Frontrunning: February 26

Frontrunning: February 26
  • California couple finds $10 million in buried treasure while walking dog (Reuters) … not bitcoin?
  • Dimon Says Threats to JPMorgan Span Google to China Banks (BBG)
  • Stocks So Many Love to Hate Buoyed by Fed’s Jobs Priority (BBG)
  • White House Weighs Four Options for Revamping NSA Phone Surveillance (WSJ) … to pick the fifth one
  • Credit Suisse Executives Weren’t Aware of U.S. Tax Dodges (BBG)
  • Militias Hunt Kiev Looters From Central Bank to Bling Palace (BBG)
  • Crisis Gauge Rises to Record High as Swaps Avoided (BBG)
  • Obama to Propose Highway-Repair Program (WSJ)
  • Ukraine Pledges to Protect Deposits as Kiev Rally Called (BBG)
  • Twinkies Bankruptcy Raises Specter of U.S. Pension Fund Failures (BBG)
  • U.S. warns banks to watch for ousted Ukraine leader moving looted funds (Reuters)
  • Investors Mount Attack on Norway in $20 Billion Oil, Gas Row (BBG)
  • Switzerland Shifting From Bankers to Bunkers in Data Push (BBG)
  • Obesity rates remain high, but stable in the U.S (Reuters)

Oveernight Media Digest


* Administration lawyers have presented the White House with four options for restructuring the National Security Agency’s phone-surveillance program, from ditching the controversial collection altogether to running it through the telephone companies, according to officials familiar with the discussions.

* The virtual currency bitcoin suffered the biggest setback in its five-year history after a major exchange shut down on Tuesday, stoking concern about the future of a digital form of money traded by professional investors and ordinary people, but regulated by no one.

* Bitcoin exchange Mt. Gox has received a subpoena from federal prosecutors in New York, according to a person familiar with the matter, dealing another blow to the embattled marketplace for buyers and sellers of the virtual currency.

* Two big banks, Morgan Stanley and Bank of America Corp, on Tuesday disclosed details of the continuing regulatory and legal challenges they face for their actions during the financial crisis.

* Credit Suisse Group AG went to great lengths to assist U.S. customers trying to open Swiss bank accounts and evade federal taxes, courting clients at a Swiss-themed ball in New York and golf tournaments in Florida and setting up a branch in the Zurich airport to assist Americans en route to ski vacations, a Senate report alleged Tuesday.

* Tesla Motors Inc shares hit a record high on Tuesday ahead of an expected announcement of a battery-production partnership in which the company would carve out a business making advanced batteries for itself and others. Panasonic Corp, now the primary battery supplier for Tesla’s $71,000-and-up electric cars, is in talks about investing in a nearly $1 billion battery factory in the United States, according to Japanese business newspaper the Nikkei.

* When word got out that Procter & Gamble Co had allowed Inc to set up shop inside its warehouses, Amazon’s bitter rival Target Corp reacted by retaliating against P&G, according to people familiar with the matter. Several months ago, the discount chain started to give some P&G products less-prominent placement in stores people in the industry said.

* The Pentagon has responded to concerns that defense cuts could harm the U.S. military-industrial base by proposing support that could aid two unlikely beneficiaries: General Electric Co and United Technologies Corp.


UK Chancellor George Osborne is facing a push from Tory MPs to announce tax cuts in the upcoming budget in an attempt to protect the government’s political position from a backlash from an interest rate hike by the Bank of England.

The European Commission has forecast a growth of 1.2 percent for the Eurozone’s economy while cautioning on vulnerable members such as Italy and France.

Indian banks may be forced to stop offering retail services in the UK as regulatory compulsions proposed in a consultation paper by Bank of England’s Prudential Regulation Authority would make it tough for banks to offer customer banking due to additional costs.

World’s biggest chemical maker by sales, BASF is targeting investments in North America and emerging markets as it feels the heat of saturating markets in Europe hit by recession.

The chief executive of British banknote printer De La Rue Tim Cobbold has resigned to join marketing services company UBM, and will replace David Levin effective May 6.


* The apparent collapse of Bitcoin’s best-known and once-dominant trading platform has provoked outrage among its users, but it has also stirred hopes that the way may now be clear for more established players to transform and rein in a largely unregulated market.

* U.S. orders tests on oil shipments as recent accidents have drawn attention to the risks of shipping large quantities of crude oil in unpressurized railcars.

* The proposal by the top Republican on the House Ways and Means Committee to overhaul and simplify the nation’s tax code is already coming under scrutiny from fellow Republicans, with at least one party leader, Senator Mitch McConnell of Kentucky, saying the plan has no chance.

* Seventeen brokerage firms, including Citigroup, Goldman Sachs, JPMorgan Chase & Co and Merrill Lynch, have agreed to stop participating in money management surveys aimed at tapping into research analysts’ changing views on companies before those opinions are publicly issued.

* A report by a Senate subcommittee said Swiss bank Credit Suisse helped customers hide assets from taxation by the United States, and also accused American law enforcement of dragging its feet.

* Bank of America said that it was facing new investigations related to its activities in foreign currency exchange markets as well as its handling of government-backed mortgages in the United States.

* Morgan Stanley has tentatively agreed to pay $275 million to resolve a federal securities investigation related to subprime mortgage bonds the investment firm underwrote in 2007.

* Steven Cohen, the billionaire hedge fund owner, is looking to hire a former prosecutor or securities regulator to monitor trading at his investment firm after the federal government’s insider trading investigation.

* Standard & Poor’s is seeking information about certain meetings between President Obama and Timothy Geithner in 2011, hoping the details will help show that a lawsuit filed by the government in 2013 against the company was done in retaliation for a ratings downgrade of American debt.

* Hedge fund Elliott Management raised its bid for Riverbed Technology on Tuesday and continued to criticize the networking equipment company for failing to begin a process to sell itself.



* The debate over the proposed overhaul of Canada’s elections laws will be confined to Parliament Hill, as the governing Conservatives and opposition New Democrats continue to spar over the changes.

* Ottawa’s auction of the 700-megahertz frequency sparked such a frenzy among wireless carriers that during some rounds, they placed bids totaling more than C$7 billion ($6.32 billion).

Reports in the business section:

* The federal government’s plan to sign a free-trade agreement with South Korea has won the support of the Japanese Automobile Manufacturers Association of Canada.

* Tim Hortons Inc is planning a big expansion, some of it in smaller spaces. The company said on Tuesday that it would open 800 restaurants in North America – 500 of those in Canada – and 220 in the Middle East as it targets compound annual profit-per-share growth of 11-13 percent in the next five years.


* Politicians have been trying to make the middle class out to be a poor huddled mass of declining fortunes, but Statistics Canada paints a different picture. The study, released on Tuesday, shows the median net worth of Canadian families jumped 44.5 percent to $243,800 in 2012, up from $168,700 in 2005. Over the past 15 years, the median net worth figure leaps 80 percent.

* Prime Minister Stephen Harper is hinting that the key Conservative campaign plank from the 2011 federal election that earned him a majority might not be pitched overboard after all. Income-splitting for couples with children under 18 was a $2.5-billion pledge during the last election – a Conservative promise that would kick in as soon as the government balanced the federal budget.


* Chief Executive John Chen is hoping that moving one step back will help BlackBerry Ltd take two steps winning back customers. Since taking over the embattled Waterloo, Ontario-based smartphone maker in November, Chen has made it clear the company must return to its roots if it hopes to restore its fortunes and rebound to profitability.

* Canadian shippers are bracing on Wednesday for a work stoppage at the Port Metro Vancouver by truck drivers protesting what they claim are long lineups, wait times and other “unfair” practices at the country’s busiest port



– The Securities Association of China has published rules that would require Chinese brokerages strengthen their risk management.


– Singaporean developer CapitaLand Ltd plans to build 100 shopping centres in China over the next 3-5 years.

– China’s electronics manufacturer, TCL Corp, said it would fully embrace Internet and mobile technologies, aiming to boost the company’s market value to over 100 billion yuan in five years, from around 23 billion yuan now.


– China President Xi Jinping has called on the nation to promote and embrace the core value of socialism.


The Telegraph


The European Commission expects Britain to grow by 2.5 percent in 2014, compared with a forecast of 2.2 percent in November. Its forecast for 2015 was unchanged at 2.4 percent.


A potential merger between Dixons and Carphone Warehouse is likely to face an investigation by Britain’s competition authorities, analysts have warned.

The Guardian


Landlords taking on new buy-to-let properties in London are charging twice as much rent as those in the rest of the country, according to data from one of Britain’s biggest buy-to-let lenders, BM Solutions.


The government faced fresh accusations of short-changing the taxpayer over the Royal Mail float on Tuesday after it was revealed that bankers valued the company at up to 8.6 billion pounds when approached months before the float went ahead.

The Times


The opening salvo in a supermarket price war was fired by Tesco as it announced a multimillion pound investment in price cuts. Britain’s biggest supermarket said it would spend more than 200 million pounds lowering prices.


Cobham is under investigation by the U.S. Department of Justice over sales of its satellite tracking devices used by spies, emergency services, mining enterprises and oil and gas companies around the world.

Sky News


Royal Bank of Scotland is to pay approximately 550 million pounds for 2013 after securing the agreement of the Treasury agency that is its biggest shareholder.


A former director of the online fashion retailer Asos is to become chairman of rival as it finalises plans for a stock market flotation valuing it at 500 million pounds.

Fly On The Wall 7:00 AM Market Snapshot

Domestic economic reports scheduled for today include:
New home sales for January at 10:00–consensus down 3.4% m/m to 400K

Bristow Group (BRS) upgraded to Overweight from Equal Weight at Barclays
Exterran Partners (EXLP) upgraded to Outperform from Neutral at Credit Suisse
Felcor Lodging (FCH) upgraded to Outperform from Market Perform at JMP Securities
Kroger (KR) upgraded to Overweight from Neutral at JPMorgan
LinkedIn (LNKD) upgraded to Outperform from Sector Perform at RBC Capital
Masco (MAS) upgraded to Hold from Underweight at KeyBanc
Ralph Lauren (RL) upgraded to Outperform from Market Perform at Wells Fargo
SciQuest (SQI) upgraded to Buy from Hold at Canaccord
Teradata (TDC) upgraded to Buy from Neutral at Longbow
DiamondRock (DRH) downgraded to Neutral from Buy at ISI Group
Dynamic Materials (BOOM) downgraded to Neutral from Overweight at JPMorgan
Fresenius Medical (FMS) downgraded to Neutral from Buy at UBS
Humana (HUM) downgraded to Sell from Neutral at Citigroup
Jazz Pharmaceuticals (JAZZ) downgraded to Hold from Buy at Cantor
Juniper (JNPR) downgraded to Neutral from Overweight at Piper Jaffray
NII Holdings (NIHD) downgraded to Neutral from Outperform at Macquarie
Phillips 66 Partners (PSXP) downgraded to Neutral from Outperform at Credit Suisse
Safeway (SWY) downgraded to Neutral from Overweight at JPMorgan
Toll Brothers (TOL) downgraded to Market Perform from Outperform at Keefe Bruyette
Valero Energy Partners (VLP) downgraded to Neutral from Outperform at Credit Suisse
Volaris (VLRS) downgraded to Hold from Buy at Deutsche Bank
Vornado (VNO) downgraded to In-Line from Outperform at Imperial Capital
Atlas Pipeline Partners (APL) initiated with a Hold at Deutsche Bank
CHC Group (HELI) initiated with a Buy at UBS
CHC Group (HELI) initiated with a Sector Perform at RBC Capital
EP Energy (EPE) initiated with a Buy at Deutsche Bank
EP Energy (EPE) initiated with a Buy at Goldman
EP Energy (EPE) initiated with an Outperform at Credit Suisse
EP Energy (EPE) initiated with an Outperform at Wells Fargo
EP Energy (EPE) initiated with an Overweight at JPMorgan
Intevac (IVAC) initiated with a Neutral at B. Riley
Kulicke & Soffa (KLIC) initiated with a Buy at B. Riley
La Jolla Pharmaceutical (LJPC) initiated with an Outperform at Wedbush
Nutraceutical (NUTR) initiated with an Outperform at Imperial Capital
Randgold Resources (GOLD) initiated with a Buy at UBS
Rudolph Technologies (RTEC) initiated with a Buy at B. Riley
Trevena (TRVN) initiated with an Outperform at JMP Securities
Trevena (TRVN) initiated with an Overweight at Barclays

GE (GE) to pay Shinsei $1.7B for refunds of interest
Bank of America (BAC) disclosed forex, FHFA probes
T. Rowe Price (TROW) opposes American Financial (AFG) tender offer for National Interstate (NATL)
General Motors (GM) expanded ignition recall to nearly 1.4M vehicles in U.S.
Lowe’s (LOW) board authorized repurchase of additional $5B in company stock
Anika Therapeutics (ANIK) announced that its Monovisc injection supplement to treat pain and improve joint mobility in patients suffering from osteoarthritis of the knee received FDA approval
Weatherford (WFT) said identified 6,192 positions for workforce reduction
Yandex (YNDX) announced advertising partnership with Google (GOOG)
Superior Energy (SPN) to pursue strategic alternatives for Asia Pacific-based unit

Companies that beat consensus earnings expectations last night and today include:
AB InBev (BUD), Ormat Technologies (ORA), Range Resources (RRC), Solar Capital (SLRC), HEICO (HEI), Alleghany (Y), Big 5 Sporting (BGFV), Huron (HURN), R.R. Donnelley (RRD), Questcor (QCOR), Chicago Bridge & Iron (CBI), Edison International (EIX)

Companies that missed consensus earnings expectations include:
Sturm, Ruger (RGR), Forest Oil (FST), Nordson (NDSN), Newfield Exploration (NFX), CoreLogic (CLGX), Superior Energy (SPN), EXCO Resources (XCO), Jazz Pharmaceuticals (JAZZ), Boston Beer (SAM), QEP Resources (QEP), Cerus (CERS), First Solar (FSLR), Culp (CFI)

Companies that matched consensus earnings expectations include:
Lowe’s (LOW), Papa John’s (PZZA), Weatherford (WFT), Dycom (DY), Demand Media (DMD)

Carlyle Group (CG) near deal for Tyco (TYC) unit, WSJ reports
Vodafone’s (VOD) European cable pursuits make AT&T (T) deal less likely, WSJ reports
Buffett (BRK.A) to modify Bank of America (BAC) investment terms, FT reports
BlackBerry (BBRY) CEO says he would accept $19B for BBM, CNBC reports
Aeropostale (ARO) working with Barclays (BCS) to explore options, Bloomberg reports
Target (TGT) retaliates against P&G (PG) after Amazon deal (AMZN), WSJ reports
Google Glass (GOOG) faces possible driving ban from some states, Bloomberg reports
Monsanto (MON) at epicenter of intensifying food debate, FT reports
Numerous Wall Street firms (JPM, GS) agree to stop analyst previews, Bloomberg reports
Royal Bank of Scotland (RBS) to pay GBP550M in staff bonuses for 2013, report FY13 loss, Sky News reports
Apple (AAPL) issues fixes for security flaw on Macintosh computers, Reuters reports

Allete (ALE) files to sell 2.5M shares of common stock
Infinity Pharmaceuticals (INFI) files to sell 1M common shares for holders
Neurocrine (NBIX) files to sell 7M shares of common stock

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