Frontrunning: February 5
- Goldman to Fidelity Call for Calm After Global Stock Wipeout (BBG)
- Turnabout on Global Outlook Darkens Investor Mood (Hilsenrath)
- EU Said to Weigh Extending Greek Loans to 50 Years (BBG)
- Second Storm Hitting Northeast Halts Planes, Schools (BBG)
- Small Banks Face TARP Hit (WSJ)
- As Sony prepares PCs exit, pressure mounts for reboot on TVs (Reuters)
- IBM Uses Dutch Tax Haven to Boost Profits as Sales Slide (BBG)
- ECB faces dilemma with inflation drop (FT)
- London Subway Strike Snarls Traffic as Union Opposes Cuts (BBG)
- Ukraine Aid Limbo Deepens Reserves Squeeze: East Europe Credit (BBG)
- US says China ‘acting professionally’ in air defence zone (FT)
- Europe’s Investment Bankers Mark Worst January in Decade (BBG)
- Deutsche Bank Fires Traders Amid Currencies Probe (WSJ)
Overnight Media Digest
* Satya Nadella is Microsoft Corp's new CEO. But he ascends as co-founder Bill Gates returns to a more central role at a company struggling to catch up in mobile and other fast-moving technologies.
* The new health law is projected to reduce the total number of hours Americans work by the equivalent of 2.3 million full-time jobs in 2021, a bigger impact on the workforce than previously expected, according to a nonpartisan congressional report. The analysis, by the Congressional Budget Office, says a key factor is people scaling back how much they work and instead getting health coverage through the Affordable Care Act.
* Small banks across the United States are facing a crunch-time decision over federal aid received during the financial crisis: repay the funds soon or face a steeper interest-rate bill.
* Morgan Stanley agreed to pay the top U.S. housing regulator $1.25 billion, the largest legal expense for the Wall Street firm relating to the financial crisis, to settle a lawsuit that it sold mortgage bonds to Fannie Mae and Freddie Mac without adequately disclosing their risks.
* Target Corp's chief financial officer told Congress that software on another 25 checkout machines continued to steal payment-card data three days after the discounter had said the malware was removed.
* RadioShack Corp plans to close about 500 stores in the coming months as the electronics retailer continues to work with advisers on its restructuring.
* J.C. Penney Co Inc's sales rose just 2 percent in its latest quarter, renewing fears about the retailer and sending its stock down sharply.
* The United States is lagging behind other developed nations in the international race to place more women on corporate boards. While the ranks of female directors at big public companies are growing faster in several countries, thanks to legal mandates or extensive voluntary efforts.
* The United States' budding commercial space industry has sparked an intense debate over the extent to which the federal government should regulate private space flights for tourists and orbital-vehicle operations.
* Sony Corp is in talks to sell its unprofitable Vaio personal computer operations to a Japanese investment fund.
* Bristol-Myers Squibb threatened to cut jobs at two French plants after the government said it planned to seek wider use of cheaper generics.
* Time Warner Inc plans to lay off just under 500 employees, or about 6 percent of its global staff, as part of a broader effort to simplify the operating structure of its magazines, a person close to the company said.
* Adidas AG sued rival Under Armour Inc on Tuesday, alleging it infringed on 10 Adidas patents used in the German company's fitness tracking system called miCoach.
* Medical researchers around the world are embracing genetic-sequencing technologies. Among the most eager are scientists in Saudi Arabia, which is plagued with diseases that have genetic roots.
* Toyota Motor Corp said solid vehicle sales and a sharply weaker yen pushed its net profit up more than fivefold in the latest quarter, prompting it to forecast a record profit for the full fiscal year.
* Google Inc has awarded $100 million in restricted stock to Executive Chairman and former CEO Eric Schmidt, as well as a cash bonus of $6 million tied to the search giant's 2013 performance.
* BP Plc's fourth-quarter profit fell 25 percent, hit by lower refining margins and lost income from asset sales, as the company continued to try to recover from the Deepwater Horizon explosion and oil spill.
* Michael Kors Holdings Ltd reported a big jump in profit for its fiscal third quarter and said it planned to expand men's clothing and accessories into a $1 billion business, a move that could further dent rival Coach Inc .
* Chrysler Group said its Ram 1500 EcoDiesel truck has earned a U.S. Environmental Protection Agency-estimated rating of 28 miles a gallon in highway driving, setting a new bar to top for truck brands, and especially Ford Motor Co's lightweight, aluminum-bodied F-150, due out later this year.
* Panasonic Corp saw a double-digit rise in profit for the third quarter, as stellar growth in a string of lesser-known niche businesses offset the decline of its vaunted television business.
* Christie's has withdrawn 85 artworks by Spanish surrealist Joan Miro from its auctions in London this week, after an uproar in Portugal over the government's move to sell the works in an attempt to cut its debt.
* Both sides declared victory after jurors delivered a mixed verdict on a civil lawsuit brought by the Securities and Exchange Commission against Life Partners Holdings Inc a Texas seller of life-insurance investments.
* A small group of investors are pressuring Yahoo Inc to revise its approach to hiring and compensation following Chief Executive Marissa Mayer's expensive firing of her No. 2 executive.
The chief executive of Britain's financial watchdog warned on Tuesday that the global investigation into the manipulation of the foreign exchange market was proving as serious as the Libor rigging probe, which has resulted in more than $6 billion of fines for banks.
Morgan Stanley has been forced to restate its fourth-quarter earnings after saying it would pay $1.3 billion to the U.S. regulator for Fannie Mae and Freddie Mac to settle a lawsuit related to the sale of mortgage-backed securities.
Microsoft has named 46-year-old India native Satya Nadella as its third chief executive in the company's 39-year history, ending a long-running search that had brought calls for an outsider who could revive the aging technology pioneer.
Stephen Hester, a former Royal Bank of Scotland boss, has been appointed chief executive of scandal-hit insurer RSA with immediate effect.
Shares in Michael Kors rose nearly 21 percent after the retailer raised its sales and profit forecasts for the year as it reported third-quarter sales in Europe had more than doubled.
* Bill Gates, who co-founded Microsoft but has spent his time on other pursuits, will return part-time to the company after the new Chief Executive, Satya Nadella, asked him to be his adviser.
* Insurer WellPoint Inc has captured a large portion of the government money being spent on Medicaid, the federal-state health care program for the poor, and can gamble on the new insurance marketplace because of protections offered by the federal government in the early days of the law's introduction.
* JPMorgan Chase & Co can write off $1.5 billion in debt relief, but it will be treated as taxable income for homeowners, resulting in burdensome costs for many families.
* Morgan Stanley has agreed to pay $1.25 billion to the Federal Housing Finance Agency to resolve claims that it sold shoddy mortgage securities to Fannie Mae and Freddie Mac.
* Texting has become such a fundamental way to communicate that crisis groups have begun to adopt it as an alternative way of providing emergency services and counseling.
* A Congressional Budget Office analysis released Tuesday predicted that the Affordable Care Act would shrink the work force by the equivalent of more than two million full-time positions and recharged the political debate over the health care law, providing Republican opponents fresh lines of attack and putting Democrats on the defensive.
* Standard & Poor's downgraded the debt of Puerto Rico to junk status on Tuesday, intensifying a cash squeeze for the commonwealth, whose financial condition is of outsize importance to the rest of the United States because its debt is widely held by individual investors through mutual funds.
* A top executive of Target told a Senate committee on Tuesday that the company was accelerating plans to adopt a technology widely used in Europe but rare in the United States that reduces potential for credit card fraud, and lawmakers from both parties called on other businesses to do the same.
* After enduring huge recalls, a tsunami in Japan and a steep drop in sales because of slowing demand, Toyota Motor Corp on Tuesday hit a milestone in its comeback, saying it was on pace to earn its biggest-ever annual profit in its fiscal year that ends in March.
* The first quarterly increase in two years for comparable-store sales at J.C. Penney was not enough to win over Wall Street. The company's stock plunged more than 10 percent on Tuesday.
* Without clear information on Herbalife's business model, the speculation in its stock creates extreme volatility as investors trade on rumor.
* A strong earnings report by Michael Kors Holdings Ltd not only drove up the stock on Tuesday, but also increased Kors's net worth by about $34 million.
* Sachem Head Capital Management, a $1 billion activist hedge fund led by a protege of William Ackman, sent a public letter to Helen of Troy Ltd board on Tuesday, demanding that the consumer company explore strategic alternatives including a sale of some of its assets.
* Stephen Hester, who took the top job at Royal Bank of Scotland Group Plc after a government bailout in 2008, replaces Stephen Lee, who resigned as chief of the RSA Group after a profit warning and a 200 million pound shortfall in the reserves related to its Irish business.
* More than a year ago, UBS AG pledged to overhaul its investment bank after a prominent trading loss and a rate-rigging scandal. Those efforts appeared to be bearing fruit, based on the bank's latest earnings report released Tuesday.
* After taking off for the Chinese New Year holiday, shareholders in Lenovo Group Ltd appear to be having some cold feet about the computer maker's recent deal spree. Shares in the company tumbled more than 16 percent in trading on the Hong Kong Stock Exchange on Tuesday.
* James Bardrick, a veteran banker in London, has been named head of Citigroup's business in Britain.
THE GLOBE AND MAIL
* The Conservative government is overhauling the rules that govern how Canadians vote and run for office by cracking down on rogue robocalls that have embarrassed the Tories and increasing by 25 percent the maximum allowable contributions to parties.
* The Royal Canadian Mounted Police has laid criminal charges as part of its probe into senators' expenses, ensuring the controversy over the conduct of Canada's unappointed legislators will continue for months to come.
Reports in the business section:
* Air Canada and WestJet Airlines Ltd, Canada's two largest airlines, are raising fares to make up for a lower Canadian dollar, in one of the first tangible signs that a falling currency is adding costs to business.
* Wal-Mart Stores Inc's Canadian venture is racing to add more low-cost items, especially fresh produce and meat, to even more outlets. In the process, the company is stealing business from incumbents, forcing them to lower their costs.
* A Tunisian scientist awaiting trial for allegedly plotting a terrorist attack on a passenger train near Toronto lashed out at the Canadian government in an interview, accusing it of "colonizing" Afghanistan. Chiheb Esseghaier did not directly admit he had conspired to derail the train but neither did he deny it.
* The Manitoba Teachers' Society says Ottawa should appoint a third-party manager to address chronic financial problems at the Sandy Bay reserve, where teachers say their paycheques have bounced, retirees can't get access to their pensions and those who are ill can't get disability benefits.
* Suncor Energy Inc is tapping U.S. Gulf Coast crudes and bringing more oil to its Montreal refinery by rail as it waits for pipelines to connect Eastern Canada with Western Canadian oil fields.
* BlackBerry Ltd should be cash flow positive by the fourth quarter of fiscal 2015 and spending may end up below previously announced plans, CIBC World Markets analyst Todd Coupland said after meeting with the company's CFO, James Yersh.
FCA WIDENS RIGGING PROBE TO OTHER BENCHMARK RATES
Regulators are investigating allegations that several London-based benchmarks used to price financial products could have been rigged, according to Martin Wheatley, the chief executive Britain's Financial Conduct Authority.
PUNCH TAVERNS IN LAST MINUTE PLEA TO LENDERS OVER DEBT DEAL
Punch Taverns, Britain's second biggest pubs group, will warn its lenders on Wednesday that failure to pass a controversial debt restructuring deal could lead to at least five years of "mess" and "uncertainty".
CANDY BROTHERS PLAN MAJOR DUBAI DEVELOPMENT
Billionaire property developer brothers Nick and Christian Candy have plans to partner a development of 3 million square feet in Dubai that, if completed, would be about three times the size of the London Shard.
UK SHOP PRICES FALL FOR NINTH CONSECUTIVE MONTH
Prices in Britain's shops fell at the fastest rate in more than seven years in January as retailers resorted to aggressive discounting on clothing, furniture and electrical goods to encourage consumers back into stores after the festive period.
HOUSING CRISIS WILL CONTINUE FOR 10 YEARS, GEORGE OSBORNE WARNS
British Finance Minister George Osborne has warned that the country's housing shortage is likely to persist for at least 10 more years. He insisted the coalition's controversial planning shakeup was having a positive effect, and played down fears of a property bubble.
BP COULD CUT INVESTMENT IN INDEPENDENT SCOTLAND
The chief executive of BP has waded into the row over Scottish independence by warning that the British oil group could cut investment in the North Sea if Scots vote "yes"in September's referendum.
LLOYDS PLANS FOR SHARE SALE DESPITE DIVIDEND SETBACK
Ministers are pushing ahead with plans for a 5 billion pound ($8 billion) sale of shares in Lloyds Banking Group by Easter, in spite of a tough stance from regulators that have dashed the bank's hopes it could resume dividend payments next month.
TALKTALK UP TO 436 MLN STG AS MORE TUNE INTO VALUE DEALS
Telecom company TalkTalk's strategy of dodging the costly pay-TV wars between BSkyB and BT and offering "value" deals for customers who only want "a little bit" of premium TV content looks to be working.
MICROCHIP MAKER ARM HOLDINGS HIT BY SMARTPHONE SALES SLOWDOWN
Microchip-designer ARM added to fears of a slowdown in the smartphone market today, as it revealed flagging shipments of high-end smartphone chips in the fourth quarter.
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled for today include:
ADP employment report for January will be reported at 8:15--consensus 170,000
ISM non-manufacturing index for January will be reported at 10:00--consensus 53.9
American Capital Agency (AGNC) upgraded to Overweight from Neutral at JPMorgan
Archer Daniels (ADM) upgraded to Buy from Neutral at Citigroup
Archer Daniels (ADM) upgraded to Outperform from Sector Perform at Scotia Capital
Banco Bilbao (BBVA) upgraded to Overweight from Neutral at HSBC
Becton Dickinson (BDX) upgraded to Market Perform from Underperform at Raymond James
BlackRock (BLK) upgraded to Positive from Neutral at Susquehanna
Centene (CNC) upgraded to Neutral from Sell at Citigroup
Church & Dwight (CHD) upgraded to Outperform from Market Perform at BMO Capital
First Niagara (FNFG) upgraded to Neutral from Sell at Citigroup
Gray Television (GTN) upgraded to Outperform from Market Perform at Wells Fargo
Hartford Financial (HIG) upgraded to Outperform from Market Perform at Keefe Bruyette
JD Wetherspoon (JDWPY) upgraded to Overweight from Equal Weight at Barclays
Lamar Advertising (LAMR) upgraded to Buy from Neutral at Citigroup
Mobile TeleSystems (MBT) upgraded to Neutral from Underperform at Credit Suisse
Myriad Genetics (MYGN) upgraded to Market Perform from Underperform at JMP Securities
Northfield Bancorp (NFBK) upgraded to Outperform from Market Perform at Keefe Bruyette
PACCAR (PCAR) upgraded to Outperform from Neutral at RW Baird
Silver Standard (SSRI) upgraded to Hold from Sell at Deutsche Bank
Steel Dynamics (STLD) upgraded to Buy from Hold at Jefferies
Tortoise Energy (TYG) upgraded to Buy from Hold at Stifel
Vale (VALE) upgraded to Overweight from Equal Weight at Morgan Stanley
Waddell & Reed (WDR) upgraded to Buy from Neutral at Citigroup
Wesco Aircraft (WAIR) upgraded to Neutral from Sell at UBS
Wynn Macau (WYNMF) upgraded to Buy from Hold at Deutsche Bank
Zillow (Z) upgraded to Buy from Fair Value at CRT Capital
AGCO (AGCO) downgraded to Market Perform from Outperform at BMO Capital
Actuate (BIRT) downgraded to Hold from Buy at Drexel Hamilton
Angie's List (ANGI) downgraded to Neutral from Buy at BofA/Merrill
CSG Systems (CSGS) downgraded to Underweight from Neutral at JPMorgan
Century Aluminum (CENX) downgraded to Market Perform from Outperform at Cowen
ITC Holdings (ITC) downgraded to Neutral from Buy at ISI Group
Oasis Petroleum (OAS) downgraded to Buy from Conviction Buy at Goldman
Sirius XM (SIRI) downgraded to Hold from Buy at Wunderlich
Triumph Group (TGI) downgraded to Neutral from Buy at BofA/Merrill
Fossil (FOSL) initiated with a Neutral at Sterne Agee
TRW Automotive (TRW) initiated with a Neutral at UBS
Morgan Stanley (MS) in $1.25B settlement with FHFA on MBS
JPMorgan (JPM) to pay $614M for False Claims Act violations
Google (GOOG) made additional guarantee to settle EC antitrust probe
3M (MMM) authorized $12B share repurchase program
Amazon (AMZN) announced new licensing agreements with Hasbro (HAS), Warner Bros. (TWX)
Time Warner (TWX) board authorized a total of $5B in share repurchases beginning January 1
Myriad Genetics (MYGN) to acquire Crescendo Bioscience for $270M cash
Oshkosh (OSK) increased share repurchase authorization by 10M shares
Companies that beat consensus earnings expectations last night and today include:
M.D.C. Holdings (MDC), W.R. Grace (GRA), Time Warner (TWX), HNI Corporation (HNI), Mueller Water (MWA), Atmos Energy (ATO), Genworth (GNW), Hillenbrand (HI), Atwood Oceanics (ATW), Aflac (AFL), Horace Mann (HMN), Ameriprise (AMP), Gilead (GILD), Buffalo Wild Wings (BWLD)
Companies that missed consensus earnings expectations include:
Humana (HUM), Heartland Express (HTLD), Eagle Materials (EXP), C.H. Robinson (CHRW), Electro Scientific (ESIO), Thoratec (THOR), Genomic Health (GHDX)
Companies that matched consensus earnings expectations include:
NICE Systems (NICE), Cerner (CERN), Spansion (CODE), Axcelis (ACLS), Hain Celestial (HAIN)
Target (TGT) says data breach continued when it thought it ended, WSJ reports
Yahoo (YHOO) sites experienced outages yesterday, Re/code reports
Autonomy hits back at fraud allegations from HP (HPQ), FT reports
Volkswagen (VLKAY) mulls increasing Scania stake, Bloomberg reports
Deutsche Bank (DB) fired three New York-based forex traders, Reuters reports
Adidas (ADDYY) sues Under Armour (UA) over alleged patent infringement, Reuters reports
Judge delays BofA's (BAC) $8.5B mortgage settlement, Reuters reports
Michael Kors (KORS) renews focus on menswear, WSJ reports
Casinos (LVS, GEBHY) take on Disney (DIS) over Florida growth, Bloomberg reports
Athlon Energy (ATHL) files to sell 12M shares of common stock for holders
Auspex Systems (ASPX) 7M share IPO priced at $12.00
Biocept (BIOC) 1.9M share IPO priced at $10.00
Continental Building Products (CBPX) 11.8M share IPO priced at $14.00
Idera Pharmaceuticals (IDRA) files to sell common stock and pre-funded warrants
YRC Worldwide (YRCW) files to sell 20.06M shares of common stock for