Frontrunning: June 11

  • World Bank Cuts Global Growth Forecast After ‘Bumpy’ 2014 Start (BBG)
  • Al-Qaeda Offshoot Threatens Iraq Oil Site After Taking Mosul (BBG)
  • Fed Prepares to Keep Record Balance Sheet for Years to Come (BBG)
  • EU investigates tax rulings on Apple, Starbucks, Fiat unit (Reuters)
  • Cantor Loss Shocks Republicans, Dims Immigration Changes (BBG)
  • More surveillance: Google to Buy Satellite-Imaging Startup for $500 Million (WSJ)
  • Tea Party activist who defeated Cantor focused on budget, immigration (Reuters)
  • Airbus Suffers Worst Order Loss as Emirates Deal Scrapped (BBG)
  • Amazon.com plans local services marketplace this year (Reuters)
  • Amazon Stops Taking Advance Orders for ‘Lego’ and Other Warner Videos (NYT)
  • China ramps up spending to spur economy, central bank sees stable policy (Reuters)
  • Microsoft Protests Order for Email Stored Abroad (NYT)
  • AIG Names Peter D. Hancock New CEO (Reuters)
  • Bank of England sends in hackers to test lenders’ defences (Independent)
  • Former and Current UPS Employees Allege Race Discrimination in Suit (WSJ)

 

Overnight Media Digest

WSJ

* American International Group Inc named longtime banker Peter Hancock to succeed Robert Benmosche as CEO of the insurer, whose woes nearly took down the financial system in 2008. Hancock, 55 years old, will take the helm of AIG on Sept. 1. (http://ift.tt/1uWYcGH)

* The number of job openings in the U.S. economy climbed to the highest level in seven years, becoming the latest labor-market gauge to recover ground lost during the recession. Job openings rose to 4.5 million in April, according to the Labor Department’s job-openings and labor-turnover survey, or Jolts. (http://ift.tt/1oN6G11)

* Eight current and former United Parcel Service Inc drivers based in Lexington, Kentucky, have filed a suit against the company, accusing it of race discrimination. The lawsuit, filed in Fayette County Circuit Court on Friday, alleges that the employees, who are African-American, experienced “severe and pervasive racist comments, intimidation, ridicule and insults” while working at UPS. (http://ift.tt/1uWYdKv)

* MetLife Inc said it would resume share repurchases, totaling as much as $1 billion, in its latest effort to return capital to shareholders while it awaits word on whether it will be named a non-bank systemically important financial institution. (http://ift.tt/1oN6HSJ)

* Jane Mendillo, head of Harvard University’s $33 billion endowment, is leaving after a six-year tenure that started with the financial crisis and more recently saw investment performance that lagged behind some peers. Mendillo will resign at the end of the year as president and chief executive of Harvard Management Co, which invests the school’s money, Harvard announced on Tuesday. (http://ift.tt/1uWYcX1)

* Time Warner is in talks with Vice Media about partnerships in an attempt to rejuvenate CNN’s struggling sister channel, HLN. The most likely deal would combine HLN with Vice to form a new venture in which Time Warner would hold a significant minority stake, according to people familiar with the matter. (http://ift.tt/1oN6G17)

* Google Inc agreed to buy satellite startup Skybox Imaging Inc for $500 million in cash, the latest in a number of moves by the world’s largest Internet search provider to collect and provide data from the sky. (http://ift.tt/1uWYdKD)

* World Bank trimmed its global growth forecast to 2.8 percent for the year, from its 3.2 percent forecast in January. Still, growth in the U.S. and Europe will accelerate this year as the effect from government spending cuts recedes, labor markets improve, and pent-up demand starts to flow through high-income economies, the bank said in its Global Economic Prospects report. (http://ift.tt/1oN6G1d)

 

NYT

* Microsoft is challenging the authority of federal prosecutors to force the giant technology company to hand over a customer’s email stored in a data center in Ireland. (http://ift.tt/1uWYcX5)

* Talks between Bank of America and Justice Department stalled on Monday after the bank’s latest offer – more than $12 billion to resolve state and federal investigations into its sale of mortgage investments that later imploded – fell far short of prosecutors’ demands, according to people briefed on the matter. (http://ift.tt/1uWYcX7)

* A decision by the Food and Drug Administration to question the use of wooden planks to age some cheeses has produced a stink that rivals Limburger, prompting an uproar among artisanal cheese makers and consumers who fear they might lose access to products like obscure blue cheeses from Vermont and imported Parmigiano-Reggiano. (http://ift.tt/1oN6HSQ)

* Amazon customers who want to order forthcoming Warner Home Video features, including “The Lego Movie,” “300: Rise of an Empire,” “Winter’s Tale” and “Transcendence,” are finding it impossible to do so. The retailer’s page for the movies says that customers’ only option is to sign up to be notified when they become available. (http://ift.tt/1uWYe0Y)

* Google agreed on Tuesday to buy Skybox Imaging, a provider of high-quality satellite images, for $500 million, as the technology giant continues to work on fulfilling its lofty ambitions for its Internet offerings. (http://ift.tt/1oN6I96)

* General Motors chief executive, Mary Barra, told shareholders on Tuesday that the company was making major changes in its operations in the wake of an internal investigation of its recall of defective small cars. (http://ift.tt/1uWYfSH)

* The American International Group on Tuesday named a successor to Robert Benmosche, the insurer’s chief executive and the voluble leader who oversaw its recovery from the financial crisis. A.I.G. said that its board had picked Peter Hancock, the head of its property casualty business, who will take over as chief executive on Sept 1. He will also become a director. (http://ift.tt/1oN6Ghx)

* Target named Brad Maiorino, formerly in charge of global information security at General Motors, as its new chief information security officer on Tuesday, on the eve of its annual shareholders’ meeting, as the retailer sought to bolster its data defenses and calm investor chagrin after the extensive hacking it experienced last year. (http://ift.tt/1uWYe1f)

* Visiting a middle school in Oakland earlier this year, Tom Wheeler, the chairman of the Federal Communications Commission, got a glimpse of just how badly American schools need better high-speed Internet connections. Wheeler is planning next week to offer his fellow commissioners a proposed regulatory change to promote Wi-Fi in schools. Wheeler’s aim is to get the issue on the agenda for the FCC’s July 11 meeting. (http://ift.tt/1oN6I9o)

* The complex system of music licensing came under attack in a congressional hearing on Tuesday, as entertainment and media executives pleaded for changes to how music rights were acquired and paid for online and by radio and television stations. The hearing, before a House Judiciary subcommittee, was part of a broad review of copyright led by Robert Goodlatte, a Republican from Virginia who heads the Judiciary committee. (http://ift.tt/1uWYfST)

* A group of eight current and former employees of United Parcel Service in Kentucky have sued the company, claiming they faced racial discrimination, poor treatment based on race and retaliation after they complained. The men also contend that an effigy of a black UPS employee hung from the ceiling outside a manager’s office for four days. (http://ift.tt/1oN6IpF)

 

Canada

THE GLOBE AND MAIL

* A move in Canada’s parliament justice committee to give transgender people extra protection under the Criminal Code failed after a Tory member of parliament, who had supported transgender rights in the past, abruptly substituted himself off the committee, apparently to watch the funeral for the three Royal Canadian Mountain Police officers slain in Moncton. (http://ift.tt/1uWYg9b)

* British Columbia’s teachers’ union has voted 86 percent in favor of a full-scale strike, although its President Jim Iker said a decision has not yet been made to move towards a full-scale walkout. The union is now obligated to give three days’ notice before teachers walk off the job, meaning a notice issued early Wednesday could result in a strike beginning Monday. (http://ift.tt/1oN6IpI)

Reports in the business section:

* Canada Pension Plan Investment Board is scouring the globe for investments, but is unwilling to invest in Russia because of legal risks and is taking a cautious approach to buying assets in Europe. (http://ift.tt/1uWYehG)

NATIONAL POST

* Danny, the police dog of fallen Royal Canadian Mountain Police constable David Ross, whimpered by the side of his partner’s casket during Tuesday’s emotional funeral, moving many Canadians across the country to tears. (http://ift.tt/1uWYehK)

* The Stephen Harper government’s new cyber-bullying legislation, Bill C-13, includes little-noticed provisions that would allow police to remotely gain entry to computers and track cellphone users’ movements, privacy experts warn. Experts say police will be able to install viruses, or malware, into the electronics of anyone suspected of a crime, after gaining judicial approval. The bill expands the definition for “tracking device” and adds the concept of a “transmission data recorder” into the Criminal Code. (http://ift.tt/1uWYg9g)

FINANCIAL POST

* British Columbia is attracting lots of oil plans to link growing production in Alberta with Asian markets. Vancouver-based Pacific Future Energy Corp said on Tuesday that a $10-billion oil sands refinery, which could be sited in the Prince Rupert area, would be built in partnership with First Nations and will be headed by a Miami-based telecom executive for Mexico’s Groupo Salinas. (http://ift.tt/1oN6Gy9)

* It has been a rough market for small companies in Alberta’s oil sands of late, as financing dried up and concern over transportation bottlenecks kept investors at bay. However, Osum Oil Sands Corp, a privately held company chaired by former Suncor Energy Inc Chief Executive Rick George, is doing just fine. On Tuesday, the company pulled the trigger on a $325-million acquisition, snapping up an oil sands property called Orion from Royal Dutch Shell Plc, in a deal that gives it something that has eluded other small oil sands players: a producing asset. (http://ift.tt/1oN6Gyb)

 

China

CHINA SECURITIES JOURNAL

– China’s regulators might expand financing channels for asset management agencies and support these institutions to issue corporate bonds, subordinated debt or short-term bills to encourage mergers and acquisitions among domestic and foreign-listed companies.

CHINA BUSINESS NEWS

– A total of 2.4 trillion yuan ($385.60 billion) local government bonds are due this year, which could be a stressful year for local governments, said the Ministry of Finance. An official survey last year indicated that China’s local government debt stood at 17.9 trillion yuan by the end of June 2013.

CHINA DAILY

– More than 20 percent of homes owned by urban households in China remained empty in 2013, a report showed. The overall vacancy rate for residential properties in urban areas across the country rose 1.8 percent from 2011 to 22.4 percent last year, translating into around 48.98 million homes being vacant during the period, said a report by the China Household Finance Survey.

SHANGHAI DAILY

– China’s listed companies are preparing for an unprecedented wave of resignations by independent directors following a party directive on officials’ other jobs outside their office. So far, more than 200 listed companies have reported resignations, some of whom are ex-government officials, professors and administrators.

 

Britain

The Telegraph

EU SAYS ICAP MAY HAVE BEEN INVOLVED IN LIBOR CARTEL

ICAP, the interdealer broker founded by the former Conservative party Treasurer Michael Spencer, may face further fines related to the Libor scandal after Brussels regulators said it could be accused of cartel behaviour. (http://ift.tt/1oN6IpO)

AIG NAMES UK-BORN PETER HANCOCK AS NEW CEO

AIG, the U.S. insurance giant bailed out by the government at the height of the economic crisis, has named London-born Peter Hancock as its new chief executive. (http://ift.tt/1uWYg9o)

LONMIN COULD NEED TO RAISE CAPITAL TO SURVIVE

Platinum producer Lonmin may soon need to raise capital to survive South Africa’s longest and costliest mining strike, which has paralysed its operations and slashed its revenue. (http://ift.tt/1oN6IpS)

WPP’S KANTAR BUYS PRECISE MEDIA GROUP IN 70 MLN STG DEAL

Martin Sorrell’s WPP has acquired Precise Media Group in a deal that values the London-based media monitoring business at around 70 million pounds ($117.54 million). (http://ift.tt/1uWYgpC)

The Guardian

BP ALLOWED COMMERCIAL DRONES BY U.S. REGULATORS IN UNPRECEDENTED DECISION

The U.S. Federal Aviation Administration said Tuesday it has granted the first permission for commercial drone flights over U.S. land to BP, the latest effort by the agency to show it is loosening restrictions on commercial uses of the unmanned aircraft. (http://ift.tt/1oN6IpV)

IMPERIAL TOBACCO COULD NET 720 MLN STG FROM FLOAT OF EUROPEAN LOGISTICS DIVISION

Imperial Tobacco has unveiled plans to float its European logistics division on the Spanish stock market in a move that could value the business at nearly 2 billion pounds. (http://ift.tt/1uWYgpK)

TESCO FACES POTENTIAL FINES AFTER FAILING TO COMPLY WITH 2010 COMPETITION ORDER

Tesco is “urgently investigating” its property division – and faces potential fines – after a Guardian analysis revealed the supermarket chain has been failing to comply with a Competition Commission order for the past four years. (http://ift.tt/1oN6IGa)

OIL RIG BUILDER LAMPRELL SEES SHAREHOLDERS REVOLT OVER PAY AGAIN

Lamprell has suffered a big pay revolt at its annual general meeting – the third year in a row that shareholders have rebelled against pay deals at the oil rig builder. (http://ift.tt/1uWYeya)

The Times

ENERGY BILLS MUST BE CUT, OFGEM WARNS SUPPLIERS

Britain’s energy regulator has fired an extraordinary broadside at the Big Six power companies after warning them that their failure to cut household bills, despite a slump in wholesale costs, was proof that the market is uncompetitive. (http://ift.tt/1oN6IGc)

NEXT BOSS QUITS TO PUT ABERCROMBIE BACK INTO SHAPE

The man behind Next’s fashion range is to swap British clothing for raunchy American college attire by taking a top job attempting to revive the fortunes of Abercrombie & Fitch . (http://ift.tt/1uWYeyc)

The Independent

BANK OF ENGLAND GOES ON ATTACK AGAINST CYBER CRIME

The Bank of England is set to unleash an army of intelligence experts and licensed hackers to probe the defences of Britain’s biggest banks as its steps up efforts to combat cyber crime. (http://ift.tt/1oN6IGe)

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Federal budget for May at 14:00–consensus deficit ($139B)

ANALYST RESEARCH

Upgrades

Achillion (ACHN) upgraded to Outperform from Neutral at RW Baird
Amazon.com (AMZN) upgraded to Conviction Buy from Buy at Goldman
Diana Shipping (DSX) upgraded to Equal Weight from Underweight at Barclays
Edwards Lifesciences (EW) upgraded to Outperform from Market Perform at JMP Securities
Entergy (ETR) upgraded to Neutral from Sell at UBS
Marvell (MRVL) upgraded to Buy from Neutral at Nomura
Micron (MU) upgraded to Buy from Underperform at BofA/Merrill
Molson Coors (TAP) upgraded to Buy from Underperform at BofA/Merrill
Prosperity Bancshares (PB) upgraded to Buy from Neutral at Sterne Agee
Reynolds American (RAI) upgraded to Buy from Neutral at BofA/Merrill
SanDisk (SNDK) upgraded to Buy from Underperform at BofA/Merrill
Skullcandy (SKUL) upgraded to Neutral from Underweight at Piper Jaffray

Downgrades

BE Aerospace (BEAV) downgraded to Hold from Buy at Canaccord
BE Aerospace (BEAV) downgraded to Hold from Buy at Jefferies
Boeing (BA) downgraded to Sector Perform from Outperform at RBC Capital
Box Ships (TEU) downgraded to Underweight from Equal Weight at Barclays
Diana Containerships (DCIX) downgraded to Underweight from Equal Weight at Barclays
PAREXEL (PRXL) downgraded to Buy from Strong Buy at ISI Group

Initiations

Actavis (ACT) initiated with an Outperform at Wells Fargo
Arbor Realty (ABR) initiated with a Buy at MLV & Co.
Endo (ENDP) initiated with an Outperform at Wells Fargo
Expedia (EXPE) initiated with an Outperform at Exane BNP Paribas
Hospira (HSP) initiated with a Market Perform at Wells Fargo
Impax (IPXL) initiated with a Market Perform at Wells Fargo
Jazz Pharmaceuticals (JAZZ) initiated with an Outperform at Wells Fargo
Mylan (MYL) initiated with an Outperform at Wells Fargo
National Bank of Greece (NBG) initiated with an Equal Weight at Barclays
National Bank of Greece (NBG) initiated with an Outperform at Credit Suisse
Navios Maritime (NM) initiated with a Buy at Canaccord
Ocera Therapeutics (OCRX) initiated with an Outperform at JMP Securities
Paragon Shipping (PRGN) initiated with a Buy at Canaccord
Regado Biosciences (RGDO) initiated with a Buy at Jefferies
Safe Bulkers (SB) initiated with a Buy at Canaccord
Salix (SLXP) initiated with a Market Perform at Wells Fargo
Star Bulk Carriers (SBLK) initiated with a Buy at Canaccord
Teva (TEVA) initiated with a Market Perform at Wells Fargo

COMPANY NEWS

The EU opened a tax investigation into Apple (AAPL), Starbucks (SBUX), Fiat (FIATY)
AIG (AIG) named Peter D. Hancock as President and CEO, effective September 1
Airbus (EADSY), Emirates Airline agreed to cancel A350 XWB order
lululemon (LULU) founder Chip Wilson voted against re-election of outside directors
Synaptics (SYNA) acquired Renesas SP Drivers for $475M and raised its Q4 revenue guidance to reflect the acquisition
Prospect Capital Corporation (PSEC) said it will not being required to restate historic financial statements
Oxford Industries (OXM) gave disappointing Q2 guidance and backed FY14 EPS and revenue guidance

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Ulta Salon (ULTA), Sportsman’s Warehouse (SPWH), Oxford Industries (OXM)

Companies that missed consensus earnings expectations include:
NCI Building Systems (NCS)

Companies that matched consensus earnings expectations include:
United Natural Foods (UNFI)

NEWSPAPERS/WEBSITES

Bank of America (BAC), Justice Department settlement talks at impasse, NY Times says
Toyota (TM)adds 650,000 vehicles to 2013 recall list, WSJ reports
Sony’s (SNE) pay TV service ‘on track,’ Re/code reports
Google (GOOG) aims for energy push by developing utility tools, Bloomberg says
Morgan Stanley (MS) CEO: Wealth management growing, fixed income weakening, NY Times reports
eBay (EBAY) not planning to shut down eBay Now local delivery service, Fortune says
Schlumberger (SLB), Qualcomm (QCOM), State Street (STT), Disney (DIS) poised for growth, Barron’s says

SYNDICATE

ClubCorp (MYCC) 7M share Secondary priced at $18.25
Exelon (EXC) files to sell 50M shares, 20M equity units
Extended Stay America (STAY) files to sell 21M paired shares for holders
GoPro (GPRO) files 17.8M share IPO with a $21.00-$24.00 range
Hilton (HLT) files to sell 90M in common stock for holders




via Zero Hedge http://ift.tt/1od4XV3 Tyler Durden

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