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Frontrunning: February 17

  • Markets From Stocks to Debt to Euro Show Little No Panic (BBG)
  • Greek Euro Exit Risk Increases as EU Delivers Ultimatum (BBG)
  • Oil rises to $62, near 2015 high as Mideast risks support (Reuters)
  • Texas judge blocks Obama plan to protect undocumented immigrants (Reuters)
  • Oil Train Derails and Ignites Forcing West Virginia Evacuations (BBG)
  • Battle rages for town where Ukraine rebels reject ceasefire (BBG)
  • Chinese Firms Tiptoe Back Into Europe’s Battered Financial Sector (WSJ)
  • Putin’s Paradise Becomes Economic No-Go Zone Where Cash Is King (BBG)
  • Emerging fund managers stuck in buy-and-hold as trading shrivels (Reuters)
  • What Exactly Is an Apple Watch For? (WSJ)
  • Sisi warns of response after Islamic State kills 21 Egyptians in Libya (Reuters)
  • Congress Starts Its Own TurboTax Probes (WSJ)
  • Apple’s Electric Car Dreams May Bring Auto Industry Nightmares (BBG)
  • Banking Heir Who Lost Millions in Gold Wants to Raise More (BBG)
  • Noble Leads $1 Billion Share Drop as Reports Query Accounts (BBG)

 

Overnight Media Digest

WSJ

* Top lawmakers in the House and Senate have begun their own probes into a recent spate of fraudulent tax filings made through Intuit Inc's TurboTax, as federal agents try to determine what has happened. (http://on.wsj.com/1AM19Pl)

* Amid the steepest downturn in crude prices in years, Europe's big oil companies are getting a boost from a previously unprofitable source, their refining businesses. (http://on.wsj.com/1vAQkcR)

* H Partners Management LLC has told Tempur Sealy International Inc's board that it wants Chief Executive Mark Sarvary removed immediately, citing concerns about the mattress company's missed financial forecasts and stock performance. (http://on.wsj.com/1JmVbKf)

* Canadian insurance giant Fairfax Financial Holdings Ltd said it had struck a deal to acquire U.K. specialty insurer Brit Plc in a transaction worth $1.88 billion. (http://on.wsj.com/1zk1EM9)

* Anbang Insurance Group of China is buying a controlling stake in South Korean life insurer Tong Yang Life Insurance Co Ltd for $1 billion, the latest acquisition abroad for the aggressively expanding Chinese insurer. (http://on.wsj.com/1zk1OmH)

* Japanese industrial-robot maker Fanuc Corp said it would invest more than $1 billion in new factories and research facilities at home, days after one of New York's most well-known hedge funds called on it to return more cash to investors. (http://on.wsj.com/1CDdv98)

 

FT

Stuart Rose, one of Britain's most senior businessmen, has delivered a critical assessment of how the National Health Service is run which has yet to see the light of day two months after it was submitted to ministers.

Young benefit claimants who have spent months out of education, work or training will be forced to carry out community service in exchange for state assistance under a future Conservative government, British Prime Minister David Cameron is set to announce on Tuesday.

Business figures have attacked UK's Labour over a suggestion from the party's policy chief Jon Cruddas that companies running some of the country's most important public services should be blocked from bidding for government contracts if they are "driven purely by profit".

HSBC is facing searching questions from regulators over the quality of its internal checks and culture after the Financial Conduct Authority, Britain's financial watchdog, said it was investigating recent revelations that its Swiss private bank helped clients evade taxes.

 

NYT

* The United States has found a way to permanently embed surveillance and sabotage tools in computers and networks it has targeted in Iran, Russia, Pakistan, China, Afghanistan and other countries closely watched by American intelligence agencies, according to a Russian cybersecurity firm. (http://nyti.ms/1EFC07I)

* The standoff between Greece and its European lenders appeared to reach a new low on Monday as European officials handed Athens an ultimatum. The demand appeared to be part of a strategy by eurozone creditors to get Prime Minister Alexis Tsipras of Greece and his finance minister, Yanis Varoufakis, to back away from the anti-austerity pledges that swept them to power last month. (http://nyti.ms/1vAL8Wj)

* Michael Fries, Liberty Global Plc's chief executive, sees himself as an underdog taking on entrenched European telecommunications giants, a strategy that has been so successful that the company is reported to be a takeover target. (http://nyti.ms/1Dk7Biu)

* Lawyers who have helped bring down big Wall Street targets are leaving public service for private law firms, but prosecutors say hungry talent is filling the gap. (http://nyti.ms/1A1xCk2)

* Government aid to low-income workers has increased, but those without jobs, who are in the direst straits, are receiving scant attention, experts say. (http://nyti.ms/1MsXg6x)

* After years of focusing heavily on its cellphone business, Vodafone Group Plc, based in Britain and the world's second-largest mobile operator behind China Mobile based on subscribers, is concentrating on high-speed broadband. (http://nyti.ms/1Ejp8V7)

* SNS Reaal, a state-owned Dutch financial services company, said on Monday that it had agreed to sell its Vivat Verzekeringen insurance arm to a unit of Anbang Insurance Group of China. (http://nyti.ms/1yPtPRQ)

 

Canada

THE GLOBE AND MAIL

** Fairfax Financial Holdings Ltd is planning to buy specialty insurer Brit Plc in a C$2.3-billion ($1.86 billion) deal. (http://bit.ly/1EjTGpv)

** The number of known measles cases in Southern Ontario doubled over the Family Day weekend, as officials took the extraordinary step of publicly warning hundreds of patrons of a Christian youth gathering in Toronto to watch out. (http://bit.ly/1AMBCW7)

** The cost of Canada's role in the battle against Islamic State militants in Iraq has hit C$122 million ($98.5 million) and the government is asking Parliament to cut a cheque to the military as it deliberates continuing a mission the Conservatives appear set to extend. (http://bit.ly/1Jn0tp8)

NATIONAL POST

** Employees at Canadian Pacific Railway Ltd returned to work on Monday after only a day and a half on the picket lines, agreeing to binding arbitration before the federal government tabled its planned back-to-work legislation. (http://bit.ly/1L3SUiK)

** The federal government has effectively stymied scientific studies that could answer whether e-cigarette devices are a life-saving alternative to tobacco - or a potential magnet drawing more people to smoking, researchers say. Scientists need Health Canada's green light for studies but the department is treating the products like an experimental drug, dragging the approval process. (http://bit.ly/1CDM5jf)

** A new trial for a man acquitted of sexual assault has been ordered after the Ontario Court of Appeal found Superior Court Justice Timothy Ray guilty of violating basic legal principles. Ray created a bogus online dating profile and told a detective that information from the website could have been used to "hang" a female complainant. (http://bit.ly/1EIqskd)

 

China

CHINA SECURITIES JOURNAL

- Shanghai Stock Exchange said it had launched a new pledge-style bond repurchases (repos) business on Monday to provide liquidity for the bond and asset-backed securities.

- China has not fallen into deflation, but the situation of its foreign trade in 2015 will be "complicated and grim," Shen Danyang, spokesman for the Ministry of Commerce (MOFCOM) said on Monday.

SECURITIES TIMES

- China's banking exchange has posted a deficit for six consecutive months, according to data provider the State Administration of Foreign Exchange (SAFE).

SHANGHAI SECURITIES JOURNAL

- New government policies are expected to help the number of new energy vehicles in China hit 500,000 in the next five years, the Ministry of Science and Technology said. China currently has 74,763 of such vehicles.

CHINA DAILY

- The Buddhist Association of China has criticised the online auctioning off of privileged access to temples during the Spring Festival via Alibaba's Taobao e-commerce website.

- Seven companies in Guangdong province were fined for employing child workers in the fourth quarter of last year. The firms were in the electronics, toy and jewellery manufacturing, and catering sectors.

Britain

The Times

HOUSING SHORTAGE BLAMED AFTER BIGGEST PRICE RISE IN ALMOST A YEAR

The chronic lack of properties coming on to the market has pushed up average house prices by nearly 6,000 stg this month and experts are warning that the shortage is the new norm. The average asking price for a home in England and Wales rose by 2.1 percent to 279,004 stg, with all regions recording increases. (http://thetim.es/1yKn5ET)

BALLS COUNTS THE COST AS RECEIPT CLAIM IS SHREDDED

Ed Balls' claim that families should follow his example and seek receipts for every low-cost job was unravelling last night as Labour admitted that the shadow chancellor had not always done so. (http://thetim.es/1Eiz1SO)

The Guardian

TORIES UP SIX POINTS IN LATEST ICM POLL

With just 80 days to go before the general election, the Tories are up six points since last month - their strongest showing in the Guardian's ICM poll since May 2012 and only one point down on their 2010 general election result. (http://bit.ly/17gVxjV)

TESCO TO PAY 20,000 POUNDS TO SUPPORT TWO FENLAND TOWNS AFTER STORES SCRAPPED

Tesco is stumping up 20,000 stg to support two Cambridgeshire communities after it left one with a "ghost store" that will never open and shelved plans to build another. (http://bit.ly/1AfJMoc)

The Telegraph

BRIT INSURANCE IN SALE TALKS WITH RIVAL

Lloyd's of London insurer Brit is understood to be in takeover talks with a rival less than a year after its 960 million stg stock market listing. (http://bit.ly/17j8AkK)

Sky News

US TECHNOLOGY GIANTS EYE MONITISE TAKEOVER

A number of American technology companies like FIS, IBM and Oracle are examining takeover bids for Monitise, one of the UK's most prominent manufacturers of mobile banking software, Monitise (http://bit.ly/1vQGgSK)

ALDERMORE CUTS IPO VALUATION AS PROFIT SOARS

Aldermore <IPO-ALDG.L> is to announce that annual pre-tax profit in 2014 more than doubled to about 50 million stg. A source close to the bank said that it could announce its intention to float on the London Stock Exchange by the end of the month, although the timing could yet slip. (http://bit.ly/17cpKke)

The Independent

BT POISED TO LAND BAILIFF CONTRACT TO COLLECT BILLIONS IN UNPAID FINES

BT is expected to land a much-criticised Ministry of Justice semi-privatisation deal that would see the telephony giant turn bailiff. (http://ind.pn/1Jlda3C)

CBI UPGRADES FORECAST FOR UK'S ECONOMIC GROWTH DUE TO LOW INFLATION AND OIL PRICES

The Confederation of British Industry (CBI) business lobby group has upgraded its forecast for the UK's economic growth plan, expecting the economy to expand by 2.7 percent this year. (http://ind.pn/1yOjXrv)

 

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Empire State manufacturing business conditions index for February at 8:30--consensus 8.5
NAHB housing market index for February at 10:00--consensus 58

ANALYST RESEARCH

Upgrades

ADT Corp. (ADT) upgraded to Outperform from Perform at Oppenheimer
Aspen Aerogels (ASPN) upgraded to Outperform from Neutral at RW Baird
Banco Bilbao (BBVA) upgraded to Outperform from Underperform at Exane BNP Paribas
Campus Crest (CCG) upgraded to Buy from Hold at Wunderlich
Greenhill & Co. (GHL) upgraded to Positive from Neutral at Susquehanna
Support.com (SPRT) upgraded to Buy from Neutral at BofA/Merrill
Teleflex (TFX) upgraded to Buy from Hold at KeyBanc
Turkcell (TKC) upgraded to Buy from Neutral at Goldman
Watsco (WSO) upgraded to Neutral from Underweight at JPMorgan
Yara (YARIY) upgraded to Neutral from Sell at UBS

Downgrades

American Express (AXP) downgraded to Neutral from Buy at Guggenheim
Freescale (FSL) downgraded to Sector Perform from Outperform at RBC Capital
IMAX (IMAX) downgraded to Hold from Buy at Canaccord
LyondellBasell (LYB) downgraded to Neutral from Buy at Citigroup
Nordstrom (JWN) downgraded to Underweight from Equal Weight at Barclays
Rayonier (RYN) downgraded to Sector Perform from Outperform at RBC Capital
Sotheby's (BID) downgraded to Market Perform from Outperform at Cowen
Zayo Group (ZAYO) downgraded to Underperform from Neutral at Macquarie

Initiations

Box, Inc. (BOX) initiated with a Market Perform at BMO Capital
Box, Inc. (BOX) initiated with a Market Perform at Wells Fargo
Box, Inc. (BOX) initiated with a Neutral at JPMorgan
Box, Inc. (BOX) initiated with a Sector Perform at Pacific Crest
Euronav NV (EURN) initiated with a Buy at Citigroup
Macy's (M) initiated with an Underweight at Barclays
NetSuite (N) initiated with an Underperform at Exane BNP Paribas
Pattern Energy (PEGI) coverage resumed with an Outperform at BMO Capital
Regeneron (REGN) initiated with an Outperform at Bernstein
Trovagene (TROV) initiated with an Overweight at Piper Jaffray
Vista Outdoor (VSTO) initiated with a Market Perform at Cowen

COMPANY NEWS

Transocean (RIG) announced the departure of CEO Steven Newman along with an 80% annual dividend cut to 60c from $3.00
Fairfax Financial (FRFHF) acquired Brit PLC for $1.88B
Starwood (HOT) appointed Adam Aron as interim CEO
Campus Crest Communities (CCG) announced that its board authorized the company to explore a range of strategic, operational and financial alternatives to further enhance shareholder value
Enable Midstream Partners (ENBL) announced that it will reduce its workforce by approximately 10% during 2015
Canadian Pacific (CP) said it and the Teamsters Canada Rail Conference agreed to enter into binding arbitration, putting an end to the work stoppage by CP's locomotive engineers and conductors

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
CryoLife (CRY), USA Technologies (USAT), USA Compression (USAC), VASCO Data Security (VDSI), MSA Safety (MSA), United Stationers (USTR), Vipshop (VIPS), Sykes Enterprises (SYKE)

Companies that missed consensus earnings expectations include:
United Fire Group (UFCS), Pioneer Energy (PES), Regal-Beloit (RBC), Helix Energy (HLX), Vectren (VVC)

Companies that matched consensus earnings expectations include:
Wolverine World Wide (WWW)

NEWSPAPERS/WEBSITES

Apple (AAPL) working on minivan-like electric vehicle, WSJ reports
ValueAct buys 30M shares of Halliburton (HAL) after Baker Hughes (BHI) deal, Bloomberg reports
H Partners to demand CEO change at Tempur Sealy (TPX), WSJ reports
Liberty Global (LBTYA) may become takeover target, NY Times reports
Cybersecurity firm Kaspersky warns of cyber attack on banks, FT reports
McDonald's (MCD) holder CtW Investment Group seeks board changes, WSJ reports
Tesco (TSCDY) to cut up to 10,000 jobs, Telegraph reports
Investors should avoid Exxon (XOM), Chevron (CVX), ConocoPhillips (COP), Shell (RDS.A), Barron's says
Credit Suisse (CS) could rise over 20%, Barron's says
Dollar General (DG) shares could rise 20%, Barron's says