More Unknowns From Washington

MORE UNKNOWNS FROM WASHINGTON  |  With investors already worried about the possible tax increases and spending cuts known as the fiscal cliff, there's another wild card that will factor into the debates in Washington in the coming months: the debt ceiling. A failure to raise the federal borrowing limit in a timely manner could send “financial markets into a panic,” writes Annie Lowrey in The New York Times.

“Congressional leaders have made clear that the debt ceiling will be part of the intense negotiations over the so-called fiscal cliff, with many members unwilling to raise the ceiling without a broader deal,” Ms. Lowrey says. Congress has some time to negotiate a deal before needing to raise the borrowing limit. But the experience last year showed that such high-stakes negotiations can hurt confidence. “Although bond yiel ds remain low, when contentious political decisions - such as raising the debt ceiling - have come due in the past, uncertainty about the outcome led to unfavorable market reactions,” economists at the International Monetary Fund said in a global risk assessment.

Political dynamics are shifting. For the housing market, that might not be a bad thing. “The best person to fundamentally change how housing works may be a president who won't be running for office again,” who is willing to risk “angering many and creating a political firestorm,” writes DealBook's Peter Eavis. The Obama administration faces a range of questions, like how to reduce the government's role in the market, and how to decide which borrowers get the most subsidies, Mr. Eavis writes. Any overhaul will be fiercely challenged, as “so many people have benefited from the status quo.”

The political wrangling may drag on for some time. The country has entered an “era of political brinkmanship,” in which lawmakers may “tiptoe back from disaster, with delaying mechanisms, before embarking on yet more brinkmanship,” writes Gillian Tett in a column in The Financial Times. Some lawmakers say they are working to strike an agreement in the postelection political atmosphere, reports Jonathan Weisman in The New York Times. And yet, there's “no guarantee that they can reach an agreement after warring for two years.”

KAYAK'S $1.8 BILLION DEAL  |  Kayak Software spent the summer as a public company, and now it is evolving again. The travel company, which had its I.P.O. in July, is being bought by Priceline.com, an older competitor, for $1.8 billion in cash and stock. The price of $40 a share represents a 29 percent premium over Kayak's closing price of $31.04 a share on Thursday. Though the deal surprised some analysts, it could provide Priceline with a new source of revenue and help Kayak expand internationally. “I see Kayak serving as a global entree into the advertising market for Priceline,” said Daniel Kurnos, an analyst at the Benchmark Company.

ON THE AGENDA  |  President Obama is scheduled to make a statement on the economy at 1:05 p.m. Jamie Dimon of JPMorgan Chase is on CNBC at 4 p.m. Sheila Bair, the former chairman of the Federal Deposit Insurance Corporation, is on Bloomberg TV at 5:10 p.m. J.C. Penney, a favorite of the hedge fund manager William A. Ackman, reports earnings before the opening bell. Brookfield Asset Management also reports results before the market opens. The November consumer sentiment index from Thomson Reuters/University of Michigan is released at 9:55 a.m.

GROUPON FALLS SHORT  |  Groupon is still having difficulty making money. The daily deals company reported third-quarter revenue of $568.6 million, compared with $430.2 million in the quarter a year earlier. Analysts surveyed by Thomson Reuters had expected revenue of $590 million. Shares fell as low as $3.21 in after-hours trading, after closing at $3.92 (and compared with an I.P.O. price last year of $20 a share). Europe has posed a particular challenge for Groupon, with the debt crisis hurting demand. The company said it had laid off about 80 employees.

THE REGULATOR-POET  |  Writing rules for Wall Street doesn't afford much opportunity for artistic license. Unless, that is, you're Bart Chilton of the Commodity Futures Trading Commission. The muse was speaking to Mr. Chilton on Thursday, when he fired up two rounds of verbal fireworks in describing the process of putting the Dodd-Frank financial overhaul into effect. There was an airplane metaphor (“We've been waiting around the gate area, eating Cinnabons and watching cable news since July of 2010.”) and a football analogy (“It's taken longer than some of us hoped at the kickoff, but now the goal line is in sight.”)

WHAT ARE DEAL LAWYERS WORTH?  |  A new study suggests that “many of the legal minutiae” involved in mergers and acquisitions “are not worth it,” writes Reynolds Holding in Reuters Breakingviews. That conclusion is based on the finding that stock prices of target companies “remain essentially unchanged when contract details are disclosed.” DealBook's Deal Professor, Steven M. Davidoff, challenged that argument. “It is quite clear that M&A terms matter. Just ask T-Mobile,” he wrote on Twitter. But he added that investors betting on deals perhaps “don't quite appreciate this.”

Mergers & Acquisitions '

Bid for Best Buy May Come in December  |  Reuters reports: “An eventual bid for Best Buy Co Inc by founder Richard Schulze could come below his initial proposal of around $8 billion and is now not expected to be made before December, sources familiar with the matter said.”
REUTERS

Will Icahn Go Hostile on Netflix?  |  “The thought has certainly crossed my mind,” Carl C. Icahn said on CNBC. “It certainly is one alternative, but I have to say we haven't made that decision at this point.”
CNBC

Orient-Express Rejects Takeover Bid and Names New Chief  |  Orient-Express Hotels formally rejected an unsolicited takeover bid by an arm of the Tata Group of India, criticizing it as undervalued and ill timed. It also named a new chief executive, John M. Scott, who would replace the company's outgoing leader.
DealBook '

Diageo to Buy Stake in United Spirits  |  The British liquor giant Diageo is buying a stake of as much as 53.4 percent in United Spirits of India for up to $2 billion, The Wall Street Journal reports.
WALL STREET JOURNAL  |  NEW YORK TIMES INDIA INK

Cnooc Says It Expects to Win Approval for Nexen Deal  | 
REUTERS

INVESTMENT BANKING '

Britain Opens Inquiry on HSBC Over Tax Haven  |  The British tax authorities said Friday they were looking into more than 4,000 accounts of HSBC clients with bank accounts in the tax haven of Jersey.
DealBook '

Credit Agricole Reports $3.6 Billion Loss  |  “The French bank Crédit Agricole posted an unexpectedly large third-quarter loss Friday, mainly from costs related to the disposal of its Greek unit,” The New York Times reports.
NEW YORK TIMES

JPMorgan Cleared for $3 Billion Stock Buyback  |  The bank also disclosed in its quarterly filing that it had come to an agreement with the Securities and Exchange Commission to wrap up two investigations into mortgage-backed securities.
DealBook '

Limits on Bonuses in Europe May Weaken  |  Bloomberg News reports: “Banker bonuses would be allowed to be as much as five times fixed pay under compromise European Union proposals that clash with tougher demands from E.U. Parliament lawmakers.”
BLOOMBERG NEWS

Ramifications of a Lower Corporate Tax Rate  |  Lowering the 35 percent corporate tax rate “could prompt large write-downs by Citigroup, A.I.G., Ford and other companies that hold piles of ‘deferred tax assets,'” The Wall Street Journal writes.
WALL STREET JOURNAL

PRIVATE EQUITY '

Bain Capital Thanks Investors for Support During Campaign  |  Few private enterprises faced as much scrutiny during the presidential campaign than Bain Capital, given its ties to Mitt Romney. With election season over, the private equity firm is giving thanks to investors for putting up with that harsh glare.
DealBook '

Rubenstein Expects Congress to Address Carried Interest Tax  |  David Rubenstein, the Carlyle Group co-founder, predicted that Congress would take up the issue of how private equity's carried interest is taxed, Bloomberg News reports.
BLOOMBERG NEWS

HEDGE FUNDS '

Hedge Fund Looks for Opportunities in Greek Assets  |  Dromeus Capital is raising a new fund as it looks to take advantage of a “dramatic sell-off in Greek assets,” The Financial Times reports.
FINANCIAL TIMES

David Einhorn, Mets Fan, on the Yankees  |  “It's O.K. to applaud for the Yankees,” the hedge fund manager said at an event at Cipriani 42nd Street, according to Bloomberg News.
BLOOMBERG NEWS

I.P.O./OFFERINGS '

Carlyle Plans a December I.P.O. for Restaurant Group  |  The Carlyle Group is looking to offload part of its stake in Chimney, a Japanese restaurant operator, through a December I.P.O., “its third attempt to list a J apanese asset this year,” Reuters reports.
REUTERS

VENTURE CAPITAL '

European Venture Capitalists Search for Hidden Gems  |  Some investors are looking in unexpected places “to find tech's Next Big Thing,” writes Bloomberg Businessweek.
BLOOMBERG BUSINESSWEEK

Car Dealers Sue Tesla Motors  |  “A judge in New York will take up a lawsuit against the company about how Tesla sells its cars,” NPR says.
NPR

LEGAL/REGULATORY '

Former Goldman Sachs Trader Accused of Fraud  |  The Commodity Futures Trading Commission accused Matthew Marshall Taylor, a former Goldman trader, of defrauding his then-employer of $118 million and covering up a position worth more than $8 billion, The Financial Times reports.
FINANCIAL TIMES

A Key Defense of the Rating Agencies Is Challenged  |  A ruling by a federal judge in Australia against Standard & Poor's could damage the reputation of the credit rating agency and prompt other lawsuits, writes Floyd Norris in his column in The New York Times.
NEW YORK TIMES

Ex-UBS Trader Accused of ‘Playing God' With Bank's Money  |  During closing arguments in the eight-week court case, the prosecution said that Kweku M. Adoboli, a former UBS trader in London, had “arro gantly” side-stepped the firm's rules and carried out risky trading activity from 2008 to 2011.
DealBook '

Setting the Table for Tax Negotiations  |  The government can address the so-called fiscal cliff through more progressive spending, not higher tax rates, writes Victor Fleischer in the Standard Deduction column.
DealBook '

Former Madoff Employee Pleads Guilty to Fraud  |  Irwin Lipkin, a longtime employee of Bernard L. Madoff's firm, said he falsified records but was not aware of the broader Ponzi scheme.
REUTERS

S.E.C. Computers Said to Be Vulnerable to Cyberattacks  | 
REUTERS

Private Equity Lawyer Heads to Simpson Thacher  |  Derek Baird, global co-head of the private equity group at Allen & Overy, is joining Simpson Thacher & Bartlett as a partner in London, Bloomberg News reports.
BLOOMBERG NEWS