Frontrunning: August 22

  • Ukraine accuses Russia of invasion after aid convoy crosses border (Reuters)
  • Hunt for Foley’s Killer Spans Old Policing and Tech Tools (BBG)
  • U.S. Probe Examines GM Lawyers (WSJ)
  • Argentina accuses U.S. Judge Griesa of “imperialist” attitude (Reuters)
  • Violence-weary Missouri town sees second night of calm (Reuters)
  • Geneva Banks Break 200-Year Silence to Unveil Earnings (BBG)
  • Richest Jailed Putin Foe Says Ukraine Fears Sparked Prosecution (BBG)
  • Disclosure of Failed Attempt to Rescue James Foley Is Criticized (WSJ)
  • Execution of U.S. journalist reveals the changing business of war coverage (Reuters)
  • Confronted With Grisly Images, Twitter Is Walking a Fine Line (WSJ)
  • American’s 3-Class Jets Dwindle as First Class Fades Away (BBG)
  • Apple iPhone 6 screen snag leaves supply chain scrambling (Reuters)
  • Citigroup Earning Less From Tokyo Than CEO Salary (BBG)
  • Oklahoma City policeman arrested for raping women while on patrol (Reuters)
  • Accounting scandal just the latest of Penn West’s problems (G&M)

 

Overnight Media Digest

WSJ

* The Obama administration’s decision to release secret details of an unsuccessful mission in Syria last month to rescue several Americans held captive by extremists is raising concerns that the disclosure could make it harder for the military to carry out similar operations in the future. (http://on.wsj.com/1ohyaI6)

* The beheading of journalist James Foley has prompted American officials to begin working to knit together a broader international campaign to combat the extremists of the Islamic State, an effort that the Pentagon, headquarters of the U.S. Department of Defence, warned that it will require taking the fight beyond Iraq and into neighboring Syria. (http://on.wsj.com/1qvryY6)

* The police response to the unrest in Ferguson, Missouri, has been criticized for a lack of coordination, but experts say the fast-moving situation was difficult to manage. (http://on.wsj.com/1ohyp65)

* U.S. Federal prosecutors are scrutinizing whether employees inside and outside General Motors Co’s legal department concealed evidence from regulators about a faulty ignition switch, potentially delaying a recall of vehicles with the fatal problem, according to people familiar with the matter. (http://on.wsj.com/1msf02C)

* Central bankers gathering for the Jackson Hole conference in Wyoming confront a global economy that has once again disappointed, leaving them reluctant in some places and unable in others to turn off spigots of easy money. (http://on.wsj.com/1q3xeLG)

* U.S. corporate-bond issuance is hurtling toward a record for the third consecutive year, as companies take advantage of a surprising interest-rate decline to stock up on cash. (http://on.wsj.com/1pPeC33)

* The Obama administration moved to restrict prescriptions of the most commonly used narcotic painkillers, with the Drug Enforcement Administration saying it would put hydrocodone combination drugs in the category reserved for medical substances with the highest potential for harm. (http://on.wsj.com/1rpaqKa)

* Sears Holdings Corp burned through more cash as its losses mounted in the second quarter, prompting the once venerable retailer to say it is weighing additional steps to shore up its balance sheet. (http://on.wsj.com/1v1cAjA)

* Citigroup Inc faces restrictions that will prevent it from selling investments in hedge funds and private-equity funds to wealthy clients, following a recent deal with U.S. regulators. (http://on.wsj.com/YGmsBR)

* Bank of America Corp’s financial-crisis hangover may finally be fading. The bank agreed to pay $16.65 billion to settle the U.S. government’s accusations it sold flawed mortgage securities in the run up to the 2008 crisis, the largest settlement ever reached between the United States and a single company. (http://on.wsj.com/1ljwCCS)

* Royal Bank of Canada is facing a conundrum about one of its fastest-growing businesses. The bank’s capital-markets business, after fighting for years to become a global player, threatens to become a victim of its own success. Earnings from capital markets are bumping up against a self-imposed limit that is key to the risk control on which Canada’s banks built their recent reputation. (http://on.wsj.com/1p15raD)

* Family Dollar Stores Inc rejected Dollar General Corp’s $9 billion cash offer, opting instead to stick with Dollar Tree Inc’s $8.5 billion cash-and-stock deal that is worth less money but may have an easier time passing muster with antitrust regulators. (http://on.wsj.com/1qvfOou)

* Jumpy commodities markets are taking hedge funds for a wild ride. A spate of unpredictable U.S. weather, a surprise record harvest and even a pig virus are giving commodities traders exactly what they craved: volatility. Unlike in years past, when star managers scored megapaydays in high-profile markets such as oil and gold, some of the biggest winners in recent months are in commodities like corn, soybeans, natural gas and electricity. (http://on.wsj.com/1sYz1VO)

* Home Depot Inc named company veteran Craig Menear its new chief executive on Thursday, handing him the challenge of keeping sales growing as the company shifts from building new U.S. stores to investing online. (http://on.wsj.com/1pPiaSZ)

* Al Gore and his business partners had “serious reservations” about selling Current TV to Al Jazeera, but ultimately overcame them because they believed the United States was likely to influence the Qatar-backed broadcaster more than the other way around, according to court papers filed on Thursday. (http://on.wsj.com/1tqIVxo)

* Dipchand Nishar, a LinkedIn Corp senior vice president who helped the professional social network expand internationally and on mobile devices, is resigning to pursue a chief executive post. (http://on.wsj.com/1z9syFU)

* Russian authorities stepped up their pressure on McDonald’s Corp, saying they were inspecting restaurants across the country for alleged sanitary violations, a day after officials closed several outlets in Moscow. (http://on.wsj.com/XE8mAI)

 

FT

United States top security advisers say that the Islamist militant group in northern Iraq can be defeated only by tackling them in Syria, signalling an escalation of the country’s military campaign.

The United Arab Emirates’ central bank on Thursday warned Standard Chartered Plc that it was liable to face legal action in the UAE after it agreed to close some customers’ UAE accounts in an anti-money laundering settlement with U.S. authorities.

Tougher western sanctions have come in the way of a planned $2 billion deal between Kremlin-backed Rosneft and oil trader Vitol.

The world’s biggest aluminium producer Rusal completed the restructuring of its $10 billion debt pile after negotiations with creditors that lasted a year.

Executives at Rabobank of the Netherlands and Raiffeisen Bank International of Austria have warned of the impact of geopolitical tensions between the EU and Russia on their business.

The head of UK’s Channel 4 said the British television industry risked becoming a victim of its own success with U.S. takeovers of British TV companies threatening the UK’s creative economy.

 

NYT

* Sears Holdings Corp, which owns Sears and Kmart stores, announced on Thursday that it lost $975 million in the first six months of the year. (http://nyti.ms/1z9Opx8)

* As Europe slogs through its latest round of bank stress tests, a growing number of analysts have already reached their own conclusion: Eurozone banks need additional cash. (http://nyti.ms/1ohyB5s)

* Wall Street now finds itself with the public relations challenge of having to woo and retain young talent. As part of the effort, many new hires found out this week that they could be paid roughly 20 percent more than their counterparts were offered last year. (http://nyti.ms/1rpm33z)

* A federal court judge said on Thursday that Argentina’s attempt to skirt one of his rulings was “lawless” but stopped short of finding the country in contempt of court. (http://nyti.ms/1wfQ6Nq)

* Dollar General Corp has offered more money to Family Dollar Stores Inc shareholders than Dollar Tree Inc’s $8.5 billion deal, but it was not enough to sway the Family Dollar board. Rejecting a bid over concerns other than price when a higher offer is in place is dangerous ground for any board. Family Dollar’s shareholders are bound to be wondering how this money can be left on the table. (http://nyti.ms/VJREhJ)

* New York’s Department of Financial Services said on Thursday that it would extend by 45 days the comment period for its proposed virtual currency regulations. Those interested in submitting comments on the new rules will now have until Oct. 21. (http://nyti.ms/1q3RAnP)

* Bank of America’s $16 billion mortgage settlement is less painful than it looks. The company’s financial burden for the settlement may not exceed $12 billion – certainly a large amount, but one significantly less than the number the government trumpets. (http://nyti.ms/1qvvvvY)

 

Canada

THE GLOBE AND MAIL

* Ontario and Quebec are forging a central Canadian alliance to co-operate on issues, including potentially expanding electricity trade, hoping their combined clout will bring back prosperity to both provinces. Ontario’s Kathleen Wynne and Quebec’s Philippe Couillard announced the new regional partnership in Quebec City on Thursday. (http://bit.ly/1ADlMeg)

* With students and parents preparing for an extension of the ongoing teacher strike into the new school year, a public spat erupted on Thursday after British Columbia’s education minister, Peter Fassbender said negotiations are impossible because the leaders of the British Columbia Teachers’ Federation are at a conference in Kamloops. (http://bit.ly/1pPPcT5)

Reports in the business section:

* Calgary energy company, Penn West Petroleum Ltd bogged down by debt following its biggest deal, the C$3.6billion takeover of Canetic Resources Trust, had devised an aggressive growth plan to spend heavily on new drilling techniques in hopes of sending production and cash flow soaring. In the end, though, Penn West could not drill itself to success. That led to a host of management changes and asset sales in an effort to refocus the company. But now it faces a new problem: the discovery of accounting irregularities in the hundreds of millions of dollars, making it the target of numerous investor lawsuits and clouding its future. (http://bit.ly/1s8C8GH)

NATIONAL POST

* The Royal Canadian Mounted Police are considering outsourcing the replacement and modernization of the national sex offender registry and the creation of a proposed new public website to the private sector. This is in advance of new legislation, expected this fall, which will toughen penalties for sexual predators. (http://bit.ly/1q47JK9)

* Canadian Prime Minister Stephen Harper says police investigations, not a national inquiry, are the best way to deal with crimes involving missing and murdered aboriginal women. The death of Tina Fontaine, a 15-year-old aboriginal girl found wrapped in a bag and dumped in the Red River has prompted renewed calls for a national inquiry. But the conservative government has rejected all calls for a national inquiry, saying it prefers to address the issue in other ways, such as through aboriginal justice programs and a national DNA missing person’s index. (http://bit.ly/1txH8W8)

FINANCIAL POST

* The Ontario Securities Commission is allocating C$2.5 million collected from monetary sanctions and settlements to the Canadian Foundation for Advancement of Investor Rights. The bulk of the funds for the investor advocacy group will be placed in trust with the recently established FAIR Canada Jarislowsky Endowment Fund for long-term funding of the organization. The remaining C$500,000 will cover day-to-day operating expenses at FAIR. (http://bit.ly/1pZ76T7)

* Stockwell Day, the former federal international trade minister and former Alberta treasurer, has joined the management team of Pacific Future Energy Corp as a senior advisor, director, and chair of the company’s advisory committee. The Vancouver-based company backed by Mexico’s Grupo Salinas is proposing a C$10 billion refinery on British Columbia’s North Coast. (http://bit.ly/1ohEPC9)

 

Hong-Kong

SOUTH CHINA MORNING POST

— State media have started to roll out articles lambasting the luxurious lives of senior executives at state-owned enterprises – a clear indication, observers say, that President Xi Jinping not only plans to cut their perks, but will make them the next target of his anti-graft campaign. (http://bit.ly/1twex3C)

— Facebook outranks popular messaging applications WhatsApp and WeChat as the most favoured digital platform in Hong Kong, according to a survey commissioned by the social network and conducted by market researchers TNS. (http://bit.ly/1sYoYjM)

— Coolpad, one of China’s smartphone brands, plans an aggressive expansion into overseas markets and greater online sales in the second half of this year. Chairman Guo Deying said the firm would focus on providing customised smartphones for mobile network operators in Asia, North America, Europe and other markets. (http://bit.ly/1pXiyOZ)

THE STANDARD

— Department store operator AEON Stores (Hong Kong) said it returned to the black in the first half, earning HK$81.94 million. The U-turn, from a loss of HK$26.34 million a year back, was driven by better operating results from the mainland and a fair value gain from a property investment along with lower impairment costs. (http://bit.ly/1s78W2B2384)

— Electrical appliance maker Techtronic Industries Co said it would continue to invest in product enhancement despite capital expenditure surging 35 percent in the first half from a year earlier. Group Chief Financial Officer Frank Chan said $64 million was spent on acquisitions and raising productivity. (http://bit.ly/1pP6FLo)

HONG KONG ECONOMIC TIMES

— Chinese sportswear firm Xtep International Holdings Ltd , which posted a 16.6 percent fall in first-half net profit, sees industry consolidation coming to an end and expects same-store sales to return to double-digit growth in the third quarter from single-digit growth in the second quarter, according to Chief Financial Officer Ho Yui-pok.

MING PAO DAILY NEWS

— The Link Real Estate Investment Trust is seen planning to sell six shopping malls in Kowloon and New Territories, which can generate about HK$2 billion $(258 million), according to market sources.

 

Britain

The Times

MILIBAND BLAMED FOR HIGH ENERGY PRICES

The boss of one of the United Kingdom’s biggest energy companies has blamed Labour’s threatened price freeze for his group’s failure to cut bills, despite the recent slump in wholesale gas prices.

BURBERRY BOSS CLASHES WITH INVESTORS OVER SALE

Only six weeks after a revolt by investors over excessive pay at Burberry, its boss has boosted his bank balance by cashing in 5.2 million pounds worth of shares.

The Guardian

LONDON HEDGE FUND EXECUTIVES SEE PAY PACKETS HALVE AS BONUSES PLUMMET

Hedge fund executives in London saw bonuses plummet last year, resulting in their pay packets being less than half of what they were 12 months ago.

BRITISH TV INDUSTRY AT RISK FROM U.S. TECH AND MEDIA GIANTS, SAYS CHANNEL 4 CHIEF David Abraham says creativity will be sacrificed for profit as U.S. companies buy up British broadcasters and producers.

The Telegraph

SCOTTISH BUSINESS LEADERS PREPARE TO UNITE AGAINST INDEPENDENCE

More than 100 business leaders with Scottish operations are planning to speak out against independence for the first time in a united statement that could be a hammerblow for Alex Salmond, The Telegraph has learned.

Sky News

HEDGE FUNDS URGE FASTER CO-OP BANK OVERHAUL

The Co-operative Bank Plc is facing demands from some of its biggest shareholders to accelerate an overhaul of its operations and commercial strategy.

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

No economic reports scheduled. Janet Yellen is scheduled to speak at 10am

 

ANALYST RESEARCH

Upgrades

AK Steel (AKS) upgraded to Neutral from Sell at UBS
Edison International (EIX) upgraded to Outperform from Market Perform at BMO Capital
Gap (GPS) upgraded to Buy from Neutral at Janney Capital
Inter Parfums (IPAR) upgraded to Buy from Neutral at Citigroup

Downgrades

Ampio (AMPE) downgraded to Hold from Buy at Jefferies
Cyberonics (CYBX) downgraded to Hold from Buy at Canaccord
DCT Industrial (DCT) downgraded to Market Perform from Outperform at BMO Capital
Liberty Property (LPT) downgraded to Market Perform from Outperform at BMO Capital

Initiations

MobileIron (MOBL) initiated with an Outperform at Imperial Capital
SuperCom (SPCB) initiated with an Outperform at Imperial Capital

COMPANY NEWS

Home Depot (HD) announced that Craig Menear will replace Frank Blake as CEO, effective November 1
Gap (GPS), which reported Q2 results above analyst estimates, announced plans to open the first franchise-operated Gap stores in India in 2015
OncoGenex (OGXI) said its Phase 3 ENSPIRIT Trial passes early interim futility analysis
Salesforce.com (CRM) said it is targeting $1.1B in cash flow at end of FY15, next company goal is $10B in annual revenue
LinkedIn (LNKD) product head Dipchand “Deep” Nishar to leave company, effective October 3

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

Salesforce.com (CRM), Brocade (BRCD), GameStop (GME), Gap (GPS), Hibbett Sports (HIBB), Royal Bank of Canada (RY), Nordson (NDSN), Scansource (SCSC), The Fresh Market (TFM), TravelCenters (TA), Lantronix (LTRX), Mentor Graphics (MENT), Marvell (MRVL), MICROS (MCRS), Ross Stores (ROST)

Companies that missed consensus earnings expectations include:

Qunar (QUNR), Accuray (ARAY), Tuesday Morning (TUES), Tuesday Morning (TUES), Intuit (INTU)

Companies that matched consensus earnings expectations include:

New York & Co. (NWY)

Salesforce.com (CRM) raises FY15 adjusted EPS view to 50c-52c from 49c-51c
GameStop (GME) sees FY14 EPS $3.40-$3.70, consensus $3.68
GameStop (GME) sees Q3 EPS 58c-64c, consensus 59c
Salesforce.com (CRM) sees Q3 adjusted EPS 12c-13c, consensus 13c
Brocade (BRCD) sees Q4 EPS 21c-23c, consensus 22c
Intuit (INTU) sees FY15 adjusted EPS $2.45-$2.50, consensus $3.97
Gap (GPS) raises FY14 EPS view to $2.95-$3.00, consensus $2.95

NEWSPAPERS/WEBSITES

Apple (AAPL) suppliers scramble after iPhone 6 screen hurdle, Reuters says
Citigroup (C) faces restrictions on hedge-fund sales, WSJ reports
Comcast (CMCSA) launches streaming TV services for college campuses, WSJ reports (NFLX)
Qualcomm (QCOM) seeks to end anti-trust probe, China regulator says, Reuters reports
Allergan’s (AGN) suit against Valeant (VRX) won’t delay special meeting, NY Times reports
GT Advanced (GTAT) estimated to supply 1.35M-2.25M 5.5-inch iPhone sapphire covers by end of 2014, DigiTimes reports

SYNDICATE

Avago (AVGO) files to sell $1B of 2% convertible senior notes due 2021
BIOLASE (BIOL) files to sell 6.25M shares for holders
Fidus Investment (FDUS) enters $50M equity distribution agreement
TriNet (TNET) files to sell $100M in common stock




via Zero Hedge http://ift.tt/1q0nuTa Tyler Durden

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