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Frontrunning: January 28

  • Fed seen remaining patient with rate guidance amid global turmoil (Reuters)
  • National Weather Service apologizes for blizzard forecast miss (CBS)
  • Greek PM Tsipras pushes on with radical change, markets tumble (Reuters)
  • Obama Drops Plan to Raise Taxes on ‘529’ College Savings Accounts (WSJ)
  • Hard Choices on Easy Money Lie Ahead for Fed Chief (Hilsenrath)
  • Debt That Once Boosted Its Cities Now Burdens China (WSJ)
  • Skymark Said to File for Bankruptcy After Airbus Deal Flops (BBG)
  • Heavy Fighting Drains Ukraine Government’s Options and Finances (WSJ)
  • Norway Regulator Raises Warning Housing Market Is Out of Control (BBG)
  • Strong Dollar Squeezes U.S. Firms (WSJ)
  • Subprime Bonds Are Back With Different Name Seven Years After U.S. Crisis (BBG)
  • Singapore Pulls Trigger in Deflation Fight (WSJ)

 

 

Overnight Media Digest

WSJ

* Janet Yellen's job is about to get harder after a relatively easy first year as Federal Reserve chairwoman, as she looks to move past the preset course of winding down a bond-buying program and begin raising interest rates. (http://on.wsj.com/1zW8Pil)

* A government program to rid itself of TARP investments in small banks has proved a boon to hedge funds, private-equity and other private investors, according to a new watchdog report. (http://on.wsj.com/1wA1LRk)

* Apple Inc surpassed even the most bullish Wall Street expectations for its holiday quarter with an improbable trifecta: selling 46 percent more iPhones at higher prices - and earning more on each sale. (http://on.wsj.com/1zW9lwY)

* The Seattle Seahawks' secret weapon just might be their willingness to give a sports psychologist the freedom to roam the training facility, locker room and even the sidelines every game, to make sure their heads are as sound as their bodies.(http://on.wsj.com/1zW9DDY)

* The stronger dollar is slicing sales and profits at big American companies, prompting them to put renewed emphasis on cost cutting and cramping the broader U.S. economy. (http://on.wsj.com/1zW9Ozb)

* Yahoo Inc unveiled plans for a tax-free spinoff of its remaining holdings in Chinese e-commerce giant Alibaba Group Holding Ltd as the company also reported declines in fourth-quarter earnings and revenue. (http://on.wsj.com/1zW9PmS)

* China's proposed new rules on foreign investment will help the Chinese government re-exert control over the flood of foreign money and interests coming into the country's booming Internet industry. (http://on.wsj.com/1zW9QqM)

* Thousands of branch closures, aimed at cutting costs, have limited access to banking services in some parts of rural Spain.(http://on.wsj.com/1zW9UXA)

* The Monetary Authority of Singapore said it would slow the Singapore dollar's appreciation against a basket of currencies, making the city state the latest country to ease monetary policy to fend off deflationary pressures exacerbated by a steep drop in crude oil prices.(http://on.wsj.com/1zWamVO)

* Audi AG, Volkswagen AG and Porsche are recalling more than 93,500 cars and SUVs world-wide to fix fuel-leak problems. (http://on.wsj.com/1zWaMvm)

* Retail foreign-exchange broker FXCM Inc was nearly felled by outsize bets made by foreign customers who aren't subject to U.S. regulations, according to people familiar with regulators' review of the firm. (http://on.wsj.com/1zWaTXP)

* A Citigroup Inc unit plans to announce Wednesday it will change its screening processes for checking and savings accounts to be more forgiving of customers' histories, becoming the second financial institution to reach such an agreement with New York Attorney General Eric Schneiderman.

 

FT

* Bain Capital, a U.S. based private equity firm, has acquired British car parts maker TI Automotive for $2.4 billion, including debt. Bain bought the company from rivals Oaktree Capital.

* Commodities trader Vitol is to develop a $7 billion offshore oil and gas project in Ghana with Italian company ENI. The final go-head for the project was received from the Ghana government on Tuesday.

* Britain's economy grew at a pace that was its fastest since the financial crisis. The economy grew 2.6 percent in 2014 despite falls in building and industrial production in the last three months of 2014.

 

NYT

* U.S. President Barack Obama concluded his three-day trip with a tough-love message to his hosts, as he vowed to be "India's best partner" in taking its place in the ranks of the world's great powers but urged it to do more to protect human rights and fight climate change. (http://nyti.ms/1zW9Nve)

* From the makeup of his cabinet to an early warning sent to the European Union over Russia policy, Greece's new prime minister, Alexis Tsipras, on Tuesday signaled a sharp shift in direction for Greece as he unveiled the first government led from the far left in the country's modern history. (http://nyti.ms/1Cfh6Pg)

* Marissa Mayer, chief executive of Yahoo, said on Tuesday that the Internet company would spin off its 15.4 percent stake in Alibaba, China's leading e-commerce company, into a separate company. (http://nyti.ms/1K1fR5z)

* If shareholders accept the bid from the International Airlines Group, or I.A.G., the parent company of British Airways Plc and Iberia of Spain, for Aer Lingus Group Plc , valued at 1.36 billion euros ($1.54 billion), it would be Europe's first significant airline consolidation deal in almost five years. (http://nyti.ms/1tnmjSb)

* Shareholder activism is in full roar as hedge funds prowl and companies retreat, but Nelson Peltz's campaign to replace four directors at DuPont may just be where corporate America finally draws the line and tries to stem the activist tide. (http://nyti.ms/1JEpTLK)

 

Canada

THE GLOBE AND MAIL

** Canada's big banks reduced their prime lending rates in the wake of the Bank of Canada's unexpected move last week, but stopped short of matching the central bank's quarter-percentage-point cut in a bid to protect profits. (http://bit.ly/15KHKRZ)

** Tim Hortons Inc is letting go an unspecified number of employees at its corporate offices as it prepares for a new era under the new ownership of fast-food chain Burger King . (http://bit.ly/15NStLk)

** The Manitoba government says it will revamp its child welfare system and introduce new legislation that will strengthen the Office of the Children's Advocate, a move that comes six months after Tina Fontaine's high-profile death in care and a decade after the province failed to protect an aboriginal girl who was ultimately murdered. (http://bit.ly/1zajeEp)

NATIONAL POST

** Canada's finance minister insists low- and middle-income families will see two-thirds of the benefits from the Stephen Harper government's contentious multibillion-dollar tableau of family-friendly measures. (http://bit.ly/1Dg6Vak)

** A tweet criticizing Prime Minister Stephen Harper for hiding in a closet during last fall's attack on Parliament Hill was swiftly removed from an Alberta Liberal party candidate's Twitter account. (http://bit.ly/1yvOrhq)

** Pinetree Capital Ltd, an investment and merchant bank that was a world leader in financing junior resource firms, announced this week that controversial chairman and chief executive Sheldon Inwentash is resigning after more than 22 years at the helm. (http://bit.ly/1D8LAPV)

 

China

CHINA SECURITIES JOURNAL

- China is expected to announce reforms to state-owned enterprises before the Lunar New Year holiday, the week starting Feb 19, according to a senior official at the National Development and Reform Commission, the country's top planner.

SECURITIES TIMES

- Chinese investors are buying shares of companies that are owned by brokerages, according to an analysis by the newspaper. Brokerages are performing well in China's current stock market rally, it said.

SHANGHAI SECURITIES NEWS

- A Shanghai-based private equity firm, VStone Capital Co, will launch an A-share mutual fund product in Europe, the paper reported, citing an unidentifiable source who is familiar with the issue.

CHINA DAILY

- Alibaba's Jack Ma along with seven other entrepeneurs opened a school for startups in Hangzhou, Zhejiang Province.

- The value of Chinese brands rose significantly in 2014, driven by private companies without government backing, rather than state-owned enterprises, according to global communications companies.

SHANGHAI DAILY

- Shanghai will limit the number of visitors to its temples over Chinese New Year, the newspaper reported. A stampede on Shanghai's famous Bund killed 36 people on New Year's Eve.

 

Britain

The Times

Mike Ashley has strengthened his grasp on the money streams entering Rangers after the cash-strapped Scottish Championship club's board agreed a 10 million pounds ($15.19 million) emergency loan with Sports Direct, the Newcastle United owner's retail business. (http://thetim.es/1yYazq1)

Greek prime minister Alexis Tsipras named a radical libertarian as his finance minister. Yanis Varoufakis was sworn in along with the other 39 members of Greece's new coalition cabinet. (http://thetim.es/1y3BTix)

The Guardian

Britain's economic recovery slowed in the fourth quarter of 2014, but annual growth was the fastest since the financial crisis of 2007. Official figures showed that in the final three months of 2014, GDP growth slowed to a quarterly rate of 0.5 percent. (http://bit.ly/1DeuNLp)

Sales commission at the estate agents Foxtons slid by more than a quarter at the end of last year in the latest sign that the capital's runaway housing market is rapidly cooling. (http://bit.ly/1v0aFO8)

The Telegraph

A High Court ruling has found Companies House liable for the demise of Taylor & Sons Ltd, after they erroneously recorded that the Cardiff engineering firm had been wound up. In fact it was another entirely unconnected company Taylor & Son Ltd which had actually gone bust. (http://bit.ly/1BlbOMI)

Venture capitalist reveals he informed Vince Cable's Department of Business of likely collapse a week before Christmas. Jon Moulton, chairman of Better Capital, said his business had suffered a serious financial and reputational hit as a result of the collapse over Christmas 2014. (http://bit.ly/1y3C5OJ)

Sky News

The chairman of Pearson Plc, Glen Moreno, is to step down after a decade at the helm. Sources said that Pearson's nominations committee had enlisted JCA Group, a City headhunting firm, to oversee the process of recruiting Moreno's successor. (http://bit.ly/1yLtfJb)

Up to two million holders of a credit card insurance product could secure compensation. The Financial Conduct Authority said it had reached agreement on a compensation scheme after card customers were sold security products costing up to 25 pounds annually to cover fraudulent use in the event of a card being lost or stolen. (http://bit.ly/1v0kiMT)

The Independent

EDF Energy today announced it will cut its gas prices by 1.3 percent making it the last of the Big Six energy suppliers to reduce tariffs in reaction to falling wholesale costs. The French-owned firm said the cut will take effect from Feb. 11 and will benefit around one million customers. (http://ind.pn/1z884jy)

Developer Almacantar announced yesterday that it has started work converting Centre Point, which was developed by property tycoon Harry Hyams in 1966, into 82 luxury apartments. According to The Telegraph, the apartments will consist of 16 one-bedroom, 37 two-bedroom, 26 three-bedroom, two four-bedroom and one five-bedroom flats. (http://ind.pn/1BjRs6I)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
FOMC meeting announcement of federal funds rate to be reported at 14:00

ANALYST RESEARCH

Upgrades

Caterpillar (CAT) upgraded to Neutral from Underweight at JPMorgan
Freescale (FSL) upgraded to Strong Buy from Buy at Needham
Interface (TILE) upgraded to Buy from Neutral at Longbow
Southwest (LUV) upgraded to Outperform from Neutral at Credit Suisse
USG (USG) upgraded to Outperform from Neutral at Macquarie
VCA Inc. (WOOF) upgraded to Buy from Hold at Stifel
Yahoo (YHOO) upgraded to Buy from Fair Value at CRT Capital

Downgrades

AOL (AOL) downgraded to Market Perform from Outperform at Wells Fargo
Agios Pharmaceuticals (AGIO) downgraded to Neutral from Buy at Citigroup
American Airlines (AAL) downgraded to Neutral from Outperform at Credit Suisse
Bonanza Creek (BCEI) downgraded to Neutral from Buy at SunTrust
CVR Refining (CVRR) downgraded to Neutral from Buy at Citigroup
Capital One (COF) downgraded to Neutral from Buy at Guggenheim
Caterpillar (CAT) downgraded to Neutral from Buy at Longbow
Caterpillar (CAT) downgraded to Underweight from Neutral at Atlantic Equities
Commerce Bancshares (CBSH) downgraded to Underperform at Keefe Bruyette
Coty (COTY) downgraded to Neutral from Overweight at Piper Jaffray
Discover (DFS) downgraded to Neutral from Buy at Guggenheim
DuPont (DD) downgraded to Neutral from Overweight at JPMorgan
Express Scripts (ESRX) downgraded to Market Perform from Outperform at FBR Capital
First Cash Financial (FCFS) downgraded to Neutral from Buy at Janney Capital
Goodyear Tire (GT) downgraded to Neutral from Buy at SunTrust
Informatica (INFA) downgraded to Hold from Buy at Evercore ISI
InterContinental (IHG) downgraded to Hold from Buy at Deutsche Bank
Marten Transport (MRTN) downgraded to Market Perform from Outperform at Raymond James
National Oilwell (NOV) downgraded to Underperform from Neutral at Credit Suisse
ONEOK Partners (OKS) downgraded to Neutral from Buy at Citigroup
Open Text (OTEX) downgraded to Neutral from Outperform at Credit Suisse
Philips (PHG) downgraded to Underweight from Equal Weight at Barclays
RE/MAX downgraded to Underperform from Market Perform at JMP Securities
Siemens (SIEGY) downgraded to Underweight from Equal Weight at Barclays
South State (SSB) downgraded to Market Perform from Outperform at Fig Partners
Tesoro (TSO) downgraded to Neutral from Buy at Citigroup
Ultra Petroleum (UPL) downgraded to Sell from Neutral at Goldman
VMware (VMW) downgraded to Hold from Buy at Needham

Initiations

Diplomat Pharmacy (DPLO) initiated with an Outperform at RW Baird
Lion Biotechnologies (LBIO) initiated with a Buy at Jefferies
Madison Square Garden (MSG) initiated with a Hold at Jefferies
Synchrony Financial (SYF) initiated with a Positive at Susquehanna
Xylem (XYL) initiated with a Neutral at Boenning & Scattergood

COMPANY NEWS

Yahoo (YHOO) said it plans for tax-free spin-off of remaining stake in Alibaba (BABA)
Apple (AAPL) said Apple Watch device expected to ship in April, said it sold 74.5M iPhones and 21.42M iPads in Q1
CommScope (COMM) to acquire TE Connectivity's (TE) Telecom, Enterprise, & Wireless business in an all-cash transaction valued at approximately $3B
TE Connectivity (TE) authorized expansion of share repurchase program by $3B
BNY Mellon (BK) under review for violating Foreign Corrupt Practices Act
VMware (VMW) authorized additional $1B stock buyback
Walter Energy (WLT) suspended dividend

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Apple (AAPL), Yahoo (YHOO), MarketAxess (MKTX), Arctic Cat (ACAT), McCormick (MKC), Anthem (ANTM), TE Connectivity (TEL), STMicroelectronics (STM), Pulaski Financial (PULB), Flushing Financial (FFIC), Seacoast Banking (SBCF), PolyOne (POL), Customers Bancorp (CUBI), U.S. Steel (X), LegacyTexas Financial (LTXB), Total System (TSS), United Financial (UBNK), Dime Community (DCOM), Amdocs (DOX), Applied Micro Circuits (AMCC), VMware (VMW), Western Digital (WDC), Cytec Industries (CYT), Informatica (INFA), Freescale (FSL), ACE Limited (ACE), Flotek (FTK), Mercury Systems (mrcy), Illumina (ILMN), Marten Transport (MRTN), Juniper (JNPR), Calamos (CLMS), Abiomed (ABMD), Amgen (AMGN), Electronic Arts (EA)

Companies that missed consensus earnings expectations include:
UMB Financial (UMBF), First Busey (BUSE), Ethan Allen (ETH), Trustmark (TRMK), WesBanco (WSBC), MidSouth Bancorp (MSL), Black Box (BBOX), United Community Financial (UCFC), International Game (IGT), EZCORP (EZPW), Accuray (ARAY), Stryker (SYK), CONMED (CNMD)

Companies that matched consensus earnings expectations include:
AT&T (T), Praxair (PX), Open Text (OTEX)

NEWSPAPERS/WEBSITES

Apple Pay (AAPL) service gaining in market share, Bloomberg reports (EBAY, GOOG)
Airbus (EADSY) CEO promises "management consequences" after A400M delays, FT says
Royal Dutch Shell (RDS.A) to build petrochemicals plant in Iraq, Reuters reports
Citi (C) unit reaches agreement with NY AG on ChexSystems data, WSJ reports
Activist investor to pressure for new Pepsi (PEP) CEO in summer, NY Post reports
IBM (IBM) could begin layoffs today, Business Insider reports

SYNDICATE

Atara Biotherapeutics (ATRA) files to sell 3M shares of common stock
Opexa Therapeutics (OPXA) files rights offering
Shake Shack (SHAK) increases 5M share IPO range to $17.00-$19.00
Synergy Resources (SYRG) 16.2M share Spot Secondary priced at $10.75
Wafergen Biosystems (WGBS) files $30M mixed securities shelf
Ascendis Pharma (ASND) 6M share IPO priced at $18.00