- Headline of the day: Complacency Breeds $2 Trillion of Junk as Sewage Funded (BBG)
- Israel intensifies Gaza offensive after surge in rocket fire (Reuters)
- Profits plunge at Vatican bank (FT)
- Investors Are Buying Troubled Golf Courses and Giving Them Makeovers (NYT)
- Pimco Dissidents Challenge Bill Gross in ‘Happy Kingdom (BBG)
- That’s a new one: Marks and Spencer blames new website for sales drop (Reuters)
- Iran’s Supreme Leader calls for more enrichment capacity (Reuters)
- Boeing Faces Long-Term Credit Risk if Ex-Im Bank Closed, S&P Says (WSJ) not to mention the collapse risk to US durable goods orders
- U.K. Manufacturing Unexpectedly Slumps Most in 16 Months (BBG)
- Some Still Lack Coverage Under Health Law (WSJ)
- Samsung earnings slide, Smartphones weigh on Samsung Electronics as guidance disappoints (Reuters)
- Coconut Water Beating Hedge Funds Lures Ex-Trader (BBG)
- CIA had role in Germany spy affair (Reuters)
- Global Borrowers Avoid $70 Billion Debt Distress in U.K. Courts (BBG)
- Afghanistan’s Abdullah rejects election result as ‘coup’ against people (Reuters)
- Amazon rainforest grew after climate change 2,000 years ago (Reuters)
Overnight Media Digest
NYT
* State and federal authorities have begun settlement talks with Commerzbank, Germany’s second-largest lender, over the bank’s dealings with Iran and other countries blacklisted by the United States, according to people briefed on the matter. (http://nyti.ms/1jjrlKw)
* In response to intelligence reports about plots being hatched by Al Qaeda’s affiliate in Yemen, the United States has, for the first time, asked officials at more than a dozen foreign airports to confiscate from passengers any electronic devices that cannot be turned on. (http://nyti.ms/1thUOIO)
* Lenders Agree to Give Puerto Rico Electric Power Authority More Time to Repay Debt. The agreement to delay certain payments for three more weeks forestalls a possible restructuring by the Puerto Rico Electric Power Authority. (http://nyti.ms/1oD58WE)
* A group of technology companies led by Intel announced on Tuesday the formation of the Open Interconnect Consortium. The group, which also includes Atmel, Broadcom, Dell, Samsung and Wind River, will focus on creating an open-source standard for wirelessly connecting devices to one another and to the Internet. Like other open-source projects, the member companies pledge to donate intellectual property, or IP, that all members and others can work on and use. (http://nyti.ms/1kysb0D)
* General Motors has resisted recalling almost 1.8 million full-size pickup trucks and sport utility vehicles from the 1999 to 2003 model years for corrosion-related brake failures, saying the issue is one of maintenance. (http://nyti.ms/1zlGQGp)
Canada
THE GLOBE AND MAIL
** Thousands of New Brunswickers cope without electricity, phones, hot water and gas while the province cleans up after post-tropical-storm Arthur. Most of the 86,000 customers still without electricity may have to wait until Wednesday evening for it to be restored. (http://bit.ly/1tfSemT)
** The federal government’s prostitution bill is vulnerable to a constitutional challenge, a Canadian lawyers group says – a warning that comes as Justice Minister Peter MacKay revealed the government wrote the bill without outside legal opinions but expects it to pass muster. (http://bit.ly/TOda3E)
Reports in the business section:
** Canada’s largest telecom company BCE Inc is crying foul over Ottawa’s announcement that it will set aside 60 percent of the airwaves in a new public auction for small wireless players in another attempt to jump-start a fourth national carrier. (http://bit.ly/1mAyBSJ)
NATIONAL POST
** In a vote split down ideological lines, Toronto City Council voted Monday to appoint Ceta Ramkhalawansingh, an activist and retired civil servant, as the new councillor for the downtown ward of Trinity-Spadina. Adam Vaughan, the elected councillor, stepped down earlier this year. He was elected as Liberal MP for Trinity-Spadina in a byelection last week. (http://bit.ly/1qerPA3)
** Toronto Police are not ruling out a connection between a missing Mississauga family and a charred car with three bodies found north of Barrie. (http://bit.ly/1jknyNc)
FINANCIAL POST
** WestJet Airlines Ltd is moving farther away from its roots as a low-cost carrier with plans to add widebody planes to its fleet – a move that will allow it to expand overseas, putting it in closer competition with Air Canada at a time when Canada’s largest airline is flying fuller planes than ever before. WestJet says it will introduce the larger planes in the fall of 2015. (http://bit.ly/1qemngw)
** About one month after BENEV Capital and Difference Capital Financial, its largest shareholder, agreed to patch up their differences and end a proxy contest, tensions between the two have resurfaced. (http://bit.ly/1mE8qdR)
Hong Kong
SOUTH CHINA MORNING POST
— Hong Kong Monetary Authority (HKMA) Chief Executive Norman Chan Tak-lam said on the city’s de facto central bank website that he would continue to support the local dollar’s peg to the US currency when his second term starts in October. (bit.ly/1j9OsXu)
— HKT, the telecommunications arm of Richard Li Tzar-kai’s PCCW, has unveiled a three-brand mobile strategy, a retail network of 137 shops, streamlined pricing plans and the widest range of smartphones on offer in Hong Kong as it marked 55 days since its HK$2.43 billion takeover of rival CSL New World Mobility. (bit.ly/1mCKjwc)
— Chun Wo Development Holdings Ltd, one of the largest construction companies in Hong Kong, said its controlling shareholder GT Winners has entered into an agreement to sell all or part of its 610 million shares, or a 56.3 percent stake, to an unnamed independent third party.
THE STANDARD
— Hong Kong Exchanges and Clearing Ltd shares rose to a three-year high even as HSBC cut its rating for local equities to “underweight” from “neutral” on concerns over Occupy Central. (bit.ly/1mCJ4NA)
— The market should disregard the short-term performance of the Exchange Fund, said Hong Kong Monetary Authority chief executive Norman Chan Tak-lam. (bit.ly/VBzD5D)
— Hong Kong’s home prices and rents rose for two consecutive months in April and May, while developers continued to put new units up for sale. (bit.ly/1macUHS)
HONG KONG ECONOMIC JOURNAL
— Galaxy Entertainment Group vice-chairman Francis Lui expected the company’s gambling revenue to grow at least 10 percent this year.
— Hedge fund Elliott Management increased its stake in Wing Hang Bank Ltd to near 7.8 percent, a move that could affect Oversea-Chinese Banking Corp Ltd’s plan to take Wing Hang Bank private.
HONG KONG ECONOMIC TIMES
— Centaline Property Agency said the consolidation mode has ended for Hong Kong’s property market and home prices will reach another record high in the third quarter, while Ricacorp Properties expected new and second home transactions to gain 38 percent from the first half.
MING PAO
— Hong Kong’s home prices rose to a record high in May, with small and medium-sized units posting the biggest increase, official data showed.
Britain
The Times
BIG GUNS ANNOUNCE 250 MLN STG MISSILE DEAL ON ARRIVAL IN INDIA
A 250 million pound ($425.4 million) weapons deal that should create hundreds of British jobs was the centrepiece of the opening day of George Osborne and William Hague’s business mission to India.
VAUXHALL SPEEDS AWAY FROM GERMAN DECLINE WITH 550 NEW JOBS IN BRITAIN
Carmaker Vauxhall, which is owned by General Motors of the US, announced plans to create 550 new British jobs, offering 250 jobs at its Luton van-making plant and another 300 at Ellesmere Port in Cheshire, the home of the Astra.
WASHINGTON BLAMES UK TAX RISES FOR COLLAPSING NORTH SEA OIL HOPES
The US Energy Department has issued a blistering indictment of the UK government’s tax raid on North Sea oil and gas revenues, warning that prohibitive costs threaten much of Britain’s energy industry.
The Guardian
BRITAIN’S BIGGEST BUY-TO-LET LANDLORDS TO SELL ENTIRE PORTFOLIO OF PROPERTIES
Britain’s biggest buy-to-let landlords, Fergus and Judith Wilson, are to withdraw from the property business, selling their entire portfolio of nearly 1,000 homes in the Ashford and Maidstone area in a deal likely to net the controversial duo at least 100 million pounds – and spark speculation that property prices have peaked.
The Telegraph
AIRPORT SECURITY: YOU WON’T FLY TO THE U.S. IF YOUR MOBILE PHONE BATTERY IS DEAD
Holidaymakers and business travellers who arrive at airport security with uncharged mobile phones or other electrical items will be stopped from boarding planes bound for the United States.
TOUR DE FRANCE WILL RETURN TO BRITAIN, SAYS RACE DIRECTOR
Britain will rekindle its love affair with the Tour de France, the race’s director has promised, after six million people turned out to give the event the most spectacular start in its 111-year history.
Sky News
LLOYDS PICKS NEW CHIEF AMID BANK IT SCRUTINY
Britain’s biggest high street lender will this week appoint a new IT chief as the banking sector seeks to overhaul creaking computer systems following a series of reputation-damaging failures.
The Independent
THE DECISION ON SCOTLAND IS ‘IRREVERSIBLE’, SAYS ALISTAIR DARLING
The impact of Scotland voting for independence could be more damaging for the UK than the 2008 banking crisis, Alistair Darling has warned.
Fly On The Wall 7:00 AM Market Snapshot
ECONOMIC REPORTS
Domestic economic reports scheduled for today include:
NFIB small business optimism for June at 7:30–consensus 97.0
JOLTs job openings for May at 10:00–consensus 4.35M
Consumer credit for May at 15:00–consensus $20.0B
ANALYST RESEARCH
Upgrades
Aimco (AIV) upgraded to Buy from Neutral at UBS
Celadon Group (CGI) upgraded to Buy from Hold at Stifel
Groupon (GRPN) upgraded to Buy from Neutral at B. Riley
Guess (GES) upgraded to Overweight from Neutral at Piper Jaffray
Rio Tinto (RIO) upgraded to Overweight from Equal Weight at Barclays
Waddell & Reed (WDR) upgraded to Buy from Neutral at Sterne Agee
Downgrades
Bruker (BRKR) downgraded to Neutral from Buy at ISI Group
Horsehead Holding (ZINC) downgraded to Market Perform from Outperform at FBR Capital
Karyopharm (KPTI) downgraded to Perform from Outperform at Oppenheimer
The Fresh Market (TFM) downgraded to Sell from Neutral at Goldman
Verastem (VSTM) downgraded to Perform from Outperform at Oppenheimer
Vertex (VRTX) downgraded to Perform from Outperform at Oppenheimer
Zebra Technologies (ZBRA) downgraded to In-Line from Outperform at Imperial Capital
Initiations
A.O. Smith (AOS) initiated with an Outperform at Northland
Abengoa Yield (ABY) initiated with a Buy at BofA/Merrill
Abengoa Yield (ABY) initiated with a Buy at Citigroup
Abengoa Yield (ABY) initiated with an Outperform at RBC Capital
Aflac (AFL) initiated with a Buy at Drexel Hamilton
Aspen Aerogels (ASPN) initiated with a Buy at Canaccord
Aspen Aerogels (ASPN) initiated with a Neutral at Citigroup
Aspen Aerogels (ASPN) initiated with a Neutral at RW Baird
Aspen Aerogels (ASPN) initiated with an Overweight at JPMorgan
Boston Scientific (BSX) initiated with a Buy at CRT Capital
CSC (CSC) initiated with an Underweight at Morgan Stanley
Intuitive Surgical (ISRG) initiated with a Neutral at BTIG
Masimo (MASI) initiated with a Buy at BTIG
Memorial Resource (MRD) initiated with a Buy at Citigroup
Memorial Resource (MRD) initiated with a Buy at Stifel
Memorial Resource (MRD) initiated with an Outperform at BMO Capital
Memorial Resource (MRD) initiated with an Outperform at RBC Capital
Memorial Resource (MRD) initiated with an Outperform at Wells Fargo
Memorial Resource (MRD) initiated with an Overweight at Barclays
MetLife (MET) initiated with a Buy at Drexel Hamilton
Mueller Water (MWA) initiated with a Market Perform at Northland
New York REIT (NYRT) initiated with a Market Perform at JMP Securities
NorthStar Asset Management (NSAM) initiated with a Market Perform at Keefe Bruyette
Ophthotech (OPHT) initiated with an Outperform at Oppenheimer
Prudential (PRU) initiated with a Buy at Drexel Hamilton
Silicon Laboratories (SLAB) initiated with a Buy at MKM Partners
St. Jude Medical (STJ) initiated with a Buy at CRT Capital
Starwood Waypoint (SWAY) initiated with an Outperform at Keefe Bruyette
T-Mobile (TMUS) initiated with an Outperform at BMO Capital
TherapeuticsMD (TXMD) initiated with an Outperform at FBR Capital
Waddell & Reed (WDR) initiated with an Outperform at William Blair
Xerox (XRX) initiated with an Overweight at Morgan Stanley
COMPANY NEWS
American Apparel (APP) said Standard General entered into a letter agreement with the company’s founder, Dov Charney
Fifth Street Finance (FSC) increased its monthly dividend by 10% to 9.17c per share
Philips Healthcare (PHG) CEO Deborah DiSanzo will step down after Q2 EBITA below expectations
Macquarie Infrastructure (MIC) to acquire remainder of IMTT for $1.025B in cash, stock
KLA-Tencor (KLAC) board announced a $1B share repurchase authorization and increased its quarterly dividend 11% to 50c per share
Volkswagen (VLKAY) Passenger Cars said delivered over 3M vehicles in 1H, 514,900 models in June
Baker Hughes (BHI) reported June international rig count down 14 to 1,336
EARNINGS
Companies that missed consensus earnings expectations include:
Intellipharmaceutics (IPCI)
Samsung (SSNLF) reports Q2 sales of approximately 52T won vs. 57.46T won last year
CA Technologies (CA) lowers FY15 EPS view to $2.42-$2.49 from $2.45-$2.52
Axcelis (ACLS) lowers Q2 EPS view to (7c)-(5c) from (2c)-0c, consensus (1c)
NEWSPAPERS/WEBSITES
Boeing faces risk to long-term credit if Export-Import Bank is closed, WSJ says
Apple (AAPL) CEO seeks expansion of board, WSJ reports
General Motors (GM) elects not to recall trucks with brake problems, NY Times reports
Commerzbank (CRZBD) expected to pay at least $500M in settlement, NY Times says
Ford (F) initiates six new recalls that cover 101,000 vehicles, Detroit News reports
Crumbs Bake Shop (CRMB) closing all stores, evaluating options, WSJ reports
Tesla (TSLA) faces trademark infringement suit in China, Reuters reports
Applied Materials (AMAT) shares could rise 30%, Barron’s says
SYNDICATE
bluebird bio (BLUE) announces proposed public offering of $100M of common stock
CatchMark Timber (CTT) files to sell 10M shares of Class A common stock
Eros International (EROS) files to sell 7M A ordinary shares
Gevo (GEVO) files to sell 17.5M shares for selling stockholders
Macquarie Infrastructure (MIC) files to sell $250M of convert senior notes, 10M shares
TC PipeLines (TCP) files to sell $200M in common units
Ultragenyx (RARE) announces proposed public offering of 2.02M shares
via Zero Hedge http://ift.tt/1vVQX0j Tyler Durden