Frontrunning: February 8
- Rate-Rig Spotlight Falls on 'Rain Man' (WSJ)
- Blizzard Cancels U.S. Flights, Threatens Snow in New York (BBG)
- Monti says he did not know of bank probes (FT)
- Japan's Aso: yen has weakened more than intended (Reuters)
- Japan Pledges Foreign-Policy Response to Territorial Incursions (BBG)
- Paratroops mutiny in Bamako in blow to Mali security efforts (Reuters)
- China, Japan engage in new invective over disputed isles (Reuters)
- Asteroid to Traverse Earth’s Satellite Zone, NASA Says (BBG)
- EU leaders haggle over budget tightening (FT)
- China Trade Tops Forecasts in Holiday-Distorted Month (Bloomberg)
- Buffett’s Son Says He’s Prepared Whole Life for Berkshire Role (BBG)
- Draghi’s Powerful Weapon Is Words as Euro Heeds His Voice (BBG)
- Dell to repatriate $7bn of overseas cash (FT)
- Scant Pickup in Economic Growth Seen for 2013 (WSJ)
Overnight Media Digest
* The Pentagon, Central Intelligence Agency and the U.S. State Department backed a plan to arm Syrian rebels, but the White House decided not to act, Panetta and Joint Chiefs Chairman Dempsey disclosed.
* Hedge fund manager David Einhorn sued Apple Inc in a New York federal court in an effort to block an Apple shareholder proposal that he argues could limit how the company could return some of its $137 billion cash pile to investors.
* Short-circuits inside a battery triggered a fire aboard a parked Boeing Co 787 Dreamliner last month, said U.S. investigators, who also found the safety approval process for the power devices was flawed and "must be reconsidered" before the jets return to passenger service.
* New York's top prosecutor has launched a probe into the conduct of the three major credit-ratings firms, according to a person familiar with the matter, opening another legal front for an industry that remains in the cross hairs of state and federal investigators.
* RadioShack Corp named Walgreen Co executive Joseph Magnacca to replace its acting chief, staking its future on a retail veteran who built his career in a merchandising role.
* New Jersey regulators are set to reconsider a decision that had forced MGM Resorts International to put its stake in an Atlantic City casino up for sale, people familiar with the matter said
Hedge fund manager David Einhorn's Greenlight Capital sued Apple , saying the company should give stockholders a bigger piece of its $137.1 billion cash pile, in one of the strongest criticisms by an investor of the consumer device giant's cash allocation strategy.
A top U.S. transport safety official has sharply criticised the process that approved the batteries on the Boeing Co 787, adding a new and potentially time-consuming wrinkle to the plane's grounding.
Dell is seeking to raise $7.4 billion in cash by selling assets, many of them held outside the U.S., as part of its deal to go private.
Struggling French carmaker PSA Peugeot Citroen wrote down the value of its automotive assets by 3.9 billion euros hurt by a weak European automotive market. The writedown will take the company's 2012 net loss to about 6 billion euros.
Italy's Monte dei Paschi said there were no more derivatives losses beyond the 730 million euros ($988 million) it has disclosed, which have rattled financial markets and become a campaign issue ahead of parliamentary elections. European Central Bank president Mario Draghi's intervention to rein in a rising euro has the makings of a global currency war, some policy makers fear. The European Union's chief budget negotiator proposed further modest cuts to the bloc's long-term spending plan on Thursday to try to bridge deep divisions among member states on how nearly 1 trillion euros of funds should be spent.
Stacey Cartwright, chief financial officer at British luxury clothing company Burberry Group, is to step down to pursue other interests. Cartwright, CFO since 2004, helped turn the company into a leading international brand.
* Apple Inc said on Thursday it would continue to evaluate ways of returning some of its $137 billion cash pile to investors, after David Einhorn called on fellow stockholders to reject the company's plan to eliminate a kind of preferred stock.
* Hewlett-Packard Co, one of the world's largest makers of computers and other electronics, is imposing new limits on the employment of students and temporary agency workers at factories across China.
* The top transportation safety official in the United States said on Thursday that the Federal Aviation Administration accepted test results from Boeing Co in 2007 that failed to properly assess the risks of smoke or fire from the batteries on Boeing's new 787 jets.
* The Irish government, trying to lighten the staggering debt burden of bailing out some of its biggest banks four years ago, reached a deal on Thursday with the European Central Bank to give the country more time to repay some of those loans.
* In a speech on Thursday, Federal Reserve governor Jeremy Stein, who joined last year, focused on parts of the financial markets that show signs of overheating. Specifically, Stein raised a red flag about junk bonds and mortgage-backed securities, and how investors are financing their purchases of such assets.
* Credit Suisse was among the first to adjust its debt-trading business to the harsher realities of new Basel III regulations, so it can probably weather the 28 percent quarter-on-quarter revenue drop it has just suffered in this segment. Other rivals may be less fortunate.
THE GLOBE AND MAIL
* Alberta Premier Alison Redford's government has frozen MLA pay, her second symbolic cost-cutting move amid warnings of slumping economic fortunes and bitter contract battles with doctors and teachers.
* 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:
* Air Canada's push for global growth is raising worries about its ability to match that expansion with customer service. Calin Rovinescu, the company's chief executive officer, said on Thursday that Air Canada continues to put pressure on its operations to compete as profitably as possible, largely by expanding internationally.
* Former Quebec premier Lucien Bouchard is stepping down as head of the Quebec oil and gas association as uncertainty continues over the future of shale-gas development in the province.
* The storm bearing down on Ontario may not be a genuine winter behemoth, but it is shaping up to be the most substantial snowfall most Ontarians have seen in more than four years, Environment Canada said Thursday.
* The inability to get oil sands crude to the right markets is costing the Canadian economy dearly, according to a new report paid for by the Saskatchewan government. Each stalled pipeline project means a loss to the Canadian economy of between C$30 million and C$70 million every day, said the report penned by the Canada West Foundation, a Calgary-based think-tank.
CHINA SECURITIES JOURNAL
-- Total profits of 19 Chinese brokerages jumped 75.5 percent to 2.70 billion yuan ($433.23 million) in January from the preceding month due to a rebound in China's A-share.
-- China's money market condition could ease after the Spring Festival holiday, following an injection of a record 662 billion yuan into the market by the People's Bank of China on Thursday.
SHANGHAI SECURITIES NEWS
-- China may raise the retail price of gasoline and diesel after the Lunar New Year to track climbing crude prices, analysts said, marking the first fuel price hike this year that could help pare refining losses at oil firms. The price of gasoline may be increased by 0.18-0.22 yuan per litre, while diesel prices could be raised by 0.22-0.26 yuan a litre, the paper said, citing an analyst.
CHINA DAILY (www.chinadaily.com.cn)
-- A growing mountain of debt default cases being brought before courts in Wenzhou, Zhejiang province, is threatening to further derail ongoing financial reforms in the city. According to the latest figures, Wenzhou's intermediate and high court handled 19,511 cases related to private financing, involving some 22 billion yuan.
-- Liquor companies' share prices and sales have slumped before the Lunar New Year, hit by a scandal about plasticizer contamination and a ban on government and military banquets that serve alcohol.
- The use of yuan worldwide surged to a record high in December partly due to increased yuan deposits in Hong Kong, a report showed on Thursday.
Fly on the Wall 7:00 AM Market Snapshot
AECOM Technology (ACM) upgraded to Buy from Underperform at BofA/Merrill
ARM Holdings (ARMH) upgraded to Outperform from Neutral at Credit Suisse
AvalonBay (AVB) upgraded to Buy from Neutral at UBS
BRE Properties (BRE) upgraded to Buy from Neutral at UBS
Barclays (BCS) upgraded to Neutral from Underperform at Macquarie
Biogen (BIIB) upgraded to Buy from Neutral at Citigroup
Discover (DFS) upgraded to Outperform from Neutral at Credit Suisse
Equity Residential (EQR) upgraded to Buy from Neutral at UBS
LRR Energy (LRE) upgraded to Outperform from Neutral at RW Baird
MetroPCS (PCS) upgraded to Neutral from Reduce at Nomura
NetEase.com (NTES) upgraded to Buy from Hold at Deutsche Bank
Renasant (RNST) upgraded to Buy from Hold at Wunderlich
UDR, Inc. (UDR) upgraded to Buy from Neutral at UBS
Westlake Chemical (WLK) upgraded to Neutral from Sell at UBS
Alpha Natural (ANR) downgraded to Fair Value from Buy at CRT Capital
CBL & Associates (CBL) downgraded to Market Perform from Outperform at Raymond James
Cameron (CAM) downgraded to Neutral from Overweight at HSBC
LPL Investment (LPLA) downgraded to Negative from Neutral at Susquehanna
Riverbed (RVBD) downgraded to Hold from Buy at Cantor
Riverbed (RVBD) downgraded to Market Perform from Outperform at FBR Capital
Skullcandy (SKUL) downgraded to Neutral from Buy at Roth Capital
Teva (TEVA) downgraded to Hold from Buy at Canaccord
Trinity Industries (TRN) downgraded to Neutral from Buy at UBS
WGL Holdings (WGL) downgraded to Hold from Buy at Brean Capital
Affymax (AFFY) initiated with an Outperform at JMP Securities
Alnylam (ALNY) initiated with an Outperform at JMP Securities
Celgene (CELG) initiated with an Outperform at JMP Securities
DSW (DSW) initiated with a Buy at Sterne Agee
McDermott (MDR) initiated with a Neutral at HSBC
Onyx Pharmaceuticals (ONXX) initiated with an Outperform at JMP Securities
Pharmacyclics (PCYC) initiated with an Outperform at JMP Securities
Verastem (VSTM) initiated with an Outperform at JMP Securities
VeriFone (PAY) initiated with a Hold at Jefferies
Zebra Technologies (ZBRA) initiated with a Market Perform at Wells Fargo
Charter (CHTR) to acquire Optimum West from Cablevision (CVC) for $1.625B
Expects acquisition to close in 3Q13
FAA to allow Boeing (BA) to conduct 787 test flights
Southeastern Asset Management told Dell (DELL) deal undervalues company, Reuters reports
Believes Dell worth $20 per share. Dell-led consortium: no plans to raise $13.65 per share bid
Corrections Corp. of America (CXW) authorized the company to elect to qualify as REIT
To declare $650M-$700M special dividend
Geokinetics (GOK) launched solicitation of votes for a plan of reorganization
Companies that beat consensus earnings expectations last night and today include:
LinkedIn (LNKD), SunPower (SPWR), Activision Blizzard (ATVI), Hasbro (HAS), Genpact (G), Coinstar (CSTR), athenahealth (ATHN), Regal Entertainment (RGC)
Companies that missed consensus earnings expectations include:
Corporate Office Properties (OFC), Carlisle (CSL), Republic Services (RSG), Aaron's (AAN)
Companies that matched consensus earnings expectations include:
Simpson Manufacturing (SSD), Intermolecular (IMI), Riverbed (RVBD)
- Fed Board Governor Stein pointed to signs of overheating in some corners of the credit markets. He said there isn't an imminent threat to the wider financial system, but highlighted several markets—including junk bonds, mortgage real-estate investment trusts and commercial banks' securities holdings—as areas where potentially troubling developments are emerging, possibly as a result of the Fed's easy-money policies, the Wall Street Journal reports
- For 20 years, Goldman Sachs (GS) has attracted clients to invest in its private-equity funds with the security blanket that the bank and its partners were in it too. But the looming "Volcker rule" is expected to sharply reduce the bank's investment in its own funds. That is forcing Goldman to make major changes in a $50B business. Goldman likely will have to shrink the size of its own investment in its funds to just 3% from as much as 37%, the Wall Street Journal reports
- France would consider taking a stake in PSA Peugeot Citroen (PEUGY), Budget Minister Jerome Cahuzac said, hours after the struggling car maker announced a $5.49B write down, Reuters reports
- Nissan Motor (NSANY) has bucked the optimistic trend among Japanese car makers reporting quarterly results, leaving its annual profit forecast unchanged as sluggish sales weighed on its bottom line while others got a boost from a weakening yen, Reuters reports.
- U.S. airlines (DAL, UAL, JBLU) cancelled about 2,000 flights and braced for additional cancellations from a winter storm that threatens to drop as much as two feet of snow across parts of New England, Bloomberg reports
- The Justice Department’s decision to sue Standard & Poor’s (MHP) has investors asking why Moody’s Investors Service (MCO) and Fitch Ratings weren’t targeted for awarding the same top grades to troubled mortgage bonds and other debt securities, Bloomberg reports
Health Insurance Innovations (HIIQ) 4.666M share IPO priced at $14.00
New Source Energy (NSLP) 4M share IPO priced at $20.00
ZAIS Financial (ZFC) 5.65M share IPO priced at $21.25