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Frontrunning: February 9

  • Greek Risk Draws Global Concern on Lehman Echo Warnings (BBG)
  • Merkel to urge caution in U.S. as pressure builds to arm Ukraine forces (Reuters)
  • West Races to Defuse Ukraine Crisis (WSJ)
  • German-French Push Yields Ukraine Summit Plan With Putin (BBG)
  • Swiss Leaks lifts the veil on a secretive banking system (ICIJ)
  • Italy Lenders Seen Cleansing Books Amid Bad-Bank Plans (BBG)
  • G-20 Finance Chiefs Face Tough Test in Istanbul (WSJ)
  • Demand for OPEC Crude Will Rise This Year, Says Group (WSJ)... or rather prays
  • U.S. Banks Say Soaring Dollar Puts Them at Disadvantage (WSJ)
  • Oil steadies near $58 as U.S. rig count offsets Chinese data (Reuters)
  • Turkish Lira Falls to Record as Erdogan Attacks Monetary Policy (BBG)
  • Behind RadioShack’s Collapse Is a Tiny Distressed Lender (BBG)
  • British Muslims protest in London against Charlie Hebdo cartoons (Reuters)
  • Saxo Bank Takes Hard Line on Clients’ Swiss Franc Losses (WSJ)
  • HSBC admits Swiss bank failings over client taxes (Reuters)
  • Conquering China’s Mountain of Debt (BBG)
  • U.S. companies may not be fleeing due to high tax rate, Reuters analysis shows (Reuters)

 

Overnight Media Digest

WSJ

* The United States and Germany are struggling to maintain a united front against an unflinching Russia ahead of a crucial week of high-stakes, top-level diplomacy on the Ukraine crisis. (http://on.wsj.com/1Fo724Y)

* The strengthening U.S. dollar is rippling through the financial system in unexpected ways, revealing what bankers say is a hidden flaw in a Federal Reserve proposal to increase capital cushions at the nation's largest banks. (http://on.wsj.com/1ALSWM7)

* Dubai, through its government and ruler-owned real-estate conglomerates, is leading a construction frenzy of ambitious developments that seem to cost increasingly more with each new announcement. Dubai has slowly but surely clawed its way out of the hole it dug for itself in 2009 when a series of government-linked companies, including several under the direct control of the ruler, were unable to pay lenders on time and called for a standstill on repayments. (http://on.wsj.com/16Dp0Eo)

* As the telecom industry marches forward, Frontier Communications Corp is growing quickly by snapping up the unloved telephone lines its bigger competitors are leaving behind. (http://on.wsj.com/1znmpFq)

* Copenhagen-based Saxo Bank has taken an aggressive approach to handling customer foreign-exchange losses that followed the Swiss central bank's decision to let the franc rise against the euro. (http://on.wsj.com/1A48ZoK)

* The anti-austerity position taken by the just-elected government toward Greece's creditors has given new hope to many Athenians, even those who did not vote for the leftist Syriza party. (http://on.wsj.com/1yYYBJ9)

* Morgan Stanley is joining the hedge-fund retreat. The New York bank is looking to sell its 19 percent stake in the $17.5 billion London-based Lansdowne Partners LLP, according to people familiar with the matter. (http://on.wsj.com/1DvraTP)

* Coca-Cola Co and PepsiCo Inc likely will highlight rough going abroad but improving conditions at home when they publish fourth-quarter results this week. (http://on.wsj.com/1DSSskY)

* Credit Suisse Group AG is launching a specialty finance company to invest in the unrated debt of small or midsize U.S. companies, following in the footsteps of rivals such as Goldman Sachs Group Inc and a handful of private-equity giants. (http://on.wsj.com/1C9IqvW)

 

FT

The U.S. Department of Justice will investigate the sale of "structured products" to investors by Barclays and UBS without disclosing the returns they made on currency trades used to generate the products' returns.

Warren Buffett is facing pressure from investment analysts to disclose more information on his $370 billion company Berkshire Hathaway, particularly about its large insurance business.

Sienna Capital, an affiliate of Groupe Bruxelles Lambert , has invested 150 million euros in Primestone - a hedge fund that aims to buy stakes in listed companies and work alongside management to increase shareholder value.

British private equity group Terra Firma will change its approach to investment and put 1 billion euros ($1.13 billion) of its own capital into deals as it seeks to restore its reputation after the debt-laden takeover of EMI in 2007.

 

NYT

* The Consumer Financial Protection Bureau is starting to draw up regulations that could sharply reduce the number of unaffordable loans with high interest rates from payday lenders.(http://nyti.ms/170xu9v)

* A year after it was announced, Comcast Corp's audacious acquisition of Time Warner Cable Inc remains in limbo as Washington regulators scrutinize the deal. The air of inevitability around Comcast's proposed $45 billion acquisition of Time Warner Cable has dissipated as the F.C.C. prepares to vote on a proposal to regulate the Internet like a utility. (http://nyti.ms/1uu1dlB)

* The New York Fire Department will receive additional funding in Mayor Bill de Blasio's budget to increase staffing in hopes of shaving seconds off ambulance response times, city officials said. (http://nyti.ms/1M4DVIE)

* Investors in billions of dollars of Puerto Rico bonds secured a major legal victory when a federal judge ruled that the commonwealth's recently enacted debt-restructuring law was unconstitutional. (http://nyti.ms/1yZ1XM2)

* A pair of fast-growing digital media companies, Vox and BuzzFeed, have landed their first interviews with President Obama. The interviews are the latest indication that Vox and BuzzFeed News have emerged as serious news organizations, and are a further sign of the Obama administration's efforts to connect with millennials. (http://nyti.ms/1yZ3rpE)

 

Canada

THE GLOBE AND MAIL

** Tim Hortons Inc has apologized after the owner of a Vancouver location was seen dumping a bucket of water on a homeless man sleeping outside. The incident at the Tim Hortons was first reported on Friday by witnesses on social media, where posts urging a boycott were shared thousands of times. (http://bit.ly/1CablQC)

** After suffering a clear loss in the Canadian Supreme Court, opponents of physician-assisted suicide now want to persuade the federal government to impose the tightest possible restrictions on the medical procedure. Constitutional-law experts and political insiders said the most likely option at this point is new legislation within the 12-month time frame that was offered by the Supreme Court in its unanimous ruling on Friday. (http://bit.ly/1A9AhZg)

** The Canadian army somehow lost three highly sophisticated, precision-guided artillery shells on its ways out of Afghanistan in an embarrassing case that resulted in an almost two-year investigation. (http://bit.ly/1yZNek5)

NATIONAL POST

** Fourth-quarter figures released last week by the Canadian Venture Capital Association show the information and communications technology sector scooped the largest share of venture capital funding in 2014 with C$1.3 billion ($1.04 billion) - up from C$1.1 billion in 2013. (http://bit.ly/1ERZ1rH)

** London-based barrister Amal Clooney is going to Cairo for visiting the family of Mohamed Fahmy, a Canadian citizen who was former Cairo bureau chief for Al Jazeera English and has been jailed for over a year in Egypt on charges of falsifying news during civil unrest and having terrorist links to the Muslim Brotherhood. (http://bit.ly/1Dw81Bg)

 

Britain

The Times

The new boss of Centrica Plc is facing calls to cut its dividend for the first time in almost a decade as it grapples with the oil price collapse and falling profits for household gas and electricity. (http://thetim.es/1ER2ir7)

Inflation will turn negative this year because of the dramatic slide in energy costs, the Bank of England will predict this week. (http://thetim.es/1Ky7OPI)

The Guardian

HSBC's Swiss banking arm helped wealthy customers dodge taxes and conceal millions of dollars of assets, doling out bundles of untraceable cash and advising clients on how to circumvent domestic tax authorities, according to a huge cache of leaked secret bank account files. (http://bit.ly/1zM7Tun)

A leading free market thinktank has issued a fierce attack on George Osborne, accusing him of cynical electioneering after the chancellor announced the amount of market-beating "pensioner bonds", available to people over 65, would be increased to 15 billion pounds ($22.86 billion) by the general election in May. (http://bit.ly/1zMCmZq)

The Telegraph

The Labour Party has begun a desperate attempt to quell growing accusations that the party is anti-business after Ed Miliband's attack on the chairman of Boots Company Plc, insisting it is "aggressively pro-business". (http://bit.ly/1vzm081)

Tesco chief executive Dave Lewis's attempts to heal relationships with suppliers suffered a blow yesterday as it emerged that the troubled supermarket continues to put pressure on already squeezed small businesses. (http://bit.ly/1DuSAZT)

Sky News

Ministers are to unveil a fresh drive urging consumers to switch energy companies just weeks before the main parties pledge renewed oversight of the industry in their general election manifestos. (http://bit.ly/1vzm9IP)

Tax havens such as Bermuda, Jersey and Guernsey will have six months to open their books or face international blacklisting if the Labour Party wins the general election in May, Ed Miliband has vowed. (http://bit.ly/1CJoNOa)

The Independent

Poundland Group Plc is set to take over rival discounter 99p Stores for 55 million pounds in a deal that would see the company become one of the biggest retailers on the high street. (http://ind.pn/1zVIEZN)

The accountancy giant PricewaterhouseCoopers is promoting tax avoidance by multinational firms "on an industrial scale," MPs said in a damning report published today. (http://ind.pn/1IduJSF)

 

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Labor market conditions index change for January at 10:00--prior 6.1

ANALYST RESEARCH

Upgrades

Advanced Semiconductor (ASX) upgraded to Overweight from Neutral at JPMorgan
Conn's (CONN) upgraded to Buy from Hold at KeyBanc
Delhaize (DEG) upgraded to Neutral from Underperform at Exane BNP Paribas
Frontier Communications (FTR) upgraded to Neutral from Sell at Citigroup
Harris (HRS) upgraded to Buy from Neutral at Sterne Agee
Hyatt Hotels (H) upgraded to Buy from Neutral at SunTrust
Mosaic (MOS) upgraded to Overweight from Equal Weight at Morgan Stanley
Nippon Telegraph (NTT) upgraded to Overweight from Neutral at JPMorgan
Pfizer (PFE) upgraded to Outperform from Market Perform at BMO Capital
Statoil (STO) upgraded to Overweight from Equal Weight at Morgan Stanley

Downgrades

Abercrombie & Fitch (ANF) downgraded to Sell from Hold at Wunderlich
Abercrombie & Fitch (ANF) downgraded to Underperform from Neutral at BofA/Merrill
Alcoa (AA) downgraded to Neutral from Overweight at JPMorgan
American Capital Mortgage (MTGE) downgraded to Neutral from Buy at Compass Point
BNP Paribas (BNPQY) downgraded to Underweight from Neutral at JPMorgan
BioMed Realty (BMR) downgraded to Hold from Buy at Stifel
Buffalo Wild Wings (BWLD) downgraded to Hold from Buy at Miller Tabak
CBOE Holdings (CBOE) downgraded to Neutral from Buy at UBS
Century Aluminum (CENX) downgraded to Underweight from Neutral at JPMorgan
Chesapeake Lodging (CHSP) downgraded to Market Perform at JMP Securities
Cummins (CMI) downgraded to Neutral from Overweight at Atlantic Equities
DISH (DISH) downgraded to Sector Perform from Outperform at RBC Capital
Deckers Outdoor (DECK) downgraded to Equal Weight from Overweight at Morgan Stanley
Dermira (DERM) downgraded to Neutral from Buy at Citigroup
Discovery (DISCA) downgraded to Market Perform from Outperform at FBR Capital
Emerson (EMR) downgraded to Perform from Outperform at Oppenheimer
Foresight Energy (FELP) downgraded to Equal Weight from Overweight at Barclays
KeyCorp (KEY) downgraded to Neutral from Buy at Citigroup
MarineMax (HZO) downgraded to Neutral from Buy at Longbow
Marsh & McLennan (MMC) downgraded to Equal Weight from Overweight at Morgan Stanley
PHH Corp. (PHH) downgraded to Market Perform from Outperform at Keefe Bruyette
Petrobras (PBR) downgraded to Underperform from Neutral at Credit Suisse
Prudential (PRU) downgraded to Hold from Buy at Deutsche Bank
Regions Financial (RF) downgraded to Underperform at Keefe Bruyette
Roche (RHHBY) downgraded to Neutral from Buy at Citigroup
Sensient (SXT) downgraded to Hold from Buy at Gabelli
Skechers (SKX) downgraded to Neutral from Buy at B. Riley

Initiations

AbbVie (ABBV) initiated with a Sell at Citigroup
Novartis (NVS) resumed with a Buy at Citigroup
Post Holdings (POST) initiated with an Outperform at BMO Capital
Valeant (VRX) initiated with an Overweight at Barclays
Vermillion (VRML) initiated with a Buy at Roth Capital

COMPANY NEWS

Alibaba (BABA) announced a $590M strategic investment in Meizu
The International Consortium of Investigative Journalists, which is comprised of reporters from 45 countries, said over the weekend that leaked documents show HSBC (HSBC) profited from maintaining secret bank accounts for "criminals, traffickers, tax dodgers, politicians and celebrities"
Google (GOOG) acquired private photo sharing/backup app Odysee
SeaWorld (SEAS) appointed Daniel Brown Chief Parks Operations Officer
Starboard 'applauds' Staples (SPLS) acquisition of Office Depot (ODP)
Intuit (INTU) announced that TurboTax has resumed e-filing of state income tax returns. The company continues to work with the states as they build their own anti-fraud capabilities and will share best practices as it works toward the best interests of the taxpayer. The resumption comes after the company temporarily paused transmissions upon seeing an increase in suspicious filings and attempts by criminals to use stolen identity information to file fraudulent state tax returns and claim tax refunds

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Hasbro (HAS), Diamond Offshore (DO), Loews (L), Sohu.com (SOHU), Cameco (CCJ), Dominion (D), Dominion Midstream (DM)

Companies that missed consensus earnings expectations include:
Boardwalk Pipeline (BWP), Nordic American Tankers (NAT), Changyou.com (CYOU)

Companies that matched consensus earnings expectations include:
Golub Capital (GBDC)

CNA Financial (CNA) reports Q4 adjusted NOI 96c, consensus 80c
Changyou.com (CYOU) sees Q1 non-GAAP EPS 64c-68c, consensus 24c
Sohu.com (SOHU) sees Q1 non-GAAP EPS ($1.05)-(95c), consensus (72c)
Cameco (CCJ) sees FY15 consolidated revenue declining up to 5%, consensus $2.52B
Frontier Communications (FTR) sees Q4 revenue approximately $1.33B, consensus $1.34B, sees FY14 revenue about $4.772B, consensus $4.79B
Dominion (D) sees Q1 EPS 85c-$1.00, consensus $1.03

NEWSPAPERS/WEBSITES

HSBC (HSBC) admits control failures at Swiss unit, Reuters reports
Qualcomm (QCOM) could announce deal with China today, Reuters reports
U.S. probe of UBS (UBS), Barclays (BCS) foreign exchange products expands, FT reports
Motorola Solutions (MSI) to explore possible sale, Bloomberg reports (RTN, HON, GD)
JPMorgan (JPM) hiring practices in Asia under U.S. scrutiny, WSJ reports
Actuant (ATU) shares could rise 25%, Barron's says
AbbVie (ABBV) could climb 30%, Barron's says
Donaldson (DCI) could be good for long-term investors, Barron's says

SYNDICATE

American CareSource (ANCI) files to sell $15M of common stock
Johnson Controls (JCI) files automatic mixed securities shelf
Marcus & Millichap (MMI) files to sell 4.6M shares of common stock for holders
POZEN (POZN) files to sell 8.5M shares of common stock