Frontrunning: July 17
- Bernanke Seeks to Divorce QE Tapering From Interest Rates (BBG)
- China launches crackdown on pharmaceutical sector (Reuters)
- Barclays, Traders Fined $487.9 Million by U.S. Regulator (BBG) - or a few days profit
- Barclays to fight $453 million power fine in U.S. court (Reuters)
- When an IPO fails, raise money privately: Ally Said to Weigh Raising $1 Billion to Pass Fed Stress Tests (BBG)
- Bank of England signals retreat from quantitative easing (FT) ... Let's refresh on this headline in 6 months, shall we.
- Russia's Putin puts U.S. ties above Snowden (Reuters)
- Smartphone Upgrades Slow as 'Wow' Factor Fades (WSJ)
- Snowden could leave Moscow airport in next few days (FT)
- New Egypt government may promote welfare, not economic reform (Reuters)
Overnight Media Digest
* The Senate stepped back from the edge of a partisan clash over nominations as Republicans agreed to quick consideration and Democrats stood down from a threat to limit the minority party's use of filibusters.
* Panamanian authorities detained a North Korean-flagged ship and its crew as they headed for North Korea from Cuba carrying what U.S. officials suspect are components of a surface-to-air missile system.
* International Paper has sunk $1.2 billion into Russia, much of it to modernize a pulp mill built five decades ago, in an almost-anything-goes part of a country that isn't always hospitable to Western companies.
* The United Nations is deploying what it calls its first-ever combatants to shut down rebels in the Democratic Republic of the Congo, in a risky shift from policing the world's conflicts with neutrality to a more aggressive use of force.
* A federal energy regulator levied a record fine against Barclays Plc, ordering the firm to pay $435 million for allegedly manipulating electricity prices in California and other western markets between 2006 and 2008.
* The Fed's plans to wind down its big bond-buying program depend on solving four economic puzzles involving the job market, the inflation rate and fiscal policy.
* A high-level Chinese GlaxoSmithKline Plc executive appeared to back allegations of bribery in an interview on state-controlled television in China, as Beijing ratcheted up pressure on the drugmaker.
* Chevron Corp agreed to fund most of a $1.5 billion joint venture with Argentina's state-run energy company, YPF , to develop shale oil and gas deposits.
* Pipeline-safety officials are calling for a stiffer punishment of PG&E Corp for its role in a lethal natural-gas pipeline explosion in San Bruno, California, in 2010.
* BHP Billiton Plc said iron ore production hit a record in its last financial year, as it stuck by plans to increase output further despite a $340 million cost blowout at a key expansion project in Australia's Pilbara mining hub.
* Google Inc has approached media companies about licensing their content for an internet TV service that would stream traditional TV programming.
* General Motors Co's Opel brand shrank to its lowest market share in Europe for more than a decade in the first half even as Ford Motor's Co sales revved up in June, benefiting from an inventory sell down earlier in the year.
* Yahoo Inc chief Marissa Mayer delivered another mixed report card on her yearlong turnaround effort, showing a 46 percent jump in quarterly earnings for the internet pioneer but continued revenue declines that underscore her challenges.
* Australian surfwear retailer Billabong International Ltd has agreed to a rescue package offered by a consortium comprising Altamont Capital Partners and The Blackstone Group's credit arm GSO Capital Partners.
* L'Oréal underlined a slowdown in the global cosmetics market, as sales of beauty products and fragrances in the United States cooled in recent months.
* Nissan Motor Co temporarily halted development of the first electric car for the Infiniti luxury brand, a bet that more advanced and cheaper technology will soon be available, company executives said.
* McDonald's Corp said it plans early next year to open its first restaurant in Vietnam, after awarding the franchise to Henry Nguyen, the son-in-law of the nation's prime minister.
* The Food and Drug Administration canceled an advisory-committee meeting that was set to review sugammadex, Merck & Co Inc's surgery drug.
* Onyx Pharmaceuticals Inc is expecting takeover interest from roughly five parties, including Amgen Inc and Pfizer Inc, according to people familiar with the matter, as the cancer-drug developer seeks to drum up demand for an acquisition that could be valued at more than $10 billion.
The European Commission is set to impose a cap on fees charged to process consumer debit and credit card transactions as per a draft plan.
The U.S. Federal Energy Regulatory Commission has hit Barclays Plc with a $470 million fine, saying the bank manipulated power prices.
Yahoo Inc's string of acquisitions and product overhauls failed to return the company to revenue growth in the second quarter with total sales falling 7 percent to $1.2 billion.
Goldman Sachs' quarterly profit more than doubled, boosted by a sharp jump in the value of its own investments and stronger demand from its clients for trading and investment banking services.
Greek lawmakers voted in favour of sending former finance minister George Papaconstantinou, charged with tampering with a list of alleged tax evaders, to stand trial.
Dell Inc founder Michael Dell has been given a last-minute ultimatum from some of the PC maker's largest shareholders to either raise his $24.4 billion bid or lose his attempt to regain control of the company.
* Google Inc has begun talks with major media companies about licensing TV channels, according to people with knowledge of the meetings.
* Individuals buying health insurance on their own will see their premiums tumble next year in New York State as changes under the federal health care law take effect, Governor Andrew Cuomo is expected to announce on Wednesday.
* Ellen Saracini, widow of a United Airlines pilot who died on September 11, 2001, wants airlines to have to install a second security door to the cockpit, but the airline industry says that isn't necessary.
* Richard Cordray was confirmed as the Consumer Financial protection Bureau chief almost two years after his nomination. Cordray, 54, and the agency are now set up to regulate interactions between borrowers and lenders, from the largest banks to mom-and-pop payday shops, and the terms of mortgages and student loans among other financial transactions.
* Top witness for the SEC in the trial against a former Goldman Sachs employee, Paolo Pellegrini, turned testy on the stand on Tuesday.
* Rising Chinese demand for drugs is a boon for foreign companies, but bribery allegations against GlaxoSmithKline underscore the risk of scrutiny from officials.
* Large-scale batteries of various types are being tested by some big utilities that want to store power for times when it is needed most.
* Lower sales from Yahoo's two primary moneymakers, display and search advertising, highlight the challenge facing chief executive Marissa Mayer.
* Goldman Sachs posted a profit on Tuesday that was twice what it reported in the period a year earlier, fueled by strong trading and investment banking results as companies looked to Goldman to arrange mergers and acquisitions.
* A special committee of Dell's board is poised to adjourn the vote on Thursday morning because it is concerned that the offer may be defeated by shareholders, people briefed on the matter said on Tuesday.
* Coca-Cola reported disappointing second-quarter sales on Tuesday as global economic weakness and cool, wet weather crimped demand for soft drinks.
* Johnson & Johnson reported on Tuesday that its earnings more than doubled in the second quarter of this year, buoyed by strong sales of prescription drugs and an influx of cash from the sale of its stake in the Irish drug manufacturer Elan.
THE GLOBE AND MAIL
* Treasury Board President Tony Clement is taking aim at the striking foreign service workers, alleging their tactics are "blackmail" and urging the union to accept the government's offer.
* Mike Allen, a Progressive Conservative MLA in Alberta has resigned from caucus after being arrested during a prostitution sting in the United States when he allegedly tried to solicit sexual services through a classified advertising website.
* Cory Monteith, the Canadian actor who rose to fame with his portrayal of quarterback-turned-crooner Finn Hudson on the hit television show "Glee", died of a toxic mix of heroin and alcohol.
* Insurance providers who reversed their decision to deny Calgary residents flooding claims after last month's weather catastrophe faced a customer backlash in the weeks following the flooding that ravaged Southern Alberta.
Reports in the business section:
* Canada's largest chain of newspapers is cutting hundreds of jobs and closing several publications to deal with plummeting profits, the second time in less than a year that Sun Media Corp has slashed its staff aggressively to deal with falling print advertising revenue.
* While Canada's labor market has rebounded sharply from the depths of the recession, the number of long-term unemployed has refused to budge, the Organization for Economic Co-operation and Development has found.
* Already a quaint relic in many parts of Canada, the old-fashioned payphone could become even harder to find after the country's telecommunications regulator rejected Bell Canada's request to double the cost of a call to $1.
* David Rosenberg, the latest pundit to weigh in on the hard versus soft landing debate, says Canada's housing market has almost recouped all the losses brought on by Ottawa tightening the mortgage rules in 2012.
* While pure-play food and drug retailers such as Metro and Rexall appear to have the most to lose in the impending nuptials of Loblaw Companies Ltd and Shoppers Drug Mart Corp , Monday's $12.4-billion deal stands to challenge a far broader swath of retail companies as the two Canadian retail giants begin stocking their strongest brands and categories in each other's stores.
* Bank of Canada Governor, Stephen Poloz, who replaced Mark Carney in June, will not be deviating the course set previously by policymakers, the ones who have kept interest rates at near-record lows for almost three years.
CHINA SECURITIES JOURNAL
- Billions of dollars of quota for the Qualified Institutional Investors Programme (QFII), which allows foreign funds to purchase mainland equities and bonds, remain unused because of enduring lack of clarity as to how the profits will be taxed and restrictions on capital flows.
- More cities will be included in the pilot project for residential property tax, following two programs started in 2011 in Shanghai and Chongqing, according to the State Administration of Taxation.
SHANGHAI SECURITIES NEWS
- China will expand a trial over-the-counter trading system for shares in small and mid-sized firms to the whole country in September.
- The China Insurance Regulatory Commission has permitted the plan of insurance funds to participate in government bond futures, and several insurance companies have started submitting their applications, unnamed sources said.
- China's social security authority is planning to expand investment channels for its social security fund to allow it to invest in instruments other than deposits in state-owned banks and Chinese treasury bonds.
- China's state-run Xinhua News Agency is investing in Shanda Literature, China's largest online literature community, to cooperate on digital reading and electronic newspaper publishing.
- The Chinese government will strengthen efforts to investigate commercial bribery by multinational corporations and continuously protect legitimate interests and rights of foreign investors, the newspaper said in its editorial comment.
Fly On The Wall 7:00 AM Market Snapshot
Adobe (ADBE) upgraded to Market Perform from Underperform at FBR Capital
BorgWarner (BWA) upgraded to Outperform from Neutral at RW Baird
Douglas Emmett (DEI) upgraded to Market Perform from Underperform at Cowen
Franklin Resources (BEN) upgraded to Outperform from Market Perform at BMO Capital
Kodiak Oil & Gas (KOG) upgraded to Buy from Neutral at SunTrust
LINN Energy (LINE) upgraded to Buy from Neutral at Goldman
LinnCo (LNCO) upgraded to Buy from Neutral at Goldman
Medivation (MDVN) upgraded to Buy from Neutral at UBS
ResMed (RMD) upgraded to Outperform from Neutral at Macquarie
Synergetics (SURG) upgraded to Buy from Hold at Wunderlich
Telefonica (TEF) upgraded to Neutral from Underperform at Macquarie
Alamos Gold (AGI) downgraded to Hold from Buy at Canaccord
Anworth Mortgage (ANH) downgraded to Hold from Buy at Deutsche Bank
athenahealth (ATHN) downgraded to Outperform from Strong Buy at Raymond James
Camden Property (CPT) downgraded to Neutral from Outperform at Macquarie
Golden Star Resources (GSS) downgraded to Sell from Hold at Canaccord
Hologic (HOLX) downgraded to Neutral from Overweight at Piper Jaffray
Iberdrola (IBDRY) downgraded to Underweight from Neutral at HSBC
Interactive Intelligence (ININ) downgraded to Market Perform at Raymond James
JAVELIN Mortgage (JMI) downgraded to Hold from Buy at Deutsche Bank
Johnson & Johnson (JNJ) downgraded to Hold from Buy at Deutsche Bank
McDonald's (MCD) downgraded to Neutral from Buy at Janney Capital
Mechel (MTL) downgraded to Underweight from Neutral at HSBC
New Gold (NGD) downgraded to Hold from Buy at Canaccord
Packaging Corp. (PKG) downgraded to Market Perform from Outperform at BMO Capital
Pan American Silver (PAAS) downgraded to Hold from Buy at Canaccord
Team (TISI) downgraded to Hold from Buy at BB&T
tw telecom (TWTC) downgraded to Hold from Buy at Deutsche Bank
Unilever (UN) downgraded to Underperform from Neutral at Credit Suisse
Wabash (WAB) downgraded to Market Perform from Outperform at FBR Capital
Western Asset Mortgage (WMC) downgraded to Hold from Buy at Deutsche Bank
Approach Resources (AREX) initiated with a Buy at Miller Tabak
Blackstone Mortgage Trust (BXMT) initiated with a Buy at Deutsche Bank
Cameron (CAM) reinstated with an Outperform at Credit Suisse
Ciena (CIEN) initiated with an Outperform at William Blair
Diamondback Energy (FANG) initiated with a Buy at Miller Tabak
Dresser-Rand (DRC) initiated with a Market Perform at Cowen
Finisar (FNSR) initiated with a Market Perform at William Blair
Fortress (FIG) initiated with an Outperform at RBC Capital
GoGo (GOGO) initiated with an Overweight at Evercore
Infinera (INFN) initiated with an Outperform at William Blair
JDSU (JDSU) initiated with a Market Perform at William Blair
Macerich (MAC) initiated with a Neutral at SunTrust
ServiceNow (NOW) initiated with a Positive at Susquehanna
Workday (WDAY) initiated with a Neutral at Susquehanna
Dell (DELL) special committee reiterated holders should vote for $13.65 per share offer
Michael Dell, Silver Lake won't raise offer even if vote delayed, Reuters reports
First Manhattan Co. rejected settlement proposal from VIVUS (VVUS)
Federal Energy Regulatory Commission ordered Barclays (BCS), four traders to pay $487.9M in civil penalties
Chevron (CVX), YPF (YPF) in agreement for Vaca Muerta shale development
Novartis (NVS) sees FY13 revenue to grow at low-single digit rate
Ford's (F) share of U.S. electrified vehicle market grew to nearly 16% in 1H
To expand electrification engineering team by about 50%
Flow International (FLOW) to file to delay annual report on form 10-K
Meade Instruments (MEAD) terminated JOC merger agreement, announced merger with SOI
Companies that beat consensus earnings expectations last night and today include:
Textron (TXT), WNS Holdings (WNS), Novartis (NVS), Pinnacle Financial (PNFP), Packaging Corp. (PKG), Renasant (RNST), United Rentals (URI), Yahoo (YHOO), Wintrust Financial (WTFC), CSX (CSX)
Companies that missed consensus earnings expectations include:
First Cash Financial (FCFS), Mattel (MAT), Miller Energy (MILL), Healthcare Services (HCSG), Interactive Brokers (IBKR), Marten Transport (MRTN)
- Fewer people are upgrading their smartphones—a trend that could make it harder for companies from AT&T (T) to Apple (AAPL) to keep up the pace of revenue growth. The rates at which American cellphone users have traded in their devices for more advanced models have declined over the last few years, the Wall Street Journal reports
- Intel (INTC) deserves kudos for taking a big step forward this year with its chip technology. Too bad its business may yet take two steps back. Investors also will watch to see if new chief Brian Krzanich lowers the company's outlook to give him breathing room. The good news: Intel is more competitive in mobile chips, the Wall Street Journal reports
- Federal Reserve Chairman Bernanke today is expected to balance a message of enduring central bank support for the U.S. economy with a reminder that the Fed's ultra-easy policies cannot last forever, Reuters reports
- A U.S. federal judge ruled that the U.S. government may pursue its $5B civil fraud lawsuit accusing Standard & Poor's (MHFI) of misleading investors by inflating credit ratings, while denying S&P's motion to dismiss the lawsuit, Reuters reports
- Boeing’s (BA) 787 Dreamliner faces no immediate threat of grounding as investigators continue an investigation into last week’s fire aboard a plane operated by Ethiopian Airlines Enterprise, the European Aviation Safety Agency said, Bloomberg reports
- Chevron’s (CVX) civil racketeering case against Ecuadoreans it accuses of fabricating evidence to win a $19B verdict in a pollution lawsuit will go to trial on Oct. 15, a judge said in rejecting a defense request for a delay, Bloomberg reports
Annie's (BNNY) files to sell 2.54M shares of common stock for holders
CAS Medical (CASM) announces proposed offering of common stock
EQT Midstream Partners (EQM) 11M share Spot Secondary priced at $43.50
Healthcare Services (HCSG) files to sell 1.21M shares of common stock for holders
Intellicheck (IDN) files to sell 3M shares of common stock for holders
NRG Yield (NYLD) 19.575M share IPO priced at $22.00
Realogy (RLGY) to sell 25.1M common shares for funds affiliated with Apollo Global
Verastem (VSTM) announces proposed offering of common stock
Engaged Capital reports 5.1% stake in AeroVironment (AVAV), talks to management
MHR Fund raises stake in Navistar (NAV) to 15.8% from 14.93%