- The $9 Billion Witness: Meet JPMorgan Chase's Worst Nightmare (Matt Taibbi)
- Explains the midterm results: Optimism precedes job data (Reuters)
- EU Dream Ebbs Amid Weak Growth, Putin's Jets, 25 Years After Wall Came Down (BBG)
- SEC Probing Trading Activity at Apple Supplier GT Advanced (WSJ)
- Boehner touts bills to repeal Obamacare, build Keystone (Reuters)
- China Gold Buying Means Price Floor to Standard Chartered (BBG)
- High-Speed Ad Traders Profit by Arbitraging Your Eyeballs (BBG)
- Central Banks Can’t Be ‘Only Game in Town’ Boosting Economies (BBG) - less talking, more getting to work
- Britain Digs In Against EU Bill as Cameron Plays to Base (BBG) - UKIP's base?
- Paul Ryan could make a compelling run for the White House. So why is he talking about going home? (Politico)
- Nigeria Central Bank Intervenes to Defend Currency (BBG)
- Who shot bin Laden? Former Navy SEALS make rival claims (Reuters)
- Singapore Returns Up to $9 Billion to Banks in Rate Probe (BBG)
- The Ukraine who cried wolf: Tank column crosses from Russia into Ukraine: Kiev military (Reuters)... and nobody believes it
Overnight Media Digest
WSJ
* U.S. President Barack Obama secretly wrote to Iran's Ayatollah Ali Khamenei in October and described a shared interest in fighting Islamic State militants in Iraq and Syria. The letter aimed at strengthening the campaign against Islamic State and nudging Iran's religious leader closer to a nuclear deal. (http://on.wsj.com/1sjSWKk)
* A year after its IPO, Twitter Inc CEO Dick Costolo has confounded investors with mixed messages and a series of executive changes. The CEO remains popular with employees, but some big investors are frustrated. (http://on.wsj.com/110g5uC)
* Home Depot Inc said hackers got into its systems last April by stealing a password from a vendor. Home Depot, which said 56 million credit card accounts were compromised by hackers, now says 53 million email addresses were stolen as well. (http://on.wsj.com/1xlcUrq)
* The Securities and Exchange Commission delivered a win to the $2 trillion exchange-traded-fund industry Thursday night, approving a new type of fund structure that does not have to disclose its holdings. The SEC said Boston-based Eaton Vance Corp can launch a so-called nontransparent ETF that will trade on an exchange but doesn't have to disclose its holdings and doesn't follow an index like a typical fund. (http://on.wsj.com/1tGr0TJ)
* House Speaker John Boehner warns President Barack Obama that unilateral action on immigration would "poison the well" for any cooperation with the new republican party. House Speaker and President held a year of confidential talks on immigration that ended in failure this summer. (http://on.wsj.com/13P9VP9)
* PepsiCo Inc President Zein Abdalla, widely viewed as a potential successor to Chairman and Chief Executive Indra Nooyi, is leaving the snack and beverage giant on Dec. 31. Hugh Johnston, PepsiCo's finance chief is now viewed as a potential internal candidate to succeed Nooyi. (http://on.wsj.com/1xeQyto)
* Bank of America Corp is in advanced talks with U.S. regulators to settle an investigation into whether the bank manipulated foreign-exchange rates. The bank said to lower its previously announced third-quarter results to a loss of four cents a share, from a per-share loss of one penny as it plans to set aside an extra $400 million for legal expenses. (http://on.wsj.com/1ybDtiT)
* The Securities and Exchange Commission is looking into trading activity in GT Advanced Technologies Inc's securities and is seeking information about its sapphire business. GT Advanced filed for bankruptcy protection on Oct.6 after Apple Inc unveiled its latest iPhone models with glass screens, rather than GT Advanced's sapphire. (http://on.wsj.com/1skp68x)
* Petroleo Brasileiro SA said it would raise gasoline prices by 3 percent and diesel prices by 5 percent in Brazil starting midnight Friday, following months of agitation from investors for such a move. The fuel price increase signals that the government of President Dilma Rousseff may ease government controls on the company. (http://on.wsj.com/1vRNE9V)
* Fannie Mae and Freddie Mac reported sharply lower profits but still earned enough for a combined $6.8 billion payment to the U.S. Treasury. The companies currently must pay nearly all of their profits to the U.S. Treasury. The weaker results stemmed mainly from slower home-price appreciation. (http://on.wsj.com/110ERuM)
* Walgreen Co raised $8 billion on Thursday to fund its purchase of international pharmacy chain Alliance Boots GmbH. The deal is tied as this year's fifth-largest corporate debt sale. Walgreen already owned a 45 percent stake in Alliance Boots, acquired in 2012. (http://on.wsj.com/1tjh4vE)
* Walt Disney Co Chief Executive Robert Iger said Disney is "well-positioned" if the market demands a move to a la carte cable programming. But he said too quick a shift could imperil the industry's business model. (http://on.wsj.com/1qsIEH7)
* Hundreds of car owners suing General Motors Co for alleged economic losses, personal injury or deaths connected to a defective ignition switch will have their arguments heard in a New York court. Jesse Furman, U.S. district judge set a trial date for the case on January 2016. (http://on.wsj.com/1xbiz4c)
* Microsoft Corp aims to maximize users over dollars with its Office franchise that lets mobile users access most Office 365 functions for free. Microsoft is not dropping the fee for Office 365 on laptops or desktops, and it still requires a paid subscription for access to some features in mobile versions. (http://on.wsj.com/1pqMrKf)
FT
Space tourism company Virgin Galactic had too few safeguards in place to prevent a disaster, Tommaso Sgobba, a former head of flight safety for the European Space Agency, told the Financial Times. Sgobba said industry standards call for operators to build the craft for two separate, unrelated failures.
Russian President Vladimir Putin has raised fresh security tensions after defending the Molotov-Ribbentrop pact that Soviet Russia signed with the Nazi Germany, under which the two countries secretly annexed Poland and other regions between them.
Turkish President Recep Tayyip Erdogan has defended his newly-inaugurated palace, which cost about $608 million to build, saying its remote location will would mean less congestion and traffic on the streets of Ankara. The presidential palace, which has more than 1,000 rooms, was built on protected forest land and is bigger than the White House and Elysee.
French President Francois Hollande admitted in a television interview that he had made mistakes in his two-and-a-half-year old term. However, he promised to carry out reforms and that by 2017 things will return back to normal. The Socialist leader also spoke about the 40 billion euro (49.52 billion U.S. dollar) tax break he plans to provide to the private sector between 2014 and 2017.
NYT
* American brands doing business in Russia have become political targets ever since the European Union and United States announced a set of sanctions against Russia for supporting pro-Russian separatists striving to carve out independent states in eastern Ukraine. (http://nyti.ms/1tjB8OC)
* Jean-Claude Juncker, head of the European Union's executive arm and former longtime leader of Luxembourg, faces rising furore by a flood of leaked documents detailing his home country's role as a haven for hundreds of companies seeking to drastically reduce their tax bills. (http://nyti.ms/1sc4NsE)
* The competition regulator in Britain said on Thursday that it planned to begin an inquiry into the dominant position of the country's largest lenders in retail banking and in lending to small and midsize businesses. (http://nyti.ms/1tjyYyD)
* Bank of America Corp is nearing a deal with federal regulators to settle an investigation into the bank's suspected manipulation of the currency market. (http://nyti.ms/1uCJNCi)
* Home Depot Inc said hackers that broke into the company's computer network this year took 53 million customer email addresses in addition to the payment card details of millions of customers. (http://nyti.ms/1zzhwyw)
* Takata Corp found a decade ago that its airbags could crack and explode. Instead of alerting regulators, it tried to erase evidence, say ex-employees who were involved in secret tests. (http://nyti.ms/1uEc7UW)
* A trial related to safety defects in General Motors Co cars, including an ignition switch flaw linked to more than 30 deaths and the recall of millions of vehicles, has been scheduled for early 2016. (http://nyti.ms/1xmhQw7)
* Investment firm Advent International Corp said it has completed raising a new $2.1 billion private equity fund for Latin America, thought to be the largest ever for this region, in a sign of increasing investor confidence. (http://nyti.ms/10C6vxs)
* Cable & Wireless Communications Plc said it will buy the private cable company Columbus International Inc for $3 billion, including debt. (http://nyti.ms/1xbaTyS)
* Cott Corp, the Canadian soft-drink maker, agreed to acquire DSS Group, the parent company of DS Services of America Inc, a United States direct-to-consumer provider of bottled water, office coffee and water filtration services, for $1.25 billion. (http://nyti.ms/1u50Awn)
* Irish drug maker Perrigo Company Plc said it has agreed to acquire Omega Pharma NV, one of the largest providers of over-the-counter health care products in Europe, for about $4.5 billion, including the assumption of debt. (http://nyti.ms/13PlCFs)
Canada
THE GLOBE AND MAIL
** The Organization for Economic Co-operation and Development has trimmed its outlook for the Canadian economy, as it sees the global economic recovery evolving more slowly than it had previously expected. (http://bit.ly/1pv6irE)
** Canadian Prime Minister Stephen Harper shared a stage with Chinese e-commerce billionaire Jack Ma on Friday during Day 1 of his trade trip to China, where the founder of online sensation Alibaba Group Holding Ltd boasted he wants to sell 200,000 Canadian lobsters on his website in a single day. (http://bit.ly/1sdLC1S)
NATIONAL POST
** Air Canada reported a small pension surplus at the beginning of 2014, a dramatic turnaround from the C$3.7 billion ($3.24 billion) deficit a year earlier. And that surplus has continued to grow throughout the year despite lower interest rates, said Chief Financial Officer Michael Rousseau. (http://bit.ly/1xfez3D)
China
CHINA SECURITIES JOURNAL
- China's President Xi Jinping said the country should promote the building of rail and shipping links between Asia and Europe, establish Asian investment banks for infrastructure and funds to finance construction.
- China is mulling reduction of taxes on the marine industry, said Wang Mingzhi, deputy director of China's Ministry of Transportation.
SHANGHAI SECURITIES NEWS
- China plans to introduce new regulatory standards governing property insurance, life insurance and reinsurance by the end of this year, the China Insurance Regulatory Commission said in a statement posted on its website on Thursday.
CHINA DAILY
- The decision by China's cabinet to reduce bureaucracy will prevent corruption and promote investment, said an editorial in the state-owned paper. The risk is that local governments and officials may compromise policy goals, it said.
- The French government will assist China's hunt for corrupt officials by confiscating their illegal assets located in France, said a senior official from the French Ministry of Justice.
PEOPLE'S DAILY
- China's central government has allocated 2 billion yuan ($327.24 million) to protect the country's grasslands, the Ministry of Finance told the newspaper.
Britain
The Times
* Qatari wealth fund bids for control of Canary Wharf
The Qatari sovereign wealth fund has made an approach to take control of the Canary Wharf estate, which is owned by Songbird Estates, in a deal that would strengthen the energy-rich country's control over the London skyline. (http://thetim.es/1tivM67)
* UK banks face threat of break-up as competition investigation is launched
The Competition & Markets Authority said it will begin a large-scale market investigation into current accounts and small business lending which could ultimately lead to the break-up of Britain's biggest banks. (http://thetim.es/1wAGH17)
The Guardian
* Luxembourg and Juncker under pressure over tax deals
French, German and Dutch finance ministers have rounded on Luxembourg for allowing multinational companies to create complicated structures to avoid billions of dollars of tax. Pressure is also mounting on Jean-Claude Juncker, the new president of the European commission and former long-serving prime minister of Luxembourg, who oversaw the introduction of the laws. (http://bit.ly/1opzX4v)
* ECB could pump 1 trillion euros into eurozone in fresh round of quantitative easing
The European Central Bank is ready to pump up to 1 trillion euros ($1.24 trillion) of fresh stimulus into the flagging eurozone economy to ward off a dangerous deflationary spiral, ECB president, Mario Draghi has signalled. (http://bit.ly/1xlDIrv)
The Telegraph
* Vladimir Putin: Oil price decline has been engineered by political forces
As slumping oil prices dampen Russia's economic outlook, the country's President Vladimir Putin has said that "at some moments of crisis it starts to feel like it is the politics that prevails in the pricing of energy resources." (http://bit.ly/10uDKlZ)
* Mike Ashley's Sports Direct raises stake in Debenhams
Sports Direct International has increased its exposure to department store chain Debenhams Plc yet further. Sports Direct now has a 12.7 percent interest in the rival retailer, up from 11.22 percent. (http://bit.ly/1skNtmn)
Sky News
* Petrol price cuts demanded by Treasury
A failure by petrol firms and supermarkets to pass on the full benefit of falling oil prices to customers filling up at the pumps would be an "outrage," a Cabinet Minister has warned. Treasury Chief Secretary Danny Alexander has demanded guarantees from fuel companies and distributors that they were doing all they could to pass on the price cuts to hard-pressed motorists. (http://bit.ly/1vR06qo)
* Banks' fury over FCA foreign exchange fines
Some of the world's biggest banks are resisting details of plans being drawn up by the City regulator to fine them for failings in their foreign currency operations. A number of the six banks in talks with the Financial Conduct Authority about a settlement are angry that the spread between the biggest and smallest penalties is in the low tens of millions of pounds. (http://bit.ly/1tg9HW1)
The Independent
* Mario Draghi addresses ECB dissent speculation: "It's normal to disagree"
European Central Bank president Mario Draghi shut down speculation of dissent among the bank's governing council. "It is fairly normal to disagree about things," Draghi said at the ECB monthly meeting, noting that the governing council had "unanimously" agreed to take on "additional unconventional instruments" to revive the euro zone and ward off deflation. (http://ind.pn/1xaLWnk)
* Morrisons warns turnaround won't happen overnight as sales continue to fall
Supermarket chain Morrisons has warned it will take some time for its turnaround plan to bear fruit as it revealed another big drop in sales as it grapples with an "intense" period of competition in the sector. (http://ind.pn/1xeiAW3)
Fly On The Wall Pre-market Buzz
ECONOMIC REPORTS
Domestic economic reports scheduled for today include:
Nonfarm payrolls for October at 8:30--consensus up 235K
Unemployment rate for October at 8:30--consensus 5.9%
Federal Reserve’s report on consumer credit for September-- consensus up $16B
ANALYST RESEARCH
Upgrades
CA Technologies (CA) upgraded to Hold from Sell at Evercore ISI
Cavium (CAVM) upgraded to Strong Buy from Outperform at Raymond James
Charter (CHTR) upgraded to Outperform from Market Perform at Raymond James
Delhaize (DEG) upgraded to Neutral from Underperform at BofA/Merrill
Envestnet (ENV) upgraded to Strong Buy from Outperform at Raymond James
GNC Holdings (GNC) upgraded to Buy from Neutral at Goldman
Kinross Gold (KGC) upgraded to Buy from Neutral at UBS
Nationstar (NSM) upgraded to Market Perform from Underperform at Wells Fargo
PetSmart (PETM) upgraded to Hold from Sell at Deutsche Bank
Plains GP Holdings (PAGP) upgraded to Outperform from Neutral at Credit Suisse
Splunk (SPLK) upgraded to Buy from Hold at Evercore ISI
Sunoco Logistics (SXL) upgraded to Buy from Hold at Stifel
Sunoco Logistics (SXL) upgraded to Buy from Neutral at UBS
Walker & Dunlop (WD) upgraded to Outperform from Market Perform at Wells Fargo
XO Group (XOXO) upgraded to Buy from Neutral at B. Riley
Zynga (ZNGA) upgraded to Buy from Hold at Needham
Downgrades
AbbVie (ABBV) downgraded to Market Perform from Outperform at BMO Capital
Allscripts (MDRX) downgraded to Hold from Buy at Evercore ISI
BB&T (BBT) downgraded to Neutral from Buy at Citigroup
Barrick Gold (ABX) downgraded to Buy from Conviction Buy at Goldman
Boulder Brands (BDBD) downgraded to Neutral from Buy at Longbow
Bruker (BRKR) downgraded to Neutral from Buy at Cantor
Bruker (BRKR) downgraded to Neutral from Buy at Citigroup
Chesapeake Granite (CHKR) downgraded to Underperform at Raymond James
Edwards Lifesciences (EW) downgraded to Neutral from Buy at Sterne Agee
Financial Engines (FNGN) downgraded to Hold from Buy at Needham
HCI Group (HCI) downgraded to Market Perform from Outperform at JMP Securities
J.B. Hunt (JBHT) downgraded to Market Perform from Outperform at Raymond James
Luminex (LMNX) downgraded to Market Perform from Outperform at Leerink
Performant Financial (PFMT) downgraded to Underperform from Neutral at Credit Suisse
Prestige Brands (PBH) downgraded to Underperform from Hold at Jefferies
Roka Bioscience (ROKA) downgraded to Neutral from Buy at BofA/Merrill
Salix (SLXP) downgraded to Hold from Buy at Stifel
Salix (SLXP) downgraded to Neutral from Buy at Mizuho
The Advisory Board (ABCO) downgraded to Hold from Buy at Stifel
Vitamin Shoppe (VSI) downgraded to Neutral from Buy at Goldman
Initiations
Chico's FAS (CHS) initiated with a Buy at Brean Capital
Christopher & Banks (CBK) initiated with a Buy at Brean Capital
Destination XL (DXLG) initiated with a Buy at Brean Capital
Evoke Pharma (EVOK) initiated with a Buy at MLV & Co.
Finish Line (FINL) initiated with a Market Perform at FBR Capital
Foot Locker (FL) initiated with a Market Perform at FBR Capital
The Buckle (BKE) initiated with a Hold at Brean Capital
Tilly's (TLYS) initiated with a Hold at Brean Capital
Urban Outfitters (URBN) initiated with a Buy at Brean Capital
Zumiez (ZUMZ) initiated with a Buy at Brean Capital
COMPANY NEWS
Home Depot (HD) found that 53M email addresses were taken during data breach, but no passwords, payment card information or other sensitive personal information
Bank of America (BAC) revised its Q3 EPS to (4c), said it has been engaged in separate advanced discussions with certain U.S. banking regulatory agencies to resolve matters related to its foreign exchange business
PepsiCo (PEP) President Zein Abdalla to retire, effective December 31
Joy Global (JOY) announced that it has received a subpoena seeking information concerning the company’s acquisition of International Mining Machinery Holdings Ltd. in 2012 and related accounting matters
Zynga (ZNGA) reported Q3 Monthly Unique Users 77M vs. 97M a year ago; reported Q3 Daily Active Users 26M vs. 30M a year ago
EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Disney (DIS), Alliant Energy (LNT), Consolidated Edison (ED), National Fuel (NFG), Multi-Fineline (MFLX), Lumos Networks (LMOS), TransAtlantic Petroleum (TAT), SemGroup (SEMG), Sapient (SAPE), Nektar (NKTR), Franklin Covey (FC), Fidus Investment (FDUS), Hawaiian Electric (HE), Zogenix (ZGNX), SurModics (SRDX), Universal Display (OLED), Vectren (VVC), Redwood Trust (RWT), Net 1 UEPS (UEPS), Kemper (KMPR), Paylocity (PCTY), Five9 (FIVN), Assured Guaranty (AGO), CSC (CSC), Mitek Systems (MITK), Shutterstock (SSTK), Main Street (MAIN), Fair Isaac (FICO), Cvent (CVT), HCI Group (HCI), Fuel Tech (FTEK), Millennial Media (MM), Skyworks (SWKS), Spectrum (SPPI), The Advisory Board (ABCO), WageWorks (WAGE), Universal Electronics (UEIC), Emergent BioSolutions (EBS), YuMe (YUME), Rentrak (RENT), FXCM (FXCM), Salem Communications (SALM), Medivation (MDVN), Theravance Biopharma (TBPH), Amber Road (AMBR), Erickson (EAC), Echelon (ELON), Sprouts Farmers Markets (SFM), International Game (IGT), ICF International (ICFI), MRC Global (MRC), Volcano (VOLC), PROS (PRO), Rovi (ROVI), Arista Networks (ANET), Air Methods (AIRM), XO Group (XOXO), Novatel Wireless (MIFI), Navigators (NAVG), Encore Capital (ECPG), Air Lease (AL), CareFusion (CFN), NVIDIA (NVDA), Power Solutions (PSIX), Kodiak Oil & Gas (KOG), Matson (MATX), Envestnet (ENV), Diodes (DIOD), NMI Holdings (NMIH), Mettler-Toledo (MTD), Opexa Therapeutics (OPXA), Opexa Therapeutics (OPXA), ChannelAdvisor (ECOM), Hyperion Therapeutics (HPTX), Oncothyreon (ONTY), LifeVantage (LFVN), Uni-Pixel (UNXL), Infinity Pharmaceuticals (INFI), Spark Networks (LOV), Monster Beverage (MNST), King Digital (KING), Rubicon (RBCN), Lionsgate (LGF), American Equity (AEL), bebe stores (BEBE), FBL Financial (FFG), NIC Inc. (EGOV)
Companies that missed consensus earnings expectations include:
LSB Industries (LXU), Humana (HUM), The New Home Company (NWHM), Humana (HUM), BPZ Resources (BPZ), Bonanza Creek (BCEI), Northeast Utilities (NU), ACETO (ACET), Atlantic Power (AT), Darling (DAR), Golden Minerals (AUMN), Great Plains Energy (GXP), Hansen Medical (HNSN), Rose Rock Midstream (RRMS), Bristow Group (BRS), Farmer Bros. (FARM), Capstone Turbine (CPST), Summit Midstream (SMLP), Third Point Reinsurance (TPRE), Bravo Brio Restaurant (BBRG), Rentech (RTK), Rentech Nitrogen (RNF), Global Eagle (ENT), Fairway Group (FWM), EZCORP (EZPW), Versartis (VSAR), Trovagene (TROV), EnerNOC (ENOC), Alpha & Omega (AOSL), Cytori Therapeutics (CYTX), RadiSys (RSYS), Mad Catz Interactive (MCZ), TherapeuticsMD (TXMD), Performant Financial (PFMT), Nuverra reports Q3 EPS ($5.44), Bankrate (RATE), Saint Joe Co. (JOE), Q2 Holdings (QTWO), Rexnord (RXN), Summer Infant (SUMR), PharmAthene (PIP), Quantum (QTWW), Stifel Financial (SF), Planet Payment (PLPM), Guidance Software (GUID), BioAmber (BIOA), Financial Engines (FNGN), Roka Bioscience (ROKA), Manitex (MNTX), Tremor Video (TRMR), Salix (SLXP), DexCom (DXCM), Boingo Wireless (WIFI), Clovis (CLVS), Allscripts (MDRX), Bruker (BRKR), Anacor (ANAC), Amicus Therapeutics (FOLD), Kratos Defense (KTOS), I.D. Systems (IDSY), Ubiquiti Networks (UBNT), Transact Technologies (TACT), Amarin (AMRN)
Companies that matched consensus earnings expectations include:
Zynga (ZNGA), TheStreet (TST), Denison Mines (DNN), Primo Water (PRMW), Gastar Exploration (GST), Varonis (VRNS), Entravision (EVC), Microsemi (MSCC), ARC Document (ARC), Northern Oil and Gas (NOG), XOMA (XOMA), El Pollo Loco (LOCO), DaVita (DVA), Tumi (TUMI), TCP International (TCPI), American Public Education (APEI), J & J Snack Foods (JJSF)
NEWSPAPERS/WEBSITES
KKR (KKR), Apollo (APO) asked to submit second-round bids for PetSmart (PETM), WSJ reports
Symantec (SYMC) to cut 2,000 jobs as it splits business, Mercury News reports
Twitter (TWTR) to open Hong Kong office early next year, WSJ reports
Samsung (SSNLF) said to be planning new series of smartphones, SamMobile reports
Ackman says Canadian Pacific (CP) may consider merger with CSX (CSX) rival, Bloomberg reports (NSC)
Federal appeals court panel still holds BP (BP) responsible for Gulf spill, AP says
SYNDICATE
Advent Software (ADVS) 3.8M share Block Trade; price range $34.00-$34.10
Builders FirstSource (BLDR) files to sell 49.2M shares for holders
CTI BioPharma (CTIC) files convertible preferred stock offering
Freshpet (FRPT) 10.417M share IPO priced at $15.00
INC Research (INCR) 8.108M share IPO priced at $18.50
ORBCOMM (ORBC) files to sell $72M in common stock
Triumph Bancorp (TBK) 6.7M share IPO priced at $12.00
Western Digital (WDC) 5.435M share Secondary priced at $96.00