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Frontrunning: June 26

Tyler Durden's picture




 
  • Scalpel in Hand, Chinese Premier Li Stirs Reform Hopes (Reuters)
  • Obama Sets Conditions for Keystone Pipeline Go-Ahead (FT)
  • World’s Most Indebted Households Face Rate Pain (BBG)
  • SAC Probers Weighing 'Willful Blindness' Tack (WSJ)
  • Draghi Says ECB Ready to Act, Calls for Investment Over Tax (BBG)
  • U.S. Tops China for Foreign Investment (WSJ)
  • Basel Presses Ahead With Plans to Limit Bank Borrowing (FT)
  • Gillard Ousted as Australia PM by Rival Rudd (FT)
  • Japan Economic Strength Will Show in Stocks, Nishimura Says (BBG)
  • Portugal Throws Open Europe’s Them-And-Us Austerity Divide (BBG)

 

Overnight Media Digest

WSJ

* The Supreme Court nullified a core provision of the Voting Rights Act in an ideologically divided ruling that eroded a landmark of the civil-rights era and threw the issue into the lap of a gridlocked Congress.

* A far reaching plan to fight climate change detailed by President Obama would profoundly reshape the way the U.S. produces and consumes electricity.

* The Federal Reserve chairman's news conference a week ago was widely seen as a signal that the Fed is preparing to wean the economy off easy money. But the markets have misread Ben Bernanke.

* The selloff in China's stock market abated on Tuesday, but a key issue for investors remains: The country's financial system puts state-owned companies ahead of private businesses.

* State regulators are warning virtual-currency exchanges and other companies that deal with digital currency Bitcoin, that they could be shut down if their activities run afoul of state money-transmission laws.

* Bond king Bill Gross and his protégé Mark Kiesel are among the hardest hit from bonds' recent declines, a sign that the selloff has caught some of the most trusted hands in the investing community.

* German government bonds, known as Bunds, have weathered the global credit-market selloff better than their major euro zone peers. Belgium, France and the Netherlands are underperforming notably, a sign that Europe remains vulnerable.

* U.S. officials are investigating whether hedge fund titan Steven Cohen purposely avoided learning about alleged criminal activity at his firm SAC Capital Advisors and, if so, whether that behavior could form an element of any charges against him, according to people familiar with the matter.

* U.S. efforts to rein in "too big to fail" banks in the wake of the 2008 financial crisis have fallen well short and must be replaced with more aggressive measures to split up or downsize the largest financial firms, a pair of Federal Reserve bank presidents and a top regulatory official will tell lawmakers Wednesday.

* A Delaware business court upheld corporate bylaws enacted by Chevron Corp and FedEx Corp that require unhappy shareholders to sue in Delaware in a closely watched case that is likely to have broad impact.

 

FT

Finance minister George Osborne is hoping that the long-term capital commitments to road, rail, energy, housing and broadband projects by the coalition government will help somewhat take the sting out of the 11. 5 billion pounds ($24.65 billion) in spending cuts he will announce on Wednesday.

Outgoing Bank of England governor Sir Mervyn King defended the U.S. Federal Reserve's decision on quantitative easing, insisting that it would be economic data that determined monetary policy around the world.

U.S. law firm Brown Rudnick has been hired to represent small investors in Britain's Co-operative Bank who are fighting back against the struggling lender's planned debt restructuring.

Dublin is worried that revelations of damaging taped conversations between executives at Anglo Irish Bank - in which they laugh about abusing Ireland's bank guarantee to attract deposits - could hurt the country's chances of getting debt relief from other EU members.

Yahoo Chief Executive Marissa Mayer, who is also a high profile board member of Walmart, was ambushed by questions over work practices at the world's largest retailer at a Yahoo shareholder meeting.

A surge in bond yields could wreck the recovery in global banks' balance sheets, according to senior bank executives and analysts preparing for quarterly earnings season.

 

NYT

* Chinese investors have been buying marquee commercial properties in New York and other American cities. The deals go beyond shimmering glass-and-steel towers: Chinese and Hong Kong investors have also become the second-largest foreign buyers of United States homes.

* The Standard & Poor's Case-Shiller home price index on Tuesday showed a 12 percent increase in prices in 20 cities from April 2012 to April 2013, the largest gain since early 2006, when home values began to level off in advance of the market collapse.

* The Chinese central bank reassured investors worried about a lingering credit squeeze and declared that it had already been selectively supporting bank liquidity, as Chinese stock markets swung wildly again Tuesday after several days of volatility.

* In the financial equivalent of the Tortoise and the Hare, Royal Bank of Canada has risen up the ranks of the biggest stock trading firms in the United States by embracing a rather Canadian restraint and prudence. The bank has made inroads with a technology that it says delays trades just enough to defuse the advantages sought by high-speed traders.

* After almost a week of silence on why Men's Wearhouse fired founder George Zimmer as chairman, the clothing retailer said on Tuesday that it was because of a power struggle with the board.

* Car-sharing services that don't require users to return a vehicle to a lot are already popular in Berlin, and have now come to many cities in the United States.

* A plan developed by the Greek government and its international creditors to recapitalize the country's banks involves an unusual twist as stock offerings go: the new shares in the banks will give investors free and potentially lucrative warrants that will entitle them to buy many more shares in the future at a predetermined price.

* Senators pick their battles, and by Tuesday, members in both parties had decided not to have one with President Obama over his nomination of Penny Pritzker, the billionaire hotel heiress, to be commerce secretary. In a 97-to-1 vote, they confirmed her to join the cabinet.

* Search engine companies should more clearly distinguish on their webpages between advertising, paid content and the results of an Internet search, the Federal Trade Commission told two dozen search engine providers on Tuesday.

* The Food and Drug Administration announced on Tuesday that for the first time it had begun exercising its power to regulate cigarettes and other tobacco products, an authority it was given under a 2009 law supported by President Obama.

* BP is placing full-page advertisements in three of the nation's largest newspapers on Wednesday as the company mounts an aggressive campaign to challenge what could be billions of dollars in settlement payouts to businesses after its 2010 oil spill in the Gulf of Mexico.

* Until recently, ads with lesbian, gay, bisexual and transgender (LGBT) themes were usually limited to media those consumers watched and read. However, LGBT ads have been getting broader exposure now. While targeted media and events remain part of the game plan, they are also running in mainstream media.

* Google Ventures does things differently from most venture capital firms, like seeking investment advice from all its staff and sharing carried interest with everyone in the firm, not just partners.

Canada

THE GLOBE AND MAIL

* Canadian police have charged Mokhtar Belmokhtar, a fugitive al-Qaeda-aligned bandit based in the Sahara Desert, with the kidnapping of two Canadian diplomats almost five years ago.

* A group of South American health professionals is looking to follow Vancouver's lead in reducing harm when it comes to injection-drug use. The South American delegation, which arrived in Vancouver on Tuesday, will spend three days meeting local health-care providers and researchers, including managers at Insite, Vancouver's supervised injection-drug clinic.

* Millions of Canadians living in many parts of the country could find their homes declared uninsurable, as the insurance industry grapples with skyrocketing water damage claims. That is the grim future predicted by Blair Feltmate, chair of the Climate Change Adaptation Project at the University of Waterloo.

Reports in the business section:

* Ice Wireless Inc plans to launch its 3G wireless phone and Internet services in 10 communities across the three territories this September, with six more markets to be added next year. It's a direct challenge to BCE Inc subsidiary NorthwesTel Inc, which is the dominant provider of telecommunications services in the North.

* Keystone XL, the contentious pipeline project intended to funnel Alberta's oil sands crude, will be rejected unless it is clear that it won't exacerbate global warming, President Barack Obama said Tuesday in a major speech outlining sweeping and tougher measures to curb carbon emissions.

* Goldman Sachs Group Inc has topped Mergermarket's list of financial advisers for the value of announced transactions so far this year in Canada. The New York-based giant chalked up a total value of $20.1 billion in deals between Jan. 1, 2013, and June 19, 2013, according to the ranking.

NATIONAL POST

* Of all the places Iran might have expected an ultimatum from - the UN, the International Atomic Energy Agency, Washington, Jerusalem - Canada's foreign ministry was probably not high on the list. On a recent trip to Israel, Foreign Affairs Minister John Baird said he was giving Iran three months to set aside its presumed nuclear ambitions. ()

* A Canadian Muslim convert imprisoned in Mauritania since 2011 has told Amnesty International he was tortured into signing a confession that said he intended to join al-Qaeda in Mali.

* Canadian diplomats and military officers posted abroad were encouraged to downplay a scathing report by the auditor general on the F-35 stealth fighter in discussions with their foreign counterparts last year, emails show.

FINANCIAL POST

* BlackBerry is joining forces with Maple Leaf Sports & Entertainment in a deal that will see Canada's smartphone maker partner with the country's largest sports conglomerate to create new mobile applications and services that will enable Toronto sports fans to interact with their favourite teams.

* Two of Canada's largest medical diagnostics laboratory operators - LifeLabs Medical Laboratory Services and CML Healthcare Inc - are joining forces in a friendly C$1.22 billion ($1.16 billion) takeover deal, a move that would make the new company the dominant player in Ontario.

* Canada's broadcast regulator is poised to issue its decision on BCE Inc's friendly bid to buy Astral Media Inc this Thursday. The Canadian Radio-television and Telecommunications Commission said Tuesday that is when it plans to release its decision on the $3.4 billion deal.

* Bombardier Inc has submitted its paperwork to Transport Canada to get a flight permit for the first flight of its new CSeries aircraft. The Montreal-based manufacturer is expected to provide an update on the new aircraft program Wednesday, including the date of its first flight.

 

China

SHANGHAI SECURITIES NEWS

-- The People's Bank of China statement about the recent money market squeeze, which was issued late on Tuesday, indicates that the central bank wants to teach a lesson to banks which have been too aggressive in conducting interbank business.

-- Many banks, including the Industrial and Commercial Bank of China , told this newspaper that they were not short of liquidity despite an overall squeeze in the country's money markets.

-- China South Locomotive and Rolling Stock Corp Ltd said its controlling shareholder has increased his domestic A-share holdings in the company. Some Chinese companies' main shareholders have recently bought new shares in their listed arms as share prices have slumped.

CHINA SECURITIES JOURNAL

-- The squeeze in China's money markets is expected to ease in July but some brokerages believed that liquidity will remain relatively tight for the coming third quarter.

-- China's Minsheng Bank said it has had no problems with its commercial paper business after some market talk of such problems in the firm during the recent money market squeeze.

CHINA DAILY

-- A failure by China and the European Union to reach a compromise in August over the solar panel dispute will deal a heavy blow to the global new-energy industry, experts said.

PEOPLE'S DAILY

-- Chinese companies have shown increasing interest in investing in Latin American countries. Bilateral trade is expected to reach $300 billion in 2013 from $261.2 billion in 2012.

 

Fly On The Wall 7:00 Am Market Snapshot

ANALYST RESEARCH

Upgrades

ARM Holdings (ARMH) upgraded to Buy from Hold at Benchmark Co.
ARM Holdings (ARMH) upgraded to Overweight from Neutral at Piper Jaffray
Adobe (ADBE) upgraded to Buy from Hold at Jefferies
Alliance Data (ADS) upgraded to Buy from Neutral at SunTrust
Allot Communications (ALLT) upgraded to Buy from Hold at Wunderlich
Banco Bilbao (BBVA) upgraded to Neutral from Sell at Citigroup
Banco Santander (SAN) upgraded to Neutral from Sell at Citigroup
Comfort Systems USA (FIX) upgraded to Buy from Hold at KeyBanc
Health Net (HNT) upgraded to Outperform from Neutral at Credit Suisse
Home Bancshares (HOMB) upgraded to Buy from Hold at Wunderlich
Lam Research (LRCX) upgraded to Buy from Underperform at BofA/Merrill
Oxford Resource (OXF) upgraded to Market Perform from Underperform at Wells Fargo
Pandora (P) upgraded to Outperform from Neutral at Cowen
Rackspace (RAX) upgraded to Outperform from Market Perform at Wells Fargo
Santander Chile (BSAC) upgraded to Overweight from Neutral at JPMorgan

Downgrades

Axiall (AXLL) downgraded to Neutral from Buy at SunTrust
Barrick Gold (ABX) downgraded to Neutral from Outperform at Credit Suisse
Lufkin (LUFK) downgraded to Market Perform from Outperform at Wells Fargo
Mosaic (MOS) downgraded to Neutral from Buy at Citigroup
Netgear (NTGR) downgraded to Sell from Neutral at Goldman
Rubicon (RBCN) downgraded to Neutral from Overweight at JPMorgan

Initiations

Air Products (APD) initiated with a Buy at SunTrust
Alliance Data (ADS) initiated with a Buy at Deutsche Bank
Global Partners (GLP) resumed with a Market Perform at Wells Fargo
Google (GOOG) initiated with a Buy at Janney Capital
Matador (MTDR) initiated with a Buy at Wunderlich
Orbitz (OWW) initiated with a Buy at Ascendiant
Praxair (PX) initiated with a Buy at SunTrust
Splunk (SPLK) initiated with an Outperform at Wedbush

HOT STOCKS

U.S. senators introduced bill to replace Fannie Mae (FNMA), Freddie Mac (FMCC)
Williams' (WMB) board approved Bluegrass Pipeline project (BWP)
Marathon Oil (MRO) announced $1.5B sale of interest in Angola Block 31
UPS (UPS) said employees approved National Master contract
BlueLinx (BXC) announced restructuring plan, sees Q2 charges
S&P raised U.S. Silica (SLCA) rating to 'BB-' from 'B+'; outlook stable
Eastman Kodak (EKDKQ) received court approval for disclosure statement

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
AeroVironment (AVAV), Apollo Group (APOL)

Companies that missed consensus earnings expectations include:
Park Electrochemical (PKE)

Companies that matched consensus earnings expectations include:
Apogee Enterprises (APOG), Smith & Wesson (SWHC), SYNNEX (SNX)

NEWSPAPERS/WEBSITES

  • For the first time since 2001, the U.S. knocked China out of first place in an annual survey of executives world-wide rating favorable places for foreign direct investment, according to A.T. Kearney, the Wall Street Journal reports
  • Square Inc., the payments company known for its quarter-sized credit-card readers, is taking its business online, pitting it against PayPal (EBAY), even as it’s moving more of its service into bricks-and-mortar retailers, the Wall Street Journal reports
  • Global banking regulators have taken a tough line on how much risk banks can take on in a move that will mostly affect lenders holding large amounts of financial derivatives. The Basel Committee on Banking Supervision published the methodology banks across the world must use to calculate their leverage ratio, Reuters reports
  • The German cartel office said it would have to examine very closely further consolidation plans in the country's cable market, which is currently witnessing a takeover battle for Kabel Deutschland by Vodafone (VOD) and Liberty Global (LBTYA), Reuters reports
  • Toyota’s (TM) Lexus has “squandered its time” in China, an LMC Automotive analyst said. While the Lexus lists for less than the BMW in the U.S., in China it’s $13,000 more because the German automaker produces its cars in the country, whereas made-in-Japan Lexus faces a 25% tariff, Bloomberg reports
  • The French banking regulator fined UBS’s (UBS) unit in the country $13.1M and reprimanded it for insufficiencies in controls and compliance with French clients, Bloomberg reports

SYNDICATE

Cinedigm Digital (CIDM) files to sell Class A common stock
Luxoft (LXFT) 4.092M share IPO priced at $17.00
NanoString Technologies (NSTG) 5.4M share IPO priced at $10.00
OMA Airports (OMAB) confirms postponement of secondary offering

 

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Wed, 06/26/2013 - 08:07 | 3694076 Catullus
Catullus's picture

* A far reaching plan to fight climate change detailed by President Obama would profoundly reshape the way the U.S. produces and consumes electricity.

 

From most of the industry accounts, whatever Obama announced yesterday was meaningless or already being done. What will shut down more coal plants in the east than anything else? The fact that power prices and capacity prices (a meaningless price rider scheme made up by the wonks at MIT) are at generational lows. 

 

Wed, 06/26/2013 - 08:16 | 3694089 slaughterer
slaughterer's picture

Big tech/data names should lead today based on rotation averages.  

Wed, 06/26/2013 - 08:44 | 3694077 Call me Ishmael
Call me Ishmael's picture

Wompum

Wed, 06/26/2013 - 08:09 | 3694079 Zer0head
Zer0head's picture

repost

No indication if this guy facing 13 years in Prison was a ZH reader but probably he was

At least now when people say no one went to jail cause of the banking crisis, they can be proven wrong

http://www.sandiegoreader.com/weblogs/news-ticker/2013/jun/23/he-chalks-...

Wed, 06/26/2013 - 09:07 | 3694272 shovelhead
shovelhead's picture

Bank cop has grease with locals.

Felony assault with chalk.

Chalky dies in prison.

The End.

This cautionary tale sponsored by Bank of America.

Wed, 06/26/2013 - 10:00 | 3694459 monad
monad's picture

"One day he drew Octopus arms protruding out from the bank walls. At the ends of the arms, stuck to its tentacles, were wads of cash.
Flushing out the bankster moles.
Forget 13. He has no priors, nonviolent, at most he gets probation and a fine. The Boa pursuing this does far more damage to the cartel than his visual combat. Their damages are (again) self inflicted.

Wed, 06/26/2013 - 08:17 | 3694090 buzzsaw99
buzzsaw99's picture

message from wall street: treasurys and gold are risky, stocks are safe. that is all.

Wed, 06/26/2013 - 08:19 | 3694093 fonzannoon
fonzannoon's picture

LOL

Wed, 06/26/2013 - 08:25 | 3694109 Sudden Debt
Sudden Debt's picture

Can I interest you in a CDI of CDS? BULLETPROOF!! SURE TO WIN!!

Anybody who isn't risking their last dollar in this market ISN'T A PATRIOT!!

Only those who are risking their lives in the middle east for the Fortune 500's don't have to buy stocks... they can also apply for patriotisme...

Wed, 06/26/2013 - 08:23 | 3694101 Sudden Debt
Sudden Debt's picture

The FED played the deflation game also in the 30's.

First deflation, than inflation and everybody got wiped out... and bankers ruled the world since than.

When this game is played, they'll own it all.

Wed, 06/26/2013 - 09:17 | 3694305 shovelhead
shovelhead's picture

Well then they better do something about the local cafe here if their going to own it...

Ever since the cook had to serve time for drunk driving, the place has gone to hell. He may be a shitty driver but he's a damn virtuoso with a breakfast griddle.

Get him back on the job as a community service sentence.

Wed, 06/26/2013 - 11:48 | 3695168 Handful of Dust
Handful of Dust's picture
The world’s largest and most controversial seed company posts weak earnings

 

 

Monsanto’s third-quarter numbers:  Not so hot. Sales were up 0.7%. Profits were down about 3% to $909 million.

 

http://qz.com/97876/the-worlds-largest-and-most-controversial-seed-compa...

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