"Ackman is a good example of 'It is OK to be the smartest guy in the room, but it may not be the best idea to tell everyone that you're the smartest guy in the room,''' said Jonathan Kanterman, an alternative investment consultant. "People can get a little turned off by that." Supporters maintain it can be easy to mistake self-confidence for arrogance. Ackman has bounced back from setbacks before, and his reputation is based on some rather spectacular successes.

1. THE DAY AHEAD
REUTERS NEWS North American Edition For Tuesday, August 20, 2013
Stocks edged lower on Monday as investors waited for clar-
ity on Federal Reserve stimulus policy. Treasury yields rose
to new two-year highs, while gold fell. The euro rose against
major currencies after comments from the Bundesbank on
interest rates. Oil ended lower in choppy trading.
MARKET RECAP COMING UP
Home improvement retailer Home Depot is expected to post
higher profit, a day ahead of the quarterly report from rival Lowe's.
The market is expected to get a better
read of the strength of the U.S. hous-
ing recovery and consumer willing-
ness to invest in home renovation
when the top home improvement
chains post financial results for the
second quarter. Many on Wall Street
expect Home Depot to outperform
Lowe's on the same-store sales front.
J.C. Penney reports its quarterly results, and the market is likely to
focus on the extent of the sales and gross profit margins decline as
well as any depletion of cash. The company, which just ended a
faceoff with top investor Bill Ackman, is trying hard to win back
shoppers who defected last year after Penney ditched discounting.
Look for TJX -- the owner of low-price TJ Maxx and Marshall
chains – to post an increase in quarterly profit versus the same
period one year ago. TJX is gearing up to launch an online store by
the end of this year and investors will be keen to hear any com-
ments on its progress, as this is the company's second attempt at e
-commerce after a 2005 failure.
Investors will get a read of demand for gadgets in the back-to-
school season when Best Buy reports its results for the second
quarter. Wall Street will also look for an update on the progress of
the turnaround at the world's largest consumer electronics chain.
Top global miner BHP Billiton reports annual results. The com-
pany is expected to be the only major miner to report a rise in profit
for the June half, thanks to cost-cutting and rising volumes offset-
ting drops in iron ore, copper and coal prices. The company may
expound on its news that U.S. authorities have laid out grounds for
possible enforcement action against the top global miner for corrupt
practices, stepping up a four-year probe linked partly to its 2008
Olympics sponsorship.
Mexico reports its GDP figures, and Latin America's second big-
gest economy is expected to show growth of 3.5 percent this year,
slower than in 2012 but holding up well in the face of weak global
demand.
Commodities trader and miner Glencore reports its first set of
earnings since it completed the takeover of Xstrata. Analysts ex-
pect a dip in profit on weaker coal, nickel and zinc prices, but the
focus is likely to be on any hints as to the outcome of Glencore's
100-day review after the Xstrata deal. The full results of that analy-
sis is due early in Sept.
KEY ECONOMICS EVENTS ET/GMT REUTERS POLL PRIOR SOURCE
ICSC/GS Report ww for w/e 08/17 0745/1145 -- -0.2 pct International Council of Shopping Centers/Goldman Sachs
Chicago Fed Index for July 0830/1230 -- -0.13 Federal Reserve Bank of Chicago
Redbook mm for w/e 08/17 0855/1255 -- 0.4 pct Redbook Research
SEMI Book/Bill for July 1800/2200 -- 1.10 Semiconductor Equipment & Materials Intl. (SEMI)
STOCKS Close Change % Chng Yr-high Yr-low
DJIA 15009.36 -72.11 -0.48 15658.40 12471.50
Nasdaq 3589.09 -13.69 -0.38 3694.19 2810.80
S&P 500 1645.93 -9.90 -0.60 1709.67 1343.35
Toronto 12588.06 -148.86 -1.17 12904.71 11759.04
Russell 982.70 -6.42 -0.65 1022.04 846.24
FTSE 6465.73 -34.26 -0.53 6875.62 5897.81
Eurofirst 1224.58 -6.85 -0.56 1258.09 1111.11
Nikkei 13758.13 108.02 0.79 15942.60 10398.61
Hang Seng 22463.70 -54.11 -0.24 23944.74 19426.36
TREASURIES Yield
10-year 2.8804 -15 /32
2-year 0.3548 -1 /32
5-year 1.6076 -7 /32
30-year 3.8976 -28 /32
Price FOREX Last % Chng
Euro/Dollar 1.3337 0.06
Dollar/Yen 97.48 -0.04
Sterling/Dollar 1.5652 0.16
Dollar/CAD 1.0341 0.06
COMMODITIES $ Price $ change % change
Front Month Crude /barrel 107.00 -0.46 -0.43
Spot gold (NY/oz) 1366.22 -9.68 -0.70
Reuters/Jefferies CRB Index 293.64 0.58 0.20
BIG MOVERS $ Price $ change % change
YRC Worldwide 14.45 -1.82 -11.19
Jinkosolar Holding 12.88 -1.54 -10.68
Soufun Holding 40.26 4.09 11.31
MannKind 6.37 0.60 10.40
 For The Day Ahead - Canada, click here
 For U.S. - Top News, click here

2. 2
COMING UP (continued)
THE DAY AHEAD For Aug 20, 2013
Trina Solar is expected to report a smaller loss this quarter on
higher margins and shipments on increased sales in the lucra-
tive European market. Chinese solar panel markers increased
sales to Europe in the second quarter ahead of European Un-
ion restrictions on Chinese imports.
Intuit, maker of Turbo Tax software, posts results. The com-
pany has warned that it will post a quarterly loss as it contin-
ues to shed non-essential assets such as Intuit Financial Ser-
vices and Intuit Health Group. The company is also facing
fierce competition from its resurgent rival H&R Block, which is
grabbing market share for digital tax filing from Intuit.
U.S. bookstore operator Barnes & Noble is expected to post a
quarterly loss, and its results are likely to reflect whether its
decision to stop making Nook tablets on its own has helped its
bottom line. The company may also give an update on
whether Chairman Leonard Riggio's offer to buy its stores is
progressing.
MARKET MONITOR
Click on the chart for full-size imageStocks lost ground on Monday, with each of the major indexes
falling for a fourth straight session as investors were hesitant to
make new bets ahead of an expected slowing by the Federal
Reserve of its stimulus. "Short-term momentum continues to be
to the upside, but the low volume suggests there's little convic-
tion that could take us up out of the range we've been in," said
Andres Garcia-Amaya, global market strategist at J.P. Morgan
Funds in New York. "The September meeting is the next big
catalyst, and until then there's nothing that should significantly
move the needle." Apple was up 1.08 percent. Intel rose 1.67
percent. JPMorgan fell 2.74 percent. The Dow was down 0.48
percent. The S&P 500 Index was down 0.60 percent and the
Nasdaq was down 0.38 percent.
Longer-dated Treasury yields rose to two-year highs, extending
weakness after their worst week in two months, as investors
worried about the effect on the market if the Federal Reserve
reduces its bond purchase program next month. The 10-year
Treasury notes were down 15/32 to yield 2.88 percent. Thirty-
year bonds were down 27/32 to yield 3.90 percent, the highest
since August 2011.
The euro rose to a two-week high against the yen and edged
higher versus the dollar, boosted by comments from the
Bundesbank which suggested that the European Central Bank's
low interest rate pledge last month was not set in stone and
would depend on the medium-term outlook for inflation. The
euro rose 0.07 percent to $1.3338. Against the yen, the euro
rose 0.07 percent to 130.01 yen.
Oil prices ended the day slightly lower in lackluster trading on
Monday as light profit-taking pressured prices but unrest in
Egypt and the loss of Libyan oil exports put a floor under them.
Oil was down 0.43 percent at $107 a barrel.
Gold fell as bond yields rose, signalling that the U.S. Federal
Reserve could be moving closer to reducing monetary stimulus
next month. Spot gold fell 0.69 percent to $1,366.41 an ounce.
December gold futures were down 0.35 percent at $1,366.20.

3. 3
TOP NEWS
JPMorgan China probe sends chill through investment
banks
A U.S. banking regulator's probe into JPMorgan's hiring prac-
tices in China will have rival banks scrambling to review their
own records, lawyers say, in a market where ties to political and
business leaders can be key to winning big deals. Offering a job
to one of China's so-called princelings - the offspring of China's
political elite - is now a potential liability, with the U.S. Securities
and Exchange Commission investigating whether JPMorgan's
Hong Kong office hired the children of China's state-owned com-
pany executives with the express purpose of winning underwrit-
ing business and other contracts, said a person familiar with the
matter. U.S. law does not stop companies from hiring politically
connected executives. But hiring people in order to win business
from relatives can be bribery, and the SEC is investigating
JPMorgan's actions under the U.S. Foreign Corrupt Practices
Act, the person added.
Saks reports weak second-quarter sales, deeper loss
Saks reported a deeper than expected second-quarter loss after
disappointing sales of shoes and handbags forced the luxury
retailer to mark down prices. Saks reported same-store sales
rose 1.5 percent, well below the 4.5 percent rise Wall Street
analysts had expected. Overall sales rose 0.5 percent to $707.8
million for the quarter. For the quarter ended Aug. 3, Saks had a
net loss of $19.6 million, or 13 cents a share, compared with a
net loss of $12.3 million, or 8 cents a share, a year earlier. Ex-
cluding costs including expenses related to store closings and
the Hudson's Bay deal, Saks lost 10 cents per share, 2 cents
worse than expected.
Teen apparel chain Urban Outfitters profit jumps 25 percent
Teen apparel retailer Urban Outfitters reported a 25 percent
jump in quarterly profit. Net income rose to $76.4 million, or 51
cents per share, in the second quarter from $61.3 million, or 42
cents per share, a year earlier. Revenue rose 12 percent to
$758.5 million.
U.S. court gives lawsuit over Barclays disclosures a second
chance
A U.S. appeals court said investors may revive a lawsuit accus-
ing Britain's Barclays of misleading them in a 2008 stock offer-
ing about its subprime mortgage exposure and ability to manage
credit risks. Reversing a lower court, the 2nd U.S. Circuit Court
of Appeals in New York said investors may sue Barclays and its
underwriters over a $2.5 billion offering of American depositary
shares in April 2008 that lost much of its value within a year.
However, the panel upheld the dismissal of claims over three
offerings totaling $2.95 billion between April 2006 and November
2007, saying the plaintiffs missed a one-year deadline to sue.
U.S. Fed tells big banks to improve capital planning
Big banks must improve the way they determine how much capi-
tal they need to withstand any future crisis, the U.S. Federal
Reserve said, citing observations from regulators' periodic tests
of banks' health. The Fed said in a paper released that banks
participating in regular "stress tests" had flaws in their capital
planning processes, such as being unable to show that they
considered all of the relevant risks to their businesses. The Fed
said its paper, which did not identify banks, describes regulators'
expectations and pointed out practices that were weak or unac-
ceptable in previous stress tests. The paper pointed to problems
such as modeling techniques that did not address bank-specific
risks, loss and revenue projections that could not be replicated,
or problems with governance of the planning process.
Boeing undercuts rivals in S.Korea fighter contest -sources
Boeing's bid in the 8.3 trillion won tender to supply South Korea
with 60 fighter aircraft was the only one below the price ceiling
set by the country's arms procurement agency, sources close to
the process said. A final decision was not expected until mid-
September, the sources said, but the price submitted by the U.S.
company appears to be a significant step toward winning the
contract. South Korea's Defense Acquisition Program Admini-
stration said that at least one bid, which it did not identify, came
within its overall budget. "It's not going to be decided on cost
alone," said the source, who is not authorized to speak publicly,
adding that the cost of the aircraft represents only 15 percent of
the decision-making process.
Lilly defends blockbuster Alimta with unusual ammo
Eli Lilly, could find $15 billion in sorely needed relief if it beats
the odds and wins a closely watched patent battle with generic
drugmaker Teva Pharmaceutical. While a Lilly victory is not
widely expected, a number of patent attorneys and industry ana-
lysts say the patent being challenged by Teva, will pass legal
muster. The Indianapolis court will weigh the merits of a sepa-
rate "method-of-use" patent on the way Alimta is administered. If
the court upholds the patent, Lilly would be able to fend off ge-
neric alternatives to Alimta until 2022. "We believe this patent is
valid and enforceable and we are prepared to defend our intel-
lectual property," said company spokesman Ed Sagabiel.
Obama to meet with financial regulators on Wall Street re-
form law
President Barack Obama will sit down with the leading U.S.
financial market regulators on Monday to discuss their progress
in implementing the 2010 Wall Street reform law, the White
House said on Sunday. The Dodd-Frank law was passed by the
then-Democratic-controlled Congress with Obama's support as
a response to the 2007-2009 financial crisis. It aims to prevent
large, complex financial firms from imperiling markets should
they collapse. The White House said it expects the heads of the
SEC, CFTC, Consumer Financial Protection Bureau, U.S. Fed-
eral Reserve, Office of the Comptroller of the Currency, Federal
Deposit Insurance Corp, Federal Housing Finance Agency and
the National Credit Union Administration to attend the meeting
Monday afternoon. Treasury Secretary Jack Lew will also partici-
pate, the Treasury Department said on Sunday.
THE DAY AHEAD For Aug 20, 2013
PIC OF THE DAY
A helicopter tanker drops fire retardant near a home at the Beaver Creek
wildfire outside Ketchum, Idaho.

4. 4
TOP NEWS (continued)
Atlas Copco to diversify into pumps with $1.6 billion Ed-
wards buy
Atlas Copco is buying Edwards Group for up to $1.6 billion in
cash as it tries to offset deteriorating profits from its mining engi-
neering business. Atlas Copco said it would pay up to $10.50
per share for Edwards, including net debt, representing a 24
percent premium to Friday's closing price of $8.45. Shareholders
will initially receive $9.25 per share, plus an additional payment
of up to $1.25 once Edwards' 2013 income statement is final,
the company said. The deal is scheduled to close in the first
quarter.
Real estate firm Re/Max Holdings files for IPO of up to $100
million
Real estate company Re/Max Holdings has filed with U.S. regu-
lators to raise up to $100 million through an initial public offering
of Class A common stock. The company recorded revenue of
$78.3 million for the six months ended June 30. Re/Max said it
would use some of the proceeds from the offering to acquire
regional franchise rights in Southwest and Central Atlantic
United States. The filing did not say how many shares the com-
pany plans to sell or their expected price. Re/Max intends to list
its Class A shares on the New York Stock Exchange under the
symbol "RMAX".
Detroit union files challenge to city's bankruptcy petition
One of Detroit's biggest public labor unions became the first
major party to file an objection to the city's bankruptcy filing
ahead of a midnight deadline for challenges. The American Fed-
eration of State, County and Municipal Employees Council 25
said Detroit has not proven it is insolvent and has not negotiated
in good faith with its creditors. In a filing with the U.S. Bank-
ruptcy Court in Detroit, the union said it was also challenging the
constitutionality of Chapter 9 of the federal bankruptcy code,
which governs municipal bankruptcies, arguing that it en-
croaches on states' rights. The union also said Michigan's emer-
gency manager law, which enabled Detroit to file for bankruptcy
on July 18, violates the state constitution because the law does
not explicitly protect retirement benefits for public workers.
GTx muscle drug fails late-stage trials
GTx Inc's experimental drug to treat muscle wasting in cancer
patients became its second successive lead drug to fail late-
stage trials, wiping out nearly two-thirds of the market value of
the once-promising cancer-focused pharmaceutical company.
GTx said that the drug, enobosarm, failed to meet the twin goals
of improving body mass and physical function in cancer patients.
There was an improvement in lean body mass in one of the two
studies but overall the drug did not meet the pre-specified crite-
ria, GTx said. It now plans to meet the FDA to discuss the path
forward for enobosarm Cowen's Schmidt, however, countered
that the FDA has been very clear that physical function is a re-
quirement for approval, and that increases in lean body mass
were not accompanied by improvements in physical function or
survival in either study.
THE DAY AHEAD For Aug 20, 2013
Company Name Action
Apache Stifel cut rating to hold from buy citing the pickup in the risk profile related to its Egyptian operations.
Best Buy
JP Morgan raised target price to $36 from $29 citing its ongoing efforts to regain price and assortment leadership
and valuation.
Intel
Piper Jaffray raised rating to neutral from underweight saying that its new Bay Trail processor will be accretive
overall to revenue growth.
Pultegroup
Wells Fargo raised rating to outperform from market perform saying that it is better positioned to weather higher
mortgage rates than peers more focused on the entry-level buyer.
Saks
Sterne Agee raised target price to $16 from $13 based on the company’s pending offer from Hudson’s Bay Com-
pany.
ANALYSTS’ RECOMMENDATIONS

5. 5
THE DAY AHEAD - CANADA For August 20, 2013
COMING UP MARKET MONITOR
 No major events are scheduled. Canada's main stock index recorded its biggest single-day per-
centage drop in eight weeks on Monday as concerns about the
U.S. Federal Reserve's exit strategy for its stimulus program hit
every major sector. Rising expectations that the wind-down of
the Fed's bond buying program is imminent created more uncer-
tainty in the market, with investors hoping the release on
Wednesday of minutes from the Fed's last policy meeting would
shed light on the U.S. central bank's intentions. The Toronto
Stock Exchange's S&P/TSX composite index was down 1.17
percent, at 12,588.02. Royal Bank of Canada gave back 0.53
percent, and insurer Manulife Financial fell 2.55 percent. Cana-
dian Natural Resources fell 2.63 percent. B2Gold Corp tum-
bled more than 13.24 percent.
The Canadian dollar was up 0.07 percent to $1.0342.
TOP NEWS
Canada asks for new WTO review of U.S. labeling rules
Canada has asked the World Trade Organization to form a
compliance panel to review the United States' rules for labeling
meat based on its country of origin, Canadian agriculture and
international trade ministers said. The WTO ruled last year that
the U.S. labeling rules were not in compliance with WTO obliga-
tions and ordered changes by May 23. The United States
changed its labeling program, but Canada and Mexico have said
the changes made the situation worse.
Ares, Ontario Teachers to buy building products maker
CPG
Ares Management and Ontario Teachers Pension Plan said
they would buy building-products maker CPG International Inc,
betting on a long-awaited recovery for an industry that has
lagged the rebound in the broader U.S. housing market. Finan-
cial terms of the deal were not disclosed but a person familiar
with the matter, who was not authorized to disclose financial
details publicly, said it values Scranton, Pennsylvania-based
CPG at around $1.5 billion, including debt. Ares and Ontario
Teachers will own an equal stake in CPG, with the company's
management retaining a minority stake.
BIG MOVERS Price C$
B2Gold Corp 2.95 -0.45
% Change
-13.24
Penn West Petrlm 11.78 -0.60 -4.85
Pacific Rubiales 18.99 -0.81 -4.09
Baja Mining 0.04 0.01 16.67
Aquila Resources 0.11 0.01 10.53
Migao Corp 1.25 0.04 3.31

6. 6
ANALYSIS AND INSIGHT
U.S. firms' blaming dollar for weak profits may be premature
By Caroline Valetkevitch
U.S. companies' warnings that a stronger dollar could drag on
profits in the second half of the year could prove overstated.
The dollar has lately been defying expectations of a rise, weak-
ening at a time when the betting had been on strengthening as
the U.S. economy outpaced other major regions.
If the weakness continues, the dollar could become a help in-
stead of a hindrance for companies that rely heavily on selling
goods and services abroad, particularly if Europe shows addi-
tional signs of improvement and China's pace of growth be-
comes stable.
A pick-up in overseas sales would be boon for U.S. multination-
als, whose second-quarter results fell short for companies that
derive more sales from the United States.
"A headwind that they're expecting in the multinationals might
not be there," said Paul Mendelsohn, chief investment strategist
at Windham Financial Services in Charlotte, Vermont.
S&P 500 companies have made their complaints about the dol-
lar loud and clear this earnings season.
Kimberly-Clark's chairman referred to a "more negative currency
environment" while Procter & Gamble pointed to dollar strength-
ening and DuPont cited increased headwinds for diminished
results.
A Reuters analysis of about 250 S&P 500 companies found that
one of four this quarter cited their competitive disadvantage in
selling abroad when the dollar is strong.
A negative currency effect is a particular worry among compa-
nies for the second half of the year - Colgate-Palmolive, among
others, cut its full-year outlook due to the dollar's strength.
And it's no wonder many companies have that view. Most
economists are forecasting the greenback will strengthen this
year, with a Reuters poll released Aug. 9 forecasting the euro
will fall to $1.260 in six months. As of Friday, the euro was at
$1.333. The dollar is expected to rise to 104 yen six months
from now; it is currently at 97.59 yen.
Even though the dollar has shown a lot of volatility, it hasn't
gained much this year, weakening recently against the euro, yen
and pound. The U.S. dollar index is down 2.2 percent so far in
the third quarter, and it is up just 2 percent since the start of the
year.
LOOKING FOR AN EXCUSE?
The dollar may be an easy scapegoat for weak global growth.
S&P companies with more overseas exposure underperformed
in the second quarter, ranging from technology companies like
Cisco Systems to staples like Wal-Mart Stores, both of which
cited international weakness for lackluster results.
Year-over-year earnings growth for companies with more than
half of their sales outside the United States fell far short of do-
mestically oriented companies, declining by 4.9 percent com-
pared with a 7.6 percent gain for more U.S.-oriented companies.
"Earnings have sort of gone nowhere fast, so perhaps (chief
financial officers) are trying to justify a lack of earnings growth
and using that as an excuse," said Martin Leclerc, chief invest-
ment officer and portfolio manager of Barrack Yard Advisors in
Bryn Mawr, Pennsylvania.
While many companies have cited the dollar and the currency
environment as a negative, most have offered few clues as to
how they expect to deal with the negative effects from the dollar.
On its strategies for managing currency risk, Procter & Gamble
said the company doesn't hedge translation exposure and pre-
fers instead to use natural and operational hedges.
"It will have downward pressure, but I think it is premature to
speculate as to what that would be," Clorox CFO Steve Robb
said in an Aug. 1 conference call.
Other companies have simply said they are monitoring the situa-
tion. Some even said the impact of recent dollar strength would
be temporary; the dollar's recent pattern suggests they might be
right.
How Ackman's Herbalife bet inflamed Wall Street passions
By Jennifer Ablan and Matthew Goldstein
The origins of a vitriolic battle that has pitted billionaire hedge
fund manager Bill Ackman against rivals such as Carl Icahn,
Dan Loeb and George Soros can be traced back to a routine
event in the world of investor activism: The unveiling in late De-
cember of Pershing Square Capital Management's bearish bet
against Herbalife Ltd.
Hedge fund industry sources said the timing of the three-hour
presentation - less than a week before Christmas - riled other
investors and brought out into the open festering resentment
against Ackman, already seen by some as too arrogant even for
the alpha-male world of hedge fund managers.
The source of the frustration was the instant – and so far,
ephemeral – boost Pershing Square got by publicizing its bet
just as the year was ending. The Dec. 20 presentation led to a
21 percent plunge in Herbalife's stock. That meant Ackman's $1
billion wager helped his $11 billion hedge fund gain 5.8 percent
that month, and end the year up 12.4 percent. The results were
far better than average for hedge funds last year, which matters
in an intensely competitive world where strong performance be-
gets fees as well as fame.
A Pershing Square representative said on Friday the timing of
the Herbalife presentation before a crowd of 500 was dictated
solely by when the firm completed research for laying out its
argument that the nutritional supplement manufacturer is a pyra-
mid scheme. Herbalife's shares have soared 97 percent this
year, costing Ackman more than $300 million in paper losses,
but the hedge fund is sticking by its bet. Herbalife has repeatedly
denied Ackman's claims.
The Pershing Square representative, when asked about criticism
of the event's timing, said: "Our strong preference would have
been to do that presentation earlier."
Icahn, who has said he finds Ackman too arrogant for his taste,
took a 16 percent stake in Herbalife shortly after Pershing
Square announced its short position, and has not wasted any
opportunity - on TV or in other media - to take Ackman to task
over the event. Soros' firm recently bought 5 million shares of
Herbalife and Third Point's Dan Loeb made hundreds of millions
early this year buying and selling the stock.
When asked in an interview with Reuters about the feud and
why other managers keep joining the fray in criticizing Ackman
of late, Icahn said: "Huh? In recent weeks? What's changed?"
Ackman drew a fresh round of criticism earlier this month, in-
cluding from Starbucks Corp CEO Howard Schultz, after he
launched a public fight with the board of struggling retailer J.C.
Penney Co Inc, where Pershing has been invested for nearly
three years, mounting an unsuccessful campaign to make the
retailer appeal to a more upscale audience. The fight ended with
Ackman resigning from the board last week.
These battles underscore what has been a rough year for Ack-
man, one of the more closely followed names in the $2.25 trillion
hedge fund industry. Pershing Square is up just 2.6 percent as
of mid-August, short of the average 4.21 percent return for the
hedge fund industry and the 16.61 percent gain in the Standard
& Poor's 500 Index. The paper losses registered by the fund on
Herbalife and Penney have taken the biggest bite out of per-
formance.
These battles are raising questions in the industry about Ack-
man's style of investing, which employs a combination of theat-
THE DAY AHEAD For Aug 20, 2013

7. 7
ANALYSIS AND INSIGHT (continued)
rics and behind-the-scenes work with corporate boards to advo-
cate for management and strategic changes.
"Ackman is a good example of 'It is OK to be the smartest guy in
the room, but it may not be the best idea to tell everyone that
you're the smartest guy in the room,''' said Jonathan Kanterman,
an independent alternative investment consultant. "People can
get a little turned off by that."
Supporters maintain it can be easy to mistake self-confidence
for arrogance. Ackman has bounced back from setbacks before,
and his reputation is based on some rather spectacular suc-
cesses.
In 2011, for example, the investor took a big stake in Canadian
Pacific Railway Ltd and, within two years, made a $2 billion profit
after forcing board and management changes. Before that, he
turned a $60 million investment in mall operator General Growth
Properties into a stake now worth $2.3 billion.
Hedge fund manager John Hempton, who has taken the other
side of Pershing Square on the Herbalife trade, said he thought
Ackman was "incredibly smart and profoundly stupid."
"When he is smart, he is smarter than me. And when he is stu-
pid, he is aggressive about it," said Hempton, the chief invest-
ment officer of Bronte Capital Management.
BREAKINGVIEWS
Strategic nepotism may give Wall St a Chinese burn
By John Foley
Investment bankers are only as good as their contacts. In China,
that may present Wall Street with a problem. The Securities
and Exchange Commission is investigating whether JPMor-
gan hired relatives of powerful people to win business, accord-
ing to the New York Times. If it decides the answer is “yes”, for-
eign banks will find it even harder to get a foot in the door.
Strategic nepotism, such as giving an internship to the offspring
of a would-be client, isn’t limited to China. But in the People’s
Republic, where institutions are weak and corporate governance
poor, “guanxi” is what gets deals done. Most banks have a
princeling or two on the payroll. In China’s socialist market
economy many company bosses are also ministers, which
makes any special treatment a potential violation of the U.S.
Foreign Corrupt Practices Act.
Proving wrongdoing is not easy. True, it’s possible to envisage a
case where nepotism and corruption come together. Daimler,
the German carmaker, settled with the SEC in 2010 after the
watchdog accused it of paying commissions to relatives of offi-
cials, including in China, without them actually doing any work,
in return for contracts.
But it’s likely that in most cases no explicit quid pro quo exists.
Consider a bank that hires the progeny of an official with the
hope, but not the promise, of winning business. There’s no guar-
antee that strategy will pay off. In many cases, it may just create
a management headache. Powerful people come with powerful
personalities, as Morgan Stanley discovered when it tied up with
CICC, the investment bank run by ex premier Zhu Rongji’s son
Levin.
In most cases, it shouldn’t be difficult to argue that most princel-
ings are qualified for the job, given the elite’s better access to
education and opportunity. But if the SEC nonetheless deems
JPMorgan’s hiring amounts to bribery, the rest of Wall Street will
have a problem. With so many financial professionals in China
touting their guanxi, it may be hard to know when a line has
really been crossed. As for the truly connected, if foreign banks
can’t hire them, it’s a fair bet that local rivals will.
CONTEXT NEWS
U.S. authorities have opened an investigation into whether
JPMorgan hired the children of powerful Chinese officials to help
it win business in China, according to the New York Times.
A report posted in the Times' online Saturday edition cited a
confidential U.S. government document as its source for the
story on the China hiring probe. The Times said the probe is a
civil investigation by the Securities and Exchange Commission’s
anti-bribery unit.
The Times said JPMorgan hired Tang Xiaoning, the son of Tang
Shuangning, a former Chinese banking regulator. Tang
Shuangning is now the chairman of the China Everbright Group,
a state-controlled financial conglomerate.
The Hong Kong office of JPMorgan also hired Zhang Xixi, the
daughter of a now-disgraced Chinese railway official, and went
on to help advise his company, which builds railways for the
Chinese government, on its plans to become a public company,
the Times said.
Reuters could not immediately reach the SEC for comment.
JPMorgan declined to comment.
(The author is a Reuters Breakingviews columnist. The opinions
expressed are his own)
THE DAY AHEAD For Aug 20, 2013
StarMine SmartEstimates® predict future earnings more accurately than consensus (or mean) estimates by putting more weight on the recent forecasts of StarMine's top-
rated analysts. StarMine is a subsidiary of Thomson Reuters. The predicted surprise is the difference between the SmartEstimate and consensus. When a predicted surprise
is 2 percent or more, history shows that you can anticipate an earnings surprise in the same direction with an accuracy rate of 70 percent.
Company Smart Estimate Predicted Surprises Market Cap. Industry
New York & Co Inc -$0.01 $0.14 $360 Specialty Retail
Yingli Green Energy Holding Co L -$0.28 $0.13 $593 Semiconductors & Semiconductor Equipment
Caseys General Stores Inc $1.33 $0.07 $2,536 Food & Staples Retailing
Brown Shoe Company $0.23 $0.05 $952 Specialty Retail
American Woodmark Corp $0.34 $0.03 $488 Building Products
Sanderson Farms Inc. $2.70 $0.03 $1,669 Food Products
Analogic Corp $1.03 $0.02 $921 Health Care Equipment & Supplies
Jos A Bank Clothiers Inc $0.51 -$0.09 $1,147 Specialty Retail
Tower Group International Ltd -$0.74 -$1.43 $923 Insurance
PREDICTED RESULTS SURPRISES FROM STARMINE

8. 8
ON THE RADAR
ECON INDICATOR ET/GMT REUTERS POLL PRIOR SOURCE
WED: Mortgage Index for w/e 08/16 0700/1100 -- 471.9 Mortgage Bankers Association
Refinancing Index for w/e 08/16 0700/1100 -- 2145.3
Existing home sales for July 1000/1400 5.15 mln 5.08 mln National Association of Realtors
Existing home sales pct change for July 1000/1400 1.6 pct -1.2 pct
FOMC minutes for July 30-31 meeting 1400/1800 Federal Open Market Committee
THU: Initial claims for w/e 08/17 0830/1230 330,000 320,000 Labor Dept
4 Week average for w/e 08/17 0830/1230 -- 332,000
Continuing claims for w/e 08/10 0830/1230 2.96 mln 2.969 mln
Markit manufacturing PMI prelim for Aug 0858/1258 54.0 53.7 Markit
FHFA home price mm for June 0900/1300 -- 0.7 pct
Lead indicators for July 1000/1400 0.5 pct 0.0 pct
K.C. Fed Comp Index for Aug 1100/1500 -- 6 Federal Reserve Bank of Kansas
FRI: New home sales for July 1000/1400 0.490 mln 0.497 mln Commerce Department
ECRI Weekly Index for w/e 08/16 1030/1430 -- 131.2 Economic Cycle Research Institute
The Day Ahead - North American Edition is compiled by Chandrashekhar Modi, Nikhil Kumar and Nilotpal Saikia in Bangalore; Franklin Paul and Meredith Mazzilli in New
York.
THE DAY AHEAD - North American Edition is produced by Reuters News
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KEY RESULTS vs. THOMSON REUTERS I/B/E/S ESTIMATES
Company Name Quarter EPS Estimates Year Ago Rev Estimates (mln)
Analog Devices Q3 $0.54 $0.56 $672
Best Buy Q2 $0.12 $0.26 $9,127
Home Depot Q2 $1.21 $1.01 $21,798
Intuit Q4 $0.02 $0.03 $652
J C Penny Q2 -$1.06 -$0.37 $2,759
** Includes companies on S&P 500 index. Estimates may be updated or revised.
Medtronic Q1 $0.88 $0.85 $4,113
TJX Companies Q2 $0.63 $0.56 $6,374
THE DAY AHEAD For Aug 20, 2013