Frontrunning: February 7
- Bersani's lead over Berlusconi continues to erode, now just 3.6 Pts, or inside error margin, in Tecne Poll
- Spain gears up for U.S. debt investor meetings (Reuters)
- PBOC Set for Record Weekly Liquidity Injection (WSJ)
- RBS Trader Helped UBS’s Hayes With Libor Bribes, Regulators Say (BBG)
- ECB, Ireland reach bank debt deal (Reuters)
- AMR-US Airways Near Merger Agreement (WSJ)
- Monte Paschi says no more derivatives losses (Reuters) ... remember this
- Harvard’s Gopinath Helps France Beat Euro Straitjacket (BBG) - by sliding into recession?
- Obama Relents on Secret Drone Memo (WSJ)
- Brennan to face questions on interrogations, drones and leaks (Reuters)
- Wall Street Success With Germans Boomerangs (BBG)
- Khamenei rebuffs U.S. offer of direct talks (Reuters)
- Boeing Preps Redesign to Get 787 Flying (WSJ)
- Jim Rogers Joins Bill Gross Warning on Treasuries (BBG)
- Alcatel Chief Is Out as Turnaround Stalls (WSJ)
Overnight Media Digest
* U.S. President Barack Obama agreed to let a small group of lawmakers look at a classified opinion explaining his administration's legal justification for targeting killings of American terror suspects in other countries.
* American Airlines parent AMR Corp and US Airways Group Inc are hashing out the last major details of a merger agreement that would create the world's largest airline and are racing to finalize a deal, said people close to the discussions.
* Standard & Poor's Ratings Services could face a much higher legal bill than the $5 billion sought by the federal government as more and more states join the battle against the credit-ratings firm.
* Royal Bank of Scotland agreed to pay more than $610 million in fines to settle interest-rate-rigging charges with U.S. and UK authorities, and the bank's Japanese unit will plead guilty to U.S. fraud charges.
* Boeing Co is proposing a series of battery design changes that it believes would minimize the risks of fire on its 787 Dreamliners and allow the grounded jets to fly again while it continues searching for a longer-term fix, say government and industry officials briefed on the matter.
* Monte dei Paschi di Siena, the Italian bank at the center of a burgeoning financial scandal, was so strapped for cash in late 2011 that it negotiated a covert loan of nearly 2 billion euros ($2.71 billion) from the Bank of Italy even as executives were describing the lender's funding position as comfortable, according to the Bank of Italy and people familiar with the deal.
* Google Inc said it will require current advertisers using its AdWords online-ad system to pay for ads on some mobile devices, like tablets, for the first time.
* News Corp's earnings more than doubled in the three months to December, helped by one-time gains related to acquisitions, but the media and entertainment company cut its profit outlook.
A day before the Bank of England's monetary policy committee announces the outcome of its monthly meeting, Chancellor George Osborne has called on BoE for a looser monetary policy to boost economic recovery.
Buyout firms are racing to raise funds for a possible 10 billion pounds bid for EE - the United Kingdom's largest mobile-phone operator. A group formed by Apax and KKR and another led by Blackstone and CVC Capital Partners are working on competing bids.
A News Corp executive said the company would hold on to its 39.1 percent stake in BSkyB for now. Chief Operating Officer Chase Carey said the media conglomerate was still looking at the long-term case for either selling its stake or trying again to take full control to BSkyB, after scrapping plans in wake of the phone hacking scandal in the UK.
Cantor Fitzgerald was in advanced talks, that stretched into Wednesday night, to buy British brokerage firm Seymour Pierce.
Institutional Shareholder Services, ISS, the influential adviser on corporate governance matters, has recommended that Bumi's shareholders vote against Nat Rothschild's proposals to replace all the miner's independent directors.
Royal Bank of Scotland will pay $612 million to U.S. and British authorities to settle allegations it manipulated benchmark interest rates. Five traders at Deutsche Bank's Frankfurt-based money market desk have been suspended as part of an internal inquiry by the bank to find out whether its staff manipulated the Euro Interbank Offered Rate, Euribor.
Dell's $24.4 billion deal to go private was almost derailed by a debate over whether the company would continue paying its quarterly dividend over the next few months, according to several people involved in the transaction.
Property tycoon Vincent Tchenguiz is seeking 200 million pounds in damages from UK's Serious Fraud Office over the agency's mishandling of investigations linking him to the collapse of Iceland's banking system
* Emails and employee interviews filed as part of a lawsuit show that JPMorgan Chase & Co flouted quality controls as it bundled mortgages into complex financial instruments.
* The Royal Bank of Scotland on Wednesday reached a combined $612 million settlement with American and British authorities over accusations that it manipulated interest rates, the latest case to emerge from a broad international investigation.
* U.S. federal regulators approved one flight of a Boeing 787, with a crew but no passengers, as engineers study ways to reduce the risks of another battery fire.
* Revenue from advertisements and subscription fees from Time Warner Inc's cable properties helped overcome a challenging quarter for the media conglomerate's publishing and movie divisions.
* Monte dei Paschi di Siena, an ancient Tuscan bank whose troubles have shaken Italian politics and caused jitters around the euro zone, on Wednesday confirmed earlier estimates of losses from a series of secret transactions that were used to conceal the scope of the bank's problems.
* GlaxoSmithKline Plc plans to cut costs in its struggling European drugs division and promised investors a return to growth this year, after failing to deliver a hoped-for recovery in sales and profits in 2012.
* Cravath, Swaine & Moore has hired David Kappos, the departing director of the United States Patent and Trademark Office, the second time the law firm has added a former senior Obama administration official to its partnership
THE GLOBE AND MAIL
* Stephen Harper's Conservative Party is fighting changes to federal ridings in Saskatchewan after an independent commission recommended new boundaries that should make it easier for Tom Mulcair's New Democratic Party to regain a foothold there.
* Ottawa's finances are taking a hit from discounted prices for Canadian oil, and Finance Minister Jim Flaherty says this will force him to hold a harder line on spending as he prepares the 2013 budget.
Reports in the business section:
* Canadian consumers are victims of higher prices driven by less competition than in the United States, the Senate says, as it formally urged the federal government to close that price gap by reducing tariffs and other barriers at the border.
* With demand among air travelers showing no signs of waning, WestJet Airlines Ltd posted strong fourth-quarter and year-end profits, beating most industry watchers' expectations.
* Ontario Finance Minister Dwight Duncan will be resigning his seat in the legislature next week.
A government source tells The Canadian Press that Duncan will make it official when he holds a news conference Thursday at Queen's Park.
* Attawapiskat Chief Theresa Spence has called a band council meeting for Thursday to discuss a blockade on a winter road leading to a De Beers diamond mine.
De Beers Canada says a group of residents of the remote northern Ontario reserve set up the blockade on Monday on a road the company uses to move in supplies like fuel, machine parts and equipment that would be too heavy to fly in.
* Consumers are asking for clear language in their cellphone contracts and want to be able to put a cap on extra fees, says a draft of a national wireless code.
Thousands of Canadians contributed their ideas to the first draft of the national wireless code, which was released Monday by the Canadian Radio-television and Telecommunications Commission.
CHINA SECURITIES JOURNAL
-- Some Chinese provinces and cities, including Zhejiang on the coast near Shanghai, could raise natural gas prices in the third quarter, sources said.
-- Top-tier cities could cut the amount of housing pre-sale certificates and reduce approvals for new houses in the first half of the year, sources said.
SHANGHAI SECURITIES NEWS
-- The ministry of finance said China would allocate 120 billion yuan ($19.26 billion) to support domestic traffic infrastructure construction.
CHINA DAILY (www.chinadaily.com.cn)
-- Inflation is fine at present and potential money supply risks can be effectively contained, said a central bank official who declined to be identified.
-- Yunnan province has suspended the approval of "laojiao" punishment, or re-education through labour, a system established in the 1950s that Chinese lawmakers expect to abolish this year.
-- Chinese Premier Wen Jiabao said at an executive meeting of the State Council that Chinese oil refining enterprises should speed up the upgrading of equipment and strengthen oil product quality supervision.
Fly On The Wall 7:00 Am Market Snapshot
BlackBerry (BBRY) upgraded to Outperform from Market Perform at Wells Fargo
Con-way (CNW) upgraded to Buy from Neutral at Citigroup
DeVry (DV) upgraded to Neutral from Underweight at JPMorgan
Fortune Brands (FBHS) upgraded to Buy from Hold at KeyBanc
Goodrich Petroleum (GDP) upgraded to Outperform from Sector Perform at RBC Capital
Molycorp (MCP) upgraded to Neutral from Underweight at JPMorgan
Owens Corning (OC) upgraded to Buy from Neutral at Longbow
Reliance Steel (RS) upgraded to Buy from Hold at Dahlman Rose
ViaSat (VSAT) upgraded to Buy from Hold at Needham
Vipshop (VIPS) upgraded to Buy from Hold at Deutsche Bank
Yandex (YNDX) upgraded to Overweight from Neutral at HSBC
Aaron's (AAN) downgraded to Hold from Buy at Canaccord
Akamai (AKAM) downgraded to Hold from Buy at Jefferies
Akamai (AKAM) downgraded to Neutral from Buy at Janney Capital
Apollo Investment (AINV) downgraded to Market Perform from Outperform at Wells Fargo
Elan (ELN) downgraded to Sector Perform from Outperform at RBC Capital
Endo Health (ENDP) downgraded to Underperform from Sector Perform at RBC Capital
Ignite Restaurant (IRG) downgraded to Neutral from Outperform at RW Baird
PACCAR (PCAR) downgraded to Neutral from Buy at UBS
Peregrine (PSMI) downgraded to Perform from Outperform at Oppenheimer
Rexnord (RXN) downgraded to Market Perform from Outperform at BMO Capital
Stryker (SYK) downgraded to Neutral from Outperform at Credit Suisse
TriQuint (TQNT) downgraded to Neutral from Buy at Longbow
United Microelectronics (UMC) downgraded to Neutral from Overweight at HSBC
Virgin Media (VMED) downgraded to Hold from Buy at Deutsche Bank
Visa (V) downgraded to Market Perform from Outperform at Wells Fargo
Delta Apparel (DLA) initiated with a Buy at Roth Capital
Fly Leasing (FLY) initiated with a Buy at Deutsche Bank
Google (GOOG) initiated with a Neutral at Sterne Agee
Optimer (OPTR) initiated with an Outperform at RW Baird
Trulia (TRLA) initiated with a Neutral at Goldman
ValueClick (VCLK) initiated with a Buy at Goldman
Vertex (VRTX) initiated with an Outperform at RW Baird
Dell (DELL): Silver Lake's equity contribution to deal is $1.4B
Yahoo! (YHOO) to run Google's (GOOG) AdSense, AdMob services on some sites
Landry's Restaurant (LNY) offered to acquire ARK Restaurants (ARKR) for $22.00 per share
BGI-Shenzhen extended tender offer for Complete Genomics (GNOM) to February 22 from February 6
O'Reilly Automotive (ORLY) sees 190 new store openings in FY13
Sees FY13 free cash flow $450M-$500M, gross profit margin 49.9%-50.3%
Spectrum Brands (SPB) sees improvements in financial results 2H weighted
Visa (V) authorized new $1.75B share repurchase program
Allstate (ALL) raised repurchase program by $1B to $2B
AT&T (T), Communications Workers of America reached tentative agreement
Green Mountain (GMCR) expects to build brewer inventory in 2H13
Vornado (VNO) received $124M in settlement of Stop & Shop (AHONY) litigation
Fujitsu (FJTSY) to cut approximately 5,000 employees
Companies that beat consensus earnings expectations last night and today include:
Starwood Hotels (HOT), Cigna (CI), Prestige Brands (PBH), Towers Watson (TW), O'Reilly Automotive (ORLY),Visa (V), News Corp. (NWSA), Spectrum Brands (SPB), Green Mountain (GMCR)
Companies that missed consensus earnings expectations include:
Rand Logistics (RLOG), Albany International (AIN), Tesoro (TSO), Prudential (PRU), Yelp (YELP), Con-way (CNW), Plains All American (PAA)
Companies that matched consensus earnings expectations include:
FMC Corporation (FMC), Atmel (ATML)
- The $24.4B deal to take Dell (DELL) private shows what is possible in the leveraged-buyout market but doesn't necessarily portend a return of the mega deals popular before the financial crisis. The deal has components that are unusual and will make its size difficult to replicate, bankers, private-equity executives and analysts said, the Wall Street Journal reports
- Standard & Poor's Ratings Services (MHP) could face a bigger bill than the $5B sought by the federal government as more states join the battle against the credit-ratings firm, the Wall Street Journal reports
- Chrysler Group (FIATY) agreed to make Banco Santander's (SAN) U.S. arm its preferred lender for auto loans to broaden the financing it can offer its buyers and dealers, Reuters reports
- Boeing (BA) said contract talks with India for military helicopters will be unaffected by planned budget cuts, after the country's defense minister said spending on arms would be tightened, Reuters reports
- Sovereign wealth funds which pushed their real estate deal making to a record last year, are set to extend their buying spree as they seek alternatives to low-yielding bonds and volatile stocks. The funds made 38 property investments valued at almost $10B in 2012, Bloomberg reports
- Japan’s major banks (MTU, MFG, SMFG) are following Goldman Sachs (GS) into domestic solar-power projects, anticipating an eightfold increase for investments in the industry. The banks expect the market to be worth as much as $19B over the next three years, Bloomberg reports
BreitBurn Energy (BBEP) files to sell 13M shares of common stock
Disney (DIS) registers 37.07M shares of common stock for Lucas Trust
ExOne (XONE) 5.3M share IPO priced at $18.00
Hudson Pacific (HPP) files to sell 7.5M shares of common stock
Nexstar (NXST) announces secondary offering of 3M shares by selling stockholders