Supply (BBG)
China backs Hong Kong leader CY Leung over tear gas (FT)

Overnight Media Digest

WSJ

* Secret Service Director Julia Pierson resigned after coming under intense pressure following an embarrassing breach of security at the White House two weeks ago. (http://on.wsj.com/10m0Iwa)

* Health authorities are monitoring for symptoms of Ebola in at least a dozen people who came into contact with a Liberian man before he was hospitalized in Dallas, a move to prevent the virus's spread in the U.S. (http://on.wsj.com/1rGPsmT)

* American consumers are buying new cars and trucks at the strongest pace in years, offsetting car makers' troubles elsewhere and leading the biggest U.S. auto maker to forecast fat profits ahead. (http://on.wsj.com/1sO9y28)

* The Coca-Cola Co, bowing to pressure from lead investor Warren Buffett, announced changes to its executive pay plan that will result in fewer stock awards. (http://on.wsj.com/1E2LU4W)

* Pacific Investment Management said investors pulled $23.5 billion from the Pimco Total Return fund in September, the firm's largest-ever monthly outflow, with the largest amount on the day founder Bill Gross abruptly quit. (http://on.wsj.com/1sOcig7)

* Bank of America Corp's board voted to make Brian Moynihan chairman as well as chief executive, capping a comeback for a banker who survived the regulatory scrutiny and huge losses that followed the financial crisis. (http://on.wsj.com/1rGPsn5)

* Some of the world's largest banks have stopped contributing to many of the financial benchmarks to avoid potential litigation, as a result of the Libor and foreign exchange rate rigging scandal.

* German ecommerce company Rocket Internet AG priced its shares at 42.50 euros ($53.6265). The share listing is expected to raise gross proceeds of 1.4 billion euros and give it a market value of 6.7 billion euros.

* France and Italy have increased their defiance of EU budget targets as the two countries go into talks relating to their public finances with their European partners in the coming weeks.

* UK Prime Minster David Cameron vowed to lower income taxes for 30 million people and keep a competitive corporate tax policy. These tax cuts will cost 7.2 billion pounds a year when fully implemented in 2020.

* Google Inc announced it would stop publishing snippets of German publisher Axel Springer's articles in its search results. This action follows a dispute between both the groups over intellectual property rights. (1 US dollar = 0.7925 euro)

NYT

* Pimco's flagship fund, once billed as the world's biggest bond fund, is shrinking fast. In September, investors pulled $23.5 billion from the Pimco Total Return Fund, with the largest redemptions coming on Sept. 26, the day Bill Gross stunned Wall Street by resigning from the firm he co-founded more than 40 years ago. (http://nyti.ms/1rNUmjx)

* Coca-Cola Co, facing sharp shareholder criticism of its executive pay, on Wednesday announced changes to the compensation plan that set off the squall. (http://nyti.ms/10lZYXP)

* Federal and state authorities, a group that includes prosecutors in New York, Alabama and Texas, are zeroing in on the most powerful, and arguably the least regulated, rung of the subprime auto loan chain, used-car dealerships, according to people briefed on the investigations. Already, they have found hundreds of fraudulent loans that together total millions of dollars. (http://nyti.ms/1vz65mf)

* A federal bankruptcy judge on Wednesday upended the widely held belief that public workers' pensions have a special status in California that makes them impossible to cut, further chipping away at the idea that pensions are sacrosanct in a municipal bankruptcy. (http://nyti.ms/1uf22vX)

* David Neil, senior Justice Department Prosecutor said he planned to depart the government at the end of the week, capping an eight-year Justice Department career. (http://nyti.ms/1ps2MIG)

* The proxy advisory firm Institutional Shareholder Services amplified calls for Allergan Inc's board to hold off from making an all-cash acquisition that would scuttle an existing takeover offer from Valeant Pharmaceuticals International Inc and Pershing Square Capital Management. (http://nyti.ms/1oAB502)

* Bank of America Corp said on Wednesday that Brian Moynihan, its chief executive, would assume the additional role of chairman. (http://nyti.ms/1oCs5HM)

* Relational Investors, one of the most prominent activist investors, is planning to start a new fund that will give more day-to-day control to the firm's younger executives, a person briefed on the matter said on Wednesday. (http://nyti.ms/1rxuRDT)

* The German technology company Rocket Internet priced its initial public offering at the top of its price range at 42.5 euros ($53.8) a share on Wednesday, valuing the company at 6.7 billion euros, or roughly $8.4 billion. (http://nyti.ms/1tj1QYh)

Canada

THE GLOBE AND MAIL

** A federal cyberbullying bill, C-13, that includes controversial new surveillance powers - and immunity for telecommunications companies that voluntarily hand over private data to police - has taken another step toward becoming law, despite a recent Supreme Court ruling that critics say is at odds with the bill. (http://bit.ly/1r0pYND)

** Canada's largest school board is joining a handful of other academic institutions in taking steps to sever its ties to a language and culture program controlled by the Chinese government. A Toronto District School Board committee voted on Wednesday evening to terminate the Confucius Institute. All but one member on the planning and priorities committee voted in favour of terminating the accord. (http://bit.ly/1vzP5wd)

** Tough new federal anti-corruption rules risk disqualifying several key government suppliers, jeopardizing government plans to buy items ranging from ships and fighter jets to computer systems. At least five foreign multinationals - BAE Systems PLC, Siemens AG, Alcatel-Lucent SA, Tyco International Inc and Hewlett-Packard Co have been convicted of crimes overseas and consequently face possible 10-year bans from doing business with Ottawa. (http://bit.ly/1mU12w3)

NATIONAL POST

** The Stephen Harper government plans further changes to its oft-maligned veterans charter, hoping to take the political sting out of complaints by ex-soldiers promising to campaign against them in the next election. (http://bit.ly/1psCwOk)

** As the debate over the Scarborough subway rages in the Toronto mayoral race, Ontario's transportation minister was forced on Wednesday to clarify again that the Liberal government is "moving forward" with the transit project, after the finance minister refused to commit to such a position. (http://bit.ly/1tjwmkL)

** The Bank of Canada will be forced to renew warnings of the possibility for higher interest rates in order to halt a "bubble" from forming in the housing market, according to Pacific Investment Management Co Managing Director Ed Devlin. (http://bit.ly/1thjewB)

Corporate Finance

* Colombian Natural Resources, owned by investment bank Goldman Sachs Group Inc, will re-start coal exports and re-establish mining operations after the government helped broker a deal for its use of Drummond's Caribbean Sea port, according to government and industry sources.

* China Investment Corp and AVIC Capital Co Ltd have ended talks to acquire Avolon Holdings Ltd (IPO-AVOL.N), making it likely that the aircraft leasing company will pursue an initial public offering, according to people familiar with the matter.

* Amazon.com Inc's India unit plans to sell packaged food and beverages, starting mid-October, according to a person with direct knowledge of the launch. (bit.ly/1BAIAtJ)

* Hochtief AG, the German building group controlled by Spain's ACS, is close to the sale of its Formart real estate business, two sources familiar with the matter told Reuters on Wednesday.

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of September 27 at 8:30--consensus 297K
Factory orders for August at 10:00--consensus down 9.3%

ANALYST RESEARCH

Upgrades

Autodesk (ADSK) upgraded to Neutral from Sell at Citigroup
Autodesk (ADSK) upgraded to Outperform from Market Perform at Cowen
Autodesk (ADSK) upgraded to Outperform from Neutral at Credit Suisse
Bank of America (BAC) upgraded to Buy from Neutral at UBS
Barrick Gold (ABX) upgraded to Hold from Sell at Canaccord
Electronics for Imaging (EFII) upgraded to Buy from Neutral at Citigroup
Encana (ECA) upgraded to Buy from Hold at Deutsche Bank
Equity One (EQY) upgraded to Neutral from Sell at Citigroup
Fossil (FOSL) upgraded to Buy from Hold at ISI Group
Gentex (GNTX) upgraded to Outperform from Market Perform at Wells Fargo
IntercontinentalExchange (ICE) upgraded to Buy from Hold at Deutsche Bank
Kinder Morgan (KMI) upgraded to Outperform from Market Perform at Wells Fargo
Mattel (MAT) upgraded to Market Perform from Underperform at BMO Capital
NASDAQ (NDAQ) upgraded to Buy from Hold at Deutsche Bank
Pandora (P) upgraded to Buy from Hold at Topeka
Preferred Bank (PFBC) upgraded to Outperform from Market Perform at Raymond James
PulteGroup (PHM) upgraded to Neutral from Sell at Goldman
Time Warner (TWX) upgraded to Hold from Sell at Topeka
Twitter (TWTR) upgraded to Overweight from Neutral at JPMorgan

Downgrades

A10 Networks (ATEN) downgraded to Neutral from Buy at Citigroup
Enphase Energy (ENPH) downgraded to Neutral from Buy at BofA/Merrill
Francesca's (FRAN) downgraded to Hold from Buy at Canaccord
Intuit (INTU) downgraded to Underweight from Equal-Weight at Evercore
JPMorgan (JPM) downgraded to Neutral from Buy at UBS
Motorola Solutions (MSI) downgraded to Neutral from Buy at Citigroup
NVR (NVR) downgraded to Sell from Neutral at Goldman
ONEOK (OKE) downgraded to Neutral from Overweight at JPMorgan
PNC Financial (PNC) downgraded to Hold from Buy at Jefferies
Tower International (TOWR) downgraded to Market Perform from Outperform at Wells Fargo
U.S. Steel (X) downgraded to Hold from Buy at KeyBanc
WebMD (WBMD) downgraded to Hold from Buy at Stifel

Initiations

Delek US (DK) initiated with an Outperform at RBC Capital
Hanesbrands (HBI) initiated with an Outperform at Credit Suisse
HollyFrontier (HFC) initiated with a Sector Perform at RBC Capital
Insys Therapeutics (INSY) initiated with an Outperform at RBC Capital
Madison Square Garden (MSG) initiated with a Neutral at JPMorgan
Marathon Patent Group (MARA) initiated with a Buy at Ladenburg
Marathon Petroleum (MPC) initiated with a Top Pick at RBC Capital
Patent Properties (PPRO) initiated with a Buy at Ladenburg
Phillips 66 (PSX) initiated with a Sector Perform at RBC Capital
Ply Gem (PGEM) reinstated with a Neutral at Credit Suisse
Rightside Group (NAME) initiated with a Buy at B. Riley
Rubicon Project (RUBI) initiated with a Buy at B. Riley
Salesforce.com (CRM) initiated with a Neutral at DA Davidson
Splunk (SPLK) initiated with a Buy at Stifel
Stillwater Mining (SWC) initiated with a Neutral at Goldman
Tesoro (TSO) initiated with an Outperform at RBC Capital
Valero (VLO) initiated with an Outperform at RBC Capital
Varonis (VRNS) initiated with an Outperform at JMP Securities

COMPANY NEWS

BofA (BAC) CEO Moynihan elected Chairman of the Board of Directors
Starboard Value raises stake in RealD (RLD) to 9.9% from 9.1%, proposes $12 buyout
NFL, DirecTV (DTV) extend NFL Sunday Ticket in new multi-year deal
Arotech (ARTX) CEO Robert S. Ehrlich steps down replaced by Steven Esses
Dollar General (DG) extends tender offer to acquire Family Dollar to Oct. 31
EMC (EMC) names Zane Rowe CFO
Liquidity Services (LQDT) announces business realignment, new senior leadership
Netflix (NFLX) signs deal deal with Adam Sandler for four feature films
NewLink Genetics (NLNK) terminates CFO Gordon Link
Qihoo 360 (QIHU) announces $200M share repurchase plan
Tesla (TSLA) CEO says time to 'unveil D, something else'

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Global Payments (GPN), McCormick (MKC), National American University (NAUH)

Companies that missed consensus earnings expectations include:
Park Electrochemical (PKE)

Global Payments (GPN) ups FY15 cash EPS view to $4.65-$4.75, consensus $4.60
Darden (DRI) sees Q2 EPS in upper end of 26c-28c, consensus 26c
McCormick (MKC) raises FY14 adjusted EPS view to $3.30-$3.37, consensus $3.28
Agrium (AGU) sees Q3 EPS 45c-55c, consensus 68c
PTC Inc. (PTC) sees Q4 revenue at or above high end of $340M-$355M, consensus $349.03M

NEWSPAPERS/WEBSITES

Masimo (MASI) wins $466M verdict in patent suit with Philips, Bloomberg says
Royal Bank of Canada (RY) prop desk spin-off plan shot down by regulators, WSJ says
Scripps Networks (SNI) reaches licensing deal with Netflix, WSJ reports
Verizon (VZ) withdraws target to throttle unlimited LTE data plans, Gigaom says
Vivendi looking for acquisitions in U.S. media space, NY Post reports

SYNDICATE

AAC Holdings (AAC) 5M share IPO priced at $15.00
Atento (ATTO) 10M share IPO priced at $15.00
Calithera Biosciences (CALA) 8M share IPO priced at $10.00
Digital Ally (dgly) files to sell 1.19M shares for holders
JP Energy (JPEP) 13.75M share IPO priced at $20.00
Memorial Resource (MRD) files to sell 27.8M shares for holders
Portola Pharmaceuticals (PTLA) files to sell 10M shares
Radius Health (RDUS) files to sell common stock
VWR Corp (VWR) 25.532M share IPO priced at $21.00
Wayfair (W) 11M share IPO priced at $29.00

Liberian Rubber Farm Becomes Sanctuary Against Ebola (WSJ)
The World’s Most Powerful Central Banker: Janet Who? (BBG)
Islamic State moves into south west of Syrian Kurdish town (Reuters)
Waldorf to Be Biggest Chinese Property Purchase in U.S. (BBG)
Spain Seeks People in Contact With Ebola-Infected Nurse (BBG)
Hong Kong protests at crossroads as traffic, frustration pile up (Reuters)
Immigration: Grim Caseload at the Border (WSJ)
China Cuts Thousands of ‘Phantom’ Workers From State Payroll (BBG)
U.S., U.K. Regulators Push to Settle Deutsche Bank Libor Case This Year (WSJ)
Wall Street Moles Go to NY’s Top Cop, Spurning SEC Cash (BBG)
Pimco's outflow headaches only just beginning (Reuters)
Japan Lawmakers Flag Need for Exit Strategy as Yen Falls (BBG)
At 78, Former Executive Still Flips Burgers for $7.98 (BBG)
Marc Andreessen on Finance: ‘We Can Reinvent the Entire Thing’ (BBG)
Russia Spends $1.68 Billion Reserves in 2 Days to Buoy Ruble (BBG)
AT&T Says Employee Gained Unauthorized Access to Data (BBG)
Samsung Electronics heads for annual profit fall after weak third-quarter guidance (Reuters)
Rio Tinto rejects Glencore merger approach amid iron ore slump (Reuters)
Millennials Spurring Canadian Condo Boom Bet on Rates (BBG)
A Trader Nicknamed ‘BearWhale’ Is Freaking Out the Bitcoin Markets (NYMag)

Overnight Media Digest

WSJ

* The U.S. Supreme Court effectively expanded the right of gay marriage to more than half the nation Monday as it let stand lower-court rulings that struck down bans in five states. (http://on.wsj.com/1ttRDsc)

* After months bemoaning Democrats' financial advantage, the National Republican Senatorial Committee collected a record $15.5 million in September - more than doubling its August haul of $6 million. (http://on.wsj.com/1BKTNrG)

* A group of volunteer scientists and immigrant-rights activists are helping officials in Texas identify unknown migrants who die each year trying to sneak across the U.S.-Mexico border. (http://on.wsj.com/ZPAl1x)

* Latin America is on track this year to post its slowest rate of annual growth since 2009, when the global financial crisis began to be felt in the region, the World Bank said Tuesday. The bank cut its growth forecast for the region by nearly half to 1.2 percent, following expansions of 2.4 percent and 3 percent in the previous two years. (http://on.wsj.com/1q7y7j8)

* Samsung Electronics Co estimated its third-quarter operating profit more than halved from a year earlier, hit by weak smartphone sales, forcing the company to rely more on its chip business to drive future earnings growth. As stiff competition from Chinese vendors continues to pressure its mobile division profit, investors have sold off Samsung shares on concerns about its outlook. (http://on.wsj.com/1CQzpI0)

* Hackers who breached JP Morgan's computer network earlier this year also tried to infiltrate a number of other financial institutions, but the companies believe they were unsuccessful. (http://on.wsj.com/1q7AJxp)

* Glencore approached Rio Tinto in July about a takeover that would have been among the biggest deals in mining history, but its proposal was rejected. (http://on.wsj.com/1s75Fnb)

* U.S. regulators on Monday said they would review the overall process for deciding whether big financial firms are "systemically important." The move, announced at a meeting of the Financial Stability Oversight Council, showed how the group of top U.S. regulators is trying to fend off criticism from the financial industry and members of Congress while also establishing itself as the prime U.S. watchdog for spotting financial-system risks. (http://on.wsj.com/1nXV6D8)

* Hilton Worldwide Holdings Inc is selling its flagship hotel, the historic Waldorf Astoria in Manhattan, for $1.95 billion, illustrating the heated competition - particularly among foreigners - for famous luxury properties that only a few years ago struggled to fill their rooms. (http://on.wsj.com/10HOMVs)

* Regulators are in talks with Deutsche Bank over a possible settlement of hundreds of millions of dollars to resolve rate-rigging allegations. (http://on.wsj.com/1uvmd8Z)

* Blackstone Group LP and Carlyle Group LP are exploring new ways to buy global companies in partnership with major investors, including potentially making acquisitions outside their existing funds, according to people familiar with the firms' thinking. (http://on.wsj.com/1q3XRgr)

* Apple Inc last year said it would invest $700 million to build the world's biggest artificial-sapphire factory. On Monday, the company running that factory - GT Advanced Technologies Inc - filed for bankruptcy protection. The bankruptcy filing comes less than a month after Apple unveiled new iPhones with glass screens, rather than sapphire. (http://on.wsj.com/ZaB7oC)

* Live Nation Entertainment Inc is in talks to buy a majority of C3 Presents, the promotion company behind festivals such as Lollapalooza and Austin City Limits, according to a person familiar with the matter. (http://on.wsj.com/1xjOO0x)

* After spending seven years persuading companies to go public, Duncan Niederauer is switching sides. The former chief executive of the New York Stock Exchange's parent is taking a part-time role at Battery East Group LLC, a small firm that helps private companies raise money from big investors. (http://on.wsj.com/1nXUJsj)

The European Commission is set to begin a formal probe into allegations that Luxembourg allowed Amazon.com Inc to benefit illegally from state subsidies for its European operations for almost 10 years, the Financial Times reported on Monday.

Volkswagen AG said it will use robots to cope with the shortage of workers caused by Germany's retiring baby boomers, to ensure that the car manufacturing is not affected.

Former Deutsche Bank AG CEO Josef Ackermann has been nominated as chairman of Bank of Cyprus, its U.S. based investors Wilbur Ross and Tyrus Capital said on Monday.

Euro Disney said on Monday it had agreed a 1 billion euro funding deal backed by its largest shareholder, the Walt Disney Co, which includes a share sale and a debt restructuring, to allow it to invest in the business.

NYT

* The Justice Department is preparing a fresh round of attacks on the world's biggest banks, again questioning Wall Street's role in a broad array of financial markets. The Justice Department has widened its focus to include a criminal investigation into banks that set an important benchmark for interest rate derivatives, a previously unreported development that coincides with international regulators proposing overhauls to the rate-setting process. (http://nyti.ms/1uuZHNz)

* Henry Paulson, who was Treasury secretary when the government rescued the American International Group, said on Monday that a bankruptcy of the insurance giant would have been "catastrophic" for the economy, but acknowledged that the terms of the government's bailout were "punitive." (http://nyti.ms/1EmVyzs)

* In the latest move, Blockchain, a Bitcoin wallet provider and software developer, is expected to announce on Tuesday that it has closed a roughly $30.5 million fund-raising round, led by Lightspeed Venture Partners and Wicklow Capital. The investment, raised from Blockchain's first round of outside financing, is one of the biggest in the digital currency industry to date.(http://nyti.ms/1xYMPlx)

* Postmedia Network Canada Corp will buy Quebecor Inc's Sun Media newspaper assets for C$301 million ($269.62 million) for the group, which includes The Toronto Sun and The London Free Press. (http://nyti.ms/1nbk41b)

* Electra Private Equity said on Monday that its shareholders had rejected a bid by activist investor Edward Bramson for two seats on the firm's board. The rejection came after a spirited back-and-forth between Electra, a British private equity firm, and Sherborne Investors Management, Mr. Bramson's New York-based investment vehicle, in the weeks ahead of Monday's shareholder meeting. (http://nyti.ms/1uvugmh)

* Thrive, which has invested in popular start-ups like Instagram and Warby Parker, plans to announce on Monday that it has raised a new $400 million fund, its third since its founding four years ago. Money for the new fund came from existing investors like Princeton University and the Wellcome Trust, as well as new mostly not-for-profit institutional investors. (http://nyti.ms/1rewoJ4)

* Late Monday in New York, Rio Tinto, the British-Australian mining giant, said it had been approached by its smaller rival Glencore Plc about a $150 billion merger, but declined to pursue a deal. (http://nyti.ms/1pJWLac)

* A week after California enacted a landmark law restricting the ways education technology companies can use the information they collect about elementary through high school students, a group of leading industry players is pledging to adopt similar data protections nationwide. The 14 companies include Microsoft Corp ; Houghton Mifflin Harcourt, the educational publishing house; Amplify, a developer of digital curriculums; and Edmodo, an online network for schools that allows teachers to assign homework and measure students' progress. (http://nyti.ms/1yIX52s)

Canada

THE GLOBE AND MAIL

** Prime Minister Stephen Harper invited the front-runner for Toronto's mayor election John Tory to meet with him in Ottawa, The Globe and Mail has learned. Harper - a public supporter of the Ford family before the drug and police scandals of the past year - sought a meeting with Tory at which the pair discussed a wide range of topics, including the mayoral race and the future of Canada's largest city. (http://bit.ly/1oLVC1J)

** The number of Canadian military advisers deployed to Iraq is rising as the Harper government defends its plan to send CF-18 fighters to strike Islamic State militants by telling Parliament that humanitarian aid alone is an insufficient response to the Mideast crisis. (http://bit.ly/1xkIaaj)

** Cpl. Ron Francis, the New Brunswick Mountie who garnered national attention for smoking medical marijuana while in uniform, has been found dead of an apparent suicide. Francis made national headlines last year after he complained he wasn't allowed to smoke medicinal marijuana for post-traumatic stress disorder while in uniform. (http://bit.ly/1vJAZrd)

NATIONAL POST

** In an attempt to shelter himself from accusations of anti-Semitism following a Toronto mayoral debate, Doug Ford declared on Monday that his wife is Jewish. (http://bit.ly/1s7em1O)

** State-owned Kuwait Foreign Petroleum Exploration Co. (Kufpec) is investing $1.5-billion in Chevron Corp's liquids-rich shale resources in about 330,000 net acres in the Kaybob area of the Duvernay in west-central Alberta, the companies said. Chevron will remain the operator and has commenced a full appraisal drilling program that ends in 2017. (http://bit.ly/ZPNhV9)

** Air Canada and its pilots' union have reached a tentative 10-year labour deal, a full year and a half before the current contract expires, in a signal that once-icy labour relations are beginning to thaw. (http://bit.ly/1yJthTy)

Britain

The Times

Bank to ring-fence balances up to 1 million pounds

Bank customers who place large temporary sums in their accounts after selling their home or inheriting money will qualify for special protection under new Bank of England proposals. Under the financial regulator's plans, "temporary high balances" of as much as 1 million pounds (1.61 million US dollar) will qualify for the full deposit protection that applies only to the first 85,000 pounds of money in a bank.(http://thetim.es/ZPrRY8)

Recession looms over eurozone amid German factory slowdown

German factory orders collapsed in August at the fastest rate in five years as investor confidence in the eurozone took another beating. Amid fears that the currency bloc is slipping back into recession, economists said that the shock slump in Germany made the prospect of full-scale quantitative easing more likely. (http://thetim.es/1uuuz0s)

The Guardian

Virgin Atlantic scraps Little Red domestic services

Virgin Atlantic has announced plans to scrap its domestic airline, Little Red, after just 18 months. The carrier has struggled to fill seats on its flights linking London Heathrow with Edinburgh, Aberdeen and Manchester and finally admitted defeat after weeks of speculation that the operation would be axed. (http://bit.ly/1nb9OWz)

Tesco turns to Ikea and Compass to beef up board

Tesco Plc has bolstered its board with the appointment of the former Ikea chief and the chief executive of Compass as non-executive directors. The composition of the supermarket's board has been criticised after a series of profit warnings and last month's revelation that expected first-half profits had been overstated by 250 million pounds. (http://bit.ly/1EmqVtU)

The Telegraph

BSkyB shareholders wave through Sky Europe takeover

British Sky Broadcasting Group Plc shareholders have overwhelmingly approved the company's plan to buy Sky Deutschland and Sky Italia from Rupert Murdoch's Twenty-First Century Fox Inc. (http://bit.ly/ZPsgd8)

France cautions Germany not to push Europe too far on austerity

France has denounced the Eurozone' s austerity regime as deeply misguided and issued a blunt warning to Germany and the EU institutions that demands for further belt-tightening may set off a political backlash, endangering European stability. (http://bit.ly/1vIIDSC)

Sky News

TPG Eyes 2 billion pounds bid for Tesco Clubcard arm

Sky News has learned that TPG, one of the world's biggest buyout firms, made an approach several months ago to Tesco Plc about acquiring Dunnhumby, a wholly owned subsidiary that bankers say is worth well over 2 billion pounds. (http://bit.ly/10Geyto)

Banks face shake-up at payments firm Vocalink

Sky News has learned that Andrea Leadsom, the city minister, and Mark Garnier, an influential member of the Treasury Select Committee, recently met bank executives and the boss of Vocalink to discuss the company's future ahead of the launch of the independent payments industry regulator next spring. (http://bit.ly/1vGPs7k)

The Independent

Walt Disney in 1 billion euros bail-out for loss-making Euro Disney theme park

Walt Disney Co has come to the rescue of its loss-making French theme park with plans for a 1 billion euros (1.26 billion US dollar) bail-out. The funding deal for Euro Disney could see the suburban Paris-based theme park removed from its French stock market listing. (http://ind.pn/1s3lsEC)

Conde Nast moves beyond print in profit squeeze

Even magazines giant Conde Nast is feeling the squeeze as the publisher of Vogue and GQ diversifies beyond print by investing more in technology, ecommerce and education. Pre-tax profits at UK arm Conde Nast Publications tumbled 16 per cent to 8.8 million pounds last year, with revenues dipping 6.3 per cent to 110 million pounds.(http://ind.pn/1vIMZcw)

Corporate Finance

* Private-equity firm TPG has approached troubled British grocer Tesco PLC to buy its data gathering and analysis subsidiary Dunnhumby, which is worth well over 2 billion pounds ($3.21 billion), the Sky News reported on Monday.

* Occidental Petroleum Corp, the fourth-largest U.S. oil and gas producer by market capitalization, is looking to sell its North Dakota oil assets for as much as $3 billion as the company seeks to focus on profitable regions, Bloomberg reported on Monday.

* Live Nation Entertainment Inc, the concert and ticketing giant, is in advanced talks to buy a majority stake in C3 Presents, an independent concert promoter, whose portfolio includes the popular Lollapalooza and Austin City Limits festivals. The prospective deal that has been in negotiations for months but still not completed, would give Live Nation a stake of 51 percent in C3 Presents and value C3 at around $250 million, the New York Times reported, citing two people with knowledge of the talks. (nyti.ms/1s5OvXT)

* Blockchain, a Bitcoin wallet provider and software developer, is expected to announce on Tuesday that it has closed a roughly $30.5 million fund-raising round, led by Lightspeed Venture Partners and Wicklow Capital. The investment, raised from Blockchain's first round of outside financing, is one of the biggest in the digital currency industry to date, the New York Times reported. (nyti.ms/1xYMPlx)

* Billionaire Patrick Drahi's cable and telecoms company Altice SA is looking to acquire the Portuguese assets of Brazilian carrier Oi SA, a source familiar with the matter told Reuters.

* Apollo Global Management LLC and Riverstone Holdings LLC are preparing Talos Energy LLC for an initial public offering that could value the oil and gas company at over $2 billion, including debt, according to people familiar with the matter.

* Spanish power firm Iberdrola has hired JPMorgan Chase & Co to sell some foreign renewable assets which could raise up to 2 billion euros ($2.52 billion) to help fund an acquisition in the fast-growing U.S. market, three sources with knowledge of the matter said.

* Thailand's Bangkok Airways Co Ltd launched on Monday an up to $604 million initial public offering that people familiar with the deal said was priced lower than previous plans as prospects for a pick-up in tourism remain weak.

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
JOLTS job openings for August at 10:00--consensus 4.71M
Consumer credit will for August at 15:00--consensus up $20.0B

ANALYST RESEARCH

Upgrades

Air France-KLM (AFLYY) upgraded to Overweight from Underweight at JPMorgan
Alcobra (ADHD) upgraded to Outperform from Market Perform at FBR Capital
Becton Dickinson (BDX) upgraded to Buy from Hold at Stifel
CNOOC (CEO) upgraded to Outperform from Market Perform at Bernstein
China Unicom (CHU) upgraded to Overweight from Equal Weight at Barclays
Crown Holdings (CCK) upgraded to Outperform from Neutral at Macquarie
Dick's Sporting (DKS) upgraded to Buy from Neutral at Goldman
Fortuna Silver Mines (FSM) upgraded to Outperformer from Sector Performer at CIBC
Horsehead Holding (ZINC) upgraded to Outperform from Market Perform at FBR Capital
Ingersoll-Rand (IR) upgraded to Buy from Neutral at Goldman
IntercontinentalExchange (ICE) upgraded to Buy from Neutral at Citigroup
Leidos (LDOS) upgraded to Neutral from Underperform at Credit Suisse
MGM Resorts (MGM) upgraded to Buy from Hold at Deutsche Bank
Natus Medical (BABY) upgraded to Outperform from Market Perform at William Blair
Noodles & Company (ndls) upgraded to Buy from Hold at Jefferies
RockTenn (RKT) upgraded to Buy from Neutral at BofA/Merrill
Sun Life Financial (SLF) upgraded to Overweight from Equal Weight at Barclays
WellCare (WCG) upgraded to Buy from Neutral at Sterne Agee
Yamana Gold (AUY) upgraded to Neutral from Underweight at HSBC

Downgrades

Alcobra (ADHD) downgraded to Hold from Buy at Canaccord
BAE Systems (BAESY) downgraded to Hold from Buy at Cantor
CareFusion (CFN) downgraded to Neutral from Overweight at JPMorgan
Commerce Bancshares (CBSH) downgraded to Underperform at Raymond James
Dunkin' Brands (DNKN) downgraded to Hold from Buy at Jefferies
Great-West Lifeco (GWLIF) downgraded to Equal Weight from Overweight at Barclays
Hibbett Sports (HIBB) downgraded to Neutral from Buy at BofA/Merrill
Las Vegas Sands (LVS) downgraded to Hold from Buy at Deutsche Bank
PG&E (PCG) downgraded to Fair Value from Buy at CRT Capital
Ryanair (RYAAY) downgraded to Neutral from Overweight at JPMorgan
Sunesis (SNSS) downgraded to Hold from Buy at Cantor
Sunesis (SNSS) downgraded to Neutral from Buy at Roth Capital
Total System (TSS) downgraded to Equal-Weight from Overweight at Evercore
U.S. Bancorp (USB) downgraded to Market Perform from Outperform at Raymond James

Initiations

Apple (AAPL) reinstated with a Buy at BofA/Merrill
Aratana Therapeutics (PETX) initiated with an Overweight at Piper Jaffray
BioMed Realty (BMR) initiated with a Buy at Mizuho
BlackBerry (BBRY) initiated with an In-Line at Imperial Capital
CBOE Holdings (CBOE) initiated with a Neutral at Citigroup
Hibbett Sports (HIBB) initiated with a Neutral at Goldman
Karyopharm (KPTI) initiated with an Outperform at Wedbush
Keurig Green Mountain (GMCR) initiated with a Buy at Goldman
Materialise (MTLS) initiated with a Buy at Canaccord
NRG Yield (NYLD) resumed with a Neutral at Citigroup
Navios Acquisition (NNA) initiated with a Buy at GMP Securities
Paylocity (PCTY) initiated with an Outperform at Northland
ReWalk Robotics (RWLK) initiated with a Buy at Jefferies
ReWalk Robotics (RWLK) initiated with a Hold at Canaccord
ReWalk Robotics (RWLK) initiated with an Equal Weight at Barclays
Salem Communications (SALM) initiated with a Buy at Noble Financial
TESARO (TSRO) initiated with a Buy at Jefferies
UnitedHealth (UNH) initiated with an Overweight at Piper Jaffray
Vantiv (VNTV) initiated with an Outperform at Pacific Crest
Vectrus (VEC) initiated with a Buy at CRT Capital
VeriFone (PAY) initiated with an Outperform at Pacific Crest

COMPANY NEWS

The European Commission opened an in-depth investigation to examine whether the decision by Luxembourg's tax authorities with regard to the corporate income tax to be paid by Amazon (AMZN) in Luxembourg comply with the EU rules on state aid
Rio Tinto (RIO) confirmed no discussions taking place with Glencore
Yara International (YARIY) CEO Jørgen Ole Haslestad resigned amid CF (CF) merger talks
Turner Broadcasting System, a subsidiary or Time Warner (TWX), will reduce its global workforce of some 14,000 full-time employees by approximately 10%
Zillow (Z) reported 82.81M monthly unique users in September

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
CalAmp (CAMP)

Companies that matched consensus earnings expectations include:
Container Store (TCS), Team (TISI)

Samsung (SSNLF) reports Q3 operating profit guidance 4.1T won vs. 10.20T won last year
Aegion (AEGN) reduces FY14 EPS guidance to $1.27-$1.37, consensus $1.54
Adobe (ADBE) targets FY15 adjusted EPS approximately $2.00, consensus $2.07
IDT Corp (IDT) reports Q4 adjusted EPS 39c, one estimate 37c
Container Store (TCS) sees FY14 adjusted EPS 41c-46c, consensus 49c
Container Store (TCS) raises FY14 EPS view to 52c-57c with gains, from 49c-54c

NEWSPAPERS/WEBSITES

Justice Department set to attack more large banks by year end, NY Times reports (BAC, C, GS, UBS, DB, BCS, JPM;MS, USB, WFC)
Deutsche Bank (DB) in talks to settle rate-rigging allegations, WSJ reports
Live Nation (LYV) in talks to acquire majority stake in C3 Presents, NY Times reports
Visa's (V) CIO leaves company to join Charles Schwab (SCHW), Re/code reports
Becton Dickinson (BDX) acquisition of CareFusion (CFN) will benefit investors, Barron's says

SYNDICATE

BreitBurn Energy (BBEP) files to sell 14M common units representing limited partners
Burlington Stores (BURL) files to sell 8M shares for holders
KCAP Financial (KCAP) files to sell 3M shares of common stock
Kosmos (KOS) files to sell 15M shares for holders
Natural Resource Partners (NRP) 8.5M share Secondary priced at $12.02
iBio (IBIO) files to sell 23.42M shares for holders

Five U.S. airports to screen for fever (Reuters)
Danger, central banks trading with each other: Bipolar U.S. Stocks See Biggest Mood Swing in Three Years (BBG)
Draghi Policies Blunted in Berlin as German Protests Grow (BBG)
White policeman kills black teen in St Louis, triggering fresh protests (Reuters)
Au Revoir to France’s Welfare Model as Socialists Cut Spending (BBG)
Here comes Roberto Cavalski (Reuters)
There are 49 U.S. venture-capital-backed companies with a valuation of $1 billion or more—the highest number on record (WSJ)
Pressure mounts on Hong Kong leader over payout amid crisis (Reuters)
JPMorgan Hackers Said to Probe 13 Financial Firms (BBG)
Google’s Tax Setup Faces French Challenge (WSJ)
Russia Moves Ruble Band in Biggest Intervention Since March (BBG)
Islamic State seizes one third of Syrian town Kobani (Reuters)
Morgan Stanley Bankers Poised for Biggest Bonus Bump (BBG)
Judge Says Poker Champ Robbed the Casino (BBG)

Overnight Media Digest

WSJ

* The Liberian man who was diagnosed with Ebola in Dallas, the first case of the deadly disease in the United States, has died. The United States plans to start checking the temperatures of passengers arriving at major airports from West African countries with high rates of Ebola, federal officials said Wednesday. (http://on.wsj.com/1qlNXqy)

* At least 49 U.S. venture-capital-backed companies have a valuation of $1 billion or more, the highest number on record, as many find private funding readily available and see no rush to go public. (http://on.wsj.com/1vNZIeS)

* Investigators believe that the hackers who broke into J.P. Morgan Chase Co targeted at least 12 other financial-services companies, including Fidelity Investments, people familiar with the matter said, suggesting the cyberattack spree on Wall Street was broader than previously thought. (http://on.wsj.com/1oSJT1x)

* A Google tax fight with France calls into question an arrangement the tech giant and many other companies use that channels revenue from around Europe to a country that has favorable tax laws. (http://on.wsj.com/1tDx90f)

* Glenn Murphy will step down next year as chief executive of Gap Inc, where he reversed a long-running sales slump but more recently has struggled to reinvigorate the company's namesake brand. (http://on.wsj.com/1sfXVQL)

* Bill Gross's new bond fund at Janus Capital Group Inc took in a net $66.4 million in September, a large increase. But that was just a sliver of the total funds that left his former Pimco fund last month. (http://on.wsj.com/1uE9dOo)

* Regulators' intensified efforts to curtail lending they see as risky has led several big banks to sit out a plum takeover deal, in the latest sign the initiative is shaking up the private-equity buyout market. Banks including J.P. Morgan Chase, Bank of America and Goldman Sachs Group Inc decided not to participate in the funding of Vista Equity Partners' expected takeover of payment-processing company TransFirst Inc, fearful that doing so would flout leveraged-lending guidance from regulators. (http://on.wsj.com/1vSnDuC)

* Citigroup will return $16 million to customers who were allegedly overcharged for advisory fees on certain investment accounts, according to an agreement with the state of New York. (http://on.wsj.com/1sifleD)

* The pace of improvement in fuel economy, now at a record 24.1 miles a gallon, is slowing as cheaper gas encourages consumers to buy trucks and sport-utility vehicles, new figures from the U.S. Environmental Protection Agency showed. (http://on.wsj.com/1xrqF8f)

* The private equity owners of Spie <IPO-SPIE.PA> are planning to sell up to 1.2 billion euros ($1.53 billion) of new and existing shares on the Euronext Paris exchange, valuing it at up to 2.75 billion euros.

* London based Primestone, a firm founded by three former Carlyle Group LP executives, has received permission from regulators to start investing money from its first hedge fund.

* The London Metal Exchange (LME) won its appeal against a court ruling that had halted new rules to cut backlogs in withdrawing metals from its global network of warehouses.

* VTB Capital, the investment arm of sanctioned Russian lender VTB Bank, is in talks to buy most of Italian fashion house Roberto Cavalli, according to people familiar with the matter. The deal could lead to VTB acquiring as much as 70 percent of the company.

NYT

* U.S. President Barack Obama and his top national security advisers began receiving periodic briefings on the huge cyberattack at JPMorgan Chase & Co and other financial institutions this summer, part of a new effort to keep security officials as updated on major cyberattacks as they are on Russian incursions into Ukraine or attacks by the Islamic State. (http://nyti.ms/1v2Z5jK)

* In a long-awaited move, Citigroup Inc's lending unit, OneMain Financial, is preparing for a $50 million initial public offering. The spinoff of OneMain, which makes personal loans often to consumers with damaged credit, comes five years after Citigroup first signaled that it intended to jettison the business. The bank has said OneMain no longer fits with its strategy of catering to more affluent consumers, but previous attempts to sell the business have fallen through. (http://nyti.ms/1tDAXhL)

* Elliott Management, the activist hedge fund that owns 2.2 percent of the technology giant EMC Corp, is calling for the $57 billion company to break itself apart. (http://nyti.ms/10SOz1P)

* Truecaller, a global mobile phone directory and caller identification service, which has more than 85 million users worldwide, announced on Wednesday that it had raised $60 million from the West Coast venture giants Kleiner Perkins Caufield & Byers and Sequoia Capital, as well as from Atomico, the venture fund started by Niklas Zennstrom, the co-founder of Skype. (http://nyti.ms/1sideYr)

* The U.S. federal government firmly pushed back on Wednesday against the notion that its 2008 bailout of the insurance giant American International Group Inc was beyond the powers of the country's central bank. Former Treasury Secretary Timothy Geithner testified that after AIG was unable to find private investors to help it avert bankruptcy in September 2008, and after a pair of Wall Street banks rejected a proposal from the Fed that they make a loan to AIG, the government had every legal authority to act. (http://nyti.ms/1sfVMoh)

Canada

THE GLOBE AND MAIL

** Brian Cornell, the new chief executive officer of Target Corp, is taking a hands-on approach to fixing the company's problems in Canada, making regular trips to check stores here as he heads into the all-important holiday season. (http://bit.ly/1CXeT8N)

** The Canadian government is preparing to alter copyright law so politicians can use news footage and other journalistic content for attack ads and campaign spots without asking broadcasters or publishers for permission. (http://bit.ly/1vSRvXT)

** The Royal Canadian Mounted Police and Canada Security Intelligence Service have redeployed investigators to track nearly 100 foreign fighters and would-be terrorists as part of the government's attempts to crack down on supporters of such groups as Islamic State in Canada and abroad, federal officials said. (http://bit.ly/1tEb01I)

NATIONAL POST

** Stakeholders have approved a controversial but essential step in U.S. Steel Canada Inc's bankruptcy protection process, allowing the company to move ahead with a restructuring that could result in the sale of its Canadian operations. An agreement was reached Wednesday on a $185 million loan that will allow the company to continue operations during the restructuring process. The loan will come from U.S. Steel Canada's parent company, United States Steel Corp. (http://bit.ly/1sgFsDH)

** A new poll commissioned by an assisted-dying advocacy group, Dying with Dignity Canada, suggests Canadians overwhelmingly support changing the law to allow Dr. Brett Belchetz, a Toronto based emergency physician, to perform what would now be punishable by up to 14 years in prison - actively help a dying patient kill himself. (http://bit.ly/1vOAlcZ)

** Dozens of police officers aided by two cadaver dogs scoured a rural area north of Toronto on Wednesday in hopes of solving the abiding mystery of just what happened to Nicole Morin, a girl last seen in her bathing suit on her way to go swimming with a friend 29 years ago. (http://bit.ly/1sgFbAH)

Hong Kong

-- Apple Daily boss Jimmy Lai Chee-ying said the impending talks between student leaders and the government would re-energise the democracy movement, even though the "dialogue definitely will give us disappointments and broken promises." (bit.ly/1t3wzhG)

-- A tour agency has sued Occupy Central co-founder Benny Tai Yiu-ting for lost business during the recent protests, but legal experts have doubts on whether such a case can succeed. (bit.ly/1oSk9lV)

-- The number of mainland visitors to Macau over the week-long National Day holiday surged 17 percent year on year as tourists avoided Hong Kong due to Occupy Central protests that paralysed parts of the city. Mainland visitor arrivals to Hong Kong were up 5.4 percent over the period, significantly lower than the 16 percent increase last year. (bit.ly/1tCTDhQ)

THE STANDARD

-- Hin Sang Group's initial public offering has been 860 times oversubscribed in the retail tranche, making it the fifth most subscribed stock this year after 1,045.5 times by Honworld Group. (bit.ly/10S32er)

-- Second-tier mainland cities saw a big boom in home sales during Golden Week, while deals in first-tier cities plunged by up to 30 percent on the same period last year. Encouraged by central bank relaxation of lending rules, Nanjing sold 2,859 units during the National Day break, up 48.44 percent from a year ago. (bit.ly/10S3olf)

-- The University of Hong Kong downgraded its forecast for Hong Kong's economic growth this year, citing economic woes in the mainland and the U.S. amid widespread expectations of interest rate hikes. Hong Kong's gross domestic product is now expected to grow by 2.2 percent in 2014 from the previous forecast of 3.4 percent. (bit.ly/1uDmIxZ)

HONG KONG ECONOMIC JOURNAL

-- Chinese mobile phone maker Xiaomi Inc saw device shipments to its warehouses rising 20 percent quarter on quarter in July-September to about 18 million devices, chief executive officer Lei Jun said on a post on Weibo.

HONG KONG ECONOMIC TIMES

-- Sihuan Pharmaceutical Holdings Group said it would pay 10 million yuan ($1.63 million) to the Institute of Microbiology and Epidemiology of the Academy of Military Medical Sciences for the ownership and franchise of anti-Ebola drug jk-05.

Britain

The Times

EDF CLEARED TO BUILD NEW HINKLEY POINT REACTOR

Brussels has cleared EDF Energy's 16 billion stg project to build the UK's first nuclear reactor for a generation. The European Commission had originally suggested that generous consumer funded subsidies awarded to the project by the government could amount to illegal state aid. (http://thetim.es/1pRWHFq)

WONGA AD BANNED BY ADVERTISING WATCHDOG

A Wonga commercial featuring its notorious puppets has been banned by the advertising regulator for failing to disclose the payday lender's high interest rate. (http://thetim.es/1rhM2DD)

The Guardian

FIRSTGROUP LOSES SCOTRAIL FRANCHISE TO ABELLIO

FirstGroup PLC has lost the contract to operate the 2.5billion stg ScotRail franchise to Abellio, an offshoot of Dutch national railways, after running the service for more than 10 years. (http://bit.ly/1sbUg6u)

EUROPEAN COMMISSION TO PROBE AMAZON'S TAX STATUS IN LUXEMBOURG

The European commission has widened its investigation into the tax treatment of multinationals, opening a formal investigation into whether online retailer Amazon.com Inc's complex tax arrangements in Luxembourg are so generous as to amount to state aid for the $146billion (90billion stg) group. (http://bit.ly/1vPelxy)

The Telegraph

SAINSBURY'S TO OPEN JESSOPS STORES IN SUPERMARKETS

J Sainsbury PLC is to open Jessops camera shops within its supermarkets as the grocery retailer looks to downsize its largest stores. Jessops will open three stores with Sainsbury's supermarkets by January before potentially rolling out the partnership further across the country. (http://bit.ly/1tCvwjb)

FIVE MILLION UK WORKERS IN CHAOS AFTER TAX BILLS MISCALCULATED TWICE

More than five million British workers face uncertainty after leaked emails revealed that their tax bills for last year may have been wrongly calculated. HM Revenue and Customs has privately admitted that those who underpaid or overpaid income tax last year may still have paid the wrong amount. (http://bit.ly/1qk8vje)

Sky News

UK SOLDIERS DEPLOYED TO EBOLA EPICENTRE

British troops are to be deployed to Sierra Leone on a mission to help fight the spiralling ebola outbreak in West Africa. Up to 700 soldiers from the Royal Scots Borders 1st Battalion, based in Holywood, Northern Ireland, will eventually be stationed near the capital Freetown. (http://bit.ly/ZtofKG)

MOBILE FIRM THREE FINED OVER COMPLAINTS

The telecoms watchdog has fined mobile operator Three over breaches related to customer complaints. Ofcom penalised the firm 250,000 stg for failure to comply with its rules. (http://bit.ly/1pRZmyZ)

The Independent

POUNDWORLD'S 'EVERYTHING 1 STG' SLOGAN BANNED BY WATCHDOG AFTER 3 STG ITEM SPOTTED IN STORE

Poundworld has been banned from using its "everything 1 stg" slogan by the advertising watchdog after a customer with an eye for detail spotted a 3 stg item. (http://ind.pn/1pRZZZt)

UK SCHOOL BANS NINE-YEAR-OLD BOY FROM SIERRA LEONE - OVER 'FEARS HE HAS EBOLA'

A nine-year-old boy from Sierra Leone who was due to attend a school in Stockport has had his placement cancelled because of the "misguided hysteria" displayed by some parents over fears of the spread of Ebola. (http://ind.pn/1yMrvRF)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of October 4 at 8:30--consensus 293K
Wholesale trade inventories for August at 10:00--consensus up 0.3%

ANALYST RESEARCH

Upgrades

Acuity Brands (AYI) upgraded to Outperform from Perform at Oppenheimer
Apple (AAPL) upgraded to Outperform from Perform at Oppenheimer
Basic Energy (BAS) upgraded to Hold from Underperform at Jefferies
Golden Minerals (AUMN) upgraded to Buy from Neutral at Roth Capital
Helmerich & Payne (HP) upgraded to Buy from Hold at Jefferies
LivePerson (LPSN) upgraded to Outperform from Neutral at Credit Suisse
Luminex (LMNX) upgraded to Market Perform from Underperform at Cowen
Pacific Coast Oil (ROYT) upgraded to Buy from Hold at Stifel
Pacific Coast Oil (ROYT) upgraded to Buy from Hold at Stifel
Pioneer Energy (PES) upgraded to Buy from Hold at Jefferies
Randgold (GOLD) upgraded to Overweight from Neutral at HSBC
Toyota (TM) upgraded to Buy from Neutral at BofA/Merrill
Transocean (RIG) upgraded to Outperform from Sector Perform at Iberia
Universal Technical (UTI) upgraded to Outperform from Market Perform at Wells Fargo
Vulcan Materials (VMC) upgraded to Buy from Neutral at Longbow

Downgrades

A10 Networks (ATEN) downgraded to Sector Perform from Outperform at Pacific Crest
ARC Group (ARCW) downgraded to Hold from Buy at Canaccord
Arrowhead (ARWR) downgraded to Sector Perform from Outperform at RBC Capital
Church & Dwight (CHD) downgraded to Market Perform from Outperform at BMO Capital
Colgate-Palmolive (CL) downgraded to Market Perform from Outperform at BMO Capital
Denbury Resources (DNR) downgraded to Neutral from Outperform at RW Baird
Gap (GPS) downgraded to Market Perform from Outperform at Wells Fargo
Gap (GPS) downgraded to Neutral from Buy at Janney Capital
Gap (GPS) downgraded to Neutral from Buy at Sterne Agee
Grifols (GRFS) downgraded to Neutral from Buy at BofA/Merrill
Hubbell (HUB.B) downgraded to Perform from Outperform at Oppenheimer
RingCentral (RNG) downgraded to Neutral from Buy at Goldman
TransDigm (TDG) downgraded to Hold from Buy at Deutsche Bank

Initiations

Allergan (AGN) initiated with a Buy at Deutsche Bank
Axiall (AXLL) initiated with an Underperform at RBC Capital
Black Diamond (BDE) initiated with an In-Line at Imperial Capital
Delek US (DK) initiated with a Buy at Deutsche Bank
Dow Chemical (DOW) initiated with an Outperform at RBC Capital
DuPont (DD) initiated with a Sector Perform at RBC Capital
GrubHub (GRUB) initiated with a Buy at CRT Capital
Hilton (HLT) initiated with an Outperform at JMP Securities
HollyFrontier (HFC) initiated with a Hold at Deutsche Bank
HomeAway (AWAY) initiated with an Outperform at BMO Capital
IPC The Hospitalist Co. (IPCM) initiated with a Neutral at RW Baird
LyondellBasell (LYB) initiated with a Top Pick at RBC Capital
MEDNAX (MD) initiated with an Outperform at RW Baird
Marathon Petroleum (MPC) initiated with a Buy at Deutsche Bank
Men's Wearhouse (MW) initiated with a Buy at Jefferies
Microsoft (MSFT) initiated with a Market Perform at BMO Capital
Nortek (NTK) initiated with an In-Line at Imperial Capital
Olin Corp. (OLN) initiated with a Sector Perform at RBC Capital
PBF Energy (PBF) initiated with a Hold at Deutsche Bank
PPG Industries (PPG) initiated with an Outperform at RBC Capital
Phillips 66 (PSX) initiated with a Hold at Deutsche Bank
Sherwin-Williams (SHW) initiated with an Outperform at RBC Capital
Tesoro (TSO) initiated with a Buy at Deutsche Bank
Triumph Group (TGI) initiated with a Buy at Jefferies
Valero (VLO) initiated with a Buy at Deutsche Bank
Valspar (VAL) initiated with a Sector Perform at RBC Capital
Westlake Chemical (WLK) initiated with an Outperform at RBC Capital

COMPANY NEWS

Endo (ENDP) to acquire Auxilium (AUXL) in cash, stock transaction for approximately $2.6B
QLT Inc. (QLTI) merger with Auxilium (AUXL) terminated for superior proposal from Endo (ENDP)
Carl Icahn said he will send an open letter to Apple (AAPL) CEO Tim Cook today
AMD (AMD) appointed Dr. Lisa Su as CEO, effective immediately, succeeding Rory Read
Gap (GPS) said Art Peck would succeed Glenn Murphy as CEO, effective February 1, 2015, and said September SSS were flat vs. a 3% decrease last year
Alcoa (AA) continues to see 2014 global aluminum demand growth of 7%

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
PepsiCo (PEP), E2open (EOPN), Alcoa (AA)

Companies that missed consensus earnings expectations include:
DragonWave (DRWI), ARC Group (ARCW), EXFO Inc. (EXFO)

Allergan (AGN) raised Q3 EPS to $1.76-$1.78 from $1.44-$1.47, consensus $1.48, sees FY14 non-GAAP EPS $6.20-$6.25, consensus $5.81
PepsiCo (PEP) raises FY14 EPS growth guidance to 9% from 8%
ChipMOS (IMOS) reports Q3 revenue $190.7M, consensus $189.90M
Biomet reports Q1 sales up 6% to $775M
Destination Maternity (DEST) narrows Q4 adjusted EPS view to (10c)-(5c) from (14c)-(4c)

NEWSPAPERS/WEBSITES

Citigroup (C), Etrade (ETFC), others attacked by same JPMorgan (JPM) hackers, Bloomberg reports (ADP, RF)
Source of JPMorgan (JPM) cyberattack still unclear, NY Times says
Apple (AAPL) suppliers push back plans to produce larger iPad, WSJ reports
Microsoft (MSFT) rumored to cancel Surface tablet business, DigiTimes reports
Twitter (TWTR) news head Vivian Schiller leaving company, Re/code reports
Costco (COST) stock still a 'buy', Barron's says

SYNDICATE
Hubspot (HUBS) 5M share IPO priced at $25.00
Onconova (ONTX) files to sell 228,647 shares for holders
PTC Therapeutics (PTCT) files to sell 3M shares of common stock
USD Partners (USDP) 9.12M share IPO priced at $17.00
Veritex (VBTX) 2.7M share IPO priced at $13.00

First a secret "Doomsday book", and now this?

Flash back to those days in September 2008 when the financial system was on the verge of collapse and when first Lehman failed and then AIG was knocking on heaven's door. While the story of the former has been written, it is the still incomplete history of the latter that is the reason why Hank Greenberg, the largest shareholder of AIG at the time, is suing the US government for bailing out AIG, alleging the US exorted shareholders when it provided a $182 billion bailout to the insurance company whose Joseph Cassano had seemingly sold insurance on every insolvent mortgage-related security: a strategy which worked in a rising market and led to a near systemic catastrophe when the market crashed.

We won't debate the merits of Greenberg's lawsuit, which is currently raging in court under STARR INTERNATIONAL COMPANY V. UNITED STATES, U.S. Court of Federal Claims 11-cv-00779 (it should be painfully clear by now that neither AIG nor crony capitalism as it exists now would have survived had Goldman and its NY Fed branch not extended several trillion in taxpayer funds to preserve the status quo), however we will note one thing: recall that when the terms of the AIG bailout first made waves in 2010 courtesy of Darrell Issa we found out something pecliar: none of the members of the Fed had any intentions on making their procedure public.

As Reuters reported back then:

New York Federal Reserve officials debated in November 2008 whether the terms of the bailout of American International Group could be kept secret from the public and whether securities regulators would even permit it to do so, according to emails obtained by Reuters on Friday.

The emails, given to Capitol Hill lawmakers by the New York Fed, revealed that some officials at the New York Fed were surprised and displeased by AIG's plan to file an exhibit with the U.S. Securities and Exchange Commission that would provide specific details of the Fed-engineered rescue package.

Lawmakers have labeled the AIG rescue a "backdoor bailout" to 16 large U.S. and European banks.

In a November 24, 2008 email, Alex Latorre, a New York Fed assistant vice president, asked: "But can they make these docs public without our consent? Aren't we parties to this and shouldn't we have a say?"

Paul Whynott, a New York Fed vice president, responded, "I noted that making the documents public was not contemplated in our last turn."

Why indeed should the Fed think that it is accountable to the US public: after all by now it has become abundantly clear the Fed only works for a very tiny subsegment of the broader population: those who have a personal net worth of at least $50 million or more.

Nonetheless, after much legal fighting most of the documents ultimately did make it into the public domain and as many expected it was proven beyond a doubt that the Fed had an explicit motive of bailing out the otherwise insolvent banks that also happened to be the Fed's directors: entities such as Goldman, JPM, Citi, Merrill (if mostly their bonuses) et al.

And while that may have come as a surprise to the Fed, which recently was stunned to learn that its cooption by Goldman Sachs had been documented by one of its former staffers in the form of some 47 hours of secret tapes, one person knew all along that things could very well escalate and become not only public information, but information of a very angry public if the Fed was unable to preserve a paper-wealth status quo in which personal wealth came from a printer.

That person was one Quince, Edward.

There is one problem: Edward Quince never actually existed. Instead, as the WSJ reports, "Mr. Quince was the pseudonym then-Federal Reserve Chairman Ben Bernanke used on emails when he was conferring with colleagues during the financial crisis. The false name was revealed as evidence as part of a class-action lawsuit against the government by shareholders of American International Group Inc.AIG -2.92%, which received a giant Fed-backed bailout as it teetered toward collapse."

Yup: the world's most powerful central banker was so terrified of leaving a paper trail with his real name in what he clearly realized was borderline illegal meddling in the financial system, he felt compelled to use a pseudonym!

A Justice Department lawyer, Kenneth Dintzer, introduced emails to and from Mr. Quince as evidence in the case on Wednesday, blowing the cover on the world’s perhaps first undercover, super-secret central banker.

On Saturday, Sept. 13, 2008, then-Fed vice chairman Donald Kohn sent an email to then-Fed governor Kevin Warsh, then-New York Fed president Timothy Geithner and the mysterious Mr. Quince, relaying a conversation Fed officials had with AIG. The insurance giant at the time was running out of access to short-term funding, a problem government officials feared could have a calamitous global impact. AIG officials wanted Fed assistance–fast.

“They were vague as to what they expected from us but it sounded like an open-ended liquidity factility,” Mr. Kohn wrote. “‘A bridge to nowhere’ at this point.”

Later in the email, Mr. Kohn went on: “At the end we could blink if they are too connected to fail, but that will open up an unknown can of worms in terms of access to discount-window credit.”

Mr. Quince replied shortly thereafter: “We think they are days from failure. They think it is a temporary problem. This disconnect is dangerous.”

As it turns out, the Fed did blink. Two days after the email Lehman went bankrupt and the biggest depression in US history started, which naturally meant that the Fed had no choice but to double down, and to make mandatory moral hazard its one and only strategy.

That also is very much known. What is not known is why the Fed's chairman was, in official communications, using a made up name?

Mr. Dintzer, the Justice Department attorney, told everyone in the courtroom that Mr. Quince was in fact Ben Bernanke, which Mr. Geithner confirmed on the witness stand.

What is perhaps most shocking is that in a room full of lawyers nobody asked the $64,000,000,000,000 question: why did Ben Bernanke feel compelled to use a pseudonym?

It’s not clear why Mr. Bernanke used a false name for emails during the crisis or when the practice started.

And yet, somehow we have a feeling that Bernanke's surprising departure from the Marriner Eccles building last year, the fact that the DJIA is about to go red on the year, and the fact that nothing that caused the financial crisis of 2008 has been fixed, are all connected.

According to the WSJ, a search of other records shows at least one public reference to Mr. Quince before now. In a hearing of the House Oversight and Government Reform Committee in January 2010, Rep. Spencer Bachus (R., Ala.) read a piece of an email dated March 2009, citing Mr. Geithner (by then the U.S. Treasury Secretary) and William Dudley of the New York Fed: “Secretary Geithner e-mailed William Dudley and Edward Quince, and he said, ‘Where are you on the AIG counterparty disclosure issue?’ You know, are you for disclosing or not?”

The email apparently went on a screen at the hearing, a transcript of the event suggests, but there was no other mention of Mr. Quince after that.

The search for meaning continues:

Furthermore, a Fed spokeswoman, who confirmed Mr. Bernanke’s use of the pseudonym, wouldn’t say why he was using an alias. She said the name didn’t have any particular significance.

Edward Quince doesn’t exactly seem like the type of name you pull out of a hat, but it’s hard to tell what the significance might have been.

Hmm, let's see: Edward Quince.... Quince, Edward.... QE....

Nope. No significance at all.

It wasn't Obama this time: Pakistani teen, Indian activist win Nobel Peace Prize (Reuters)
Surging VIX Shakes Bulls as S&P 500 Charts Go Haywire (BBG)
Global shares hit six-month low as growth worries mount (Reuters)
Police, protesters clash in St. Louis ahead of weekend of rallies (Reuters)
We're Sitting on 10 Billion Barrels of Oil! OK, Two (BBG)
Spain seeks answers as seven more enter Ebola isolation (Reuters)
Iran will sell its oil to Asia in November at the biggest discount (BBG)
Redefining honeypot: U.S. DEA 'most interested' in U.S. investors in Canadian marijuana firms (Reuters)
UKIP Wins First Commons District With Conservative Defector (BBG)
Fake Ebola Patients Help Hospitals Prepare for Next Case (BBG)
Johnson Controls Fires Consultant After Affair With CEO (BBG)
Singapore Condo Builders Brace as $19 Billion Due (BBG)
Fed Aim Off Target as Inflation Descends Near Danger Zone (BBG)
IMF Urges BOJ Pragmatism on Meeting Inflation Timeframe (BBG)
Kurdish Ammo Runs Low in Kobani as Turkey Controls Exit (BBG)
North, South Korea Exchange Fire as Kim Extends Mystery Absence (BBG)
Draghi Clashes With Schaeuble Over Steps for Europe (BBG)

Overnight Media Digest

WSJ

* The White House is drafting options that would allow President Obama to close the detention facility in Guantanamo Bay, Cuba, by overriding a congressional ban on bringing detainees to the United States, senior administration officials said. (http://on.wsj.com/1o2wUiP)

* Turkey's unwillingness to intervene in the battle over a predominantly Kurdish Syrian city on its border has earned the country harsh criticism from Washington, exposing a dangerous rift over how the two allies want to tackle Islamic State's rise. (http://on.wsj.com/1pXKGhK)

* With risks growing that Ebola could flare on foreign shores, the United States is calling for nations to dispatch doctors and nurses to West Africa, where thousands of lives are on the line. Few have heeded the call, but one country has responded in strength: Cuba. (http://on.wsj.com/1w8j8Kf)

* Federal investigators believe the same hackers who stole data from JP Morgan Chase & Co computers this summer also plucked some information from Fidelity Investments, according to people close to the case. It is unclear which Fidelity networks were infiltrated or what types of data were taken from the company, the people said. (http://on.wsj.com/1tIgAQx)

* Symantec Corp, which helped pioneer commercial antivirus software, said it plans to split its cybersecurity and information-management businesses into two publicly traded companies. (http://on.wsj.com/1s1wZlb)

* Endo International, which has already completed a tax-inversion deal, said it would buy Auxilium Pharmaceuticals in a $2.6 billion cash-and-stock deal. (http://on.wsj.com/10Yf1ar)

* Distressed Apple Inc supplier GT Advanced Technologies Inc plans to exit the business of manufacturing sapphire after a failed effort to produce material for Apple's smartphone screens, court documents disclosed. A U.S. bankruptcy judge on Thursday allowed GT to keep secret the details of its problems with Apple which preceded its filing for protection from creditors. (http://on.wsj.com/1CZPgnZ)

* The World Bank's international arbitration court awarded Exxon Mobil Corp $1.6 billion on Thursday in its case against the Venezuelan government over assets expropriated in 2007. The unanimous decision by a panel at the International Center for Settlement of Investment Disputes is a far cry from the $16.6 billion that the U.S. oil major had sought for the nationalization of its Cerro Negro project. (http://on.wsj.com/Zun2CO)

Former head of Anglo-Swiss mining company Xstrata PLC, Mike Davis approached BHP Billiton to buy its bundle of mines. However, BHP rebuffed the bid.

Two former executives at the Italian defence company Finmeccanica SpA were sentenced to two years in jail on Thursday for falsifying invoices regarding a 560 million euros contract to supply helicopters to India.

The European Commission conducted unannounced inspections on Tuesday in several energy companies, which are involved in producing and trading ethanol. The commission said that it is just acting on the concerns "that price benchmarks may have been distorted through anti-competetive behaviour."

The UK government has hired Bank of China Ltd, HSBC Holdings PLC and Standard Chartered PLC to look over the country's first sovereign bond issue designated in China's renminbi currency. These banks will arrange the UK's "dim sum" bond debut, soon after an investor meeting on Oct 13.

NYT

* Since Andrea Orcel, a career deal maker, was named sole chief executive of UBS AG's investment bank two years ago, he has been on a mission to transform UBS's sprawling and unfocused investment bank into a financial powerhouse despite UBS's desire to limit its scope as the bank shifts its resources elsewhere. (http://nyti.ms/1siGGNn)

* Ben Bernanke, a former chairman of the Federal Reserve, was not the most cheerful of witnesses on Thursday as he took the stand in the lawsuit over terms of the 2008 bailout of the insurance giant American International Group Inc. (http://nyti.ms/1oWeWJP)

* Symantec Corp on Thursday became the latest technology company to announce plans to split in two. The company, which has a market value of more than $16 billion, will become two publicly traded companies - one focused on security and the other on information management. (http://nyti.ms/ZhiCyZ)

* Carl Icahn, the billionaire activist investor, said on Thursday that Apple Inc is hugely undervalued in the short term and urged the company to use as much as $100 billion of its $133 billion in cash reserves to repurchase shares. (http://nyti.ms/1BZkid4)

* Dave & Buster's Entertainment Inc, the restaurant and arcade chain, is set to make its public market debut after eight years of private ownership. The company priced its initial public offering on Thursday evening at $16 a share, the bottom of an expected range of $16 to $18. It raised $94.1 million and achieved a valuation of $625.4 million. (http://nyti.ms/1qtFG3S)

* Espirito Santo Financial Group SA, which at one point held about 25 percent of the bailed-out Portuguese lender Banco Espirito Santo SA, said on Thursday that it would file for bankruptcy after it was denied creditor protection by a Luxembourg court last week. Espirito Santo Financial is part of a complex web of companies controlled by the Espirito Santo family. (http://nyti.ms/1xwcYoB)

* Endo International Plc agreed on Thursday to acquire Auxilium Pharmaceuticals Inc for $2.6 billion including debt in the latest deal to reshape the drug industry. (http://nyti.ms/1oUIBDb)

* The Tianhe Chemicals Group Ltd, accused of being a fraud by a short-seller research firm last month, lost about $3 billion in market value when its shares resumed trading in Hong Kong on Thursday after a five-week suspension. (http://nyti.ms/1vVA4WE)

Canada

China

CHINA SECURITIES JOURNAL

- China is set to invest a total of 2 billion yuan ($326.27 million) to build monitoring systems and equipment around its water resources between 2015 to 2017.

SHANGHAI SECURITIES NEWS

- China is working on a scheme, called RQDII2, to allow institutions to use Chinese currency to invest abroad rather than having to convert into local tender, according to central bank official Wang Dan. China is also pushing forward to allow individuals to invest in overseas stocks, he said.

CHINA BUSINESS NEWS

- Agricultural Bank of China Ltd has build a team to work with the London Stock Exchange to develop the first yuan-denominated GDR (global depository receipts) product, the bank's vice president Li Zhenjiang said.

SHANGHAI DAILY

- There have been 26,370 cases of dengue fever in southern Guangdong province, according to figures from local authorities. Six people have died in the outbreak.

- Chinese companies raised $29.8 billion through initial public offerings in the third quarter of the year, according to a report from Chinese consultancy Zero2IPO. This was up from under $2 billion in the same period last year when the mainland IPO market was under a freeze.

CHINA DAILY

- Beijing will restrict industrial activity and vehicle use to lower pollution levels when it hosts the APEC Economic Leaders meeting in November, city authorities said on Thursday. The city struggles with severe pollution levels.

- China will strengthen supervision of food and drugs, according to a notice from the State Council on Thursday. The country has been hit by a spate of recent food safety scares.

Britain

The Times

Lagarde warns of 'lost decade' for eurozone

Europe is at risk of a Japan-style lost decade unless members pull together to fend off the threat of recession, according to Christine Lagarde, managing director of the International Monetary Fund. (http://thetim.es/1o21ZDo)

Fall in mortgage lending as housing market cools

Mortgage lending dropped in August, adding to the mounting evidence of a slowdown in the property market. The number of home loans fell 3 percent from July to 65,400 in August, according to latest figures from the Council of Mortgage Lenders (CML). It was the first month-on-month lending decline since February. (http://thetim.es/1oVrTU0)

The Guardian

Germany needs 'small miracle' to avoid recession after exports fall by 5.8 percent.

German exports suffered the biggest monthly fall in more than five and a half years in August, leaving Europe's largest economy in need of "a small miracle" to avoid recession in the third quarter. (http://bit.ly/1s0o1oc)

Tesco ditches plans to build huge superstore on Margate seafront.

Tesco Plc has ditched plans to build a huge superstore on Margate's seafront in the latest sign of the troubled supermarket's retreat from aggressive expansion. The ailing supermarket group has written to the site's landlord, Freshwater Developments, to terminate its contract to operate the 82,000 sq ft store. (http://bit.ly/1slNV7E)

The Telegraph

Carl Icahn: Apple's share price is half what it should be

Carl Icahn, the billionaire activist investor, has re-booted his campaign for Apple Inc to put its massive $133 billion cash pile to use and buy back shares. In an open letter to Tim Cook, Apple's chief executive, he said the tech giant is still "dramatically undervalued", and that "the more shares repurchased now, the more each remaining shareholder will benefit." (http://bit.ly/1CY8Z7q)

George Osborne: Britain's economic recovery at 'critical' juncture as euro zone 'risks slipping back into crisis'

Britain's economic recovery is at a "critical" juncture and remains vulnerable in the event of another euro zone recession, Chancellor George Osborne has warned. He said recent economic data from the euro zone had shown that the single currency bloc could slip back into crisis and that the UK would "not be immune" from the effects. (http://bit.ly/1vTh7DW)

Sky News

Old Mutual sweetens 650 million pound bid for wealth firm

Old Mutual Plc, a London-listed South African financial services group, is in advanced talks about a 650 million pound ($1.05 billion) takeover of the UK's second-biggest independent wealth manager. (http://bit.ly/1vPuR1v)

Lego drops Shell over Greenpeace spill video

Lego has ended a longstanding partnership with Royal Dutch Shell Plc, after a Greenpeace video used Lego toys to illustrate an Arctic oil spill. The decision comes after the slick parody video by the environmental group went viral online, garnering more than 5 million YouTube hits, over the oil giant's plan to drill in the Arctic. (http://bit.ly/1EAoN1O)

The Independent

Royal Mail sets aside 18 million pounds for international fine on IPO anniversary

Royal Mail Plc has marked the anniversary of its 3.3 billion pound privatisation by setting aside 18 million pounds to cover a potential fine for alleged breaches of competition law at its international parcels business. (http://ind.pn/1vPPTx5)

Avengers 2: Disney handed record 31 million pound tax credit for filming in UK

Walt Disney Co has been handed a record 31.9 million pound tax credit by HM Revenue & Customs in return for agreeing to film the next instalment of its Avengers movie series in Britain. (http://ind.pn/1sj9dmo)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Import prices for September at 8:30--consensus down 0.7%
Treasury budget for September at 14:00--consensus up $72.0B

ANALYST RESEARCH

Upgrades

Aon plc (AON) upgraded to Market Perform from Underperform at BMO Capital
Avon Products (AVP) upgraded to Neutral from Sell at UBS
CIT Group (CIT) upgraded to Neutral from Underperform at Macquarie
Canadian National (CNI) upgraded to Outperform from Market Perform at BMO Capital
Carrefour (CRRFY) upgraded to Neutrall from Conviction Sell at Goldman
DuPont (DD) upgraded to Buy from Hold at Jefferies
Education Management (EDMC) upgraded to Market Perform at Wells Fargo
Endo (ENDP) upgraded to Overweight from Neutral at Piper Jaffray
Fresenius Medical (FMS) upgraded to Buy from Neutral at BofA/Merrill
Halliburton (HAL) upgraded to Buy from Hold at Societe Generale
Johnson & Johnson (JNJ) upgraded to Neutral from Underperform at Credit Suisse
Kindred Healthcare (KND) upgraded to Outperform from Market Perform at Wells Fargo
Liberty Ventures (LVNTA) upgraded to Neutral from Sell at Citigroup
Natural Resource Partners (NRP) upgraded to Outperform at Wells Fargo
Quintiles (Q) upgraded to Buy from Neutral at ISI Group
T-Mobile (TMUS) upgraded to Buy from Hold at Jefferies
Ventas (VTR) upgraded to Buy from Hold at Stifel
Weatherford (WFT) upgraded to Buy from Hold at Societe Generale
Westamerica (WABC) upgraded to Market Perform from Underperform at BMO Capital

Downgrades

BioDelivery Sciences (BDSI) downgraded to Neutral from Buy at Roth Capital
British American Tobacco (BTI) downgraded to Sell from Neutral at Goldman
ICON plc (ICLR) downgraded to Neutral from Buy at ISI Group
Lindsay Corp. (LNN) downgraded to Underweight from Neutral at Piper Jaffray
Manitowoc (MTW) downgraded to Underperform from Market Perform at BMO Capital
Nordson (NDSN) downgraded to Hold from Buy at BB&T
PAREXEL (PRXL) downgraded to Neutral from Buy at ISI Group
Procera Networks (PKT) downgraded to Hold from Buy at Needham
Procera Networks (PKT) downgraded to Hold from Buy at Stifel
Procera Networks (PKT) downgraded to Market Perform from Outperform at William Blair
Procera Networks (PKT) downgraded to Neutral from Buy at Sterne Agee
Sun Communities (SUI) downgraded to Market Perform from Outperform at BMO Capital

Initiations

2U (TWOU) initiated with an Outperform at Pacific Crest
Bloomin' Brands (BLMN) initiated with an Outperform at BMO Capital
Brinker (EAT) initiated with a Market Perform at BMO Capital
Buffalo Wild Wings (BWLD) initiated with an Outperform at BMO Capital
Chipotle (CMG) initiated with a Market Perform at BMO Capital
Chuy's (CHUY) initiated with a Market Perform at BMO Capital
Darden (DRI) initiated with a Market Perform at BMO Capital
EMC (EMC) initiated with a Buy at Jefferies
EPR Properties (EPR) initiated with a Buy at BofA/Merrill
HP (HPQ) initiated with a Hold at Jefferies
IBM (IBM) initiated with an Underperform at Jefferies
McDermott (MDR) initiated with an In-Line at Imperial Capital
Merrimack (MACK) coverage assumed with an Outperform at Oppenheimer
NetApp (NTAP) initiated with a Hold at Jefferies
New Residential (NRZ) initiated with a Neutral at Piper Jaffray
Nimble Storage (NMBL) initiated with a Buy at Jefferies
Noodles & Company (ndls) initiated with an Outperform at BMO Capital
Panera Bread (PNRA) initiated with a Market Perform at BMO Capital
PennyMac Financial (PFSI) initiated with an Outperform at JMP Securities
PennyMac Financial (PFSI) initiated with an Overweight at Piper Jaffray
PennyMac Mortgage (PMT) initiated with a Neutral at Piper Jaffray
Pioneer Natural (PXD) initiated with an Outperform at Imperial Capital
Seagate (STX) initiated with a Buy at Jefferies
Silicon Motion (SIMO) initiated with a Buy at Brean Capital
TE Connectivity (TEL) resumed with a Buy at Citigroup
Texas Roadhouse (TXRH) initiated with a Market Perform at BMO Capital
W.P. Carey (WPC) initiated with a Neutral at BofA/Merrill
Wayfair (W) initiated with a Buy at Janney Capital
Western Digital (WDC) initiated with a Buy at Jefferies
Yelp (YELP) initiated with a Buy at Sterne Agee

COMPANY NEWS

Alaska Air (ALK), flight attendants tentatively agree to five year contract
Amgen (AMGN) blinatumomab granted priority review by FDA
Basic Energy (BAS) reports September well servicing rig count unchanged at 421
Elon Musk says worldwide Tesla (TSLA) fleet has surpassed 500M cumulative miles
General Motors (GM) reports September China sales up 15.2% to 319,936
Greenlight Capital reports 9.99% stake in Civeo Corp. (CVEO), urges CEO change
Infosys (INFY) board approves bonus issue of one share for every share held
Isis Pharmaceuticals (ISIS) reports data from ISIS-SMN Rx Phase 2 study
Liberty obtains competition approval in connection with public offer for Ziggo
MicroStrategy (MSTR) committed to restructuring plan, sees charges $17.0M-$20.0M
Symantec (SYMC) plans to separate into two public companies
Tesla (TSLA) unveils all-wheel-drive version of Model S

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Infosys (INFY), Comtech (CMTL), Barracuda Networks (CUDA), AngioDynamics (ANGO), Helen of Troy (HELE)

Companies that missed consensus earnings expectations include:
VOXX International (VOXX), Family Dollar (FDO), Joe's Jeans (JOEZ)

Companies that matched consensus earnings expectations include:
Performance Sports Group (PSG)

Juniper (JNPR) reports preliminary Q3 adjusted EPS 34c-36c, consensus 38c
Microchip (MCHP) lowers Q2 revenue guidance to $546.2M from $560.0M-$575.9M

NEWSPAPERS/WEBSITES

Ackman added to Fannie (FNMA), Freddie (FMCC) stakes, NY Post reports
Amazon (AMZN) in discussions for Jabong acquisition, Economic Times says
Apple (AAPL) upside potential is 'significant', Barron's says
Berkshire's(BRK.A) Dairy Queen suffers data breach, Bloomberg reports
E-Trade (ETFC) 'touched' by JPMorgan hacking incident, CNBC says
T. Boone Pickens says EXCO (XCO) approached by buyers, Bloomberg says
GT Advanced (GTAT) to ask to wind down sapphire operations, Bloomberg reports
Google (GOOG) allowed to face Rockstar in California court, Reuters says
Netflix (NFLX) spends $150M annually on content recommendations, Gigaom reports
Oracle (ORCL) hires former director of engineering from Google, Re/code reports
Time Warner (TWX) CEO to be questioned on growth plans, NY Post reports
United Continental (UAL) shares could climb 30%, Barron's says

SYNDICATE

Dave & Busters (PLAY) 5.882M share IPO priced at $16.00
Diplomat Pharmacy (DPLO) 13.3M share IPO priced at $13.00
PTC Therapeutics (PTCT) 3M share Spot Secondary priced at $36.25

No Happy Ending for Investors in Central Bank Fairy Tale (BBG)
Ebola Response Strains Hospitals (WSJ)
Obama, foreign military chiefs, to thrash out Islamic State plans (Reuters)
Draghi’s ‘Whatever It Takes’ Plan on Trial at EU Court (BBG)
Too-Big-to-Fail Banks Face Up to $870 Billion Capital Gap (BBG)
Iran’s Message to World: You Need Us to Fight Islamists (BBG)
Facing new oil glut, Saudis avoid 1980s mistakes to halt price slide (Reuters)
Ukraine Grannies Outprice Banks on Hryvnia Black Market (BBG)
HK police use sledgehammers, chainsaws to clear protest barriers, open road (Reuters)
Gazprom Quarterly Net Rises 13%, Misses Estimate on Ukraine Debt (BBG)
Google Adopts Delivery-Service Model, Targets Amazon (WSJ)
German Investor Confidence Drops With Economy Near Recession (BBG)
JPMorgan posts profit as legal costs ease (Reuters)
Koch donors uncloaked (Politico)
Americans face post-foreclosure hell as wages garnished, assets seized (Reuters)
Bond Market Convinced Fed Inflation Goal Elusive This Decade (BBG)
Turkish warplanes hit Kurdish militant targets in southeast (Reuters)
Energy Honeymoon Over as Canadian Stocks Trailing U.S. (BBG)
North Korea leader Kim re-appears, with walking stick (Reuters)

Overnight Media Digest

WSJ

* The challenges specialized centers have encountered with Ebola show the steep learning curve all hospitals are facing. On Monday, the director of the Centers for Disease Control and Prevention, Tom Frieden, said the country needs to boost hospital training and prevention techniques for Ebola. (http://on.wsj.com/1D8qX7f)

* Canadian Pacific Railway Ltd's proposed merger with CSX Corp is being pushed by perhaps the only railroad boss in favor of consolidation. And while CSX did not accept CP Chief Executive Hunter Harrison's approach last week, that is unlikely to be the last word. (http://on.wsj.com/1ERHdv7)

* J.C. Penney Co Inc chose Marvin Ellison, a retail veteran most recently at Home Depot Inc, as its next CEO, picking an executive who is known for his strong operational skills and giving him a long transitional period to come up to speed. (http://on.wsj.com/1p7MN2k)

* Crude producers, from corporations to oil-rich nations, are keeping the spigots open, and there is little sign that global demand will rise quickly enough to help erase the overhang in supplies. (http://on.wsj.com/1CfAqY9)

* Iliad SA has dropped plans to acquire a controlling stake in T-Mobile US Inc, ending a four-month pursuit that would have marked the French telecommunications company's entry into the North American market. (http://on.wsj.com/1wwTA9X)

* Fidelity Investments has named Abigail "Abby" Johnson chief executive, according to an internal memo sent by the mutual-fund firm Monday. (http://on.wsj.com/ZWZyqN)

* Google Inc is expanding its delivery service and will start charging a membership fee, intensifying its battle with Amazon.com Inc for consumer spending. Starting this week, Google will charge $10 a month, or $95 a year, for unlimited same-day or overnight delivery on orders over $15. Nonmembers will pay $4.99 an order, or $7.99 if the order costs less than $15. Until now, the deliveries had been free. (http://on.wsj.com/1tpWvV0)

* For months this summer, unidentified hackers used a previously unknown hole in Microsoft Corp's Windows operating system to spy on Ukrainian officials and an American academic, according to an investigation by a U.S. cybersecurity company. Microsoft said it plans to release a patch for the bug Tuesday. But once it is publicized, other hackers could race to exploit the vulnerability before Windows users update their systems, which often does not happen immediately. (http://on.wsj.com/Zpja5W)

French telecom group Iliad SA said on Monday night that it has dropped its offer to acquire a majority stake in T-Mobile US Inc.

Swiss-based chemicals group Ineos has acquired an 80 percent stake in a shale gas license in Scotland, its second such license in the country.

Novo Banco, which has been put up for sale to rescue it from the wreckage of Banco Espirito Santo SA, has been warned that it will struggle to attract takeover offers more than half the 4.9 billion euros it had hoped for.

U.S. medical technology company Steris Corp offered to buy British sterilisation services provider Synergy Health Plc for about $1.9 billion in cash and stock in a deal that would shift its domicile to the UK and cut its tax bill.

George Osborne, the chancellor, announced on Monday that initial bids for a 40 percent stake in Britain's Eurostar could be made by the end of October.

NYT

* Steris Corp said on Monday that it had offered to buy Synergy Health Plc, a British provider of outsourced equipment-sterilization services, for about $1.9 billion in cash and stock. Steris would reincorporate in Britain in what would be the latest proposed inversion deal. (http://nyti.ms/1vmTm8x)

* Luxury shoe maker Jimmy Choo, which aims to list in London, has narrowed the range of its initial public offering to 140-160 pence from 140-180 pence, valuing the company up to 624 million pounds ($1 billion) at the top end of the range, according to a person familiar with the discussions. (http://nyti.ms/Zpjem0)

* Japanese investment bank Nomura Holdings Inc is accelerating its expansion in the Americas. The bank said on Monday it had hired 13 managing directors and two executive directors for investment banking roles. (http://nyti.ms/1tpWoc7)

* The aircraft leasing unit of General Electric Co announced on Monday that it would buy the Milestone Aviation Group, which leases helicopters, for $1.78 billion. (http://nyti.ms/1qm3nMc)

* A fund led by the activist investor William Ackman stumbled badly in its trading debut in Amsterdam on Monday. The offering price was $25 a share, valuing the fund, Pershing Square Holdings, at $6.2 billion. But the stock took a 12 percent skid in its first day on the Euronext Amsterdam bourse, closing at $22. (http://nyti.ms/1v3fpj2)

* French low-cost telecoms operator Iliad SA said on Monday it was ending its efforts to take over T-Mobile US Inc , despite having increased the size of the stake it was willing to acquire and the price it was willing to pay. (http://nyti.ms/ZBOD59)

* J.C. Penney Co Inc on Monday named a Home Depot Inc executive, Marvin Ellison, as president and as its next chief executive, tapping a seasoned retail hand as it struggles to assure investors that a nascent turnaround after two years of heavy losses will be lasting. (http://nyti.ms/1sAf3iY)

Canada

THE GLOBE AND MAIL

** As clinical trials begin on a Canadian Ebola vaccine, the country's top public health officials are set to discuss whether to strengthen their strategy for preventing or containing an Ebola case after an American nurse fell ill despite efforts to prevent spread of the virus. (http://bit.ly/1vq0tNx)

** TransCanada Corp faces a rough ride in Central Canada over its proposed C$11 billion ($9.78 billion) Energy East pipeline as industrial users and natural-gas distribution companies warn they'll be short-changed by the company's plan to switch the pipeline to gas from oil. (http://bit.ly/1z6IBd8)

** Toronto mayoral candidate Doug Ford is defending his management record at his family label business, contending sales are up and all of the firm's divisions are profitable. During the campaign, the one-term councillor has pointed to his experience as president of Deco Labels and Tags as evidence he is best qualified to manage the public purse. (http://bit.ly/1w3Wm6J)

NATIONAL POST

** Canadian Pacific Railway Ltd has reportedly approached CSX Corp about a tie-up, but a merger of two major North American railroads has virtually no hope of getting a green light from regulators, according to several analysts. (http://bit.ly/1w5tHA5)

** The subject of a massive police manhunt in southern British Columbia after an exchange of gunfire in the tiny community of Slocan last week is dead, Royal Canadian Mounted Police said late Monday. Police say Peter DeGroot was discovered Monday afternoon in the vicinity of the community in British Columbia's West Kootenay region, but they refused to disclose whether further shots were fired. (http://bit.ly/1sB96lW)

** John Tory received a key endorsement in a campaign dominated by transit issues when federal Transport Minister Lisa Raitt on Monday became the latest Conservative MP to back his bid for Toronto mayor. (http://bit.ly/1w3YRGb)

China

SHANGHAI SECURITIES NEWS

- Preparations for the Shanghai-Hong Kong stock connector programme are complete, and brokerages are applying for trading licenses, according to industry insiders.

CHINA SECURITIES JOURNAL

- China's new bank loans is estimated to reach 720-800 billion yuan ($130.61 billion) in September, after a rise in broad money supply, but the growth of trust loan financing may remain at a low level, according to experts.

CHINA DAILY

- China is to unify the safety standards for consumer products from both home and abroad markets in the next three years, said Tian Shihong, the head of the Standardization Administration of China at a work conference.

- Former senior political official Li Daqiu from the Guangxi Zhuang Autonomous Region was sentenced to 15 years in jail for accepting bribes.

SHANGHAI DAILY

- The price of imported milk formula in China will not be affected by fines imposed by the EU on eight European milk exporters for exceeding their production quotas, given global milk supply is adequate, a Chinese expert said.

- Consumer sentiment in Shanghai grew in the third quarter as people were more willing to accept the slow growth in the current economic downturn, according to a research conducted by a local university.

PEOPLE'S DAILY

- Self discipline and obeying the rules are the keys to grow for the party, according to the commentary in the People's Daily.

Britain

The Times

OIL SLIDES AS SAUDIS DIG IN FOR PRICE WAR

The price of Brent crude falls to $87.7 a barrel as the Saudis refuse to slash production to address flush global supply and arrest a dramatic slide in prices. Oil prices have hit a near four-year low after Saudi Arabia indicated it was digging in for a drawn-out price war. (http://thetim.es/11gmTV1)

'DOUBLE IRISH' TAX LOOPHOLE TO BE SEALED OFF

A tax-avoidance loophole - one that is thought to allow the likes of Google, Facebook and Microsoft to save hundreds of millions of dollars legally - could be shut down beginning as early as Tuesday when Dublin announces its annual budget. (http://thetim.es/1voyaiw)

The Guardian

JEAN TIROLE WINS NOBEL PRIZE FOR ECONOMICS

Jean Tirole, the French economist who has used game theory in an attempt to find ways to control the dominance of major companies, has won the Nobel prize for economics. Tirole, of the University of Toulouse, said he was very grateful for the award for his work on "taming powerful firms". (http://bit.ly/1tobnDl)

JIMMY CHOO SET FOR LOWER IPO PRICE

Luxury shoemaker Jimmy Choo is facing the prospect of a lower flotation price for its shares as market turbulence hits companies planning to list in London. (http://bit.ly/1xM1pd8)

The Telegraph

ITALY'S 'UKIP' LAUNCHES DRIVE FOR EURO REFERENDUM

Italy's Five Star Movement has launched a petition drive for withdrawal from the euro to lift the country out of depression and protect Italian democracy, a dramatic turn for a country that was passionately pro-European for 60 years. "We must leave the euro as soon as possible," said Beppe Grillo, the combative comedian-politician and founder of the protest party that swept into Italy's parliament last year with 26 percent of the vote. (http://bit.ly/1D81ydM)

FRANCE'S PM: NOBEL PRIZE WIN MAKES MOCKERY OF FRENCH-BASHING

French Prime Minister Manuel Valls has claimed that the award of the Nobel Prize for economics to France's Jean Tirole makes a mockery of "French-bashing" amid growing criticism of the country's economic management. (http://bit.ly/1vYDU02)

Sky News

FTSE 100 DIRECTORS' EARNINGS UP 21 PCT IN A YEAR

A steep rise in long-term incentives meant directors at FTSE 100 companies earned 21 percent more in the last financial year, a study by employment research specialists Incomes Data Services suggests. (http://bit.ly/1D7GODa)

AMAZON TO CREATE 1,000 UK WAREHOUSE JOBS

Online retailer Amazon has announced plans to hire a further 1,000 staff for its UK warehouse operations. The company, which just a month ago said it was expanding its UK office operations, said the separate announcement would boost staffing levels across its eight existing distribution sites. (http://bit.ly/1sGvOJP)

The Independent

NASDAQ: WE'RE TOP CHOICE FOR TECH IPOS DESPITE ALIBABA REBUFF

Nasdaq is still the top choice for tech firms looking to list on the stock market, according to Hans-Ole Jochumsen, president of global trading and market services at Nasdaq, despite losing out to its bitter rival for the world record Alibaba flotation. (http://ind.pn/1p7gpNk)

EUROSTAR SALE: FRANCE'S SNCF HAS NO INTENTION TO BUY UK STAKE

SNCF, the French majority shareholder in the Eurostar, has ruled out plans to buy the UK's stake in the Channel tunnel train operator as the government started the sale. (http://ind.pn/1sJkKeV)

Fly On The Wall Pre-Market News

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
NFIB small business optimism index for September at 7:30--consensus 95.8

ANALYST RESEARCH

Upgrades

8x8, Inc. (EGHT) upgraded to Buy from Neutral at B. Riley
ARC Document (ARC) upgraded to Outperform from Market Perform at William Blair
AU Optronics (AUO) upgraded to Neutral from Sell at UBS
BancorpSouth (BXS) upgraded to Equal Weight from Underweight at Morgan Stanley
BorgWarner (BWA) upgraded to Buy from Neutral at Goldman
CRH Plc. (CRH) upgraded to Buy from Neutral at Citigroup
Delphi Automotive (DLPH) upgraded to Buy from Neutral at Goldman
EOG Resources (EOG) upgraded to Outperform from Market Perform at Bernstein
Eaton (ETN) upgraded to Overweight from Equal Weight at Barclays
Energizer (ENR) upgraded to Outperform from Market Perform at Wells Fargo
Federal-Mogul (FDML) upgraded to Neutral from Sell at Goldman
HeartWare (HTWR) upgraded to Overweight from Neutral at Piper Jaffray
Helmerich & Payne (HP) upgraded to Outperform from Market Perform at FBR Capital
Israel Chemicals (ICL) upgraded to Buy from Neutral at UBS
Kimco Realty (KIM) upgraded to Neutral from Sell at UBS
Legg Mason (LM) upgraded to Neutral from Underperform at BofA/Merrill
Netflix (NFLX) upgraded to Buy from Neutral at BTIG
Nielsen (NLSN) upgraded to Outperform from Market Perform at Bernstein
Orbitz (OWW) upgraded to Outperform from Market Perform at FBR Capital
Rackspace (RAX) upgraded to Buy from Hold at Evercore
Universal Forest (UFPI) upgraded to Buy from Neutral at Sterne Agee

Downgrades

Advanced Semiconductor (ASX) downgraded to Equal Weight from Overweight at Barclays
Brinker (EAT) downgraded to Hold from Buy at KeyBanc
Cigna (CI) downgraded to Neutral from Buy at Sterne Agee
Corning (GLW) downgraded to Neutral from Buy at BofA/Merrill
EnerNOC (ENOC) downgraded to Neutral from Overweight at JPMorgan
Ford (F) downgraded to Neutral from Buy at Goldman
General Motors (GM) downgraded to Buy from Conviction Buy at Goldman
Goodyear Tire (GT) downgraded to Buy from Conviction Buy at Goldman
Group 1 Automotive (GPI) downgraded to Sell from Neutral at Goldman
Hawaiian Electric (HE) downgraded to Neutral from Outperform at Macquarie
Johnson Controls (JCI) downgraded to Market Perform from Outperform at Wells Fargo
Las Vegas Sands (LVS) downgraded to Neutral from Buy at BofA/Merrill
Lear (LEA) downgraded to Neutral from Buy at Goldman
NetScout (NTCT) downgraded to Hold from Buy at Wunderlich
Texas Roadhouse (TXRH) downgraded to Hold from Buy at KeyBanc
Tyco (TYC) downgraded to Equal Weight from Overweight at Barclays
Wynn Resorts (WYNN) downgraded to Neutral from Buy at BofA/Merrill

Initiations

Akorn (AKRX) initiated with a Buy at WallachBeth
BT Group (BT) initiated with a Hold at Deutsche Bank
CSX (CSX) initiated with a Buy at UBS
Canadian National (CNI) initiated with a Neutral at UBS
Canadian Pacific (CP) initiated with a Buy at UBS
CubeSmart (CUBE) initiated with a Buy at Jefferies
Diamond Resorts (DRII) initiated with a Neutral at Goldman
F.N.B. Corp. (FNB) initiated with a Buy at SunTrust
FirstMerit (FMER) initiated with a Neutral at SunTrust
Kansas City Southern (KSU) initiated with a Neutral at UBS
Michael Kors (KORS) initiated with a Hold at Stifel
National Penn (NPBC) initiated with a Neutral at SunTrust
Norfolk Southern (NSC) initiated with a Buy at UBS
Quantum (QTWW) initiated with an Outperform at FBR Capital
Sovran Self Storage (SSS) initiated with a Buy at Jefferies
Tumi (TUMI) initiated with a Hold at Stifel
Union Pacific (UNP) initiated with a Buy at UBS
Vodafone (VOD) initiated with a Buy at Deutsche Bank

COMPANY NEWS

JPMorgan (JPM) CEO: While challenges remain in recovery, U.S. economy is exception
Google (GOOG) expanded Express delivery service to new cities, to charge membership fee
Luxottica (LUX) named Leonardo Del Vecchio as interim CEO
iSIGHT Partners announced the discovery of a zero-day vulnerability impacting all supported versions of Microsoft Windows (MSFT) and Windows Server 2008 and 2012
Toyota (TM) reported September global hybrid sales surpassed 7M unit mark

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Wolverine World Wide (WWW)

Companies that missed consensus earnings expectations include:
JPMorgan (JPM)

Companies that matched consensus earnings expectations include:
Del Frisco's (DFRG)

Wolverine World Wide (WWW) backs FY14 adjusted EPS view of $1.57-$1.63
Del Frisco's (DFRG) sees FY14 EPS 90c-94c, consensus 89c
Hudson Global (HSON) lowers Q3 revenue guidance to $163M from $165M-$175M
Exactech (EXAC) sees Q3 net income below prior guidance

NEWSPAPERS/WEBSITES

Google (GOOG) may be leading $500M funding round for Magic Leap, Re/code reports
Apple (AAPL) expected to show new iPads at Thursday's event, Re/code reports
EMC (EMC) to acquire cloud-computing firm Cloudscaling, Bloomberg reports
'Double Irish' tax arrangement poised to be halted, itnews says (GOOG, AAPL, FB)
Sysco (SYY) looks to save $3.5B acquisition of US Foods, NY Post reports

M&A Bubble is bursting: AbbVie Says It Reconsiders Merger Pact With Shire (WSJ)
Winner of bad headline timing award: Spinoffs Could Set Stage for Next Merger Wave (BBG) - and now wait for the spinoffs getting pulled
Record mortgage settlement pushes Bank of America into third-quarter loss (Reuters)
Korea joins the Japan currency war: Bank of Korea Cuts Base Rate (WSJ)
Double Irish’s Slow Death Leaves Google Executives Calm (BBG)
Global Oil Glut Sends Prices Plunging (WSJ)
Slow Rise in Prices Shows China’s Economy Is Still Struggling (WSJ)
EBay Merchants Lamenting Neglect Bid PayPal Good Riddance (BBG)
Bugs Joining Robots to Overcome Global Shortage of Copper (BBG)
Worrying for Saudi, U.S. oil output cuts could take a while (Reuters)
Putin Intimidation Tactics Kill Entente Hope for Finnish Premier (BBG)
Hong Kong tension rises with police beating of protester (Reuters)
U.S.-led air strikes intensify as Syria conflict destabilizes Turkey (Reuters)
Cities Look for Ways to Get Free of Empty Jails (WSJ)

Overnight Media Digest

WSJ

* Oil prices posted their biggest one-day drop in nearly two years Tuesday as a U.S.-led wave of crude has crashed into weak global demand, threatening the stability of some countries and providing an economic lifeline to others. (http://on.wsj.com/1z9dgX4)

* A clinic in the Liberian capital Monrovia has hired seven Ebola survivors to counsel other patients suffering from the virus. (http://on.wsj.com/1tstCaS)

* AbbVie Inc has notified Shire Plc that its board intends to reconsider its recommendation that AbbVie shareholders adopt the companies' merger agreement. (http://on.wsj.com/ZYBPXv)

* JP Morgan and Citigroup each said they socked away hundreds of millions of dollars in the third quarter to cover legal costs, a sobering reminder that they are still reckoning with crisis-era behavior that has triggered billions in penalties already. (http://on.wsj.com/11k68Il)

* After a false start that set back its plans at least two years, Hilton Worldwide Holdings is launching a boutique-hotel chain that aims for a wider audience and lower room rates than some direct competitors. (http://on.wsj.com/1w1DFBn)

* The U.S. Supreme Court blocked Texas from implementing abortion-clinic restrictions that could leave the state with as few as seven providers. (http://on.wsj.com/1sFI7FO)

Japanese telecommunications company Softbank Corp said it would acquire video streaming service DramaFever, known for its Korean television shows and movies.

Britain's biggest retailer Tesco Plc has removed another three employees from their jobs as it continues to probe a 250 million stg ($400 million) profit overstatement.

Britain's mobile operator EE said it would acquire Phones 4U mobile business. EE is expected to pay less than 5 million stg for this deal.

Spain will sell a 21 percent stake in its state-owned airports operator Aena to Corporacion Financiera Alba SA , Ferrovial SA and British investment fund the Children's Investment Fund, Aena's holding company Enaire said on Tuesday.

NYT

* Drugmaker AbbVie Inc disclosed on Tuesday that its board plans to reconsider recommending that shareholders vote in favor of its $54 billion takeover of its Irish-based, London-listed counterpart Shire. AbbVie directors will meet on Oct. 20 to decide whether to change its mind about the deal, which would let their company reincorporate in Britain to take advantage of a lower tax rate. (http://nyti.ms/1o9Ov8M)

* The housing bust ended several years ago, but the big mortgage banks are still acting as if the home loan business were fraught with peril. Their caution has restricted the availability of home loans, preventing many seemingly creditworthy people from obtaining mortgages. And on Tuesday, executives from Wells Fargo & Co, the nation's biggest mortgage bank, said that important changes had to be made before they might consider increasing the flow of credit. (http://nyti.ms/1u34qlu)

* U.S-based footwear maker Converse says some of the core elements of its widely recognizable Chuck Taylor sneakers - black stripes and a rubber toe topper - are being co-opted by Wal-Mart Stores Inc, Kmart, Skechers USA Inc and others. And it is taking them to court, accusing 31 companies of trademark infringement in 22 separate lawsuits filed Tuesday in United States District Court in Brooklyn. (http://nyti.ms/1qqKjwq)

* A senior currency trader at JPMorgan Chase & Co in London has left the bank after he was placed on paid leave last year amid regulatory inquiries into potential manipulation of the foreign exchange market by currency traders. (http://nyti.ms/1u36Pg4)

* Geberit AG of Switzerland said on Tuesday that it had offered to acquire the Sanitec Corp, a Finnish maker of toilets and bathroom ceramics, for about $1.35 billion in cash. (http://nyti.ms/1sPJ7rm)

Canada

THE GLOBE AND MAIL

** Canadian stocks hit a record high six weeks ago, but have been on a downhill run ever since as nervous investors act on growing worries about deteriorating global conditions and their debilitating effect on demand for Canada's energy and other resources. (http://bit.ly/1r8wu5g)

** The Canadian government is backing New Zealand's bid for a temporary seat on the UN Security Council, throwing its support behind a long-time ally that's promising a stronger voice for less-influential countries if it's elected. (http://bit.ly/1nlE3u8)

** John Tory is promising no services will be cut if he is elected mayor, saying he would keep tax increases at or below the rate of inflation by finding efficiencies and wringing more money for Toronto out of the federal and provincial governments. (http://bit.ly/1tsWRu3)

NATIONAL POST

** Canada's finance minister expects the economy to remain on track for solid growth this year and next, an outlook shared by private-sector economists who met with Joe Oliver on Tuesday as part of the government's pre-budget consultations. (http://bit.ly/1r8xVkb)

** Tom Mulcair, leader of the New Democratic Party, said Canada "can't afford not to" spend C$5-billion ($4.40 billion) a year on a new plan to create or maintain one million childcare spaces. The goal, he said, is to make sure that parents don't pay more than C$15 a day for a childcare space. (http://bit.ly/1qrDV8a)

** Just five months after announcing that it was shelving its massive C$11-billion Joslyn oil sands mine - a decision that fueled wider concerns about the economic viability of the oil patch - the Canadian arm of French energy giant Total SA has confirmed that it is forging ahead with an application to expand the project by 60 percent. (http://bit.ly/1tsYXdu)

China

CHINA SECURITIES JOURNAL

- The central government has approved plans by Sichuan province to set up the new Tianfu business district as part of plans to accelerate development in western China.

SHANGHAI SECURITIES NEWS

- Luzhou Lao Jiao Co said in a statement that it had filed a lawsuit against the Agricultural Bank of China Ltd's Changsha branch after about 150 million yuan ($24.5 million) of the company's deposit was found missing.

21st CENTURY BUSINESS HERALD

- The National Development and Reform Commission has suspended approvals of auctioning corporate bonds this week, sources told the newspaper, amid plans to crack down on corruption and irregularities in the bond market.

SECURITIES TIMES

- China Minsheng Banking Corp Ltd entered into an agreement with Tesla Motors Inc for the U.S. carmaker to build at least 400 charging points in business offices of Minsheng Bank and local financial stores in more than 20 Chinese cities.

SHANGHAI DAILY

- The 4.5-generation mobile network, which is three to 10 times faster than the 4G network, will be used commercially network in 2016, Huawei Technologies Co said on Tuesday.

CHINA DAILY

- Structured products will be the most popular financial instrument and the United States will be the investment destination of choice for China's wealthy in the coming 12 months, according a report co-released by Julius Baer Group and Bank of China Co Ltd.

PEOPLE'S DAILY

- Anyone who cares and loves Hong Kong should firmly support the Hong Kong government and allow them to carry out their official duties under the basic laws, a commentary carried by the mouthpiece of the ruling Communist Party of China said.

Britain

The Times

TESCO SUSPENSIONS ADD TO CHAOS AT TOP

An investigation into Tesco's 250 million pound ($397 million) accounting crisis has prompted the suspension of three more executives, stoking concern about a disruption to its preparations for the crucial Christmas shopping season. (http://thetim.es/1w7aRsa)

WARRING SAUDIS OVER A BARREL ON FALLING OIL PRICE

Prince Alwaleed bin Talal expressed his "astonishment" that Ali al-Naimi, the Saudi oil minister, had played down the impact of prices falling below $100 a barrel. In his open letter to Saudi ministers, posted on Twitter, he noted that 90 percent of the country's revenues come from oil. (http://thetim.es/1wCrSIQ)

The Guardian

UK INFLATION FALLS TO FIVE-YEAR LOW OF 1.2 PCT

Inflation has slumped to its lowest rate for five years, hitting 1.2 percent in September and taking pressure off the Bank of England to raise interest rates in coming months. (http://bit.ly/1r169WO)

IRELAND TO ABOLISH CONTROVERSIAL 'DOUBLE IRISH' TAX ARRANGEMENT

Ireland has officially announced the phased abolition of its controversial "double Irish" tax scheme that has enabled multinationals such as Apple to dramatically cut down their tax bills. (http://bit.ly/1yzUGpO)

The Telegraph

BIS WARNS ON 'VIOLENT' REVERSAL OF GLOBAL MARKETS

Global financial markets are dangerously stretched and may unwind with a shock as liquidity dries up, the Bank of International Settlements has warned. Guy Debelle, head of the BIS's market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to "blow up" at the first sign of stress. (http://bit.ly/1sOIm1Z)

HOUSE PRICES: THE NORTH-SOUTH DIVIDE IS NOW WIDER THAN EVER

The gap between the average prices of property in London and the northeast grew to its widest in history in August, according to data released from the Office of National Statistics. A home in the capital cost an average 514,000 pounds, the monthly analysis showed, compared with just 154,000 pounds in the northeast of England - an area of the country out of reach of the London "ripple" affect. (http://bit.ly/1xOqhAW)

Sky News

STRUGGLING BALFOUR BEATTY PICKS NEXT CHIEF

Balfour Beatty, the beleaguered construction group, will hand Qinetiq Chief Executive Leo Quinn the task of reviving its fortunes. (http://bit.ly/1vsGGx2)

OVER-55s TO USE PENSION POTS LIKE BANK ACCOUNTS

People reaching the age of 55 are to be given more flexibility over what they can do with their pension pots as they approach retirement. Chancellor George Osborne will announce that the over-55s will be able to withdraw several lump sums instead of just one. (http://bit.ly/1sASYB7)

The Independent

MULBERRY AND BURBERRY HIT BY LUXURY SLOWDOWN AS RICH TOURISTS STAY AWAY

The state of the luxury market was laid bare after Mulberry issued its third profit warning this year and larger rival Burberry warned the outlook for the sector was getting tougher, prompting both stocks to tumble in London IPO trading. (http://ind.pn/1sIOARI)

BOX'S FOUNDER AARON LEVIE ADMITS HE ANNOUNCED IPO PLANS TOO SOON

Aaron Levie, founder of Silicon Valley cloud-storage firm Box, on a visit to Box's European headquarters in London, has admitted he was too quick to announce plans for his now-postponed stock-market float. (http://ind.pn/ZCReMd)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Empire State manufacturing survey for October at 8:30--consensus 20.5
Retail sales for September at 8:30--consensus down 0.1%
Producer Price Index for September at 8:30--consensus up 0.1%

ANALYST RESEARCH

Upgrades

Applied Materials (AMAT) upgraded to Buy from Neutral at BofA/Merrill
Baker Hughes (BHI) upgraded to Buy from Neutral at Sterne Agee
Banco Bilbao (BBVA) upgraded to Buy from Hold at Deutsche Bank
BorgWarner (BWA) upgraded to Buy from Neutral at Sterne Agee
C.H. Robinson (CHRW) upgraded to Neutral from Underperform at Macquarie
CBS (CBS) upgraded to Buy from Neutral at Citigroup
Cavium (CAVM) upgraded to Outperform from Market Perform at JMP Securities
Charles River Labs (CRL) upgraded to Buy from Neutral at SunTrust
Daimler AG (DDAIF) upgraded to Overweight from Underweight at Barclays
Diodes (DIOD) upgraded to Strong Buy from Outperform at Raymond James
Grand Canyon (LOPE) upgraded to Outperform from Neutral at RW Baird
Host Hotels (HST) upgraded to Overweight from Equal Weight at Barclays
Lithia Motors (LAD) upgraded to Overweight from Underweight at Morgan Stanley
Micron (MU) upgraded to Overweight from Neutral at JPMorgan
Sabra Health Care (SBRA) upgraded to Buy from Neutral at BofA/Merrill
Sabra Health Care (SBRA) upgraded to Overweight from Equal Weight at Barclays
Sanofi (SNY) upgraded to Outperform from Neutral at Credit Suisse
Solvay (SVYZY) upgraded to Overweight from Equal Weight at Barclays
Sun Bancorp (SNBC) upgraded to Buy from Neutral at Sterne Agee
United Natural Foods (UNFI) upgraded to Overweight from Neutral at Piper Jaffray

Downgrades

Intel (INTC) downgraded to Underweight from Equal Weight at Morgan Stanley
Masco (MAS) downgraded to Neutral from Outperform at Macquarie
Northfield Bancorp (NFBK) downgraded to Neutral from Buy at Sterne Agee
Occidental Petroleum (OXY) downgraded to Neutral from Outperform at Credit Suisse
TreeHouse Foods (THS) downgraded to Underweight from Hold at KeyBanc

Initiations

Ambarella (AMBA) initiated with an Outperform at Pacific Crest
Baker Hughes (BHI) initiated with a Buy at Citigroup
CrossAmerica (CAPL) initiated with an Equal Weight at Barclays
Globe Specialty Metals (GSM) initiated with a Buy at Stifel
GoPro (GPRO) initiated with a Sector Perform at Pacific Crest
Green Bancorp (GNBC) initiated with an Outperform at Keefe Bruyette
Halliburton (HAL) initiated with a Neutral at Citigroup
Helmerich & Payne (HP) initiated with a Neutral at Citigroup
NIC Inc. (EGOV) initiated with a Hold at Maxim
Nabors Industries (NBR) initiated with a Buy at ISI Group
Orion Engineered (OEC) initiated with an Overweight at JPMorgan
Patterson-UTI (PTEN) initiated with a Buy at Citigroup
Pharmacyclics (PCYC) initiated with a Buy at Citigroup
RPC, Inc. (RES) initiated with a Buy at Citigroup
Receptos (RCPT) initiated with a Buy at Goldman
Schlumberger (SLB) initiated with a Neutral at Citigroup
Sensata (ST) resumed with a Buy at Citigroup
Sierra Wireless (SWIR) initiated with an Outperform at Northland
Superior Energy (SPN) initiated with a Neutral at Citigroup
Syntel (SYNT) initiated with a Buy at Maxim
Weatherford (WFT) initiated with a Neutral at Citigroup

COMPANY NEWS

AbbVie (ABBV) board reconsidering recommendation to holders to accept Shire (SHPG) merger
Qualcomm (QCOM) to acquire CSR (CSRE) for GBP 9.00 per share
BG Group (BRGYY) named Statoil's (STO) Helge Lund as CEO, effective March 2, 2015; Statoil named Eldar Saetre as acting president and CEO
Google (GOOG) said researchers discovered vulnerability in SSL encryption
IndiGo signed MOU for 250 Airbus (EADSY) A320neo aircraft
Ann Inc. (ANN) announced a nondisclosure agreement with Golden Gate Capital.
Palo Alto (PANW) CEO told CNBC 'not concerned' about margins

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Intel (INTC) PNC Financial (PNC), BlackRock (BLK), ADTRAN (ADTN), Bank of the Ozarks (OZRK), Bank of the Ozarks (OZRK), Synergetics (SURG), Consumer Portfolio (CPSS), CSX (CSX)

Companies that missed consensus earnings expectations include:
KeyCorp (KEY), Linear Technology (LLTC), Healthcare Services (HCSG), Marten Transport (MRTN)

Companies that matched consensus earnings expectations include:
iGATE (IGTE)

Intel (INTC) sees Q4 revenue $14.7B, plus or minus $500M, consensus $14.49B
Wet Seal (WTSL) expects Q3 EPS (28c), consensus (26c)
CSX (CSX) sees sustaining double-digit earnings growth and margin expansion in 2015

NEWSPAPERS/WEBSITES

HP (HPQ), EMC (EMC) halt merger agreement discussions, Reuters reports
Avista (AVA) 'quietly' seeks buyer, Berkshire (BRK.A) interested, TheDeal.com reports (MDU)
Facebook (FB), Samsung (SSNLF) could collaborate to develop mobile content, Korea Times reports
Apple (AAPL) asks permission to lodge objections to GT bankrupcy in secret, Re/code says
Toyota (TM) to manufacture SUVs in Turkey starting in 2016, Nikkei reports
JPMorgan (JPM) looks like a buy, Barron's says

SYNDICATE

CubeSmart (CUBE) files to sell 6.5M shares of common stock
Dominion Midstream (DM) 17.5M share IPO priced at $21.00
Esperion (ESPR) files to sell $85M in common stock
EveryWare Global (EVRY) files to sell 2.11M shares for holders
Forward Pharma (FWP) 10.5M share IPO priced at $21.00
Great Western (GWB) 16M share IPO priced at $18.00
Inogen (ingn) files to sell $50M of common stock for holders
Lpath (LPTN) files to sell 3.6M shares of common stock for holders
Memorial Production (MEMP) files to sell $250M of common units for limited partners
STAG Industrial (STAG) offers 5M shares of common stock

Dallas County May Declare State of Disaster From Ebola Virus (BBG)
Markets on edge after worst turmoil in four years (Reuters)
Central bankers may have no quick fix as markets swoon, economy weakens (Reuters)
Risk of Deflation Feeds Global Fears (Hilsenrath)
U.S. health official allowed new Ebola patient on plane with slight fever (Reuters)
Texas Hospital Fights Allegations About Ebola Protocols (BBG)
Treasuries Gain as Oil Drops Below $80 While Stocks Slide (BBG)
Greek Bonds Slump on Bailout Concern as Spain Misses Sale Target (BBG)
White House shifts into crisis mode on Ebola response (Reuters)
Obama Confronts Slippery Slope as Islamic State Advances (BBG)
Cocktail of Trouble for Liquor Makers Diageo, Rémy Cointreau and LVMH (WSJ)
Dark Pools Said to Rebuff Orders Amid U.S. Volume Surge (BBG)
EU Starts Two-Week Austerity Scrutiny as Crisis Reawakens (BBG)
U.S. foreclosure activity falls to eight-year low (Reuters)
Well that was fun: AbbVie board ditches planned $55 billion Shire acquisition (Reuters)
Lockheed says makes breakthrough on fusion energy project (Reuters)
Paris’s `Squalor Pit’ Gare du Nord Becomes French Decline Symbol (BBG)

Overnight Media Digest

WSJ

* Concerns grew about containing the spread of Ebola in the United States after federal health officials disclosed Wednesday that the second Texas nurse infected with the virus flew from Dallas to Cleveland and back in the days before reporting her symptoms. (http://on.wsj.com/1rdCg5N)

* U.S. officials said they weren't seeking to extend nuclear negotiations with Iran beyond a Nov. 24 deadline, as Secretary of State John Kerry met with his Iranian counterpart on Wednesday. (http://on.wsj.com/1zcfyVu)

* AbbVie Inc said on Wednesday its board is recommending stockholders vote against the drug maker's proposed $54 billion takeover of Shire Plc. (http://on.wsj.com/ZvJBH7)

* Mexico's banking regulator fined Banamex, the local unit of Citigroup Inc a little more than $2 million for failing to prevent an alleged fraud against the bank by a client, oil-services firm Oceanografia. (http://on.wsj.com/1npL4tN)

* Sierra Nevada Corp, the losing bidder in NASA's recent multibillion-dollar "space taxi" competition, has gone to court seeking to block winners Boeing Co and SpaceX from proceeding with work until its pending contract protest is resolved. (http://on.wsj.com/1twUx5q)

* Amazon Inc plans to hire 80,000 seasonal workers for its warehouse network in the United States, representing a 14 percent increase from last year as the company brings its massive distribution facilities closer to urban centers. (http://on.wsj.com/1vfPlBn)

* Google Inc unveiled three Nexus-branded devices on Wednesday, signaling plans to compete with Apple Inc for high-end consumers. Google's new Nexus 6 smartphone, Nexus 9 tablet and Nexus Player set-top box are priced slightly below, or in line with, competing devices from Apple. In the past, Google has priced new models significantly below Apple products. That is a departure for Google, which in the past has priced new models significantly below Apple products. (http://on.wsj.com/1xTlqyl)

* McDonald's Corp has hired back a second former executive as it tries to stabilize its U.S. business. Karen King, retired east division president for McDonald's USA, returned to the company this week as its chief people officer for the U.S. (http://on.wsj.com/1w9OZuk)

Russian billionaire Mikhail Fridman's attempt to buy RWE Dea, the oil and gas arm of German utility RWE AG for about 5.1 billion euros was blocked by the UK government, a move that indicates that even private Russian companies will have to bear the impact of U.S. and EU sanctions.

Japan's Toyota Motor Corp said it would recall 1.75 million vehicles globally to address three separate defects, relating to brake master cylinders, fuel delivery pipes and the fuel suction plate.

Statoil ASA's long-serving chief executive Helge Lund unexpectedly quit to take on the top role at smaller rival BG Group PLC where he has been promised a big pay rise if he can turn round the flagging British gas and oil producer.

Tata Steel Ltd said it was in talks with the Klesch Group to sell its long products business in Europe that employs about 6,500 people including those at its distribution facilities.

NYT

* The Obama administration may have killed the biggest corporate takeover of the year. AbbVie Inc, the Illinois-based drugmaker that had agreed to pay $54 billion for the Irish pharmaceutical company Shire Plc, now has cold feet. AbbVie's abrupt reconsideration of the deal sent Shire's stock price plummeting on Wednesday and provided the clearest evidence yet that the Treasury Department had succeeded in cracking down on corporate inversions. (http://nyti.ms/1sUEqww)

* The first two drugs that can slow the progression of a fatal lung disease won approval from the Food and Drug Administration on Wednesday, a decision that could open a new era for patients but also a new chapter in the controversy over high drug prices. Roche Holding AG's drugs Esbriet and Boehringer Ingelheim's Ofev, are meant to treat idiopathic pulmonary fibrosis, a scarring of the lungs that affects roughly 100,000 Americans and kills many of them in three to five years. (http://nyti.ms/ZFNaL9)

* Waves of nervous selling buffeted the stock market in the United States on Wednesday, after a steep sell-off in Europe. At one point, the Dow Jones industrial average had plunged 460 points, or 2.8 percent, though it later swung higher to close down 1.1 percent, or 173.45 points. The Standard & Poor's 500-stock index fell 0.8 percent, or 15.21 points. Since their peak a month ago, American stocks have lost over $2 trillion in value, losses that may ripple through the wider economy. (http://nyti.ms/1yG2bvz)

* During an event at its Cupertino, California, headquarters on Thursday, Apple Inc is set to unveil new iPads that are expected to include fingerprint sensors for each model. A major revision of the full-size tablet, the iPad Air, is also expected. (http://nyti.ms/1sW3Yu9)

* JPMorgan & Chase corporate race website, which is managed by an outside vendor, has been conspicuously inaccessible since early August, with visitors to the site seeing only a lonely list of coming races. The link between the breach on that website and the broader attack, which the bank said did not compromise any financial information, has not been previously reported. (http://nyti.ms/1rwp6R8)

* SolarCity Corp, installer of rooftop solar systems, began selling bonds online to ordinary investors on Wednesday, joining a handful of companies that are using crowdfunding to finance solar development. The company will issue up to $200 million in the bonds, whose maturities range from one to seven years and carry interest rates of 2 percent to 4 percent. (http://nyti.ms/1sKZEwr)

China

CHINA SECURITIES JOURNAL

- Chinese insurance firms will need to run tests to monitor and measure liquidity risks, according to a circular from the China Insurance Regulatory Commission (CIRC) on Wednesday.

SHANGHAI SECURITIES NEWS

- Chinese brokerages need to ratify a three-year capital replenishment plan before the end of the year and make use of at least one funding channel within three years, according to Zhang Yujun, assistant chairman at the China Securities Regulatory Commission (CSRC).

SECURITIES TIMES

- China's Ministry of Environmental Protection has launched a programme to monitor air pollution discharged by companies through winter, typically a time of high pollutant levels.

CHINA DAILY

- Some Chinese companies operating in Africa are taking measures to protect employees against a deadly outbreak of Ebola in the region, the official paper said. China has thousands of people working in the worst affected regions in West Africa.

SHANGHAI DAILY

- Eight people in southwest China have been killed during a clash between local villagers and construction workers over a land dispute, local officials said on Wednesday.

PEOPLE'S DAILY
- Chinese artists should reflect the country's socialist values in their work, China's president Xi Jinping said on Wednesday. Art works should not be "slaves" to the market or bear the "stench of money", he added.

Britain

The Times

29 MLN STG PACKAGE HELPS BG TO LURE NEW BOSS

BG Group PLC has been forced to pay top dollar to recruit one of the oil and gas sector's most well-respected figures, Helge Lund from Statoil ASA to lead the company after seven months without a chief executive, offering Lund a package of up to 29 million pounds. (http://thetim.es/100jg55)

PANIC GRIPS INVESTORS AMID VOLATILE MARKETS

Investors succumbed to the biggest bout of jitters since the nadir of the eurozone crisis two years ago, prompting wild swings in equities and government bonds. Volatility took hold and the Dow Jones swung by almost 450 points over the course of a turbulent day. The S&P 500 VIX index has doubled in the space of a fortnight and hit a peak of 31, higher than in the summer of 2012. (http://thetim.es/1yFr8aq)

The Guardian

BANKS FACE CRACKDOWN OVER EU BONUS CAP

Europe's top banking regulator has warned banks they should not hand their staff top-up payments to avoid the EU bonus cap in a move that could have implications for dozens of banks and thousands of bankers. (http://bit.ly/1w9CqRP)

UK UNEMPLOYMENT FALLS TO 6 PERCENT

UK unemployment has fallen below the 2 million mark for the first time since the global financial system was on the brink of collapse six years ago. (http://bit.ly/1w9CkJO)

The Telegraph

SHIRE TAKEOVER HANGS IN THE BALANCE AS 13 BLN STG WIPED OFF SHARES

The 36 billion pounds takeover of Shire Plc was hanging in the balance on Wednesday night after U.S. drugmaker AbbVie Inc said it was reconsidering the deal in the wake of US tax reforms. (http://bit.ly/11pitem)

TATA STEEL TO SELL OFF LONG PRODUCTS BUSINESS, AFFECTING THOUSANDS OF BRITISH JOBS

Tata Steel Ltd is planning to sell its Long Products division, which employs thousands of workers at several sites in the UK. The steel giant said it had signed a Memorandum of Understanding with the Klesch Group, an industrial company which operates across Europe. (http://bit.ly/1sUdvAT)

Sky News

EX-RSA EXECUTIVE MILES TO JOIN TROUBLED WONGA

The chairman of troubled payday lender Wonga is recruiting another former colleague from the insurer RSA Insurance Group Plc. Paul Miles, the chief financial officer of Capquest, a debt recovery firm, will join Wonga to take on the same role. (http://bit.ly/1sffYUM)

SAINSBURY'S ENDURES BACKLASH ON NECTAR CUTS

J Sainsbury Plc's customers have threatened to shop elsewhere after the supermarket chain confirmed it was planning cuts to its Nectar reward points. (http://bit.ly/1w9ihcF)

The Independent

UBER RIVAL HAILO QUITS NORTH AMERICAN BUSINESS

Taxi hailing app Hailo is to pull out of North America as the London-based company struggles to make a profit amid "astronomical" marketing costs. (http://ind.pn/1vxagkW)

BALFOUR BEATTY NAMES LEO QUINN NEW CHIEF EXECUTIVE

Balfour Beatty has appointed a new chief executive just weeks after fending off a takeover by rival Carillion Plc . Leo Quinn is poised to join in January after five years as group chief executive of defence research firm QinetiQ, following four years as the boss of banknote printer De La Rue. (http://ind.pn/1zbRX7k)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic reports scheduled for today include:
Jobless claims for week of October 11 at 8:30--consensus 290K
Industrial production for September at 9:15--consensus up 0.4%
Philadelphia Fed manufacturing survey for October at 10:00--consensus 20.0
Housing market index for October at 10:00--consensus 59

ANALYST RESEARCH

Upgrades

Air Products (APD) upgraded to Outperform from Neutral at Credit Suisse
American Express (AXP) upgraded to Neutral from Underweight at JPMorgan
Baidu (BIDU) upgraded to Outperform from Perform at Oppenheimer
Bank of America (BAC) upgraded to Outperform from Market Perform at FBR Capital
Bank of the Ozarks (OZRK) upgraded to Buy from Hold at Wunderlich
Bristol-Myers (BMY) upgraded to Outperform from Market Perform at BMO Capital
CSX (CSX) upgraded to Outperform from Neutral at Credit Suisse
Cloud Peak (CLD) upgraded to Buy from Hold at Brean Capital
Cullen/Frost (CFR) upgraded to Market Perform from Underperform at BMO Capital
FireEye (FEYE) upgraded to Overweight from Neutral at JPMorgan
FleetCor (FLT) upgraded to Overweight from Equal Weight at Morgan Stanley
Gulfport Energy (GPOR) upgraded to Outperform from Sector Perform at RBC Capital
Host Hotels (HST) upgraded to Outperform from Market Perform at FBR Capital
Illumina (ILMN) upgraded to Overweight from Neutral at Piper Jaffray
L Brands (LB) upgraded to Outperform from Market Perform at Wells Fargo
LifePoint Hospitals (LPNT) upgraded to Outperform from Neutral at RW Baird
Magellan Midstream (MMP) upgraded to Buy from Neutral at Ladenburg
Netflix (NFLX) upgraded to Hold from Underperform at Jefferies
Sibanye Gold (SBGL) upgraded to Neutral from Sell at UBS
Targa Resources (TRGP) upgraded to Buy from Neutral at UBS
Tiffany (TIF) upgraded to Outperform from Neutral at Macquarie
Time Warner (TWX) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Akamai (AKAM) downgraded to Market Perform from Outperform at Wells Fargo
Francesca's (FRAN) downgraded to Underperform from Outperform at Macquarie
lululemon (LULU) downgraded to Underperform from Neutral at Macquarie
Netflix (NFLX) downgraded to Fair Value from Buy at CRT Capital
Nordstrom (JWN) downgraded to Neutral from Outperform at Macquarie
Norfolk Southern (NSC) downgraded to Neutral from Outperform at Credit Suisse
Rio Tinto (RIO) downgraded to Market Perform from Outperform at Cowen
Seadrill (SDRL) downgraded to Reduce from Neutral at Nomura
Ternium (TX) downgraded to Neutral from Overweight at JPMorgan
Urban Outfitters (URBN) downgraded to Neutral from Outperform at Macquarie
Viacom (VIAB) downgraded to Underperform from Neutral at BofA/Merrill

Initiations

Aquinox (AQXP) initiated with a Buy at Canaccord
Starwood Waypoint (SWAY) initiated with an Outperform at JMP Securities
Teck Resources (TCK) initiated with an Equal Weight at Barclays
Western Asset Mortgage (WMC) initiated with a Market Perform at Wells Fargo

COMPANY NEWS

Following Shire's (SHPG) waiver of the three-day notice period, AbbVie (ABBV) announced its board withdrew its recommendation made on July 18 regarding the proposed Shire transaction and recommended that stockholders vote against the transaction
Amazon (AMZN) announced it is creating 80,000 seasonal positions across its U.S. network of fulfillment and sortation centers this holiday season
Google (GOOG) unveiled Android 5.0 Lollipop, new Nexus phone, tablet, set-top player
Microsoft (MSFT) said working with YouTube (GOOG) to reinstate content inadvertently removed
Las Vegas Sands (LVS) said its board authorized an additional $2B to the company's stock repurchase program
Meredith (MDP) secured rights to license Martha Stewart Living (MSO) Magazine, website
Insys Therapeutics (INSY) received a Refusal to File Letter from the FDA for its proprietary Dronabinol Oral Solution
Michigan bill blocked Tesla (TSLA) from selling directly to consumers

EARNINGS

Companies that beat consensus earnings expectations last night and today include: eBay (EBAY), Netflix (NFLX), Orbital (ORB), WNS Holdings (WNS), Danaher (DHR), UnitedHealth (UNH), Briggs & Stratton (BGG), HNI Corporation (HNI), HCA Holdings (HCA), Intellipharmaceutics (IPCI), C1 Financial (BNK), Astoria Financial (AF), Umpqua Holdings (UMPQ), United Rentals (URI), BankMutual (BKMU), Boston Private Financial (BPFH), RLI Corp. (RLI), Badger Meter (BMI), American Express (AXP)

Companies that missed consensus earnings expectations include:
Fifth Third Bancorp (FITB), Baker Hughes (BHI), Mattel (MAT), Cohen & Steers (CNS), Universal Forest (UFPI), Central Valley Community (CVCY), Platinum Underwriters (PTP), Las Vegas Sands (LVS)

Companies that matched consensus earnings expectations include:
First Cash Financial (FCFS), BB&T (BBT), Navient (NAVI), Guaranty Bancorp (GBNK)

eBay (EBAY) sees FY14 EPS at low end of $2.95-$3.00, consensus $2.97
Danaher (DHR) sees Q4 EPS $1.00-$1.04, consensus $1.04
WNS Holdings (WNS) raises FY15 adjusted EPS to $1.56-$1.63 from 1.44-$1.56
Orbital (ORB) raises 2014 adjusted EPS view to $1.20-$1.25 from $1.10-$1.20

NEWSPAPERS/WEBSITES

EU antitrust chief criticizes 'irrational' response by politicians to Google (GOOG) probe, WSJ reports
Boeing (BA) mulls potential helicopter deal with Brazilian Army, Reuters reports
American Apparel (APP) to make interest payment on bonds, Bloomberg reports
Mexican regulators fine Citigroup's (C) Banamex unit 30M pesos, Bloomberg reports
Berkshire Hathaway (BRK.A) cuts Tesco (TSCDY) stake to less than 3%, Telegraph reports
AbbVie (ABBV), Shire (SHPG) both look like buys no matter what, Barron's says

SYNDICATE

Esperion (ESPR) 4.25M share Secondary priced at $20.00
NeuroMetrix (NURO) files to sell 3.3M shares for holders
Southern Missouri Bancorp (SMBC) files to sell 345,893 shares for holders
Tetraphase (TTPH) files to sell $75M of common stock

Total CEO de Margerie killed in Moscow as jet hits snow plough (Reuters)
China GDP Growth Rate Is Slowest in Five Years (WSJ)
Oil at $80 a Barrel Muffles Forecasts for U.S. Shale Boom (BBG)
Carney Faces Scrutiny on Worst Payments Outage Since 2007 (BBG)
Ebola crisis turns a corner as U.S. issues new treatment protocols (Reuters)
Gold Buying Rebounds in India on Diwali Jewelry Sales (BBG)
China-backed hackers may have infiltrated Apple's iCloud (Reuters)
Greece Said to Seek Recycling of Bank Funds for Exit (BBG)
Another merger-arb blows up: AbbVie to Pay Shire $1.64B Fee Over Nixed Merger (AP)
Because the market is unrigged: Forex-Rigging Fines Could Hit $41 Billion Globally (BBG)
Sears Seeks New Cash Via Two Paths (WSJ)
Oil Slump Rings Alarm Bells for Nigeria as Elections Loom (BBG)
SEC Is Steering More Trials to Judges It Appoints (WSJ)
Hong Kong leader indicates possible concession ahead of talks (Reuters)
Government Watchdog Recommends Review of Firm Facing Fraud Allegations (WSJ)
For More Teens, Arrests by Police Replace School Discipline (WSJ)
Staples says probing possible payment card data breach (Reuters)

Overnight Media Digest

WSJ

* China's economy grew at its slowest pace for five years in the third quarter, suggesting the government's targeted easing measures to boost economic growth haven't yielded expected results. (http://on.wsj.com/1wl3lbA)

* French oil company Total SA said Chairman and Chief Executive Christophe de Margerie died Monday in a plane crash at a Russian airport. (http://on.wsj.com/1tGL8bA)

* The U.S. Government Accountability Office on Monday made a rare recommendation that the Department of Homeland Security consider stripping a $210 million contract from a major contractor, delivering a blow to the private company that once carried out most background security checks for the government. (http://on.wsj.com/1CO3PsO)

* Samsung Electronics Co said Tuesday the U.S. National Security Agency approved a number of its mobile devices for use by government officials to carry classified information, a positive step for the smartphone maker's struggling mobile division. (http://on.wsj.com/1wh5ZQs)

* The Securities and Exchange Commission is increasingly steering cases to hearings in front of the agency's appointed administrative judges, who found in its favor in every verdict for the 12 months through September, rather than taking them to federal court. (http://on.wsj.com/1DuRxHU)

* Sears Holdings Corp is again turning to billionaire CEO Edward Lampert for funds, as the struggling retailer shores up its balance sheet ahead of the holiday season and seeks to reassure vendors worried about its health. (http://on.wsj.com/1s0zwss)

* CVS Health Corp is offering a prescription-drug plan that charges patients more if they buy their medications at pharmacies that sell tobacco products, a plan that could benefit the company's own network of drugstores. (http://on.wsj.com/1vFcsFZ)

* Amazon.com Inc and CBS Corp's Simon & Schuster publishing arm have reached a new multi-year print and digital contract, a pact that comes as the online retailer continues difficult negotiations with Hachette Book Group. (http://on.wsj.com/1FuiFJ6)

Bank of England Governor Mark Carney launched an independent review on Monday into what is the worst disruption of Britain's banking payment system in seven years.

British Prime Minister David Cameron is under pressure by members of his own Conservative party and harried by the anti-EU UK Independence party to formulate a policy to tackle the issue of curbing immigration - and fast. However, as the rest of Europe is in no mood to rip up the rules that allow freedom of movement within the European Union, the British prime minister risks angering everyone while pleasing no one.

An overnight fire at one of UK's biggest power stations has cut capacity to generate electricity, however the government on Monday insisted that there was no risk of blackouts during winter.

The head of U.S.-based pharma company AbbVie Inc, which had dropped its support last week for a $55 billion takeover of UK drugmaker Shire PLC, blamed the U.S. Treasury for destroying the deal as both the companies took the final step to nullify the deal.

NYT

* A slowing in the pace of growth, partly by design, has made assessing the Chinese economy and predicting its prospects difficult. Chinese inflation is at its weakest levels in nearly five years and foreign investment is contracting. The overall economy, though, continues to chug along at a steady pace. (http://nyti.ms/1t6Yzzn)

* More than 14 million vehicles by 11 automakers that contain defective air bags made by Japan's Takata Corp have been recalled. At the heart of the defect is a faulty propellant that is intended to burn quickly and produce gas to inflate the air bag but instead is too strong and can rupture its container, shooting metal parts into the cabin. (http://nyti.ms/1oov2Ba)

* Trinity Industries Inc, the highway guardrail maker accused of selling systems that can malfunction during crashes and slice through cars, was found by a Texas jury on Monday to have defrauded the federal government and as a result may need to pay $525 million in damages. (http://nyti.ms/1sJ31mo)

* Wall Street's main regulator on Monday stepped up his campaign to improve the ethical culture of large banks. William C. Dudley, president of the Federal Reserve Bank of New York, told bankers assembled at the New York Fed that continued ethical lapses would be a sign that their institutions were too big to manage - and that they might need to be reduced in size. (http://nyti.ms/1CObSpr)

* Apple Inc's biggest cash cow, the iPhone, is gaining weight. Sales of iPhones, including the new, big-screen iPhone 6 models released last month, helped carry Apple to a record-breaking quarter and offset slowing sales of one of Apple's other major products, the iPad, the company announced Monday. (http://nyti.ms/121vlYz)

Canada

THE GLOBE AND MAIL

** The Conservative government is weighing changes to its key income-splitting promise that would respond to critics who say the tax cut would mostly benefit well-off Canadians. Conservative sources say the notion of capping access to the tax cut so that it is less available to higher-income Canadians is under consideration. (bit.ly/1tHGauZ)

** A company's willingness to become a sponsor of the 2015 Toronto's Pan American/Parapan Games will be considered in the awarding of a new security contract, according to a request for proposals document issued by the TO2015 organizing committee. (bit.ly/1t7wnh5)

** Canada is looking at slapping duties on iconic U.S. products ranging from California wine to ketchup after the World Trade Organization found the country's meat-labelling laws offside for a third time in five years. (bit.ly/ZEewRC)

NATIONAL POST

** Toronto Mayor Rob Ford is once again accused of breaking city rules after he was kicked out of three advance polling stations late last week. (bit.ly/10hmCRm)

** Evan Siddall, the president of Canada Mortgage and Housing Corp, acknowledges that there may be a "data gap" when it comes to the degree of foreign ownership in the marketplace, as debate swirls over whether overseas buyers are inflating house prices in markets like Vancouver and Toronto. (bit.ly/1yTR7Lj)

** Questions from the progressive conservatives about the possible sale of public assets and a government loan to a charity to expand a medical research center dominated the return of the Ontario legislature on Monday. (bit.ly/1whwWmZ)

China

SECURITIES TIMES

- Beijing Tongchuang Jiuding Investment Management Co Ltd, a private equity firm, recently said it invested 3.64 billion yuan ($594.43 million) in Tianyuan Securities, making Tongchuang the first PE company to hold stock in a brokerage in China.

SHANGHAI SECURITIES NEWS

- China plans to publish the first regulations on the online insurance industry by the end of this year, according to a document obtained by the newspaper from authorities who are familiar with the matter.

CHINA DAILY

- Information transparency is of great importance for the accountability of the Chinese government and is fundamental to the rule of law, the newspaper said in an editorial.

SHANGHAI DAILY

- The dean of the Executive Master of Business Administration (EMBA) course at Fudan University said student enrolment has fallen 10 percent after the Chinese government rolled out a series of anti-corruption campaigns, including banning government officials from using public funding to take EMBA courses.

PEOPLE'S DAILY

- The rule of law has the power to push China going forward. The ongoing fourth Plenary Session of the 18th Central Committee of the ruling Communist Party is a historically important moment to realize this goal, the government's mouthpiece said in an editorial on Tuesday.

Britain

The Times

SIGNALS OF DECLINE MOUNT FOR RAIL ROUTE The TransPennine Express is a microcosm of the British railway industry, at once enjoying unprecedented growth but with old, overcrowded trains that create a bar to economic progress. It is the railway that lives up to only half its name. Its core route is transporting people across the Pennines between Leeds and Manchester, but it does so at non-express average speeds of 40mph. (http://thetim.es/11ZcHk6) CGI EXPANSION GIVES WALES HIGH-TECH JOBS BOOST The burgeoning Welsh high-tech sector is set for a major boost after CGI Group Inc, the Canadian company that bought Logica, announced plans to create 620 skilled jobs in south Wales. CGI, which is the largest tech employer in the region with 900 employees, has announced plans to create hundreds of positions over the next five years after receiving a 3.2 million pound grant from the Welsh Government. (http://thetim.es/1zijBQd)

The Guardian

BARCLAYS CHAIRMAN QUESTIONS IMPACT OF LARGE BANK FINES ON PUBLIC CONFIDENCE

David Walker, appointed chairman of Barclays Plc in the wake of the Libor-rigging scandal in 2012 said on Monday that big fines on banks were making it harder for the industry to win back public trust. He also suggested fines were being levied for activities that in the past might have been regarded as acceptable, though he acknowledged past conduct issues needed to be dealt with. (http://bit.ly/1yc58Rw) FORMER JJB SPORTS CHIEF FAILS TO GIVE EVIDENCE AT 1 MLN STG FRAUD TRIAL Christopher Ronnie, former chief executive of JJB Sports Plc, accused of a 1 million pounds ($1.62 million) fraud has chosen not to give evidence in his defence at his trial. Ronnie was warned by the judge that jurors may "draw such inferences as appear proper" by his failure to take to the witness box. Ronnie is accused of receiving three payments from two sporting goods companies and failing to declare them to JJB's board of directors. Southwark crown court heard he used some of the cash to buy property in Florida. It had been anticipated that he would give evidence in his defence, but his barrister, Jim Sturman QC, told the jury on Monday: "We are calling no evidence at all for Ronnie." (http://bit.ly/1wko2Ey)

The Telegraph PUBLIC VOTE ON EU MEMBERSHIP WOULD 'RESOLVE UNCERTAINTY' FOR BUSINESS, SAY CONSERVATIVES A referendum on Britain's membership of the European Union would end companies' concerns over the country's increasingly fractious relations with Brussels, according to Matthew Hancock, Business Minister. Speaking at a CBI event on Monday about Britain's industrial strategy, Hancock denied that the Conservatives' pledge to put the decision on EU membership to voters would create problems for companies. (http://bit.ly/1rZggvj) EUROZONE STARTS QE-LITE AS CURRENCY BLOC FACES FRESH CRISIS The European Central Bank (ECB) has begun purchases of some French assets, in an attempt to revive a flagging eurozone. Monday's purchases marked the start of the covered bond purchase programme (CBPP3), and is one of three new tools intended to stimulate the euro area economy. By buying covered bonds - bonds backed by underlying loans - the ECB intends to expand its balance sheet, and boost demand in the region. (http://bit.ly/1r1mQlQ)

Sky News

ROYAL MAIL AND AMAZON CREATE 32,000 XMAS JOBS More than 30,000 temporary jobs are to be created for the Christmas postal rush, it has been announced. Royal Mail Plc said it would take on 19,000 additional workers and online retailer Amazon Inc wanted 13,000 staff. Privatised last October, Royal Mail said the jobs will start in the middle of November and end in January, with the peak staffing period in December. The roles will be in support of the company's 124,000 full-time sorting and delivery personnel. (http://bit.ly/1t68lmz)

The Independent

GREENE KING RAISES GLASS TO SPIRIT MERGER DEAL

Greene King and Spirit Pub Company Plc have agreed a 723 million pound takeover to create a pub company with the highest sales in Britain. Together the two will own just over 3000 pubs nationwide, which places them behind rivals Enterprise with 5500 and Punch with 4000. (http://ind.pn/1ybbekU)

GOOGLE COMMITS EXTRA $25M TO EUROPE'S TECH START UPS Google Inc has committed a further $25 million to invest in Europe's tech start ups, with the head of the search giant's venture capital arm revealing the company could be on the verge of investing in a London start-up. Bill Maris, who founded Google Ventures in 2009, revealed that the size of Google Ventures Europe's inaugural fund has been raised from $100 million to $125 million. The European arm was announced in July and is based in Clerkenwell. (http://ind.pn/1zilSL8)

SHIRE CFO LEAVES FOR SEVERN TRENT AFTER ABBVIE BUYOUT FALLS THROUGH FTSE 100 pharmaceuticals giant Shire Plc has had its finance director poached by water firm Severn Trent Plc, days after the collapse of its $55 billion by US rival AbbVie Inc. (http://ind.pn/1sHVVhU) BALFOUR BEATTY WANTS 'EXTRA 50 MILLION STG' TO FINISH WEST HAM STADIUM CONVERSION Taxpayers could have to find tens of millions more to fund the conversion of the Olympic Stadium into West Ham United 's home as building firm Balfour Beatty Plc presses for more cash. Balfour Beatty - hit by a string of calamitous profit warnings and without a chief executive - won the deal to convert the stadium with a bid of 154 million pounds. But according to the industry website Construction Enquirer, Balfour has been pushing for around 200 million pounds to complete the deal due to the technical complexity of the contract in a series of meetings with the client. Sources told the Enquirer that builder Balfour Beatty is pushing for up to 50 million pounds more to complete the job. (http://ind.pn/1uuap37) (

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Existing home sales for September at 10:00--consensus up 1% to 5.1M rate

ANALYST RESEARCH

Upgrades

Belden (BDC) upgraded to Buy from Hold at Stifel
Brandywine Realty (BDN) upgraded to Outperform from Market Perform at Wells Fargo
Cabot Oil & Gas (COG) upgraded to Outperform from Market Perform at Bernstein
EOG Resources (EOG) upgraded to Buy from Neutral at Guggenheim
Eagle Materials (EXP) upgraded to Buy from Hold at Stifel
Halliburton (HAL) upgraded to Buy from Neutral at Guggenheim
Pioneer Natural (PXD) upgraded to Buy from Neutral at Guggenheim
Post Holdings (POST) upgraded to Buy from Neutral at Goldman
Rouse Properties (RSE) upgraded to Buy from Hold at MLV & Co.
TECO Energy (TE) upgraded to Equal Weight from Underweight at Barclays

Downgrades

AbbVie (ABBV) downgraded to Neutral from Buy at Guggenheim
BHP Billiton (BHP) downgraded to Hold from Buy at Jefferies
Bank of Marin (BMRC) downgraded to Market Perform from Outperform at Keefe Bruyette
Consolidated Edison (ED) downgraded to Underweight at Morgan Stanley
HCP (HCP) downgraded to Hold from Buy at Jefferies
IBM (IBM) downgraded to Hold from Buy at Evercore
Inland Real Estate (IRC) downgraded to Underperform from Neutral at BofA/Merrill
Universal Forest (UFPI) downgraded to Neutral from Buy at Sterne Agee

Initiations

American Axle (AXL) initiated with a Neutral at Susquehanna
American Eagle (AEO) initiated with an Outperform at BlueFin
Autoliv (ALV) initiated with a Neutral at Susquehanna
BorgWarner (BWA) initiated with a Positive at Susquehanna
CONE Midstream (CNNX) initiated with an Overweight at Barclays
Dana Holding (DAN) initiated with a Neutral at Susquehanna
Delphi Automotive (DLPH) initiated with a Positive at Susquehanna
Ford (F) initiated with a Neutral at Susquehanna
General Motors (GM) initiated with a Neutral at Susquehanna
Lear (LEA) initiated with a Neutral at Susquehanna
Liberty TripAdvisor (LTRPA) initiated with an Outperform at Oppenheimer
Medley Management (MDLY) initiated with a Buy at Gilford Securities
Medley Management (MDLY) initiated with a Neutral at Goldman
Medley Management (MDLY) initiated with an Outperform at Keefe Bruyette
PC Connection (PCCC) initiated with a Neutral at B. Riley
PCM, Inc. (PCMI) initiated with a Buy at B. Riley
RealNetworks (RNWK) initiated with a Buy at B. Riley
Retail Opportunity (ROIC) initiated with a Market Perform at Wells Fargo
Rexford Industrial (REXR) initiated with a Buy at MLV & Co.
Tenneco (TEN) initiated with a Positive at Susquehanna
Textron (TXT) initiated with an Outperform at Wells Fargo
TripAdvisor (TRIP) initiated with an Outperform at Oppenheimer
Twitter (TWTR) initiated with a Neutral at Citigroup
Visteon (VC) initiated with a Positive at Susquehanna

COMPANY NEWS

AbbVie (ABBV), Shire (SHPG) announced termination of proposed merger. AbbVie will pay Shire a $1.64B break up fee
AbbVie (ABBV) announced new $5B stock repurchase program, raised dividend nearly 17% to 49c per share
Total (TOT) confirms death of CEO Christophe de Margerie. de Margerie was killed in a private plane crash at Vnukovo Airport in Moscow, following a collision with a snow removal machine
Chipotle (CMG) sees FY15 low to mid-single digits comparable restaurant sales gains
DISH Network (DISH) announced that Monday night Turner Networks (TWX) removed Boomerang, Cartoon Network, CNN, CNN en Español, HLN, truTV and
Turner Classic Movies from the DISH programming lineup. The two companies have been unable to negotiate the terms of a renewed distribution agreement
Rhino Resources (RNO) lowered quarterly dividend to 5c per share from 44c per share

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Apple (AAPL), Customers Bancorp (CUBI), Lexmark (LXK), Regions Financial (RF), Carlisle (CSL), Signature Bank (SBNY), Steel Dynamics (STLD), First Defiance Financial (FDEF), Helix Energy (HLX), Celanese (CE), East West Bancorp (EWBC), BancorpSouth (BXS), Healthstream (HSTM), Texas Instruments (TXN), Rent-A-Center (RCII), Rambus (RMBS), Illumina (ILMN), Hexcel (HXL), Cadence Design (CDNS), Washington Trust Bancorp (WASH), ServisFirst (SFBS), Chipotle (CMG)

Companies that missed consensus earnings expectations include:
BBCN Bancorp (BBCN), GulfMark Offshore (GLF), Steel Dynamics (STLD), Potlatch (PCH), Kaiser Aluminum (KALU), Ultra Clean (UCTT), Zions Bancorp (ZION), Wilshire Bancorp (WIBC)

Companies that matched consensus earnings expectations include:
Brown & Brown (BRO), Packaging Corp. (PKG), Werner (WERN)

NEWSPAPERS/WEBSITES

Staples (SPLS) may be latest retailer to be hacked, Krebs reports (TGT, HD)
Lawyers for Ackman, Valeant (VRX) say Allergan (AGN) CEO oversaw campaign to discredit Valeant, Reuters reports
Actavis (ACT), Sanofi (SNY) among bidders for Omega Pharma, Bloomberg reports (PRGO)
Yahoo (YHOO) in talks to acquire BrightRoll, TechCrunch reports
Apple (AAPL) iCloud may have been attacked by Chinese hackers, Reuters reports
Apple (AAPL) to supply more iPhone 6 Plus to satisfy China demand, DigiTimes reports
Investigators say plough driver in Total (TOT) crash was inebriated, Reuters says

SYNDICATE

CEL-SCI (CVM) announces proposed offering of common stock, warrants
Tesoro Logistics (TLLP) 20M share Secondary priced at $57.47

Frontrunning: September 11

Frontrunning: September 16

Ukraine Currency Crashes To Record Low As IMF Blasts "Gross Abuses"

Subprime Is Back With A Vengeance

CEOs Darken Outlook, Slash Hiring and Cap-Ex Plans – Hope Now Focused on Share Buybacks (which just Plunged)

Frontrunning: September 18

Shale Fracking Is a “Ponzi Scheme” … “This Decade’s Version of The Dotcom Bubble” … “A Lot In Common With the Subprime Mortgage"

Frontrunning: September 23

Where Is Venezuela's 366 Tonnes Of Gold?

Frontrunning: September 30

High-Yield Credit Suffers Biggest Quarterly Loss Worldwide Since 2011

Frontrunning: October 2

Frontrunning: October 7

Frontrunning: October 9

Meet The World's First "Undercover, Super-Secret Central Banker"

Frontrunning: October 10

Frontrunning: October 14

Frontrunning: October 15

Frontrunning: October 16

Frontrunning: October 21