- Obama to tout manufacturing gains, highlight economic progress (Reuters)
- Iraq Gunmen Attack North of Baghdad as Obama Weighs Plan (BBG)
- Chinese Regulators Block Shipping Alliance Abandoned Deal (WSJ)
- Russian $8.2 Trillion Oil Trove Locked Without U.S. Tech (BBG)
- Ukrainian forces, rebels clash near Russian border (Reuters)
- M&A talk lifts stocks, Iraq tensions ease slightly (Reuters)
- Wealthy Clintons Use Trusts to Limit Estate Tax They Back (BBG)
- Argentina vows to service debt despite new legal blow (Reuters)
- Allergan’s Bitter Pill for Morgan Stanley (WSJ)
- Islamists kill 50 in Kenya, some during World Cup screening (Reuters)
- American Express Revs Up Pursuit of the Masses (WSJ)
- GM’s Investigator Said Clues in Flaw Reports Were Missed, But Few Are Easily Available (WSJ)
- Iraqi Kurds plan to continue oil exports, reach budget allocation (Reuters)
- GM safety crisis grows with recall of 3 million more cars for ignition issues (Reuters)
- Hong Kong banks investigated by HKMA over money laundering breaches (SCMP)
Overnight Media Digest
WSJ
* German engineering giant Siemens AG and Japanese conglomerate Mitsubishi Heavy Industries Ltd launched a bid for Alstom SA’s energy business, hoping to thwart General Electric Co’s earlier $17 billion offer for the French industrial group with a pitch that is as much about politics as finance. (http://ift.tt/1pEvmLe)
* General Motors on Monday pushed its repair-cost estimate for auto recalls this year to $2 billion as it disclosed plans to replace potentially faulty ignition keys on 3.37 million older model cars in North America. (http://ift.tt/1n9gTkh)
* An internal report on General Motors Co’s blunders handling a deadly safety defect included a mistake of its own: It incorrectly said the service bulletins that auto makers send to dealers, which might have offered a clue to the problem, were readily available on a U.S. website. The service bulletins are issued by car companies to notify dealers of problems that have been reported by drivers, mechanics and others and to outline any necessary fixes. (http://ift.tt/1pEvoTp)
* BP PLC won its first new energy contract from the Pentagon since U.S. government sanctions imposed after the Deepwater Horizon disaster were lifted, regaining a foothold in a market that is set to grow. The $43 million natural-gas deal was the company’s first new Defense Department supply contract in almost 18 months. (http://ift.tt/1n9gSNi)
* Allergan Inc, which is fending off a $53 billion takeover bid by Valeant Pharmaceuticals International Inc , released emails sent by senior Morgan Stanley bankers appearing to denigrate Valeant and its business strategy. (http://ift.tt/1pEvoTr)
* Google Inc is facing fresh accusations of anticompetitive behavior in Europe over its Android operating system for mobile phones, even as the Web giant struggles to overcome separate concerns over its dominance of online search. (http://ift.tt/1pEvoTt)
* In a security filing Monday, Alibaba included details investors had complained were missing in its initial documents in May. Chief among them: a sales breakdown for the e-commerce company’s two main shopping sites; names of the 27 people who control nominations for a majority of the board and insight into the company’s acquisition strategy. Alibaba also released updated financial figures that showed the company’s margins were under pressure. (http://ift.tt/1n9gT3Q)
* Royal Dutch Shell PLC is selling most of its shares in Woodside Petroleum Ltd for 6.1 billion Australian dollars ($5.73 billion), as the company continues to unload assets in the face of falling profit. (http://ift.tt/1pEvmLj)
FT
Germany is pressing for a vote on the European Commision President to override British objections as early as next week in a setback to British Prime Minister David Cameron’s campaign to head off Jean-Claude Juncker’s election to the EU’s most high-profile job.
The Federal Reserve in the U.S. has discussed whether exit fees should be imposed on bond funds to avert a potential run by investors, underlining concern about the vulnerability of the $10 trillion corporate bond market.
EU finance ministers have been advised that Brussels is going beyond the law in its plan to exempt the UK’s Vickers reforms from its EU-wide overhaul of “too big to fail” banks.
The International Monetary Fund has warned that the U.S. will have to keep interest rates low for longer than markets expect, in a downbeat assessment of the American economy.
General Electric is trying to win over the French authorities with fresh concessions to obtain approval for its $16.9bn bid for Alstom and head off a rival offer from Siemens and Mitsubishi Heavy Industries.
NYT
* The Supreme Court handed Argentina two major defeats on Monday in cases brought by bondholders who refused to accept reduced payments after the country’s 2001 default. The developments are likely to add to the turmoil in Argentina’s already unsettled bond market. (http://ift.tt/1n9gTAN)
* General Motors Co said on Monday that it would recall 3.36 million defective cars worldwide, another low point in the seemingly endless safety crisis that has engulfed the nation’s largest automaker. (http://ift.tt/1pEvp9O)
* In a broad legal rationale for collecting information from Internet use by its citizens, the British government has reportedly asserted the right to intercept communications that go through services like Facebook, Google and Twitter that are based in the United States or other foreign nations, even if they are between people in Britain. (http://ift.tt/1pEvp9Q)
* A new study claims a quarter of all public company deals may involve some kind of insider trading. The study by two professors at the Stern School of Business at New York University and McGill University, perhaps the most detailed and exhaustive of its kind, examined hundreds of transactions from 1996 through the end of 2012. (http://ift.tt/1n9gTR8)
* Moelis & Co said on Monday that it has hired four executives from a rival boutique investment bank, Greenhill & Co Inc, to start up a group specializing in raising money for private equity firms. (http://ift.tt/1pEvmLn)
Canada
THE GLOBE AND MAIL
* The leadership of Newfoundland and Labrador’s governing Progressive Conservatives was thrown into a tailspin on Monday after the man who had a clear path to becoming the province’s next premier suddenly dropped out of politics. Frank Coleman, 60, said he decided to leave public life because of a “significant and challenging family matter.” (http://ift.tt/1n9gVZn)
* Progressive Conservative MPPs said they did not receive advance notice of Tim Hudak’s controversial pledge to axe 100,000 public-sector jobs, with some blaming his platform for getting the party thumped by the Liberals in last week’s election. (http://ift.tt/1n9gTRl)
Reports in the business section:
* The transformation of Air Canada’s network is running into some unexpected turbulence because of the later-than-expected arrival of some of the airline’s new Boeing 787 Dreamliners. The airline has delayed some new flights, put off Dreamliner service to Tel Aviv and been forced to lease planes from a European charter airline that offer fewer amenities. This has caused headaches for travelers and the airline as it fields customer criticism of Rouge, its new low-cost airline. (http://ift.tt/1pEvn1C)
* The head of Canada Mortgage and Housing Corp is shifting the priority of the mortgage insurer to helping Canadians buy homes they need, not the bigger, pricier homes they might want. Chief executive Evan Siddall said in an exclusive interview that his first six months on the job have been focused on building an organization that will be more flexible and transparent, one that will do more to emphasize its social housing role and less to subsidize the banks. And one that will only help Canadians purchase homes they need. (http://ift.tt/1n9gTRn)
* Enbridge Inc is expecting a green light on Tuesday from the Harper government on its proposed Northern Gateway pipeline, but will still have to clear a series of hurdles, including signing up committed shippers for the project, if it gets the go-ahead from Ottawa. (http://ift.tt/1n9gVZx)
* Kinross Gold Corp has been working feverishly to ensure that its prized Russian mines do not become a casualty of the diplomatic spat between Russia and the West. (http://ift.tt/1pEvn1F)
NATIONAL POST
* Noting Iran’s rising “anti-Canada rhetoric,” intelligence officials have been monitoring the Islamic republic as a potential terrorist threat to the Ottawa area, newly declassified documents show. While the diplomatic falling out between Ottawa and Tehran is well-known, the intelligence reports are the first indication the Canadian government is tracking the possibility it could lead to terrorism in the capital. (http://ift.tt/1n9gU7D)
* British Columbia’s unionized teachers are preparing to erect picket lines, with little reason to expect a deal on wages with the government to avert a full-scale strike. Talks were at a standstill on the eve of job action that will shut a half million students and more than 40,000 teachers out of school weeks ahead of the scheduled summer break. (http://ift.tt/1pEvpqg)
FINANCIAL POST
* The Canadian Real Estate Association said on Monday home sales jumped 5.9 percent in May from April – the largest monthly increase in more than four years. Sales jumped in 80 percent of the markets surveyed by the group. (http://ift.tt/1n9gWfR)
* Buoyed by the unexpected success of crude by rail, companies are beginning to consider transporting natural gas as remote drilling frontiers emerge beyond the reach of pipelines, executives said. (http://ift.tt/1pEvpqi)
Hong Kong
— The Hong Kong Monetary Authority is investigating several financial institutions, including at least one bank, for possible criminal breaches of the city’s anti-money laundering laws. (http://ift.tt/1n9gWg0)
— An undercover investigation by state media Xinhua has found that many industries bribe officials to obtain quality-control certification. The practice of certifying a company’s products as meeting quality standards had been compromised by industries resorting to bribery. (http://ift.tt/1pEvn1L)
— Tung Chee-hwa, the first chief executive of Hong Kong, will join the board of e-commerce giant Alibaba Group (IPO-ALIB.N) as an independent director soon after its initial public offering in New York, according to the company’s updated U.S. regulatory filing. (http://ift.tt/1pEvn1N)
THE STANDARD
— Judicial independence will not be compromised if judges are required to be patriotic, the Law Society chairman claimed amid debates over Beijing’s white paper on Hong Kong. The white paper does not affect the current status of Hong Kong and is based on the Basic Law, Ambrose Lam San-keung said. (http://ift.tt/1n9gUoc)
— Macau has reduced to five days, from seven, the permitted stay for Chinese passport holders who transit in the enclave effective from July 1. The move is aimed at deterring some mainlanders from deliberately breaching the existing entry requirements of transiting in Macau for seven days without actually travelling elsewhere. (http://ift.tt/1pEvpqk)
— Hong Kong-based internet finance firm Welab has altogether raised HK$180 million ($23.22 million) from investors including TOM Group and Sequoia Capital. Welab launched Welend, which is the first local peer-to-peer lending platform for lenders and borrowers, last June. (http://ift.tt/1n9gUof)
HONG KONG ECONOMIC JOURNAL
— The construction cost of the third runway at the Hong Kong airport is set to be inflated due to delays in the project, with the overall cost expected to increase by 50 percent to HK$200 billion ($25.80 billion) from an initial estimate of HK$136.2 billion, according to industry sources.
— Newspapers publication and printing service firm Next Media Ltd posted a profit of HK$240 million ($30.96 million) for the year ended March 2014, against HK$968 million loss in the previous year.
HONG KONG ECONOMIC TIMES
— Knitted fabric and yarn producer Texwinca Holdings Ltd said its net profit for the year ended March amounted to HK$668 million, down 9 percent from a profit of HK$734 million in the previous year.
Britain
The Telegraph
CHANGES TO VISA REGIME FOR CHINESE VISITORS ‘LACK SUBSTANCE
Home Secretary Theresa May has extended a pilot scheme that allows Chinese tour operators to use the European Schengen form to also apply for UK visas but her announcement failed to spark enthusiasm from business leaders
MYSALE IPO CHAOS AFTER LISTING PRICE COCK-UP
MySale, the Australian fashion website backed by Sir Philip Green, has slumped on its stock market debut with traders blaming a listing price mistake.
The Guardian
POUND HITS FIVE-YEAR HIGH AGAINST DOLLAR AND EURO
The pound climbed to a near five-year high against the dollar as markets reacted to the prospect of an interest rate hike before Christmas.
EUROZONE INFLATION DROPS TO FIVE-YEAR LOW OF 0.5 PCT
Official data for the Eurozone -the 18-member currency zone – showed prices rose by just 0.5 percent, supporting concerns that consumers remain wary of spending while the economy appears weak.
The Times
BANK SETS COURSE FOR EARLY INTEREST RATE RISE
An early rise in interest rates has been all but confirmed after the most doveish of the Bank of England’s nine policymakers revealed yesterday that he expects to vote for an increase by May.
GAS PRICES SOAR AS RUSSIA-UKRAINE DISPUTE THREATENS SUPPLIES
The prospect of an imminent cut in British household energy bills has been scuppered after Russia cut off gas supplies to Ukraine, triggering fears of a European energy crisis.
The Independent
LONG YEARS OF OIL PRICE STABILITY ARE AT RISK, BP’S TOP ECONOMIST WARNS
Escalating violence in Iraq threatens to unleash an oil price spike that would put an end to the greatest period of price stability for nearly half a century, BP’s chief economist has warned.
Fly On The Wall 7:00 AM Market Snapshot
ECONOMIC REPORTS
Domestic economic reports scheduled today include:
Consumer Price Index for May at 8:30–consensus up 0.2% for the month
Housing starts for May at 8:30–consensus down 3.9% to 1.03M rate
Housing permits for May at 8:30–consensus down 0.9% to 1.05M rate
ANALYST RESEARCH
Upgrades
Apollo Investment (AINV) upgraded to Outperform from Market Perform at Keefe Bruyette
Armstrong World (AWI) upgraded to Conviction Buy from Buy at Goldman
DSW (DSW) upgraded to Buy from Neutral at Goldman
Exelon (EXC) upgraded to Buy from Hold at Jefferies
Expedia (EXPE) upgraded to Positive from Neutral at Susquehanna
Lazard (LAZ) upgraded to Buy from Neutral at UBS
Medtronic (MDT) upgraded to Outperform from Neutral at Credit Suisse
Medtronic (MDT) upgraded to Outperform from Sector Perform at RBC Capital
Medtronic (MDT) upgraded to Overweight from Equal Weight at Morgan Stanley
PSEG (PEG) upgraded to Buy from Hold at Jefferies
Southwest (LUV) upgraded to Buy from Hold at Stifel
Whiting USA Trust (WHZ) upgraded to Neutral from Underperform at RW Baird
Downgrades
Banco Bilbao (BBVA) downgraded to Equal Weight from Overweight at Barclays
Booz Allen (BAH) downgraded to Underperform from Neutral at BofA/Merrill
CRH Plc. (CRH) downgraded to Neutral from Outperform at Exane BNP Paribas
Domino’s Pizza (DPZ) downgraded to Underperform from Neutral at BofA/Merrill
Moelis (MC) downgraded to Neutral from Buy at UBS
Ply Gem (PGEM) downgraded to Sell from Neutral at Goldman
Triumph Group (TGI) downgraded to Underperform from Neutral at BofA/Merrill
West Corp. (WSTC) downgraded to Equal Weight from Overweight at Morgan Stanley
Initiations
Absolute Software (ALSWF) initiated with an Outperform at Imperial Capital
Agile Therapeutics (AGRX) initiated with a Buy at Cantor
Agile Therapeutics (AGRX) initiated with an Outperform at RBC Capital
athenahealth (ATHN) initiated with a Buy at Stifel
Aviv REIT (AVIV) initiated with a Neutral at Citigroup
Cobalt (CIE) initiated with a Buy at Brean Capital
DaVita (DVA) initiated with a Neutral at Susquehanna
Dorian LPG (LPG) initiated with an Overweight at JPMorgan
eHealth (EHTH) initiated with a Hold at Stifel
Healthstream (HSTM) initiated with a Hold at Stifel
Heritage Insurance (HRTG) initiated with a Buy at Citigroup
Heritage Insurance (HRTG) initiated with an Outperform at JMP Securities
Medidata Solutions (MDSO) initiated with a Buy at Stifel
NOW Inc. (DNOW) initiated with an Equal Weight at Barclays
Orbitz (OWW) initiated with a Buy at UBS
Parsely Energy (PE) initiated with a Neutral at Goldman
Parsely Energy (PE) initiated with a Neutral at JPMorgan
Parsely Energy (PE) initiated with an Outperform at Wells Fargo
Tetraphase (TTPH) initiated with an Outperform at RW Baird
TherapeuticsMD (TXMD) initiated with an Outperform at JMP Securities
COMPANY NEWS
Shell (RDS.A) said it would reduce its interest in Woodside Petroleum (WOPEY) by 156.5M shares, representing a total estimated value to Shell of around $5B on an after-tax basis
Kindred Healthcare (KND) said it would commence a $14.50 tender offer for Gentiva Health (GTIV); Gentiva urged shareholders to take no action in response to Kindred offer
GM (GM) said it would rework, replace keys on 3.16M U.S. cars, sees charge up to $700M
BlackBerry (BBRY) announced the availability of BBM Protected, a secure messaging app
NY Governor Cuomo signed a bill on pact between automobile dealers and Tesla (TSLA), under which the company will be allowed to keep five currently licensed retail locations
Bob Evans (BOBE) said it would postpone Q4 earnings for material weaknesses
EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Amira Nature Foods (ANFI), Korn/Ferry (KFY)
Steel Dynamics (STLD) sees Q2 EPS 28c-32c, consensus 32c
Straight Path (STRP) reports Q3 EPS 1c vs. (8c) a year ago
Virco (VIRC) reports Q1 EPS (26c), one estimate (27c)
Newell Rubbermaid (NWL) reaffirms outlook for FY14
Kindred Healthcare (KND) reaffirms FY14 EPS view $1.05-$1.25 , consensus $1.16
Amira Nature Foods (ANFI) sees 2015 revenue, adjusted EBITDA up over 20%
Korn/Ferry (KFY) sees Q1 adjusted EPS 37c-43c, consensus 40c
NEWSPAPERS/WEBSITES
BP (BP) to sign $20B long-term LNG contract with China, WSJ reports
Google (GOOG) faces new antitrust accusations in Europe, WSJ reports
Softbank (SFTBF) CEO hopes for more T-Mobile (TMUS) talks after opposition, Reuters says
FireEye (FEYE) under review by Finra ahead of $1B Mandiant acquisition, WSJ reports
Telefonica (TEF) expected to secure EU approval for EUR8.6B E-Plus (KKPNY) bid, Guardian says
Apple (AAPL) prevails in patent suit brought by Golden Bridge, Bloomberg reports
Tesla’s (TSLA) Model X on track for production in 2015, TechCrunch reports
Apple (AAPL) to settle civil antitrust suit over e-book pricing, Re/code reports
SYNDICATE
Kindred Healthcare (KND) announces 9M share equity offering
Kona Grill (KONA) files to sell 2M shares of common stock
Marin Software (MRIN) files to sell 1.72M shares for holders
Microvision (MVIS) enters $4.5M at-the-market equity offing with Meyers Associates
NRG Yield (NYLD) files to sell $565M of Class A common stock
QIWI (QIWI) 7.973M share Secondary priced at $40.00
Revance Therapeutics (RVNC) announces proposal to sell 3M shares
Williams (WMB) files to sell $3B of common stock
via Zero Hedge http://ift.tt/1oAdrWn Tyler Durden