Frontrunning: January 17
- NSA phone data control may come to end (AP)
- China to rescue France: Peugeot Said to Weigh $1.4 Billion From Dongfeng, France (BBG)
- China to rescue Davos: Davos Teaches China to Ski as New Rich Lured to Slopes (BBG)
- Hollande’s Tryst and the End of Marriage (BBG)
- Iran has $100 billion abroad, can draw $4.2 billion (Reuters)
- Target Hackers Wrote Partly in Russian, Displayed High Skill, Report Finds (WSJ)
- Nintendo Sees Loss on Dismal Wii U Sales (WSJ)
- Goldman's low-cost Utah bet buoys its bottom-line (Reuters)
- Royal Dutch Shell Issues Profit Warnin: Oil Major Hit by Higher Exploration Costs and Lower Oil and Gas Volumes (WSJ)
- EU Weighs Ban on Proprietary Trading at Some Banks From 2018 (BBG) - so no holding of breaths?
- Sacramento Kings to Accept Bitcoin (WSJ)
- In London, 'Guardians' Live in Empty Office Buildings (WSJ)
- Fiat Heir Elkann Reshapes Family Legacy With Chrysler (BBG)
- Macau Casino Magnate Lui Passes Li as Asia’s Richest Man (BBG)
- Boeing Faulted by Norwegian Air on 787 Short Circuit (BBG)
Overnight Media Digest
* Vice President Joe Biden has resumed a push to withdraw virtually all U.S. troops from Afghanistan at year end, arguing for a far-smaller presence than many military officers would like to see, said officials briefed on the discussions.
* Best Buy Co on Thursday became the latest retailer to chime in with weak holiday results. Like other chains, the electronics retailer blamed the race to offer the deepest discounts, a game of brinkmanship that hurt profit margins and held back revenue.
* President Barack Obama, in a highly anticipated speech that follows a six-month review of U.S. spying programs, is expected to extend privacy protections to non-U.S. citizens and announce measures to continuously evaluate sensitive surveillance, particularly involving foreign leaders, people familiar with the plan say.
* The holiday data breach at Target Corp appeared to be part of a broad and highly sophisticated international hacking campaign against multiple retailers, according to a report prepared by federal and private investigators that was sent to financial-services companies and retailers.
* Congress has turned to a new chapter in its long-running battle over the federal budget, as the Senate Thursday approved and sent to the White House a monumental spending bill that keeps the government running through September.
* Regulators took another swing at tamping down the riskiness of big U.S. banks, proposing new requirements for boards and executives and laying the groundwork for swifter enforcement for missteps. In guidelines proposed Thursday, the Office of the Comptroller of the Currency detailed risk-management standards for firms with more than $50 billion in assets, putting the onus on board members to ensure the rules are followed and requiring banks have independent audit and risk-management officers who can go straight to the board with concerns.
* The Justice Department hasn't charged employees at two-thirds of nearly 400 companies that have settled criminal investigations or been convicted of crimes in recent years, according to newly analyzed data.
* A federal bankruptcy judge on Thursday delivered a major blow to the only completed deal to cut a portion of the city of Detroit's estimated $18 billion in long-term debt. Judge Steven Rhodes rejected a proposed $165 million settlement of so-called interest-rate swap agreements that the city used to help fund its pensions, calling the pact financially imprudent.
* Sprint Corp has received proposals from at least two banks on how it could finance a takeover of smaller rival T-Mobile US Inc giving it confidence that a deal could be funded, people familiar with the matter said.
Citigroup Inc, the third-largest U.S. bank by assets, posted quarterly results lower than analysts' expectations on Thursday, as lackluster mortgage banking and fixed-income trading weighed on overall revenue.
Goldman Sachs Group Inc reported a 21 percent drop in quarterly net income on Thursday with its worst year for fixed income trading since 2005.
Buyout firm Carlyle Group agreed to buy Johnson & Johnson's ortho clinical diagnostics unit for $4.15 billion on Thursday, joining the host of companies making acquisitions as the new year gets under way.
Best Buy Co shares tumbled about 30 percent on Thursday after the world's largest consumer electronics chain reported disappointing holiday sales, hurt by heavy discounting by its rivals.
Intel Corp's profits narrowly missed expectations in the fourth quarter, sending its shares down almost 3 percent after-hours with the slide in global PC sales showing signs of slowing.
Big U.S. banks would have to follow tougher standards for risk management and face quicker punishment under new rules proposed by The Office of the Comptroller of the Currency (OCC) on Thursday to help avoid a repeat of the 2007-2009 financial crisis.
* Most banks are not disclosing the overall size of their litigation reserves, which is crucial for assessing their ability to deal with the barrage of litigation that has been raining down on Wall Street banks.
* The Senate on Thursday gave final approval to a $1.1 trillion spending bill for the current fiscal year, leaving behind what might have been the Obama administration's best chance to overhaul the International Monetary Fund and meet its obligations to the world's other economic powers. Congressional Republicans did not budge from their refusal to cede some control of the fund to China, India, Brazil and other emerging economic powers.
* A federal judge on Thursday rejected a deal that Detroit had negotiated to help it move forward in bankruptcy, but said the city could borrow $120 million it says it urgently needs to provide services to its residents. He ruled that Detroit could not proceed with a plan to pay $165 million to two big banks to extricate itself from some long-term financial contracts that have been costing the bankrupt city tens of millions of dollars a year.
* The announcement on Wednesday that Yahoo CEO Marissa Mayer had tossed out her top lieutenant, Henrique de Castro, was her first public acknowledgment that turning around Yahoo would be far more difficult than has sometimes been suggested by the media attention she has received.
* The computer network at Neiman Marcus was penetrated by hackers as far back as July, and the breach was not fully contained until Sunday, according to people briefed on the investigation.
* Target, the discount retailer, which has long focused on large stores in suburban markets, completed a lease last week on its smallest store yet, a 20,000-square-foot location in Minneapolis, a test store for a new format called TargetExpress. The new format would allow the company to open more locations in dense urban markets, like New York.
* The European Union is tempering its ambitions and considering turning mandatory targets for renewable energy into just goals in light of a deep and lasting economic slowdown, persistently high prices for renewable energy sources and years of inconclusive international negotiations.
THE GLOBE AND MAIL
* Thomas Mulcair, the leader of the New Democrat party that is the official opposition but has been mired in third place in public opinion polls for many months, is embarking on a tour of Ontario and Western Canada to talk to Canadians about "affordability".
* Reopening a subject that divided it 21 years ago, the Supreme Court of Canada has agreed to take another look at the right to an assisted suicide.
Unlike the situation in 1993, when the Supreme Court rejected the right to assisted suicide 5-4, the issue has become prominent on the political stage, with several provincial leaders urging that it be taken up.
Reports in the business section:
* Advertising groups are taking steps to address concerns raised by Canada's privacy watchdog, fearing a backlash that could have a negative impact on the lucrative world of targeted online advertising.
The Office of the Privacy Commissioner of Canada said on Wednesday it found that Google Inc had violated privacy laws by targeting ads based on a person's medical condition revealed in his online searches for devices to help with the condition.
* Liberal leader Justin Trudeau disclosed on Thursday that he wrongly claimed $840 in MP travel and living expenses incurred while he was actually working as a paid public speaker.
He called them administrative errors and said he repaid the money as soon as he was made aware of the problem.
* Several Prince Edward Island rinks that were convinced to make the expensive conversion to wind power, but never saw the promised savings, are now trying to get rid of the trouble-plagued turbines and win compensation for their troubles.
* Brian Ferguson, the chief executive of Cenovus Energy Inc , said his company is looking to reach out to a broader audience to counter popular but false perceptions about oil sands, a type of unconventional petroleum deposit.
Like Neil Young, the rock star who opposed the oil sands and began his vitriolic Honor The Treaty tour in Toronto, Ferguson and Russ Girling of TransCanada Corp brought their message to Canada's largest city at an event on Wednesday.
* The cost of Bombardier Inc's CSeries program is expected to mount after the manufacturer announced another delay for the delivery date of its transcontinental jet, saying it will now enter service in late 2015.
SHANGHAI SECURITIES NEWS
- "China's naked officials", those who stay in mainland China while their spouses and children reside abroad, shall not be promoted, according to the country's new regulation on cadre selection.
- Liu Xinhua, vice chairman of China Securities Regulatory Commission, said on Thursday that the CSRC will not tolerate any illegal internet-related securities activities.
- Wang Xiaochu, chairman of China Telecom, said in an annual conference on Thursday that the company forecast 100 million terminal devices to be sold in 2014, including 36 million 4G devices.
NATIONAL BUSINESS DAILY
- China's eastern city of Suzhou has submitted to the State Council, or China's cabinet, a proposal to set up a free trade zone, competing with dozens of regions like Tianjin and Guangdong. Shanghai has recently set up China's first free trade zone.
- Safe production is a life-and-death matter and shall be given extra importance as the Spring Festival, or the "accident season", is coming, said a commentary in a paper that acts as the Party's mouthpiece.
BANKS MUST SELL 'SIGNIFICANT' NUMBER OF BRANCHES, SAYS ED MILIBAND
Ed Miliband will promise to create at least two new challenger lenders by forcing Britain's biggest high street banks to sell a "significant" number of branches. The Labour leader claims that, if elected, one of his first acts would be to order the Competition and Markets Authority to produce a report on how to cap the market share of the big banks and encourage new competitors. Miliband's keynote speech at the University of London has been widely leaked in advance, but details released on Thursday made clear the scale and speed of his proposed reforms.
HSBC FACES 70 BLN STG CAPITAL HOLE, WARN HONG KONG ANALYSTS
HSBC could have overstated its assets by more than 50 billion pounds and ultimately need a capital injection of close to 70 billion pounds before the end of this decade, according to an incendiary report published by a Hong Kong-based research firm.
ARGOS AND DIXONS TRIUMPH DURING CHRISTMAS SALES AS ONLINE RETAIL BOOMS
Argos and Dixons have emerged as winners from the Christmas battle of Britain's retailers, as booming online orders drove sales. Sales at Argos stores open a year or more rose 3.8 percent to 1.8 billion pounds in the trading period covering Christmas while equivalent sales at Dixons in the UK and Ireland jumped 5 percent.
GOLDMAN SACHS PAYS EMPLOYEES AVERAGE OF $383,000 AFTER PROFITS RISE 5 PCT
Goldman Sachs Group Inc paid its bankers an average of $383,000 in 2013, after profits for the year rose by 5 percent to $8 billion. Putting a fresh focus on the debate over bankers' pay, Goldman's 32,900 global employees will be told the size of their individual bonuses on Thursday.
FINANCIAL ADVISERS LOSE THEIR TICKETS TO LUXURY
Overseas junkets, luxury hotel jollies masquerading as "training weekends" and invitations to top sporting events are to be outlawed amid a crackdown on inducements offered by insurers and fund managers to financial advisers.
GROWTH IN CYCLING KEEPS HALFORDS IN GOOD HEALTH
Halfords Group Plc hailed an "excellent" Christmas as festive sales of children's bicycles kept its recovery firmly on track. The car parts and bicycle retailer, which in November announced a return to profit growth, said like-for-like retail sales rose 5.9 percent over the 15 weeks to January 10 - driven by a 20 percent rise across its cycle ranges.
MIKE ASHLEY SWAPS DEBENHAMS SHARE STAKE FOR OPTIONS IN 'BAFFLING' MOVE
Newcastle United owner Mike Ashley's Sports Direct investment in Debenhams took another twist on Thursday as it sold its 4.6 percent share stake in the struggling department stores chain but took a complex financial option, which could see it buy an even larger stake at a cheaper price.
REBALANCING THE ECONOMY WILL TAKE YEARS, WARNS VINCE CABLE
Business secretary Vince Cable has admitted the government's industrial strategy to rebalance the economy away from its dependence on financial services might need more than a decade to "take root".
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled for today include:
Housing Starts and Permits for December will be reported at 8:30--Current consensus is 985K for starts and 1.02M for permits
Industrial Production for November will be reported at 9:15--Current consensus is 0.3% for the month
Consumer Sentiment for January will be reported at 9:55--Current consensus is 83.5
Allergan (AGN) upgraded to Buy from Neutral at SunTrust
American Express (AXP) upgraded to Positive from Neutral at Susquehanna
Forest Labs (FRX) upgraded to Outperform from Neutral at Credit Suisse
ITT Educational (ESI) upgraded to Buy from Neutral at BofA/Merrill
Maxwell (MXWL) upgraded to Overweight from Neutral at Piper Jaffray
Pioneer Natural (PXD) upgraded to Buy from Hold at Stifel
Seaspan (SSW) upgraded to Hold from Sell at Stifel
Statoil (STO) upgraded to Buy from Hold at Deutsche Bank
Total (TOT) upgraded to Buy from Neutral at Citigroup
Best Buy (BBY) downgraded to Neutral from Buy at Goldman
Best Buy (BBY) downgraded to Neutral from Buy at UBS
Capital Product (CPLP) downgraded to Hold from Buy at Stifel
Clarcor (CLC) downgraded to Neutral from Outperform at RW Baird
Columbia Sportswear (COLM) downgraded to Neutral from Neutral at Macquarie
Foster Wheeler (FWLT) downgraded to Neutral from Buy at UBS
GrafTech (GTI) downgraded to Hold from Buy at Jefferies
Harmonic (HLIT) downgraded to Underperform from Market Perform at Raymond James
Main Street (MAIN) downgraded to Market Perform from Outperform at Raymond James
Navios Maritime Partners (NMM) downgraded to Hold from Buy at Stifel
Nu Skin (NUS) downgraded to Neutral from Buy at BofA/Merrill
People's United (PBCT) downgraded to Underperform from Market Perform at FBR Capital
QR Energy (QRE) downgraded to Hold from Buy at MLV & Co.
ResMed (RMD) downgraded to Neutral from Outperform at Macquarie
Rocket Fuel (FUEL) downgraded to Market Perform from Outperform at BMO Capital
STMicroelectronics (STM) downgraded to Neutral from Outperform at Exane BNP Paribas
Silver Spring Network (SSNI) downgraded to Neutral from Outperform at RW Baird
Strayer (STRA) downgraded to Underperform from Neutral at BofA/Merrill
DCP Midstream (DPM) initiated with a Hold at Wunderlich
Dillard's (DDS) initiated with a Buy at BofA/Merrill
Magellan Midstream (MMP) initiated with a Buy at Wunderlich
Nike (NKE) initiated with a Neutral at Macquarie
ONEOK (OKE) initiated with an Outperform at Oppenheimer
Paramount Gold & Silver (PZG) initiated with a Buy at Roth Capital
Sinclair Broadcast (SBGI) initiated with an Outperform at RBC Capital
Twitter (TWTR) initiated with a Buy at Stifel
Under Armour (UA) initiated with a Neutral at Macquarie
VF Corp. (VFC) initiated with an Outperform at Macquarie
Bombardier (BDRBF) consortium won contract in Queensland valued at $4.1B
Shell (RDS.A) sees Q4 figures 'significantly lower than recent levels of profitability'
Florida AG said reviewing Sysco (SYY), U.S. Foods deal, Reuters reports
SLM Corp. (SLM) sees FY14 private education loan originations of $4B
IntercontinentalExchange (ICE) announced IBA to become new administrator of Libor
Google (GOOG) working on smart contact lens
Microsoft's (MSFT) Hryb said company sold 908,000 Xbox One consoles in the U.S. in December
Elizabeth Arden (REDN) withdrew FY14 guidance
Companies that beat consensus earnings expectations last night and today include:
SunTrust (STI), Schlumberger (SLB), Bank of the Ozarks (OZRK), Skyworks (SWKS), BancFirst (BANF), Bank of Kentucky (BKYF)
Companies that missed consensus earnings expectations include:
SLM Corp. (SLM)), Silver Spring Network (SSNI), American Express (AXP), People's United (PBCT), Capital One (COF), Intel (INTC)
Companies that matched consensus earnings expectations include:
Associated Banc-Corp (ASBC)
- Report says Target (TGT) breach could be part of broader scam, AP reports
- Response to China Mobile (CHL) iPhone (AAPL) launch 'muted,' NY Times reports
- Yahoo (YHOO) editor-in-chief Singh departs, Re/code reports
- Yahoo's (YHOO) pitch to Madison Avenue falls short, WSJ reports
- Sprint (S) gets bank proposals on financing T-Mobile (TMUS) bid, WSJ reports
- Norwegian Air blames Boeing (BA) for 787 short-circuit, Bloomberg reports
- IBM (IBM) expanding cloud services worldwide, Reuters reports
- Tyco (TYC) has shortlist of private equity firms for Caps unit, WSJ reports
- Twitter (TWTR) near deal with payments startup, Re/code reports
- Deutsche Telekom (DTEGY) denied it’s rushing to unload T-Mobile (TMUS) onto Sprint (S), BGR reports
CHC Group (HELI) 31M share IPO priced at $10.00
Cvent (CVT) 5.28M share Secondary priced at $35.50
EP Energy (EPE) 35.2M share IPO priced at $20.00
FuelCell (FCEL) files automatic common stock shelf
ORBComm (ORBC) files to sell 5.5M common shares
Orchid Island Capital (ORC) 1.8M share Secondary priced at $12.50
RSP Permian (RSPP) 20M share IPO priced at $19.50