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Frontrunning: March 17

  • Israelis vote as 'King Bibi's' reign hangs in the balance (Reuters), Factbox: Main candidates in Israel's election (Reuters)
  • Iran Can Add Million Barrels a Day of Oil If Sanctions Halt (BBG)
  • Kremlin rules out handing back Crimea to Ukraine (Reuters)
  • Saudi Arabia Needs More Oil to Feed Local Refinery Expansion (BBG)
  • How Lafarge’s CEO Went From Holcim Merger Architect to Obstacle (BBG)
  • When Yellen Gets Less Predictable She’s Getting Back to Normal (BBG)
  • Iran nuclear talks intensify as sides face tough issues (Reuters)
  • Debunking $1.4 Trillion Europe Debt Myth in Post-Heta Age (BBG)
  • Kuroda Won’t Rule Out CPI Dipping Below Zero, Keeps Stimulus (BBG)
  • Bill Gross’s Replacements Thrive at Pimco (BBG)
  • Is this the 3rd "launch" of Apple TV, or 4th: Apple Plans Web TV Service in Fall (WSJ)
  • German Investor Confidence Increases Less Than Forecast (BBG)
  • Credit Suisse settles allegations it helped cause Freeport-McMoran to overpay for two deals (WSJ)
  • U.K. to Raise Minimum Wage by 10 Times Current Rate of Inflation (BBG)

 

Overnight Media Digest

WSJ

* Apple Inc is in talks with programmers to offer a slimmed-down bundle of TV networks this fall, anchored by broadcasters such as ABC, CBS and Fox. (http://on.wsj.com/1GOgcrv)

* Mayor Rahm Emanuel describes a city on the mend, while challenger Jesus "Chuy" Garcia sees one in free fall as the two met Monday for the first of three debates in a mayoral runoff where the tone is sharpening. (http://on.wsj.com/1EXsTDn)

* Iran, the United States and its allies are pushing ahead with talks over a nuclear deal that would change many things-perhaps none faster than the price of oil. (http://on.wsj.com/1AP2u3k)

* A dispute between a bank and a client over advice ended in a settlement Monday that included an unusual payment: more advice. Credit Suisse Group agreed to pay Freeport-McMoRan $10 million and provide $6.25 million in future advisory work for free. (http://on.wsj.com/1HWzbS8)

* Some big U.S. companies are poised to hand activist investors the keys to their boardrooms following intense shareholder pressure and a regulatory shift that disrupted firms' ability to block investor initiatives. (http://on.wsj.com/19u6JM3)

* Valeant Pharmaceuticals raised its price for Salix Pharmaceuticals by about a billion dollars in a new deal that knocked out rival bidder Endo International . (http://on.wsj.com/1DuXs2E)

* Holcim Ltd has rejected the terms of a proposed $44 billion merger with Lafarge, casting doubt over the creation of a global construction-materials behemoth. (http://on.wsj.com/1BOPbER)

 

FT

British advertising group WPP has teamed up with General Atlantic to bid for a majority of stake in Dunnhumby, the customer data business put up for sale by Tesco. In January, Tesco's Chief Executive Dave Lewis said the retailer had appointed Goldman Sachs to find options for Dunnhumby, which could fetch between 1 billion pounds ($1.48 billion) and 2 billion pounds, according to analysts.

The board of Ryanair Holdings Plc has approved plans to start a transatlantic airline, with some one-way tickets costing 10 pounds. The service could commence in four to five years if Ryanair could reach a deal with either Airbus or Boeing to buy long-haul aircraft.

Banco de Madrid has filed for bankruptcy in less than a week after it was accused by the U.S. Financial Crimes Enforcement Network of having relations with Banca Privada d'Andorra for money laundering for Chinese, Russian and Venezuelan interests.

British insurer RSA Insurance Group Plc is considering selling its business in Latin America as part of a broad restructuring plan.

 

NYT

* Blackstone Group said it had purchased the Willis Tower in Chicago, the second-tallest building in the United States, for about $1.3 billion. (http://nyti.ms/1DuXRSY)

* Pinterest, an online scrapbooking service, disclosed on Monday that it raised about $367 million in a new round of financing from new and existing investors. (http://nyti.ms/18Aj1S3)

* In a petition to the Federal Communications Commission, nine broadcasters, including major ones like iHeartMedia, Cox, Emmis Communications and Entercom, requested a waiver to longstanding requirements that stations say on the air when a sponsor or promoter has paid for a piece of programming, like a song. (http://nyti.ms/1LlJVyW)

* Oil prices fell to six-year lows on Monday in the face of concerns that a glut in the United States was outpacing already brimming storage facilities. Additionally, the Organization of the Petroleum Exporting Countries published a report suggesting that the cartel remained reluctant to intervene to prop up prices. (http://nyti.ms/1FsPpm4)

 

Canada

THE GLOBE AND MAIL

** The U.S. National Security Agency has been trying to map the communications traffic of corporations around the world, and a classified document reveals that at least two of Canada's largest companies are included. A 2012 presentation by a U.S. intelligence analyst, a copy of which was obtained by the Globe and Mail, includes a list of corporate networks that names Royal Bank of Canada and Rogers Communications Inc. (http://bit.ly/1BsMh3y)

** The federal government is attempting to fill two more gaps in the support offered to Canada's most injured military personnel with better compensation for severely disabled veterans and financial assistance for the family members who care for them. (http://bit.ly/1EmfDmk)

** Canada's spy agency, Canadian Security Intelligence Service, helped senior federal officials figure out how to deal with protests expected last summer in response to resource and energy development issues, including a pivotal decision on the Northern Gateway pipeline, documents obtained under the Access to Information Act show. (http://bit.ly/1BPBVjh)

NATIONAL POST

** Canadian benchmark crude oil slid below C$30 ($24) per barrel as the oil patch braced for a second round of bloodletting, with prices yet to find a bottom as OPEC continues to cut demand projections and expectations rise for sanctions relief for Iran that would flood yet more supply onto world markets. (http://bit.ly/1FuDDaQ)

** A round of public furor has centered on Toronto's Ryerson University after two journalism students were barred from an on-campus meeting because they were not "racialized." (http://bit.ly/1CpcFT0)

** More than half of the workforce at the Toronto Police Service earned in excess of C$100,000 last year, which saw a dramatic jump in part due to the factoring in of paid duty earnings. (http://bit.ly/1Coo31t)

 

Hong Kong

SOUTH CHINA MORNING POST

-- Staff at China's state-owned oil giant Sinopec have been told to avoid staging lavish weddings and funerals. A new directive states that the number of guests at a wedding or funeral of any middle-level or high-level Sinopec employee must be not exceed 150, the oil company's website reported. (bit.ly/1wSBWTk)

-- Flights with budget airlines could end up costing you more than those by full-service carriers, the Consumer Council in Hong Kong has warned, after complaints about low-cost providers doubled last year to 764 cases - 10 times higher than 2012. (bit.ly/1GfKFPk)

-- Small-cap stocks and exchange-traded funds (ETFs) targeting retail investors will be the main features in the Shenzhen-Hong Kong stock connect scheme being launched this year, said Hong Kong's Secretary for Financial Services and the Treasury Chan Ka-keung. (bit.ly/1wSDrAQ)

THE STANDARD

-- Sogo store operator Lifestyle International says it will launch more promotions this year as it targets single-digit growth in same-store sales after net profit fell 12.4 percent to HK$2.14 billion ($275.6 million) last year. (bit.ly/1DuiX3J)

-- Deutsche Asset & Wealth Management expects the scale of forex hedged exchange-traded funds to double and hit a total of US$100 billion this year. Many European or American pension funds are also keen on investing in A shares in the near future, noted Thorsten Michalik, head of global client group in passive investment. (bit.ly/19tuxje)

HONG KONG ECONOMIC JOURNAL

-- Major lenders The Hong Kong and Shanghai Banking Corp, Bank of China (Hong Kong), Hang Seng Bank, Standard Chartered Bank (Hong Kong) and Bank of East Asia have been designated systemically important banks, according to the Hong Kong Monetary Authority. Those banks are big enough to lead to crisis if they fail

 

Britain

The Times

U.S. TREASURY LOOKS TO BOX OF TRICKS AS IT HITS DEBT LIMIT

The U.S. debt ceiling debacle is back. The federal government hit its debt limit yesterday, necessitating a set of "extraordinary measures" or accounting tricks, by the U.S. Treasury Department to keep the government open and prevent it defaulting on its debt.(http://thetim.es/1BrcK1G)

AO WORLD CHAIRMAN SELLS 10 MLN POUNDS STAKE IN ONLINE RETAILER

The chairman of AO World Plc has sold 10 million pounds of shares in the white goods retailer, further denting investor confidence in the company.(http://thetim.es/1Brda8f)

The Guardian

WPP LAUNCHES BID FOR DATA COMPANY THAT DEVISED TESCO CLUBCARD

The world's largest advertising firm, WPP Plc, lodged a bid for Tesco Plc-owned company Dunnhumby as the supermarket looks to revive its fortunes after turbulent year.(http://bit.ly/1BrdYtD)

RYANAIR PLANS TO OFFER FLIGHTS BETWEEN EUROPE AND THE U.S.

Ryanair Holdings Plc is launching transatlantic flights, which it claims could have fares as low 10 pounds, as part of an ambitious five-year growth strategy.(http://bit.ly/1BrepUQ)

The Telegraph

HEDGE FUND BUYS PHONES 4U DEBT FOR POSSIBLE ATTACK ON PRIVATE EQUITY OWNER

A New York hedge fund, Stonehill Capital Management, has bought up a large chunk of the 430 million pounds in senior bonds in Phones 4U that were rendered almost worthless by the controversial collapse of the retailer last year.(http://bit.ly/1xsUCUA)

European giants side with UK in Chinese World Bank row with U.S.

France, Germany and Italy have joined Britain in signing up to the China-backed Asian Infrastructure Investment Bank (AIIB), dealing a further blow to the U.S. government.(http://bit.ly/1BrgHDp)

Sky News

BHS CHIEF EXECUTIVE LEAVES DAYS AFTER SALE

The chief executive of BHS, Richard Price, who had resigned prior to last week's deal but was expected to stay on to assist with the transition to the new owners, has already vacated his role.(http://bit.ly/1bcuvg5)

DYSON BACKS SMARTPHONE BATTERY TECHNOLOGY FIRM

British vacuum company Dyson is investing more than 10 million pounds in a new type of technology that could double smartphone battery life.(http://bit.ly/1BrfR9C)

The Independent

U.S. LAW ENFORCERS REQUESTED FACEBOOK DATA ON 45,000 LAST YEAR ALONE

US law enforcement agencies asked Facebook Inc for information on over 45,000 people last year as part of surveillance and counterterrorism efforts and the prosecution of criminal cases.(http://ind.pn/1BreOqe)

YOUTUBE COULD LAUNCH SUBSCRIPTION SERVICE FOR AD-FREE ORIGINAL VIDEOS

YouTube could launch a subscription service for its original content, according to new reports. The company is exploring the possibility of launching a subscription service for video on-demand films.(http://ind.pn/1Brf9JA)

 

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Housing starts for February at 8:30--consensus down 2.4% to 1.04M rate
Building permits for February at 8:30--consensus up 0.5% to 1.065M rate

ANALYST RESEARCH

Upgrades

ABM Industries (ABM) upgraded to Outperform from Neutral at RW Baird
Charles Schwab (SCHW) upgraded to Outperform from Market Perform at JMP Securities
Sanofi (SNY) upgraded to Outperform from Market Perform at Leerink
Walker & Dunlop (WD) upgraded to Outperform from Market Perform at Keefe Bruyette

Downgrades

Black Diamond (BDE) downgraded to Hold from Buy at Needham
Credit Suisse (CS) downgraded to Underperform from Neutral at Macquarie
Culp (CFI) downgraded to Market Perform from Outperform at Raymond James
Deutsche Post (DPSGY) downgraded to Neutral from Buy at UBS
ExOne (XONE) downgraded to Market Perform from Outperform at FBR Capital
Heineken (HEINY) downgraded to Neutral from Buy at Goldman
Weight Watchers (WTW) downgraded to Underperform from Neutral at Credit Suisse

Initiations

Aimco (AIV) initiated with an Outperform at RW Baird
American Campus (ACC) initiated with a Neutral at RW Baird
AvalonBay (AVB) initiated with a Neutral at RW Baird
Camden Property (CPT) initiated with an Outperform at RW Baird
Education Realty (EDR) initiated with a Neutral at RW Baird
Equity Lifestyle (ELS) initiated with an Outperform at RW Baird
Equity Residential (EQR) initiated with a Neutral at RW Baird
Essex Property Trust (ESS) initiated with a Neutral at RW Baird
Facebook (FB) initiated with a Buy at Brean Capital
Intercept (ICPT) initiated with a Hold at MLV & Co.
LinkedIn (LNKD) initiated with a Sell at Brean Capital
Mid-America Apartment (MAA) initiated with an Outperform at RW Baird
NetSuite (N) initiated with a Hold at Brean Capital
Paycom (PAYC) initiated with a Buy at Brean Capital
Platform Specialty Products (PAH) initiated with a Buy at UBS
Post Properties (PPS) initiated with a Neutral at RW Baird
Salesforce.com (CRM) initiated with a Hold at Brean Capital
ServiceNow (NOW) initiated with a Buy at Brean Capital
Sun Communities (SUI) initiated with a Neutral at RW Baird
Twitter (TWTR) initiated with a Buy at Brean Capital
UDR, Inc. (UDR) initiated with an Outperform at RW Baird
Workday (WDAY) initiated with a Hold at Brean Capital

COMPANY NEWS

BHP Billiton (BHP) recommends shareholders approve proposed demerger of South32
Kindred Biosciences (KIN) said Phase 2 study of KIND-012 met primary endpoint
Jamba (JMBA) filed form 12b-25 to extend filing date for FY14 Form 10-K
American Airlines (AAL) to replace Allergan (AGN) in S&P 500 as of 3/20 close; Henry Schein (HSIC) to replace CareFusion (CFN) in S&P 500 as of 3/17 close; Buffalo Wild Wings (BWLD) to replace Henry Schein in S&P 400 as of 3/17 close; Talmer Bancorp (TLMR) to replace Buffalo Wild Wings in S&P 600 as of 3/17 close
Over the long term, Foot Locker (FL) is targeting: Sales of $10B; Sales per gross square foot of $600; EBIT margin of 12.5%; NIM of 8.5%; ROIC of 17%; Inventory turnover of 3+ times
Black Diamond (BDE) engaged Rothschild, Baird to explore strategic alternatives

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Discovery Labs (DSCO), Providence Service (PRSC), magicJack (CALL), Ring Energy (REI), KVH Industries (KVHI), Achaogen (AKAO), Omeros (OMER), TriplePoint Venture (TPVG)

Companies that missed consensus earnings expectations include:
Zebra Technologies (ZBRA), Synergy Pharmaceuticals (SGYP), Patriot National (PN), Ryerson (RYI), Molycorp (MCP), Five Star Quality (FVE), Fuel Tech (FTEK), Five Oaks (OAKS), ExOne (XONE), Heritage-Crystal Clean (HCCI), Qunar (QUNR), La Jolla (LJPC), GlycoMimetics (GLYC), OvaScience (OVAS), Lifeway Foods (LWAY), Jumei (JMEI), Black Diamond (BDE), BioDelivery Sciences (BDSI), Auspex Pharmaceuticals (ASPX), CHC Group (HELI), Nuverra Environmental (NES), WaferGen Bio-systems (WGBS), CUI Global (CUI), FX Energy (FXEN)

Companies that matched consensus earnings expectations include:
Sunshine Heart (SSH), Aegean Marine (ANW)

Tyson Foods (TSN) backs FY15 EPS $3.30-$3.40, consensus $3.43
Zebra Technologies (ZBRA) sees Q1 EPS 95c-$1.20, consensus $1.22
ExOne (XONE) sees FY15 revenue $58M-$66M, consensus $61.77M

NEWSPAPERS/WEBSITES

Apple (AAPL) set to launch online TV service this year, Financial Times reports
Raytheon (RTN) in talks to buy network-security company Websense, Bloomberg reports
Studies find Gilead's (GILD) hepatitis C drugs cost effective, Reuters reports
Foot Locker (FL) to exit Lady Foot Locker business slowly, TheStreet reports
Credit Suisse (CS) to pay Freeport McMoRan (FCX) $10M to settle allegations, WSJ reports
American Apparel (APP) talks with Irving Place at standstill, Bloomberg reports

SYNDICATE

Carrizo Oil & Gas (CRZO) 4.5M share Spot Secondary priced at $45.50
Eagle Pharmaceuticals (EGRX) files to sell $50M in common stock
Epizyme (EPZM) files to sell 4.75M shares of common stock
Mobileye (MBLY) 17.1M share Secondary priced at $41.75
National Penn (NPBC) files to sell 11.6M shares for Warburg Pincus
ParkerVision (PRKR) files to sell 5.9M shares of common stock for holders
Prologis (PLD) announces exchange of $460M convertible senior notes due 2015
Retrophin (RTRX) files to sell 5.1M shares of common stock
Valeant (VRX) files to sell $1.45B in common stock
Walker & Dunlop (WD) files to sell 8.25M shares for Fortress