Frontrunning: January 10
- From the guy who said the market is not overvalued: Q&A with Fed’s Williams on Upbeat 2014 Outlook and What Keeps Him up at Night (Hilsenrath)
- Obama Readies Revamp of NSA (WSJ)
- Indian envoy leaves U.S. in deal to calm diplomatic row (Reuters)
- China overtakes US as largest goods trader (FT)
- Wall Street Predicts $50 Billion Bill to Settle U.S. Mortgage Suits (NYT)
- Low-End Retailers Had a Rough Holiday: Family Dollar, Sears Struggle as Lower-Income Customers Remain Under Pressure (WSJ)
- ECB charts familiar course as Japan, US and UK begin to diverge (FT)
- Housing experts warn of hiccups as new U.S. mortgage rules go live (Reuters)
- People’s Bank of China keeps pressure on money markets (FT)
- It's a HFT eat HFT world: Infinium ex-employees sue over $4.1m loss (FT)
- Google linking of social network contacts to email raises concerns (Reuters)
- Slowing China crude imports to challenge exporters (FT)
- Beijing moves to bolster claim in South China Sea (WSJ)
- Fiery Oil-Train Accidents Raise Railroad Insurance Worries (WSJ)
- UK Factory Output Flat; Construction Falls (WSJ)
- Congress push on fast-track authority boosts trade deal hopes (FT)
Overnight Media Digest
* President Obama is leaning toward extending broad privacy protections to non-U.S. citizens and is seriously considering restructuring the National Security Agency program that collects phone-call data of nearly all Americans.
* The Justice Department has put Wall Street on notice that it plans additional enforcement actions against banks that haven't done enough to stem the flow of illicit funds into the U.S. financial system.
* Well-off students at private schools have long subsidized poorer classmates. But as states grapple with the rising cost of higher education, middle-income students at public colleges in a dozen states now pay a growing share of their tuition to aid those lower on the economic ladder.
* A sharp slowdown in mortgage refinancing is forcing banks to cut jobs, fight harder for a smaller pool of home-purchase loans and employ new tactics to drum up business.
* European Central Bank chief Mario Draghi pledged "decisive action" if needed to safeguard the euro-zone recovery, as it kept its key lending rate at a record low 0.25 percent.
* Fund manager Bill Gross said Thursday that he expects bond investments to bounce back in 2014, following a tumultuous year in which the Pimco Total Return Fund he manages suffered an industry-record $41.1 billion of investor redemptions.
* Mathew Martoma, a former SAC Capital Advisors LP portfolio manager fighting insider trading charges was expelled from Harvard Law School in 1999 for falsifying grade transcripts, according to a person familiar with the matter.
* World-wide PC shipments fell 10 percent last year, research firms Gartner Inc and IDC said Thursday, the worst-ever sales slump for the industry. Both companies have been tracking personal computer sales since the 1980s.
* As technology shifts from personal computers to smartphones and tablets, Apple Inc is expanding its reach into a lucrative customer base: companies.
Alcoa World Alumina, a joint venture controlled by U.S. aluminium group Alcoa Inc agreed to pay $384 million to resolve charges of paying millions of dollars in bribes to Bahraini officials, including members of the secretive Gulf state's royal family.
Shares in Ford Motor Co rose 1.9 percent as the U.S. automaker raised its quarterly dividend 25 percent on Thursday, responding to pressure to return more capital to shareholders.
Hedge fund Elliott said on Thursday it would sell part of its 25 percent stake in Celesio to McKesson Corp after the U.S. drugs wholesaler raised its offer for its German peer to $8.6 billion.
RSA Insurance Group Plc acknowledged there were "lessons to be learnt" from accounting irregularities at its Irish division, that prompted the British insurer to issue a series of profit warnings and cost the head of the Irish business and the group CEO their jobs.
Standard Chartered Plc said on Thursday its highly regarded finance director, Richard Meddings, will step down, amid a massive reshuffle launched by the Asia-focused lender as it battles to reverse falling profits.
Santander Consumer USA Holdings Inc, the U.S. consumer-finance arm of Spain's Banco Santander SA, is planning to raise as much as $1.56 billion in an initial public offering on the New York stock market as its private equity stakeholders cash out.
* Wall Street could pay nearly $50 billion to federal authorities who are taking aim at the banks over their role in the mortgage crisis, according to interviews and a confidential analysis of the industry's potential legal exposure. JPMorgan Chase's record $13 billion mortgage settlement in November has stepped up the pressure on other banks to strike their own separate deals in the coming months, some top bank executives say.
* New York State Attorney General Eric Schneiderman said he planned to investigate brokerage firms that might have provided early market-moving information to preferred clients. The remarks came a day after his office reached an agreement with BlackRock, the world's largest asset manager, to end the company's practice of surveying Wall Street analysts for early clues on their opinions before those opinions became public.
* Disagreements over a program to help dairy producers when milk prices drop have emerged as a major sticking point in negotiations on a new farm bill, which had been expected to be wrapped up this week. But lawmakers appear to have reached a deal to cut about $9 billion over 10 years from the food stamp program, which is part of the farm bill and had been the most contentious issue in the efforts to pass the legislation.
* Apollo Global Management LLC said it raised $17.5 billion from outside investors for its eighth private equity fund. It is the largest such fund the firm has ever raised, and includes $880 million from Apollo and affiliated investors, including employees of the firm, bringing the total to about $18.4 billion.
* Google will soon allow people to send anyone an email, even if they do not have the person's email address, as long as both people have a Gmail and Google Plus account.
* Ford announced a new Fiesta compact car tailored for global drivers, complete with advanced anti-collision technology, a fuel-saving engine and its lowest price tag yet for a car it will sell in Japan - 2.29 million yen, or $21,800. With the Fiesta, Ford hopes to finally pry open a market that has flummoxed many foreign automakers, one that it all but abandoned as it fought off bankruptcy during the global economic crisis.
* Mathew Martoma, the former hedge fund manager accused of insider trading at SAC Capital Advisors, was expelled from Harvard in 1999 for creating a false transcript when he applied for a clerkship with a federal judge. Martoma used a computer program to change several grades from B's to A's, including one in criminal law, and then sent the forged transcript to 23 judges as part of the application process, court papers unsealed on Thursday showed.
THE GLOBE AND MAIL
* The federal transport minister asked for a review of the decision to shut down incoming North American flights at Pearson International Airport this week, and expressed concern about the reliability of air transportation.
* The City of Toronto will need tens of millions of dollars in aid from the provincial and federal governments to help with the cleanup of December's ice storm, even after it drains its emergency funds.
Reports in the business section:
* Clarke Inc, a major Sherritt International Corp shareholder, said the company rejected its request to overhaul the board, setting the Canadian miner up for a nasty proxy fight.
* Nissan's Canada unit said it will bring the subcompact Micra back to the Canadian market and not sell it in the United States, in what is an unusual move for auto makers selling vehicles in North America.
* Mayor Rob Ford said Ottawa should consider decriminalizing marijuana and make "revenue" from it but said it wouldn't happen with the Conservatives in charge.
* A weak Canadian dollar, which slid to a more than four-year low against the U.S. dollar on Thursday, will be the new normal for most of 2014, analysts said.
* Starbucks Canada and Twitter Canada announced a new e-gifting program known as "Tweet-a-Coffee" which will enable Canadian Twitter users to send Starbucks gift cards to their friends over the social networking service.
SHANGHAI SECURITIES NEWS
Anhui Jianghuai Automobile Co Ltd may aim for a group listing that could see the company acquire the remaining assets of its parents.
CHINA BUSINESS NEWS
- U.S. drugmaker Johnson & Johnson will appeal a ruling to restore the exclusive rights to its OneTouch trademark of diabetes monitoring products, the company said in a statement.
- Chinese media should uphold professional ethics, said a commentary in the paper that acts as the Party's mouthpiece. Media should not let down the trust of the people, it said.
SHOPPERS SPENT LESS IN DECEMBER THAN NOVEMBER, SAYS BRC
British retail sales growth slowed in December despite signs of strong consumer confidence, industry data showed, raising questions about the durability of the recovery. Capping a mixed holiday season for major British retailers, the British Retail Consortium said shoppers spent 1.8 percent more in December than a year earlier, slackening from annual growth of 2.3 percent in November.
KATE SWANN SET FOR CITY RETURN WITH SSP
The former boss of WH Smith, Kate Swann, looks set for a return to the City as SSP, the food brand company she joined last year, is eyeing a London flotation.
EURO PLUMMETS AFTER ECB WARNS CURRENCY ZONE MAY NEED MORE SUPPORT
The European Central Bank sent the euro tumbling on world markets after it warned that the 18-member currency zone may need further support to prevent a Japanese-style period of stagnation.
GREGGS RETURNS TO SALES GROWTH - AND CUTS MORE THAN 400 JOBS
Greggs emerged as a winner from Christmas trading but it will not be a happy new year for more than 400 of its employees who face losing their jobs. In a trading update, the bakery chain said underlying sales for the five weeks ending Jan. 4 rose 3.1 percent in a return to growth after a difficult start to the year.
STRONGER TRADE 'NOT ENOUGH' TO FUEL RECOVERY
Britain's trade position strengthened slightly in November but is still too weak to support the recovery, economists have warned, dealing another blow to coalition hopes for an economic rebalancing.
MEDDINGS GOES AS STANDARD CHARTERED SHUFFLES ITS PACK
Standard Chartered's finance director is to leave the bank amid a wide-ranging restructuring. The resignation of Richard Meddings, who has until recently been one of the best-regarded finance chiefs in the banking sector, further unsettled investors after a profit warning last month.
BANK OF ENGLAND KEEPS RATES UNCHANGED AT 0.5 PCT
The Bank of England has kept interest rates on hold at a record low of 0.5 percent. The Bank pledged last year not to consider a rise until the unemployment rate falls to 7 percent as part of efforts to support the UK's recovery.
RSA BLAMES 200 MLN STG HOLE ON 'INAPPROPRIATE COLLABORATION' BETWEEN BOSSES IN IRISH BUSINESS
Insurer RSA has indicated that there would be more pain ahead on the dividend as it looks to shore up its finances after "completely unacceptable" losses in Ireland. A review of the Irish business by accountants PwC and KPMG found that "inappropriate collaboration" between the subsidiary's top bosses undermined accounting controls, but said the problems were confined to Ireland.
Fly On The Wall 7:00 AM Market Snapshot
Abercrombie & Fitch (ANF) upgraded to Buy from Neutral at Janney Capital
Artisan Partners (APAM) upgraded to Buy from Neutral at Goldman
BlackBerry (BBRY) upgraded to Sector Perform from Underperform at RBC Capital
Bristol-Myers (BMY) upgraded to Overweight from Equal Weight at Barclays
Cheniere Energy Partners LP (CQP) upgraded to Buy from Neutral at Citigroup
Con-way (CNW) upgraded to Outperform from Market Perform at Wells Fargo
Hartford Financial (HIG) upgraded to Outperform from Market Perform at Wells Fargo
Incyte (INCY) upgraded to Overweight from Equal Weight at Barclays
Ironwood (IRWD) upgraded to Outperform from Market Perform at BMO Capital
Janus Capital (JNS) upgraded to Neutral from Sell at Goldman
Liberty Property (LRY) upgraded to Buy from Neutral at UBS
Macy's (M) upgraded to Buy from Neutral at Goldman
Microsoft (MSFT) upgraded to Overweight from Equal Weight at Barclays
Qlik Technologies (QLIK) upgraded to Buy from Hold at Jefferies
SunTrust (STI) upgraded to Conviction Buy from Buy at Goldman
Target (TGT) upgraded to Buy from Neutral at Goldman
Triangle Capital (TCAP) upgraded to Outperform from Market Perform at Keefe Bruyette
Ventas (VTR) upgraded to Buy from Neutral at UBS
Washington Federal (WAFD) upgraded to Buy from Neutral at Sterne Agee
William Lyon Homes (WLH) upgraded to Overweight from Neutral at JPMorgan
Allegheny Technologies (ATI) downgraded to Hold from Buy at Deutsche Bank
Ambarella (AMBA) downgraded to Hold from Buy at Deutsche Bank
Applied Micro Circuits (AMCC) downgraded to Neutral from Buy at Sterne Agee
BP (BP) downgraded to Neutral from Outperform at Exane BNP Paribas
Barracuda Networks (CUDA) downgraded to Neutral from Buy at BofA/Merrill
BioMarin (BMRN) downgraded to Equal Weight from Overweight at Barclays
BlackRock (BLK) downgraded to Neutral from Buy at Goldman
Camden Property (CPT) downgraded to Neutral from Buy at UBS
Cheniere Energy (LNG) downgraded to Neutral from Buy at Citigroup
Eli Lilly (LLY) downgraded to Underweight from Equal Weight at Barclays
Fifth & Pacific (FNP) downgraded to Hold from Buy at Brean Capital
Johnson & Johnson (JNJ) downgraded to Equal Weight from Overweight at Barclays
KiOR (KIOR) downgraded to Market Perform from Outperform at Raymond James
Kimco Realty (KIM) downgraded to Sell from Neutral at UBS
Las Vegas Sands (LVS) downgraded to Market Perform from Outperform at FBR Capital
Maxim Integrated (MXIM) downgraded to Perform from Outperform at Oppenheimer
Medical Properties Trust (MPW) downgraded to Neutral from Buy at Goldman
Omega Healthcare (OHI) downgraded to Sell from Neutral at UBS
Pacific Sunwear (PSUN) downgraded to Neutral from Buy at Janney Capital
Paychex (PAYX) downgraded to Underperform from Sector Perform at RBC Capital
Pfizer (PFE) downgraded to Market Perform from Outperform at Cowen
PulteGroup (PHM) downgraded to Underweight from Neutral at JPMorgan
Sequenom (SQNM) downgraded to Neutral from Overweight at Piper Jaffray
Siemens (SI) downgraded to Neutral from Buy at BofA/Merrill
Splunk (SPLK) downgraded to Equal Weight from Overweight at Barclays
UDR, Inc. (UDR) downgraded to Neutral from Buy at UBS
Weingarten Realty (WRI) downgraded to Sell from Neutral at UBS
Wisdom Tree (WETF) downgraded to Neutral from Buy at Goldman
Andersons (ANDE) initiated with a Hold at Stifel
BioAmber (BIOA) initiated with an Overweight at Barclays
Cheniere Energy Partners (CQH) initiated with a Buy at Citigroup
Corporate Executive Board (CEB) initiated with an Outperform at RBC Capital
Gartner (IT) initiated with a Sector Perform at RBC Capital
Healthcare Services (HCSG) initiated with an Outperform at RBC Capital
IHS Inc. (IHS) initiated with an Outperform at RBC Capital
MEI Pharma (MEIP) initiated with a Buy at Brean Capital
Orexigen (OREX) initiated with a Buy at WallachBeth
Roundy's (RNDY) initiated with a Hold at Jefferies
Stericycle (SRCL) initiated with a Sector Perform at RBC Capital
The Bancorp (TBBK) initiated with an Outperform at Raymond James
Vale (VALE) initiated with a Hold at Jefferies
West Corp. (WSTC) initiated with an Outperform at RBC Capital
Sears (SHLD) said market value of Sears Canada interest is $670M, seeking strategic alternatives for Sears Auto Center business
Aegerion (AEGR) received DOJ subpoena requesting documents regarding the company's marketing and sale of Justapid in the U.S.
Alcoa (AA) sees 2014 global aluminum demand growth of 7%
Gartner (IT) said worldwide PC shipments down 6.9% in Q4
Teamsters rejected YRC Worldwide (YRCW) proposal, YRC exploring options
Rolls-Royce (RYCEY) said discussions with Wartsila board are over
PharMerica (PMC) acquired BGS Pharmacy Partners, terms not disclosed
Overstock.com (OSTK) accepting Bitcoin
Companies that beat consensus earnings expectations last night and today include:
Infosys (INFY), Barracuda Networks (CUDA), Progress Software (PRGS), E2open (EOPN), Helen of Troy (HELE), SYNNEX (SNX), AngioDynamics (ANGO)
Companies that missed consensus earnings expectations include:
Park Electrochemical (PKE), Ceres (CERE), Alcoa (AA), PriceSmart (PSMT)
- Banks may have to pay nearly $50B to settle mortgage allegations, NY Times reports
- Skagen: Ignore Wall Street banks, buy emerging markets, Bloomberg reports
- Mercedes closes gap with Audi on compact cars, Bloomberg reports
- U.S. Senator Warren: Yellen will be tougher regulator, Bloomberg reports
- Goldman Sachs (GS) unit denies dumping Singapore client's stock, Bloomberg reports
- NY AG investigating brokerages to analysts after BlackRock (BLK) deal, Bloomberg reports
- Netflix (NFLX) app to stream 4K on new televisions right away, AP reports
- Video game makers challenged by China pirating, Reuters reports
- EU clears Publicis (PUBGY), Omnicom $35B merger, Reuters reports
- Ford's (F) Mulally ended flirtation with Microsoft weeks ago, WSJ reports
- Banks make cuts as mortgage refinancing slows, WSJ reports
- Apple (AAPL)s's new, lucrative customer base: companies, WSJ reports
- Low-end retailers struggle as customers remain pressured, WSJ reports
- DOJ plans additional action against banks over laundering, WSJ reports
Acceleron Pharma (XLRN) files to sell $100M of common stock
Biota Pharmaceuticals (BOTA) files automatic common stock shelf
GlycoMimetics (GLYC) 7M share IPO priced at $8.00
Meritage Homes (MTH) files to sell 2.2M shares of common stock
NCI Building Systems (NCS) 8.5M share Secondary priced at $18.00
Retrophin (RTRX) 7M share Secondary priced at $8.00
WidePoint (WYY) files mixed securities shelf for up to $25M