Frontrunning: August 2
- Low Wages Work Against Jobs Optimism (WSJ)
- Tourre’s Junior Staff Defense Seen Leading to Trial Loss (BBG)
- Russia gives Snowden asylum, Obama-Putin summit in doubt (Reuters)
- Fortress to Blackstone Say Now Is Time to Sell on Surge (BBG)
- Brazil backs IMF aid for Greece and recalls representative (FT), previously Brazil refused to back new IMF aid for Greece, says billions at risk (Reuters)
- Google unveils latest challenger to iPhone (FT)
- Swaps Probe Finds Banks Manipulated Rate at Expense of Retirees (BBG)
- Academics square up in fight for Fed (FT)
- Potash Turmoil Threatens England’s First Mine in Forty Years (BBG)
- Dell Deal Close but Not Final (WSJ)
- Corporate Bond Yield Premiums Fall in Europe as Offerings Slow (BBG)
- Apple Stores Glow Less Brightly (WSJ)
Overnight Media Digest
* Russia granted asylum to National Security Agency leaker Edward Snowden, defying and embarrassing an Obama administration that threatened to scale back diplomatic relations between the two countries.
* A jury found former Goldman Sachs Group Inc trader Fabrice Tourre liable for misleading investors in a mortgage-linked deal that collapsed during the financial crisis, delivering a big win for the Securities Exchange Commission out to prove its mettle inside the courtroom.
* Intensifying a dispute within his own party, Senate Majority Leader Harry Reid issued a warning on Thursday to Senator Max Baucus, the Democrats' lead tax-law writer in the senate, not to proceed with an overhaul of the tax code unless there is "significant revenue" to be generated from the effort.
* Baxter International Inc investigated a joint venture in China and discovered expense violations there last year. The drug and medical-device maker said it conducted the investigation and "took actions in a prompt and responsible manner" after employees of the venture, Guangzhou Baxter Qiaoguang Healthcare Co, reported problems internally in July 2012. The disclosure comes amid heightened attention on how multinational drug makers sell in China.
* In the wake of the financial crisis, global financial regulators implemented a labyrinth of new rules to constrain banks. Now, regulators in the United States and Europe are starting to conclude the way they currently measure banks' exposure to risk may be too elaborate.
* As Google Inc pushes deeper into hardware, the Internet search giant is pulling Motorola Mobility closer even as it tries to assure device partners that the phone maker won't have an unfair advantage. Google is forming tighter connections with the cellphone maker, even debating whether it could be used to produce products like Google Glass, the company's wearable computer.
* The pain reliever acetaminophen, often sold as Tylenol, can cause rare but serious skin diseases, the Food and Drug Administration said on Thursday. The FDA said that in searching its database of adverse events, it found 107 such cases between 1969 and 2012.
* Sprouts Farmers Market Inc's shares more-than-doubled after the specialty grocery chain's initial public offering, the latest sign of healthy demand for natural-foods retailers. Sprouts' stock rose 123 percent to close at $40.11 on the Nasdaq on Thursday, from an offering price of $18, the largest first-day pop for a U.S.-listed IPO since March 2011.
* Carl Icahn has filed a lawsuit against Dell Inc and its board to prevent the computer maker from further delaying a vote scheduled on Friday or changing the voting rules for a proposed buyout by Michael Dell.
* Chesapeake Energy Corp's shares jumped 7 percent on Thursday to the highest level in more than a year, as the energy producer reported rising oil output and its new chief executive Doug Lawler pledged to close a persistent gap between its spending and cash flow by next year.
Lloyds Banking Group shares rose above the price the government paid for its 21 billion pound ($31.84 billion)stake after the bank swung back to profit in the first half, fuelling hopes that taxpayers would make a profit on the bank's rescue.
Former Goldman Sachs trader Fabrice Tourre was found liable for fraud by a jury for his role in a derivatives deal, following a trial stemming from the financial crisis.
Britain's manufacturing activity grew at its fastest pace in almost two and a half years in July, the purchasing managers index published on Thursday showed.
Britain's top accounting watchdog has decided not to continue with a long-running probe examining the auditing of commissions paid by BAE Systems, claiming it would have to delve too far back into the past.
Tour operator Thomas Cook, which was on the brink of collapse two years ago, cut its net debt and made a profit on an underlying basis in its third quarter.
Ian Andrews has stepped down as chairman of Britain's Serious Organised Crime Agency after failing to register his role as director of a management consultancy.
AIG announced its first dividend and share buyback since the insurer was bailed out in 2008, as the company reported improved results for the second quarter.
* Fabrice Tourre, the former Goldman Sachs Group Inc trader at the center of a toxic mortgage deal sold to investors, was found liable on six of the seven civil charges against him, giving the Securities Exchange Commission its first significant courtroom victory in a case stemming from the financial crisis.
* President Barack Obama is said to be considering three people to replace Ben Bernanke as Federal Reserve chairman- Lawrence Summers, President Obama's former economic policy adviser; Janet Yellen, the vice chairwoman at the Federal Reserve; and Donald Kohn, a former Fed vice chairman. Summers appears to be the strongest contender.
* Management and financial turmoil has plagued J.C. Penney in recent months, unfolding along with a trial over whether the company could sell Martha Stewart's goods. By this Thursday, when closing arguments for the trial wrapped up, Penney appeared to be in an even worse position, also being forced to dispute reports that lender CIT Group Inc had stopped financing its shipments by small vendors.
* New York's top prosecutor, attorney general Eric Schneiderman is investigating some of the nation's largest banks in connection with their use of credit-reporting databases that disqualify people seeking to open checking or savings accounts - an inquiry that has gained urgency as the ranks of the un-banked has swelled in the aftermath of the financial crisis.
* Regulators are investigating Bank of America Corp and Merrill Lynch as both companies try to move past the problems of the financial crisis. Bank of America disclosed on Thursday that the Justice Department was weighing whether to bring a civil complaint against it over claims that the bank had improperly handled securities backed by jumbo loans.
* American automakers, buoyed this year by robust sales in pickups, said on Thursday that smaller cars and midsize sedans were helping spur growth in the industry to levels not seen since before the recession. Over all, it was the strongest July since 2006 for the industry, with sales rising 14 percent, to 1.3 million vehicles.
* Sony Corp said on Thursday that it was weighing "carefully" shareholder Daniel Loeb's proposal to spin off part of its entertainment arm, but executives said signs of a turnaround in the company's long suffering electronics business showed that their strategy was on track.
* The growth of tests for painkillers has led to concerns about their accuracy and whether some companies and doctors are exploiting them for profit. In 2013, sales at such companies are expected to reach $2 billion, up from $800 million in 1990, according to consulting company Frost & Sullivan.
THE GLOBE AND MAIL
* The federal investigation into the fatal Lac-Mégantic train derailment and fiery crude oil explosion, after a runaway train carrying 72 cars of crude crashed into the small town's center in early July, has shifted from Quebec to North Dakota, where the oil was drilled, purchased and loaded onto rail cars. A team of investigators was recently dispatched to North Dakota after experts confirmed that the oil reacted "in a way that was abnormal".
* Ontario Premier Kathleen Wynne was dealt a setback in her first electoral test as leader, with the opposition parties chipping away at her government's hold on the province in the by-elections. Progressive Conservatives won in Etobicoke-Lakeshore, giving the party its first seat in Toronto in a decade. But they failed to win any of the other four races.
Reports in the business section:
* TransCanada Corp and Irving Oil Ltd are joining forces to market Canada's crude oil to the world, officially launching the proposed C$12 billion ($11.62 billion) Energy East pipeline and a C$300 million deep-water marine terminal to be built off Saint John, New Brunswick. The pipeline, subject to regulatory approval, promises to unlock new markets for landlocked Western Canadian suppliers by giving them access to eastern refineries and global export markets through ports at Quebec City and Saint John.
* After its second major writedown in just six months, Barrick Gold Corp is trying to woo back shaken investors by focusing on assets closer to home. The world's largest gold miner announced a hefty $8.7 billion after-tax impairment charge, leaving the company with a second-quarter loss of $8.6 billion. In response to the losses, the Toronto-based company plans to shed, suspend or shut high cost mines and continue to cut costs.
* Mayor Rob Ford lost an important ally at City Hall, but gained one at Queen's Park, as Etobicoke-Lakeshore sent Deputy Mayor Doug Holyday to the provincial legislature Thursday. The decision to install a Progressive Conservative in a seat long held by the Liberals is a major Toronto breakthrough for the PC's and a vote of confidence for Mayor Rob Ford, who campaigned tirelessly on behalf of his longtime friend.
* In the hunt for evidence about Senator Mike Duffy, Nigel Wright and a backroom deal struck in the Prime Minister's Office to repay Duffy's expenses, the Royal Canadian Mounted Police has repeatedly tried to glean information from a senior television journalist. CTV Ottawa bureau chief Robert Fife's name appears in a court document filed by the RCMP in June.
* Senator Patrick Brazeau claimed a home he didn't own as his primary residence, didn't stay there even when he visited, and may never have lived there over the last two years, the Royal Canadian Mounted Police (RCMP) allege in court documents made public on Thursday. The RCMP say Brazeau claimed as his primary residence a home his father owns in Maniwaki, Quebec, far enough from Parliament Hill to qualify the senator for a $22,000 a year housing allowance from the Senate.
* Canada's government has begun a search for investment banks to sell its 10 percent, $5.1 billion stake in General Motors Co, but hasn't decided on the timing of any sale. ()
* Canadian auto sales hit a record in July as cars and trucks continue to fly off dealership lots at a blistering pace in 2013. Chrysler Canada took the sales title in July in this country with sales up 8.4 percent year-over-year during the month to 26,066 units. The Detroit automaker said it was its best July on record, driven by a 20 percent increase year over year in passenger car sales.
SHANGHAI SECURITIES NEWS
- China needs to firm up its capital market regulation and avoid the tendency to focus on stringent approval processes, while maintaining light supervision, said Xiao Gang, chairman of the China Securities Regulatory Commission.
- Minsheng Bank has registered an e-commerce subsidiary, according to sources with knowledge of the matter.
- The China Insurance Regulatory Commission will resume granting life insurers approval to open new subsidiaries after a two-year hiatus, potentially benefiting well-capitalized players.
- Shanghai High People's Court on Thursday ordered Johnson & Johnson Medical China Ltd to pay 530,000 yuan ($86,500) to a former dealer for engaging in a monopoly, in the first case of a Chinese court ruling a Fortune 500 firm to be contravening anti-monopoly legislation.
- China's average new-home prices in 100 cities rose 0.87 percent in July from June to 10,347 yuan per square meter, marking the 14th consecutive month of increase, said the China Index Academy on Thursday.
Fly On The Wall 7:00 AM Market Snapshot
Ferro (FOE) upgraded to Buy from Hold at Deutsche Bank
FleetCor (FLT) upgraded to Overweight from Equal Weight at Barclays
Groupon (GRPN) upgraded to Equal Weight from Underweight at Evercore
ITT Corp. (ITT) upgraded to Market Perform from Underperform at FBR Capital
LinkedIn (LNKD) upgraded to Buy from Hold at Cantor
Mohawk (MHK) upgraded to Outperform from Market Perform at Raymond James
Mylan (MYL) upgraded to Overweight from Equal Weight at Morgan Stanley
Pacific Biosciences (PACB) upgraded to Neutral from Underweight at Piper Jaffray
ResMed (RMD) upgraded to Buy from Hold at Deutsche Bank
Time Warner Cable (TWC) upgraded to Outperform from Market Perform at Raymond James
ADP (ADP) downgraded to Neutral from Positive at Susquehanna
Applied Industrial (AIT) downgraded to Hold from Buy at Wunderlich
BRE Properties (BRE) downgraded to Neutral from Buy at UBS
Broadcom (BRCM) downgraded to Neutral from Buy at UBS
Cbeyond (CBEY) downgraded to Market Perform from Outperform at FBR Capital
DirecTV (DTV) downgraded to Neutral from Buy at Guggenheim
Edison International (EIX) downgraded to Neutral from Outperform at Credit Suisse
Flow International (FLOW) downgraded to Neutral from Buy at Roth Capital
Fly Leasing (FLY) downgraded to Market Perform from Outperform at Wells Fargo
GameStop (GME) downgraded to Neutral from Outperform at Credit Suisse
Guidance Software (GUID) downgraded to Sell from Hold at Benchmark Co.
Halozyme (HALO) downgraded to Equal Weight from Overweight at Barclays
Ligand (LGND) downgraded to Sell from Hold at Cantor
Linear Technology (LLTC) downgraded to Neutral from Buy at UBS
MRC Global (MRC) downgraded to Market Perform from Outperform at Raymond James
Marathon Petroleum (MPC) downgraded to Neutral from Outperform at Macquarie
Mosaic (MOS) downgraded to Neutral from Buy at UBS
Onyx Pharmaceuticals (ONXX) downgraded to Hold from Buy at Jefferies
Protective Life (PL) downgraded to Outperform from Strong Buy at Raymond James
Select Income REIT (SIR) downgraded to Sector Perform from Outperform at RBC Capital
Selective Insurance (SIGI) downgraded to Market Perform at Keefe Bruyette
Taminco (TAM) downgraded to Neutral from Buy at UBS
United Stationers (USTR) downgraded to Hold from Buy at Wunderlich
ValueClick (VCLK) downgraded to Hold from Buy at Needham
ValueClick (VCLK) downgraded to Underperform from Market Perform at Raymond James
ViroPharma (VPHM) downgraded to Market Perform from Outperform at Leerink
Calpine (CPN) initiated with a Hold at Drexel Hamilton
Dynegy (DYN) initiated with a Buy at Drexel Hamilton
Electronic Arts (EA) initiated with a Buy at Benchmark Co.
NRG Energy (NRG) initiated with a Buy at Drexel Hamilton
AIG (AIG) declares dividend of 10c per share, to buy back up to $1B shares
Active Network (ACTV) received expressions of interest, exploring alternatives
BAE Systems (BAESY) awarded $534M contract to sustain U.S. ICBMs by U.S. Air Force
Bank of America (BAC) says DoJ intends to file charges related to securitizations
Credit Suisse (CS) divests CFIG to Grosvenor Capital Management
ImmunoGen (IMGN) announces FDA acceptance of IND for novel EGFR-targeting ADC
Lockheed Martin (LMT) awarded $223.31M government contract
Novartis (NVS) says FDA expands Menveo use for infants, toddlers
Pacira Pharmaceuticals (PCRX) Exparel Phase 3 trial did not meet primary endpoint
ResMed (RMD) increases dividend 47% to 25c
Royal Bank of Scotland (RBS) names Ross McEwan as Chief Executive
Tesoro (TSO) raises quarterly dividend by 25% to 25c
Theravance (THRX) announces FDA Advisory Committee to review Anoro Ellipta
Universal American (UAM) declares $1.60 special cash dividend
Weight Watchers (WTW) names James Chambers as President and CEO, cuts outlook
Companies that beat consensus earnings expectations last night and today include:
ImmunoGen (IMGN), Alliant Energy (LNT), Consolidated Edison (ED), LRR Energy (LRE), Approach Resources (AREX), Tellabs (TLAB), PerkinElmer (PKI), MasTec (MTZ), ZAGG (ZAGG), Globus Medical (GMED), AVG Technologies (AVG), Cubic (CUB), Synaptics (SYNA), SciQuest (SQI), Move, Inc. (MOVE), MRC Global (MRC), Southwestern Energy (SWN), Addus HomeCare (ADUS), Alaska Communications (ALSK), SS&C Technologies (SSNC), Audience (ADNC), MaxLinear (MXL), ResMed (RMD), Entravision (EVC), Cascade Microtech (CSCD), Active Network (ACTV), Autobytel (ABTL), OpenTable (OPEN), Hercules Technology (HTGC), Vistaprint (VPRT), ServiceSource (SREV), PerkinElmer (PKI), PC Connection (PCCC), Virtusa (VRTU), Quantum (QTM), Kodiak Oil & Gas (KOG), AIG (AIG), CEC Entertainment (CEC), Weight Watchers (WTW), AMN Healthcare (AHS), Guidance Software (GUID), FEI Company (FEIC), YY Inc. (YY), AtriCure (ATRC), Web.com (WWWW), Skullcandy (SKUL), PROS (PRO), HCI Group (HCI), Eastern Insurance (EIHI), Activision Blizzard (ATVI), FleetCor (FLT), Silver Spring Network (SSNI), LeapFrog (LF), Pacific Biosciences (PACB), DXP Enterprises (DXPE), LinkedIn (LNKD), MercadoLibre (MELI), Omnicell (OMCL), Edison International (EIX), Fluidigm (FLDM), FBL Financial (FFG), NIC Inc. (EGOV)
Companies that missed consensus earnings expectations include:
Eaton (ETN), Portland General Electric (POR), Liberty Global (LBTYA), Berry Plastics (BERY), Harris Teeter (HTSI), Universal American (UAM), Arbitron (ARB), North American Energy (NOA), Mercer (MERC), TG Therapeutics (TGTX), Erie Indemnity (ERIE), Inphi (IPHI), TTM Technologies (TTMI), Uroplasty (UPI), Westport Innovations (WPRT), Leap Wireless (LEAP), Rockwell Medical (RMTI), SBA Communications (SBAC), eMagin (EMAN), Endocyte (ECYT), Bill Barrett (BBG)
Companies that matched consensus earnings expectations include:
Sierra Wireless (SWIR), Immersion (IMMR), Kemper (KMPR), ICF International (ICFI), ON Semiconductor (ONNN), Ellie Mae (ELLI), RealPage (RP), Rudolph Technologies (RTEC), Spansion (CODE), Clear Channel Outdoor (CCO), Chef's Warehouse (CHEF), Financial Engines (FNGN), Einstein Noah (BAGL)
Michael Dell, Silver Lake close to deal with Dell (DELL) board, WSJ reports
Apple (AAPL) decision in Samsung case delayed until August 9, Bloomberg reports
Hewlett-Packard (HPQ) developing smartphones with Taiwan makers, DigiTimes says
ICU Medical (ICUI) in exclusive talks on sale, Bloomberg says
Panel to develop new gainful employment rule, Politico reports
Sony (SNE) Mobile may be only Japan-based handset vendor left, DigiTimes says
Yahoo (YHOO) CEO Mayer, activist Loeb parted on bad terms, NY Post says
Athlon Energy (ATHL) 15.79M share IPO priced at $20.00
Boyd Gaming (BYD) 16.5M share Secondary priced at $12.00
Control4 (CTRL) 4M share IPO priced at $16.00
Generac (GNRC) files to sell 7.03M shares of common stock for holders
Liberty Property (LRY) 21M share Secondary priced at $36.00
Marrone Bio (MBII) 4.75M share IPO priced at $12.00
Organovo (ONVO) files to sell common stock
Pure Cycle (PCYO) files $15M mixed securities shelf, 1.98M shares of stock for holders
Vantiv (VNTV) files to sell 20M shares of common stock for holder
Williams Partners (WPZ) files to sell 21.5M common units