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Frontrunning: February 10

  • Greek defense minister says Greece has Plan B if EU rigid on deal (Reuters)
  • Germany rejects Greek claim for World War Two reparations (Reuters)
  • Greece to Seek $11.3 Billion in Financing to Avoid Funding Crunch (BBG)
  • Lazard Sees $113 Billion Greek Debt Cut as ‘Reasonable’ (BBG)
  • U.S. Navy Considers Setting Up Ship Base in Australia (BBG)
  • As U.S. Exits, China Takes On Afghanistan Role (WSJ)
  • EU money funds cut exposure to bank debt (FT)
  • Dalio’s Bridgewater Fund Said to Rise 8.3% in January (BBG)
  • Oil-Price Rebound Predicted (WSJ)
  • U.S. Is Seeking Felony Pleas by Big Banks in Foreign Currency Inquiry (NYT)
  • China Inflation Drops to Five-Year Low in January (WSJ)
  • Top Turkish judge warns of judiciary becoming "instrument of revenge" (Reuters)
  • Ukraine Begins Offensive Against Rebels While U.S. Weighs Arms Aid (BBG)
  • Central Bankers Bash ‘Audit the Fed’ Bill (WSJ)
  • China Injects Funds Into Financial System (WSJ)
  • Egypt’s Currency War: The Devaluation Eclipsed by Russia, Brazil (BBG)

 

Overnight Media Digest

WSJ

* Qualcomm Inc said it will pay a $975 million fine as part of a long-awaited settlement with Chinese antitrust authorities, which also includes several changes to Qualcomm's practices in licensing patents for mobile phones sold in China. (http://on.wsj.com/1CbY9Ir)

* McDonald's Corp said continued steep declines in same-store sales in Japan and China in January outweighed a slight improvement in the U.S., extending the slump that has roiled the fast-food company. (http://on.wsj.com/1y3hbOR)

* Cathy Engelbert was named as the new chief executive of Deloitte LLP, effective March 11. The 50-year-old becomes one of the most senior women in the financial-services industry, which in some areas trails behind other sectors in promoting women to high-level positions. (http://on.wsj.com/1KBC3oY)

* Members of the United Auto Workers union have ratified a four-year contract with truck maker Navistar International Corp that will provide workers with a combination of wage increases and bonuses, while maintaining a two-tier wage scale for new hires and veteran employees. (http://on.wsj.com/1A7SgAO)

* Three Federal Reserve officials criticized proposed legislation to expand congressional oversight of the central bank's interest-rate decisions, pushing back against the bill as it is gaining attention. Fed governor Jerome Powell called the bill, known to supporters as "Audit the Fed," misguided. (http://on.wsj.com/1COauaX)

 

FT

Two Singaporean shipbuilders - Keppel Corporation and Sembcorp Marine - and three other Brazilian shipbuilders have been accused of corruption and participating in a bribe-for-contracts scheme at Brazil state-owned oil group Petrobras.

Towergate is considering appointing David Ross - who is currently leading New York-based rival Arthur J Gallagher - as its new CEO. The UK-based insurance broker has been without a leader since October and has 1 billion pounds ($1.52 billion) in debt.

Chinese developer Dalian Wanda has won an auction to acquire sports rights agency Infront Media for 1 billion euros ($1.13 billion) from private equity group Bridgepoint. Infront Media is owned by the nephew of FIFA President Sepp Blatter.

Vistara - an airline joint venture setup by India's Tata Group and Singapore Airlines aims to go beyond ferrying passengers domestically and wants to feed India's rapidly growing appetite for international travel.

 

NYT

* Governor of Illinois Bruce Rauner, the newly elected Republican who has often criticized public sector unions, took his first step toward curbing their power by announcing an executive order that would bar unions from requiring all state workers to pay the equivalent of dues. (http://nyti.ms/1Dzs9Cq)

* Chipmaker Qualcomm Inc said it would pay $975 million for violating China's antimonopoly law. As part of the deal, Qualcomm will also offer its licenses for third- and fourth-generation communications systems for high-speed wireless data to smartphones, at a sharp discount to what it charges companies elsewhere. (http://nyti.ms/1uybX28)

* The Justice Department is pushing some of the biggest banks on Wall Street, including, for the first time in decades, American institutions to plead guilty to criminal charges that they manipulated the prices of foreign currencies. (http://nyti.ms/1AdRsc1)

* Elvira Nabiullina, governor of the Bank of Russia, views the Ruble's steep drop as a painful but necessary step to wean the nation off imports. (http://nyti.ms/1AdTFEl)

* Critical elements of Puerto Rico's plan to avert financial disaster are in jeopardy, after a federal judge struck down a law that allowed the government to restructure certain debts. (http://nyti.ms/1COfMmJ)

 

Canada

THE GLOBE AND MAIL

** Auto investment soared in Mexico last year and light vehicle production topped three million for the first time, underscoring Canada's decline to junior-partner status in North American Free Trade Agreement when it comes to the auto industry. (http://bit.ly/1z3CeC9)

** Canadian Prime Minister Stephen Harper shook up his foreign policy team with a mini-shuffle that moves his most valuable lieutenant Jason Kenney to Defence as the date approaches for Canada to decide on extending the politically sensitive military mission in Iraq. (http://bit.ly/1zFF3wZ)

** Ontario Provincial Police will question Premier Kathleen Wynne as part of the criminal investigation into bribery allegations against one of her top aides. The move comes after officers accused Wynne's deputy chief of staff for breaking anti-corruption laws by offering a former Liberal candidate a government job in exchange for dropping out of the Sudbury by-election race. (http://bit.ly/1Deb6p4)

NATIONAL POST

** Plans for a new no-frills airline are in flux after Canada Jetlines Ltd scrapped a proposed C$50 million ($40 million) IPO, but the company's president said a new deal is in the works. The company said on Friday that a reverse takeover deal with a capital-pool company called Inovent Capital Inc had been abandoned. (http://bit.ly/1zr8FJO)

** Queen's University says Melody Torcolacci, a professor who has come under fire for teaching anti-vaccination materials, will not lead the course in question for the rest of the term. The university had made headlines last week when a PowerPoint presentation from Torcolacci's first-year class showed what looked like a heavy anti-vaccination focus in her teaching. (http://bit.ly/1Ccwqau)

** Aboriginals who were adopted into white families during the 1960s "Scoop" are suing the federal government for the loss of their culture and emotional trauma. Almost 1,200 adoptees have filed a class-action lawsuit in Saskatchewan, seeking compensation from Ottawa for "cultural genocide". (http://bit.ly/1KIcbGh)

 

Hong Kong

SOUTH CHINA MORNING POST

-- The growth in the number of tourists visiting Hong Kong will slow down this year after a robust increase in 2014, the Tourism Board is predicting, while it noted that spending last year by tourists, excluding day-trippers, fell for the first time in a decade. (bit.ly/1zQNPHp)

-- Guangdong saw its slowest economic growth in a quarter of a century last year, with three main indicators failing to reach their targets. The province's economy grew 7.8 percent last year, and was short of the targeted 8.5 percent, as investment, exports and consumption had lost momentum, according to governor Zhu Xiaodan. (bit.ly/1M7HjT4)

THE STANDARD

-- Hong Kong Disneyland Resort recorded a golden year in 2014, reaping HK$332 million ($42.82 million) in profit, up 36 percent from 2013 due to a rise in per capita guest spending and an increase in visitor numbers. (bit.ly/193w8vA)

-- Hong Kong could be heading for an acute shortage of the H3N2 flu vaccine, which will mean a priority system for people needing jabs. For health authorities have been able to only order between 80,000 and 100,000 bit.ly/1DZQajDdoses - 70 percent less than last year's order of 260,000 to 280,000 - and they will not arrive until at least April. ()

-- Clothing retail chain I.T Limited will bid for a plot of land in Kunshan in Jiangsu province, hoping to set up its first logistics and distribution center for HK$372 million. The firm is leasing several warehouses in mainland cities and facing long-term rental pressure, said chairman Sham Kar-wai. (bit.ly/1y1ODVH)

HONG KONG ECONOMIC JOURNAL

-- Sun Hung Kai Properties said it would invest HK$7 billion ($902.86 million) in a residential development project in Tin Shui Wai awarded by MTR Corp after the develper beat three other consortiums in the tender.

-- Home appliances retailer GOME Electrical Appliances Holding Ltd said it has signed a 20 billion yuan purchase order with Haier Group, parent of Haier Electronics Group Co Ltd. Some 16 billion yuan is targetted to be from offline stores sales and 4 billion yuan from online sales.

HONG KONG ECONOMIC TIMES

-- Chinese developer Greenland Hong Kong Holdings Ltd said its sales rose three times year on year last year to 12.9 billion yuan ($2.07 billion). It expects sales to increase to 18 billion yuan in 2015.

 

Britain

The Times

A former government minister and the ex-head of Revenue & Customs face being called before MPs to explain how Britons were able to hide 135 million pounds ($205.52 million) in the Swiss branch of HSBC without facing criminal sanctions. (http://thetim.es/1vAWhw8)

Thousands of British motorists caught speeding on the Continent could be tracked down and fined in the UK under new European Union legislation. (http://thetim.es/1zQNjZU)

The Guardian

HSBC was fighting an international firestorm on Monday over revelations that its Swiss private bank helped clients conceal undeclared accounts and provided services to criminals and corrupt businessmen. (http://bit.ly/16Mbgra)

The Bank of England governor, Mark Carney, has urged the G20 to mount a big push to implement global regulatory reforms, fearing that governments may be tiring of nonstop rule-making since the financial crisis six years ago. (http://bit.ly/1zqHEpU)

The Telegraph

One of the richest men in Thailand, Dhanin Chearavanont, has approached Tesco Plc about a multi-billion pound deal to buy its business in the country. (http://bit.ly/16IJBHc)

The Co-operative Pharmacy brand is to disappear after more than 70 years as part of a revamp of the high street chain by its new owners. (http://bit.ly/1zQPpcd)

Sky News

A report says HSBC's Swiss arm helped wealthy customers avoid tax, months after Indian elections focused on battling tax evasion. (http://bit.ly/1uxlNRU)

Royal Bank of Scotland Group Plc has called on regulators to intervene after accusing firms offering free product trials of taking its customers for a ride. (http://bit.ly/1IGVSO5)

The Independent

A police force was forced to apologise today after one of its officers told a newsagent to hand over the names of four people after they bought a commemorative edition of the Charlie Hebdo magazine. (http://ind.pn/1CLVUAL)

The new privacy policy for Samsung Electronics Co Ltd's smart TVs allows the company and its partners to listen in on everything their users say. The policy has drawn the ire of internet users, who compared it with George Orwell's dystopian fiction 1984. (http://ind.pn/1Dx7Khb)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
NFIB small business optimism index for January at 9:00--consensus 101.0
Wholesale trade inventories for December at 10:00--consensus up 0.2%
JOLTS job openings for December at 10:00--consensus 4.99M

ANALYST RESEARCH

Upgrades

Citi (C) upgraded to Buy from Hold at Deutsche Bank
CoreSite Realty (COR) upgraded to Buy from Neutral at BofA/Merrill
CyberArk (CYBR) upgraded to Outperform from Market Perform at William Blair
Equity Residential (EQR) upgraded to Buy from Neutral at BofA/Merrill
Hasbro (HAS) upgraded to Outperform from Market Perform at BMO Capital
St. Jude Medical (STJ) upgraded to Buy from Neutral at Sterne Agee
TECO Energy (TE) upgraded to Buy from Neutral at UBS

Downgrades

AES Corp. (AES) downgraded to Neutral from Buy at BofA/Merrill
American Campus (ACC) downgraded to Neutral from Buy at Citigroup
Approach Resources (AREX) downgraded to Sell from Hold at Miller Tabak
Bruker (BRKR) downgraded to Neutral from Buy at BofA/Merrill
EPR Properties (EPR) downgraded to Neutral from Buy at Citigroup
Fifth Street Finance (FSC) downgraded to Equal Weight from Overweight at Barclays
Fifth Street Finance (FSC) downgraded to Market Perform at Raymond James
Fifth Third Bancorp (FITB) downgraded to Hold from Buy at Deutsche Bank
Gap (GPS) downgraded to Neutral from Buy at Mizuho
Golub Capital (GBDC) downgraded to Market Perform from Outperform at Wells Fargo
Masco (MAS) downgraded to Neutral from Buy at MKM Partners
Masco (MAS) downgraded to Outperform from Strong Buy at Raymond James
Occidental Petroleum (OXY) downgraded to Neutral from Buy at Citigroup
SPX Corp. (SPW) downgraded to Sell from Hold at Deutsche Bank
Transocean (RIG) downgraded to Underperform from Neutral at Credit Suisse

Initiations

AmTrust (AFSI) initiated with a Buy at SunTrust
Cempra (CEMP) initiated with a Buy at Janney Capital
County Bancorp (ICBK) initiated with an Outperform at RW Baird
Hain Celestial (HAIN) initiated with an Outperform at Bernstein
Insmed (INSM) initiated with a Buy at Janney Capital
Leju (LEJU) initiated with a Buy at BofA/Merrill
Old Line Bancshares (OLBK) initiated with an Outperform at RW Baird
Patriot National (PN) initiated with a Buy at SunTrust
Patriot National (PN) initiated with a Buy at UBS
Patriot National (PN) initiated with an Outperform at BMO Capital
Patriot National (PN) initiated with an Outperform at JMP Securities
Pernix Therapeutics (PTX) initiated with a Buy at Cantor
Primerica (PRI) initiated with a Hold at Jefferies
Stifel Financial (SF) initiated with a Buy at Evercore ISI
Unilife (UNIS) initiated with an Overweight at Piper Jaffray

COMPANY NEWS

Qualcomm (QCOM) confirmed settlement in China, to pay $975M fine
Gap (GPS) reported January SSS down 3%
Aeropostale (ARO) announced that Marc Miller, EVP and CFO, has been appointed EVP and COO. The company also said that David Dick will join the company as SVP and CFO on February 17
UBS (UBS) said SEC, NY AG investigating sales of unregistered securities
GNC Holdings (GNC) refuted claims made by the New York State Attorney General in his February 2 letter with original test results and the results of retesting that was performed on the product lots cited in the letter

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Wyndham (WYN), Spirit Airlines (SAVE), RetailMeNot (SALE), Globe Specialty Metals (GSM), Full Circle Capital (FULL), Horace Mann (HMN), Yodlee (YDLE), INTL FCStone (INTL), AMAG Pharmaceuticals (AMAG), Inphi (IPHI), Brixmor (BRX), Comstock Resources (CRK), Compass Minerals (CMP), CSC (CSC), Newport (NEWP), Meru Networks (MERU), ICU Medical (ICUI), MaxLinear (MXL), Model N (MODN), GigOptix (GIG), Primerica (PRI), Premier (PINC), Waste Connections (WCN), Molina Healthcare (MOH), Cascade Microtech (CSCD), ESCO Technologies (ESE), Danaos (DAC), Montpelier Re (MRH), RealD (RLD), Qualys (QLYS)

Companies that missed consensus earnings expectations include:
Regeneron (REGN), Genesee & Wyoming (GWR), Talisman Energy (TLM), NGL Energy Partners (NGL), Otter Tail (OTTR), Albany International (AIN), Dun & Bradstreet (DNB), Good Times Restaurants (GTIM), Argo Group (AGII), KapStone (KS), Orion Energy (OESX), CM Finance (CMFN), Selectica (SLTC), Coupons.com (COUP), Unilife (UNIS), First Marblehead (FMD), Neurocrine (NBIX), Allison Transmission (ALSN), Arrowhead (ARWR), Blue Capital (BCRH)

Companies that matched consensus earnings expectations include:
Allot Communications (ALLT), Crown Holdings (CCK), Liberator Medical (LBMH), Silver Spring (SSNI)

Greenbrier (GBX) backs FY15 EPS view $5.20-$5.50, consensus $5.42
Qualcomm (QCOM) raises FY15 EPS view to $4.85-$5.05 from $4.75-$5.05
Gap (GPS) raises Q4 EPS view to 73c-74c, consensus 68c, raises FY14 EPS view to $2.86-$2.87, consensus $2.76
Aeropostale (ARO) sees Q4 EPS (6c)-(1c), consensus (27c)
Urban Outfitters (URBN) reports Q4 revenue $1.01B, consensus $997.69M

NEWSPAPERS/WEBSITES

Disney's (DIS) Marvel, Sony (SNE) agree on Spider-Man movie production, WSJ reports
Telefonica (TEF) undecided on response to AT&T's (T) Mexico push, Financial Times says
IBM (IBM) files lawsuit against Priceline (PCLN) over patent royalties, Bloomberg reports
Samsung (SSNLF), Microsoft (MSFT) settle Android patent payment dispute, Re/code reports
Apple (AAPL) planning debut bond sale in Swiss francs, WSJ reports
Ireland may reject IAG (ICAGY) offer for Aer Lingus, Bloomberg says (BAIRY)

SYNDICATE

Atara Biotherapeutics (ATRA) files to sell 3M shares of common stock
Avenue Financial (AVNU) 2.5M share IPO priced at $11.00
Biocept (BIOC) 8M share Secondary priced at $1.25
Ensign Group (ENSG) files to sell 2.5M shares of common stock
Health Insurance Innovations (HIIQ) files to sell 800,992 shares of Class A common
Idera Pharmaceuticals (IDRA) files to sell $75M in common stock
RedHill Biopharma (RDHL) files to sell ADS shares, no amount given
Rose Rock Midstream (RRMS) files to sell 2M common units representing limited partners
Teva (TEVA) files automatic mixed securities shelf