Frontrunning: June 10

  • In Hong Kong, ex-CIA man may not escape U.S. reach (Reuters)
  • Backlash over US snooping intensifies (FT)
  • Apple to Revamp IPhone Software, Ending Product Funk (BBG)
  • Nothing like revising history: Japan revises up Q1 growth to annual 4.1% (FT), just don't look at the trade deficit
  • Coffee Exports From Indonesia Seen Slumping to Two-Year Low (BBG)
  • Euro bailout Troika nears end of road with patchy record (Reuters)
  • Treasuries Little Changed Before Bullard Speaks Amid QE Debate (BBG)
  • Schwab Topping Goldman Sachs Presages Return to Stocks (BBG)
  • Hedge funds take over another city: London’s Forced Renters Fuel Apartment Investing Boom (BBG)
  • All is Fair in Exchanges' War  (WSJ)
  • New stamping ground for Nike and Adidas as 3D shoes kick off (FT)
  • French Soccer Stadiums Target Qatar to Offset Home Losses (BBG)
  • National Envelope Prepares Bankruptcy Filing (WSJ)


Overnight Media Digest


* The National Security Agency's monitoring of Americans includes customer records from the three major phone networks as well as emails and Web searches, and the agency also has cataloged credit card transactions.

* The Obama administration acknowledged the existence Thursday of a secret National Security Agency program dubbed Prism, which a senior administration official said targets only foreigners and was authorized under U.S. surveillance law.

* U.S. and British authorities are preparing to bring criminal charges against former employees of Barclays for their alleged roles in trying to manipulate benchmark interest rates.

* Online sports retailer Fanatics raised $170 million in a new funding round that more than doubles the company's valuation to $3.1 billion from just a year ago.

* The net worth of U.S. households rose 4.5 percent, or about $3 trillion, in the first three months of this year to $70.35 trillion, the highest level since at least 2007, according to a Fed report.

* A government panel called for easing restrictions on diabetes drug Avandia, in a remarkable about-face nearly three years after concerns over heart risk led regulators to curtail use of the drug.

* The U.K. has left itself vulnerable to cyber attacks by allowing a Chinese telecommunications company to become a major player in Britain without adequate security checks, a parliamentary committee said.

* The bloom appears to be off the rose at Vera Bradley , an accessories maker known for its floral quilted cotton bags. The stock fell sharply following a profit warning and news that its CEO was stepping down



The UK Treasury is mulling over selling an initial 10 percent of Lloyds Banking Group before the end of the year, with a view to begin reprivatising both Lloyds and Royal Bank of Scotland before the 2015 general election.

British Members of Parliament are planning to launch an inquiry into the independence of the Bank of England's new financial risk watchdog, the Financial Policy Committee.

French bank BNP Paribas is planning to merge its U.S. operations in an attempt to offset the blow of potential U.S. regulatory reforms for foreign banks, according to people familiar with the matter.

The LongRiver consortium is threatening to walk away from buying Severn Trent, which rejected the LongRiver's third takeover bid on Friday, unless the British water firm agrees to talks.

State-owned Chinese oil company Cnooc Ltd is teaming up with Iceland's Eykon Energy to bid for an exploration licence off the northeast coast of Iceland, a month after China was successful in its bid to become a permanent observer at the Arctic Council.



* Edward Snowden's employer, Booz Allen Hamilton Holding Corp, has become one of the largest and most profitable corporations in the United States almost exclusively by serving a single client, the government of the United States.

* Apple Inc is expected to unveil a streaming music service, in an attempt to use its dominance of the digital music market to create a new revenue source.

* As stratification becomes more pronounced in all corners of America, theme parks have adopted a tiered model, with special access and perks for those willing to pay.

* In Silicon Valley, dismay at revelations about government monitoring have led some to call for disclosure of companies' involvement.

* The conservative pundit Glenn Beck took the lectern at a conference center on Manhattan's East Side last Thursday to accept the Freedom of Speech Award for his commentary on TheBlaze television network and his syndicated radio show.




* A federal committee developing proposals to get more women on boards of directors must draft "action-oriented" recommendations and not produce a lengthy report on an issue that has already been studied for years, says Status of Women Minister Rona Ambrose.

* Ontario's energy regulator will have to reconsider a bid by Ontario Power Generation (OPG) to hike the price of electricity. OPG, the government-owned company that produces most of the province's power, proposed a 6.5 percent increase in rates in 2010.

Reports in the business section:

* The Montreal-based travel tour operator Transat A.T. Inc appears to be doing all the right things in its efforts to take on fierce competition in a tight leisure travel market. The company has cut office staff positions, restructured its fleet of planes and scaled back capacity, among other moves.


* Former Conservative Member of Parliament Brent Rathgeber said he looks forward to being able to hold cabinet ministers to account in a way he never could before he quit the caucus.


* Canada's bid to find new markets for its oil and natural gas inched forward Friday as British Columbia unveiled a new natural gas-focused ministry and New Brunswick deepened support for a plan to pipe Alberta crude east.


Corporate Finance

* British finance minister George Osborne will launch the early sale to the public of shares in bailed-out lender Lloyds Banking Group, the Sunday Times newspaper said, adding that shares the government owns in Royal Bank of Scotland , also rescued during the financial crisis, would be sold at a later date.

The Treasury is considering selling an initial 10 percent of Lloyds before the end of the year, the Financial Times said on Monday, citing people close to the process.

* Google is close to buying Waze for $1.3 billion, an Israeli newspaper said on Sunday, potentially trumping rival offers for the Israeli mapping start-up.

* SoftBank Corp is in talks with Deutsche Telekom AG over a possible deal for T-Mobile US Inc, as the Japanese company looks for alternatives to enter the U.S. wireless market if its deal with Sprint Nextel Corp falls apart, three sources familiar with the matter said.

* Brazil's JBS SA, the world's largest meatpacker, will pay as much as $3 billion in cash and assumed debt for the Seara Brasil poultry unit of rival Marfrig Alimentos SA, a source close to the negotiations told Reuters.

* The LongRiver consortium will walk away from its $8.2 billion takeover bid for British water firm Severn Trent unless the latter begins to engage in talks, a source close to the consortium said.

* Italian defence group Finmeccanica and private equity fund Cinven will get at least five offers for satellite propulsion system unit Avio Spazio, business daily Il Sole 24 Ore said.

* Britain's The Co-operative Group Ltd is seeking buyers for Plymouth-based Western Mortgage Services, which employs 350 people and has 11 billion pounds ($17.09 billion) of loans under administration, The Times newspaper said. ()



Alexandria Real Estate (ARE) upgraded to Buy from Neutral at ISI Group
BB&T (BBT) upgraded to Overweight from Equal Weight at Evercore
CyrusOne (CONE) upgraded to Strong Buy from Outperform at Raymond James
EQT Corporation (EQT) upgraded to Buy from Hold at Brean Capital
Edwards Lifesciences (EW) upgraded to Outperform from Neutral at Credit Suisse
Enersis (ENI) upgraded to Buy from Neutral at Citigroup
Entergy (ETR) upgraded to Buy from Hold at Deutsche Bank
Monsanto (MON) upgraded to Outperform from Neutral at Macquarie
Regency Centers (REG) upgraded to Buy from Neutral at ISI Group
Silver Standard (SSRI) upgraded to Hold from Sell at Deutsche Bank
Standard Pacific (SPF) upgraded to Neutral from Underweight at JPMorgan
Stericycle (SRCL) upgraded to Buy from Hold at Wunderlich
WABCO (WBC) upgraded to Buy from Neutral at Goldman
Western Union (WU) upgraded to Outperform from Market Perform at Raymond James
Weyerhaeuser (WY) upgraded to Outperform from Sector Perform at RBC Capital


Bank of Ireland (IRE) downgraded to Sell from Neutral at Goldman
CVR Energy (CVI) downgraded to Sell from Neutral at Goldman
DexCom (DXCM) downgraded to Hold from Buy at Wunderlich
Micron (MU) downgraded to Market Perform from Outperform at Wells Fargo
Morgan Stanley (MS) downgraded to Perform from Outperform at Oppenheimer
Occidental Petroleum (OXY) downgraded to Neutral from Buy at UBS
Rovi (ROVI) downgraded to Neutral from Buy at B. Riley
Titan International (TWI) downgraded to Hold from Buy at Jefferies


Ambit Biosciences (AMBI) initiated with a Buy at Citigroup
Ambit Biosciences (AMBI) initiated with an Outperform at Leerink
CST Brands (CST) initiated with a Neutral at Credit Suisse
CVR Refining (CVRR) initiated with a Neutral at Goldman
Questar (STR) initiated with a Neutral at UBS
Tallgrass Energy (TEP) initiated with a Hold at Deutsche Bank
Tallgrass Energy (TEP) initiated with a Neutral at Citigroup
Tallgrass Energy (TEP) initiated with an Outperform at Credit Suisse


AstraZeneca (AZN) acquired Pearl Therapeutics for up to $1.15B
Elan (ELN) rejected revised takeover offer from Royalty Pharma
Elan (ELN) tells advisors to assess all strategic interests
IHS Inc. (IHS) announced intent to acquire R. L. Polk in $1.4B transaction
California state controller announced multi-state settlements with 11 life insurance companies totaling about $736M, including Genworth (GNW), Hartford (HIG), ING (ING), and Symetra (SYA) over unpaid life insurance benefits
Amdocs (DOX), SeaChange (SEAC) announced partnership to monetize multi-screen TV services


Companies that beat consensus earnings expectations last night and today include:
Triangle Petroleum (TPLM), Piedmont Natural Gas (PNY)


  • Investors are bracing for a stormy summer, as steady asset-price gains fueled by bottomless central bank liquidity have given way to sharp swings jolting stocks, currencies and commodities alike, the Wall Street Journal reports
  • The Electronic Entertainment Expo has served as the center of the video-game world, but E3, which begins this week in Los Angeles, is losing some cachet as it fails to attract the industry's new rising stars: creators of hit games for smartphones. The phenomenon reflects a broader transition in the $66B video-game industry (NTDOY, AAPL, MSFT, SNE), the Wall Street Journal reports
  • Japan's current account surplus doubled in April from a year earlier, and bank lending posted its biggest annual rise in over three years, a new sign the government's aggressive policies to stimulate growth are paying early dividends, Reuters reports
  • The British water firm Severn Trent (SVTRY) rejected a raised $8.2B takeover bid, with a deadline for the suitors to make a formal offer fast approaching, Reuters reports
  • Shares of discount brokers (SCHW, AMTD, ETFC) are gaining the most since 2003 compared with the S&P’s 500 Index, a sign that small investors are joining the four-year bull market even after U.S. stocks suffered their biggest losses in six months, Bloomberg reports
  • The modest pace of the U.S. economic recovery has a silver lining, as the expansion shows signs of lasting almost twice as long as average. Four years into the upswing, the economy isn’t seeing many of the excesses that often presage the start of contractions. Inflation is slowing, household debt is shrinking, and the labor market is slack, Bloomberg reports


Tesla (TSLA) stock could head lower
Clean Harbors (CLH) could rise 45%
Foot Locker (FL) shares could jump 25%
Loral Space (LORL) value could jump by selling stake in Telesat
Time Warner (TWX) looks fully priced
Ciena (CIEN), F5 Networks (FFIV), Oracle i(ORCL), Cisco (CSCO) could benefit from network war
Investors “should be wary” of Iron Mountain (IRM)

Clovis (CLVS) files to sell $170M in common stock
Diamondback Energy (FANG) files to sell 5M shares for holders
First Federal (FFBH) of Arkansas files to sell 750K shares
Quantum (QTWW) files to sell 6.18M shares of common stock for holders


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