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Frontrunning: February 18

  • Greece to submit loan request to euro zone, Germany resists (Reuters)
  • Ukrainian forces start to quit besieged town (Reuters)
  • Bank of Japan maintains policy, no surprises (FT)
  • China Considering Mergers Among Its Big State Oil Companies (WSJ)
  • Soros Shifts to Europe, Asia as Investors Cut U.S. Equities (BBG)
  • Putin tells Kiev to let troops surrender as Ukraine ceasefire unravels (Reuters)
  • Venezuela Squanders Its Oil Wealth (BBG)
  • Swiss prosecutor raids HSBC office, opens criminal inquiry (Reuters)
  • Meet Uber's German Nemesis (BBG)
  • IPO Flash Crash 2.0: BATS Moves Toward Another Try at an IPO (WSJ)
  • Traders Burned on Swiss Franc Carry Shun Free Money (BBG)
  • U.S. Congress questions plan to admit Syrian refugees (Reuters)
  • BOE Sees 2016 Inflation Pickup as U.K. Labor Market Strengthens (BBG)
  • Texas judge's immigration rebuke may be hard to challenge (Reuters)
  • Chesapeake alleges founder McClendon stole 'trade secrets' to start new firm (Reuters)

 

Fly On The Wall Pre-Market Buzz

WSJ

* The United States has decided to provide trucks equipped with machine guns and radios for calling in U.S. airstrikes to some moderate Syrian rebels, seeking to replicate the success Kurdish forces had over Islamic State last month. (http://on.wsj.com/1Jom9RG)

* China is considering forging megamergers among its big state oil companies, seeking to create new national champions and produce greater efficiencies. (http://on.wsj.com/1Bkssl4)

* Brokers who recommend retirement-account investments would have to put their clients' interests first ahead of personal gain under rules expected to be endorsed by the Obama administration as soon as next week. (http://on.wsj.com/1LaRNQi)

* BATS Global Markets, one of the three big stock-exchange operators in the United States, is preparing to replace its chief executive as it lays the groundwork for restarting an IPO, according to people familiar with the matter. (http://on.wsj.com/1ELbRoe)

* The chief executive officer of Starwood Hotels & Resorts Worldwide Inc abruptly resigned on Tuesday, following months of behind-the-scenes quarreling with shareholders and board members. (http://on.wsj.com/1ADcPp5)

* Chesapeake Energy Corp turned on the man who built it into a natural-gas powerhouse, accusing former Chief Executive Aubrey McClendon of stealing sensitive documents to start a rival company. In a lawsuit filed Tuesday, Chesapeake contends McClendon made off with confidential data and maps of oil and gas prospects before he left the company in early 2013. It alleges that he emailed the documents to a personal account and had an assistant print them out. (http://on.wsj.com/1JnQ3pm)

* Bank of America Corp CEO Brian Moynihan got a promotion last year but he is also taking a pay cut. Moynihan is expected to be paid $13 million for 2014, most of it in the form of restricted stock. That is down 7 percent from 2013 when he was paid $14 million a personal record. (http://on.wsj.com/1E4AHSa)

 

FT

Inflation has hit its lowest level in Britain in decades, as falling food and oil prices hand the Conservatives a pre-election boost.

Dogger Bank Creyke Beck project, the world's biggest offshore wind scheme has been given the go-ahead off the coast of Yorkshire, in a move the government claimed was likely to create hundreds of jobs.

House prices are still buoyant across most of the United Kingdom, but the pace of increases is continuing to slow, according to official figures from the Office for National Statistics.

UK's Labour has urged the party's activists to fight the election campaign on a platform of protecting the National Health Service, raising living standards and taxing the rich through a pocket-sized leaflet which is printed in bold lettering in short, punchy sentences.

 

NYT

* A California nursing home fined by the state for substandard care and facing multiple lawsuits by patients and their families has taken the extreme measure of filing for bankruptcy protection in the face of millions of dollars in potential payouts. (http://nyti.ms/19uVu5O)

* Many business owners in Greece say relief from austerity measures imposed by foreign creditors will not be enough to reinvigorate growth. (http://nyti.ms/1AjXUge)

* The Singaporean government's plan to stall a property boom that had become a symbol of inequality has worked only too well. A property sales tax of 18 percent for foreigners has reduced buyers' enthusiasm. (http://nyti.ms/1zmFQ2m)

* Snapchat is raising a round of venture capital that could value the company at up to $19 billion, according to a person with knowledge of the discussions. (http://nyti.ms/1MwbxPP)

* Boston Scientific Corp agreed to pay Johnson & Johnson $600 million in connection with Johnson & Johnson's botched acquisition of Guidant, a medical device company, in 2004.

 

Canada

THE GLOBE AND MAIL

** Cenovus Energy Inc, one of Canada's major oil sands firms, has turned to the market to raise at least C$1.5-billion ($1.21 billion) to help fund its already-reduced 2015 budget. The company said on Tuesday that it had raised the cash from a bought deal, selling 67.5 million shares for C$22.25 each. (http://bit.ly/17pnPZy)

** Tax relief is on the way this year for some of British Columbia's poorest families, but the provincial budget unveiled on Tuesday offers no new benefits to offset an array of government fee increases that most middle-class British Columbians will face. (http://bit.ly/17giNPl)

** The New Democratic Party is taking up the fight against Ottawa's anti-terrorism bill, planning to oppose the legislation on the grounds it gives too much power to security agencies to spy on the government's political enemies, party officials said. (http://bit.ly/1Laqwxg)

** The Royal Canadian Mounted Police pay council has compiled a "business case" that calls for a 10 percent raise, stating RCMP members have fallen far behind other police bodies. (http://bit.ly/1Blngxj)

** Bell Canada has tweaked its policy on tracking its cellphone customers' internet browsing habits, but public interest groups say the change does not go far enough. (http://bit.ly/1AEehHP)

NATIONAL POST

** SSQ Financial Group Inc is set to become the first Canadian insurer to address some of the chronic conditions that turn the body's immune system against itself. The company will also narrow the industry standard, the 30-day survival period, to 14 days. This means that, as long as those diagnosed survive two weeks, they will receive a life-insurance-style lump sum payment. (http://bit.ly/1La0sk7)

** One in five people working for Trinidad Drilling Ltd will lose their jobs as the company, one of Canada's largest drillers, is cutting spending, cutting salaries and trimming its workforce to survive the downturn in the oilfield. (http://bit.ly/1CHhVOO)

** Prime Minister Stephen Harper says "a lot" of Radio-Canada employees "hate" conservative values. Harper says those values that are loathed by many employees of CBC's French-language network are the same ones that he says are supported by a large number of Quebecers. (http://bit.ly/17gj051)

 

China

SOUTH CHINA MORNING POST

- The tenants of two units of a Tuen Mun industrial building are being evicted over suspected parallel trading activities. The Lands Department said the two units at Mai Kei Industrial Building were used for purposes other than industrial and they were in violation of the lease conditions. As landlords, the department evicted the tenants after repeated warnings.
(http://goo.gl/4TkXDu)

-Civil servants have been told to standardise the use of language in correspondence involving the city's sovereignty and its relations with the mainland.(http://goo.gl/QEvagC)

THE STANDARD

- Another meeting between pan-democratic lawmakers and Beijing officials on political reform may be held before the end of March, Secretary for Constitutional and Mainland Affairs Raymond Tam Chi-yuen revealed. (http://goo.gl/EVYXTu)

-Another 18 people died of the H3N2 flu virus yesterday, bringing the toll in the outbreak to 228. Centre for Health Protection controller Leung Ting-hung said it was the most to die of flu in a single day. (http://goo.gl/ES0G9z)

 

Britain

The Times

INFLATION FALLS TO 0.3 PCT IN JANUARY AS BRITAIN HEADS FOR DEFLATION

Inflation has fallen to its lowest level on record as the Bank of England predicts that Britain is heading for deflation. New figures from the Office for National Statistics (ONS) showed that the annual rate of consumer price inflation dropped to 0.3 percent in January, down from 0.5 percent in December. (http://thetim.es/1FZ3qXv)

FAIRFAX BUYS BRIT INSURANCE FOR 1.22 BLN POUNDS

Lloyd's of London insurer Brit Insurance has agreed to a takeover by Canada's Fairfax Financial Holdings for 1.22 billion stg in the latest consolidation in the sector. (http://thetim.es/1zlVo6A)

The Guardian

TESCO ANNOUNCES JOHN ALLAN AS NEW CHAIRMAN

Tesco has named John Allan, chairman of the housebuilder Barratt Developments and the card-processor Worldpay, as its new chairman, completing a sweeping overhaul at the top of Britain's biggest retailer. (http://bit.ly/1zMhQ7H)

ARTS AND CULTURE BEING 'SYSTEMATICALLY REMOVED FROM UK EDUCATION SYSTEM'

Creativity, culture and the arts are being systematically removed from the education system, with dramatic falls in the number of pupils taking GCSEs in design, drama and other craft-related subjects, a new report has revealed. (http://bit.ly/1zLLyd7)

The Telegraph

TOP LABOUR FIGURE DUMPS ED MILIBAND FOR UKIP

Harriet Yeo, former chairman of Labour's National Executive Committee and one of Labour's most senior figures, has resigned from the party and will be supporting Ukip because of Ed Miliband's failure to offer a referendum on Britain's membership of the European Union. (http://bit.ly/1vT5C2i)

BP SAYS CO2 EMISSIONS UNSUSTAINABLE, WARNS ON GLOBAL WARMING

BP has warned that carbon dioxide emission levels from burning fossil fuels are unsustainable unless the international community unilaterally introduces tougher binding regulations on atmospheric pollution. (http://bit.ly/19tqoeS)

Sky News

ENERGY REGULATOR FACES BLOW FROM CMA REPORT

The Competition and Markets Authority (CMA) is likely to label the energy industry's regulatory framework as an ongoing "theory of harm" that requires further investigation. The development, which will be included in an issues statement published by the CMA, will represent a blow to Ofgem, the energy regulator. (http://bit.ly/1vdo7xV)

The Independent

TORIES ACCUSED OF HIDING 'TOTALLY SHOCKING' REPORT INTO NHS MANAGEMENT

A withering assessment of NHS management by the Conservative peer Lord Stuart Rose, who is credited with turning around the fortunes of Marks & Spencer, was submitted to the Department of Health in December but has still not been published by the government. (http://ind.pn/1Em9l82)

Fly On The Wall Pre-Market Buzz

 ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Housing starts for January at 8:30--consensus down 1.7% to 1.07M rate
Building permits for January at 8:30--consensus up 0.9% to 1.07M rate
Producer Price Index for January at 8:30--consensus down 0.4%
Industrial production for January at 9:15--consensus up 0.3%
FOMC minutes from Jan. 27-28 meeting to be released at 14:00

ANALYST RESEARCH

Upgrades

Agnico Eagle (AEM) upgraded to Overweight from Neutral at JPMorgan
Amarin (AMRN) upgraded to Buy from Neutral at SunTrust
Carlyle Group (CG) upgraded to Buy from Neutral at Citigroup
Danone (DANOY) upgraded to Neutral from Underperform at Exane BNP Paribas
Express (EXPR) upgraded to Overweight from Neutral at Piper Jaffray
Legg Mason (LM) upgraded to Buy from Hold at Jefferies
Rackspace (RAX) upgraded to Outperform from Sector Perform at Pacific Crest
Valero (VLO) upgraded to Outperform from Neutral at Credit Suisse
Wolverine World Wide (WWW) upgraded to Neutral from Underperform at Sterne Agee

Downgrades

CenturyLink (CTL) downgraded to Sell from Neutral at Goldman
EXFO Inc. (EXFO) downgraded to Underperformer from Sector Performer at CIBC
Equity One (EQY) downgraded to Hold from Buy at Evercore ISI
Escalade (ESCA) downgraded to Hold from Buy at Wunderlich
Financial Engines (FNGN) downgraded to Neutral from Overweight at Piper Jaffray
Fleetmatics (FLTX) downgraded to Sector Perform from Outperform at Pacific Crest
Insulet (PODD) downgraded to Hold from Buy at Canaccord
Linear Technology (LLTC) downgraded to Sell from Neutral at UBS
Pebblebrook Hotel (PEB) downgraded to Neutral from Outperform at Credit Suisse
Qihoo 360 (QIHU) downgraded to Hold from Buy at Jefferies
Sasol (SSL) downgraded to Sell from Neutral at UBS
Waddell & Reed (WDR) downgraded to Hold from Buy at Jefferies
Williams-Sonoma (WSM) downgraded to Neutral from Overweight at Piper Jaffray
zulily (ZU) downgraded to Neutral from Outperform at RW Baird

Initiations

C.H. Robinson (CHRW) initiated with a Neutral at UBS
Echo Global (ECHO) initiated with a Buy at UBS
Heartland Express (HTLD) initiated with a Sell at UBS
Knight Transportation (KNX) initiated with a Buy at UBS
McGraw Hill Financial (MHFI) initiated with a Positive at Susquehanna
Neuralstem (CUR) initiated with a Buy at Brean Capital
Swift Transport (SWFT) initiated with a Buy at UBS
W.P. Carey (WPC) initiated with a Market Perform at Wells Fargo
Werner (WERN) initiated with a Neutral at UBS

COMPANY NEWS

Boston Scientific (BSX) announced the settlement of the breach of merger agreement lawsuit brought by Johnson & Johnson (JNJ) against Guidant, stemming from Boston Scientific's acquisition of Guidant
Perry Ellis (PERY) said West Coast port disruption impacts Q4, FY15 revenues by $23M
Owens & Minor (OMI) initiated search for successor to CEO, increased dividend 1% to 25.25c per share
Fossil Group (FOSL) and Kate Spade (KATE) announced the companies have signed a global licensing agreement for the design, development and distribution of kate spade new york watches through 2025
Fossil sees FY15 results 'significantly negatively impacted' by currency, restructuring
Caterpillar (CAT) disclosed grand jury subpoena from the U.S. District Court for the Central District of Illinois. The subpoena requests documents and information from the company relating to, among other things, financial information concerning U.S. and non-U.S. Caterpillar subsidiaries

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Actavis (ACT), Cinemark (CNK), Allegion (ALLE), Mazor Robotics (MZOR), Cimarex Energy (XEC), Terex (TEX), Consumer Portfolio (CPSS), Viper Energy (VNOM), Innospec (IOSP), Kaiser Aluminum (KALU), JBT Corporation (JBT), Neenah Paper (NP), Phototronics (PLAB), Premiere Global (PGI), Varonis (VRNS), FirstEnergy (FE), KAR Auction (KAR), Enphase Energy (ENPH), Flowserve (FLS), Cloud Peak (CLD), Hatteras Financial (HTS), Veeco (VECO), Analog Devices (ADI), Masimo (MASI), Potbelly (PBPB), Borderfree (BRDR), Jack in the Box (JACK), Chemed (CHE), Rogers Corp (ROG), Retail Properties of America (RPAI), ANADIGICS (ANAD), Eagle Pharmaceuticals (EGRX), AMC Entertainment (AMC), Exactech (EXAC), Rackspace (RAX)

Companies that missed consensus earnings expectations include:
Hilton (HLT), Huntsman (HUN), Owens & Minor (OMI), Valmont (VMI), CF Industries (CF), Norwegian Cruise Line (NCLH), Diamondback Energy (FANG), Greenlight Capital (GLRE), Innophos Holdings (IPHS), Watts Water (WTS), FreightCar America (RAIL), PHH Corp. (PHH), La-Z-Boy (LZB), Devon Energy (DVN), ZixCorp (ZIXI), Blackstone Mortgage (BXMT), Civitas Solutions (CIVI), Fossil (FOSL), T2 Biosystems (TTOO)

Companies that matched consensus earnings expectations include:
Healthcare Realty Trust (HR), Ultra Clean (UCTT), Midcoast Energy (MEP), MedAssets (MDAS), Agilent (A)

NEWSPAPERS/WEBSITES

HSBC (HSBC) Swiss offices searched by Geneva authorities, WSJ reports
New York Times (NYT) CEO denies talent flight, Re/code reports
Fosun Pharma interested in acquiring Lumenis (LMNS), Globes reports
Rolls-Royce (RYCEY) plans to build SUV vehicle, Financial Times reports
Facebook (FB) developing virtual reality apps, Re/code reports

SYNDICATE

Aramark (ARMK) announces 30M share secondary offering for holders
Inotek Pharmaceuticals (ITEK) 6.667M share IPO priced at $6.00
Neurocrine (NBIX) files to sell $225M in common stock
Phillips 66 Partners (PSXP) 5.25M share Secondary priced at $75.50
Rock Creek files to sell 27.25M shares of common stock for holders