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Frontrunning: December 18
- Swiss National Bank Starts Negative Interest Rate of 0.25% to Stave Off Inflows (BBG)
- Putin Strikes Uncompromising Stance Over Crisis Gripping Russia (BBG)
- Sony cancels North Korea movie in apparent win for Pyongyang hackers (Reuters)
- U.S. Said Set to Blame North Korea for Sony Cyber Attack (BBG)
- China’s Short-Term Borrowing Costs Surge as Demand for Money Grows (WSJ)
- Russia Currency Market Bends But Doesn’t Break (BBG)
- Jeb Bush Puts Pressure on Chris Christie for 2016 (WSJ)
- From joy to outrage, Florida's Cuban-Americans greet new U.S. policy (Reuters)
- Russians Quit London Luxury Homes as Only Super-Rich Stay (BBG)
- Draghi Counts Cost of Outflanking ECB’s Home Nation in QE (BBG)
- Couche-Tard to Buy Pantry for $860 Million (WSJ)
- China is Planning to Purge Foreign Technology and Replace With Homegrown Suppliers (BBG)
- Yellen Makes It Clear That Fed’s Patience on Rates Has Limits (BBG)
- Chinese Criminals Blamed for Record Japan Bank Cybertheft (BBG)
- Oldest U.S. black college on verge of financial collapse (Reuters)
- Barclays Keeps Burning Shareholders as Analysts Push Stock (BBG)
Overnight Media Digest
WSJ
* Sony Pictures canceled its planned release of "The Interview" after hackers threatened violence against theaters that played the film, as U.S. officials concluded that North Korea was behind the broad cyberattack on the company. (http://on.wsj.com/1zyaZll)
* Damaging revelations emerging from the computer assault on Sony Corp are playing like a horror movie in America's executive suites, prompting companies to review security measures and reconsider what is said in an email. (http://on.wsj.com/1wjOuRt)
* Fresh off a failed takeover bid that would have lowered its taxes and diversified its product lineup, drugmaker AbbVie Inc is hoping for regulatory approval of its first significant new product in a decade: a multidrug regimen for the liver disease hepatitis C. (http://on.wsj.com/1DQ2Kqc)
* The European Union is considering Uber's latest legal maneuver to block a new French law that could upend how the company operates. (http://on.wsj.com/1AJyhEa)
* The owner of the New York Stock Exchange is pushing a major overhaul of the U.S. stock market aimed at helping exchanges reclaim their role at the center of trading. (http://on.wsj.com/13capyb)
* Oracle Corp's revenue rose 3 percent during the quarter ended in November, the first one with co-chief executives Safra Catz and Mark Hurd at the helm. (http://on.wsj.com/1J4sQG4)
* Business leaders warned of disruptions in the insurance and commercial real-estate markets after Congress adjourned without extending the federal government's terrorism insurance program. (http://on.wsj.com/1J6dFvO)
* A batch of leaked emails involving a Snapchat board member show the startup's rapid rise to be the work of Evan Spiegel, the company's 24-year-old co-founder and chief executive with a distaste for Silicon Valley and its conventions. (http://on.wsj.com/1x1evqz)
* The White House's move to normalize ties with Cuba could give U.S. companies access to a market that's been largely off-limits for more than a half century but has less commercial allure than it once did. (http://on.wsj.com/1w1g94u)
* Australia's most populous state New South Wales, said it will go ahead with the partial privatization of its electricity network, as it attempts to raise 20 billion Australian dollars ($16.26 billion) to spend on new infrastructure such as roads. (http://on.wsj.com/13e9v4b)
* A U.S. District Court rejected Brazilian mining company Vale SA's bid to dismiss a lawsuit alleging it conspired with Israeli billionaire Benjamin Steinmetz to take a West African mine away from rival Rio Tinto Plc. (http://on.wsj.com/1zyiLM6)
* Italian fashion firm Roberto Cavalli SpA and private-equity fund Clessidra SGR said they have entered exclusive talks to sell a majority stake in the Cavalli group to the fund. (http://on.wsj.com/1sI3R6J)
* China's Ministry of Agriculture approved a controversial biotech corn product that has been blamed for the collapse of U.S. corn exports to the big Asian market. (http://on.wsj.com/1wH7RDS)
FT
UK's four major mobile operators have agreed on a deal with the government to provide mobile coverage to 90 percent of the region's geography by 2017. Sajid Javid, the culture secretary, said the deal would eliminate poor coverage, which plagues more than a fifth of the country.
UK's chancellor George Osborne said the government will reduce its holding in the Lloyds Banking Group from 25 percent to 20 percent hoping to raise 3 billion pounds ($4.67 billion).
Catlin Group Ltd, operator of the biggest syndicate in the Lloyd's of London insurance market, said it received a takeover offer from New York-listed XL Group, valuing the company at 2.6 billion pounds.
Sony Pictures has decided not to release its controversial comedy film "The Interview," after threats of a terror attack prompted America's five biggest movie chains to decide against screening the film.
NYT
* Russia's finance ministry said it was prepared to sell as much as $7 billion of its foreign currency reserves to support the rouble, which an official called "extremely undervalued." (http://nyti.ms/1AJsZIZ)
* The turmoil in the Russian economy appears to be encouraging Moscow to seek compromise in the crisis over Ukraine, although President Vladimir V. Putin has proved so erratic in past months that Western leaders are wary of proclaiming progress, officials and analysts said. (http://nyti.ms/1DQ2F5C)
* President Obama ordered the restoration of full diplomatic relations with Cuba and the opening of an embassy in Havana for the first time in more than a half-century as he vowed to "cut loose the shackles of the past" and sweep aside one of the last vestiges of the Cold War. (http://nyti.ms/1r1y92X)
* American officials have concluded that North Korea was "centrally involved" in the hacking of Sony Pictures computers, even as the studio canceled the release of a far-fetched comedy about the assassination of the North's leader that is believed to have led to the cyberattack. (http://nyti.ms/1wjKSyL)
* Sony Pictures Entertainment dropped plans for its Christmas Day release of "The Interview," a movie that depicts the assassination of the North Korean leader Kim Jong-un, after receiving a terror threat against theaters. (http://nyti.ms/1x18Gtg)
* While declaring that budget rules "are made for everybody," the European Union's economic policy chief says that "sanctions are always a failure" as they only make the target country "feel stigmatized and create a backlash in public opinion." (http://nyti.ms/1zwFVDM)
* The Obama administration, seeking to cut off the flow of oil to the government of President Bashar al-Assad, imposed penalties on five people and six companies it said were defying American sanctions and helping Syria's government attack its own citizens. (http://nyti.ms/1xrTTYi)
* Janet L. Yellen, the Federal Reserve chairwoman, said that the Fed still expected to start raising interest rates next year, but that it would wait patiently for the right time and did not expect to begin any earlier than late April. (http://nyti.ms/13AHnZO)
* A former Countrywide Financial executive who became a whistle-blower is collecting more than $57 million for helping federal prosecutors force Bank of America Corp to pay a record $16.65 billion penalty in connection with its role in churning out shoddy mortgage and related securities before the financial crisis. (http://nyti.ms/1xrU2ef)
* The British government said it planned to further reduce its stake in Lloyds Banking Group Plc through a measured sale of a portion of its holdings over the next six months. (http://nyti.ms/1J66sMv)
Canada
THE GLOBE AND MAIL
** Canadian Pacific Railway Ltd Director Bill Ackman says the plunge in oil prices that has hit the Calgary-based company's share price will dampen growth at the company. Canadian Pacific has not altered its revenue guidance as oil has plunged 43 percent since Aug. 1, raising fears energy producers will slash production and cut rail shipments. (http://bit.ly/13BwXt4)
** Canadian businesses are beginning to calculate the fallout from the U.S. move to open up relations with Cuba, which could eventually generate opportunities for some and increased competition for others. While the moves by U.S. President Barack Obama to ease economic, travel and diplomatic relations between the United States and Cuba are small steps and fall far short of an end to a decades-old trade embargo, they could lead to a broader opening up of relations. (http://bit.ly/1xs6v1z)
** Alberta's political lines were redrawn on Wednesday as the head of the Official Opposition led the bulk of her Wildrose Party into the Progressive Conservative establishment she spent the past five years attacking on a daily basis. The mass defection of nine of 14 members of legislative assembly effectively ends the Wildrose as a political force in Alberta and is a resounding victory for Premier Jim Prentice. (http://bit.ly/1DQ7yM0)
NATIONAL POST
** The diplomatic breakthrough between the United States and Cuba changes very little for Sherritt International Corp and the dozens of other Canadian companies active in Cuba. But a potential lifting of the U.S. embargo would have a transformative impact on them. (http://bit.ly/1wHt804)
** Rogers Communications Inc has filed an application to block its rival, BCE Inc, from buying wireless phone retailer Glentel Inc in a previously announced deal valued at C$670 million ($578 million) in stock, cash and debt. (http://bit.ly/1GuzByE)
** Stuck with massive liabilities and no way to grow production in its core area, Niko Resources Ltd, once an investor-darling with shares trading in triple digits, has put itself up for sale. Niko has posted quarter after quarter of net losses partly as a result of the Indian government's control of the country's natural gas prices and partly due to its liabilities in Indonesia and Trinidad. (http://bit.ly/1w1Mg43)
Britain
The Times
GOVERNMENT TO 'DRIBBLE OUT' 3 BILLION POUNDS OF LLOYDS SHARES IN LATEST SELL-OFF
The British government is pressing ahead with an innovative way of privatising more of Lloyds Banking Group, announcing plans to gradually trickle out an estimated 3 billion pounds ($4.67 billion) of Lloyds shares onto the market over the next six months. UK Financial Investments (UKFI), which owns the 25 percent taxpayer stake in Lloyds, said it had instructed Morgan Stanley to conduct the so-called "dribble-out" sale, officially called a trading plan. (http://thetim.es/13cHL03)
The Guardian
DIXONS CARPHONE CUTS 400 JOBS DESPITE 'BARNSTORMING' PERFORMANCE
Dixons Carphone Plc is cutting 400 jobs in the wake of the merger between Dixons Retail and Carphone Warehouse. As the retailer hailed a "barnstorming" performance at its UK and Irish stores in its maiden half-year results, it said 20 percent of the combined total of head office staff would be leaving. (http://bit.ly/1z3MpuW)
The Telegraph
BARCLAYS' 500 MiLLION POUNDS FOR FOREX SETTLEMENTS IS NOT ENOUGH, SAYS CHIEF ANTONY JENKINS
Barclays Plc's chief executive has admitted that the 500 million pounds the bank has set aside to settle allegations of foreign exchange manipulation will not be enough. (http://bit.ly/16u9KKq)
BT PLANS 2 BILLION POUNDS RIGHTS ISSUE TO FUND EE TAKEOVER
BT Group Plc is preparing a giant financing package including a 2 billion pounds rights issue to help fund its planned takeover of EE, the mobile operator. The share placing will help to keep the telecom giant's level of debt at a manageable level as it faces big bills next year from an anticipated increase in pension fund top-up payments and a jump in Premier League rights costs. (http://bit.ly/1wMkhZS)
Sky News WELLCOME TRUST WARNS ON 'POPULIST' MANSION TAX One of Britain's most successful investors has issued a thinly veiled swipe at Labour's proposed mansion tax and warned that "populist politics" risk derailing Britain's economic revival. (http://bit.ly/1zvjhMe) MYNERS: GOVERNMENT ASSET SALES NEED OVERHAUL Taxpayers lost out on a lower sum from the privatisation of Royal Mail Plc than the 1 billion pounds suggested by MPs earlier this year, a report commissioned by Vince Cable will conclude this week. (http://bit.ly/1zvhQxc)
Fly On The Wall Pre-Market Buzz
ECONOMIC REPORTS
Domestic economic reports scheduled for today include:
Jobless claims for week of Dec. 13 at 8:30--consensus 295K
Markit flash services PMI for December at 9:45--consensus 56.3
Leading indicators for November at 10:00--consensus up 0.5%
Philadelphia Fed business conditions survey for December at 10:00--consensus 26.0
ANALYST RESEARCH
Upgrades
Ares Capital (ARCC) upgraded to Overweight from Equal Weight at Barclays
Baker Hughes (BHI) upgraded to Outperform from Sector Perform at RBC Capital
Cepheid (CPHD) upgraded to Buy from Neutral at BofA/Merrill
Coeur Mining (CDE) upgraded to Outperform from Market Perform at Cowen
Corning (GLW) upgraded to Buy from Neutral at Citigroup
FedEx (FDX) upgraded to Conviction Buy from Neutral at Goldman
Halliburton (HAL) upgraded to Outperform from Sector Perform at RBC Capital
Hologic (HOLX) upgraded to Conviction Buy from Buy at Goldman
Infoblox (BLOX) upgraded to Outperform from Sector Perform at Pacific Crest
Joy Global (JOY) upgraded to Neutral from Underperform at Longbow
Key Energy (KEG) upgraded to Outperform from Sector Perform at RBC Capital
Lam Research (LRCX) upgraded to Buy from Neutral at Citigroup
Superior Energy (SPN) upgraded to Outperform from Sector Perform at RBC Capital
Tyco (TYC) upgraded to Buy from Neutral at Goldman
Williams-Sonoma (WSM) upgraded to Conviction Buy from Neutral at Goldman
Downgrades
BreitBurn Energy (BBEP) downgraded to Sector Perform from Outperform at RBC Capital
Bruker (BRKR) downgraded to Sell from Neutral at Goldman
Enduro Royalty (NDRO) downgraded to Sector Perform from Outperform at RBC Capital
FMC Technologies (FTI) downgraded to Sector Perform from Outperform at RBC Capital
Frank's International (FI) downgraded to Sector Perform at RBC Capital
IHS Inc. (IHS) downgraded to Underweight from Equal Weight at Morgan Stanley
Legacy Reserves (LGCY) downgraded to Sector Perform from Outperform at RBC Capital
Linear Technology (LLTC) downgraded to Sell from Neutral at Citigroup
Macerich (MAC) downgraded to Neutral from Buy at MLV & Co.
Maxim Integrated (MXIM) downgraded to Neutral from Buy at Citigroup
Mid-Con Energy (MCEP) downgraded to Sector Perform from Outperform at RBC Capital
New Source Energy (NSLP) downgraded to Hold from Buy at Wunderlich
Oceaneering (OII) downgraded to Sector Perform from Outperform at RBC Capital
Oil States (OIS) downgraded to Sector Perform from Outperform at RBC Capital
Prospect Capital (PSEC) downgraded to Equal Weight from Overweight at Barclays
QIAGEN (QGEN) downgraded to Sell from Neutral at Goldman
RLJ Lodging Trust (RLJ) downgraded to Hold from Buy at KeyBanc
Realogy (RLGY) downgraded to Neutral from Buy at Citigroup
Retail Properties of America (RPAI) downgraded to Hold from Buy at KeyBanc
Teradyne (TER) downgraded to Neutral from Buy at Citigroup
Volcano (VOLC) downgraded to Neutral from Buy at Roth Capital
XL Group (XL) downgraded to Market Perform from Outperform at Keefe Bruyette
Initiations
AMD (AMD) initiated with a Sell at Citigroup
AMRI (AMRI) initiated with an Equal-Weight at First Analysis
Agile Therapeutics (AGRX) coverage resumed with a Buy at Sterne Agee
Allot Communications (ALLT) initiated with a Hold at Jefferies
Ally Financial (ALLY) initiated with a Buy at Jefferies
Altera (ALTR) initiated with a Neutral at Citigroup
American Express (AXP) initiated with a Hold at Jefferies
Analog Devices (ADI) assumed with a Neutral at Citigroup
AngloGold (AU) initiated with a Sector Perform at RBC Capital
Avon Products (AVP) initiated with a Neutral at Piper Jaffray
Boston Beer (SAM) initiated with a Buy at Nomura
Capital One (COF) initiated with a Hold at Jefferies
Ceragon Networks (CRNT) initiated with a Hold at Jefferies
Coach (COH) initiated with a Perform at Oppenheimer
Community Health (CYH) initiated with a Buy at Sterne Agee
Cooper-Standard (CPS) initiated with a Buy at Jefferies
Destination XL (DXLG) initiated with a Buy at CRT Capital
Discover (DFS) initiated with a Buy at Jefferies
FARO Technologies (FARO) initiated with an Outperform at Oppenheimer
Fossil (FOSL) initiated with a Neutral at Goldman
HCA Holdings (HCA) initiated with a Buy at Sterne Agee
Hill International (HIL) initiated with a Speculative Buy at Global Hunter
Hilton (HLT) initiated with a Buy at Evercore ISI
Hyatt Hotels (H) initiated with a Buy at Evercore ISI
Intel (INTC) initiated with a Neutral at Citigroup
InterOil (IOC) initiated with a Buy at Goldman
Intercept (ICPT) coverage resumed with a Buy at Sterne Agee
KLX Inc (KLXI) initiated with a Neutral at DA Davidson
LifePoint (LPNT) initiated with a Buy at Sterne Agee
Marriott (MAR) initiated with a Hold at Evercore ISI
Michael Kors (KORS) initiated with a Perform at Oppenheimer
Microchip (MCHP) assumed with a Buy at Citigroup
NPS Pharmaceuticals (NPSP) coverage resumed with a Neutral at Sterne Agee
PTC Therapeutics (PTCT) initiated with a Buy at Citigroup
Proto Labs (PRLB) initiated with an Outperform at Oppenheimer
RCS Capital (RCAP) resumed with an Overweight at Barclays
Regis (RGS) initiated with an Overweight at Piper Jaffray
Restaurant Brands (QSR) initiated with a Neutral at UBS
Sally Beauty (SBH) initiated with an Overweight at Piper Jaffray
Sierra Wireless (SWIR) initiated with a Hold at Jefferies
Starwood (HOT) initiated with a Buy at Evercore ISI
Tenet (THC) initiated with a Buy at Sterne Agee
Texas Instruments (TXN) initiated with a Buy at Citigroup
Tupperware Brands (TUP) initiated with an Overweight at Piper Jaffray
Tutor Perini (TPC) initiated with an Accumulate at Global Hunter
Universal Health (UHS) initiated with a Neutral at Sterne Agee
WABCO (WBC) initiated with an Outperform at RBC Capital
Xilinx (XLNX) initiated with a Neutral at Citigroup
Zendesk (ZEN) initiated with an Outperform at JMP Securities
COMPANY NEWS
Marathon Oil (MRO) announced that the company anticipates its 2015 capital, investment and exploration budget will be approximately $4.3B-4.5B, or about 20% lower than 2014 levels
Shell (RDS.A) agreed to sell downstream business in Norway to ST1
Target (TGT) named Casey Carl as Chief Strategy and Innovation Officer, Laysha Ward as chief corporate social responsibility officer
Amgen (AMGN) raised Q1 dividend 30% to 79c per share
Avon Products (AVP) confirmed FCPA settlement with DOJ and SEC. The agreements include aggregate payments of $135M to the two U.S. government agencies, with $68M in fines payable to the DOJ and $67M in disgorgement and prejudgment interest payable to the SEC
Tetraphase Pharmaceuticals (TTPH) announced positive top-line results from IGNITE 1 Phase 3 clinical trial of eravacycline
Genworth Financial (GNW) said it is still in process of reviewing long term care active life margins
EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Sanderson Farms (SAFM), Jabil Circuit (JBL), Oracle (ORCL)
Companies that missed consensus earnings expectations include:
Worthington (WOR), Civitas Solutions (CIVI), Apogee Enterprises (APOG), Biodel (BIOD)
Jabil Circuit (JBL) sees Q2 core EPS 39c-50c, consensus 38c
Oracle (ORCL) sees Q3 EPS in constant currency 69c-74c, consensus 73c, sees currency volatility affecting Q3 EPS by 4c, revenue by 4%
Steel Dynamics (STLD) sees Q4 EPS ex-items 38c-42c, consensus 45c
Health Net (HNT) sees FY15 EPS for combined segments at least $3.15, consensus $3.20, sees FY15 consolidated revenue $17.4B
NEWSPAPERS/WEBSITES
Sony (SNE) cancels release of 'The Interview,' CNBC reports
Deutsche Bank (DB) to examine strategy, may revise profit targets, Reuters reports
Microsoft (MSFT) may be planning head-worn gaming device for 2015, DigiTimes reports
BT Group prepping 'giant' financing package to fund EE takeover, Telegraph reports
eBay's (EBAY) Christopher Payne set to leave company, Re/code reports
Investigators confirm North Korea behind Sony (SNE) cyber attack, CNN reports
Buy FedEx (FDX) on the dip, Barron's says
SYNDICATE
Bellicum Pharmaceuticals (BLCM) 7.35M share IPO priced at $19.00
Bravo Brio Restaurant (BBRG) accepts 3.57M shares at $14 for tender offer
Meta Financial (CASH) files to sell $26M of common stock "at-the-market"
Poage Bankshares (PBSK) files to sell up to 129,488 shares of common stock
Regency Energy Partners (RGP) files to sell $1B of common units
Venaxis (APPY) files to sell $50M of common stock
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