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Frontrunning: February 12

  • 'Glimmer of hope' for Ukraine after deal at Minsk peace summit (Reuters)
  • Ruble Rebounds, Russian Stocks Surge on Ukraine Cease-Fire Deal (BBG)
  • Greek PM Tsipras in Brussels as clock ticks on EU bailout (Reuters)
  • Emerging-Market Currencies Rout Not Over for Traders (BBG)
  • Little noticed, new Saudi king shapes contours of power (Reuters)
  • In Wake of Financial Crisis, Goldman Goes It Alone (WSJ)
  • AmEx Is Losing Its Millionaires (BBG)
  • Thousands to Lose Health Insurance Over Residency Questions (WSJ)
  • Carney Signals Faster U.K. Rate Increases as Economy Strengthens (BBG) ... yes, any minute now
  • Benefit of ECB’s Bond Buying: Fiscal Breathing Room (WSJ)
  • Chinese Maker of Drone on White House Lawn Sees Sales Doubling (BBG)
  • U.S. gunman kills three young Muslims; motive disputed (Reuters)
  • Blackstone to Buy Stake in New York Office Portfolio (WSJ)
  • Greek Economic Tragedy Sets Scene for Varoufakis on Debt (BBG)

 

Bulletin Headline Summary

WSJ

* President Barack Obama asked Congress for new powers to wage military operations against the Islamic State militant group, kicking off a renewed national debate over the scope of wartime powers that should be afforded to the commander-in-chief. (http://on.wsj.com/1vELile)

* The Obama administration is cutting off health-insurance coverage under the Affordable Care Act for 200,000 people who haven't proved they are legally residing in the United States (http://on.wsj.com/1vmaasm)

* Thanks to a consistently soaring dollar, and plunging euro, investment funds focused on currencies had the best month in years in January. (http://on.wsj.com/1KLEVQk)

* Bank of America used its government-backed U.S. banking subsidiary to finance controversial trades that helped hedge funds and other clients avoid taxes. (http://on.wsj.com/1CjrWPw)

* General Electric Co opened the door for its investors to get a seat on the company's board. GE said it would begin allowing groups of shareholders to put forth nominees to the board, provided the candidates' backers own at least 3 percent of GE shares for at least three years. (http://on.wsj.com/1KLF5ah)

* Tesla Motor Inc's CEO predicted brighter days in 2015, but its fourth-quarter loss widened, as deliveries of its luxury electric cars fell short of a reduced forecast due to weather and customers unable to accept deliveries. (http://on.wsj.com/19b2vZn)

* South Korea's antitrust agency said Thursday it is considering an investigation into whether Qualcomm Inc misused its dominant market position, in the latest complication to how the U.S. chip maker licenses or sells its technology to overseas clients. (http://on.wsj.com/19b2CE2)

 

FT

In its annual supplier responsibility report, iPhone-maker Apple Inc said employees of its suppliers worked more overtime to realise what is the company's most profitable quarter in its history. The company also said that it has drastically reduced the usage of conflict minerals, such as tin and gold, that come from warlord-controlled parts of mineral-rich Africa.

Facebook Inc will launch a social network for cyber security professionals to share information about threats that could lead to potential attacks. The world's largest social network is also teaming up with Yahoo Inc and Pinterest for this project.

If Ukraine goes ahead with its widely expected move to limit private sector creditors - as part of bailout terms laid out by the International Monetary Fund - bond manager Michael Hasenstab is poised to lose the most, as he owns more than $7 billion of Ukrainian debt. Hasenstab is known for his contrarian moves, which have earned him big rewards in the past.

Fiat Chrysler Automobiles chief Sergio Marchionne said that carmakers that are reluctant to merge will be forced to do so as they come under attack from activist investors. "At first many boards will try to defend themselves with lawyers and bankers, but ultimately they will have to come to the table to discuss a merger with either us or other large competitors," said Marchionne.

 

NYT

* Higher demand in Asia, difficult weather in the major cocoa-producing countries in West Africa and attacks of fungus are contributing to the price increases. (http://nyti.ms/1vm0Zbb)

* The Obama administration accused China of providing illegal export subsidies to critical industries, flexing its muscle on trade as it presses Congress to expand President Obama's authority to secure major trade accords. (http://nyti.ms/1uENt7G)

* Eurozone finance ministers failed to narrow their deep differences with Greece on Wednesday over how to keep the country from running out of money as it tries to revise the terms of its bailout. (http://nyti.ms/17jXixH)

* The White House passed a bill approving construction of the Keystone XL oil pipeline, setting up a confrontation with President Obama, who has vowed to veto the measure. (http://nyti.ms/1B0p8LD)

* Jet.com, a soon-to-start online marketplace that aims to loosen Amazon's grip on e-commerce, said it had raised $140 million in a new round of funding. The investment, led by Bain Capital Ventures, values the company at almost $600 million, according to people briefed on the funding round. (http://nyti.ms/1IYeNEl)

* The chief executive of Britain's tax agency was questioned by politicians over leaked documents that describe how HSBC's Swiss private banking arm helped clients, including politicians, rock stars and dealers of illicit diamonds, hide billions of dollars before 2007. (http://nyti.ms/1vG53ZJ)

 

Canada

THE GLOBE AND MAIL

** Canada launched a flurry of last-minute diplomacy in the lead-up to Thursday's retrial of jailed Canadian journalist Mohamed Fahmy in Cairo. Staff from the Prime Minister's office called the Egyptian ambassador in to discuss Fahmy's case in Ottawa on Tuesday, and an Egyptian government official said Canada's ambassador to Egypt met with that country's public prosecutor on Wednesday. (http://bit.ly/1zNWWd9)

** Premier Jim Prentice told Albertans on Wednesday that they need to wake up and face a world of low oil prices, as his Finance Minister announced there would be a 9 percent cut to government programs in a budget expected next month. (http://bit.ly/1FBqJXe)

NATIONAL POST

** Walmart Canada, the country's biggest mass merchant will build two new supercentres this fiscal year, bringing its Canadian store total to 396 locations from 394. The company said it will spend about C$340 million ($269 million ) on new building and store renovation projects as it continues to shore up its position as a purveyor of groceries. (http://bit.ly/1CgAZDc)

** More than 3,000 workers at Canadian Pacific Railway Ltd represented by Teamsters Canada will strike as early as Sunday morning if a negotiated settlement isn't reached with the railroad before then. The strike would not only cut into the company's earnings but also have the potential to create transportation chaos across the country. (http://bit.ly/1vFtQx8)

** A Muslim woman is asking to be sworn in as a Canadian citizen as soon as possible while wearing a niqab, even as the Harper government considers appealing a court ruling overturning its policy requiring women to remove face coverings while reciting the oath. (http://bit.ly/1AemCSl)

** Rob Ford was ordered to leave a city council meeting Wednesday after he twice refused to apologize for suggesting that staff had deliberately misled councillors about the cost of a promotional trip to Italy. (http://bit.ly/1uI4ygN)

 

China

CHINA SECURITIES JOURNAL

- The Central Commission for Discipline Inspection (CCDI) plans to inspect 26 centrally-administered state-owned enterprises after the Lunar New Year, Wang Qishan, the head of China's anti-corruption watchdog, said during an internal meeting on Wednesday. This would be the first round of disciplinary inspections this year.

- Seventeen companies that will launch initial public offerings (IPOs) in Shanghai and Shenzhen will lock up 1.5 trillion yuan ($240.30 billion) this week, the paper reported, citing estimates from local financial institutions.

SECURITIES TIMES

- The market-oriented registration system for China's IPO market is likely to be launched on June 1, reported the paper, citing a source familiar with the issue.

CHINA DAILY

- To comprehensively promote the rule of law in a nation of 1.3 billion people is equivalent to launching a sweeping and profound revolution, and to promote the rule of law is to further consolidate the Communist Party's leadership, an editorial said.

GLOBAL TIMES

- Various forces in China and the United States should cherish the good momentum created by Chinese President Xi Jinping and U.S. President Barack Obama, who plan to meet in September and work to forge a new type of major-power relationship, an editorial said.

Britain

The Times

Millions of council houses would be "given away" to low-paid workers under Tory plans to reward people who come off benefits. (http://thetim.es/1Aoy6RL)

The Conservatives could capture 11 of 15 Liberal Democrat seats in the southwest, according to analysis by a leading pollster, as David Cameron seeks to capitalise on the weakness of his coalition partners. (http://thetim.es/1KNxKFp)

The Guardian

David Cameron stood accused by Ed Miliband of acting as a "dodgy prime minister" after he repeatedly failed in the House of Commons to say whether he had discussed tax avoidance at HSBC Holdings Plc with Stephen Green before appointing him as trade minister in 2011. (http://bit.ly/1EbWk0p)

House prices rose in January at the slowest pace in two years across England and Wales, finds a housing market survey by the Royal Institution of Chartered Surveyors. (http://bit.ly/1DH8kJz)

The Telegraph

Talks over Greece's debt crisis appeared stuck in limbo on Wednesday, as European finance ministers meeting in Brussels refused to give ground over the terms of the Athens bail-out. (http://bit.ly/1zXGPZp)

Sky faced questions from the City on Wednesday about the heavy price it paid to maintain Premier League superiority over BT Group Plc in a rights auction that beat even the highest inflation predictions. (http://bit.ly/16VsrH1)

Sky News

A Conservative Party treasurer has hit back at a suggestion by Labour leader Ed Miliband that he was involved in "tax avoidance activities". (http://bit.ly/1EbOSlY)

Scotland's First Minister, Nicola Sturgeon, used a speech in London to claim the UK Government's economic policy had failed "categorically and comprehensively" and caused "misery" for some of the UK's most vulnerable people. (http://bit.ly/1CWQBi9)

The Independent

The boss of HM Revenue and Customs (HMRC) has denied allegations that the department failed to act on tax evasion claims linked to HSBC's Swiss subsidiary. (http://ind.pn/1ChuRYN)

The high street fashion chain New Look Eyewear Inc could be ready to rejoin the stock market after an 11-year absence, according to its chief executive. (http://ind.pn/1zVbjLz)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of Feb. 7 at 8:30--consensus 288K
Retail sales for January at 8:30--consensus down 0.4%
Business inventories for December at 10:00--consensus up 0.2%
EIA natural gas storage change for week of Feb. 6 at 10:30

ANALYST RESEARCH

Upgrades

Ally Financial (ALLY) upgraded to Outperform from Market Perform at Bernstein
BGC Partners (BGCP) upgraded to Outperform from Market Perform at Keefe Bruyette
HubSpot (HUBS) upgraded to Overweight from Neutral at JPMorgan
INC Research (INCR) upgraded to Outperform from Neutral at RW Baird
Mosaic (MOS) upgraded to Buy from Neutral at UBS
NICE Systems (NICE) upgraded to Equal Weight from Underweight at Barclays
TubeMogul (tube) upgraded to Buy from Neutral at Citigroup
Urban Outfitters (URBN) upgraded to Buy from Neutral at Goldman
Willis Group (WSH) upgraded to Overweight from Equal Weight at Morgan Stanley

Downgrades

Amber Road (AMBR) downgraded to Sector Perform from Outperform at Pacific Crest
Cornerstone OnDemand (CSOD) downgraded to Sector Perform at Pacific Crest
Ctrip.com (CTRP) downgraded to Perform from Outperform at Oppenheimer
FMC Technologies (FTI) downgraded to Neutral from Buy at Citigroup
FMC Technologies (FTI) downgraded to Underperform from Neutral at Credit Suisse
Grifols (GRFS) downgraded to Equal Weight from Overweight at Morgan Stanley
InterXion (INXN) downgraded to Market Perform from Outperform at Wells Fargo
Nanosphere (NSPH) downgraded to Neutral from Overweight at Piper Jaffray
NetApp (NTAP) downgraded to Hold from Buy at Brean Capital
Owens Corning (OC) downgraded to Market Perform from Outperform at FBR Capital
Owens Corning (OC) downgraded to Sell from Neutral at MKM Partners
Pioneer Natural (PXD) downgraded to Neutral from Buy at SunTrust
Prudential (PRU) downgraded to Sector Perform from Outperform at RBC Capital
Tanger Factory (SKT) downgraded to Hold from Buy at Evercore ISI
Tesla (TSLA) downgraded to Underweight from Neutral at JPMorgan
Tesoro (TSO) downgraded to Neutral from Buy at BofA/Merrill
zulily (ZU) downgraded to Fair Value from Buy at CRT Capital
zulily (ZU) downgraded to Hold from Buy at Canaccord
zulily (ZU) downgraded to Neutral from Outperform at RW Baird
zulily (ZU) downgraded to Neutral from Overweight at Piper Jaffray
zulily (ZU) downgraded to Sector Perform from Outperform at RBC Capital

Initiations

Albemarle (ALB) resumed with a Neutral at Citigroup
Columbia Pipeline (CPPL) initiated with a Buy at Jefferies
DSW (DSW) initiated with a Buy at Jefferies
H&R Block (HRB) initiated with an Outperform at BMO Capital
Oi S.A.  (OIBR)reinstated with an Equal Weight at Barclays
Ritchie Bros. (RBA) initiated with an Outperform at RBC Capital
Vista Outdoor (VSTO) initiated with an Outperform at Imperial Capital

COMPANY NEWS

Petrobras (PBR) said an explosion at a platform kills three workers
FXCM (FXCM) reported retail customer trading volume of $450B in January 
JetBlue (JBLU) reported January traffic up 14.3%
Tesla CEO Elon Musk said financials 'better than they appear, not worse'
Total (TOT) said it plans to sell $5B of assets in 2015
zulily (ZU) said Marc Stolzman will no longer serve as CFO and announced a $250M share repurchase over next 24 months
UniCredit (UNCFF) announced plans to sell UCCMB unit to Fortress (FIG)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Capella Education (CPLA), PBF Logistics (PBFX), PBF Energy (PBF), Nielsen (NLSN), First American (FAF), SPX Corp. (SPW), NorthWestern (NWE), Walker & Dunlop (WD), Quintiles (Q), Acorda Therapeutics (ACOR), Pilgrim's Pride (PPC), Copa Holdings (CPA), Luxoft (LXFT), AGL Resources (GAS), Panera Bread (PNRA), TAL International (TAL), China Distance Education (DL), Agnico-Eagle (AEM), TechTarget (TTGT), The Advisory Board (ABCO), Markel (MKL), Stamps.com (STMP), Student Transportation (STB), Equifax (EFX), NVIDIA (NVDA), Anworth Mortgage (ANH), C&J Energy (CJES), Aerohive (HIVE), NCI, Inc. (NCIT), HubSpot (HUBS), Diodes (DIOD), Zendesk (ZEN), Cray (CRAY), Quidel (QDEL), Corrections Corp. (CXW), Amber Road (AMBR), Catalent (CTLT), Morningstar (MORN), MetLife (MET), Select Comfort (SCSS), Navigators (NAVG), Navigators (NAVG), Cisco (CSCO), Whole Foods (WFM), FireEye (FEYE), Globant (GLOB), Forrester (FORR)

Companies that missed consensus earnings expectations include:
Tesla (TSLA), Bunge (BG), Sigma-Aldrich (SIAL), Time Inc. (TIME), Teck Resources (TCK), Forum Energy (FET), Yamana Gold (AUY), CareTrust REIT (CTRE), HNI Corporation (HNI), ION Geophysical (IO), Hornbeck Offshore (HOS), LivePerson (LPSN), Baidu (BIDU), Cenveo (CVO), zulily (ZU), Tesoro Logistics (TLLP), Tesoro (TSO), Cheesecake Factory (CAKE), Mattersight (MATR), CenturyLink (CTL), Covanta (CVA), NetApp (NTAP), TripAdvisor (TRIP), Insight Enterprises (NSIT), Tucows Inc (TCX), Itron (ITRI)

Companies that matched consensus earnings expectations include:
Himax (HIMX), CYS Investments (CYS), Oceaneering (OII), Applied Materials (AMAT), Cornerstone OnDemand (CSOD), Acadia (ACHC), Skechers (SKX)

NEWSPAPERS/WEBSITES

eBay (EBAY) plans to send off PayPal with $5B in cash, WSJ reports
Qualcomm (QCOM) under investigation by South Korean competition authorities, FT reports
SEC investigates disclosures tied to Icahn takeover of CVR (CVI), Reuters reports
Google (GOOG) gives Apple (AAPL), Microsoft (MSFT) 90 days to fix security flaws, Bloomberg says

SYNDICATE

Achillion (ACHN) 12M share Secondary priced at $10.25
Callon Petroleum (CPE) files $400M mixed securities shelf
Eclipse Resources (ECR) files to sell 62.5M shares of common stock for holders
Ensign Group (ENSG) 2.5M share Secondary priced at $41.00
Harvard Apparatus (HART) files to sell common stock, Series B Convertible Preferred Stk
Invitae (NVTA) 6.35M share IPO priced at $16.00
Orion Energy (OESX) intends to offer $15M shares of common stock
Remark Media (MARK) files $50M mixed securities shelf
Threshold Pharmaceuticals (THLD) sells common stock and warrants
Transition Therapeutics (TTHI) files automatic common stock shelf
Vermillion (VRML) files to sell 11.11M shares of common stock for holders