Frontrunning: June 24

  • Stocks Fall With China in Bear Market as Bonds Decline (BBG)

  • Russia defiant as U.S. raises pressure over Snowden (Reuters) ...

  • and sure enough: Kerry Warns Hong Kong and Russia on Snowden  (WSJ)

  • Slow-Motion U.S. Recovery Searches for Second Gear (WSJ)

  • PBOC Sees ‘Reasonable’ Liquidity in China’s Financial System (BBG)

  • Italy's Berlusconi faces verdict in underage sex trial (Reuters)

  • Fed Monetary Course Difficult for a Bernanke Successor to Alter (BBG)

  • Another China central bank worry; companies push into lending (Reuters)

  • Gold Miner Writedowns at $17 Billion After Newcrest Fallout (BBG)

  • Snowden Faces Often-Posed U.S. Fugitive Question: Where to Run? (BBG)

  • Banks Present Own Crisis Plan to Fed (WSJ)

Overnight Media Digest


* A global cat-and-mouse game involving the admitted leaker of National Security Agency secrets exploded into a diplomatic scramble, as U.S. authorities sought to catch Edward Snowden before he reached what supporters say is his next goal: political asylum in Ecuador.

* Federal officials are cracking down on fraud in student-aid programs, responding to evidence that a growing number of recipients are pocketing federal loans and grants without any intent of going to school.

* Banks have floated to federal regulators a proposal on how to pay for a restructuring of the nation's largest financial institutions in the event of a future crisis.

* Chinese companies are under growing financial pressure as the country's economic growth slows. So industries ranging from airlines to steel to consumer appliances increasingly are leaning on the Chinese government. Government aid to Chinese publicly traded companies rose 23 percent last year.

* Most Australians think the government is allowing too much Chinese investment, a poll suggests, even as ownership of local assets by the nation's biggest trading partner remains relatively small.

* Four years in, the U.S. recovery is slowly gaining steam. Many economists predict 2014 will be the best year for growth since 2005, and joblessness is expected to dip below 7 percent next year for the first time since 2008.

* U.S. airline passengers, eager to be able to start using electronic devices throughout their flights, have months to wait until new rules are hammered out.

* Chevrolet's next brand chief, Alan Batey, aims to make the cars once sold as the "Heartbeat of America" able to quicken pulses when cruising Beijing, Sao Paulo or Moscow. Chevys account for 70 percent of General Motor's about 9.3 million in global vehicle sales and were a big chunk of its $152.26 billion in 2012 sales.

* Facebook is quietly working on a service, internally called Reader, that displays content from users and publishers in a format tailored for mobile devices. Such mobile-focused endeavors are critical as Facebook tries to jump-start its sagging stock price.

* Starbucks Corp said it paid UK corporation tax for the first time since 2008, a move that followed sustained pressure from the British government, which continues to heap pressure on companies that seek to minimize tax payments on their earning.


Germany's largest cable operator Kabel Deutschland is set to recommend Vodafone's revised offer for the company, ensuring that the British telecom giant trumps a rival bid from U.S. media company Liberty Global.

The oligarch founders of Kazakh miner Eurasian Natural Resources Corp are close to finalising a buyout bid for the company, valuing it at just over 3 billion pounds ($4.7 billion), below the value of a tentative proposal made in May.

Big infrastructure projects will receive a major boost this week as Finance Minister George Osborne gears up to pledge tens of billions of pounds to the sector, shifting the focus from austerity to recovery.

Europe's leading telecom companies have written to José Manuel Barroso, president of the European Commission, calling for a rethink on proposed market reforms, advocating deregulation of the market to secure future investment.

German tax authorities are investigating Barclays over the use of legal loopholes that cut the bank's tax bill by billions of euros, a German newspaper reported on Saturday.

The Financial Times' annual analysis of total rewards for the heads of 15 banks reveals shareholder revolts, legal scandals and increased scrutiny from regulators and has lead to a drop in bank chief executives' pay for three years.


* Edward Snowden, a former National Security Agency contractor who leaked details about American surveillance, personifies a debate at the heart of technology systems in government and industry: can the IT staff be trusted?

* Hoping to cut medical costs, employers are experimenting with a new way to pay for health care, telling workers that their company health plan will pay only a fixed amount for a given test.

* The founders of the Eurasian Natural Resources Corporation Plc and the government of Kazakhstan are preparing an offer to buy the remaining stake in the troubled mining giant they do not already own in a deal valuing the miner at 3 billion pounds, or $4.7 billion.

* Once worth $34.5 billion, Brazilian billionaire Eike Batista's holdings are now estimated at $4.8 billion and falling. The rise and fall of the charismatic industrialist mirrors Brazil's sudden reversal of fortune. After years of economic expansion, the South American nation has begun to sputter.

* The Bank for International Settlements, a group representing central banks including the Federal Reserve and the European Central Bank, warned political leaders on Sunday that they should not expect central banks' cheap-money policy to hold the global economy together forever.



* The Toronto Maple Leafs pulled off the first big trade of the NHL off-season on Sunday morning, landing highly touted young netminder Jonathan Bernier from the Los Angeles Kings and ending GM Dave Nonis's long hunt for depth in goal.

* Former Ontario education minister Laurel Broten, who was at the centre of a bitter battle with the province's teachers over wage-freeze legislation, announced her resignation from provincial politics Sunday, opening up a fourth Liberal-held seat in the legislature.

Reports in the business section:

* Calgary's downtown business core faces indefinite power outages and untold damage on Monday after devastating flooding made a ghost town out of the city's gleaming array of office towers. The disruption rippled through one of Canada's most vibrant economies and raised questions about the longer-term impact.

* After a three-day negotiation blitz, talks have adjourned between Quebec's construction unions and an alliance of construction companies. The conciliator in the dispute has asked both sides to take a break to consider some of the issues being discussed. About 175,000 construction workers put down their tools last Monday, shutting down work sites across the province.


* As Calgary began a long and arduous effort to restore power and clean pools of silt and mud, the city of Medicine Hat awaited the tsunami of river water that has been wreaking havoc across big cities and small towns in Southern Alberta for the past four days. Here, in the town where several rivers swollen beyond all recognition will meet, city officials were bracing for a flood bigger than any they'd seen in almost twenty years.

* Major energy and financial companies with offices in downtown Calgary rolled out contingency plans on the weekend, bracing for disruptions Monday as officials continued to survey flood related damage and power remained cut off from pockets of the city's core



- A total of 569 listed companies among 917 in Shanghai and Shenzhen stock markets have published their six-month disclosure reports, saying that they forecast an increase in profit.


- There is no time schedule for a resumption in A-share initial public offerings, as some of the relevant conditions and policies have not been finalised by China Securities Regulatory Commission, according to unidentified sources.

- Shanghai Stock Exchange has announced a new policy to make disciplinary actions over securities trading more transparent.


- Cyber attacks against Chinese websites that originate from the United States may be partly backed by Washington, according to Chinese experts.


- Edward Snowden's departure from Hong Kong is in line with relevant local law and regulation, and the Chinese central government fully respects the decision, it said in an editorial.

Fly On The Wall 7:00 AM Market Snapshot 



AMD (AMD) upgraded to Outperform from Market Perform at FBR Capital
CME Group (CME) upgraded to Neutral from Sell at Goldman
Charles Schwab (SCHW) upgraded to Buy from Sell at Citigroup
Chiquita Brands (CQB) upgraded to Buy from Hold at BB&T
Digital Realty (DLR) upgraded to Neutral from Sell at UBS
Eaton Vance (EV) upgraded to Neutral from Sell at Citigroup
FXCM (FXCM) upgraded to Buy from Neutral at Citigroup
Graco (GGG) upgraded to Neutral from Sell at Goldman
PHH Corp. (PHH) upgraded to Buy from Neutral at Compass Point
Portland General Electric (POR) upgraded to Buy from Neutral at Goldman
T. Rowe Price (TROW) upgraded to Buy from Neutral at Citigroup
TIBCO (TIBX) upgraded to Buy from Long-Term Buy at Hilliard Lyons


AB InBev (BUD) downgraded to Hold from Buy at Societe Generale
Allergan (AGN) downgraded to Hold from Buy at Deutsche Bank
Allergan (AGN) downgraded to Market Perform from Outperform at Leerink
Clearwire (CLWR) downgraded to Market Perform from Buy at Janco
Cleco (CNL) downgraded to Neutral from Buy at Goldman
Illinois Tool Works (ITW) downgraded to Sell from Neutral at Goldman
Praxair (PX) downgraded to Neutral from Buy at Citigroup
RealD (RLD) downgraded to Neutral from Buy at B. Riley
Teekay Offshore Partners (TOO) downgraded to Neutral from Buy at Citigroup
Valspar (VAL) downgraded to Neutral from Buy at Citigroup
Walgreens (WAG) downgraded to Hold from Buy at Cantor


Beazer Homes (BZH) initiated with a Neutral at Goldman
Blackstone Mortgage Trust (BXMT) initiated with a Buy at Citigroup
ChannelAdvisor (ECOM) initiated with an Outperform at BMO Capital
Coca-Cola (KO) initiated with a Buy at SunTrust
Cubic (CUB) initiated with a Neutral at Credit Suisse
D.R. Horton (DHI) initiated with a Neutral at Goldman
Hovnanian (HOV) initiated with a Sell at Goldman
KB Home (KBH) initiated with a Neutral at Goldman
KNOT Offshore Partners (KNOP) initiated with a Buy at Citigroup
Lennar (LEN) initiated with a Neutral at Goldman
M.D.C. Holdings (MDC) initiated with a Neutral at Goldman
Meritage Homes (MTH) initiated with a Buy at Goldman
NVR Inc. (NVR) initiated with a Neutral at Goldman
PulteGroup (PHM) initiated with a Sell at Goldman
Ryland Group (RYL) initiated with a Conviction Buy at Goldman
Sherwin-Williams (SHW) initiated with a Buy at UBS
Taylor Morrison (TMHC) initiated with a Neutral at Goldman
Toll Brothers (TOL) initiated with a Buy at Goldman


Tenet Healthcare (THC) to acquire Vanguard (VHS) for $21 per share in cash
IHS Inc. (IHS) acquired Intellichem
Simcere (SCR) announced sale of equity interest in Boda
ADM (ADM) lodged recommended offer documents for GrainCorp
JoS. A. Bank (JOSB) confirmed seeking potential acquisition
Ambow Education (AMBO) CEO said private takeover could hurt company


  • Several banks (WFC, BAC, C) have floated to federal regulators a proposal on how to pay for a restructuring of the nation's largest financial institutions in the event of a future crisis, sources say. The plan, given to the Fed, is an effort by banks to preempt tougher rules from officials in Washington who believe banks still could pose a threat to financial stability in a crisis, the Wall Street Journal reports

  • Facebook (FB) wants to become a newspaper for mobile devices, and has been quietly working on a service, internally called Reader, that displays content from Facebook users and publishers in a new visual format tailored for mobile devices, sources say, the Wall Street Journal reports

  • Germany's antitrust regulator said it would likely be responsible for examining the proposed takeover of Kabel Deutschland by Vodafone (VOD), Reuters reports

  • More U.S. senators are raising concerns about a Chinese company's plan to buy U.S. pork company Smithfield Foods (SFD), particularly in light of restrictions that China continues to place on imports of U.S. meat, Reuters reports

  • Newcrest Mining’s (NCMGY) decision to write down the value of its mines by as much as $5.5B will lead to the biggest one-time charge in gold mining history. It also heralds pain for competitors (ABX, NEM, GFI), Bloomberg reports

  • U.S. Treasuries are now providing less than half the yield of stocks, giving investors little reason to keep the three-decade bull market in bonds alive as housing starts, consumer confidence and corporate profits point to an improving economy, Bloomberg reports


Revlon (REV) could double in a takeover
Diebold (DBD) shares could reach $40
Con-way (CNW) could climb 18% to $46 or more
Weight Watchers (WTW) shares are cheap
Time to take profits in Men's Wearhouse (MW)
Intel (INTC) readies TV subscription service with revolutionary set-top box


Agenus (AGEN) files to sell 500K of common stock for holders
TG Therapeutics (TGTX) files to sell $50M of common stock through MLV

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