Frontrunning: January 23
- Gross Told El-Erian ‘Hell No’ Seeking to Stop Departure (BBG)
- How Caterpillar got bulldozed in China (Reuters)
- Davos Bankers Struggle to Convince Elite That Markets Are Safer (BBG)
- Lucrative Role as Middleman Puts Amazon in Tough Spot (WSJ)
- Arctic Air Blankets Northern U.S. as Texas to Get Snow (BBG)
- Lenovo buys IBM's server business in China's biggest IT acquisition (Reuters)
- SEC judge bars "Big Four" China units for six months over audits (Reuters)
- U.S. Accuses Security Background Check Firm of Fraud (WSJ)
- RIP BOE forward guidance: Bank of England rate rise is 'still some way off' - Fisher (Reuters)
- Banks Aid U.S. Forex Probe, Fullfilling Libor Accords (BBG)
- EBay dismisses Icahn proposal to spin off Paypal (Reuters)
- Talk of what? Spain's unemployment rate inches up, checking talk of recovery (Reuters)
- Russia Court Orders Release of Khodorkovsky's Jailed Business Partner (WSJ)
- Poloz Feeds Loonie Bears as Strategists Recalibrate (BBG)
Overnight Media Digest
* The Justice Department accused USIS, the government's largest private security background check contractor, of defrauding the country of millions of dollars by methodically filing more than 660,000 flawed background investigations.
* Syria and the United States opened a long-awaited peace conference by clashing over the fate of President Bashar al-Assad, exposing the depths of division and pessimism about any progress at the first talks in nearly three years of war.
* Taiwan prosecutors charged several former employees of Foxconn, a top supplier to Apple Inc and other technology firms, for breach of trust, the latest development in a bribery investigation that began a year ago.
* China's economy started the year on a weaker note, as an initial gauge of manufacturing activity in January slipped to its lowest level in six months.
* Last spring, Amazon.com Inc moved to end its relationship with one of its biggest third-party sellers, saying that company had offered products that were illegal or otherwise prohibited. Within months, however, an employee of the e-commerce company unwittingly reached out to that same seller, DAB Unlimited, to coach it on how to increase its volume.
* Activist investor Carl Icahn has called for eBay to spin off its PayPal business into a separate company, the company said in its quarterly earnings report.
* Boeing is adding hundreds of contract workers at its South Carolina plant to try to curb production problems that threaten to impede plans to maintain high production rates for its flagship 787 Dreamliner jets.
* Stripe Inc, a payments startup, has raised about $80 million in new funding this week from venture capital investors including Khosla Ventures, Sequoia Capital, and Founders Fund, said brothers John and Patrick Collison. Stripe, at just over four years old, is now valued at $1.75 billion.
* The Chinese units of the Big Four accounting firms should be suspended from auditing U.S.-traded companies for six months, a judge ruled, a move that could complicate the audits of dozens of Chinese companies and some U.S.-based multinationals.
* Talks between Credit Suisse Group and U.S. authorities on settling allegations the Swiss bank helped Americans evade taxes have intensified, and a settlement of more than $800 million could be struck in the first half of the year, people familiar with the situation said.
* Netflix Inc said it added 2.33 million U.S. streaming subscribers in the fourth quarter, sending its shares soaring in after hours trading, and signaled it is considering pricing changes that would be aimed at targeting different market segments.
* Lenovo Group Ltd is close to a deal to buy International Business Machines Corp's low-end server business, according to a person familiar with the matter. A deal could be announced as soon as Thursday, the people said.
* Security experts believe the malicious software that infected Target Corp was in part the work of a 23-year-old in southern Russia who counted punk rock as a hobby.
* VMware Inc announced a $1.54 billion deal to buy closely held AirWatch, the big software company's first major move to exploit the mobile device boom.
* Carl Icahn has added about $500 million to his Apple Inc investment, he said Wednesday, and is planning to push again for more share buybacks ahead of the technology company's expected earnings release Monday.
JPMorgan Chase & Co said in a submission to the UK Treasury that the country will get what it wants on cross-border rules if it negotiates as part of the European Union.
European Court of Justice rejected UK's plea that challenged a law giving the European Securities and Markets Authority the right to impose a ban on short selling in emergencies, a move which could help Germany extend its powers.
European Union's unveiled wide-ranged 2030 climate and energy targets, which included a 40 percent bloc-wide emission reduction target and said the commission will not change the criteria to determine which companies can receive free carbon permits under the Emissions Trading Scheme (ETS) for allocations over 2015-2019.
Online takeaway service group Just Eat is expected to launch its initial public offering in the UK by April or May for a valuation of 700 million pounds to 900 million pounds.
Dyson Ltd, a maker of vacuum cleaners and bladeless fans, will invest 250 million pounds in its research and development centre, and is aiming to create 3,000 jobs in the UK by 2020.
* A U.S. judge has ruled that the Chinese units of the Big Four accounting firms - KPMG, Deloitte & Touche, PricewaterhouseCoopers and Ernst and Young - should be suspended from practicing in the United States for six months, an escalation in a long-running dispute between regulators in the United States and China over access to audits.
* Activity in China's manufacturing sector contracted in January for the first time in six months as new orders declined, a preliminary private survey showed on Thursday, confirming that a mild slowdown at the end of 2013 has continued into the new year.
* On Tuesday, most of China's 500 million Internet users were unable to load websites for up to eight hours, and experts say the country's own system of Internet control was to blame.
* Overseas banks like Barclays, Deutsche Bank and Credit Suisse have not had to comply with parts of the Dodd-Frank Act that aim to strengthen the capital they must maintain to absorb losses.
* Netflix racked up another quarter of impressive growth to finish 2013, surpassing 30 million paid subscribers in the United States for the first time and predicting continued growth through the first quarter of this year.
* Striking workers at a Goodyear tire plant in France agreed on Wednesday to accept severance pay that they said was three times as much as the company had initially offered, clearing the way for the facility to close after a bitter conflict that escalated into a "boss-napping."
* The author of a parody Twitter account @GSElevator with more than 600,000 followers has a tell-all book in the works about the excesses and greed of Wall Street. The book, whose author writes under the name J. T. Stone but has revealed his identity to his publisher, editor and literary agent, will be released in October, in the prime fall season for bookselling.
* N. S. Bienstock, the best-known and largest agency serving television news personalities and producers such as Anderson Cooper and Bill O'Reilly, has become a unit of the United Talent Agency, the major Hollywood representation firm. UTA, as it is known, announced its acquisition of Bienstock on Wednesday in what one top executive described as a significant financial deal, though the terms were not disclosed.
THE GLOBE AND MAIL
* The number of people claiming refugee status in Canada reached what Ottawa calls a "historic low" in 2013 after it brought in changes to speed up the program by deterring applicants from safer countries. (http://link.reuters.com/wam36v)
* Alberta Health Minister Fred Horne said Wednesday he is "outraged" a laptop containing key information on 620,000 patients was stolen four months ago but only now brought to his department's attention. (http://link.reuters.com/xam36v)
Reports in the business section:
* The Bank of Canada's angst over low inflation sent the dollar into a nosedive, but Governor Stephen Poloz says a cheaper currency is simply the "icing on the cake" for an economy that will be driven by stronger U.S. growth. (http://link.reuters.com/zam36v)
* Mayor Rob Ford says he suffered a "minor setback" on Monday, when he was captured clearly inebriated and hurling profanities about the chief of a police in a Rexdale restaurant, but maintains it is "completely a private matter." (http://link.reuters.com/dem36v)
* Prime Minister Stephen Harper launched a blistering assessment Wednesday of unrest in the Arab world saying the Syrian civil war has descended into a regional sectarian battle, Egypt is grappling with democracy, and Iran is still led by an "extremist" and "hateful" regime. (http://link.reuters.com/jem36v)
* Canada, struggling to emerge from a two-year slump brought on by weak exports, has swept past the U.S., Germany and Japan in a Bloomberg ranking of the best countries for doing business. (http://link.reuters.com/hem36v)
* With expansion of the Canada Pension Plan on indefinite hold, Ontario Premier Kathleen Wynne has tapped former prime minster Paul Martin to advise her government on creating a stand-alone pension alternative for the province. (http://link.reuters.com/kem36v)
CHINA SECURITIES JOURNAL
- The China Securities Regulatory Commission has ended its spot inspections of pricing mechanisms used by underwriters for initial public offerings, sources told the newspaper.
21st CENTURY BUSINESS HERALD
- Loans by China's 'Big Four' banks hit 440 billion yuan ($72.71 billion) in the first 20 days of January, while around 700 billion yuan in deposits flowed out of the banking system, higher than last year's 300 billion yuan decline in deposits, banking sources told the newspaper.
CHINA BUSINESS NEWS
- Analysts expect profit growth at listed banks could be below 10 percent this year.
- The number of Chinese going abroad to work or study has doubled in two decades, from 4 million in 1990 to 9.3 million in 2013, according to a report by the Center for China and Globalization released on Wednesday.
- China should deepen reform on Party members' conduct, living habits, and anti-corruption efforts, said a commentary by the mouthpiece of the ruling Communist Party of China.
SIR JAMES DYSON TO CREATE JOBS FOR 3,000 ENGINEERS
Sir James Dyson plans to invest 250 million pounds in the expansion of his company headquarters in Wiltshire, creating jobs for 3,000 engineers.
RBS TURNAROUND UNIT IS 'FLAWED,' SAYS FORMER BANK OF ENGLAND OFFICIAL
The former Bank of England official charged with identifying problems in small business lending at Royal Bank of Scotland says the lender needs to rethink the way its controversial turnaround group operates.
CABLE TO SCRUTINISE ROYAL MAIL CHIEF'S PAY
A politically toxic battle over the 1.5 million pounds pay of Royal Mail boss Moya Greene looks likely to intensify as the government suggested it might block any large increases in executive remuneration.
E.ON RUNS DOWN POWER STATIONS DESPITE BLACKOUT WARNING
E.ON is to shut one gas-fired power station and expects to reduce output at three others despite continued warnings from the National Grid and others that Britain faces a capacity crunch and potential blackouts.
EUROPE NEEDS TO START FROM SCRATCH, BOSSES CAUTION DAVOS
Europe should be reclassified as an emerging market that needs major economic reform if it is not to fall behind the world's fast-growing developing nations, the chief executive of the French oil company Total has said.
LAND SECURITIES NEARS "WALKIE SCORCHIE" SOLUTION
Land Securities said that it was less than a month away from submitting a planning application for a solar solution for its skyscraper scheme at 20 Fenchurch Street in Central London.
UNILEVER EXPLORES 1 BILLION STG DEAL TO SHED SLIMFAST
The consumer products giant Unilever is exploring a sale of SlimFast, its weight loss range, in a deal that would inevitably crystallise a big loss for the company. Sky News has learnt that Unilever has been discussing a potential disposal of the brand as it seeks to focus on the core brands in its portfolio.
PENSIONS 'SHOULD BE COMPULSORY LIKE TAXES'
A new report by the Policy Exchange says the government's auto-enrolment pension programme does not go far enough amid warnings that some people need to save six times more than they do to avoid poverty in old age.
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled for today include:
Jobless Claims for the week of January 18 will be reported at 8:30--consensus 330K
Markit’s U.S. flash PMI for January will be reported near 9:00--consensus 55.0
Leading Indicators for December will be reported at 10:00--consensus 0.1%
Existing Home Sales for December will be reported at 10:00--consensus 4.9M
AMAG Pharmaceuticals (AMAG) upgraded to Hold from Underperform at Jefferies
Access National (ANCX) upgraded to Outperform from Market Perform at Keefe Bruyette
Allegheny Technologies (ATI) upgraded to Outperform from Neutral at Credit Suisse
Concur (CNQR) upgraded to Buy from Hold at Deutsche Bank
ExlService (EXLS) upgraded to Buy from Neutral at Goldman
F5 Networks (FFIV) upgraded to Buy from Neutral at Janney Capital
Five Below (FIVE) upgraded to Overweight from Equal Weight at Barclays
General Dynamics (GD) upgraded to Outperform from Perform at Oppenheimer
LinnCo (LNCO) upgraded to Outperform from Neutral at RW Baird
Microsoft (MSFT) upgraded to Buy from Hold at Deutsche Bank
NetSuite (N) upgraded to Buy from Hold at Deutsche Bank
Norfolk Southern (NSC) upgraded to Buy from Neutral at BofA/Merrill
Norfolk Southern (NSC) upgraded to Overweight from Neutral at JPMorgan
Oracle (ORCL) upgraded to Buy from Hold at Deutsche Bank
Phillips 66 (PSX) upgraded to Outperform from Market Perform at Raymond James
Rambus (RMBS) upgraded to Buy from Neutral at Citigroup
TE Connectivity (TEL) upgraded to Buy from Hold at Cross Research
Total System (TSS) upgraded to Neutral from Sell at Goldman
TriCo Bancshares (TCBK) upgraded to Outperform from Market Perform at Keefe Bruyette
Varian Medical (VAR) upgraded to Buy from Hold at Cantor
American Eagle (AEO) downgraded to Hold from Buy at Stifel
Camelot Information (CIS) downgraded to Underweight from Equal Weight at Barclays
Citrix (CTXS) downgraded to Hold from Buy at Deutsche Bank
Delek US (DK) downgraded to Market Perform from Outperform at Raymond James
First Midwest (FMBI) downgraded to Market Perform from Outperform at Keefe Bruyette
GNC Holdings (GNC) downgraded to Underperform from Market Perform at William Blair
Genpact (G) downgraded to Sell from Neutral at Goldman
Gol Linhas (GOL) downgraded to Market Perform from Outperform at Raymond James
Heartland Payment (HPY) downgraded to Neutral from Buy at Goldman
Hercules Offshore (HERO) downgraded to Neutral from Buy at Global Hunter
HollyFrontier (HFC) downgraded to Market Perform from Outperform at Raymond James
Lamar Advertising (LAMR) downgraded to Neutral from Buy at Citigroup
Ormat Technologies (ORA) downgraded to Underweight from Equal Weight at Barclays
PBF Energy (PBF) downgraded to Market Perform from Outperform at Raymond James
Performant Financial (PFMT) downgraded to Neutral from Buy at Goldman
Renasant (RNST) downgraded to Market Perform from Outperform at Raymond James
Rowan Companies (RDC) downgraded to Neutral from Buy at UBS
Salesforce.com (CRM) downgraded to Hold from Buy at Deutsche Bank
TAL Education (XRS) downgraded to Equal Weight from Overweight at Morgan Stanley
Texas Capital (TCBI) downgraded to Equal Weight from Overweight at Evercore
Valero (VLO) downgraded to Outperform from Strong Buy at Raymond James
Vitamin Shoppe (VSI) downgraded to Market Perform from Outperform at William Blair
West Corp. (WSTC) downgraded to Neutral from Buy at Goldman
eBay (EBAY) downgraded to Hold from Buy at Stifel
eBay (EBAY) downgraded to Neutral from Positive at Susquehanna
ChannelAdvisor (ECOM) initiated with a Hold at Deutsche Bank
Diamond Resorts (DRII) initiated with an Outperform at JMP Securities
Jive Software (JIVE) initiated with a Hold at Deutsche Bank
Marriott Vacations (VAC) initiated with an Outperform at JMP Securities
MicroStrategy (MSTR) initiated with a Hold at Deutsche Bank
Palo Alto (PANW) initiated with a Buy at Deutsche Bank
Qlik Technologies (QLIK) initiated with a Hold at Deutsche Bank
SolarWinds (SWI) initiated with a Hold at Deutsche Bank
Splunk (SPLK) initiated with a Buy at Deutsche Bank
TIBCO (TIBX) initiated with a Hold at Deutsche Bank
Tableau Software (DATA) initiated with a Buy at Deutsche Bank
WWE (WWE) initiated with a Buy at Benchmark Co.
WellCare (WCG) initiated with a Neutral at Credit Suisse
Workday (WDAY) initiated with a Hold at Deutsche Bank
Wyndham (WYN) initiated with an Outperform at JMP Securities
Lenovo (LNVGY) to acquire IBM's (IBM) x86 server business for about $2.3B in cash, stock
eBay (EBAY) announced $5B share repurchase plan
eBay (EBAY) said Icahn nominated two to board, proposed PayPal spin off, eBay CEO
Donahoe said Icahn's idea “nothing new”
Netflix (NFLX) has no plans to move towards advertising-based models
American Eagle (AEO) CEO Robert Hanson leaving the company; Jay Schottenstein named Interim CEO
Ethan Allen (ETH) said cautiously optimistic on increasing sales, profitability
Companies that beat consensus earnings expectations last night and today include:
Cash America (CSH), Logitech (LOGI), DHT Holdings (DHT), Teradyne (TER), Raymond James (RJF), Susquehanna (SUSQ), United Rentals (URI), Western Digital (WDC), eBay (EBAY), Ethan Allen (ETH), SanDisk (SNDK), Varian Medical (VAR), Stryker (SYK), RLI Corp. (RLI), LSI Corp. (LSI), Netflix (NFLX)
Companies that missed consensus earnings expectations include:
Cabot Microelectronics (CCMP), Hill-Rom (HRC), Precision Castparts (PCP), 8x8, Inc. (EGHT),
Companies that matched consensus earnings expectations include:
American River (AMRB), United Community Banks (UCBI), East West Bancorp (EWBC)
- Fiat (FIATY) CEO to propose NYSE listing, Bloomberg reports
- JPMorgan (JPM) CEO says economy beginning to 'fire on all cylinders,' CNBC reports
- Liberty Media (LMCA) CEO: TWC (TWC) talks not productive, WSJ reports
- Boeing (BA) changes course, hires more workers for Dreamliner issues, WSJ reports
- Software version that infected Target (TGT) tied to Russian, WSJ reports
- Berkshire Hathaway (BRK.A) facing U.S. scrutiny on systemic risk, Bloomberg reports
- Loral Space & Communications (LORL) explores sale, Reuters reports
- Eli Lilly (LLY) approached Ariad (ARIA) on deal, Daily Mail reports
- Volkswagen (VLKAY) labor head dismisses U.S. strategy, growth targets, WSJ reports
- Navistar (NAV) to explore potential sale of MWM engine business, Bloomberg reports
Acceleron Pharma (XLRN) 2.4M share Secondary priced at $50.00
American Midstream Partners (AMID) to offer 3.4M common units
Aratana Therapeutics (PETX) to offer 5.5M common shares, includes 1M for holders
Discovery Labs (DSCO) files to sell 4.66M shares of common stock for holders
Exelixis (EXEL) files to sell 10M shares of common stock
Five Prime (FPRX) files to sell $50M of common stock
Global Brass & Copper (BRSS) files to sell 3.75M in common stock for holder
Hudson Pacific (HPP) files to sell 8.25M shares of common stock
Keryx (KERX) 6.9M share Secondary priced at $14.50
Nektar Therapeutics (NKTR) 8.5M share Secondary priced at $12.75
Rocket Fuel (FUEL) files to sell 5M shares of common stock
Santander Consumer USA (SC) 75M share IPO priced at $24.00
Splunk (SPLK) 6M share Secondary priced at $81.00
Texas Capital (TCBI) files to sell 1.25M shares of common stock