Frontrunning: August 19
- Egypt, U.S. on Collision Course (WSJ), Gunmen kill 24 Egyptian police in Sinai ambush (Reuters)
- India’s efforts fail to prevent new rupee low (FT)
- More bad news for AAPL: Steve Jobs Biopic Crashes on Opening Weekend (WSJ)
- "Sustainable" - U.S. Stocks Beat BRICs by Most Ever Amid Market Flight (BBG)
- Merkel cancels election rally after hostage taking (Reuters)
- Some day, Abenomics might work... Not today though: Japan Exports Rise Most Since ’10 as Deficit Swells (BBG)
- China July Home Prices Rise as Nation Seeks Long-Term Policy (BBG)
- Spanish Bank’s Bad Loan Ratio Rises to Record in June (Reuters)
- Recovery... for some - Ferrari NART Spyder Sets $27.5 Million Auction Record (BBG)
- Bund yields hit 17-month high, rupee slumps (Reuters)
- Regulatory Headaches Worsen for J.P. Morgan (WSJ)
- Britain detains partner of journalist linked to Snowden (Reuters)
- Confident Biden Team Sows Seeds For 2016 (WSJ)
Overnight Media Digest
* Political allies of Vice President Joe Biden have concluded that he can win the 2016 Democratic presidential nomination, even if Hillary Clinton enters the contest, and are considering steps he could take to prepare for a potential candidacy. While Biden has made no decision about his future, people familiar with his thinking say, he hasn't ruled out a bid for the White House.
* Egypt's military-led government said it was "reviewing" its strategic relationships with the United States and other Western governments critical of its crackdown on Islamists, deepening the divide between the Obama administration and Cairo.
* Petroleos Mexicanos, Mexico's state oil monopoly, will set up a new company to explore and produce shale gas and deep-water oil in the United States as part of an ambitious plan by its rookie Chief Executive to turn around years of falling production.
* A growing number of lawsuits and investigations could force JPMorgan Chase & Co, the nation's largest bank, to absorb $6.8 billion in future legal losses above its existing reserves, according to a filing earlier this month. That amount is greater than any other U.S. bank, according to an analysis from Barclays Research, a unit of Barclays Plc.
* GlaxoSmithKline Plc employees in China are said to have organized an all-expense-paid trip in May for a group of doctors to tour the scenic river town of Guilin, one of China's premier tourist destinations. The goal: Get Chinese doctors to begin prescribing the company's Botox medication, according to an anonymous tipster who alerted company executives.
* Indian potash buyers are demanding discounts for the price of the key fertilizer ingredient as the Russian miner that shook up the sector's cartel system last month ramps up production, threatening to send prices tumbling. Uralkali said in late July that it was pulling out of one of two sales partnerships that together control two-thirds of the nearly $22 billion potash market.
* At a closely watched trial scheduled to begin Monday in federal court in its hometown of Indianapolis, Eli Lilly & Co will defend a patent for its lung-cancer treatment Alimta, which generated $2.6 billion in global sales last year. Lilly's loss could clear the way for generics to enter the market in 2017, when patent exclusivity expires for the basic compound.
* Russia is moving to clamp down on imports from Ukraine if its ex-Soviet neighbor signs a landmark free-trade and political-association deal with the European Union, a senior adviser to President Vladimir Putin said.
* Alibaba Group Holding Ltd is in talks with the Hong Kong Stock Exchange to come up with an ownership structure that would allow the Chinese e-commerce company to list its shares while enabling founder Jack Ma and his management team to maintain control, people familiar with the talks said.
In wake of escalating protests and violence in Egypt the European Union is urgently reviewing its relations with the country and is considering suspending aid to it.
U.S. authorities are investigating hiring practices of JPMorgan Chase & Co in China to find out whether the bank hired the children of powerful Chinese officials to help it win business in region.
Large cable and telecom companies in the U.S. including Comcast and Verizon are seeking a relaxation of privacy rules that could allow them to sell information about their customers' telephone use and other services.
Data released by the Office for National Statistics show that employment in London's Canary Wharf financial district has almost quadrupled in the past decade.
Craig Kreeger, the first American head of Sir Richard Branson's Virgin Atlantic Airways, is confident that the UK airline can return to profit in 2014-15, and remain a significant player in global aviation.
* Unions, creditors and retirees are expected to file formal objections to Detroit's eligibility for bankruptcy protection before a Monday deadline, the opening of a legal fight over whether the largest municipal bankruptcy in the nation's history should proceed.
* The Obama administration has poured billions of dollars into expanding the reach of the Internet, and nearly 98 percent of American homes now have access to some form of high-speed broadband. However, persistent digital inequality - caused by the inability to afford Internet service, lack of interest or a lack of computer literacy - is deepening racial and economic disparities in the United States, experts say.
* Federal authorities have opened a bribery investigation into whether JPMorgan Chase & Co hired the children of powerful Chinese officials to help the bank win lucrative business in the booming nation, according to a confidential United States government document.
* Baidu Inc's $1.9 billion acquisition of 91 Wireless, an operator of mobile application stores has already sharpened a rivalry among China's digital powerhouses, but the deal could also bring more order to China's messy world of mobile apps. The move should help Baidu regain ground against two other Chinese Internet giants - Alibaba and Tencent - which were quicker to add mobile capabilities.
* Al Jazeera America, the most ambitious American television news venture since Fox News Channel, will join cable and satellite lineups on Tuesday afternoon and will go against the grain of seemingly every trend in television news. Ehab Al Shihabi, the channel's acting chief executive said there will be less opinion, less yelling and fewer celebrity sightings.
* Investors responsible for more than $2 trillion recently gathered at a resort in the Canadian Rockies, far from the news media and, more important, far from Wall Street. The group holding the gathering, the Institutional Investors Roundtable, is part of a much broader push by the world's biggest pension and sovereign wealth funds to reduce their reliance on the Wall Street firms that used to manage almost all their money.
THE GLOBE AND MAIL
* U.S. discounter Target Corp arrived in Canada with a splash in March, stirring up a buzz about its cool factor and drawing throngs of shoppers. But it hasn't been able to live up to high expectations, a new survey suggests. Shoppers complain that its stores have been short on inventory and that prices are higher than those at its U.S. outlets.
* The head of the Montreal, Maine & Atlantic Railway, the rail operator whose tanker train blew up in a Quebec town last month, says his firm's assets could be sold to raise funds to pay for rebuilding devastated Lac-Mégantic, but such a deal is only possible if a bypass rail line is built for a new operator.
* Toronto Mayor Rob Ford refused to comment Sunday on reports that police interviewed former staffers about attempts to retrieve an alleged video that shows the mayor purportedly smoking crack cocaine.
Reports in the business section:
* Flooding in Alberta and an increasingly cautious consumer have economists predicting that Statistics Canada will report weaker retail sales figures for June when the numbers come out Thursday.
* Hewlett-Packard Co has joined a number of big-name technology companies attempting to pull off a very difficult trick - switching from their core businesses to something more profitable. When HP posts its third-quarter earnings on Wednesday, investors and analysts will be watching to see if the company can continue to go against the trend of declining fortunes in the personal computer market.
* Access to justice in Canada is being described as "abysmal" in a new report from the Canadian Bar Association, which also calls for much more than "quick fix" solutions. The summary report, released Sunday at the association's conference in Saskatoon, says there is profoundly unequal access to justice in Canada.
* A federal government television commercial touting a not yet existent Canada Job Grant was misleading and a breach of the Canadian Code of Advertising Standards, Canada's advertising watchdog has ruled. In a letter to James Gilbert, assistant deputy human resources minister, Advertising Standards Canada said it received more than 20 consumer complaints alleging the ad was "misleading".
* Canada's three biggest wireless companies plan to attack Verizon Communications Inc's role in the U.S. government's electronic spying scandal, as they scramble to force Ottawa to rethink rules that encourage Verizon to set up in Canada, according to four sources.
* A new research report says real estate investment trusts in Canada are increasingly being squeezed out of purchases in the commercial property market by private equity and pension funds.
CHINA SECURITIES JOURNAL
- Trading in China's gold and silver has hit record highs following the slump in prices, spurring a revival with current gold prices 17 percent higher than June's low.
SHANGHAI SECURITIES NEWS
- China's State Council confirmed on Friday that it would implement measures to advance pension reform, and issued a notice on Saturday setting out its strategy to boost broadband usage.
- Chongqing ChangAn Automobile Co Ltd will acquire a 50 percent stake in Chang'an PSA, a joint venture between Chang'an Automobile Group and Peugeot SA for 2 billion yuan ($327.06 million) in the fourth quarter of this year, a ChangAn Automobile spokesman said.
- It will be almost impossible for China's economy to absorb all the unemployed graduates in the short-term, said an editorial. So it is crucial that the economy continues to expand fast enough to bridge the unemployment gap.
- China started training 45 government and provincial authority units in July on their supervision competency, which is important as it will iron out discrepancies in their ideological understanding, according to an editorial.
Dollar General (DG) upgraded to Overweight from Neutral at JPMorgan
Harvest Natural (HNR) upgraded to Buy from Hold at Wunderlich
Huntsman (HUN) upgraded to Outperform from Neutral at Macquarie
Intel (INTC) upgraded to Neutral from Underweight at Piper Jaffray
Kaiser Aluminum (KALU) upgraded to Buy from Neutral at Sterne Agee
Mid-Con Energy (MCEP) upgraded to Outperform from Neutral at RW Baird
Norwegian Cruise Line (NCLH) upgraded to Buy from Neutral at UBS
Public Storage (PSA) upgraded to Sector Perform from Underperform at RBC Capital
Timmins Gold (TGD) upgraded to Outperform from Market Perform at Cowen
Apache (APA) downgraded to Hold from Buy at Stifel
Halcon Resources (HK) downgraded to Hold from Buy at Stifel
Riverbed (RVBD) downgraded to Market Perform from Outperform at JMP Securities
Southwestern Energy (SWN) downgraded to Market Perform from Outperform at BMO Capital
Trulia (TRLA) downgraded to Sector Perform from Outperform at RBC Capital
Agios Pharmaceuticals (AGIO) initiated with a Buy at Goldman
Agios Pharmaceuticals (AGIO) initiated with a Neutral at JPMorgan
America Movil (AMX) initiated with an Equal Weight at Barclays
Bill Barrett (BBG) initiated with a Buy at Canaccord
Celluar Dynamics (ICEL) initiated with an Outperform at Leerink
Celluar Dynamics (ICEL) initiated with an Overweight at JPMorgan
Conatus Pharmaceuticals (CNAT) initiated with a Buy at Stifel
Conatus Pharmaceuticals (CNAT) initiated with an Overweight at Piper Jaffray
Lumber Liquidators (LL) initiated with a Buy at Jefferies
New Source Energy (NSLP) assumed with an Outperform at Oppenheimer
News Corp. (NWSA) initiated with a Buy at UBS
Onconova Therapeutics (ONTX) initiated with a Neutral at Citigroup
Onconova Therapeutics (ONTX) initiated with an Overweight at Piper Jaffray
Orient-Express (OEH) reinstated with a Neutral at Goldman
Phillips 66 Partners (PSXP) initiated with a Hold at Deutsche Bank
Phillips 66 Partners (PSXP) initiated with an Outperform at Credit Suisse
Phillips 66 Partners (PSXP) initiated with an Outperform at RBC Capital
Phillips 66 Partners (PSXP) initiated with an Overweight at JPMorgan
Ross Stores (ROST) initiated with an Overweight at Barclays
WCI Communities (WCIC) initiated with a Neutral at Citigroup
WCI Communities (WCIC) initiated with an Outperform at Credit Suisse
Statoil (STO) to divest minority interests offshore Norway projects for $2.65B
Edwards Group (EVAC) to be acquired by Atlas Copco Group for $10.50 per share or $1.6B
Pinnacle (PNK) to sell Lumiere Place Casino and Hotels to Tropicana for $260M
Companies that missed consensus earnings expectations include:
- Regulatory headaches keep piling up for J.P. Morgan Chase & Co. (JPM) as a growing number of lawsuits and investigations could force the nation's largest bank to absorb $6.8B in future legal losses above its existing reserves, according to a filing earlier this month, the Wall Street Journal reports
- After more than a decade of losing ground to China and other export powerhouses, U.S. manufacturers are finally showing signs of regaining their competitive edge. The U.S. deficit on trade of manufactured goods in this year's first half shrank to $225B from $227B a year earlier, according to Manufacturers Alliance for Productivity and Innovation data, the Wall Street Journal reports
- Mitsui & Co. (MITSY) and Carlyle Group (CG) submitted preliminary bids for Quality Healthcare Medical Services, which is being sold by India's Fortis Healthcare, and is valued at around $300M, sources say, Reuters reports
- W&G Investments, one of the three bidders vying for Royal Bank of Scotland's (RBS) 315 branches, said the sale could be delayed beyond the two-year schedule, Reuters reports
- Oil companies are hitting the brakes on a U.S. shale land grab that produced an abundance of cheap natural gas, and troubles for the industry. The spending slowdown by international companies (BHP, RDS.A) comes amid a series of write-downs of oil and gas shale assets, caused by plunging prices and disappointing wells, Bloomberg reports
- Wal-Mart Stores (WMT) took a $680M hit to sales last quarter because of the stronger dollar, showing the risks that companies face when they don’t hedge against swings in the greenback, Bloomberg reports
Pfizer (PFE), Danaher (DHR), Lear (LEA), Oracle (ORCL), and Qualcomm (QCOM) look attractive, while Tiffany (TIF), Praxair (PX), Lennar (LEN) should be avoided
Profits should be taken in FXCM (FXCM) and Live Nation (LYV), as they no longer look inexpensive
Grupo Televisa (TV) could rise 27%
Alaska Air (ALK) has little exposure to the AMR Corp. (AAMRQ), U.S. Airways (LCC) lawsuit and shouldn't be impacted as badly as other airlines
Intel (INTC) may expedite release of Atom microprocessor
Independent Bank (IBCP) files to sell $86M in common stock
MeetMe (MEET) files to sell 500,000 shares of common stock for holders
Zillow (Z) files automatic mixed securities shelf