• Obama Shrinking Second-Term Hastened by Syria Opposition (BBG)
• Obama says Russian proposal on Syria a potential 'breakthrough' (Reuters)
• Poll Finds Support Fading for Syria Attack (WSJ)
• France to Introduce Resolution Aimed at Dismantling Syria's Chemical Arsenal (WSJ)
• China Factory Output Rises (WSJ)
• Apple to Unveil IPhones Seeking End to Year of Struggles (BBG)
• Verizon Plans Largest Debt Sale Ever: Proceeds From Deal, Expected to Raise $20 Billion, Would Fund Venture Buyout (WSJ)
• Shipping Rates Seen at 2010 High on Record Ore to China (BBG)
• Europe Financial Transactions Tax Hits Legal Wall (FT)
• Japan Readies Stimulus to Cushion Blow of Sales-Tax Increase (BBG)
• Ads coming to Twitter: Twitter makes its largest acquisition, a mobile ad company (FT)
• Houses on fire as fighting erupts in southern Philippines (Reuters)
• Banks Seen at Risk Five Years After Lehman Collapse (BBG)
• Poll shows healthy young adults may keep Obamacare afloat (Reuters)
• Russia to Brazil Intervention Adds to U.S. Debt Distress (BBG)

Overnight Media Digest

WSJ

* President Barack Obama's campaign for an attack on Syria took an unexpected turn as his administration inadvertently gave the Assad regime a potential way out that spawned second thoughts on Capitol Hill and enthusiasm among international opponents of a military strike.

* Carl Icahn tried with all his might, but couldn't break the $24.8 billion buyout of Dell Inc. On Monday, the activist investor announced he wouldn't take further actions to block the buyout, moving the deal on the edge of passing at a scheduled shareholder vote on Thursday.

* Koch Industries Inc known for concentrating on such unglamorous industries as oil refining, chemicals and fertilizer, has a new role: supplying electronic parts to Apple Inc. The Wichita, Kansas-based conglomerate, owned by billionaire brothers Charles and David Koch, on Monday announced an agreement to pay $7.2 billion, or $38.50 a share, for Molex Inc.

* Neiman Marcus Inc's private-equity owners got the outcome they desired when they found a buyer to pay $6 billion for the luxury retail chain. They just wish it had come a few years earlier. Under terms of the deal announced Monday, TPG and Warburg Pincus LLC are poised to more than double the amount of cash they put in when they bought Neiman in 2005, people familiar with the matter said.

* A federal judge in California ruled last week that clothing retailer Abercrombie & Fitch Co discriminated against a Muslim employee on religious grounds, the U.S. Equal Employment Opportunity Commission said Monday. The lawsuit was filed by the EEOC in 2011 on behalf of Umme-Hani Khan, a Muslim who was fired in February 2010 because her head scarf didn't conform to the company's dress code called its "Look Policy."

* The battle over hydraulic fracturing is heating up in California - and broadening to include what California regulators contend has been undisclosed oil-well fracking off the Pacific Coast. The California Coastal Commission, which is charged with overseeing development along the state's coastline and in its waters, said it found out only recently offshore fracking had occurred from oil platforms overseen by the federal government. The state agency has launched a probe into the practice.

* In a development that is sending ripples throughout the corporate-bond market, Verizon Communications Inc is expected to raise $20 billion or more on Wednesday in what would be the largest-ever debt sale by a company. The New York telecommunications company will sell debt ranging in maturity from three to 30 years, the banks backing the deal said Monday.

* Brazil's OGX Petróleo e Gás Participações SA has tapped lawyers at Davis Polk & Wardwell LLP to represent it in talks with creditors, according to people familiar with the situation. The hire comes as Brazilian businessman Eike Batista tries to manage a split that is pitting him, a controlling shareholder, against the oil firm's managers.

* Google Inc offered to make further concessions to European Union regulators to settle a nearly three-year antitrust probe and avert a possible multibillion-dollar fine. The European Commission, the EU's competition watchdog, was analyzing the proposals and if they are satisfactory, a deal could be reached in the coming months, an EU spokesman said on Monday. Google's proposal wasn't made public.

* Chinese authorities said that social-media users who post comments considered to be slanderous could face prison if the posts attract wide attention - a ruling free-speech advocates criticized as an attempt to give legal backing to the suppression of online dissent.

* UK cable operator Virgin Media Inc said it will make Netflix Inc available to some of its subscribers through their set-top boxes, making Virgin the first major pay-TV operator to integrate the streaming-video outlet into its service.

FT

Deutsche Bank AG is under scrutiny from Japan's securities market watchdog over concerns that its employees breached Japan's anti-bribery regulations by providing corporate entertainment to pension fund executives.

ICAP is nearing a settlement with U.S and British regulators over allegations that it manipulated the Libor benchmark interest rates that would see the UK interdealer broker pay a fraction of the fines given to banks over the scandal.

Verizon plans to sell a combination of fixed and floating-rate debt across maturities ranging from three to 30 years as part of its $130 billion acquisition of Verizon Wireless, according to a company filing with regulators.

Spanish energy company Repsol has consulted Citigroup and Deutsche Bank on the possible sale of its $6 billion stake in utility Gas Natural.

Twitter has bought mobile advertising company MoPub in its largest acquisition to date, in a deal worth 16 million shares in Twitter.

NYT

* A Russian plan to have international monitors take control of the Syrian government's chemical weapons appeared to offer an exit strategy for President Obama, who had been reluctant to order a military strike.

* Documents released Monday detail the largely secretive process that lets the U.S. government detain an individual at a border crossing and confiscate or copy any electronic devices that person is carrying.

* Yahoo and Facebook each filed suit in the secret Foreign Intelligence Surveillance Court to ask the government for permission to reveal information about the number and types of national security requests for user data that the companies receive. Meanwhile, Google and Microsoft, which filed suit in June to ask for this permission, amended their petitions Monday to compel the government to publish even more detail about the requests.

* Google said it made a second attempt to settle an antitrust inquiry it faces in Europe over accusations that it abuses its dominance in Internet search and advertising.

* On Monday, the Koch Brothers' conglomerate made a big move into a very different business by offering to buy Molex , a relatively obscure maker of electronics plugs for the likes of Apple - for $7.2 billion.

* The U.S. government is selling $2.4 billion in bonds issued by Citigroup during the financial crisis in exchange for federal guarantees against the bank's possible losses. The sale by the Federal Deposit Insurance Corp ends the government's holdings in the third-largest U.S. bank.

* In a barb-filled letter to shareholders on Monday, billionaire Carl Icahn wrote that he could not overcome a series of defeats, including changes to the voting rules that make it easier for Michael Dell and the investment firm Silver Lake to prevail in their bid to buy Dell Inc.

* Comcast's NBCUniversal put Jeff Shell, a television executive, in charge of its film studio, Universal Studios, on Monday, leading to the promotion of one longtime movie manager and the ouster of another.

* Robert Allbritton, the publisher of the Washington news publication Politico, said on Monday that he had acquired the three-year-old news website Capital New York and that he intended to turn it into a version of Politico for the Empire State.

* The owners of the Neiman Marcus luxury retail chain agreed on Monday to sell it to a group led by Ares Management and a Canadian pension plan in a deal worth $6 billion.

Canada

THE GLOBE AND MAIL

* A former Conservative campaign staffer charged in connection with the "Pierre Poutine" robo-calls told multiple acquaintances that he'd played a part in the 2011 effort to send opposition voters to the wrong polling station in a Southern Ontario riding, an Elections Canada investigator alleges.

* A grassroots movement from within British Columbia's dejected New Democratic Party launched an effort on Monday to rebuild the political party and place modern-thinking people in positions of power at the NDP's November convention in Vancouver.

Reports in the business section:

* The long-delayed Keystone XL pipeline has been tangled up in environmentalist opposition and political wrangling. Now some energy experts say the oil market is moving on without it. A combination of growing oil-by-rail capacity and other new pipelines is increasingly providing alternatives to Keystone XL, just as Ottawa redoubles efforts to persuade President Barack Obama to green-light the project.

* Fairfax Financial Holdings Ltd, the largest shareholder of BlackBerry Ltd , is courting some of Canada's largest pension plans to join it in a buyout consortium as one of the options for the embattled smartphone maker. Fairfax is also talking to potential buyers for its 9.9-per-cent stake.

* Canada's Finance Minister Jim Flaherty said a deal is near that could see Canadian authorities begin collecting financial information on Americans living in Canada and remit it to the U.S. Internal Revenue Service. Flaherty said on Monday that he expects to reach an agreement "before too long" with the U.S. government.

NATIONAL POST

* Progressive Conservative Leader Tim Hudak insisted on Monday that he didn't approve a controversial housing allowance claimed by his ousted finance critic. Peter Shurman has said that Hudak approved his claim for C$20,719 (about $20,000) last year to subsidize his Toronto apartment after moving to Niagara-on-the-Lake. But Hudak denied it.

* Nova Scotia Premier Darrell Dexter returned Saturday to the scene of what his New Democrats see as an economic triumph to call a provincial election for Oct. 8, reminding voters that his party has directly intervened in the economy when jobs were on the line. Dexter kicked off his bid for re-election in the Cape Breton town of Port Hawkesbury, where his government helped keep a paper mill running with a C$124.5 million aid package in 2012.

FINANCIAL POST

* In another visit to the United States to promote the proposed Keystone XL oil sands pipeline, Canada's Natural Resources Minister Joe Oliver met Monday with his United States counterpart, Energy Secretary Ernest Moniz, to propose a joint approach to greenhouse gas emissions and other technology initiatives in energy.

* The Canada Pension Plan Investment Board secured its first large private deal in more than a year on Monday with partner Ares Management LLC to purchase U.S. luxury retailer Neiman Marcus Group Ltd for $6 billion.

* Richardson GMP Ltd, a retail brokerage arm that caters to high net worth individuals, is set to double in size. The firm that grew out of the 2009 merger between the retail brokerage units of GMP Capital and Richardson Capital, has signed a definitive agreement to purchase Macquarie Private Wealth Inc, the local unit of the Australian-based Macquarie Group, that came to Canada in late 2009.

China

CHINA SECURITIES JOURNAL

- The Chinese government plans to roll out a new set of policies to promote the use of new energy vehicles. Various government agencies are currently studying rules to promote the use of hybrid and electric vehicles, according to sources.

SHANGHAI SECURITIES NEWS

- Ping An Insurance (Group) Co of China Ltd and China Pacific Insurance (Group) Co Ltd plan to set up branches in the Shanghai free trade zone, according to sources.

CHINA DAILY

- China's judicial interpretations about handling online crimes will protect against online rumours, fraud, libel and blackmail, according to an editorial in the state-owned paper. But this crackdown should not have an impact on the freedom of speech, it added.

PEOPLE'S DAILY

- China's leaders are focused on the importance of education involving stricter measures, requirements and discipline to ensure that cadres are ideologically trained, said an editorial from the paper which is a mouthpiece for the Chinese communist party.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

BioMed Realty (BMR) upgraded to Overweight from Equal Weight at Morgan Stanley
E-Trade (ETFC) upgraded to Outperform from Neutral at Macquarie
Endesa Chile (EOC) upgraded to Buy from Neutral at Citigroup
Fusion-io (FIO) upgraded to Overweight from Neutral at Piper Jaffray
M.D.C. Holdings (MDC) upgraded to Outperform from Neutral at Credit Suisse
Marvell (MRVL) upgraded to Overweight from Neutral at JPMorgan
National Oilwell (NOV) upgraded to Outperform from Neutral at Credit Suisse
TIBCO (TIBX) upgraded to Buy from Neutral at Janney Capital

Downgrades

Beazer Homes (BZH) downgraded to Neutral from Outperform at Credit Suisse
D.R. Horton (DHI) downgraded to Neutral from Outperform at Credit Suisse
Dollar General (DG) downgraded to Equal Weight from Overweight at Barclays
First Horizon (FHN) downgraded to Hold from Buy at Wunderlich
Hercules Technology (HTGC) downgraded to Market Perform at Wells Fargo
Marathon Petroleum (MPC) downgraded to Neutral from Outperform at Credit Suisse
Model N (MODN) downgraded to Hold from Buy at Stifel
Model N (MODN) downgraded to Neutral from Overweight at JPMorgan
NVR Inc. (NVR) downgraded to Underperform from Neutral at Credit Suisse
NuStar GP Holdings (NSH) downgraded to Underperform from Neutral at Credit Suisse
Red Robin (RRGB) downgraded to Hold from Buy at Wunderlich

Initiations

Blackstone Mortgage (BXMT) initiated with an Outperform at JMP Securities
C&J Energy (CJES) initiated with an Overweight at Barclays
Cimarex Energy (XEC) initiated with a Buy at Canaccord
Concho Resources (CXO) initiated with a Hold at Canaccord
CubeSmart (CUBE) initiated with an Underperform at Macquarie
Illumina (ILMN) initiated with an Outperform at Wells Fargo
Konami Corp (KNM) initiated with an Underperform at Jefferies
Nationstar (NSM) initiated with an Outperform at Oppenheimer
Ocwen Financial (OCN) initiated with an Outperform at Oppenheimer
PHH Corp. (PHH) initiated with a Perform at Oppenheimer
Sophiris Bio (SPHS) initiated with a Buy at Stifel
Sprouts Farmers Markets (SFM) initiated with a Neutral at Credit Suisse
Sprouts Farmers Markets (SFM) initiated with a Neutral at Goldman
Sprouts Farmers Markets (SFM) initiated with a Neutral at UBS
Sprouts Farmers Markets (SFM) initiated with an Underperform at BofA/Merrill
TCP Capital (TCPC) initiated with an Outperform at Wells Fargo
Walter Investment (WAC) initiated with a Perform at Oppenheimer
iRobot (IRBT) initiated with a Positive at Susquehanna

HOT STOCKS

Wal-Mart (WMT) to launch smartphone trade-in program in U.S.
Baxter (BAX) ratings affirmed by Fitch, negative outlook assigned
PVH Corp. (PVH) expects consumer environment to remain soft
Toshiba (TOSYY) to acquire T&D business from Vijai Electricals for $200M
Emerald Oil (EOX) sold substantially all non-operated Williston Basin assets

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Triangle Petroleum (TPLM), Conatus Pharmaceuticals (CNAT), PVH Corp. (PVH), Five Below (FIVE), Limoneira (LMNR), Casey's General Stores (CASY)

Companies that missed consensus earnings expectations include:
HD Supply (HDS), Pep Boys (PBY), Majesco (COOL)

Companies that matched consensus earnings expectations include:
Palo Alto (PANW), Peregrine (PPHM)

NEWSPAPERS/WEBSITES

On Sept. 23 the SEC will lift an 80-year ban preventing privately held businesses from advertising for investments, helping usher private businesses into the world of "crowdfunding" that has largely been limited to donations. Less excited are some state regulators who fear the relaxed rules could stoke scams and losses as businesses court individual investors to raise money, the Wall Street Journal reports
Federal regulators' attempts to enforce "net neutrality" rules (VZ) may have just hit a tough snag. In oral arguments, a federal appeals court signaled it had deep concerns about the legal underpinnings of the FCC's 2011 rules requiring equal treatment for all traffic on the Internet, the Wall Street Journal reports
At least three of the top 20 investors in Microsoft (MSFT) want a turnaround expert to succeed CEO Ballmer and urged the board to consider Ford (F) CEO Mulally and Computer Science CEO Lawrie (CSC) for the job, sources say, Reuters reports
The European car market (VLKAY, FIATY, PEUGY, NSANY, DDAIF) is bottoming out after five years of falling demand, but high unemployment and weak bank lending suggest its recovery will be long and slow, executives at the Frankfurt car show say, Reuters reports
IBM (IBM), which is moving benefits for Medicare-eligible retirees to a private health exchange, said in a letter that its contribution to their health care would be “consistent” with previous years, As long as retirees enroll with the private insurance exchange, Bloomberg reports
Goldman Sachs Group (GS) is moving brokerage accounts for some current and former employees with less than $1M in assets to Fidelity Investments, sources say, providing more investment choices and services for employees who don’t fit the firm’s wealth-management focus on high-net worth clients, Bloomberg reports

SYNDICATE

Armstrong World (AWI) files to sell 10.06M shares of common stock for holders
Enbridge Energy Management (EEQ) files to sell 8M shares of common stock
Enbridge Energy (EEP) files to sell 8M shares of comon stock
Fiduciary/Claymore MLP (FMO) files to sell 3.52M shares of common stock
Inergy Midstream (NRGM) files to sell 11M units for limited partners
Kennedy Wilson (KW) files to sell 6M shares of common stock
MagnaChip (MX) files to sell 1.7M shares for stockholders
Marketo (MKTO) files to sell 6M shares of common stock
Rhino Resources (RNO) files to sell 1.1M units for limited partners
Starwood Property (STWD) files to sell 25M shares of common stock
Stratasys (SSYS) files to sell 4M shares of common stock
Textura (TXTR) files to sell 4M shares of common stock
TriMas (TRS) files to sell 3.75M shares of common stock
UMB Financial (UMBF) files to sell 3.9M shares of common stock
Virtus Investment Partners (VRTS) files to sell $175M in common stock
Xoom (XOOM) files to sell 3.733M shares of common stock

Plastic phones, a gold cover, and no China Mobile deal seems to have disappointed more than a few AAPL investors this morning. Downgrades are a plenty but we await confirmation from Carl Icahn's twitter account of what to do next as the price of the stock has just fallen below his initial tweet level.

Oh well, perhaps now that Apple's conversion to a Wall Street darling is complete (despite the downgrades by UBS, BofA, Credit Suisse and JPM) it is time for even more iBonds to reclaim the largest bond issuer ever title from Verizon...

• Syrian Rebels Hurt by Delay (WSJ), U.S. seeks quick proof Syria ready to abandon chemical weapons (Reuters)
• Lavrov Brings Acerbic Pragmatism to Syria Meet With Kerry (BBG)
• Five years after Lehman, risk moves into the shadows (Reuters)
• U.S. shares raw intelligence data with Israel, leaked document shows  (LA Times)
• Japan to raise sales tax, launch $50 bln stimulus (AFP) - so 1) lower debt by sales tax, then 2) raise debt through stimulus.
• Blackstone’s Hilton Files for $1.25 Billion U.S. Initial Offer (BBG)
• Second Life Bankers Thrive in Dubai as Boutiques Boost Fees (BBG)
• Brussels probes multinationals’ tax deals (FT)
• Wall Street's Top Cop: SEC Tries to Rebuild Its Reputation (WSJ) ... and fails
• Tablet sales set to overtake PCs (FT)
• The end of angst? Prosperous Germans in no mood for change (Reuters)
• Mondelez strikes deal to chew into Twitter’s social media knowhow (FT)
• Australia’s Jobs Drop Underscores Challenge for Abbott (BBG)
• Chicago Mayor Emanuel apologizes for past police torture (Reuters)

Overnight Media Digest

WSJ

* With a U.S. attack on Syria on hold, Western-backed rebels said they feared they had lost their best chance of promptly ousting President Bashar al-Assad and sidelining Islamist extremists.

* The Obama administration plans to block the construction of new coal-fired power plants unless they are built with novel and expensive technology to capture greenhouse gases.

* Verizon Communications $49 billion bond offering sparked a frenzy across Wall Street on Wednesday as investors clamored to buy a piece of the largest corporate debt sale in history.

* SEC officials will question top exchange executives on Thursday morning about the most recent computer glitch to rattle the markets, as regulators seek tougher standards for trading systems that have drawn objections from the industry. The meeting comes nearly three weeks after the latest major market failure, at the Nasdaq Stock Market, and isn't widely expected to yield new rules for exchanges immediately.

* A U.S. appeals court suggested it might give Apple a second crack at making a case that Google's Motorola Mobility copied iPhone patents.

* Pandora Media appointed Brian McAndrews to be its new CEO, president and chairman as the online radio company faces the threat of Apple's new iTunes Radio service.

* MiMedx is scrambling to reassure investors after the FDA raised questions about key products it makes, all of which come from the human placenta. The company's travails have shed light on a little known segment of the medical-products business. A few companies including MiMedx have worked up treatments using amniotic tissue, but the government appears to be taking a closer at whether their processing should force them to be regulated as drugs.

* A Dish Network Corp director who resigned in recent weeks did so amid a disagreement over the company's handling of a bid for a telecommunications firm that could deliver hundreds of millions of dollars of personal profits to Dish Chairman Charlie Ergen, people involved in the situation said.

* Vivendi SA moved closer Wednesday to reshaping itself as a smaller media company, beginning a process to spin off its biggest telecommunications unit while simultaneously calming a simmering leadership dispute.

* Private-equity firms KKR & Co and Sycamore Partners are considering a joint bid for Jones Group Inc , the footwear and apparel maker that has put itself up for sale, people familiar with the matter said.

* Time Warner Cable Inc's chief operating officer, Rob Marcus, said Wednesday that the cable operator lost customers as a result of the recent month-long blackout of CBS Corp programming on its systems in some major markets

FT

Morgan Stanley is being sued by an ex-auditor, claiming that senior executives and audit officers ignored and "whitewashed" his concerns that the bank was taking on too much credit risk before the global financial crisis.

A German labour court on Wednesday ordered Deutsche Bank to rehire four traders that it wrongfully dismissed during an internal probe into the global Libor scandal.

The European Commission will next week announce that London will remain the primary authority for Libor, despite plans earlier in the year to put the lending rate under the direct control of a European supervisor in Paris.

Leading global grains exporter Cargill said on Wednesday that its Chief Executive Greg Page is set to leave more than two years ahead of his mandatory retirement age, to be replaced by David MacLennan, the agribusiness' president and chief operating office.

A group of creditors - including hedge fund Cube Capital - on Wednesday commenced legal proceedings against the Indonesian Bakrie family in a payment dispute over a $155 million bond issued by Bakrieland Development, a property affiliate.

NYT

* Several big life insurers are going to have to set aside a total of at least $4 billion because New York regulators believe they have been manipulating new rules meant to make sure they have adequate reserves to pay out claims. The development stems from contentions by insurance companies that states' regulations are forcing them to hold too much money in reserve.

* Facebook Inc, which has repeatedly tripped over its own feet when changing its privacy practices, has stumbled yet again. The Federal Trade Commission said on Wednesday that it had begun an inquiry into whether the social network's proposed new privacy policies, unveiled two weeks ago, violated a 2011 agreement with regulators. Under that agreement, the social network is required to get the explicit consent of its users before exposing their private information to new audiences.

* With the introduction of a cheaper iPhone on Tuesday, Apple Inc took a step toward catering to China, the world's largest smartphone market and one that is crucial to the company's future. But the cost of the phone - more than $700 in China - will still keep Apple's phones beyond the reach of most Chinese consumers.

* Pandora Media Inc on Wednesday named Brian McAndrews, a technology and digital advertising executive, its chief executive and chairman. He succeeds Joseph Kennedy, who announced his resignation in March after nine years with Pandora, a leading Internet radio service.

* On Wednesday, the three largest record companies - Sony, Universal and Warner, along with ABKCO, an independent that controls many of the Rolling Stones' early music rights - sued Sirius XM Radio Inc in a California court, saying that the satellite service used recordings from before 1972 without permission.

* California's top lawmakers on Wednesday pledged their support for a plan to raise the minimum wage in the state to $10 an hour, which could soon give California workers the highest minimum pay rate in the country.

* William Ackman expanded his campaign against Herbalife Ltd on Wednesday, questioning the independence of its auditor, PricewaterhouseCoopers, and warning of "serious accounting" issues at the company. Ackman, the hedge fund billionaire who runs Pershing Square Capital Management, questioned whether PricewaterhouseCoopers has a conflict of interest because of nonauditing work it performed for Herbalife, the nutritional supplement company.

Canada

THE GLOBE AND MAIL

* The Parti Québécois is pushing the private sector to adopt its proposed charter of values as a model to create a more secular workplace. The charter, which would regulate religious-based clothing for public employees, has been met with mixed reactions, including concerns in the private sector that it sends a negative signal to would-be immigrants.

* Russian President Vladimir Putin warned on Wednesday against a U.S. strike on Syria, saying such action risked escalating the conflict beyond that country and unleashing terrorist attacks. Writing in the New York Times, Putin said there were "few champions of democracy" in the 2-1/2-year-old civil war in Syria, "but there are more than enough Qaeda fighters and extremists of all types battling the government."

* An armored car guard who gunned down four crewmates on the job has been handed the toughest sentence in Canada since the country's last execution, but it is not enough for some family members of his victims. An Edmonton judge agreed on Wednesday to a plea deal that gives 22-year-old Travis Baumgartner a life sentence with no chance of parole for 40 years.

Reports in the business section:

* BlackBerry Ltd is stepping up its lobbying efforts in Ottawa in a bid to smooth regulatory hurdles if the company can find a foreign buyer for its struggling business. The Waterloo, Ontario-based smartphone maker recently added the Investment Canada Act to its discussion topics with government officials under the lobbying registry, which previously included a number of topics ranging from intellectual property legislation to tax policy, law enforcement and other subjects.

* Alberta natural gas prices, already under pressure after recent changes to pipeline transport rates, have weakened against a backdrop of mild weather and bulging inventories, a potential hit on the province's finances even as oil markets look brighter.

* Bombardier Inc's rail division continues to expand its signaling business by winning its first major contract in the Eastern European country of Azerbaijan. The Berlin-based division of the train and plane maker is part of a consortium awarded a $288 million contract to supply signaling equipment for a 503-kilometre line to Azerbaijan Railways.

NATIONAL POST

* It could be called a storm in a coffee cup, but New Brunswick's Green Party leader wants Quebec-style sign legislation requiring all businesses to post signs in French as well as English. David Coon was spurred into action after Seattle, Washington-based Starbucks Corp opened a coffee shop in the city and provided customers with menus in English only.

* The wrangling over transit in Scarborough shows no sign of abating, with Mayor Rob Ford disputing whether the city should pay for any subway cost overruns, and the Toronto Transit Commission chairwoman delivering her strongest rebuke yet of the route favored by the province.

FINANCIAL POST

* Canada's largest oil company has added its voice to those playing down the importance of Keystone XL, as the U.S. government weighs approval of the contentious pipeline. "The belief is that the industry will get access to markets" with or without the pipeline, Suncor Energy Inc chief executive Steve Williams said on Wednesday.

* Irving Oil Co could be facing some hefty fines after it was determined the crude oil involved in the Lac-Mégantic disaster had been improperly labeled. The Transportation Safety Board said on Wednesday its investigation into the July 6 Lac-Mégantic derailment, in which 47 people died, determined the oil contained in the railcars was mislabeled and more flammable than previously thought.

* Low interest rates are helping to boost property markets across the globe and Canada is no exception, says a new report from the Bank of Nova Scotia. However, future gains in Canada are no guarantee, the report from economist Adrienne Warren says.

China

CHINA SECURITIES JOURNAL

-- China built 3.6 million units of low-cost apartments in the first eight month of this year. The government plans to build 4.7 million units of such apartments in 2013.

-- China will soon approve license of 4G mobile communication, said Zhang Xiaoqiang, deputy director of the National Development and Reform Commission.

SHANGHAI DAILY

-- Unilever Plc plans to build a fourth factory in China, Zeng Xiwen, the firm's vice president for North Asia, said.

CHINA DAILY

-- China needs to make greater efforts to ensure migrant workers' social inequalities are rectified so they can enjoy the same services as urban residents, the paper said in an editorial.

PEOPLE'S DAILY

-- China will increase investment in education sectors to raise the standard of education of financially stricken students, the State Council of China said.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Allstate (ALL) upgraded to Outperform from Market Perform at Wells Fargo
Cardinal Financial (CFNL) upgraded to Outperform from Market Perform at Keefe Bruyette
Cash America (CSH) upgraded to Outperform from Market Perform at JMP Securities
Constant Contact (CTCT) upgraded to Buy from Neutral at Janney Capital
Encana (ECA) upgraded to Outperform from Sector Perform at RBC Capital
Mobile Mini (MINI) upgraded to Outperform from Neutral at RW Baird
Polycom (PLCM) upgraded to Outperform from Market Perform at Raymond James
Portland General Electric (POR) upgraded to Buy from Hold at KeyBanc
Umpqua Holdings (UMPQ) upgraded to Outperform from Sector Perform at RBC Capital
Zynga (ZNGA) upgraded to Equal Weight from Underweight at Evercore

Downgrades

AB InBev (BUD) downgraded to Reduce from Neutral at Nomura
Arch Capital (ACGL) downgraded to Market Perform from Outperform at Wells Fargo
Associated Banc-Corp (ASBC) downgraded to Underperform at Raymond James
Cliffs Natural (CLF) downgraded to Market Perform from Outperform at FBR Capital
Netflix (NFLX) downgraded to Equal Weight from Overweight at Morgan Stanley
Symantec (SYMC) downgraded to Equal Weight from Overweight at Morgan Stanley
Travelers (TRV) downgraded to Market Perform from Outperform at Wells Fargo
Weatherford (WFT) downgraded to Market Perform from Outperform at Raymond James
Weatherford (WFT) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

Barnes Group (B) initiated with a Buy at Deutsche Bank
CNA Financial (CNA) initiated with an Outperform at William Blair
Expedia (EXPE) initiated with a Neutral at Janney Capital
NeoStem (NBS) initiated with a Buy at MLV & Co.
Packaging Corp. (PKG) initiated with a Market Perform at Wells Fargo
RockTenn (RKT) initiated with an Outperform at Wells Fargo
Tree.com (TREE) initiated with a Buy at Needham

HOT STOCKS

America Movil (AMX) said discussions continue with KPN (KKPNY)
Carl Icahn told CNBC he bought more Apple (AAPL) stock yesterday as price fell
SAIC (SAI) sees $25B in new market opportunities following spin-off
Qualcomm (QCOM) announced new $5B share repurchase program
Philip Morris (PM), others (MO) prevail in settlement payment dispute
HP (HPQ) announced HP Chromebook14 (GOOG) powered by Intel (INTC) processor
Facebook CEO Zuckerberg: 'Home' service takeoff proceeding slower than expected
Dunkin' Brands (DNKN) to enter U.K. market
Weatherford (WFT) selling 38.5% Borets JV stake to partner
IAC (IACI) said to be considering Daily Beast sale after Tina Brown's departure, Bloomberg reports
DTE Energy (DTE) said cable failure occurred on electric system that serves Detroit

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
ChinaEdu (CEDU), Vera Bradley (VRA)

Companies that missed consensus earnings expectations include:
Evolution Petroleum (EPM), Men's Wearhouse (MW)

NEWSPAPERS/WEBSITES

• Bank executives (C, JPM, BBT) have been hoping they could dull the pain of a plummeting mortgage-refinance market by shifting focus to loans for home purchases. That’s not working out. The Mortgage Bankers Association said mortgage applications fell 13.5% in the week ended Sept. 6 from the previous week. The data reflect a 20% drop in refinancing and a 3% decline in purchase loans, the Wall Street Journal reports
• Michael Dell is set to win a bruising, year long battle for control of his company. His next task—getting Dell Inc. (DELL) growing again—may be even tougher, the Wall Street Journal reports
• Societe Generale (SCGLY) is exploring the sale of its Asia private banking arm, sources say, seeking to exit a market where small managers are getting hit by rising costs and competition. The Singapore-based division could bring about $600M, Reuters reports
• Sharp Corp. (SHCAY)  plans to raise up to $1.7B as it seeks to pay down debt after a rescue last year and shore up its tattered finances, sources say, Reuters reports
• While the cheaper of Apple’s (AAPL) new iPhones disappointed critics who say it’s not priced low enough, in Europe it may still help carriers achieve what’s become rare in a region where wireless devices outnumber people: finding new customers, Bloomberg reports
• California Governor Brown said he’ll approve regulations for hydraulic fracturing criticized by environmental groups as the state prepares for development of the largest shale-oil reserves in the U.S., Bloomberg reports

SYNDICATE

Chemical Financial (CHFC) files to sell $50M of common stock
Global Brass & Copper (BRSS) files to sell 5M shares for holders
Glu Mobile (GLUU) files to sell common stock
Golub Capital (GBDC) files to sell 3M shares of common stock
Kilroy Realty (KRC) files to sell 4.5M shares of common stock

The aspirational bulge bracket firm that is best known for issuing and trading $200 million or thereabouts-sized HY bonds, hiring all recently terminated UBS bankers, and writing highly confident letters for Carl Icahn, also happens to be a very useful early indicator of the general state of the banking industry. Since it is one of the very few original Investment Banks left that did not convert into a holding company, and shift its calendar to a December 31 year end (everyone remembers that stub month in 2008 when every bank took epic writedowns, padded their credit reserves for the next 5 years, and... effectively deleted it by moving from a November 30 to a December 31 calendar), Jefferies also provides a glimpse into general trading dynamics (and revenues) one month early. Unfortunately, if the Jefferies quarterly data released yesterday are any indication of what banks are set to report, then run far away.

The chart below summarizes what can only be described as an epic collapse in Jefferies' fixed-income trading revenue, which imploded by an unprecedented 88% Y/Y, and 84.5% from later quarter, to $33.1 million - the lowest since the same quarter in 2011 when the European collapse dragged everyone down, and sent Jefferies stock into the single digits over concerns about its European exposure, forcing Dick Handler to release a CUSIP by CUSIP disclosure of its European bond holdings.

Adding insult to injury, Equity trading also dropped 28% Y/Y, however at least Investment Banking revenue (in a quarter in which a blind monkey could underwrite a B2/B- Dividend recap PIK Toggle) offset these unprecedented losses somewhat by rising 23% to $319.3 million.

End result: profit crashed from $70.2MM in 2012 to just $11.7MM in the current year. Naturally, the collapse in revenue had an impact on bonus provisioning as comp and benefits expense dropped 33% to $293.8 million.

So what happened? It is unclear: here is what CEO Dick Handler had to say via WSJ:

"With the significant change in expectations regarding interest rates, we experienced a very challenging summer in our fixed-income businesses," said Jefferies and Leucadia Chief Executive Richard Handler in a statement. Still, he said that, since Labor Day, client flows have been stronger and fixed-income performance has "markedly improved to more normal levels."

 

Mr. Handler attributed the decline in fixed-income revenue to the rising-rate environment, spread widening, redemptions experienced by its client base which "heavily muted trading," and related mark-to-market write downs.

The last bolded sentence is what one would associated with a market plunging into a bear market... not trading at its all time highs.

Which begs the question: just how, if at all, are banks hedged or providioned for an increase in volatility and/or rates from these levels, if a mere 4% blimp in equity markets caused Jefferies to nearly write-down it entire bond-trading revenue for the quarter?

And now that Jefferies is in the record books, just how bad with bond trading results for the rest of the big banks be? We should know in about 4 weeks.

While the twitter world desperately awaits the outcome of Carl iCahn's infamous dinner with Tim Cook (less than 1 week left in September), the billionaire has just proclaimed his latest long: Ben Bernanke.

Our country owes Bernanke a great deal for pulling us out of the mess several of the largest investment banks go us into in ‘08.

— Carl Icahn (@Carl_C_Icahn) September 24, 2013

Our country has been lucky over its history that it has had the right people to call on in a crisis. It’s sad to see Bernanke go.

— Carl Icahn (@Carl_C_Icahn) September 24, 2013

Trolling of the highest degree... Or legitimate gratitude that Ben Bernanke has made life for the 1% better than ever, if everyone else is largely worse off than they were when Lehman filed, except of course for those who consider being on foodstamps an "aspirational" venture.

And let's not forget that corporations, too, are people. They have truly never had it better.

I present to you Part Two of our exclusive interview with World Bank Whistleblower Karen Hudes in which I discuss with Ms. Hudes the need to end an immoral fractional reserve banking system that continually drains the wealth of citizens without their consent and without their knowledge, the hope to establish open competition for money so the best forms of money will be adopted worldwide, how Central Bankers manipulate media and religion to deceive people into gut visceral reactions that support bankers’ immoral actions, and the need for people to question what bankers have tricked them into believing through the bankers’ control of media, education and religion.

(I apologize for my “mmm hmms” when Ms.Hudes is speaking if some find this distracting. I was unaware I was doing this when we were speaking, but was unable to edit these out)

Below are some of the salient points of the above interview.

SmartKnowledgeU: “I believe that for sound money to protect the people against currency devaluation over time, that money must be 100% backed by gold or a bi-monetary gold/silver standard. Some people argue that a fractional reserve gold standard, such as Bretton Woods could work again. What are your thoughts on this?”

Karen Hudes:“I don’t think that fractional reserve[banking] works… you should allow people to pick and choose [what they want to use] among the currencies…We’re starting to move [to open competition among currencies] because we have no choice.”

SmartKnowledgeU:  Since bankers fund and control the military, “Do you foresee a military-funded backlash [against open monetary competition] if this situation continues to grow?”

Karen Hudes:“the group I’m working with is a very resilient bunch, and we are bound and determined that we are taking back our world from these fiat bankers. They’re fired…You have to go back and look at this chronology that I gave to the European Parliament showing what the rules are supposed to be …There’s a cover up going on here. People are not aware of what’s really going on and once they really understand how the system really works, do you think they are going to want this system to be perpetuated? Absolutely not…[These bankers] are powerful because nobody knows what they are doing.”

Regarding whether or not ordinary citizens can defeat a criminal banking cartel that controls much of the global resources at the current time, Karen Hudes had this to say: “Let’s go back to this stakeholder analysis, because, you know, I’ve been working this problem now for over 15 years.  At every step, I have asked myself whether I’m making progress, because this model predicts that if I could get one country to support this rule of law, this transition, that we would have a breakthrough for rule of law…and I have gotten through to the UK parliament, which is to say, they have published three of my statements now on rule of law.”

The accuracy of the stakeholder analysis Ms. Hudes references above is discussed on page 62 of Randolph M. Silverson’s, “The Contributions of International Politics Research to Policy”, Political Science and Politics, published March 2000. 

Jacek Kugler explained to Ms. Hudes that the rule of law would prevail once a single country had the courage to opt for the rule of law, as this singular action would trigger other countries to follow.  Jacek's analysis is at:  Jacek Kugler, Ron Tammen and Brian Efird: “The War Presidency: Options Taken and Lost”, International Studies Association Meetings, Montreal,Canada, published February 2004.  

Karen’s analysis of rule of law at the World Bank begins on page 16 of this document.  

SmartKnowledgeU: In the banking industry, we have a prime example of “the foxes guarding the henhouse, so how do we get outside independent oversight that would actually enforce the rule of law?”

Karen Hudes:“The US citizen now knows that any email they write is read and filed. Are they going to have the muscle to back us?  Are they going to stay asleep or are they going to back us?...Because if they think, well, Big Brother is going to be in control and there’s nothing I can do about it…well, that’s what these [bankers] want everyone to think…so all you have to do, if you’re trying to figure this out, is go and look at the stakeholder analysis. What the stakeholder analysis shows is that those crooks are not strong enough provided we believe in ourselves. We have to believe in ourselves…and I guess the point you can ask yourself, if you’re somebody with kids, is ‘Which world do you want your kids to be living in? The one that’s got Big Brother, or the one in which you had a chance to make a difference, and you were told that everybody’s up there making a difference.”

It’s extremely interesting to note, that Ms. Hudes stated that in the fight against criminal bank industry corruption, one cannot take the attitude of thinking that it is best to stay out of the way because there is nothing one can do to fight the bankers. This self-defeating attitude is the same one that pervades many citizens’ attitudes regarding issues of privacy stirred up by recent NSA spying revelations. When Google offered LeVar Burton, the actor that played the role of Geordi La Forge on Star Trek, a pair of free GoogleGlass in exchange for some photos of him wearing the glasses and some free PR for GoogleGlass, LeVar Burton turned down Google’s offer. His hilarious, but very serious, response:  

“I’m not comfortable with digitizing my experiences and sharing the data with Google. My mama didn’t raise no dummy.”

 LeVar then comically tweeted that if he owned GoogleGlass, “it would be a downgrade” from his Trekkie character Geordi La Forge's specs. Just like we can say no to spying, we have to learn that we can say no to banks that do not act in the interest of the people as well and that we can say no to the wealth-destructive fractional reserve banking platform of all commercial banks.

Geordi La Forge rejects GoogleGlass. If Geordi La Forge calls you a "dummy" for voluntarily choosing to wear GoogleGlass, who are we to argue with him?

On whether the military will rise up and defend citizens of sovereign nations as they are mandated and sworn to do, or whether they will opt to defend corrupt criminal banking interests because they are their financiers, Ms. Hudes replied, “There’s a group called the Council of Governors which is under the [US] Department of Defense. It’s linked with Homeland Security. So I’ve written to all these governors, and I’ve said, ‘You know, you’re not there for a crackdown [and to enforce martial law], you’re there to help us get clean currency.”

On Egypt and Syria, Ms. Hudes stated, “That situation is tragic, because it is so unnecessary…There has been a power grab by unscrupulous people that are using those conflicts to distract everybody. ”

On Israel, and the Jewish and Catholic religions, Ms. Hudes had this to say: “The people in Israel are not in agreement that their government consists of thieves that are ripping off the world. They don’t know about what’s going on…I was in touch with the representative of the Israeli government on the board of the World Bank. And we were working together to try to figure out how to bring all of the people in the Middle East together so that it’s a happy place so it’s not a place ridden with conflicts…you know the ‘freedom fighters’ in Syria are mercenaries. Everybody knows that…I told the [Jewish people] to get ready when the world learns about who these crooks are and what they’ve been doing because some of them happen to be Jewish. Does this mean that the Jewish religion is wrong? Absolutely not. And let’s switch a little bit to the Catholic religion. The Jesuits own Bank of America. They’ve been in on these nefarious practices. And if people start looking at the flow of funds and they find out that the money from their taxes, Internal Revenue, is ending up in the Vatican Bank account, how do you think they’re going to find what’s going on there?...People have got to be discerning. THEY HAVE TO SEE WHAT’S WHAT (emphasis mine)... and I’m not saying that if you’re religious, you’re a dupe, no, no, that’s not what I’m saying, because these [bankers] are very good at putting words in your mouth…[People of all religions] have many, many common enemies. If we would only learn to work together, we can get some progress. Why is that our world looks so ridiculous. Are we that inept?...We have to admit that we were manipulated. We have to admit that we were duped.”

In regard to her above comments, Ms. Hudes informed me that she was the lawyer in the World Bank's Legal Department who helped establish the World Faiths Development Dialogue within the World Bank, although she wanted to make it clear that she did not found the WFDD itself. (Editor's note: As bankers notoriously twist the words of anyone that dares to discuss religion and banking together to falsely accuse those exposing the truth about banking's manipulation of religion to further their own divide and conquer tactics, let us make it abundantly clear that both Karen Hudes and SmartKnowledgeU believe that there are bad immoral bankers of every religion, no different than the fact that there are bad immoral people of every race. However, in no way, shape or form, are we discrediting or indicting any religion. We are merely stating that immorality in banking extends across people of most every religion.)

Regarding bankers successfully marginalizing anyone that accuses them of criminal activity by calling them “conspiracy theorists” even though the bankers’ have often deftly deflected and marginalized accusations of their rigging of LIBOR interest rates, F/X rates, gold and silver prices, ethanol prices, electricity utility rates and numerous other prices by labeling them as “conspiracy theories”,  every single one of these accusations have now all been proven to be factual and real and not conspiracy theories. During our interview, Karen Hudes had this to say about how the term “conspiracy theorist” is used to marginalize and even ridicule truth: “the people who were angry at conspiracy theorists… were the people who were rigid because they had a very narrow idea of what reality was and they weren’t open to seeing what the facts are. In this day and age, when the mainstream media is controlled by the bankers, you have to be a conspiracy theorist or you won’t get your facts straight. It turns out that the conspiracy theorists were the realists.”

Regarding what we can do to help people understand that converting unsound fiat currencies that have enormous counterparty risk into sound money with zero counterparty risk like physical gold and physical silver will ultimately save them from banking criminality long-term, Karen Hudes had this to say: “All you have to do with [people that would rather hold unsound fiat currencies over sound money like gold and silver] is tell them that Germany asked for their gold back, and they were told to take a hike for seven years, and that Germany [in response] has now cancelled its 50 year-old intelligence sharing arrangement  with the US. I think that the American people will get that very very well…We are firing the fiat bankers. They do not decide for this country whose our ally. They do not put us at war with Germany. We don’t want to be at war with Germany.”

Note that Ms. Hudes states that countries like Germany are no longer lying down to the private US Federal Reserve banking cartel's bullying and that they are implementing real strategic counterstrikes to the United States that have real negative consequences. Thus, it is ultimately up to the citizens to rise up against these criminal Central Banks if they don't want to allow them to ruin their countries. Lie down and do nothing and a ruinous future for their countries is near guaranteed, but the choice of what happens to their countries is most definitely in the hands of the citizens.

Furthermore, when analyzing the perpetually declining worth of fiat currencies versus the ever increasing value  of real money like gold and silver,  one needs to focus on the prices of REAL physical gold and silver and not the BOGUS fake prices of paper gold and silver set in derivatives markets by the criminal banking crime syndicate. Many people today still don’t know that the prices of gold and silver that they see flash across their screen everyday on financial TV shows is NOT the price of real physical gold and silver but the price of fake paper gold and paper silver derivative products. For example, on the morning of September 23, 2013, the bankers had set their fake paper silver price in Asia at $21.73 and their fake paper gold price in Asia at $1328.30. However, at the exact same time, the Apmex bullion dealer website was listing a 1-oz Credit Suisse gold bar at $1364.59, a whopping $36.29 premium per ounce over the spot price, and a 1-oz 2012 Canadian Silver Maple Leaf coin at $27.27, a whopping $5.54 per ounce, or 25.50% premium over the spot price. If you want to buy paper gold and paper silver that provides zero protection against the Central Banks’ currency wars, then you can buy this paper at the price you see flashing across your TV or computer screen everyday. However if you want REAL gold and silver with zero counterparty risk, you will have to pay a very hefty premium over spot prices at the current time.

In conclusion, I believe that the following question Ms. Hudes posed to me was the most important question of all: “Can we get the word out in a way in which people will understand us, believe us and back us?”

To this end, please bookmark us at https://www.smartknowledgeu.com/blog, subscribe to our Twitter feed, and subscribe to our YouTube channel as we will be releasing the following media (articles and videos) over the next couple of weeks with information that should help the common person that doesn’t have the insider perspective of  fraud that is committed within the banking industry.

“The Last Market Bubble to Pop Will Be Banker Immorality” (written article)

“Can it be Proven That Drug Lord Pablo Escobar Provided More Positive Value to Society than Bank Crime Lords?” (video)

“Breaking Bad & The Bystander Effect: How Bad Bank CEOs Dupe Good People Into Working For Them” (written article)

In regard to our beliefs about the CFTC closing their 5-year investigation into silver manipulation with zero action, despite hard evidence provided by two JP Morgan whistleblowers, as revealed by Andrew Maguire, we have always held, all throughout this 5-year investigation, that the CFTC was just provided responses to the thousands and thousands of people that filed complaints with them just to hold them at bay and to provide an appearance that they actually cared about these complaints when in reality, they could care less. Only a fool would think it would take them 5-years to reach a conclusion, especially when they were provided hard evidence of silver manipulation by JP Morgan employees themselves well over a year ago.  We firmly believe that the CFTC maintained this charade of an "investigation" just to keep people at bay for 5 full years. Unless we see any real action taken by the CFTC to stop the silver manipulation, we still hold this position, and it appears now that our position, a position for which we had been told by many to please give the "good" people at the CFTC the benefit of the doubt, was the correct one.

Finally, we just received this very gracious email from Ms. Hudes yesterday regarding our interviews with her:  

“Thank you so much for the great interview.  Both of the parts are very well edited and give the audience what they need to know.  The question now is whether the group that is aware has reached critical mass.  Your well thought-through questions into the crux of the financial system is just what is needed, and I am so very grateful for that.” - Karen Hudes

Please help us to spread Ms. Hudes’s critical message to everyone you know. We need to start rewarding those whistleblowers courageous enough to risk their careers and their livelihood by spreading their message. We would greatly appreciate the efforts of anyone that forwards this article to friends, community organizations, and loved ones as we firmly believe that the only way to reverse the enormous damage already done and to usher in a fresh start to a new, sustainable economy is to forever close the doors on fractional reserve banking and to build a new honest, sound monetary system that benefits not just the 0.01% but instead benefits 100% of humanity. The very reason people like Carl Icahn and Warren Buffet recently expressed their undying gratitude to Fed Reserve Chairman Ben Bernanke was because they used the fraudulent mechanisms of fractional reserve banking to continuing enriching themselves. However, billionaire Stanley Druckenmiller got it right when he said the Feds were using the fractional reserve banking system in "robbing [the] poor to pay the rich"and that Central Bank monetary policies were clearly responsible for "the biggest redistribution of wealth from the middle class and the poor to the rich ever"in history.

(Republishing rights: this article may be republished only if it is republished in its entirety with all links and the author attribution below intact. All violations of these republishing terms will be considered a copyright violation.)

About the author: JS Kim is the founder and Managing Director of SmartKnowledgeU, a fiercely independent research & consulting firm with a focus on intelligent, dynamic investment strategies to avoid the wealth destruction of quantitative easing and Central Banks’ currency wars. Sign up for our free newsletter on our homepage to learn the best
ways to buy gold and buy silver. Follow us on twitter @smartknowledgeu

It’s often argued that they don’t a bell at the top.

I would argue that we numerous bells ringing in the financial markets today.

Carl Icahn wants Apple to leverage up to boost returns to shareholders. Apple has maintained next to no debt for the better part of ten years.

Now share price is lagging and the goal is to issue a load of debt to buy back shares. Leveraging up companies that have long had little debt is a classic market mania indicator

Hilton is trying to go public. Put another way, one of the largest commercial real estate/ hospitality chains in the world is going public after being private for over 40 years…

Why go public now? Because you can raise funds cheaply in today’s high liquidity environment and you don’t want to be holding the bag when the economy slumps again.

The large financial institutions that bought homes and real estate in the slump are looking to exit. These groups and their clients didn’t get rich by being wrong.

They’ve made their profits by buying when no one else wanted to and now they’re getting out. Hedge fund Och-Ziff, PE firm Blackstone, and others are unloading their real estate portfolios.

The smart money is getting out of the market. Fortress Investment Group, Apollo Investment Group and other large “smart money” investors are literally “selling everything” they can. They’re not doing this because they expect things to improve and the market to continue to move sharply higher.

Indeed, even investment legend Warren Buffett, who has virtually never advocated against investing in stocks (with the exception of the Tech Bubble) has stated the market is “fully valued” at today’s levels.

Buffett loves stocks. He’s made his fortune investing in them. He is a near eternal optimist. For him to state the markets are fully valued and be sitting in the single largest cash hoard of his investment life is a major indicator that stocks are topping.

If you have not taken steps to prepare for a market collapse, we have a FREE Special Report that outlines how to prepare your portfolio. To pick up a copy, swing by:

http://gainspainscapital.com/protect-your-portfolio/

Best Regards

Phoenix Capital Research

Just as we wondered earlier in the day...

Has Icahn tweeted an update on his NFLX position yet?

— zerohedge (@zerohedge) October 22, 2013

Sold block of NFLX today. Wish to thank Reed Hastings, Ted Sarandos, NFLX team, and last but not least Kevin Spacey: http://t.co/BRWpKOBfD2

— Carl Icahn (@Carl_C_Icahn) October 22, 2013

What is perhaps most worrisome for the market is the sale of 2.99 million shares collapsed the market cap by around 20%...

Our guess is that there is no way Icahn announced this without protecting the rest of his position... so expect volatility to get a little crazy as the OTC positions begin to be unwound and more of his position unwound...

Of course, he hedges his sell...

• ICAHN SAYS NETFLIX REMAINS `SIGNIFICANTLY UNDERVALUED'
• NETFLIX HOLDER ICAHN REPORTS SALE OF 2.99M SHRS
• ICAHN CITES 457% NFLX SHR PRICE BOOST SINCE ORIGINAL INVESTMENT

Of course it's "undervalued" - he still has millions more shares to sell to hapless bagholders. Such as the algo that bought NFLX at $390 24 hours ago, to which all we have to say is: 0100101001110101011100110111010000100000010000100101010001000110010000010101010001001000

• Top China Banks Triple Debt Write-Offs as Defaults Loom (BBG)
• PBOC suspends open market operations again (Global Times)
• Eurozone bank shares fall after ECB outlines health check plan (FT)
• O-Care falling behind (The Hill)
• Key House Republican presses tech companies on Obamacare glitches (Reuters)
• J.P. Morgan Faces Another Potential Huge Payouta (WSJ)
• Yankees Among 10 MLB Teams Valued at More Than $1 Billion (BBG)
• Free our reporter, begs newspaper as China cracks down on journalists (Reuters)
• Peugeot Reviews Cost-Saving Alliance With GM (WSJ)
• Ex-RBS IB head Hourican to lead Bank of Cyprus (FT)
• Obama’s Uncertain Path Amid Syria Bloodshed (NYT)
• Boutique Moelis Weighs an IPO in Its Vision of Future (WSJ)
• Underwriters to Lend Twitter $1 Billion (WSJ)

Overnight Media Digest

WSJ

* The delayed September jobs report clouded the outlook for the U.S. economy, creating a new obstacle for the Federal Reserve to wind down its controversial bond-buying program.

* Republican critics say Senator Mike Lee helped chart a doomed course that weakened the party's standing and hurt the Utah's economy.

* Investors are seeking at least $5.75 billion from JPMorgan in a bid to recover losses from mortgage-backed securities sold to them before the financial crisis, said people familiar with the talks.

* In 87 deals since 2006, Puerto Rico and its public agencies sold $61 billion of bonds, giving the tiny island more municipal debt per capita than any U.S. state. In the process, the territory paid Wall Street securities firms, lawyers and others about $1.4 billion.

* Online brokerage firm Charles Schwab Corp showed customers on its trading platform incorrect prices on certain fixed-income securities for about a week, the latest financial firm to suffer from technology glitches.

* The Securities and Exchange Commission is set to propose rules allowing entrepreneurs to tap large numbers of ordinary investors for small amounts of capital, advancing long-delayed "crowdfunding" provisions from last year's Jumpstart Our Business Startups Act.

* Billionaire investor Carl Icahn sold more than half his stake in Netflix Inc for nearly $1 billion in recent days, he disclosed on Tuesday, saying it was "time to take some chips off the table."

* Dutch lender Rabobank Groep NV is poised to pay close to $1 billion to settle allegations that it participated in a wide-ranging scheme to manipulate benchmark interest rates, according to people familiar with the matter.

* Daniel Loeb often makes headlines for publicly pitching his investment ideas. His new brainstorm: Get smaller. Loeb's Third Point LLC will return 10 percent of its $14 billion in assets to investors, according to a letter received by investors Tuesday and reviewed by The Wall Street Journal.

* New York Times Co's sale of the Boston Globe and Worcester Telegram & Gazette to Boston Red Sox owner John Henry has been stalled by an unsettled class-action lawsuit related to the Telegram & Gazette, Times Co said Tuesday.

FT

Alibaba, China's No. 1 e-commerce firm, is considering listing on the London Stock Exchange after failing to convince Hong Kong regulators of the merits of its corporate governance concerns.

JPMorgan Chase could face a $6 billion fine from institutional investors to settle claims that it mis-sold mortgage-backed securities, according to people familiar with the matter.

Rabobank could face a near $1 billion fine from British and U.S. regulators looking to settle allegations that the Dutch lender helped manipulate benchmark interbank lending rates, three people familiar with the matter said.

A hedge fund with a reputation for aggressive campaigning to boost company performance has bought a 5 percent stake in the recently listed Royal Mail.

E-commerce company eBay said it would buy Shutl, a London-based same-day courier service, in order to take more control of product deliveries

NYT

* Figures for unemployment and job creation in October and November will be skewed by the temporary disappearance of hundreds of thousands of government workers and contractors, economists say.

* A Labor Department report showing lackluster hiring in September - 148,000 jobs - is expected to further put off the Federal Reserve's decision to reduce its stimulus efforts.

* Apple applications, which essentially duplicate Microsoft Office and used to cost $10 each, will now be free to anyone who buys a new Apple device.

* A federal judge has ruled that Goldman Sachs must pay the legal fees of a former computer programmer, Sergey Aleynikov, accused of stealing code from the bank.

* SAC Capital Advisors will close its London office and cut six portfolio management teams in the United States, the hedge fund's management revealed.

* Amazon.com Inc is expected to generate $75 billion in revenue this year by putting its customers first. Tuesday, in a very rare move, it put its bottom line first by tightening the requirements for one of its most popular shipping methods, Super Saver Shipping, which for over a decade mailed items free as long as the order met a $25 threshold. The new threshold is $35.

* Federal gridlock over the debt ceiling could adversely affect the bottom lines of big Wall Street banks and firms, a report by Thomas DiNapoli, the New York State comptroller, asserts.

* The Internal Revenue Service plans to delay the start of tax-filing season by a week or two because of the government shutdown, the agency said on Tuesday. But taxpayers will still have to turn in their 2013 returns by April 15 as usual.

* A class-action suit by delivery workers at The Worcester Telegram & Gazette prompted a judge to issue a temporary injunction preventing the sale of The Boston Globe.

* A recent court case has given the federal government a chance to sidestep Congress and eliminate private equity's billion-dollar tax break. The question is whether the Obama administration takes up the fight.

Canada

THE GLOBE AND MAIL

* The Prime Minister's Office intervened directly in the Senate expense affair, pressing Prince Edward Island Senator Mike Duffy into a plan to repay past expense claims and instructing him on what he should say to the media, Duffy's lawyer says.

* A split has emerged in Prime Minister Stephen Harper's government over a fundamental principle: the rules governing the potential breakup of Canada. The Conservatives' senior Quebec minister has declared in two media interviews that a 50-percent-plus-one vote for separation is enough for a province to secede.

Reports in the business section:

* A U.S. unit of Montreal-based CGI Group Inc, a global technology services giant with annual revenue of $10 billion, is the main contractor behind the problem-plagued, Web-based insurance exchange that plays a key role in the Affordable Care Act, commonly known as Obamacare.

* Canadian food giant Maple Leaf Foods Inc is facing a potential breakup as it puts its $1.6-billion bakery unit up for sale, at the same time as potential suitors target its meat division.

NATIONAL POST

* Hospitals and clinics should resist patient requests to be treated by doctors of a particular race, religion or sex, a top medical group is telling its members, highlighting a touchy yet reportedly common healthcare phenomenon.

* The West Coast General Hospital in Port Alberni, British Columbia, recently posted signs on its doors telling visitors to stop bringing flowers for friends and family.

FINANCIAL POST

* Canada will relax rules on foreign investment for the United States, Mexico and 12 other countries as a result of its free trade pact with the European Union.

* Sales of new homes in the Toronto housing market appear to be rebounding but activity in the country's largest market has a long way to go to match 2012 levels.

China

CHINA SECURITIES JOURNAL

- Beijing is expected to roll out new policies to curb the rapid rise in home prices in the fourth quarter after China's house prices rose 9.1 percent in September from a year earlier, the sharpest rise since January 2011, the newspaper reported without citing sources.

SHANGHAI SECURITIES JOURNAL

- Ninety-two companies have listed on the "E-board" in Shanghai, an electronic over-the-counter exchange for trading of non-listed companies. IPOs in China remain frozen.

- China will launch its new egg futures contract on Nov. 11 on the Dalian Commodities Exchange, sources said.

21ST CENTURY BUSINESS HERALD

- The province of Sichuan has unleashed a stimulus spending package of 4.26 trillion yuan ($699.11 billion) for infrastructure, environmental protection and other investment projects over 2013-2014.

CHINA DAILY

- A joint operation by U.S. and Chinese police has resulted in the closure of four child pornography sites in China and the arrest of 180 suspects in 30 provinces, with an additional 19 detained in Hong Kong.

- A top pension official voiced support for raising the retirement age to deal with strain placed on pension funds by an aging population.

SHANGHAI DAILY

- The city of Harbin is shut for a second day due to heavy pollution, with one station still showing a PM2.5 reading of 367, down from Monday's reading of 1,000 but still as much as 15 times the levels deemed safe by the World Health Organisation.

PEOPLE'S DAILY

- A total of 151,350 graft cases and 32 ministry-level officials were investigated for corruption from January 2008 to August 2013, according to a report from the Supreme People's Procuratorate released on Tuesday.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

BBCN Bank (BBCN) upgraded to Outperform from Market Perform at BMO Capital
BBCN Bank (BBCN) upgraded to Outperform from Market Perform at Raymond James
C.R. Bard (BCR) upgraded to Neutral from Sell at Goldman
C.R. Bard (BCR) upgraded to Overweight from Neutral at Piper Jaffray
Commercial Vehicle Group (CVGI) upgraded to Overweight from Neutral at JPMorgan
Consolidated Edison (ED) upgraded to Neutral from Sell at UBS
DuPont (DD) upgraded to Overweight from Neutral at JPMorgan
Eaton Vance (EV) upgraded to Outperform from Underperform at Credit Suisse
Fossil (FOSL) upgraded to Overweight from Neutral at Piper Jaffray
Gentex (GNTX) upgraded to Outperform from Neutral at RW Baird
Medtronic (MDT) upgraded to Buy from Hold at Deutsche Bank
Morgans Hotel (MHGC) upgraded to Buy from Neutral at MKM Partners
NuStar Energy (NS) upgraded to Equal Weight from Underweight at Morgan Stanley
NuStar GP Holdings (NSH) upgraded to Equal Weight from Underweight at Morgan Stanley
Papa John's (PZZA) upgraded to Buy from Neutral at Janney Capital
Peoples Bancorp (PEBO) upgraded to Outperform from Market Perform at Raymond James
Syngenta (SYT) upgraded to Overweight from Neutral at HSBC

Downgrades

ARM Holdings (ARMH) downgraded to Neutral from Buy at UBS
American Campus (ACC) downgraded to Neutral from Buy at UBS
American Equity (AEL) downgraded to Market Perform from Strong Buy at Raymond James
Centene (CNC) downgraded to Sell from Neutral at Citigroup
Cimarex Energy (XEC) downgraded to Market Perform from Outperform at FBR Capital
Coach (COH) downgraded to Neutral from Buy at BofA/Merrill
Cree (CREE) downgraded to Hold from Buy at Needham
EOG Resources (EOG) downgraded to Market Perform from Outperform at FBR Capital
Eagle Bancorp (EGBN) downgraded to Market Perform from Outperform at Keefe Bruyette
Exelon (EXC) downgraded to Underperform from Hold at Jefferies
Federated Investors (FII) downgraded to Neutral from Buy at Citigroup
Infinity Pharmaceuticals (INFI) downgraded to Neutral from Buy at UBS
Integra LifeSciences (IART) downgraded to Underweight at Morgan Stanley
Lannett (LCI) downgraded to Perform from Outperform at Oppenheimer
Matador (MTDR) downgraded to Hold from Buy at Canaccord
Modine Manufacturing (MOD) downgraded to Underweight from Neutral at JPMorgan
Monarch Casino (MCRI) downgraded Hold at Brean Capital
National CineMedia (NCMI) downgraded to Neutral from Overweight at JPMorgan
Panera Bread (PNRA) downgraded to Hold from Buy at KeyBanc
Regency Energy Partners (RGP) downgraded to Underweight at Morgan Stanley
Regions Financial (RF) downgraded to Neutral from Buy at SunTrust
Resolute Energy (REN) downgraded to Market Perform from Outperform at FBR Capital
Spectra Energy Partners (SEP) downgraded to Underweight at Morgan Stanley
Symmetricom (SYMM) downgraded to Neutral from Buy at B. Riley
Twin Disc (TWIN) downgraded to Neutral from Outperform at RW Baird
Ultra Petroleum (UPL) downgraded to Neutral from Buy at ISI Group
Waters (WAT) downgraded to Neutral from Buy at BofA/Merrill
Weight Watchers (WTW) downgraded to Neutral from Outperform at Credit Suisse

Initiations

AOL (AOL) initiated with a Buy at BofA/Merrill
Expedia (EXPE) initiated with an Outperform at FBR Capital
HomeAway (AWAY) initiated with a Market Perform at FBR Capital
Liberty Media (LMCA) initiated with an Outperform at FBR Capital
Lifeway Foods (LWAY) initiated with an In-Line at Imperial Capital
MakeMyTrip (MMYT) initiated with a Market Perform at FBR Capital
NGL Energy Partners (NGL) initiated with a Neutral at Goldman
Orbitz (OWW) initiated with a Market Perform at FBR Capital
Pandora (P) initiated with a Market Perform at FBR Capital
PetSmart (PETM) initiated with a Neutral at ISI Group
priceline.com (PCLN) initiated with an Outperform at FBR Capital
Sirius XM (SIRI) initiated with an Outperform at FBR Capital
TripAdvisor (TRIP) initiated with a Market Perform at FBR Capital
Walker & Dunlop (WD) initiated with a Market Perform at Wells Fargo

HOT STOCKS

American Realty (ARCP) acquired Cole Real Estate (COLE) for $11.2B or $14.59 per share
Twitter (TWTR) secured $1B credit line
Corning (GLW) announced strategic, financial agreements with Samsung (SSNLF)
Corning (GLW) announced additional $2B of share repurchases
Canadian National (CNI) announced two-for-one stock split, announced 15M share repurchase plan
Bill Barrett (BBG) announced $371M sale of West Tavaputs natural gas property
Broadcom (BRCM) sees cutting up to 1,150 employees in restructuring

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
W.R. Grace (GRA), Encana (ECA), JAKKS Pacific (JAKK), Wellpoint (WLP), Thermo Fisher (TMO), BE Aerospace (BEAV), Nabors Industries (NBR), TSYS (TSS), ACE Ltd. (ACE), Altera (ALTR), C.R. Bard (BCR), Corning (GLW), Broadcom (BRCM), Juniper (JNPR), iRobot (IRBT), Pzena Investment (PZN), Celestica (CLS), Amgen (AMGN), Cubist (CBST), RF Micro Devices (RFMD)

Companies that missed consensus earnings expectations include:
Hudson Valley (HVB), Flagstar Bancorp (FBC), Unisys (UIS), WesBanco (WSBC), Pacific Biosciences (PACB), Ziopharm (ZIOP), Abaxis (ABAX), Datalink (DTLK), FMC Technologies (FTI)

Companies that matched consensus earnings expectations include:
AmSurg (AMSG), Horace Mann (HMN), Waste Connections (WCN), Robert Half (RHI), Super Micro Computer (SMCI), Cree (CREE)

NEWSPAPERS/WEBSITES

• As Blackstone Group (BX) prepares an IPO for Brixmor Property Group, investors and analysts are watching the deal to see what tone it sets for other Blackstone-led IPOs waiting in the wings. Blackstone is expected to take as many as four real-estate companies public over the next year, the Wall Street Journal reports
• Online brokerage firm Charles Schwab (SCHW) showed customers on its trading platform incorrect prices on certain fixed-income securities for about a week, the latest financial firm to suffer from technology glitches, the Wall Street Journal reports
• PSA Peugeot Citroen (PEUGY) said its alliance with GM (GM) may be reduced, as the troubled French carmaker posted a 3.7% quarterly revenue decline, Reuters reports
• Roche Holding (RHHBY) CEO Severin Schwan said he wouldn’t rule out a move into treatments for rare diseases. He wouldn't comment on whether the company was interested in buying Alexion Pharmaceuticals (ALXN) or BioMarin (BMRN), Reuters reports
• Warren Buffett (BRK.A), who invested over $11B in IBM (IBM), said he’s confident in the computer-service provider’s prospects after the stock slumped last week, Bloomberg reports
• Toyota Motor’s (TM) in-house lender is leveraging the automaker’s AA- credit rating and cash to offer low rates to customers. Toyota’s $37B cash pile and credit ratings that outrank GM (GM) and Ford (F), enable its Toyota Financial Services unit to offer more loans and take on riskier borrowers, Bloomberg reports

SYNDICATE

Cancer Genetics (CGIX) 2.86M share Secondary priced at $14.00
Crown Castle (CCI) 36M share Secondary priced at $74.00
Gigamon (GIMO) 5.1M share Secondary priced at $38.50
Guidewire Software (GWRE) 7.76M share Secondary priced at $48.75
OCZ Technology (OCZ) files to sell 13.48M shares of common stock for holders
Venaxis (APPY) files to sell $20M of common stock
Ziopharm (ZIOP) files to sell $50M in common stock

Given the carnage that ensued in NFLX yesterday, we suspect the following tweet:

Just sent a letter to Tim Cook. Full letter will be disclosed on my website, the Shareholders’ Square Table, which will be launched tomorrow

— Carl Icahn (@Carl_C_Icahn) October 23, 2013

which he notes will be released to the public tomorrow is more a threat of him "selling" his shares if he doesn't get what he wants... and given the market liquidity, who knows what AAPL's stock does?

When Jeremy Stein warned in February of "froth" in the credit markets, it was much discussed but little action'ed. However, today we start to see some actions:

• *FED SAID TO ISSUE WARNING ON LAX LEVERAGED LOAN UNDERWRITING

With cov-lite issuance at all-time record highs (as we explained here most recently and Moody's tried to ignore), Stein's bubble is even bigger and whether or not the Fed 'tapers' it is clear now by this signal that their concerns over bubbles are growing day by day.

Of course, as we warned here, this is Carl iCahn's worst nightmare...

...But we have seen this "credit cycle end, equities ramp" before - in 2007 - where leverage (both firm-wise (debt/EBITDA) and instrument-wise (CDOs)) provided the extra oomph to send stocks higher on the back of credit fueled extrapolation of earnings trends.

(charts: Barclays)

In the end we know this is unsustainable - the question is when (in 2007 it last 10 months or so...).

We already see 30Y Apple bonds trading at 5% yields - admittedly low still but notably higher than when they issued previously. The Verizon deal recently now trades at around 5.7% yield and is considerably worse financially pro forma. Of course, just as in 2007, things change very quickly once collateral chains start to shrink.

Perhaps this is why Carl iCahn said the Apple CFO/CEO shunned him - iCahn's worst nightmare is simply the inability to proxy-LBO each and every firm...

Given these charts - which market do you think is in a bubble - equity or credit? Bear in mind that the Fed's Jeremy Stein has already made his case that the latter is a bubble for sure... and the fragility that reaching for yield creates...

and here is Stein's most recent warning...

Stein 20130926 A

• Contractors describe scant pre-launch testing of U.S. healthcare site (Reuters)
• Carney Says BOE Revamp Offers Wider Access to Cheaper Funds (BBG)
• Help wanted in Fukushima: Low pay, high risks and gangsters (Reuters)
• Merkel and Hollande to change intelligence ties with US (FT)
• Twitter IPO pegs valuation at modest $11 billion (Reuters)
• NSA monitored calls of 35 world leaders after US official handed over contacts (Guardian)
• Officials alert foreign services that Snowden has documents on their cooperation with U.S. (WaPo)
• Scottish Nationalists Lose Vote After Plant Threatened With Axe (BBG)
• Fernández contemplates a train wreck in Argentine elections (FT)
• Irish Government will consider ‘best options’ for bailout exit (Irish Times)
• China court throws out Bo Xilai appeal (FT)
• Electrolux closes refrigerator factory in Australia, concentrating production to the major appliances plant in Rayong, Thailand (PR)
• FDA recommends tightening access to hydrocodone pain-killers (Reuters)

Overnight Media Digest

WSJ

* A flurry of recent attacks by al Qaeda-linked militants in Iraq - strengthened by their alliance with jihadist fighters in Syria - is threatening to undo years of U.S. efforts to crush the group.

* Activist investor Carl Icahn boosted his investment in Apple Inc by 22 percent to 4.73 million shares, and continued to push for a massive $150 billion buyback at the company, according to a letter he sent to Apple Chief Executive Tim Cook.

* Former employees at USIS, the company that did the background check of Edward Snowden, the leaker of national-security information, say they were pushed to speed through background checks amid a corporate culture that made revenue the top priority.

* Outrage over alleged U.S. monitoring of German Chancellor Angela Merkel's personal cellphone spread across Europe on Thursday, threatening to complicate an array of America's trans-Atlantic interests.

* Twitter set its price range for its initial public offering at $17 to $20 a share, in a deal that values the company at up to $11.1 billion.

* Highly rated issuers sold more than $12 billion of bonds Thursday, taking advantage of robust investor demand and the latest tumble in market interest rates to stock up on cash.

* The U.S. Federal Communications Commission is considering softening the decades-old 25 percent foreign-ownership limit on TV and radio stations, paving way for new investment.

* The slowdown in mortgage-refinancing activity is hitting towns across the U.S. as banks such as Bank of America, Wells Fargo and Citigroup eliminate thousands of jobs to cope with declines in home lending.

* Amazon.com Inc shares soared Thursday in after-hours trading after the online retailer reported its third loss in the past year. Investors were focused on a big jump in quarterly sales, which exceeded analysts' forecasts.

* The Chief Executive of Southwest Airlines Co hinted Thursday that the carrier could soon start charging for checked baggage if the flying public comes to accept the fees that other airlines charge.

FT

Micro-blogging company Twitter set a modest $17 to $20 price range per share for its initial public offering next month, anxious to avoid the runaway valuations which dogged rival Facebook's offering.

Bank of America is planning to axe 3,000 jobs - most of which are not full-time employees - in its legacy asset servicing unit as improving credit quality reduces work on delinquent loans and foreclosures.

WPP, the world's largest advertising company, posted better-than-expected third-quarter sales growth driven by strength from business in western Europe for the first time this year.

Royal Bank of Scotland's "bad bank" is taking bids for its West Register internal property portfolio, which consists of a number of industrial distribution units with a guide price of 63 million pounds ($101.85 million).

G4S, the world's biggest security services firm, said its UK chief executive had stepped down immediately after holding the position for little more than a year

NYT

* Twitter disclosed that it planned to price its eagerly awaited initial public offering in the $17 a share to $20 a share range, as it readies a road show for investors.

* The Food and Drug Administration on Thursday recommended tighter controls on how doctors prescribe the most commonly used narcotic painkillers. The move, which represents a major policy shift, follows a decade-long debate over whether the widely abused drugs, which contain the narcotic hydrocodone, should be controlled as tightly as more powerful painkillers like OxyContin.

* Fury over reports that American intelligence had monitored the cellphone of Chancellor Angela Merkel spread from Germany to much of Europe on Thursday, plunging trans-Atlantic relations to a low and threatening to recast the United States and President Obama from friend and ally to cyberbully.

* When the stock market opened on Thursday, NQ Mobile Inc , a Chinese mobile security company, had a valuation of $1.1 billion. Just hours later, half of its value was erased. Muddy Waters, a short-selling firm known for its scathing reports on Chinese companies, released a harsh assessment of NQ Mobile on Thursday, calling it a "massive fraud."

* Federal officials did not fully test the online health insurance marketplace until two weeks before it opened to the public on Oct. 1, contractors told Congress on Thursday.

* The Federal Reserve's rule asks banks to estimate how much cash might flee in a 30-day period, and requires them to enough assets that they could sell to cover that outflow.

* Microsoft Corp's earnings of $5.24 billion beat expectations, and were helped in large part by a surge in the company's corporate software business.

* On Thursday, DuPont said it would spin off its performance chemicals segment into a new publicly traded company. The unit - which makes a pigment that turns paints, paper and plastics white, as well as refrigerants and polymers for cables - generated about $7 billion in revenue in 2012.

* More than a year after the activist investor William Ackman won a bitter battle for control of the Canadian Pacific Railway, he is cashing in part of his investment at a substantial profit.

* Many high-end brands have left behind Bal Harbour Shops, for years a magnet to the wealthy, for more breathing room in Miami's Design District - once an enclave of furniture showrooms, low storefronts and empty streets in the shadow of two interstate highways.

Canada

THE GLOBE AND MAIL

* Canadian Prime Minister Stephen Harper insisted that "very few" people in Conservative circles knew that chief aide Nigel Wright was personally bailing out Senator Mike Duffy when the politician faced public pressure to reimburse taxpayers for questionable expense claims.

* Senators pressed the Canadian government about why a federal spy agency has been probing telecommunications in Brazil, seeking clear answers about the activities of Communications Security Establishment Canada.

Reports in the business section:

* CGI Group Inc faced the full fury of the U.S. political process on Thursday, as executives from the Canadian technology giant appeared before an angry congressional committee investigating the botched rollout of the healthcare.gov website.

* Companies operating in Canada's oil sands are facing new pressure to assess and disclose the long-term risks to the value of their crude reserves amid a global effort to address climate change.

NATIONAL POST

* Training for front-line officers and better information sharing between police and government agencies can help protect law enforcement officials from potentially aggressive "sovereign citizens," says a newly declassified briefing to Canadian police chiefs.

* An American who shot a Chicago police officer, and then fled to Toronto until he was caught 30 years later, was treated unfairly by Canadian immigration officials, a judge has ruled. The Federal Court of Canada said there were several problems with the way officials handled Douglas Gary Freeman's immigration case and, as a result, he was "denied procedural fairness."

FINANCIAL POST

* On a conference call to discuss third-quarter results, the Chief Executive of Potash Corp of Saskatchewan Inc ripped into OAO Uralkali, the Russian producer, saying its decision to collapse a cartel-like marketing company and max out production was "probably the single dumbest thing" he has ever seen in the fertilizer business.

* Pershing Square Capital Management has announced a public offering of more than 5.9 million shares of Canadian Pacific Railway Ltd that would have a value of more than $880-million at market prices.

China

CHINA SECURITIES JOURNAL

- Net profit of Chinese insurers jumped 134.9 percent in the first nine months of this year to 91.75 billion yuan ($15.09 billion), due to a low base last year and improved investment returns, according to the China Insurance Regulatory Commission.

SHANGHAI SECURITIES NEWS

- Shanghai will merge the city's two major newspaper groups, the Jiefang Daily Group and Wenhui Xinmin United Press Group.

- Wal-Mart Stores is looking to close 15-30 underperforming stores in China.

SHANGHAI DAILY

- Competition and protectionism have caused Japanese dairy manufacturer Meiji to quit the China infant formula market. Meiji was forced to slash prices by regulators during an anti-monopoly campaign.

CHINA DAILY

- China's industrial recovery remains weak, said an official with the Ministry of Industry and Information Technology.

- Agricultural Bank of China plans to offload non-performing assets valued 10 billion yuan ($1.64 billion) on the Beijing Financial Assets Exchange.

PEOPLE'S DAILY

- China's urban employment increased by 10.66 million people during the first nine months, hitting the 9 million target for the year ahead of schedule.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Advance Auto Parts (AAP) upgraded to Outperform from Sector Perform at RBC Capital
Amazon.com (AMZN) upgraded to Strong Buy from Market Perform at Raymond James
CYS Investments (CYS) upgraded to Neutral from Underperform at BofA/Merrill
Career Education (CECO) upgraded to Outperform from Market Perform at Wells Fargo
Columbia Sportswear (COLM) upgraded to Neutral from Sell at Citigroup
DuPont (DD) upgraded to Buy from Neutral at Citigroup
Forest Labs (FRX) upgraded to Market Perform from Underperform at BMO Capital
ITT Educational (ESI) upgraded to Neutral from Sell at Compass Point
ITT Educational (ESI) upgraded to Neutral from Underweight at JPMorgan
Knightsbridge Tankers (VLCCF) upgraded to Equal Weight from Underweight at Evercore
Monolithic Power (MPWR) upgraded to Outperform from Perform at Oppenheimer
Sierra Bancorp (BSRR) upgraded to Market Perform from Underperform at Raymond James

Downgrades

Caterpillar (CAT) downgraded to Neutral from Overweight at Atlantic Equities
Coca-Cola Enterprises (CCE) downgraded to Hold from Buy at Societe Generale
Credit Suisse (CS) downgraded to Neutral from Overweight at JPMorgan
Eastman Chemical (EMN) downgraded to Neutral from Conviction Buy at Goldman
Hill-Rom (HRC) downgraded to Market Perform from Outperform at Wells Fargo
ICON plc (ICLR) downgraded to Market Perform from Strong Buy at Raymond James
Landstar System (LSTR) downgraded to Neutral from Outperform at Credit Suisse
NCR Corp. (NCR) downgraded to Neutral from Buy at Compass Point
PAREXEL (PRXL) downgraded to Neutral from Outperform at RW Baird
Patterson-UTI Energy (PTEN) downgraded to Hold from Buy at Wunderlich
Plexus (PLXS) downgraded to Underperform from Neutral at BofA/Merrill
Rayonier (RYN) downgraded to Market Perform from Outperform at Raymond James
Rayonier (RYN) downgraded to Neutral from Buy at BofA/Merrill
Rayonier (RYN) downgraded to Sell from Hold at Deutsche Bank
Reliance Steel (RS) downgraded to Neutral from Outperform at Credit Suisse
STMicroelectronics (STM) downgraded to Neutral from Buy at Goldman
Sandridge Mississippian Trust (SDT) downgraded to Underperform at Raymond James
Sirius XM (SIRI) downgraded to Neutral from Buy at Goldman
Susquehanna (SUSQ) downgraded to Market Perform from Outperform at FBR Capital
Susquehanna (SUSQ) downgraded to Neutral from Outperform at Credit Suisse
Susquehanna (SUSQ) downgraded to Underperform from Market Perform at Raymond James
Taubman Centers (TCO) downgraded to Neutral from Overweight at JPMorgan
Texas Capital (TCBI) downgraded to Market Perform from Outperform at Keefe Bruyette
Timken (TKR) downgraded to Neutral from Buy at BofA/Merrill
Union First (UBSH) downgraded to Market Perform from Outperform at Keefe Bruyette
United Continental (UAL) downgraded to Underweight from Neutral at JPMorgan
Zimmer (ZMH) downgraded to Neutral from Outperform at RW Baird

Initiations

21st Century Fox (FOXA) initiated with an Outperform at FBR Capital
Actavis (ACT) initiated with a Buy at Citigroup
DISH (DISH) initiated with an Underperform at FBR Capital
DirecTV (DTV) initiated with a Market Perform at FBR Capital
Discovery (DISCA) initiated with an Outperform at FBR Capital
Disney (DIS) initiated with an Outperform at FBR Capital
Hannon Armstrong (HASI) initiated with a Sector Perform at RBC Capital
Kythera (KYTH) initiated with a Buy at BofA/Merrill
Mylan (MYL) initiated with a Neutral at Citigroup
NGL Energy Partners (NGL) initiated with an Outperform at Raymond James
Netflix (NFLX) initiated with a Market Perform at FBR Capital
Starz (STRZA) initiated with a Market Perform at FBR Capital
Teva (TEVA) initiated with a Buy at Citigroup
TiVo (TIVO) initiated with a Market Perform at FBR Capital
Time Warner (TWX) initiated with an Outperform at FBR Capital
Vermilion Energy (VET) initiated with a Neutral at Goldman
Viacom (VIAB) initiated with an Outperform at FBR Capital

HOT STOCKS

Disney (DIS) to build its largest Disney Store in Shanghai, China
Microsoft (MSFT) CFO said corporate PC demand better than expected, Bloomberg reports
DuPont (DD) to spin-off Performance Chemicals segment
Omnicare (OCR) to pay U.S. $120M to settle False Claims Act suit

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Callaway Golf (ELY), Superior Energy (SPN), Validus (VR), Flowserve (FLS), QLogic (QLGC), KLA-Tencor (KLAC), CA Technologies (CA), NetSuite (N), Western Digital (WDC), NCR Corp. (NCR), Maxwell (MXWL), VeriSign (VRSN), Chubb (CB), Regal Entertainment (RGC), Wynn Resorts (WYNN), Zynga (ZNGA), Microsoft (MSFT), Deckers Outdoor (DECK)

Companies that missed consensus earnings expectations include:
Santander Chile (BSAC), Cliffs Natural (CLF), ResMed (RMD), KBR (KBR), Delta Apparel (DLA), DeVry (DV), BJ's Restaurants (BJRI), Sterling Financial (STSA),

Companies that matched consensus earnings expectations include:
Cabot Oil & Gas (COG), Express Scripts (ESRX), Cerner (CERN), Amazon.com (AMZN), Netgear (NTGR)

NEWSPAPERS/WEBSITES

• The FCC is considering softening the decades-old 25% foreign-ownership limit on TV and radio stations, a move that could open up new sources of investment capital at a time of consolidation in the TV station sector, the Wall Street Journal reports
• Three years after BP’s (BP) Deepwater Horizon disaster, it’s still fighting to keep damage claims and regulatory fines in check. But BP is spending to leave behind one of the biggest retrenchments in its 100-plus-year history, increasing its investment in exploration, the Wall Street Journal reports
• In a rare move, Sinopec Group (SHI) wants to sell half of its two biggest shale gas acreages in Canada to spread costs and accelerate their development, as the Chinese energy company focuses increasingly on return of investment, Reuters reports
• Boeing (BA) secured commitments for about 200 of its 737 Max aircraft, worth $20.7B, for the upgraded variant of its best-selling short-haul planes, from multiple Chinese customers, sources say, Reuters reports
• Ford’s (F) market value is reaching levels last seen in 1999, putting the company closer to its historical peak than Toyota (TM), the world’s biggest car maker, Bloomberg reports
• Wynn Resorts (WYNN) founder Steve Wynn said he was “flabbergasted” when he heard  Caesars Entertainment (CZR) pulled out of a casino project in Boston after a critical review by regulators. Wynn who is pursuing a casino in nearby Everett, MA, Bloomberg reports

SYNDICATE

Aerie Pharmaceuticals (AERI) 6.72M share IPO priced at $10.00
Alcobra (ADHD) 2M share Secondary priced at $16.50
Canadian Pacific (CP) announces sale of 5.97M shares by Pershing
CommScope (COMM) 38.462M share IPO priced at $15.00
Dynavax (DVAX) to offer common stock
Endurance (EIGI) 21.051M share IPO priced at $12.00
Fidelity National (FNF) 17.25M share Secondary priced at $26.75
Horsehead Holding (ZINC) 5.5M share Secondary priced at $12.00
Institutional Financial (IFMI) files to sell 6.84M shares of common stock
Sorrento Therapeutics (SRNE) 4.15M share Secondary priced at $7.75
Sprague Resources (SRLP) 8.5M share IPO priced at $18.00
Twitter (TWTR) sees IPO price range $17-$20 on 70M shares

This week marked what we suspect will become an important inflection point when the world looks back at this debacle of a bubble. The Fed, having already warned in January of 'froth' in credit markets (and ths the fuel for 'hope' in stocks) proposed tougher underwriting standards for leveraged loans. Credit markets have underperformed since; but as Diapason Commodities' Sean Corrigan notes, the baleful impact of the central banks is still everywhere to be seen in the credit markets. From junk issuance to the rapid regrowth of the CDO business to the 'record' high multiples now being exchanged for LBOs; Central Banker's monomaniacal fixation on zero interest rates and artificial bond pricing is setting us up for the next, great disaster of misallocated capital and malinvested resources.

Any 'popping' of the credit bubble will be massively destructive to stocks - as we warned here, this is Carl iCahn's worst nightmare...

...But we have seen this "credit cycle end, equities ramp" before - in 2007 - where leverage (both firm-wise (debt/EBITDA) and instrument-wise (CDOs)) provided the extra oomph to send stocks higher on the back of credit fueled extrapolation of earnings trends.

(charts: Barclays)

In the end we know this is unsustainable - the question is when (in 2007 it last 10 months or so...).

We already see 30Y Apple bonds trading at 5% yields - admittedly low still but notably higher than when they issued previously. The Verizon deal recently now trades at around 5.7% yield and is considerably worse financially pro forma. Of course, just as in 2007, things change very quickly once collateral chains start to shrink.

Perhaps this is why Carl iCahn said the Apple CFO/CEO shunned him - iCahn's worst nightmare is simply the inability to proxy-LBO each and every firm...

Given these charts - which market do you think is in a bubble - equity or credit? Bear in mind that the Fed's Jeremy Stein has already made his case that the latter is a bubble for sure... and the fragility that reaching for yield creates...

But the signs of an even bigger bubble are clear...

Via Sean Corrigan of Diapason Commodities:

The Taper fiasco may have delivered a temporary fright, but this has not yet been sufficient to bring about a more lasting reappraisal. With junk yields having retraced half their 180bps spike ? and so reaching territory only ever undercut at the very height of the wild enthusiasm of the first half of this year—and with the CDX index pretty much back to its post?Crisis best, it can only be a matter of time before issuance volumes swell once more.

Even with the last few months’ abatement, this has hardly been a market in dearth, as you can see from a sampling of the comments made by Thomson Reuters in its review of the third quarter:?

The volume of global high yield corporate debt reached US$350.2 billion during the first nine months of 2013, a 27% increase compared to the first nine months of 2012 and the strongest first three quarters for high yield debt activity since records began in 1980... Issuance from European issuers more than doubled compared to the same time last year.

 

Nor was the gold rush restricted to bonds, per se:?

Overall Syndicated lending in the Americas… increased 34.9% from the same period in 2012, with proceeds reaching US$1.8 trillion… Leveraged lending in the United States increased markedly from the first nine months of 2012, totalling US$894.8 billion... representing an 81.5% increase in proceeds.

And, to add to the thrills—They?y?y’r?r?e Back! Yes, CDOs and CLOs are enjoying a renewed vogue just five short years after they played a key role in blowing up the world’s financial system:?

Global asset?backed securities totalled US$251.3 billion during the first nine months of 2013, a 7% increase compared to the same time last year and the best annual start for global ABS since 2007. Collateralized debt and loan obligations totalled US$62.3 billion during the first nine months, more than double issuance during the first nine months of 2012. CDO and CLO volume accounted for one quarter of ABS [volume].

 

As the good folks at PitchBook also pointed out, this was no time to be sitting on the sidelines in the LBO world, either:?

Corporations’ appetite to utilize cheap debt manifested itself in an average leverage ratio of 61.8%... a postfinancial?crisis high (2007 was 67.6%). Another important development has been the rapid increase in valuation?to?EBITDA multiples for buyout deals, which hit a decade high of 10.7x in 2013.

 

In a summation which perfectly encapsulates how the CBs’ monomaniacal fixation on zero interest rates and artificial bond pricing is setting us up for the next, great disaster of misallocated capital and malinvested resources, one Margaret Shanley, a principal at Cohn?Reznick, opined that:?

“...it is no surprise that valuations have remained at robust levels this year, several factors are at play supporting the increase—high demand and low supply for quality deals and easy access to debt with historically low pricing...”

? the first two features being a direct consequence of a set of policies expressly fashioned to bring about the last one cited, one hastens to add.

A week ago, completely out of the blue, Bill Gross took a swipe at Carl Icahn, tweeting "Icahn should leave #Apple alone & spend more time like Bill Gates. If #Icahn’s so smart, use it to help people not yourself." Today, Carl Icahn retaliates.

To Bill Gross @PIMCO: If you really want to do good, why not join http://t.co/nn6jp9E2ch like Gates, I and many others have?

— Carl Icahn (@Carl_C_Icahn) October 28, 2013

We can't wait as this cage match between a 69 and a 77 year-old escalates and culminates with the inevitable (Im)Mor(t)al Combat fatality.

For now, our money is on the Icahnator.

More impotantly: as the bored billionaires seek Twitter exposure, it is once again popcorn time.

First it was JPMorgan, now it is PIMCO's turn.

Gross: All risk asset prices artificially high. When won’t they be? When they don’t produce growth in real economy. Is 2% GDP enough?

— PIMCO (@PIMCO) October 29, 2013

Alas, by now everyone but the Fed realizes there is a bubble in practically every asset class. As such, Gross' tweeter time may be better spent engaging in smack talk with Carl Icahn: it is far more entertaining and engaging.

• Philippines Left Reeling in Wake of Storm (WSJ)
• Khamenei controls massive financial empire built on property seizures (RTRS)
• Race to Bottom Resumes as Central Bankers Ease Anew (BBG)
• U.S. Postal Service to deliver Amazon packages on Sundays  (LA Times)
• Obama Stocks Among Best After Re-Election as Rally Tested (BBG)
• Health-Law Rollout Weighs on Obama's Ratings, Agenda (WSJ)
• Twitter in Celebrity Spat With Facebook as Rivalry Builds (BBG)
• Iran deputy industry minister shot dead (AFP)
• Financier of Taliban-linked group shot dead in Pakistan (RTRS)
• Obama: The Lonely Guy (Vanity Fair)
• Shire Buys ViroPharma for $4.2 Billion to Grow in Rare Diseases (BBG)
• Apple Finds Surprising Growth Market in Japan (WSJ)
• U.S. retailers tread tight path in shortened holiday race (Reuters)
• They Loved Your G.P.A. Then They Saw Your Tweets (NYT)
• Acer's CEO Is Out, Another Victim of the iPad (BBG)
• Worry Over Inequality Occupies Wall Street (WSJ)
• IPhone App Wipes Out Population to Show Contagion Risks (BBG)

Overnight Media Digest

WSJ

* Johnson & Johnson and Amazon.com Inc are clashing over complaints that Amazon isn't doing enough to prevent people from selling damaged or expired J&J products-Tylenol painkillers and Rogaine baldness treatments, among others-on its website.

* A political stalemate could persuade Office Depot to move more than 2,000 jobs out of Illinois as lawmakers grouse about the growing number of companies seeking special tax treatment.

* JPMorgan and Credit Suisse are considering blocking employees from computer chat rooms that have become pervasive tools of the modern trading floor, but which face mounting scrutiny from regulators.

* The second film in the God of Thunder franchise from Walt Disney's Marvel Studios grossed $86.1 million in North America following a huge international haul.

* Sony and Microsoft are preparing for one of the biggest holiday battles in years, as the companies overhaul their videogame consoles. But software could be a decisive weapon this time.

* The EU and the United States open a second round of trade talks Monday. The biggest economic gains are expected to come from chipping away at trade barriers, but the two sides have different approaches to regulation.

* The Washington state legislature completed passage of key elements of an incentive package Saturday aimed at guaranteeing Boeing will locate manufacturing work for its 777X jetliner in Puget Sound.

* The U.S. government has been fighting to try to seize a Midtown Manhattan skyscraper it says is secretly owned by the Iranian government. After the U.S. won a ruling, a court monitor has signed a long-term lease for the retail space to a venture including one of the city's top landlords.

* Luxury-car brand Mercedes-Benz, facing stagnant sales in Europe and troubles in China, is doubling down on expansion in the United States as part of its plan to overtake rivals BMW AG and Volkswagen AG's Audi in global luxury sales.

* Cooper Tire & Rubber Co isn't yet entitled to an order forcing India's Apollo Tyres Ltd to close its takeover of the Ohio-based tire maker at the agreed-on $2.2 billion price, a Delaware judge said over the weekend.

FT

Renault-Nissan would miss its target for global sales of electric cars, chief executive Carlos Ghosn said in an interview, adding that the market is failing to live up to his expectations.

BP Plc for the first time challenged directly payments for losses not caused by its 2010 oil spill in the Gulf of Mexico basing its arguments on the issue of causation in a fresh attempt to limit the cost of its compensation settlement, according to court documents filed by the company late last week.

JPMorgan Chase & Co is one of several banks considering banning traders from electronic chat rooms, which face scrutiny from regulators as a platform exchange of market information, as part of a probe into the foreign exchange market, according to people familiar with the matter.

Co-operative Group said it would scrap dividend payments to its 7.6 million members as part of a review to help pay for a 1.5 billion pound ($2.4 billion) rescue of its banking division.

Analysts are forecasting a profit warning from Serco Group Plc this week as the outsourcing firm continues to grapple with problems with contracts for UK prisons and Australian asylum centres.

China Investment Corporation is set to buy Chiswick Park, a west-London office development, from U.S. private equity group Blackstone for about 800 million pounds ($1.3 billion), according to people familiar with the matter.

NYT

* The CBS news magazine issued a rare retraction and apology for its report on an attack on Americans in Libya, saying it was misled by a source.

* Start-ups are gathering data and analyzing it much faster than was possible even a couple of years ago, aiming to project economic trends from seemingly unconnected information.

* Labor leaders and businesses are closely watching a Supreme Court case to be argued this Wednesday that involves a popular strategy used by unions to successfully organize hundreds of thousands of workers.

* Twitter is counting on millions of websites to link to the service and encouraging legions of independent developers to find creative new uses for its platform, driving up activity and the number of advertisements that Twitter users see.

* In their efforts to attract children, television networks are starting to show programs online before they appear on old-fashioned TV.

* Vox Media, a company with three strong digital brands, including the technology site The Verge, is adding to its portfolio. The company plans to announce on Monday that it is buying Curbed.com LLC, which runs three web publications that deliver in-depth neighborhood coverage, with attitude, of real estate, dining and retailing.

* The Treasury's schedule of financing this week includes the regular weekly auction of new three- and six-month bills on Tuesday, delayed for the Veterans Day holiday, and an auction of four-week bills on Wednesday.

* The saving of BlackBerry may represent a patriotic calling to Prem Watsa, but he is not used to dealing in as public an arena as the company does. ()

Canada

THE GLOBE AND MAIL

* Western Canadian farmers and grain handlers are struggling to move a record crop amid a shortage of railcars that some say is worsened by the surge in the energy industry's oil shipments by rail.

* Negotiators at the United Nations climate summit are searching for broad agreement that will lead to a new treaty requiring deeper cuts to each country's greenhouse gas emissions after 2020, even as Canada struggles to achieve its existing commitments.

Reports in the business section:

* As discounter Wal-Mart Canada Corp ramps up its food aisles and U.S. arch rival Target Corp expands in this country, conventional chains such as Loblaw Companies Ltd and Metro Inc feel the mounting pressure.

* Economists have been surprised by the degree to which Canada home sales have bounced back from the pounding they took in the summer of 2012, when Finance Minister Jim Flaherty tightened the mortgage insurance rules.

NATIONAL POST

* Officials have been sent to the Philippines to assess whether Canada should send a military team to provide medical care and water to typhoon victims, Canada's foreign affairs minister said.

* Ontario Provincial Police are confirming five people have died in a plane crash in northwestern Ontario near the community of Red Lake. They have also confirmed there were two survivors.

China

PEOPLE'S DAILY

- A commentary by the mouthpiece of the ruling Communist Party of China (CPC) said the country's new leadership has launched a slew of innovations aimed to building up a democratic political system since they came into power a year ago. The commentary was issued as the party is convening a crucial central commission plenum.

CHINA DAILY

- China will take major steps to reform its gigantic state-owned enterprises, allowing private capital to have easier access to invest in the state sector, after the four-day Third Plenum of the CPC's 18th Central Committee, which started on Saturday, said Huang Shuhe, vice-chairman of the State-owned Assets Supervisions and Administration Commission.

SHANGHAI SECURITIES NEWS

- Chongqing Iron and Steel Co said the China Securities Regulatory Commission (CSRC) has approved its plans to issue new shares to its parent and other parties to raise money to buy new assets from its parent, a move expected to narrow its losses sharply next year.

- Oil giant Sinopec Corp said its parent on Friday bought back 39 million yuan-denominated A shares. The parent last week announced a plan to spend an estimated maximum of $17.7 billion to buy back a 2 percent stake in Sinopec's Shanghai-listed entity over the next year, in a move to support the mainland's sagging stock market.

CHINA SECURITIES JOURNAL

- China has quietly opened the second-batch tenders for high-speed trains this year worth an estimated 56-57 billion yuan ($9.18-$9.34 billion). The country in August lifted a suspension of tenders of high-speed trains imposed after a crash that killed dozens of passengers in 2011.

- A total of 757 companies are now on the waiting list to launch initial public offerings (IPOs) in the mainland's stock exchanges, CSRC data shows. China quietly suspended IPOs one year ago to help check a slide in the domestic stock market .

SECURITIES TIMES

- The Shenzhen Stock Exchange will blacklist those companies that announce poorly conceived merger and acquisition plans aimed at boosting their own share prices.

CHINA DAILY

- An editorial by a senior editor criticized Hangzhou-based Alibaba Group's IPO strategy in Hong Kong, saying Hong Kong was right to reject Alibaba's proposal to list under a tiered share structure that would allow management and preferred shareholders to retain control after listing, in contravention of the Hong Kong Exchange's rules.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Alon USA Energy (ALJ) upgraded to Neutral from Underperform at Credit Suisse
American Tower (AMT) upgraded to Buy from Neutral at Citigroup
BT Group (BT) upgraded to Overweight from Neutral at JPMorgan
Best Buy (BBY) upgraded to Buy from Neutral at UBS
Concho Resources (CXO) upgraded to Buy from Hold at Canaccord
LPL Financial (LPLA) upgraded to Neutral from Sell at UBS
Mueller Water (MWA) upgraded to Neutral from Sell at Goldman
Netgear (NTGR) upgraded to Sector Perform from Underperform at RBC Capital
Rocket Fuel (FUEL) upgraded to Outperform from Market Perform at BMO Capital
TD Ameritrade (AMTD) upgraded to Outperform from Market Perform at Raymond James
WEX Inc. (WEX) upgraded to Buy from Neutral at Janney Capital
Youku Tudou (YOKU) upgraded to Buy from Hold at Brean Capital

Downgrades

AGCO (AGCO) downgraded to Sell from Neutral at Goldman
Deutsche Telekom (DTEGY) downgraded to Sell from Neutral at Goldman
Diodes (DIOD) downgraded to Outperform from Strong Buy at Raymond James
Eli Lilly (LLY) downgraded to Sell from Neutral at Goldman
Hill-Rom (HRC) downgraded to Underweight from Equal Weight at Morgan Stanley
KLA-Tencor (KLAC) downgraded to Negative from Neutral at Susquehanna
Penn National (PENN) downgraded to Equal Weight from Overweight at Barclays
Range Resources (RRC) downgraded to Perform from Outperform at Oppenheimer
Teekay Offshore Partners (TOO) downgraded to Neutral from Buy at BofA/Merrill

Initiations

Ann Inc. (ANN) initiated with a Sell at Goldman
Antero Resources (AR) initiated with a Hold at Deutsche Bank
Burlington Stores (BURL) initiated with a Buy at SunTrust
Burlington Stores (BURL) initiated with a Neutral at Goldman
Burlington Stores (BURL) initiated with an Overweight at JPMorgan
Discovery Labs (DSCO) initiated with an Overweight at Piper Jaffray
Empire State Realty (ESRT) initiated with a Buy at KeyBanc
Empire State Realty (ESRT) initiated with a Neutral at Goldman
Express (EXPR) initiated with a Buy at Goldman
Franklin Resources (BEN) initiated with a Sector Perform at RBC Capital
Gaming and Leisure Properties (GLPI) initiated with an Equal Weight at Barclays
Gulfport Energy (GPOR) initiated with a Buy at Deutsche Bank
Mazor Robotics (MZOR) initiated with an Overweight at Barclays
Movado (MOV) initiated with a Hold at KeyBanc
Veeva Systems (VEEV) initiated with a Buy at Canaccord
Veeva Systems (VEEV) initiated with a Buy at Deutsche Bank

HOT STOCKS

Shire (SHPG) acquired ViroPharma (VPHM) for $50 per share or $4.2B
Mitel (MITL) to acquire Aastra for C$392M
IntercontinentalExchange (ICE) said NYSE Euronext (NYX) deal to close November 13
PepsiCo (PEP) announced targeted investment of $5.5B in India by 2020
State of Washington worked out incentives to keep Boeing 777X work, WSJ reports
Transocean (RIG) announced agreement with Carl Icahn (IEP)
Amazon.com (AMZN) announced USPS to deliver packages on Sunday
Suntech (STP) received approval for a provisional liquidation from Cayman Islands
Denbury (DNR) to initiate quarterly dividend, increased share repurchase authorization

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Sterling Construction (STRL), CTI Industries (CTIB), Enzymotec (ENZY), Arkansas Best (ABFS)

Companies that missed consensus earnings expectations include:
RadNet (RDNT), Rexford Industrial (REXR), Ballantyne Strong (BTN), Nordic American Tanker (NAT), Tesoro Logistics (TLLP)

NEWSPAPERS/WEBSITES

Johnson & Johnson (JNJ) and Amazon.com (AMZN) are clashing over complaints that Amazon isn't doing enough to prevent people from selling damaged or expired J&J products on its website, the Wall Street Journal reports
Big banks (JPM, CS, RBS, BCS, UBS, C) are considering blocking employees from computer chat rooms that have become pervasive tools of the modern trading floor, but which face mounting scrutiny from regulators as potential venues for collusion and market manipulation, the Wall Street Journal reports
U.S. retailers (AMZN, WMT, TGT, M) have little room for error in the fast-approaching and shortened holiday shopping season, a period that typically generates 30% of annual sales. Plus, a late Thanksgiving has cut six days off the gift-buying season, Reuters reports
Even with the flawed roll out of health-care reform and uproar over spying, President Obama is enjoying one of the best stock markets for a re-elected president. Signs are building that it might not last, Bloomberg reports
Cooper Tire & Rubber (CTB) isn’t yet entitled to an order that would force Apollo Tyres to pay a contractually agreed $35 a share for the company, a judge said in a weekend letter to lawyers. Cooper must prove it had satisfied all the conditions of the $2.5B buyout agreement, Bloomberg reports
Panasonic (PCRFY) said it can afford a deal worth $1B as the maker of electric-car batteries and solar panels looks to expand its automotive and housing businesses, Bloomberg reports

BARRON’S

GulfMark Offshore (GLF) could rally another 30%
International Paper (IP), Hanesbrands (HBI), Xerox (XRX), L-3 (LLL) are bargains
Devon Energy (DVN) is undervalued by 25%
Twitter's (TWTR) prices indicates investors' bet on advertising plan (GOOG)

SYNDICATE

Bright Horizons (BFAM) files to sell 7.5M shares for holders
CDW Corporation (CDW) files to sell 15M shares for holders
Hansen Medical (HNSN) files to sell 5.29M and 62.6M shares for holders
Wisdom Tree (WETF) files to sell 835,000 shares for holders

• China Pledges Greater Role for Market in Economy (WSJ), China vows 'decisive' role for markets, results by 2020 (Reuters)
• China expected to cut growth target to 7% (FT)
• World Trade Center Tower Debuts in Manhattan Leasing Test (BBG)
• Job Gap Widens in Uneven Recovery (WSJ)
• Khamenei’s conglomerate thrived as sanctions squeezed Iran (Reuters)
• Swiss referendum on wages of high earners stirs debate (FT)
• Obama to Nominate Massad to Head CFTC (WSJ)
• Japan readies additional $30 billion for Fukushima clean-up (Reuters)
• Shadow banks reap Fed rate reward (FT)
• Airlines Run From Onboard Gabfests as Gadget Use Embraced (BBG)
• Target Fills Its Cart With Amazon Ideas (WSJ)
• Apple Said Developing Curved IPhone Screens, New Sensors (BBG)
• GE Printing Engine Fuel Nozzles Propels $6 Billion Market (BBG)
• Rolex Daytona Sells for Record $1.1 Million at Christie’s (BBG)

Overnight Media Digest

WSJ

* Initial reports suggest that fewer than 50,000 people successfully navigated the troubled federal health-care website to enroll in private health-insurance plans as of last week, two people familiar with the matter said.

* America's jobs recovery is proceeding on two separate tracks - a pattern that is persisting far longer than after past economic rebounds and lately has been growing worse. Despite three years of steady job gains, and four years of economic growth, many Americans have yet to experience much that could be described as a recovery. That sort of pattern isn't unusual in the aftermath of a recession, but it usually eases as growth picks up steam.

* Hedge funds are making a large bet on municipal debt, bringing aggressive tactics to a $3.7 trillion market long known as humdrum.

* Freddie Mac and Bank of America are in settlement talks to resolve disputes over more than $1.4 billion in faulty mortgages Freddie has said Bank of America should have to take back.

* Federal prosecutors and the SEC's internal watchdog recently probed the personal financial holdings of some SEC employees in New York, a move that could again shine a spotlight on the agency's internal compliance efforts.

* Just a handful of companies have taken goodwill write-downs this year on past acquisitions that have soured. Last year U.S. companies slashed the value of their past acquisitions by $51 billion because the deals didn't pan out as expected, according to a study set for release Tuesday. That was the highest yearly total for such write-downs since the financial crisis.

* Sotheby's said its third-quarter loss narrowed as the auction house logged an increase in private sale commissions and auction commission revenue.

* Target has come up with an answer to Amazon.com . Copy it. The discount chain's latest online offerings have a distinct Amazon feel-from recurring deliveries for diapers to on-demand streaming video.

* Google said it will begin allowing Nielsen to measure audiences for ads on its YouTube website, a decision that could give ad buyers more confidence to shift dollars to online video.

FT

Industrial and Commercial Bank of China (ICBC), the world's biggest bank by market capitalisation, has been added to the list of banks that must hold extra capital to counter the risk they pose to the financial system, the Financial Stability Board (FSB) said on Monday.

Rupert Murdoch's News Corp reported a 3 percent decline in revenue in its first results since its separation from 21st Century Fox, blaming weakness in its Australian newspaper division.

Non-bank lenders, known as "shadow banks", which often fall outside the remit of regulation, have emerged as among the biggest beneficiaries of the Federal Reserve's ultra-low interest rates with three specialist categories increasing their assets by almost 60 percent since the height of the financial crisis.

Transocean Ltd said it reached an agreement with activist investor Carl Icahn that would see the offshore driller raise its dividend, step up its cost cuts and spin off some of its assets in a new partnership.

British retailer Marks & Spencer said on Monday it planned to make India its biggest foreign market, with "at least" 44 new outlets in the country by 2015, up from 36, as it seeks to stem a sales decline in parts of its UK business.

London-listed drugmaker Shire Plc said on Monday it had agreed to buy ViroPharma for $4.2 billion to strengthen its rare disease treatment business.

NYT

* Some major health insurers are so worried about the Obama administration's ability to fix its troubled health care website that they are pushing the government to create a shortcut that would allow them to enroll people entitled to subsidies directly rather than through the federal system.

* The new video game consoles from Sony and Microsoft about to hit store shelves are almost certain to be hot holiday gifts this year. The uncertainty for the games business is: What happens after Santa leaves? Sales of a new generation of consoles could be dented by tablets, smartphones and Facebook, which offer games at lower prices.

* Sunday was a bad day for Fantex, the fledgling company promoting initial public offerings of National Football League stars, as its first two prospects were sidelined.

* Liquidators seeking to recover money for investors in two hedge funds filed a lawsuit on Monday against Standard & Poor's, Fitch and Moody's.

* A new trial expected to start this week will determine how much Samsung has to pay for an important suit it lost against Apple.

* Bitcoin's emergence has brought a field of competitors. Already, dozens of ideas are jockeying for the market. The online payment system viewed by many insiders as having the best chance of supplanting bitcoin is Ripple. Ripple holds out the promise not just of a new currency, but also of a novel method to send money around the world.

* The Justice Department's prosecution of SAC Capital Advisors raises the question of who the victims of a violation are.

* After several years of lackluster performance, the hedge fund industry is increasingly turning to self-help programs, sometimes referred to as "mindware" products, to try to improve its game.

* Several ideas about using financial instruments and a for-profit approach in the world of non-profits are now taking hold.

Canada

THE GLOBE AND MAIL

* Fairfax Financial Holdings Chairman Prem Watsa, who recruited BlackBerry Ltd's new interim chief executive, says he did not ask former CEO Thorsten Heins to leave.

* Manitoba is being criticized for making it easier to take polar bears from the icy shores of Hudson Bay and place them in captivity. The province - home to the polar bear capital of Churchill - has quietly lifted restrictions that had been in place for 30 years and which allowed only bears under the age of two to be put in zoos.

Reports in the business section:

* Betting that businesses are more interested in renting than buying software and online storage space, two of Canada's biggest cloud computing companies, Mitel Networks Corp and Aastra Technologies Ltd, are joining forces to create a home-grown competitor to companies such as Oracle and Google.

* Canadian home renovation retailer Rona Inc is acquiring 49 percent of Groupe Coupal Inc for an undisclosed price from the Doucet family, which has run the 99-year-old business since 1971. Quebec-based Rona has held a majority stake in Coupal for nearly eight years.

NATIONAL POST

* Dating portal Ashley Madison has delivered a harsh legal counterattack to a former employee who is suing the company for $20 million for injuries sustained while typing up fake profiles of women for the adultery site, releasing pictures of the woman playing on a jet ski after her alleged injury.

* In the six months after the Canadian Senate began investigating the expense claims of some of its members, about two-thirds of senators claimed less than they had in the same six-month period before the Senate spending issue came to light.

FINANCIAL POST

* The last lifeline for Gabriel Resources Ltd's controversial mining project in northwestern Romania went dead on Monday, after a parliamentary commission voted down a draft bill that would have allowed Europe's largest open pit gold mine to move forward.

* Australia said it would allow Saputo Inc to bid for Warrnambool Cheese and Butter Factory Holdings Ltd, removing a key obstacle for the deal aimed at consolidating the country's dairy industry as global demand surges.

China

CHINA SECURITIES JOURNAL

- China's Ministry of Land and Resources said in recent meetings that it will restrict the use of land for industrial production to alleviate oversupply in certain industries. The areas of concern include iron and steel, cement, plate glass and shipping, among others.

- The Chinese central government provided 4.1 billion yuan ($673.1 million) in subsidies to cover the yearly costs of rural financial institutions in 2012, up by 74 percent from the year before, the finance ministry said. The funds supported the development of new types of rural financial institutions and strengthened basic financial services.

CHINA DAILY

- China will fine-tune its 30-year-old family planning policy, but changes will be made in a prudent and coordinated way, and serve to maintain a low birth rate, said Mao Qun'an, spokesman for the National Health and Family Planning Commission.

- China needs 75,000 executive managers with global experience in the next five to 10 years, but only 3,000-5,000 people in the local market meet necessary criteria, research by the Center for China and Globalisation shows.

SHANGHAI DAILY

- Shanghai's Communist Party chief Han Zheng said the city could handle slower GDP growth, and looking ahead development would focus on reforms to make the economy more efficient, protect the environment, and improve the well-being of city residents. Shanghai's GDP grew by 7.7 percent in the first nine months of the year. The government target for 2013 is 7.5 percent.

SECURITIES TIMES

- Guangdong will launch a pilot lending business that would allow domestic companies to obtain loans or credit from domestic financial institutions with a guarantee from external institutions or individuals, according to the People's Bank of China Guangzhou Branch. This would help to expand the means of financing for private companies and small businesses.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

BioCryst (BCRX) upgraded to Neutral from Underperform at BofA/Merrill
Cinemark (CNK) upgraded to Buy from Neutral at Janney Capital
Comerica (CMA) upgraded to Market Perform from Underperform at Raymond James
Crosstex Energy LP (XTEX) upgraded to Outperform from Neutral at RW Baird
Crosstex Energy LP (XTEX) upgraded to Outperform from Sector Perform at RBC Capital
E-House (EJ) upgraded to Buy from Neutral at Goldman
EQT Corporation (EQT) upgraded to Buy from Hold at Stifel
Embraer (ERJ) upgraded to Neutral from Sell at Citigroup
Emulex (ELX) upgraded to Overweight from Neutral at Piper Jaffray
Heartland Express (HTLD) upgraded to Overweight from Neutral at JPMorgan
Kite Realty Trust (KRG) upgraded to Market Perform from Underperform at Wells Fargo
LeapFrog (LF) upgraded to Outperform from Market Perform at BMO Capital
MedAssets (MDAS) upgraded to Buy from Neutral at B. Riley
Regal Entertainment (RGC) upgraded to Buy from Neutral at Janney Capital
SeaWorld (SEAS) upgraded to Buy from Neutral at Citigroup

Downgrades

Clean Harbors (CLH) downgraded to Neutral from Outperform at Credit Suisse
Costco (COST) downgraded to Neutral from Buy at UBS
FARO Technologies (FARO) downgraded to Hold from Buy at Stifel
Gogo (GOGO) downgraded to Neutral from Buy at UBS
Heartland Payment (HPY) downgraded to Neutral from Outperform at RW Baird
Hologic (HOLX) downgraded to Hold from Buy at Canaccord
Hologic (HOLX) downgraded to Sector Perform from Outperform at RBC Capital
Innospec (IOSP) downgraded to Hold from Buy at KeyBanc
Randgold Resources (GOLD) downgraded to Sector Perform from Outperform at RBC Capital
Symantec (SYMC) downgraded to Neutral from Outperform at Macquarie

Initiations

Atmel (ATML) initiated with an Outperform at Oppenheimer
Container Store (TCS) initiated with a Buy at Stifel
Qualcomm (QCOM) initiated with a Buy at Jefferies
Star Bulk Carriers (SBLK) initiated with a Hold at Stifel
TriMas (TRS) initiated with a Buy at Deutsche Bank
Twitter (TWTR) initiated with a Neutral at Susquehanna
Voxeljet (VJET) initiated with a Neutral at Citigroup
Voxeljet (VJET) initiated with a Neutral at Piper Jaffray

HOT STOCKS

Baker Hughes (BHI) declared force majeure in Iraq
GlaxoSmithKline (GSK) said heart disease drug misses primary endpoint
Vale (VALE) selling Norsk Hydro shares
Heartland Express (HTLD) acquired Gordon Trucking for $300M
Assured Guaranty (AGO) approved $400M share repurchase authorization

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Achillion (ACHN), Third Point Reinsurance (TPRE), DISH (DISH), RDA Microelectronics (RDA), Assured Guaranty (AGO), Premier (PINC), TG Therapeutics (TGTX), Hologic (HOLX), Sotheby's (BID), ESCO Technologies (ESE)

Companies that missed consensus earnings expectations include:
Dolan Co. (DM), Gran Tierra (GTE), Global Brass & Copper (BRSS), Northern Tier (NTI), Vocera (VCRA), Cray (CRAY), News Corp. (NWSA), BIOLASE (BIOL), Rackspace (RAX)

Companies that matched consensus earnings expectations include:
Fontegra Financial (FRF)

NEWSPAPERS/WEBSITES

• Target Corp. (TGT) has come up with an answer to Amazon.com (AMZN): Copy it. The discount chain's latest online offerings have a distinct Amazon feel—from recurring deliveries for diapers to on-demand streaming video and free shipping and discounts for its members, the Wall Street Journal reports
• Hedge funds are making a large bet on municipal debt, bringing aggressive tactics to a $3.7T  market. The strategies include demanding high interest rates in return for financing local governments, buying the debt of struggling municipalities on the cheap, and trying to profit on rising volatility, the Wall Street Journal reports
• Tyco International (TYC) is approaching global private-equity firms to sell its Korean security unit Caps Co. in entirety, sources say, the Wall Street Journal reports
• Russian crude oil producer Rosneft said its board approved deals to sell oil product cargoes to BP (BP) worth over $6B, in addition to a previous deal to sell oil worth $5.3B, Reuters reports
• John Malone’s Liberty Global (LBTYA), the European cable operator, is in talks to acquire Intel’s (INTC) online pay-TV service under development. Malone would use Intel’s system outside the U.S., sources say, Bloomberg reports
• UBS’s (UBS) China venture plans to offer more computerized-trading services as it bets on a surge in demand from institutional money managers in the biggest emerging market, Bloomberg reports

SYNDICATE

Allison Transmission (ALSN) announces sale of 15M common shares by holders
Booz Allen (BAH) files to sell 10M shares of Class A common stock for holders
Fiesta Restaurant (FRGI) files to sell $100M in common stock
Preferred Apartment (APTS) files to sell 3.23M shares of common stock
QuickLogic (QUIK) files to sell common stock
T-Mobile (TMUS) files to sell 66.15M shares of common stock

Carl Icahn, who is currently speaking at the Reuters Global Investment Outlook Summit, just poured cold water over the Fed's 16,000 DJIA EOD price target.

• ICAHN: ‘VERY CAUTIOUS ON EQUITIES, MARKET COULD EASILY HAVE BIG DROP'
• ICAHN SAYS MANY COS. EARNINGS ARE A ‘MIRAGE,’ REUTERS SAYS
• ICAHN: DOESN’T WANT FIGHT WITH APPLE,NO PLANS TO WALK AWAY

But... but.. two POMOs... Still, not too late for K-Fed and his merry unlimited balance sheet trading men to pull a record third POMO today and keep the "wealth effect" illusion going.

The credit cycle is getting long in the tooth...

Was it just a month ago that we warned "Carl Icahn's nightmare" was about to occur? - as the credit market became saturated...

With the inability to proxy-LBO every and any firm, the fun ends - as Icahn just let everyone know... it's called a credit 'cycle' for a reason.

Of course - it's all about carry..

As written by Carl Icahn on the Shareholders' Square Table

Personal Views Concerning Media Reports On My Remarks re Markets and APPL from Reuters Summit

Reuters was completely accurate that I am concerned about the level of the market.  But I also made it clear on the conference call (and I believe as Reuters reported it), that it is almost impossible to predict what a market will do in the short term.  There are too many variables.

Often when we are concerned about the market, we hedge to some extent and this is one of those times.  Interestingly, our investment funds had an annualized return of approximately 27% since January 1, 2009, and that return would have been greater if we had not hedged.  As I have often said, picking short term moves in the market is like predicting how many sevens the “hot” dice player will continue to roll.

Concerning Apple, I told Reuters I believe that Apple is not a bank and that a large buyback should be put into place, as well as taking advantage of other ways this cash can be made more productive.  While I do not micromanage, at the risk of being immodest, I believe that in the area of allocating capital there are very few better then we and we hope to be able to be involved, as a large shareholder, with Apple, in this area.

It is time for the centrally-planned markets to "try" for the round number trifecta of 16000, 1800 and 4000 again, although it may be a tad more difficult on a day in which there is no double POMO and just $2.75-$3.50 billion will be injected by the NY Fed into the S&P - perhaps it is Bitcoin that will hit the nice round number of $1000 first? Overnight, the Chinese Plenum news rerun finally was priced in and the SHComp closed red, as did the Nikkei 225 as the Asian euphoria based on communist promises about what may happen by 2020 fades.  What's worse, the Chinese 7-day repo rate is up 140bp this morning to 6.63% amid talk of tightening domestic liquidity conditions, and back to levels seen during the June liquidity squeeze. All this is happening as China continues leaking more details and hope of what reform the mercantilist country can achieve, and how much internal consumption the export-driven country can attain: overnight there were also additional reports of interest rate liberalization and that the PBOC are to set up a floating CNY rate. Good luck with that.

Heading west to Europe, the German ZEW Surve printed at 54.6 up from 52.8 and above expectations of 54.0 - the highest since October 2009, however the current situation survey dropped from 29.7 to 28.7, well below the expected 31.0. According to the ZEW expectations increased slightly following the ECB rate cut. So Germany should not have a problem with greenlighting QE then - just think of how high the ZEW would surge. Also in Europem Italian Industrial Orders missed expectations of a 2.0% increase, and instead declined from 2.2% to 1.6% in September. In Spain, Confidencial reported that the ECB stress tests may penalize Spanish bank bond holdings, because only in Europe will the central bank which bailed out Spain's bank penalized Spain's banks.

In conclusion, and in the most bullish news of the day - for stocks of course - the OECD lowered 2014 world GDP forecast from 4.0% to 3.6%.  At the same time is urged the ECB to consider QE and scrap the debt ceiling. What can one say: the OECD - the best friend of the 0.1%.

There is nothing on the US docket today except the following two things:

• US: Employment cost index for Q3, cons 0.5% (8:30)
• US: Fed speaker Evans (14:15)

Overnight bulletin from Bloomberg and RanSquawk:

• China's Zhou says PBOC to remove itself from day-to-day interventions in the domestic FX market and establish a managed floating CNY FX rate, will cut the ratio of T-Bonds held to maturity. Governor Zhou Xiaochuan said, without giving a timeframe
• OECD lowers 2014 world GDP forecast to 3.6% from 4.0% in May outlook. Calls on ECB to consider quantitative easing and says that the U S should scrap the debt ceiling for a credible long-term budget plan.
• Combination of profit taking related flow, as well as initial reaction to comments by Fed’s Dudley and Plosser saw USTs edge lower overnight in Asia and in turn resulted in lower Europe open.
• Treasuries decline, 10Y yield holding near 50-DMA at 2.671%, 100-DMA at 2.665%; light eco calendar with Bernanke due to speak at National Economists Club in Washington at 7pm.
• JPMorgan has resolved the last obstacles to a record $13b settlement of civil state and U.S. probes over the sale of mortgage bonds, clearing the way for a deal today after months of negotiations, two people briefed on the matter said
• German investor confidence rose to 54.6 in November, highest level in more than four years, from 53.8 in prior month and median estimate of 54 in Bloomberg survey
• ECB’s Asmussen said policy makers haven’t exhausted their options to counter low inflation, must be very careful on negative deposit rate, according to an interview broadcast on Austria’s ORF radio
• Greek banks’ bad loan ratio at 32%, with rate of increase in non-performing loans slowing, Kathimerini reported
• OECD cut its forecast for global growth to 2.7% this year and 3.6% next year from the 3.1% and 4% predicted in May as emerging markets including India and Brazil cool
• Potential shortfalls in Obamacare enrollment would put a 30% dent in projections for U.S. prescription-drug sales in 2017, a report from IMS Health Inc. shows
• Obama’s job approval rating fell to 42% in a ABC News/Post poll, down 13 points this year and six in the past month to match the lowest of his presidency
• Sovereign yields mostly higher, EU peripheral spreads narrow. Asian, European stocks, U.S. equity-index futures lower. WTI crude, copper and gold lower

Market recap:

China will gradually expand the CNY trading band to help make the currency more flexible. A combination of profit taking related flow, as well as initial reaction to comments by Fed’s Dudley and Plosser saw USTs edge lower overnight in Asia and in turn translate into somewhat cautious equity cash open in Europe. Also,  reports that China will gradually expand the CNY trading band to help make the currency more flexible and market-driven resulted in broad-based, albeit short-lived USD weakness which pushed EUR/USD and GBP/USD to session highs. However the reaction was short-live and the initial bout of selling pressure quickly abated after it became apparent that these comments were part of the study guide released by a Communist Party after the third plenum and is part of long-term reforms as recently proposed by the Chinese government. Still, the fact that the head of the Bank also noted China will cut the ratio of T-Bonds held to maturity is USD negative in the near future. In other news, German ZEW survey expectations for the month of October came in at its highest since October 2009, while the OECD lowered 2014 world GDP forecast to 3.6% from 4.0% in May outlook. The OECD also called on the ECB to consider quantitative easing and stated that the US should scrap the debt ceiling for a credible long-term budget plan. Going forward, market participants will get to digest the release of the weekly API report and await comments from Fed’s Evans and Bernanke.

Asian Headlines

China's Zhou says PBOC to remove itself from day-to-day interventions in the domestic FX market and establish a managed floating CNY FX rate. However, no timeline has yet been given.

The Chinese Ministry of Commerce says China exports continue to face difficulties and fast CNY rise is squeezing exporter profits.

Japanese Economy Minister Amari said expects stimulus to be about JPY 5trln with tax measures of about JPY 1-2trln pushing the total up to about JPY 6trl, aimed to counter impact of tax hike.

EU & UK Headlines

German ZEW Survey Expectations (Nov) M/M 54.6 vs Exp. 54.0 (Prev. 52.8) - Highest since October 2009
German ZEW Survey Current Situation (Nov) M/M 28.7 vs Exp. 31.0 (Prev. 29.7)

OECD lowers 2014 world GDP forecast to 3.6% from 4.0% in May outlook
Calls on ECB to consider quantitative easing.
US should scrap the debt ceiling for a credible long-term budget plan.

Eurozone banks are set to be allowed to avoid complex new definitions for bad loans in their first data submissions in next year's ECB check, winning a temporary reprieve from their heavy data-gathering burden.

UK DMO sells GBP 3.75bln 2.25% 2023 Gilts, b/c 1.80 (Prev. 1.84) tail 0.2bps (Prev. tail 0.2bps)

US Headlines

The US Treasury has face a backlash from the likes of BlackRock, PIMCO and Fidelity after a report by the Office of Financial Research showed that asset managers could pose risks to the broader financial system.

Equities

Stocks traded lower in early European trade after coming off the highs seen yesterday, which resulted from the positive sentiment observed in the Asian session. Afren are leading the way this morning following the Co.'s drilling results being 'significantly' above expectations. EasyJet are also trading in the green after the Co.’s proposed dividend pence per share increased 55.8% from GBP 0.215 to GBP 0.335. In terms of laggards Paddy Power are leading the way downwards after the Co. lowered operating profit growth in 2013 before FX to be about EUR 11mln lower than mid-point of previous guidance. From a sector specific perspective, Industrials are being lead lower following Intertek's pre-market earnings.

Home Depot (HD) Q3 EPS USD 0.95 vs. Exp. USD 0.90, year forecast raised

FX

The FT writes that traders are betting China's CNY is about to strengthen to its highest level against the US dollar since at least 1998. One month non-deliverable forwards, which are contracts betting on the renminbi-US dollar exchange rate in a month's time, have jumped to 6.1265 per dollar, their strongest since December 1998. This saw a relatively short-lived market reaction by market participants as despite the news being released, markets were not presented with much in the way of a timeline for these events and therefore isn't gaining the momentum that the headline could have brought.

Overnight, AUD/USD pared back all the initial losses seen in the wake of the RBA policy November meeting minutes, which

were somewhat surprisingly 'upbeat' showing that the RBA saw improvement in forward looking indicators in the last month and sees "mounting evidence" that past rate cuts supporting activity and asset values. This comes despite the RBA saying that they feel AUD is still uncomfortably high with a fall needed to rebalance the economy and not closing possibility of a rate cut to support growth.

Commodities

Heading into the North American open, WTI crude and brent futures trade in minor negative territory after retracing most of the losses seen overnight, with a weaker USD providing some upside for commodities. Brent did see some upside later in the session after an AFP tweet claimed that Iran had accused Israel of being behind the Beirut bombing earlier in the day.

Earlier today it was reported that two explosions were heard in South Beirut near Iranian Embassy, it was later revealed that an Iranian official was killed in the blast. Afterwards an AFP tweet: "Iran accuses Israel of being behind Beirut bombing".

Iran are to pump their first oil at fields shared with Iraq by the end of the Iranian year according to Press TV.

Obama is to meet with the Senate today in an attempt to try to dissuade the House from imposing more Iran sanctions *Please see today's 'Energy Commentary' report for more energy news.

SocGen's macro event recap:

It could be costly to fail to provide accommodation [to the market],” Fed chair nominee Yellen told US Senators last Thursday. Maybe that, and a 12-month forward P/E of 15.5 vs a 10y average of 16.3, is why investors continue to articulate a bullish view for risk assets. And are lower yields a sign that markets are pricing in a fall in annual CPI to 1% this week and therefore UST 10y yields are dropping back below 2.70%? The reality is that because of falling US yields EUR/USD is trading back to where it was before the ECB cut rates two weeks ago (1.3532). Intra-day flows continue to support the EUR at these levels and shows that the ECB's powers are limited as it battles disinflationary pressures. Data yesterday reported a widening in the eurozone trade surplus to EUR14.3bn in September, a 45% increase from a year ago despite an anaemic economic recovery. The current account surplus has been running in double digits every month since May 2012. With numbers like that, the pace of EU depreciation will be glacial until the surplus is whittled back or US rates push higher. Meanwhile, foreign investors chose to offload $26.2bn of US T-bills in September as the government went into shutdown. A budget deal is of the essence before January.

A speech by ECB chief economist Praet in Frankfurt will garner close attention one week after the interview in the WSJ where he put forward the idea of outright asset purchases as a policy solution to help arrest the disinflationary pressure from building. We look for a rise in the ZEW survey expectations in November to 56.1 vs 52.8 last and a rise in current conditions to 32.4 vs 29.7 last, the highest since June 2012.

DB's Jim Reid concludes the overnight event summary:

The positive sentiment from Chinese reforms has abated somewhat today after a very strong day for Chinese H-shares yesterday. The closely watched Hang Seng China Enterprises index is still up 1.0% today (following a 5.7% gain yesterday) and it’s safe to say that there is still a reasonable bid from offshore for Chinese exposure. But as we noted yesterday, the bullish sentiment from reforms isn’t flowing through to all Chinese risk assets uniformly at the moment. Indeed, onshore equity indices are tracking slightly lower today (Shanghai Composite -0.1%) and, by sector, the softness in onshore equities is being driven by cyclicals including smelters and autos.  Copper futures are down another half a percentage point and mining stocks in Asia are trading with a mixed tone. The recently announced reforms place a heavy emphasis on curbing overbuilding, protection of the environment and achieving sustainable growth, so it’s not unexpected that cyclicals to be lagging to some extent.

There is also increasing focus on the onshore Chinese fixed income markets at the moment. One of the major goals of the reforms was to liberalise Chinese money rates - which includes the Chinese treasury yield curve. The 10yr government bond yield has been rising over the last few months and has increased by around 50bp in November alone. Some of this move can be put down to positioning ahead of the third plenum announcements but we’ve also seen yields add 15bp over the past two days alone (currently 4.657% from lows of 3.45% in May). Staying in the money markets, the 7day repo rate is up 140bp this morning to 6.63% amid talk of tightening domestic liquidity conditions. This move brings its back up to levels seen during the liquidity squeeze in June . The increase in rates is also having a negative impact on onshore corporate bond markets. Offshore though, US dollar Chinese corporate bonds remain fairly well bid and spreads have tightened by a several basis points over the past couple of days. Although we imagine that the onshore rate selloff is negative for bank investment portfolios in the short term, our Chinese banking analysts expect higher bond yields to eventually raise returns for bond investments and increase loan pricing for large corporates, which will help mitigate the impact from deposit rate regulation.

Again, our view on the reforms is that the range of announced measures is impressive and that they are step in the right direction, but the truth will be in the execution. There are conservative interest groups within the government and State-owned sector who would be resistant to reforms, but as DB’s James Malcolm argues the big question is whether China can implement these reforms quickly enough for impatient markets. An argument can also be made that if reforms are implemented too quickly the frictional costs for the economy could come to the fore. So it’s definitely a delicate balancing act for the government and one which will be crucial to markets over the weeks, months and even years to come.

Outside of China, US markets spent most of the day above 16000 and 1800 on the Dow and S&P 500 before slipping in the last hour of trading with the S&P 500 closing at 1792 - down 0.37% on the day. Explanations for the late selloff varied. Carl Icahn was quoted at a Reuters investment conference that he is “very cautious” on equities and that the equity market could easily have a “big drop”. Icahn also commented that earnings are a mirage and are being boosted by low interest rates. His comments were published on newswires well after the downward slide had begun though. Others blamed hawkish comments from the Philly Fed’s Plosser earlier in the day who argued for a fixed cap on QE and that the labour market had sufficient momentum to justify a start to tapering. Plosser also argued that he wasn’t supportive of linking QE tapering with changes in the Fed’s unemployment threshold for rate hikes, describing the policy shifts as potentially a source of confusion which could undermine the effectiveness of forward guidance. Plosser is a FOMC voter next year and is a known hawk. Those comments were at odds with the NY Fed’s Dudley (a voter and a dove) who described current labour market momentum as insufficient. He also commented that there was enough slack in labour markets to continue with very accommodative monetary policy without having an inflation problem.

The late weakness in stocks helped US treasuries rally into the close (-4bp on the day) but the catalyst for the rally in rates started with a weaker than expected NAHB homebuilder sentiment report. The sentiment index came in at 54.0 for November, which was unchanged from October, but was weaker than the median estimate of 55.0. The index remains at a five month low but it’s still much higher than at any point in H1 of the year. The detail of the report showed some softening in the outlook and in buyer traffic, perhaps as the impact of higher mortgage rates starts to flow through. The US dollar was a touch weaker against major currencies– and the combination of firmer UST yields and weaker dollar spurred a strong day for EM. Indeed the MSCI EM index gained 2% for its best gain in a month while EM bond yields were firmer on the day.

Looking at the day ahead, Italian industrial orders and sales and the German ZEW survey are the main data highlights in Europe. In the US, the employment cost index will be released but there will be some focus on the Fed speak. Indeed, Bernanke will deliver the Herbert Stein Memorial Lecture at the National Economists Club in Washington DC, well after the US markets close. He's not expected to discuss Fed policy but there may some interesting snippets from the Chairman.