Frontrunning: February 25

Frontrunning: February 25
  • Turkish PM says tapes of talk with son a fabrication (Reuters) but opposition confirms authenticity, and national TV carriers cut parliament when played live
  • Inside the Showdown Atop Pimco, the World’s Biggest Bond Firm (WSJ)
  • Ex-Jefferies Trader’s Customers Say Lies Common Tactic (BBG)
  • Bitcoin exchange Mt. Gox disappears in blow to virtual currency (Reuters)
  • The messenger mania is spreading: SoftBank Said to Seek Stake in Naver’s Line Messaging Unit (BBG)
  • Ukraine Replaces Central Bank Head (BBG)
  • Yup, an actual headline: Harsh weather tests optimism over U.S. economy (Reuters)
  • Hiring of Law Grads Improves for Some (BBG)
  • Easy Currency Bet Gets Harder as the Chinese Yuan Tumbles (WSJ)
  • In Ukraine turbulence, a lad from Lviv becomes the toast of Kiev (Reuters)
  • Buffett Warns of Liquidity Curse, Celebrates Property Bet (BBG)
  • MGM Envisions Spending Up to $10 Billion on Japanese Casino (BBG)
  • ‘Pony’ botnet steals bitcoins, digital currencies (Reuters)

Overnight Media Digest


* Activist investor Carl Icahn stepped up his attack on eBay Inc on Monday, accusing the online retailer of overlooking conflicts of interest on its board in what amounts to a broadside against a common practice in Silicon Valley.

* Bernard Madoff’s longtime secretary took the stand in her own defense Monday in Manhattan federal court, testifying she viewed the disgraced financier as her “big brother” and trusted him so implicitly that she never questioned any of his instructions.

* The chief executives of six major bitcoin exchanges and businesses pledged a coordinated efforts to assure customers of the security of their funds in response to mounting concern about the future of Japan-based exchange Mt. Gox.

* The website of embattled bitcoin exchange platform Mt. Gox was unavailable Tuesday and appeared to have been deleted.

* China is projecting fresh increases this year in steelmaking volume and iron-ore imports, underlining the sector’s cautiously optimistic outlook on the country’s economy as well as the difficulty in retrenching the industry.

* Ousted Ukrainian President Viktor Yanukovych was on the run Monday from a new government, which issued an arrest warrant for him on allegations of ordering the “mass murder” of protesters on the streets of Kiev last week.

* Under pressure from regulators, several auto makers are preparing to roll out emissions-free cars powered by hydrogen fuel cells instead of gasoline engines.

* Sina Corp is aiming to raise roughly $500 million in a second-quarter U.S. initial public offering of the Twitter-like service, according to two people with direct knowledge of the deal.


The European Union is expected to lay out tough rules on car emissions in an agreement that would require carmakers to reduce emissions by about 30 percent by 2021.

Telenor chief Jon Fredrik Baksaas told telecom leaders at the Mobile World Congress that mobile network operators will need to pump in $1,700 billion by 2020 to meet the growing need of consumers.

Brussels has initiated a preliminary probe into the possible breach of state aid rules by the UK when it guaranteed a 75 million pound-loan to Drax Group, operator of Britain’s biggest power station.

HSBC Chief Executive Stuart Gulliver’s base salary increased by a 1.7 million pound “fixed pay allowance” with his 2014 bonus being capped to a percentage of his fixed pay in line with an EU rule.

Hans-Jörg Rudloff, regarded as the father of the eurobond market, is set to retire as the chairman of Barclay’s investment bank after serving about 16 years at the bank.


* The most prominent Bitcoin exchange Mt. Gox appeared to be on the verge of collapse late Monday, raising questions about the future of a volatile marketplace.

* The steel industry is feeling stress as automakers turn to aluminum, and are responding by producing lighter, stronger steel in a bid to retain one of their most important customers Ford Motor Co.

* Tax season doesn’t usually stir up emotions about the meaning of family and equal rights. But this year is different for the tens of thousands of same-sex married couples who, for the first time, will be required to file federal income tax returns that reflect their married status. Whether couples ultimately owe more in taxes or receive big refunds, for many of them, it will provide a long-awaited sense of validation.

* The Justice Department in Washington and the Serious Fraud Office in London have agreed to divide up cases against employees at the center of an investigation into the manipulation of the global interest rate benchmark used for mortgages, credit cards and corporate loans known as the London interbank offered rate, or Libor, according to people briefed on the matter.

* Sina Corp, one of China’s biggest Internet portals, is preparing an initial public offering in the United States for Weibo, its Twitter-like microblogging service, according to people close to the matter.

* Alphonse Fletcher Jr., a flashy hedge fund manager, has been accused of running something akin to a Ponzi scheme, and the pension systems that say he misled them are hoping to get their money back.

* Stocks rose on Monday and the Standard & Poor’s 500-stock index hit a nominal intraday high, helped by gains in health insurers’ shares and optimism about mergers. ()



* Finance Minister Jim Flaherty said in an interview that Canada’s unemployment rate is too high and his government would try and do better at getting Canadians working again as part of commitments made by the Group of 20 countries at a summit over the weekend.

* Some of Quebec’s fine dining establishments will soon feature meats more commonly associated with bygone rural life after the province agreed to allow some of its most famous chefs to buy and sell hunted wild game.

Reports in the business section:

* Sun Life Financial Inc will move out of the Toronto tower that has been its head office for 30 years, a sign of what many real estate experts say is the slow migration of Canada’s biggest financial district.

* U.S. President Barack Obama has signaled he will make a decision about the long-delayed Keystone XL pipeline before summer, allaying concerns that the administration would punt the controversial decision until after mid-term congressional elections in November.


* Paul Godfrey, president and chief executive of Postmedia Network Canada Corp, is one of three new co-chairs of the Ontario Progressive Conservative party’s Toronto Leader’s Dinner.

* Under a directive imposed at the start of this influenza season, visitors to all British Columbia hospitals and long-term care facilities must don a mask if they have not been immunized. At least three hospitals in Ontario have implemented similar policies.


* BlackBerry Ltd appears poised to snatch Ford Motor Co’s in-car mobile technology business from Microsoft Corp , highlighting a unit where the Canadian company is the world leader, not playing catch up.

* National Bank of Canada, the country’s sixth-largest lender, said on Monday that its first-quarter profit rose 9 percent, driven by stronger wealth management and financial markets income.



– The Ministry of Commerce said trade in 2014 could be moderately positive, with a possibility of abrupt fluctuation in February as well as the second quarter, driven by seasonal factors.

– The Ministry of Land and Resources said it would push forward rural land acquisition reform at the local level, aiming at narrowing down the scope of acquisition, standardizing procedures and improving living qualities of farmers.


– Real estate industry analysts predicted the performance of China’s housing market would diverge in 2014, with firm demand in China’s first-line cities including Beijing, Shanghai and Guangzhou, steady price trends in second-tier cities, but downward risks in smaller cities.


– The CSRC said it would provide supportive policies for Shenzhen’s innovation in finance to accelerate the development of multi-tiered capital markets.


— China is optimistic that a recent visit by a senior Vietnam official will help maintain stability in the disputed South China Sea thanks to “breakthrough” agreements on handling territorial disputes, but the article warned about “external forces” that would try to sabotage the relationship.


— Japan’s undisguised efforts to whitewash its war history are preventing it from becoming a normal country and participating in the system of international relations, said an editorial in this mouthpiece of the Chinese Communist Party.


The Telegraph


The Tesco boss will on Tuesday unveil a refreshed strategy for the UK and is expected to sacrifice the company’s industry-leading profit margin of 5.2 percent.


Britain must forge an alliance with China that is as strong as its “special relationship” with the U.S. or it could miss out on the developing nation’s huge consumer boom, according to the minister for business and enterprise.


North Sea oil exploration is at a “worrying” all-time low and needs urgent government action such as tax breaks to stimulate drilling, Sir Ian Wood has warned.

The Guardian


A defiant HSBC is handing its Chief Executive Stuart Gulliver allowances worth 32,000 pound a week – on top of his 1.2 million pound salary – to get around the EU’s cap on bonuses, in a move that is expected to be replicated by the other high street banks.


Tesco has confirmed it is in talks with several companies over a possible restructuring of its struggling business in Turkey. Last October, Tesco said its business in eastern Turkey could be restructured, but it would not exit the country.

The Times


Landlords fear that hundreds of stores could close if Dixons and Carphone Warehouse merge – a deal that would create a FTSE 100 company worth more than 3.4 billion pounds.


Heathrow revealed that it had begun a 22 million pound restructuring that will involve reducing the 1,000-strong workforce of its central organisation by a fifth.

Sky News


Sir Sandie Crombie and Brendan Nelson, who sit on the taxpayer-backed lender’s board as non-executive directors, are being discussed as possible successors to Sir Philip Hampton.


The UK government’s bank levy undermines both its own desire for a stable tax regime and the City’s status as a leading financial centre, the industry’s main lobbying group has warned George Osborne.

Fly On The Wall 7:00 AM Market Snapshot


Domestic economic reports scheduled for today include:
December Case-Shiller 20-city home price index at 9:00–consensus up 13.4% y/y
February consumer confidence at 10:00–consensus 80.1
February Richmond Fed manufacturing index at 10:00–consensus 5


Consolidated Edison (ED) upgraded to Overweight from Equal Weight at Barclays
Golden Star Resources (GSS) upgraded to Hold from Sell at Canaccord
Kindred Biosciences (KIN) upgraded to Outperform from Market Perform at BMO Capital
Kinross Gold (KGC) upgraded to Buy from Hold at Canaccord
Nordson (NDSN) upgraded to Outperform from Perform at Oppenheimer
Peoples Bancorp (PEBO) upgraded to Strong Buy from Outperform at Raymond James
TriQuint (TQNT) upgraded to Buy from Hold at Brean Capital
Washington REIT (WRE) upgraded to Buy from Hold at Stifel


Ameren (AEE) downgraded to Equal Weight from Overweight at Barclays
Basic Energy (BAS) downgraded to Underperform from Hold at Jefferies
Einstein Noah (BAGL) downgraded to Neutral from Overweight at Piper Jaffray
FirstService (FSRV) downgraded to Market Perform from Outperform at JMP Securities
Greenbrier (GBX) downgraded to Hold from Buy at Stifel
HSBC (HSBC) downgraded to Neutral from Buy at Citigroup
MarkWest Energy (MWE) downgraded to Hold from Buy at Jefferies
Pan American Silver (PAAS) downgraded to Sell from Neutral at Goldman
RF Micro Devices (RFMD) downgraded to Hold from Buy at Canaccord
RealPage (RP) downgraded to Sector Perform from Outperform at RBC Capital
Royal Gold (RGLD) downgraded to Sector Performer from Outperformer at CIBC
VIVUS (VVUS) downgraded to Neutral from Overweight at JPMorgan
VIVUS (VVUS) downgraded to Underperform from Neutral at BofA/Merrill


Adobe (ADBE) initiated with a Positive at Susquehanna
Alaska Air (ALK) initiated with a Buy at Stifel
Allegiant Travel (ALGT) initiated with a Buy at Stifel
Avago (AVGO) initiated with an Outperform at Raymond James
Cara Therapeutics (CARA) initiated with an Overweight at Piper Jaffray
Datawatch (DWCH) initiated with an Outperform at William Blair
Delta Air Lines (DAL) initiated with a Buy at Stifel
Hawaiian Holdings (HA) initiated with a Hold at Stifel
Infoblox (BLOX) initiated with a Buy at Deutsche Bank
Intrawest Resorts (SNOW) initiated with a Buy at KeyBanc
Intrawest Resorts (SNOW) initiated with a Hold at Deutsche Bank
Intrawest Resorts (SNOW) initiated with a Neutral at Goldman
Intrawest Resorts (SNOW) initiated with an Outperform at Credit Suisse
Intrawest Resorts (SNOW) initiated with an Outperform at JMP Securities
Malibu Boats (MBUU) initiated with an Outperform at Wells Fargo
New Residential (NRZ) initiated with a Buy at Citigroup
Ocwen Financial (OCN) initiated with a Buy at Citigroup
Procera Networks (PKT) initiated with a Sell at Deutsche Bank
Southwest (LUV) initiated with a Hold at Stifel
Spirit Airlines (SAVE) initiated with a Buy at Stifel
The New Home Company (NWHM) initiated with a Buy at Citigroup
The New Home Company (NWHM) initiated with an Outperform at Credit Suisse
The New Home Company (NWHM) initiated with an Overweight at JPMorgan
Ultragenyx (RARE) initiated with an Overweight at JPMorgan
United Continental (UAL) initiated with a Buy at Stifel


Home Depot (HD) increased dividend by 21% to 47c
Office Depot (ODP) sees total annual run-rate cost synergies of over $600M by end of 2016
Minerals Technologies (MTX) increased offer to acquire AMCOL (ACO) to $42.50 per share
Dara BioSciences (DARA) treatment for peripheral neuropathy received FDA orphan designation
XOMA’s (XOMA) gevokizumab granted FDA orphan status
Perry Ellis (PERY) Q4 results impacted by inclement weather
PayPal (EBAY) to support Samsung’s (SSNLF) mobile fingerprint authentication technology
Qualcomm (QCOM) said Samsung (SSNLF) Galaxy S5 features Snapdragon chips
AT&T (T), IBM (IBM) announced network security relationship
Pactera (PACT): ISS, Glass Lewis recommend going private transaction (BX)


Companies that beat consensus earnings expectations last night and today include:
Home Depot (HD), Toll Brothers (TOL), GulfMark Offshore (GLF), Chemtura  (CHMT), EOG Resources (EOG), Ferro (FOE), Rosetta Resources (ROSE), StarTek (SRT), Haverty Furniture (HVT), Tenet (THC), SINA (SINA), Live Nation (LYV), Polypore (PPO), Tutor Perini (TPC), Stifel Financial (SF), Frontier Communications (FTR), VIVUS (VVUS)

Companies that missed consensus earnings expectations include:
Integra LifeSciences (IART), Office Depot (ODP), Seadrill (SDRL), PRGX Global (PRGX), Tredegar (TG),  RealPage (RP), XPO Logistics (XPO), Stone Energy (SGY)

Companies that matched consensus earnings expectations include:
Hackett Group (HCKT), Retail Opportunity Investments (roic), Nautilus (NLS)


JPMorgan (JPM) planning to cut ‘several thousand’ jobs in mortgage business, FT reports
Verizon (VZ) and AT&T (T) also in talks with Netflix (NFLX) to connect networks, Mashable reports
U.K. expected to make it easier for foreign banks (C, UBS, JPM) to open branches, WSJ reports
Target’s (TGT) Canadian business has been disappointing, NY Times reports
Several analysts expect Target (TGT) to slash its share buybacks as it deals with costs tied to data breach, Reuters reports
Orange (ORAN), Microsoft (MSFT) in talks for Dailymotion partnership, WSJ reports
BlackBerry’s (BBRY) design head the latest to leave company, WSJ reports
Senate report to reprimand Credit Suisse (CS) for helping tax dodgers, Bloomberg reports
LinkedIn (LNKD) expands in China, dealing with censorship, WSJ reports
WhatsApp (FB) won’t generate significant revenue anytime soon, Re/code reports


Allison Transmission (ALSN) files to sell 25M shares of common for holders
Apollo Investment (AINV) files to sell 12M shares of common stock
Tornier (TRNX) files to sell 5.12M ordinary shares for holders

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