- European Bonds Surge on Slowing German Inflation, Ukraine Tumult (BBG)
- Ukraine tensions hit shares (Reuters)
- Debating Geithner’s Appearances in 2008 Transcripts (Hilsenrath)
- Tensions in Asia Stoke Rising Nationalism in Japan (WSJ)
- GM Investigated Over Ignition Recall Linked to 13 Deaths (BBG)
- Smartphone wars shift from gadgetry to price (Reuters)
- Some Companies Alter the Bonus Playbook (WSJ)
- London’s Subterranean Luxury Manors Lure New Breed of Lenders (BBG)
- Japan No Country for Old Farmers as 7-Eleven Takes Plow (BBG)
- Dream of U.S. Oil Independence Slams Against Shale Costs (BBG)
- EU’s Highest Court Rules Spain Fuel Tax is Unlawful (WSJ)
- And in other news… Arizona governor vetoes bill widely criticized as anti-gay (Reuters)
- Britain’s economic recovery is rooted overseas (FT)
- Porsche Founder’s Legacy Hits Nazi Past in Czech Hometown (BBG)
- Rajan Says RBI Aims to Curb Inflation ‘Over Time,’ Not Abruptly (BBG)
Overnight Media Digest
* New York’s financial regulator is probing mortgage-servicing firm Ocwen Financial Corp’s relationships with several businesses, saying that borrowers may be harmed because of the companies’ close ties.
* The Consumer Financial Protection Bureau filed a lawsuit against ITT Educational Services Inc on Wednesday claiming the company engaged in predatory lending by pushing its students into high-cost private loans likely to default.
* The Obama administration has asked a special surveillance court for approval to retain records of millions of Americans’ phone calls stored by the National Security Agency – an unintended consequence of lawsuits seeking to stop the data-surveillance program.
* Verizon Communications Inc is investigating possible security breaches at two unnamed retailers that appear similar to intrusions at other merchants late last year.
* A record $14 million whistleblower award paid by the Securities and Exchange Commission last year was for a tip about an alleged Chicago-based scheme to defraud foreign investors seeking U.S. residency, according to people familiar with the payment.
* China’s central bank engineered the recent decline in the country’s currency as part of its efforts to prepare the tightly tethered yuan for wider trading, according to people familiar with the central bank’s thinking.
* Oil Search Ltd said it would raise $1.09 billion to fund the purchase of stakes in two large natural gas discoveries in Papua New Guinea, boosting its bets on an impoverished country soon to join the ranks of global gas producers.
* Data released Wednesday by the Federal Deposit Insurance Corp shows that the outstanding balance on loans for land acquisition, development and construction rose in the fourth quarter to $209.9 billion, compared with $206 billion in the third quarter. While that is a relatively small gain, economists note that if the overall balance is growing it means that originations of new loans are likely rising even faster. It was the third consecutive quarter of growth.
* Sales of new homes surged unexpectedly in January, easing concerns about a deeper housing-sector slowdown.
* Boeing Co filed plans this week with the Federal Communications Commission for a smartphone dubbed Boeing Black, which is designed for defense and security customers and won’t be available to average consumers.
* Electric car maker Tesla Motors Inc said on Wednesday its proposed battery “Gigafactory” would cost up to $5 billion and allow it to sell as many as 500,000 vehicles a year.
Spanish group Telefonica’s bid to takeover E-Plus, Germany’s top mobile operator, for 8.6 billion euros has been challenged by Brussels in an antitrust objection, claiming that the buyout would raise mobile tariffs by up to a third.
The Financial Conduct Authority is set to increase scrutiny of trading houses in an attempt to increase transparency in markets. In a report to be published on Thursday, the FCA will say that the rise in proportion of activity in London markets by unregulated, overseas entities poses a challenge to its market supervisions, alongside risks to market standards and integrity.
A Whitehall memo cites a U-turn by David Cameron in ensuring insurance cover to the 9,000 “newly built or high value” households, which were earlier excluded from benefiting from the Flood Re scheme.
U.S. private-equity giant Blackstone is nearing a deal to buy a 20 percent stake in Italian fashion brand Versace, according to people familiar with the talks.
Scotland’s financial services industry head has warned that an independent Scotland’s use of the British pound without the permission of the rest of the UK could endanger the stability of the nation’s financial sector.
* The turn to bigger screens is a sharp departure from the dominant strategy of phone makers just a few years ago, when critics often mocked devices with big screens, joking that people would never buy them.
* Federal prosecutors in Manhattan are said to have issued a grand jury subpoena to Mt. Gox, while regulators in Japan weigh how to regulate Bitcoin.
* In the wake of the implosion of the Bitcoin trading platform Mt. Gox, countries like the United States and Japan are gathering data on virtual currency.
* Senators accused Credit Suisse of helping thousands of Americans hide billions of dollars in assets from United States tax authorities.
* Mythili Raman, an acting assistant attorney general overseeing some of the biggest investigations into Wall Street misdeeds, will soon depart the Justice Department.
* JPMorgan Chase and American Express said in statements on Wednesday that they oppose an Arizona bill that would let businesses there invoke religion to refuse services to gay and lesbian customers, according to Business Insider.
* The Blackstone Group is contemplating buying a roughly 20 percent stake in Versace at a valuation of about 1 billion euros, or $1.37 billion, in the latest sign that the finance industry’s interest in high fashion shows few signs of abating.
* The investment profits generated by private equity, long a subject of debate in Washington, would be taxed at a higher rate under a proposal on Wednesday by the chairman of the House Ways and Means Committee.
THE GLOBE AND MAIL
* The Conservative government says it shut out opposition parties from a historic delegation to Ukraine because one leader made light of the crisis and the other “wouldn’t pick a side” at the outset of the political uprising.
* The federal government has ruled that the proposed New Prosperity copper-gold mine near Williams Lake cannot proceed, striking what could be a final nail into the project that has put the province of British Columbia at loggerheads with Ottawa.
Reports in the business section:
* Royal Bank of Canada’s latest quarterly results prove the lender can consistently make over C$2 billion ($1.80 billion). Now the country’s most profitable bank must demonstrate it can earn even more.
* One of the world’s biggest and most respected hedge funds predicts that Canada’s economy has a tough decade ahead of it. Ray Dalio’s Bridgewater Associates says the country’s economy is just beginning a tough period of rebalancing.
* Alberta is on track to record a C$1.4 billion surplus on day-to-day spending this year, but it will be C$8.5 billion in the hole on the capital side due to borrowing for new schools and roads.
* Despite posting vastly lower sales than it expected in Canada, Target Corp expects its sales in this country to double this year over last, but it has a long way to go before hitting its longer-term forecast of C$6 billion.
CHINA SECURITIES JOURNAL
– Tencent Holdings Ltd has developed insurance products to compete against Alibaba Group Holding Ltd, which will be marketed using Tencent’s popular WeChat mobile messaging app.
– The Shanghai Stock Exchange said it would push forward the development of the blue chip market in 2014, promoting the issuance procedures of preferred shares included, to provide strategic and emerging industries with better services.
– Chinese aircraft manufacturer AVIC Xi’an Aircraft Industry Group has applied to ground some of its MA-60 regional commuter-class planes after a problem with the landing carriage kept an MA-60 trying to land in Shenyang circling the airport for two hours.
– Thirty-seven Chinese citizens filed suit in Beijing demanding apologies and reparations from Japan for forced labour during the World War II.
– Constructive advice and sincere criticism is needed to activate institutional benefit through China’s democracy, an editorial said in the mouthpiece of the Chinese Communist Party ahead of the National People’s Congress in early March.
ANDREW BAILEY POURS DOUBT ON SALMOND’S PLANS FOR SHARED FINANCIAL REGULATOR
Andrew Bailey has told MPs that Alex Salmond’s plan for the Bank of England to continue to regulate Scottish financial institutions after independence was “not a system in place anywhere else.”
RSA SET TO ANNOUNCE 800 MLN STG RIGHTS ISSUE
RSA Group is set to announce a discounted rights issue of around 800 million pounds ($1.33 billion) to bolster its capital position as the insurer suffered a 200 million pound fraud in its Irish business in the run-up to Christmas.
BRITAIN SHOULD KEEP OPEN POSSIBILITY OF JOINING EURO, SAYS LABOUR FRONTBENCHER
Britain should keep open the possibility of eventual membership of the European single currency, according to a Labour frontbencher Lord Liddle who says it would be “ludicrous” for the UK to cut itself off from the EU mainstream for ideological reasons.
SCOTTISH ENGINEERING FIRM WEIR ORDERS INDEPENDENCE REPORT
One of Scotland’s biggest companies, engineering group Weir , has commissioned a report into the implications of Scottish independence on businesses after warning that “very serious questions” need to be answered.
CHANCELLOR ARRIVES ON CRUTCHES TO DEFEND THE EUROPEAN DREAM
Angela Merkel will set out the case for Britain to stay in the European Union in her address to both Houses of Parliament today, while warning that there are limits to the powers that can be won back from Brussels.
CO-OP TO SELL FARMS AND PHARMACIES IN SURVIVAL PLAN
Britain’s struggling Co-operative Group said on Wednesday it had kick started the sale of its farms and was looking at selling part or all of its pharmacy business.
RBS Slashes Costs As Markets Chief Bows Out
Royal Bank of Scotland will unveil plans to slash billions of pounds from its cost-base on Thursday in an overhaul aimed at facilitating its eventual return to private sector ownership.
Cameron Criticised On Flood Defence Spending
The boss of the country’s biggest insurance firm, Legal & General, has told Sky News he is concerned about a lack of spending on flood defences.
Fly on the Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled for today include:
Jobless Claims for the week of Feb. 22 at 8:30–consensus 335K
Durable goods orders for January at 8:30–consensus -1.6%
Kansas City Fed manufacturing activity index at 11:00–consensus 2
Acuity Brands (AYI) upgraded to Overweight from Neutral at Piper Jaffray
Air Products (APD) upgraded to Buy from Neutral at Citigroup
Baidu (BIDU) upgraded to Buy from Hold at Stifel
CSR (CSRE) upgraded to Overweight from Equal Weight at Morgan Stanley
Care.com (CRCM) upgraded to Overweight from Neutral at JPMorgan
First Solar (FSLR) upgraded to Outperform from Neutral at RW Baird
ICF International (ICFI) upgraded to Market Perform from Underperform at Wells Fargo
Nordson (NDSN) upgraded to Buy from Hold at BB&T
PetroChina (PTR) upgraded to Buy from Neutral at Goldman
Ralph Lauren (RL) upgraded to Buy from Neutral at Goldman
Sinopec (SNP) added to Conviction Buy List at Goldman
Sony (SNE) upgraded to Buy from Neutral at Citigroup
Teekay (TK) upgraded to Outperform from Neutral at Credit Suisse
Weatherford (WFT) upgraded to Buy from Neutral at UBS
WellCare (WCG) upgraded to Outperform from Neutral at Credit Suisse
Workday (WDAY) upgraded to Outperform from Market Perform at FBR Capital
AGCO (AGCO) downgraded to Equal Weight from Overweight at Morgan Stanley
Baidu (BIDU) downgraded to Equal Weight from Overweight at Morgan Stanley
CNOOC (CEO) downgraded to Neutral from Buy at Goldman
Campus Crest (CCG) downgraded to Neutral from Outperform at RW Baird
Cedar Realty Trust (CDR) downgraded to Hold from Buy at Wunderlich
Clean Harbors (CLH) downgraded to Perform from Outperform at Oppenheimer
Cree (CREE) downgraded to Neutral from Overweight at Piper Jaffray
Cypress Semiconductor (CY) downgraded to Sector Perform at Pacific Crest
Deutsche Bank (DB) downgraded to Neutral from Buy at BofA/Merrill
Dyax (DYAX) downgraded to Market Perform from Outperform at Leerink
GameStop (GME) downgraded to Underperform from Neutral at Longbow
Globus Medical (GMED) downgraded to Hold from Buy at WallachBeth
ITT Educational (ESI) downgraded to Neutral from Buy at BofA/Merrill
JAKKS Pacific (JAKK) downgraded to Neutral from Buy at B. Riley
LightInTheBox (LITB) downgraded to Perform from Outperform at Oppenheimer
Nektar (NKTR) downgraded to Neutral from Buy at MKM Partners
UTi Worldwide (UTIW) downgraded to Market Perform from Outperform at Avondale
VF Corp. (VFC) downgraded to Neutral from Buy at Goldman
Allison Transmission (ALSN) initiated with an Equal Weight at Morgan Stanley
Cummins (CMI) initiated with an Equal Weight at Morgan Stanley
EP Energy (EPE) initiated with a Buy at Citigroup
Express (EXPR) initiated with a Neutral at Wedbush
Francesca’s (FRAN) initiated with an Outperform at Wedbush
KaloBios (KBIO) initiated with an Outperform at JMP Securities
Manhattan Associates (MANH) initiated with a Buy at B. Riley
Microsoft (MSFT) initiated with a Neutral at B. Riley
Navistar (NAV) initiated with an Equal Weight at Morgan Stanley
Oracle (ORCL) initiated with a Buy at B. Riley
PACCAR (PCAR) initiated with an Overweight at Morgan Stanley
PTC Inc. (PTC) initiated with a Buy at B. Riley
Ross Stores (ROST) initiated with an Outperform at Wedbush
SAP (SAP) initiated with a Neutral at B. Riley
TIBCO (TIBX) initiated with a Buy at B. Riley
TJX (TJX) initiated with a Neutral at Wedbush
The Buckle (BKE) initiated with a Neutral at Wedbush
Trevena (TRVN) initiated with a Buy at Needham
Urban Outfitters (URBN) initiated with an Outperform at Wedbush
Veeco (VECO) coverage resumed with a Neutral at Piper Jaffray
WABCO (WBC) initiated with an Equal Weight at Morgan Stanley
Wabash (WNC) initiated with an Underweight at Morgan Stanley
Zumiez (ZUMZ) initiated with a Neutral at Wedbush
Williams Partners (WPZ) to acquire Williams’ (WMB) Canadian assets for $1.2B, sees assets immediately accretive
J.C. Penney (JCP) said the SEC was not recommending action its liquidity, cash position and debt and equity financing, as well as the company’s underwritten public offering of common stock last September
J.C. Penney (JCP) forecast FY14 SSS up mid-single digits, Q1 SSS up 3%-5%
Tesla (TSLA) announced a $1.6B convertible note offering and outlined plans for its Gigafactory
Sinovac Biotech (SVA) said its Phase III trial of its EV71 vaccine showed efficacy against hand, foot and mouth disease
IDC: Gamers spent four times as much on Google Play (GOOG) games in Q4 vs. year ago
Nordstrom (JWN) boosted dividend 10% to 33c per share
Riverbed (RVBD) board of directors member Satya Nadella stepped down to more fully devote time to his new position as Microsoft (MSFT) CEO
Bayer (BAYRY) to acquire Dihon Pharmaceutical Group in China
Companies that beat consensus earnings expectations last night and today include:
TRI Pointe Homes (TPH), Orion Marine (ORN), Assured Guaranty (AGO), Great Plains Energy (GXP), L Brands (LB), BioMarin (BMRN), Kennedy Wilson (KW), DCP Midstream (DPM), Autodesk (ADSK), Safe Bulkers (SB), Nutrisystem (NTRI), J.C. Penney (JCP)
Companies that missed consensus earnings expectations include:
Hilton (HLT), Sears (SHLD), PetroQuest (PQ), Delek US (DK), American Water (AWK), Vanguard Natural (VNR), BioScrip (BIOS), Southwest Gas (SWX), Churchill Downs (CHDN), Darling (DAR), Baidu (BIDU), Babcock & Wilcox (BWC), Halcon Resources (HK), TiVo (TIVO)
Companies that matched consensus earnings expectations include:
Republic Airways (RJET), Transocean (RIG), Aegean Marine (ANW), ICF International (ICFI), STAAR Surgical (STAA)
Market research firm IDC predicts global smartphone growth will fall sharply this year, Reuters reports
Blackstone (BX) near deal for Versace stake, FT reports
Verizon (VZ) investigating additional retail breaches, WSJ reports
Royal Bank of Scotland (RBS) CEO Ross McEwan says the bank is not yet strong enough for any profitable U.K. sale, NY Times reports
Credit Suisse (CS): Tax evasion limited to a few employees, WSJ reports
Baidu (BIDU) CEO: More acquisitions coming, Reuters reports
FDA eases worries regarding certain diabetes medications (MRK, NVO, BMY), AP reports
J. Crew considering possible IPO this year, NY Post reports
Berkshire (BRK.A) expected to post record profit, Bloomberg reports
Solar (FSLR, SUNE, SCTY) brightens for investors, WSJ reports
Allete (ALE) 2.8M share Secondary priced at $49.75
Cesca Therapeutics (KOOL) files to sell 5.01M shares of common stock for holders
DCP Midstream (DPM) files to sell 12.5M common units representing limited partners
Lumenis (LMNS) 6.25M share IPO priced at $12.00
Neurocrine Biosciences (NBIX) 8M share Secondary priced at $17.75
Tesla (TSLA) announces $1.6B convertible notes offering
United Insurance (UIHC) files to sell $50M of common stock