- The market in one sentence: Buying on Dips Pays Most in Five Years as Stocks Rebound (BBG)
- Europe subdued, Russia shares tumble on new sanctions (Reuters)
- Chinese Data Don’t Add Up (WSJ)
- Argentine Default Drama Nears Critical Stage (WSJ)
- Global Pressure Mounts on Israel to End Gaza Fighting (BBG)
- Ukraine troops advance as experts renew attempt to reach crash site (Reuters)
- Prospects Brighten for Republicans to Reclaim a Senate Majority (WSJ)
- Europe’s banking union faces legal challenge in Germany (FT)
- Investors Bet on China’s Large Property Developers (WSJ)
- Hague court orders Russia to pay over $50 billion in Yukos case (Reuters)
- Luxembourg Covets Offshore Trade in China’s Yuan (WSJ)
- Time Machine Finds Bulls Run Amok at ’07 Stock-Market Top (BBG)
- Microsoft says government officials make sudden visits to China offices (Reuters)
- Equinox Fitness Is Buying Rest of Millennium’s Gyms (NYT)
Overnight Media Digest
WSJ
* With 100 days to go until the midterm election, unexpectedly strong bids by several Republican candidates and President Barack Obama’s continued sagging approval ratings are boosting GOP chances of capturing a Senate majority. (http://on.wsj.com/1l5WnRi)
* The chaos that followed the crash of Malaysian Airline System Bhd’s Flight 17 has added to the worry that families will never learn exactly what happened. (http://on.wsj.com/WJaO8L)
* Twenty-First Century Fox Inc is prepared to offer shareholders of Time Warner Inc board representation as part of its bid to acquire the media company, according to a person familiar with the matter. (http://on.wsj.com/1AnuQVn)
* Luxembourg is seeking to be at the heart of a new trend in global finance: the rising use of China’s currency outside its home market. (http://on.wsj.com/1kibHzD)
* Regulators have questioned JPMorgan Chase & Co executives in recent months about whether the firm steers private-banking clients to its own investment products, according to people familiar with the matter. (http://on.wsj.com/1ux42Si)
* The fight over Herbalife Ltd has taken on a more personal, distinctly 19th century flavor. Rather than a battle among faceless institutions, as is usually the case today, Herbalife features a handful of financiers – Bill Ackman, Carl Icahn and George Soros – in a high-stakes duel. (http://on.wsj.com/UwjPjT)
* Deutsche Bank co-CEO Anshu Jain has in the past two years made it a top priority to get the lender’s investment bank and wealth-management business to work to each other’s benefit. (http://on.wsj.com/1rW82qQ)
* Hospira Inc has emerged as a bidder for Danone’s medical-nutrition unit in a deal that could be worth about $5 billion and mark the latest in a flurry of so-called inversion deals. (http://on.wsj.com/1xmwTES)
* U.S.-based meat supplier OSI Group Inc said it would withdraw all products manufactured by its embattled Shanghai unit from the marketplace, a move to control damage that has hit fast-food companies across China, in Hong Kong and in Japan.(http://on.wsj.com/1nMmxP0)
* Tencent Holdings Ltd will use its alliance with online retailer JD.com Inc to sell in advance Microsoft Corp’s Xbox One consoles in China, as it ramps up efforts to compete with electronic-commerce giant Alibaba Group Holding Ltd <IPO-BABA.N>. (http://on.wsj.com/1rP0RBT)
* Volkswagen AG’s Audi on Saturday announced price cuts for spare parts of up to 38 percent in China, the company’s largest market, as the Chinese government steps up its scrutiny of foreign luxury-auto makers. (http://on.wsj.com/1pu1wUO)
* The Justice Department indicted FedEx Corp earlier this month, charging conspiracy to distribute controlled substances because of the shipper’s alleged role in transporting painkillers and other prescription drugs that had been sold illegally. FedEx is scheduled to be arraigned in the proceeding Tuesday morning in San Francisco. (http://on.wsj.com/1AnXRQO)
FT
French dairy group Danone has been in talks for several weeks to sell its medical nutrition business to U.S. rival Hospira in a deal that would let the buyer move its tax base to Europe.
UBS was in talks with French authorities over a 100 million euro ($134.29 million) settlement to resolve an investigation into how the Swiss wealth manager dealt with some of its rich clients, before discussions collapsed two weeks ago.
Underwriters are reviewing policies for aircraft involved in hostile acts such as the downing of Malaysia Airlines flight MH17 as the airline insurance industry faces its most expensive year since the 9/11 attacks in 2001
Diageo, the world’s largest spirits maker, will say when it reports full-year results on Thursday that it is writing down the value of its majority stake in its troubled premium Chinese baijiu brand.
NYT
* About 1,200 fast-food workers from McDonald’s, Burger King and other chains crowded over the weekend into an expo center in the suburb west of Chicago to pursue their ambitious goal of creating a $15-an-hour wage floor for the nation’s four million fast-food workers. (http://nyti.ms/1AnVLAm)
* The Federal Reserve’s policy-making committee, which meets Tuesday and Wednesday, is widely expected to announce another cut in its monthly bond purchases, to $25 billion, in keeping with its declared intention to end the purchases in October.(http://nyti.ms/UEqTuo)
* Reddit, a community-driven site, is trying to jump-start its advertising business and reinforce some smaller moneymaking efforts. Reddit’s focus is to figure out how to become a real business without changing the essential nature of the service and alienating its powerhouse constituency of 114 million intensely loyal monthly users. (http://nyti.ms/1nxfj03)
* The British government plans to make more land available for licensing for oil and natural gas exploration in the first such expansion since 2008. The government wants new sources of oil and gas to help replace Britain’s declining offshore production in the North Sea, to create jobs and to ease growing dependence on fuel imports, especially from Russia. (http://nyti.ms/X1vvwr)
* The multi-billion dollar dispute over Guidant between Johnson & Johnson and Boston Scientific Corp finally heads for a trial. After virtually no movement in the case for two years, a federal judge has denied a motion for summary judgment that would have put the matter to rest. (http://nyti.ms/1xmzIFV)
* Equinox Fitness said it will buy rest of Millennium’s Gyms for about $110 million. The purveyor of expensive workout centers and risqué advertising, Equinox is about to announce on Monday that it had acquired Sports Club/LA gyms in New York and four other cities, as well as the Reebok Sports Club/NY gym on the Upper West Side of Manhattan. All will soon bear the Equinox brand and feature the company’s classes and products. (http://nyti.ms/1rt3uqV)
* Hospira, a Midwestern medical device maker is in talks to pay about $5 billion for the medical nutrition business of the French consumer group Danone. The deal, if completed, would allow Hospira to re-incorporate overseas in a so-called inversion, lowering its tax rate and freeing its foreign cash. (http://nyti.ms/1mTmNFz)
* Alan Greenberg, who led Bear Stearns Co through its rise and fall, died on Friday at the age of 86. Greenberg as chief executive of Bear Stearns Co transformed a small bond shop into the fifth-largest U.S. securities firm before it collapsed in 2008 in one of the key events of the global credit crisis. (http://nyti.ms/1uxe31I)
Canada
THE GLOBE AND MAIL
* Canadian diplomatic staff in Tripoli have taken the precaution of working out of an undisclosed location, as Libya faces increasingly intense intermilitia violence that this weekend that cost dozens of civilian lives and prompted the U.S. to temporarily shutter its embassy. (http://bit.ly/1xnw66x)
* Parts of Ontario suffered some severe thunderstorms on Sunday night, including an unconfirmed report of a tornado near the shores of Lake Huron. Environment Canada forecaster Jason Burford says the storm activity stretched across southern Ontario from Windsor to Kingston. (http://bit.ly/1ozti5R)
Reports in the business section:
* Quebecor Inc’s management will face further questions about plans for a potential wireless expansion when the company reports second quarter results on Thursday. (http://bit.ly/1o5wktw)
NATIONAL POST
* The Canadian government is not responding to a report that Germany is set to reject Canada’s long sought after trade deal between Canada and the European Union. The leading German newspaper Sueddeutsche Zeitung cites diplomats in Brussels as saying Berlin won’t sign the deal in its current form. (http://bit.ly/1rKj8BI)
* Two people have been killed in a small plane crash near Nanaimo on Vancouver Island. Transportation Safety Board spokesman Bill Yearwood says the plane, an “amateur built” Avid amphibious aircraft, crashed on takeoff from the Nanaimo Airport in Cassidy. (http://bit.ly/1lLV1LE)
FINANCIAL POST
* PetroChina Co Ltd, the Chinese oil giant rocked by a corruption scandal that has spread to its Canadian unit, is trying to reduce a C$1.23 billion payment to Calgary-based Athabasca Oil Corp for oil sands properties it believes are of poorer than expected quality, a source close to PetroChina said Friday. (http://bit.ly/1uygCAI)
* Airline stocks have often found it hard to win over investors in recent times. But investors are now finding many reasons to love the airlines. Their stocks are soaring, making them one of the best-performing segments on the U.S. and Canadian markets in the past year. (http://bit.ly/1kgzvUt)
Hong Kong
SOUTH CHINA MORNING POST
— Genetically modified rice, which is illegal to sell or grow commercially on the mainland, has been found on sale in a large supermarket in Wuhan. State television CCTV said there was also evidence that genetically modified rice had been sold in Hunan, Anhui and Fujian. (http://bit.ly/1l5Mvad)
— McDonald’s issued another apology on Sunday for its part in the rotten meat scandal, saying a “lack of clarity” had confused people. McDonald’s managing director in Hong Kong, Randy Lai Wai-sze, said the company had “not communicated well” and promised it would never again source from the Shanghai Husi plant at the heart of the scandal. (http://bit.ly/1ptAeOh)
— Swire Pacific’s core property and aviation businesses face major structural shifts, chairman John Slosar said. He said residential property trading operations were at their cyclical peak while the performance at Cathay Pacific would be in line with an industry that had underperformed expectations worldwide. (http://bit.ly/1mT3TyM)
THE STANDARD
— A group of bloggers has set up a Facebook page for people’s commentaries on politics and other issues following the sudden closure of House News, a pro-democracy news site with strong ties to media mogul Jimmy Lai Chee-ying. Within 20 hours of it being set up on Saturday night, the House News Bloggers Group received more than 20,000 likes. (http://bit.ly/WJ7tq7)
— Hong Kong Airlines, a local budget carrier partly owned by Hainan Airlines, will submit its listing application by next month and is expected to open the retail book in October at the earliest. It plans to raise up to HK$3.9 billion in what could be Hong Kong’s first dual-currency float with investors able to subscribe to shares in either yuan or Hong Kong dollars. (http://bit.ly/1rOxKyr)
HONG KONG ECONOMIC JOURNAL
— Hong Kong Monetary Authority on Saturday injected HK$5.348 billion into the banking system, its fifteenth intervention so far this month, to meet commercial demand for the local currency.
— Property developer Cheung Kong has generated HK$17.6 billion ($2.27 billion) revenue from flat sales so far this year, representing 58.7 percent of its HK$30 billion annual sales target this year, according to its senior management. It generated HK$5 billion from flat sales last year.
— Bank of East Asia is expected to post an interim profit of up to HK$3.505 billion, with cross-border loan business leading the growth, while also facing challenges from increasing non-performaning loans, according to analysts.
APPLE DAILY
— Conglomerate Hutchison Whampoa is expected to post single-digit growth in first-half earnings due to lower contribution from subsidiaries following stake sales of some of its units, according to analysts. Morgan Stanley estimates Hutchison to post a 9 percent growth in earnings at HK$13 billion, the slowest since 2009.
Britain
The Times
RBS COULD CLAW BACK BONUSES FROM TURNAROUND DIVISION
Royal Bank of Scotland could claw back millions of pounds in bonuses from staff working for its controversial turnaround unit after it was revealed that the bank has set aside 17 million pounds ($28.86 million) in pay awards. (http://thetim.es/1rVCtgS)
RECKITT BENCKISER SET TO SPLIT OFF U.S. PHARMA DIVISION
Reckitt Benckiser, the maker of Nurofen and Cillit Bang, is likely to confirm it will spin off RBP, its American pharmaceuticals division, when it announces half-year results this morning. (http://thetim.es/1lKO39G)
The Guardian
U.S. INVESTOR SUES THREE BANKS OVER SILVER PRICE
HSBC, Deutsche Bank and the Bank of Nova Scotia have been accused of attempting to rig the price of silver in the latest price fixing scandal to rock the banking industry. (http://bit.ly/WZxEbY)
STRONG POUND TRIGGERS RISE IN PROFIT WARNINGS
Profit warnings from British companies have hit a three-year high despite the improving economy, with the strong pound a growing problem for businesses with overseas operations. (http://bit.ly/1rOuRxK)
The Telegraph
SMITH & NEPHEW BOSS: ‘I DON’T WANT A MEGA-MERGER’
The boss of perennial bid target Smith & Nephew has criticised “defensive” mega-mergers and tax-driven deals that have swept the healthcare sector in the last few months. Chief Executive Olivier Bohuon said he was not interested in striking a deal with another large med tech company. (http://bit.ly/1k2yn6u)
COLLINGWOOD MULLS SALE TO PRIVATE EQUITY FIRM
Learner-driver car insurance firm Collingwood Insurance Services is exploring selling the business to private equity. Sources said that a clutch of mid-market private equity firms had already been sounded out for the business which has earnings before interest, tax, depreciation and amortisation of about 6 million pounds. (http://bit.ly/1ptAEnM)
Sky News
FORMER CBI CHIEF TO AID OSBORNE MARKETS PROBE
Richard Lambert, who ran the Confederation of British Industry until 2011, will this week be appointed to scrutinise a Government-led probe into financial markets launched in the wake of a string of major trading scandals. (http://bit.ly/1prHEBD)
The Independent
VINCE CABLE GOES OFF MESSAGE ON SLOW GROWTH IN WAGES
British Business Secretary Vince Cable, in a series of articles for regional newspapers, warned that wage growth was sluggish and the economy remained stubbornly imbalanced. His comments came after Chief Secretary to the Treasury Danny Alexander and Finance Minister George Osborne trumpeted GDP figures showing growth was now at record levels. (http://ind.pn/1pr1Nrw)
Fly On The Wall Pre-Market Buzz
ECONOMIC REPORTS
Domestic economic reports scheduled include:
Markit U.S. services PMI for July at 9:45–consensus 59.8
Pending home sales index for June at 10:00–consensus up 0.3%
ANALYST RESEARCH
Upgrades
AbbVie (ABBV) upgraded to Buy from Neutral at UBS
Bancolombia (CIB) upgraded to Overweight from Neutral at JPMorgan
CIT Group (CIT) upgraded to Overweight from Equal Weight at Morgan Stanley
Calpine (CPN) upgraded to Conviction Buy from Buy at Goldman
DHT Holdings (DHT) upgraded to Buy from Hold at Jefferies
Dynegy (DYN) upgraded to Buy from Neutral at Goldman
Heritage Commerce (HTBK) upgraded to Outperform from Market Perform at Fig Partners
Lorillard (LO) upgraded to Neutral from Reduce at Nomura
NuStar Energy (NS) upgraded to Outperform from Neutral at Credit Suisse
NuStar GP Holdings (NSH) upgraded to Outperform from Neutral at Credit Suisse
Pitney Bowes (PBI) upgraded to Buy from Hold at Brean Capital
Prosensa (RNA) upgraded to Buy from Neutral at Roth Capital
QR Energy (QRE) upgraded to Buy from Hold at Wunderlich
Reynolds American (RAI) upgraded to Top Pick from Outperform at RBC Capital
Royal Bank of Scotland (RBS) upgraded to Neutral from Underweight at JPMorgan
Safeguard Scientifics (SFE) upgraded to Overweight from Equal Weight at First Analysis
Xerox (XRX) upgraded to Neutral from Underweight at JPMorgan
Zimmer (ZMH) upgraded to Outperform from Perform at Oppenheimer
Downgrades
AcelRx (ACRX) downgraded to Hold from Buy at Canaccord
Cisco (CSCO) downgraded to Sector Perform from Outperform at Pacific Crest
DSW (DSW) downgraded to Underperform from Neutral at Sterne Agee
DuPont Fabros (DFT) downgraded to Neutral from Buy at Citigroup
Enphase Energy (ENPH) downgraded to Hold from Buy at Deutsche Bank
Horizon Technology (HRZN) downgraded to Hold from Buy at Wunderlich
Monster Beverage (MNST) downgraded to Neutral from Buy at UBS
NRG Energy (NRG) downgraded to Buy from Conviction Buy at Goldman
PG&E (PCG) downgraded to Sell from Neutral at Goldman
Pfizer (PFE) downgraded to Market Perform from Outperform at BMO Capital
Post Properties (PPS) downgraded to Neutral from Buy at Citigroup
Initiations
Empire State Realty (ESRT) initiated with a Market Perform at Wells Fargo
FirstService (FSRV) initiated with an Outperform at RBC Capital
Interpublic Group (IPG) initiated with a Neutral at Citigroup
Minerva (NERV) initiated with a Buy at Jefferies
Minerva (NERV) initiated with an Outperform at JMP Securities
Minerva (NERV) initiated with an Outperform at RW Baird
NextEra Energy Partners (NEP) initiated with an Overweight at Barclays
Omnicom (OMC) initiated with a Sell at Citigroup
Seventy Seven Energy (SSE) initiated with a Neutral at Susquehanna
COMPANY NEWS
Dollar Tree (DLTR) to acquire Family Dollar (FDO) for $74.50 per share in cash, stock
Berkshire Hathaway Energy (BRK.A) received Canadian approval for AtlaLink acquisition
Tyson Foods (TSN) said Hillshire Brands (HSH) acquisition on track to close in Q4
Tyson Foods (TSN) to close three plants to improve prepared foods performance
Aspen Insurance (AHL) holders overwhelmingly rejected Endurance (ENH) authorization proposals
Federal Reserve did not object to Zions Bancorp (ZION) FY14 capital plan
Husi Shanghai said it would withdraw products from marketplace (MCD, YUM, SBUX)
EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Cal-Maine Foods (CALM), Changyou.com (CYOU), Sohu.com (SOHU), Lincoln Electric (LECO)
Companies that missed consensus earnings expectations include:
Tyson Foods (TSN), NTELOS (NTLS), TGC Industries (TGE), Blue Capital (BCRH), Hudson Valley (HVB)
NEWSPAPERS/WEBSITES
Goldman (GS) close to settling FHFA suit on faulty mortgage claims, Bloomberg reports
Hospira (HSP) in talks to acquire Danone’s (DANOY) medical nutrition business, FT reports
Fox (FOXA) may be willing to give board seats to Time Warner (TWX), Bloomberg reports
GlaxoSmithKline (GSK) could eventually spin off consumer healthcare business, FT reports
JPMorgan (JPM) questioned by regulators for conclicts of interest, WSJ says
J&J (JNJ) dispute with Boston Scientific (BSX) looks set to go to trial, NY Times reports
Apple (AAPL) nears deal to buy Swell radio app for $30M, Re/code reports
Apple (AAPL) acquires book analytic startup BookLamp, TechCrunch reports
Larger iPhone could squeeze iPad sales further, Barron’s says
CIT Group (CIT) still looks undervalued, Barron’s says
Wal-Mart (WMT) doesn’t look cheap, Barron’s says
Dow Chemical (DOW) could return 20%, Barron’s says
Theravance (THRX) looks overvalued, Barron’s says
SYNDICATE
Seabridge Gold (SA) files to sell C$100M of common shares
Teekay LNG (TGP) files to sell $500M of common units representing limited partners
Zions Bancorp (ZION) files to sell $525M in common stock
via Zero Hedge http://ift.tt/1pvpLBO Tyler Durden