Frontrunning: February 6
- Draghi as ECB Master of Suspense Keeps Investors on Edge (BBG)
- Abe lays out detailed plan for expanding defense powers (Nikkei)
- Inflation Fuels Crises in Two Latin Nations (WSJ)
- Obama walks into crossfire of Asian tensions (FT)
- Harvard Makes Professor Disclose More After Blinkx Slides (BBG)
- Hedge Funds Rework Currency Positions in Market Drop (BBG)
- Canada, U.S. Strike Tax-Information Sharing Deal (WSJ)
- Indonesia calls for greater clarity from Fed on tapering (FT)
- Sony to cut 5,000 jobs, split off PC, TV operations (Reuters)
- US shale under fire over thirst for water (FT)
- Carney must avoid another unforced error (FT)
- Australia’s Exports to China Still Firing (WSJ)
- Carney Seeks to Maintain Low-Rate Outlook as U.K. Economy Gains (BBG)
Overnight Media Digest
* The Obama administration will narrow its controversial drone program in Pakistan to target a short list of high-level terrorists, and aim to end it during the prime minister's current term, senior U.S. officials have told their Pakistani counterparts.
* Insurers are facing pressure from regulators and lawmakers about plans that offer limited choices of doctors and hospitals: a tactic the industry said is vital to keep down coverage prices in the new health law's marketplaces.
* CVS Caremark Corp, United States' second-largest pharmacy chain, would stop selling all cigarettes and tobacco products nationwide by October, saying they have no place in a drugstore company that is trying to become more of a health-care provider.
* Apple Inc is facing a claim for about $2 billion in damages from a German patent-holding company, IPCom GmbH, that alleges the U.S. technology giant infringed on a cellphone technology it owns, a German court said Wednesday.
* Twitter Inc's fourth-quarter revenue surged, but so did concerns about the site's ability to grow and engage users. Costs continued to rise faster than revenue, and shares fell after hours.
* Google Inc under a tentative deal with European Commission regulators agreed to tweak the way it presents search results in Europe to address concerns that it is abusing its dominance in online search to favor its own services at the expense of rivals.
* Relations between Bill Gates and Steve Ballmer were strained at times as they worked with the board to find the third CEO in Microsoft Corp's history. The six-month search started with 100 candidates.
* Pandora Media Inc provided guidance for the first quarter and 2014 that missed Wall Street's consensus views, though the Internet-radio service continued to report strong revenue growth in its fourth quarter.
* More than one in six men aged 25 years to 54 years don't have jobs. It is partly a symptom of a U.S. economy slow to recover from the worst recession in 75 years and also a chronic condition that shows how technology and globalization are transforming jobs faster than many workers can adapt.
* Work to expand the Panama Canal has virtually halted, and the group in charge of construction said the project is on the "brink of failure" after talks to resolve $1.6 billion in cost overruns broke down.
* Union Pacific and BNSF Railway allege inadequate repair work led to several derailments in cases that raise questions about whether repair shops or railroads are responsible for equipment safety.
* Government investigators looking into the cyber attacks on Neiman Marcus Group LLC and Target Corp believe the malicious software used in the heists was specifically tailored to exploit vulnerabilities in each retailer's checkout systems.
* Time Warner Inc broke out financial results for HBO for the first time on Wednesday, showing that the premium cable channel is generating far bigger profits than emerging rival Netflix Inc but HBO's revenue is growing at a much slower pace.
* Ralph Lauren Corp reported a 9.7 percent climb in its third-quarter profit. The company whose upscale brands include Polo and Club Monaco has continued to post stronger sales in recent quarters as consumers in the luxury sector have proved to be more resilient after the recession.
* The ranks of U.S. public companies grew last year for the first time since the go-go days of the Internet boom, getting a long-awaited boost from an expanding economy and renewed investor interest in U.S. stocks.
* The arrest of bitcoin advocate Charles Shrem is a blow to a currency that has been red-hot with users and some investors. But "2014 will be like the Industrial Revolution for bitcoin," he says.
* More lenders are introducing fees on checking accounts, just as consumers and business are pouring record amounts into the most basic of banking services.
* Merck & Co unveiled an unusual plan to collaborate with three rivals, Pfizer Inc, Amgen Inc and Incyte Corp to study how Merck's immunotherapy cancer drug performs in combination with other treatments.
* GlaxoSmithKline PLC managed to increase sales marginally last year despite problems in China, reversing two years of falling revenue for the U.K.'s largest drug maker.
* The National Labor Relations Board on Wednesday revived a sweeping proposal to streamline and speed union-organizing elections at companies, positioning the agency for a fight with business groups, which stymied the original 2011 measure in court on a technicality.
* Circassia, a company specializing in treating cat, grass and dust-mite allergies is planning to float an offering on the London Stock Exchange, a move that people familiar with the situation said is aimed at raising 175 million pounds ($285 million), which would rank as one of the biggest U.K. biotech listings ever.
* Akamai Technologies Inc, whose fourth-quarter earnings rose 18 percent, benefited from increasing demand for content over the Internet with its network of servers and other equipment to expedite content delivery.
* Yelp Inc said its fourth-quarter loss narrowed as revenue soared as the Internet company continued to attract more visitors and added local business accounts.
Ben Lawsky, New York's superintendent of financial services, has demanded documents from more than a dozen banks related to foreign exchange trading, as a global probe into possible market manipulation widens.
The banks include Deutsche Bank, Goldman Sachs , Lloyds, Royal Bank of Scotland, and Standard Chartered, one person familiar with the matter said.
Google's three-year antitrust probe is set to end in settlement after it reached a deal with the European Union, agreeing to make concessions on how it displays competitors' links on its website.
Twitter's shares fell as much as 18 percent after the micro-blogging website reported slowing growth in new users and falling engagement, even though its revenue and net loss of $512 million for 2013 were better than expected.
British luxury sports carmaker Aston Martin is recalling nearly 18,000 cars - 75 percent of the cars it built since 2008 - after learning a Chinese sub-supplier had used counterfeit materials in its cars' accelerator pedals.
Disney's first-quarter net income rose by a third to $1.84 billion as the box office hits 'Frozen' and 'Thor: The Dark World' lifted the media group's earnings beyond analysts' forecasts.
* CVS Caremark Corp, United States' largest drugstore chain, announced on Wednesday that it planned to stop selling cigarettes and other tobacco products by October.
* Despite the diminished state of late-night television and technology that has altered viewing habits, the "Tonight" show remains one of the signature franchises of broadcasting and still carries unusual resonance with Jay Leno exiting the stage for the last time on Thursday, making way for Jimmy Fallon.
* The American International Group is continuing its quest to upend an $8.5 billion settlement between Bank of America and a group of mortgage securities investors.
* After years in philanthropy, many wonder how Bill Gates, a luminary of the tech world, will choose to position Microsoft Corp going forward. The last time Bill Gates played an active role at Microsoft, as chief software architect, he witnessed the company muffing its earliest efforts to become a major player in search, smartphones and tablet computers.
* Apple Inc has taken down one of the last remaining iPhone mobile applications that allowed users to buy and sell Bitcoin. The app, named BlockChain, had been downloaded 120,000 times, and was commonly used as a way to hold and spend Bitcoins.
* Google Inc has agreed to a settlement with European competition regulators that leaves the company with a few bruises, yet victorious over all, and would end half a decade of wrangles with antitrust authorities across the globe.
* Twitter has finally acknowledged what any newcomer could have told the company within five minutes of signing up: The messaging service is too hard to use. Discussing the company's fourth-quarter results in a call with analysts, Chief Executive Dick Costolo said that he was working on improving its web software and mobile apps to make it easier for new users to sign up and current ones to find the most relevant information on topics they care about.
* The makers of the blood-thinning drug Pradaxa were so worried that an internal research paper would damage drug sales that some employees not only pressured the author to revise it, but suggested it should be quashed altogether, according to newly unsealed legal documents.
* The Coca-Cola Co agreed on Wednesday to buy a 10 percent stake in Green Mountain Coffee Roasters, as it seeks to cement ties with the fast-growing coffee company.
* Anheuser-Busch InBev, United States' largest brewer, has agreed to buy the Blue Point Brewing Co in a move that could help it capitalize on the popularity of craft beer.
* Investigators say they believe they have identified the entry point through which hackers got into Target Corp's systems, zeroing in on the remote access granted through the retailer's computerized heating and cooling software, according to two people briefed on the inquiry.
* Lazard Ltd said on Wednesday that its profits rose 35 percent in the fourth quarter, as it benefited from improvements in its advisory and asset management businesses.
* Whether or not Mario Draghi and his European Central Bank colleagues plan to do anything about it at the monthly meeting Thursday, many economists are sounding the alarm. It is time, they say, to act defensively against the danger of deflation.
* Growth picked up in the service sector in January, with steady strength in private sector hiring, suggesting that the severe winter weather over the last several weeks had a limited effect on the economy.
* Investors' faith in Puerto Rico's debt appeared undaunted on Wednesday after Standard & Poor's cut the island's credit rating to junk a day earlier.
THE GLOBE AND MAIL
* Ottawa will start routinely sharing vast amounts of financial data about Americans living in Canada with U.S. tax authorities. Canada and the United States signed an agreement on Wednesday that paves the way for full implementation of a controversial U.S. crackdown on offshore tax evasion in 2015.
* Mayor Rob Ford will not attend World Pride in Toronto because he has not gone to a Pride parade yet and he is "not going to change the way I am," he said at the first mayoral debate of the 2014 campaign.
Reports in the business section:
* Ontario is seeking to vastly expand its proposed pension plan, aiming to create a new nationwide retirement savings system. The province announced plans to set up its own pension late last year, after Ottawa rebuffed an attempt to expand the Canada Pension Plan. Now, Ontario is asking the rest of the country to join it, which would effectively produce a second national pension plan, alongside CPP, albeit one controlled jointly by the provinces and territories.
* The Supreme Court of Canada decision that struck down parts of Canada's prostitution laws, but suspended its judgment for a year to let Ottawa come up with a new legislative umbrella, has left the country with a myriad of approaches to prostitution. Several provinces, in fact, have not yet figured what their approach will be, leaving local authorities to figure it out as they go.
* Winter blasted Southern Ontario Wednesday, as two massive weather-related collisions, collectively involving almost 200 vehicles, crippled Highway 401 between Toronto and Cornwall.
* Canadian banks will soon begin collecting detailed citizenship and residency information about their clients, some of which will make its way through the Canada Revenue Agency to authorities in the United States as that country cracks down on tax cheats.
* Partners of law firm Heenan Blaikie LLP, a Canadian legal powerhouse which has for years been a favourite place for retired prime ministers, premiers and cabinet ministers to spend their post-political days, have decided to wind up the firm.
GSK ADDS TEN NEW DRUGS TO LATE STAGE PIPELINE AS IT SEEKS TO MOVE ON FROM CHINA
GlaxoSmithKline has announced plans to launch late stage clinical trials on ten new drugs covering key areas including respiratory disease and cancer.
ASTON MARTIN RECALLS 17,590 CARS OVER ACCELERATOR PROBLEM
Aston Martin is recalling 17,590 sports cars due to a problem with the accelerator pedal. The manufacturer, the favoured brand of the James Bond film franchise, said that the fault risked the driver being unable to maintain or increase engine speed, increasing the risk of a crash.
UK TO GET FIRST DIRECT LINK TO COLOMBIA FOR A DECADE
Heathrow Airport will announce on Thursday a deal with Colombia's national airline that will give the UK its first direct connection to the Latin American country for a decade.
FRENCH CONNECTION ENJOYS BETTER THAN EXPECTED CHRISTMAS
The under-pressure fashion retailer French Connection says its losses over the last year will be lower than expected after a productive Christmas.
SCOTTISH INDEPENDENCE: CABLE SAYS RBS WOULD HAVE TO MOVE TO LONDON
Vince Cable has insisted it is "almost certain" that an independent Scotland would need its own currency and warned that Royal Bank of Scotland would move to London in the wake of a breakaway.
ANGLO IRISH BANK CHIEFS' LENDING PRACTICES 'ABSOLUTELY ILLEGAL', COURT TOLD
Former executives at the Anglo Irish Bank broke company law and carried out lending practices that were "absolutely illegal", a Dublin court heard on Wednesday.
ROYAL MAIL SEALS STAFF HARMONY WITH 9 PCT PAY DEAL
Postal workers have voted to accept a 9 percent pay rise over three years and a 200 pound ($330) Christmas bonus in a ground-breaking pay and conditions deal which indicates that both peace and goodwill has finally broken out at the Royal Mail .
OSBORNE'S AUSTERITY DRIVE COULD END IN 2015
Britain may be able to scrap austerity shortly after the 2015 election because the pace of the recovery alone could be enough to fix the public finances, according to analysis from one of the country's leading think tanks.
STEPHEN HESTER COUP REDUCES 'CHANCES OF A TAKEOVER' AT RSA
The decision to appoint Stephen Hester as RSA Insurance boss has reduced the likelihood of a takeover of the troubled group and a fire sale of any its assets, analysts claimed today.
BP'S LEGAL BILL FOR THE GULF OIL SPILL DISASTER SOARS TO $1 BLN
The Gulf of Mexico oil spill has cost BP more than $1 billion in lawyers' fees, the company revealed yesterday, as it announced a further $150 million charge to cover its external legal expenses for the disaster.
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled for today include:
Jobless claims for week of Jan. 1 will be reported at 8:30--consensus 337K
Trade balance for December will be reported at 8:30--consensus $36B deficit
Q4 productivity will be reported at 8:30--consensus up 2.6%
Q4 unit labor costs will be reported at 8:30--consensus down 0.7%
Akamai (AKAM) upgraded to Neutral from Underperform at Credit Suisse
American Express (AXP) upgraded to Buy from Neutral at Janney Capital
Booz Allen (BAH) upgraded to Buy from Neutral at BofA/Merrill
Boyd Gaming (BYD) upgraded to Outperform from Market Perform at FBR Capital
Buffalo Wild Wings (BWLD) upgraded to Buy from Hold at Miller Tabak
CACI International (CACI) upgraded to Buy from Hold at Stifel
Compass Minerals (CMP) upgraded to Neutral from Underperform at Credit Suisse
Coty (COTY) upgraded to Outperform from Market Perform at Wells Fargo
Crown Holdings (CCK) upgraded to Outperform from Market Perform at Wells Fargo
Douglas Dynamics (PLOW) upgraded to Outperform from Neutral at RW Baird
Fifth Third Bancorp (FITB) upgraded to Buy from Neutral at BofA/Merrill
Glu Mobile (GLUU) upgraded to Overweight from Neutral at Piper Jaffray
Green Dot (GDOT) upgraded to Neutral from Sell at Janney Capital
Green Mountain (GMCR) upgraded to Hold from Sell at Stifel
Intelsat (I) upgraded to Outperform from Market Perform at Wells Fargo
Lennar (LEN) upgraded to Conviction Buy from Neutral at Goldman
Level 3 (LVLT) upgraded to Buy from Hold at Canaccord
Mettler-Toledo (MTD) upgraded to Buy from Neutral at UBS
Veeco (VECO) upgraded to Overweight from Neutral at JPMorgan
WEX Inc. (WEX) upgraded to Outperform from Market Perform at Wells Fargo
Yelp (YELP) upgraded to Outperform from Market Perform at Raymond James
M.D.C. Holdings (MDC) downgraded to Underperform from Outperform at Raymond James
Meritage Homes (MTH) downgraded to Neutral from Buy at Goldman
Roadrunner (RRTS) downgraded to Market Perform from Strong Buy at Raymond James
Ryland Group (RYL) downgraded to Buy from Conviction Buy at Goldman
Synalloy (SYNL) downgraded to Neutral from Buy at Sterne Agee
Twitter (TWTR) downgraded to Hold from Buy at Stifel
Twitter (TWTR) downgraded to Sell from Neutral at UBS
Twitter (TWTR) downgraded to Underweight from Neutral at Atlantic Equities
Coca-Cola (KO) said it would buy 10% stake in Green Mountain (GMCR) for $1.25B
Sony (SNE), JIP sign memorandum of understanding for sale of PC business
Sony (SNE) says will cut 5,000 jobs
Harley-Davidson (HOG) raises quarterly dividend 31%, announces 20M share repurchase
CME Group (CME) increases dividend 4% to 47c per share
Cisco (CSCO) and Samsung (SSNLF) enter into patent cross-license agreement
Twitter (TWTR) says 'doubling down' in 2014 to accelerate growth in core user base
AstraZeneca (AZN) continues suspension of share buybacks, sees restructuring costs higher by $200M
Companies that beat consensus earnings expectations last night and today include:
Medidata Solutions (MDSO), AstraZeneca (AZN), Dunkin' Brands (DNKN), Carlisle (CSL), Sequans (SQNS), Towers Watson (TW), NXP Semiconductors (NXPI), O'Reilly Automotive (ORLY), Education Management (EDMC), Matrix Service (MTRX), Sierra Wireless (SWIR), Badger Meter (BMI), Amerco (UHAL), Schweitzer-Mauduit (SWM), Green Mountain (GMCR), Planar Systems (PLNR), Hanover Insurance (THG), Lincoln National (LNC), Assurant (AIZ), Synchronoss (SNCR), Exponent (EXPO), TTM Technologies (TTMI), FMC Corporation (FMC), EnerSys (ENS), FEI Company (FEIC), Glu Mobile (GLUU), Con-way (CNW), Green Plains (GPRE), Clearwater Paper (CLW), Digital River (DRIV), SolarWinds (SWI), Standard Pacific (SPF), Pandora (P), CBRE Group (CBG), FormFactor (FORM), Callidus Software (CALD), TriQuint (TQNT), Stericycle (SRCL), Shutterfly (SFLY), Mettler-Toledo (MTD), iRobot (IRBT), RealD (RLD), EMCORE (EMKR), Twitter (TWTR), Akamai (AKAM), OraSure (OSUR), Affymetrix (AFFX)
Companies that missed consensus earnings expectations include:
Ingredion (INGR), Sally Beauty (SBH), Invacare (IVC), RetailMeNot (SALE), Flowers Foods (FLO), Prestige Brands (PBH), Diamond Offshore (DO), Aetna (AET), Evolution Petroleum (epm), Geospace (GEOS), WGL Holdings (WGL), Rand Logistics (RLOG), Marathon Oil (MRO), Blue Capital (BCRH), Tesoro Logistics (TLLP), PennyMac (PFSI), Wabash (WNC), Allied World (AWH), Atmel (ATML), Brookdale Senior Living (BKD), Select Comfort (SCSS), Roadrunner (RRTS), Allstate (ALL), Prudential (PRU), FleetCor (FLT), Wesco Aircraft (WAIR), Fiserv (FISV)
Companies that matched consensus earnings expectations include:
Hi-Crush Partners (HCLP), Mueller Industries (MLI), Gildan Activewear (GIL), Solera (SLH), Entropic (ENTR), Yelp (YELP)
Volvo (VOLVY) planning 4,400 job cuts this year, AP reports
Amazon (AMZN) acquires 'Killer Instinct' developer Double Helix, TechCrunch reports
JPMorgan (JPM) reviews bids for Global Special Opportunities unit, WSJ says
AstraZeneca (AZN): Headwinds to remain challenging, FT reports
Ford (F) cutting close to 300 jobs at its Australian manufacturing facility, Bloomberg reports
Target (TGT) hackers got into systems by using HVAC credentials, NBC News reports
Boeing (BA) sees 'tough' defense business climate and flat margins, Reuters reports
BlackRock (BLK) CEO says market decline 'old-fashioned correction,' Bloomberg says
Alcatel-Lucent (ALU) in exclusive discussions to sell phone unit to China Huaxin, WSJ reports
CM Finance (CMFN) 6.667M share IPO priced at $15.00
Constellium (CSTM) files to sell 25M Class A Ordinary shares for holders
DHT Holdings (DHT) files to sell $227.3M of common stock in direct offering
Egalet (EGLT) 4.2M share IPO priced at $12.00
Eleven Biotherapeutics (EBIO) 5M share IPO priced at $10.00
Envision Healthcare (EVHC) 27.5M share Secondary priced at $30.50
Ladder Capital (LADR) 13.25M share IPO priced at $17.00
Revance Therapeutics (RVNC) 6M share IPO priced at $16.00
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