Frontrunning: July 17

  • Bubble Paranoia Setting in as S&P 500 Surge Stirs Angst (BBG)
  • But how will math PhDs determine “fair value” – Wall Street Techs Take Secrets to Next Job at Their Peril (BBG)
  • U.S., EU Escalate Russia Sanctions as Putin Holds Firm (Bloomberg)
  • Australia Becomes First Developed Nation to Repeal Carbon Tax (WSJ)
  • Gaza humanitarian truce goes into force, hours after tunnel clash (Reuters)
  • Barclays, Deutsche Bank Said to Face U.S. Senate Hearing (BBG)
  • ECB Asset Buying Far Off and May Not Come, Hansson Says (BBG)
  • Time Warner win would make Murdoch U.S. media king (Reuters)
  • Costly Vertex Drug Is Denied, and Medicaid Patients Sue (WSJ)
  • China Rallying for All Wrong Reasons to Top-Rated Analyst (BBG)
  • GM recalls some cars with problematic switches; judges others safe (Reuters)
  • Boeing Buoyed at Show With $46 Billion in Day-Three Sales (BBG)
  • Reserves Break $3 Trillion Mark in Emerging Markets (BBG)
  • China Plays a Big Role as U.S. Treasury Yields Fall (WSJ)

 

Overnight Media Digest

WSJ

* Israel agreed to a five-hour cease-fire on Thursday to allow aid into Gaza as the country came under pressure over mounting civilian casualties that included four Palestinian boys killed as they played on a beach. At the same time, officials warned that the chances of a ground invasion of Gaza are very high and growing with each day that militants keep firing rockets into Israel. (http://on.wsj.com/1jzWlWx)

* After almost a decade of heated political debate, Australia has become the world’s first developed nation to repeal carbon laws that put a price on greenhouse gas emissions. (http://on.wsj.com/WcXOrx)

* The Obama administration escalated its sanctions against Russia over its alleged interference in Ukraine, imposing restrictions on the Russian state-controlled oil giant Rosneft and other top firms. (http://on.wsj.com/Wc8uq9)

* Vertex Pharmaceuticals’ $300,000-a-year cystic-fibrosis drug has sparked a legal battle in Arkansas, illustrating the dilemma faced by cash-strapped government insurance programs. (http://on.wsj.com/1nyBPk8)

* Time Warner rejected an $80 billion offer made by Rupert Murdoch’s Twenty-First Century Fox Inc that would have united the media giants. (http://on.wsj.com/1pbBsyP)

* The retail sector continues to confound billionaire investor Warren Buffett and his Berkshire Hathaway partner Charlie Munger, who have bemoaned their bad luck in retail investing for years. (http://on.wsj.com/1jA2DWi)

* Bank of America Corp and the Justice Department remain far apart on a possible mortgage-securities settlement even though the bank offered $13 billion to resolve the civil probe. The bank on Wednesday announced it had reached a $650 million settlement in a mortgage-securities lawsuit brought by American International Group Inc. (http://on.wsj.com/WiU73U)

* Low interest rates are continuing to pressure banks at a time when lending activity is picking up. U.S. Bancorp and PNC Financial Services Group Inc the two largest U.S. regional banks by assets, saw a key measure of lending profitability decline in the second quarter, due in part to low rates. (http://on.wsj.com/UdkmXE)

 

FT

Time Warner rejected an audacious $80 billion bid from Rupert Murdoch’s Twenty-First Century Fox on Wednesday, setting up a stand-off between two of the biggest names in media.

Dubai’s Emirates could buy an additional 60 to 80 Airbus A380s if the four-engined superjumbo were revamped with more fuel-efficient engines by 2020, the airline’s Chief Executive Officer Tim Clark said.

If Apple Inc loses its appeal in a price-fixing case, it has agreed to pay $400 million to U.S. consumers as compensation for overcharging for ebooks.

Cyber attacks on eBay user data dragged on the online retailer’s quarterly sales and drove it to scale back its full-year revenue guidance.

A substantial minority of Experian shareholders revolted against the world’s biggest credit checking company’s decision to replace its chairman with its chief executive officer, saying it contravened Britain’s Corporate Governance Code.

 

NYT

* Microsoft Corp plans to announce layoffs on Thursday that will substantially exceed the largest layoffs in the company’s history, according to several people briefed on the decision who spoke only on the condition of anonymity. Previously, the largest layoffs were in 2009, when 5,800 or so people were affected. (http://nyti.ms/1r5aMCV)

* Rupert Murdoch’s 21st Century Fox Inc said it has made an $80 billion takeover offer for Time Warner Inc, which would be the biggest media deal in more than a decade. While Time Warner has rebuffed his effort and no talks are underway, Murdoch is determined and unlikely to walk away anytime soon, people briefed on the matter said. (http://nyti.ms/1nI1try)

* Funding Circle, a so-called peer-to-peer lending network, announced that it had raised $65 million in new funding and appointed Robert Steel, the chief executive of Perella Weinberg, to its board. (http://nyti.ms/1paKzQi)

* Apple Inc might have to pay $400 million to consumers to settle charges of conspiring with publishers to raise e-book prices. Apple last month agreed to settle a class action brought by attorneys general in 33 states. They had sought hundreds of millions of dollars in damages from Apple, claiming it had colluded with book publishers to inflate e-book prices. (http://nyti.ms/1oKB3BT)

* Once again, Bank of America’s troubled past is clouding its present and future. After months of negotiations, a possible settlement with the Justice Department is in jeopardy over a disagreement on the bank’s liability for the suspected mortgage misdeeds of its Countrywide Financial and Merrill Lynch units, people briefed on the matter said. (http://nyti.ms/1qJ5Q4K)

* The Federal Reserve’s chairwoman, Janet Yellen, said on Wednesday that it would be a “grave mistake” for Congress to adopt legislation proposed by House Republicans constraining the Fed’s management of monetary policy. (http://nyti.ms/1mVyUGi)

 

Canada

THE GLOBE AND MAIL

* The Royal Canadian Mounted Police are expected to lay charges against Senator Mike Duffy on Thursday in connection with improper expense claims charged to taxpayers, a development that would add fresh fuel to the controversy surrounding this Prime Minister Stephen Harper appointee to the Red Chamber. (http://bit.ly/1l6XfoC)

* The Royal Canadian Navy has opened another investigation into three incidents of alleged misconduct in San Diego by the crew of HMCS Whitehorse, including whether there was a “failure of leadership.” (http://bit.ly/1nzCyli)

Reports in the business section:

* Barrick Gold Corp’s new chairman John Thornton eliminated the chief executive position in a management shakeup that sees Jamie Sokalsky leave as CEO and cements the former banker’s authority at the top of the world’s biggest gold producer. (http://bit.ly/1tUN5kh)

NATIONAL POST

* Ontario’s opposition parties said on Wednesday the Liberal government is not being honest with people about its plans to “maximize” the value of provincial assets like the Liquor Control Board, Ontario Power Generation and Hydro One. (http://bit.ly/1mhSKHk)

* A graduate student from Tunisia arrested over an Al-Qaeda plot to derail a Toronto-bound train tried to send $3,000 to terrorists in Syria and Mali, a lawyer said on Wednesday. The terror financing allegation against Chiheb Esseghaier came as a New York judge sentenced one of his former associates, Ahmed Abassi, to 15 months for U.S. immigration violations. (http://bit.ly/1oLEo3E)

FINANCIAL POST

* In a sign of the mounting tensions over new energy infrastructure, Enbridge Inc has raised the possibility of an “attack” on one of its pipelines. (http://bit.ly/UbYQSK)

* In a move that adds uncertainty to PetroChina’s plans for Canada, Zhiming Li, the PetroChina executive who built and headed the Chinese company’s operations in this country for the past four years, has been arrested by the Chinese government. (http://bit.ly/1r60VN6)

 

China

CHINA SECURITIES JOURNAL

– Qin Hong, the director of the policy research centre in the Ministry of Housing and Urban, said they would strive to curb property investment and speculative demand to protect reasonable housing demand in the next six months with a hope that the market will be better than the first half of the year.

– The Guangxi Zhuang Autonomous Region plans to expand the scale of its investment and speed up railway construction to invest a total of 15 billion yuan ($2.42 billion) in 2014 which can go up to 20 billion yuan. And, the investment scale for the coming years will be 30 billion yuan per year.

– China Life Insurance Co Ltd said its insurance premium income nearly hit 200 billion yuan in the first half of this year.

SHANGHAI SECURITIES NEWS

– Bank of Nanjing said it would raise 8 billion yuan through a private placement.

CHINA BUSINESS NEWS

– China’s central authorities issued guidelines on Wednesday on the supply and use of government vehicles in an effort to cut spending, which industry experts predict would reduce expenditure by 150 billion yuan per year.

– Banks’ non-performing loans in Fujian province increased more than 90 percent in 2013, according to official data released on Wednesday.

21st CENTURY BUSINESS HERALD

– Regulators are considering easing the lending policy for China’s small companies, which may allow them to extend loans.

China Daily

– Guangdong, China’s largest provincial economy, plans to make further cuts in obsolete manufacturing capacity for iron, steel and cement by 2017, according to a draft plan by the province’s development and reform commission.

– Japanese Prime Minister Shinzo Abe is losing the public’s trust thanks to his lifting of the ban on collective self defense and other rightists moves, China Daily said in an editorial.

 

Britain

The Times

ASHLEY PULLS OUT OF 200 MLN STG SHARE PLAN

The billionaire founder of Britain’s biggest sportswear chain, Sports Direct, has withdrawn from a controversial bonus scheme just weeks after forcing through the award. (http://thetim.es/1l5BCVM)

SHAREHOLDER BACKLASH FORCES ICAP TO REVIEW BONUSES

Interdealer broker ICAP is to go into talks with shareholders over its executive bonus scheme after a third of investors voted against its pay policy at the annual meeting. (http://thetim.es/1kxiArm)

FRENCH ACCUSE ROYAL MAIL OF BREACHING ANTITRUST LAW

Royal Mail has been caught up in a competition investigation after French regulators accused one of its subsidiaries of breaching antitrust laws. (http://thetim.es/Ud5EQm)

CONFUSED.COM ABOUT CAR INSURANCE? SO IS THE CITY REGULATOR

Britain’s biggest price comparison websites are being ordered to address insurance listings that mislead or confuse their users.

The websites sometimes failed to provide the right information to users buying motor and household insurance, the Financial Conduct Authority said in a report. (http://thetim.es/1jQFfEn)

The Guardian

REGULATOR’S REPORT ON BANKS PROMPTS SPECULATION ABOUT COMPETITION INQUIRY

Britain’s new competition watchdog will release the outcome of an initial study into the banking sector on Friday, prompting speculation about a full-blown investigation into the industry. (http://bit.ly/1tTfrvl)

The Telegraph

RUPERT MURDOCH’S LEGACY CAN ONLY BE SECURED WITH TOTAL MEDIA CONTROL

With his jaw-dropping $80 billion approach to buy U.S. media giant Time Warner Inc, Rupert Murdoch has made his intentions crystal-clear: he wants to become the undisputed global “king of content”, and is willing to pay a fortune at the top of the market to get his way.

The deal was rebuffed, of course, but Murdoch, who has bounced back from the UK phone-hacking scandal and the split of his corporate empire with remarkable ease, will be back. (http://bit.ly/1mW1Tty)

THE LETTER SENT TO LLOYDS CUSTOMERS UNDER A LAW FIRM’S NAME

Lloyds Banking Group has sent Chairman of the Treasury Select Committee Andrew Tyrie an example of the letters it sent customers who owed the bank money under the name of a defunct law firm. (http://bit.ly/1r52kDH)

FIRSTGROUP VOWS ‘DEEP REVIEW’ OF PAY AFTER INVESTOR REVOLT

FirstGroup Chairman John McFarlane yesterday pledged a “deep review” of the company’s executive pay policies in the wake of criticism of the near 2 million pound ($3.43 million)package received by Chief Executive Tim O’Toole last year. (http://bit.ly/1rscptL)

Sky News

INVESTORS REVOLT AGAINST GULF KEYSTONE BOSS

Some investors in Gulf Keystone Petroleum, the London-listed oil explorer, have lodged votes opposing the re-election of founder Todd Kozel as an executive director. (http://bit.ly/UabXEc)

The Independent

POUND SOARS AS INFLATION LEAPS AND FED CHIEF JANET YELLEN TALKS DOWN U.S. ECONOMY

The pound surged to new six-year highs against the dollar last night as an inflation shock fuelled expectations of UK interest rate rises while a dovish Federal Reserve Chair Janet Yellen warned over “false dawns” for the U.S. economy. (http://ind.pn/1paXMbL)

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of July 12 at 8:30–consensus 310K
Housing starts for June at 8:30–consensus up 1.9% to 1.02M rate
Housing permits for June at 8:30–consensus up 3.0% to 1.035M rate
Philadelphia Fed business conditions index for July at 10:00–consensus 16.9

ANALYST RESEARCH

Upgrades

Aflac (AFL) upgraded to Outperform from Market Perform at Raymond James
Allegiant Travel (ALGT) upgraded to Buy from Fair Value at CRT Capital
Clarcor (CLC) upgraded to Outperform from Neutral at RW Baird
Endurance Specialty (ENH) upgraded to Buy from Neutral at Janney Capital
First Republic Bank (FRC) upgraded to Strong Buy from Outperform at Raymond James
International Game (IGT) upgraded to Neutral from Sell at Goldman
Kayne Anderson (KED) upgraded to Buy from Hold at Stifel
SM Energy (SM) upgraded to Buy from Neutral at Guggenheim
Time Warner (TWX) upgraded to Buy from Neutral at Guggenheim
Time Warner (TWX) upgraded to Buy from Neutral at Janney Capital

Downgrades

Charter (CHTR) downgraded to Hold from Buy at Jefferies
Covidien (COV) downgraded to Hold from Buy at Needham
GNC Holdings (GNC) downgraded to Hold from Buy at Jefferies
International Game (IGT) downgraded to Market Perform from Outperform at Wells Fargo
PetSmart (PETM) downgraded to Sector Perform from Outperform at RBC Capital
Rexam (REXMY) downgraded to Hold from Buy at Deutsche Bank

Initiations

A10 Networks (ATEN) initiated with a Neutral at Buckingham
ACI Worldwide (ACIW) initiated with an Outperform at BMO Capital
AIG (AIG) initiated with an Outperform at RBC Capital
Aerohive Networks (HIVE) initiated with a Buy at Buckingham
Agilent (A) initiated with a Neutral at Citigroup
Antero Resources (AR) initiated with a Buy at Canaccord
Aruba Networks (ARUN) initiated with a Neutral at Buckingham
Bed Bath & Beyond (BBBY) initiated with a Neutral at Nomura
Blackhawk (HAWK) initiated with a Market Perform at BMO Capital
Bruker (BRKR) initiated with a Buy at Citigroup
Cabot Oil & Gas (COG) initiated with a Hold at Canaccord
CalAmp (CAMP) initiated with an Outperform at William Blair
Container Store (TCS) initiated with a Hold at BB&T
EQT Corporation (EQT) initiated with a Buy at Canaccord
Esterline (ESL) initiated with a Buy at Drexel Hamilton
Ethan Allen (ETH) initiated with a Neutral at Nomura
Fiserv (FISV) initiated with an Outperform at BMO Capital
FleetCor (FLT) initiated with a Neutral at Piper Jaffray
Fleetmatics (FLTX) initiated with an Overweight at Piper Jaffray
Gastar Exploration (GST) initiated with a Buy at Canaccord
Global Payments (GPN) initiated with a Market Perform at BMO Capital
Gulfport Energy (GPOR) initiated with a Buy at Canaccord
Heartland Payment (HPY) initiated with a Market Perform at BMO Capital
Illumina (ILMN) initiated with a Buy at Citigroup
Jazz Pharmaceuticals (JAZZ) initiated with a Neutral at SunTrust
Mallinckrodt (MNK) initiated with an Outperform at Oppenheimer
Meritor (MTOR) initiated with an Overweight at Piper Jaffray
Mettler-Toledo (MTD) initiated with a Neutral at Citigroup
Navistar (NAV) initiated with an Overweight at Piper Jaffray
PerkinElmer (PKI) initiated with a Buy at Citigroup
Pier 1 Imports (PIR) initiated with a Buy at Nomura
Range Resources (RRC) initiated with a Buy at Canaccord
Restoration Hardware (RH) initiated with a Buy at Nomura
Rex Energy (REXX) initiated with a Hold at Canaccord
Rice Energy (RICE) initiated with a Buy at Canaccord
Riverbed (RVBD) initiated with a Neutral at Buckingham
Seventy Seven Energy (SSE) initiated with an Equal Weight at Morgan Stanley
Sigma-Aldrich (SIAL) initiated with a Neutral at Citigroup
Thermo Fisher (TMO) initiated with a Buy at Citigroup
Vantiv (VNTV) initiated with a Market Perform at BMO Capital
Waters (WAT) initiated with a Neutral at Citigroup
Williams-Sonoma (WSM) initiated with a Buy at Nomura

COMPANY NEWS

Liberty Global (LBTYA) acquired a 6.4% stake in ITV (ITVPF) from BSkyB (BSYBY) for GBP481M. Liberty said that while it does not intend to make a takeover offer for ITV, it does reserve the right to announce an offer within the next six months
Starboard Value announced that it has sent a letter to Darden’s (DRI) board seeking new leadership
Carl Icahn said he has not sold any shares of Herbalife (HLF); Icahn also said Apple (AAPL) CEO Tim Cook doing a “good job” and “disappointed” Dollar General (DG) CEO leaving
Legion Partners called on Perry Ellis (PERY) to review strategic alternatives
Danaher (DHR) said it would acquire Siemens Healthcare Diagnostics’ (SIEGY) clinical microbiology unit

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
eBay (EBAY), KeyCorp (KEY), Fifth Third Bancorp (FITB), Baker Hughes (BHI), Orbital (ORB), First Cash Financial (FCFS), WNS Holdings (WNS), UnitedHealth (UNH), Danaher (DHR), HNI Corporation (HNI), Navient (NAVI), Blackhawk (HAWK), BankMutual (BKMU), Central Valley Community Bancorp (CVCY), United Rentals (URI), SanDisk (SNDK), Select Comfort (SCSS), RLI Corp. (RLI), Plexus (PLXS)

Companies that missed consensus earnings expectations include:

Mattel (MAT), Novartis (NVS), El Paso Pipeline (EPB), Kinder Morgan (KMI), Yum! Brands (YUM), Universal Forest (UFPI), Platinum Underwriters (PTP), Las Vegas Sands (LVS)

Companies that matched consensus earnings expectations include:
East West Bancorp (EWBC)

NEWSPAPERS/WEBSITES

Siemens (SIEGY) preparing bid for Dresser-Rand (DRC), Manager Magazin reports
Microsoft (MSFT) layoffs could be announced today, NY Times reports
Report says VW (VLKAY) in talks to buy Fiat (FIATY), Reuters says
General Motors (GM) hires outside law firm to review litigation practices, WSJ says
Defense Department to seek rival bids for satellite launches, WSJ reports (BA, LMT)
Intel (INTC) looks like a hold, Barron’s says

SYNDICATE

CareDx (CDNA) 4M share IPO priced at $10.00
Colony Financial (CLNY) files to sell 15M in common stock
Orbitz (OWW) files to sell 20M shares of common stock
Roka Bioscience (ROKA) 5M share IPO priced at $12.00
TreeHouse Foods (THS) 4.3M share Secondary priced at $75.50




via Zero Hedge http://ift.tt/1t8dLK9 Tyler Durden

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