Frontrunning: July 15

  • An actual Bloomberg headline: Granny’s Gold Bars Are Key to Vietnam Push to Boost Dong (BBG)

  • Gay delivers further body blow to troubled sport (Reuters)

  • China Wealth Eludes Foreigners as Stocks Earn 1% in 20 Years (BBG)

  • Portugal's Parties Set Deadline for Pact (WSJ)

  • Corporate Spending Set to Surge in U.S. (BBG)... or not at all based on the actual corporate data

  • Bernanke Boom Signaled by Yield Surge as Market Recalculates (BBG)

  • Legal Fears Slowed Aid to Syrian Rebels (WSJ)

  • A mega-camp adds to the Boy Scouts’ troubles (Reuters)

  • GSK accused of being ‘ringleader’ in China probe (FT)

  • 19 Hospitalized in US-Ukraine Army Exercise - Ministry (RIA)

  • Egypt Islamists march as senior U.S. official visits (Reuters)

  • German spies made use of U.S. surveillance data (Reuters)

  • Apple hires fresh talent for ‘iWatch’ (FT)

Overnight Media Digest

WSJ

* A string of cautionary opinions from administration lawyers over the last two years sheds new light on President Obama's halting and ultimately secretive steps to provide military support to rebels in Syria's deadly civil war.

* As the numbers pile up showing China's sizzling growth cooling down, industries worldwide - from German paper cutter makers to Indonesian palm oil exporters - are confronting an altered landscape of winners and losers.

* In one of the first lawsuits to go to trial involving Bernard Madoff's massive fraud, a group of investors is nearing a settlement with a Connecticut bank that they said should have uncovered the Ponzi scheme years before it collapsed.

* Chinese officials released new details of their bribery allegations against GlaxoSmithKline and said four executives have been detained.

* With new parts of the healthcare overhaul kicking in this October, some insurers have set up simulated healthcare exchanges as a test drive, so that they can see what packages of benefits will sell at what prices.

* Restoration Hardware Holdings, once teetering on the edge of bankruptcy and the subject of a buyout bidding war, is turning into a bonanza for its private-equity owners. The firms that bought the luxury-home-furnishings retailer in 2008 are on track to make about eight times their initial investment, according to a Wall Street Journal analysis.

* Talks on resolving a multibillion-dollar trade dispute between the European Union and China over solar panels have reached an impasse, EU officials said, with a deadline looming.

* Coca-Cola, PepsiCo and Dr Pepper Snapple are expected to disclose weak U.S. sales in the wake of a chilly spring and the wettest June in decades.

* Meredith Corp is creating a print magazine based on a popular website, Allrecipes.com. It is usually the other way around. The food magazine is a spinoff of the Allrecipes.com website Meredith acquired last year, and will feature a curated selection of recipes from the site, whose user-generated content is popular with home cooks.

* Microsoft has cut the price of its Surface RT, the cheaper of the two versions of its Surface tablet, by $150 or up to 30 percent, as even some Microsoft partners have called the device a sales laggard.

* Max Azria is likely to lose control of BCBG Max Azria to investment firm Guggenheim Partners, in a deal that eases the fashion house's roughly $685 million in debt.

* IMAX and its South Korean partner plan to add 30 IMAX movie screens in China and five in South Korea. The expansion, to be announced in coming days, is aimed at capitalizing on rising entertainment spending by the Chinese middle class and demand for the immersive high-resolution technology in Korea.

FT

BP says U.S. law firms in the Gulf of Mexico area have been reaping a "bonanza", winning some of the biggest compensation awards for themselves as a result of a misinterpretation of the company's settlement to compensate those affected by the Deepwater Horizon disaster.

A radical shake-up of UK corporate law will include plans under which negligent directors will be made personally liable for repaying failed companies' debts.

Group of 20 finance ministers are set to launch a new phase in the crackdown on global tax avoidance this week.

German Chancellor Angela Merkel has called for a tough European agreement that would require internet companies to disclose what personal information they have collected and who they have made it available to.

Preliminary investigations have found no evidence that a fire on a Boeing 787 Dreamliner at London's Heathrow airport was linked to the airliner's lithium-ion batteries.

JPMorgan Chase & Co and Goldman Sachs are mulling a sale of their metal warehousing units and have begun informally sounding out buyers for the businesses in recent months.

AT&T Inc has agreed to buy Leap Wireless International for about $1.2 billion, the latest in a series of recent deals in the telecoms sector.

Irn-Bru maker A.G. Barr is considering a possible 1 billion pound bid for GlaxoSmithKline's Lucozade and Ribena brands days after merger talks with rival Britvic fell through.

NYT

* Fabrice Tourre, the former Goldman Sachs trader whose emails about the mortgage crisis became a symbol of Wall Street hubris, spent time volunteering on a coffee farm in Rwanda after Goldman Sachs, and after the Securities and Exchange Commission accused him of misleading investors about a mortgage security that ultimately failed.

* Air accident investigators continued on Sunday to try to figure out why a parked Boeing 787 Dreamliner caught fire on Friday in London, while airlines around the world kept flying the plane and expressed confidence in it.

* Brick-and-mortar stores are looking for a chance to catch up with their online competitors using software -- video surveillance and signals from shoppers' cellphones and apps -- that allows them to watch customers as they shop, and gather data about their behavior and moods.

* Michael Dell is fighting a battle over a company that many say is doomed. Dell wants to take his company private and retool it without quarterly earnings pressure. In this quest, he is opposed by Carl Icahn, the onetime corporate raider who has profited in battles over TWA, RJR Nabisco and Motorola, among many others.

* If you are a corporate executive, this may be one of the last sentences you want to hear: "Erich Spangenberg is on the line." Invariably, Spangenberg, the 53 year old owner of IPNav, is calling to discuss a patent held by one of his clients, which he says your company is infringing - and what are you going to do about it?

Canada

THE GLOBE AND MAIL

* The chairman of the company whose runaway freight train exploded in downtown Lac-Mégantic, Quebec, and killed dozens says his employees have begun cleaning up wreckage, a little more than a week after the crash.

* Stephen Harper is leaving his economic team in place, as the Prime Minister unveils a new cabinet on Monday that aims to revitalize an administration beset by recent scandals and flagging popularity.

* The sudden death of Cory Monteith, the Victoria-raised actor whose portrayal of quarterback-turned-crooner Finn Hudson on the hit television show "Glee" propelled him into one of Canada's rising on-screen stars, has spurred shock and condolence, from the upscale Vancouver hotel where he took his final breath, to Ottawa, Hollywood, and beyond.

Reports in the business section:

* Jeffrey Immelt, the CEO of General Electric Co, said Canada will play a part in his effort to transform the iconic 135-year-old industrial conglomerate into a dominant global player in intelligent machines and advanced manufacturing.

* Canada's central bank could surprise financial markets this week and signal a longer period of ultra-low interest rates, as exports languish and executives display little enthusiasm for spending their excess profits.

China

SHANGHAI DAILY

- Hong Kong is considering lifting limits on the amount of infant milk formula mainland visitors can take home with them. The restrictions came into effect in March when mainland visitors bought so much formula in Hong Kong it caused a shortage.

PEOPLE'S DAILY

- The abrupt cancellation on Saturday of a plan to build China's largest uranium processing plant indicates that local governments are not communicating properly with residents in building environmentally-sensitive projects, a commentary by this newspaper said.

SHANGHAI SECURITIES NEWS

- A slew of new policy steps promulgated by the State Council, or cabinet, over the past 10 days indicate that China is stepping up its efforts to boost consumption.

- Along with increasing signs the U.S. Federal Reserve is considering an exit from quantitative easing (QE), China's stock market will likely see an outflow of overseas funds in the second half of the year.

CHINA SECURITIES JOURNAL

- High ratio bonus issues offered by Chinese listed firms reflect that some companies have tried to attract investors looking to take a punt on markets while avoiding rewarding cash dividends, the paper said in a commentary.

NATIONAL BUSINESS DAILY

- Half-yearly reports published by local governments so far show that many Chinese localities still rely on government investment to boost growth.

CHINA DAILY

- A house editorial castigated the United States for "engineering its monetary and exchange policy to suit its needs" and said that the current U.S. policy of monetary easing is causing rapidly rising inflation in emerging market economies.

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

Applied Micro Circuits (AMCC) upgraded to Strong Buy from Outperform at Raymond James
BNY Mellon (BK) upgraded to Buy from Neutral at Citigroup
Deckers Outdoor (DECK) upgraded to Overweight from Neutral at Piper Jaffray
Franco-Nevada (FNV) upgraded to Outperform from Market Perform at BMO Capital
Leap Wireless (LEAP) upgraded to Market Perform from Underperform at BMO Capital
Leap Wireless (LEAP) upgraded to Neutral from Underperform at RW Baird
Leap Wireless (LEAP) upgraded to Neutral from Underweight at JPMorgan
Leap Wireless (LEAP) upgraded to Overweight from Underweight at Barclays
NetApp (NTAP) upgraded to Overweight from Equal Weight at Morgan Stanley
Patterson Companies (PDCO) upgraded to Neutral from Cautious at ISI Group
Tiffany (TIF) upgraded to Buy from Hold at Stifel
Webster Financial (WBS) upgraded to Overweight from Equal Weight at Evercore


Downgrades

Allscripts (MDRX) downgraded to Neutral from Buy at ISI Group
AngloGold (AU) downgraded to Underperform from Market Perform at BMO Capital
DSW (DSW) downgraded to Neutral from Buy at Sterne Agee
ExOne (XONE) downgraded to Hold from Buy at BB&T
Gap (GPS) downgraded to Neutral from Overweight at Piper Jaffray
Genesco (GCO) downgraded to Neutral from Buy at Sterne Agee
Grand Canyon (LOPE) downgraded to Neutral from Overweight at Piper Jaffray
Harmony Gold (HMY) downgraded to Underperform from Market Perform at BMO Capital
Hartford Financial (HIG) downgraded to Market Perform at Keefe Bruyette
Kinross Gold (KGC) downgraded to Market Perform from Outperform at BMO Capital
Linear Technology (LLTC) downgraded to Neutral from Outperform at Credit Suisse
Magnum Hunter (MHR) downgraded to Market Perform from Outperform at BMO Capital
Michael Kors (KORS) downgraded to Neutral from Overweight at Piper Jaffray
Mosaic (MOS) downgraded to Sector Performer from Sector Outperformer at CIBC
Newmont Mining (NEM) downgraded to Market Perform from Outperform at BMO Capital
NuVasive (NUVA) downgraded to Underperform from Market Perform at BMO Capital
Portugal Telecom (PT) downgraded to Underperform at Exane BNP Paribas
QLogic (QLGC) downgraded to Underweight from Equal Weight at Morgan Stanley
Steven Madden (SHOO) downgraded to Neutral from Buy at Sterne Agee
Stoneridge (SRI) downgraded to Neutral from Buy at B. Riley
Teekay Tankers (TNK) downgraded to Underweight from Neutral at JPMorgan
UPS (UPS) downgraded to Hold from Buy at BB&T
UPS (UPS) downgraded to Neutral from Overweight at JPMorgan
UPS (UPS) downgraded to Outperform from Strong Buy at Raymond James
VIVUS (VVUS) downgraded to Neutral from Outperform at Credit Suisse

Initiations

Bluebird Bio (BLUE) initiated with a Buy at BofA/Merrill
Bluebird Bio (BLUE) initiated with a Buy at Canaccord
IHS Inc. (IHS) initiated with a Neutral at Janney Capital
PTC Therapeutics (PTCT) initiated with an Outperform at Credit Suisse
PTC Therapeutics (PTCT) initiated with an Overweight at JPMorgan

HOT STOCKS

AT&T (T) to acquire Leap Wireless (LEAP) for $15 per share; to include PCS, AWS spectrum
Crown Castle (CCI) announced certain contractual terms with AT&T, Leap Wireless
Wells Fargo (WFC) to acquire Hypothekenbank Frankfurt U.K. real estate portfolio
MB Financial (MBFI) to acquire Taylor Capital (TAYC) for $22 per share or $680M
VIVUS (VVUS) offered compromise to First Manhattan to end proxy fight
Starboard hired advisors to explore “superior proposals” to Shuanghui, Smihfield Foods (SFD) merger
International Rectifier (IRF), TowerJazz (TSEM) in multi-year agreement through 2020
Research Frontiers (REFR) filed patent infringement suit against Amazon (AMZN), others (BKS, SNE)
Actavis (ACT) generic Opana ER received FDA approval
Kaman (KAMN) to acquire Ohio Gear & Transmission

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
MB Financial (MBFI)

Companies that missed consensus earnings expectations include:
Taylor Capital (TAYC)

NEWSPAPERS/WEBSITES


  • The recent rout in emerging markets is enticing some investors to jump back in to search for cheap stocks, bonds and currencies. But the sell-off is prompting these bargain hunters to be a lot pickier than in the past, the Wall Street Journal reports

  • Coca-Cola (KO), PepsiCo (PEP) and Dr Pepper Snapple (DPS) are expected to disclose weak U.S. sales following a chilly spring and the wettest June in decades, the Wall Street Journal reports

  • Stung by leftover inventory and unsure about consumer spending, many retailers (LF) are ordering conservatively for the second busiest selling season of the year--back-to-school sales--behind the end of the year holiday period, according to executives in shipping, banking and manufacturing, Reuters reports

  • GlaxoSmithKline (GSK) channeled bribes to Chinese officials and doctors through travel agencies for six years to illegally boost sales and to raise the price of its medicines in China, police said today, as four senior Chinese executives from GSK have been detained, Reuters reports

  • Companies in the U.S. are beginning to empty their deep pockets and boost capital spending as they look past the specter of sequestration and global growth risks. Orders for capital goods excluding aircraft and military equipment, an indicator of future business investment, was up 1.5% percent in May, a third consecutive advance and the longest streak since October 2011, Bloomberg reports

  • Commerzbank (CRZBD) rose in Frankfurt trading after a report that German Finance Minister Schaeuble spoke with UBS (UBS) Chairman Weber to evaluate interest in buying a stake, Bloomberg reports

BARRON’S

Citigroup (C) may be able to return more capital to investors
Paychex (PAYX), H&R Block (HRB), others (ADP, ACN, AVAV, NOC, RTN, GD, MSI, CTSH, WIT, INFY, CXW, GEO, WU) could benefit from immigration reform
Hess (HES), Noble (NE), others (FOXA, INTU, ACN, CA, DHR, HAR, MPC, WDC) could raise dividends during Q3
Charles Schwab (SCHW) looks expensive
Entegris (ENTG) could jump 40% in the next year or two
MercadoLibre (MELI) could drop 50% or more
PC-related stocks (INTC, MSFT, HP, DELL, GOOG, SSNLF) could remain up through summer

SYNDICATE

Clean Energy (CLNE) files to sell 3.16M shares of common stock for holders
Dex Media (DXM) files to sell 4.92M shares of common stock for holders
IDACORP (IDA) files to sell 3M shares of common stock
Rally Software (RALY) announces proposed offering of $70M of common stock
Vermillion (VRML) files to sell 20.5M shares of common stock for holders

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