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Thursday, March 28, 2024

Frontrunning: October 15

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

  • M&A Bubble is bursting: AbbVie Says It Reconsiders Merger Pact With Shire (WSJ)
  • Winner of bad headline timing award: Spinoffs Could Set Stage for Next Merger Wave (BBG) – and now wait for the spinoffs getting pulled
  • Record mortgage settlement pushes Bank of America into third-quarter loss (Reuters)
  • Korea joins the Japan currency war: Bank of Korea Cuts Base Rate (WSJ)
  • Double Irish’s Slow Death Leaves Google Executives Calm (BBG)
  • Global Oil Glut Sends Prices Plunging (WSJ)
  • Slow Rise in Prices Shows China’s Economy Is Still Struggling (WSJ)
  • EBay Merchants Lamenting Neglect Bid PayPal Good Riddance (BBG)
  • Bugs Joining Robots to Overcome Global Shortage of Copper (BBG)
  • Worrying for Saudi, U.S. oil output cuts could take a while (Reuters)
  • Putin Intimidation Tactics Kill Entente Hope for Finnish Premier (BBG)
  • Hong Kong tension rises with police beating of protester (Reuters)
  • U.S.-led air strikes intensify as Syria conflict destabilizes Turkey (Reuters)
  • Cities Look for Ways to Get Free of Empty Jails (WSJ)

 

Overnight Media Digest

WSJ

* Oil prices posted their biggest one-day drop in nearly two years Tuesday as a U.S.-led wave of crude has crashed into weak global demand, threatening the stability of some countries and providing an economic lifeline to others. (http://on.wsj.com/1z9dgX4)

* A clinic in the Liberian capital Monrovia has hired seven Ebola survivors to counsel other patients suffering from the virus. (http://on.wsj.com/1tstCaS)

* AbbVie Inc has notified Shire Plc that its board intends to reconsider its recommendation that AbbVie shareholders adopt the companies’ merger agreement. (http://on.wsj.com/ZYBPXv)

* JP Morgan and Citigroup each said they socked away hundreds of millions of dollars in the third quarter to cover legal costs, a sobering reminder that they are still reckoning with crisis-era behavior that has triggered billions in penalties already. (http://on.wsj.com/11k68Il)

* After a false start that set back its plans at least two years, Hilton Worldwide Holdings is launching a boutique-hotel chain that aims for a wider audience and lower room rates than some direct competitors. (http://on.wsj.com/1w1DFBn)

* The U.S. Supreme Court blocked Texas from implementing abortion-clinic restrictions that could leave the state with as few as seven providers. (http://on.wsj.com/1sFI7FO)

 

FT

Japanese telecommunications company Softbank Corp said it would acquire video streaming service DramaFever, known for its Korean television shows and movies.

Britain’s biggest retailer Tesco Plc has removed another three employees from their jobs as it continues to probe a 250 million stg ($400 million) profit overstatement.

Britain’s mobile operator EE said it would acquire Phones 4U mobile business. EE is expected to pay less than 5 million stg for this deal.

Spain will sell a 21 percent stake in its state-owned airports operator Aena to Corporacion Financiera Alba SA , Ferrovial SA and British investment fund the Children’s Investment Fund, Aena’s holding company Enaire said on Tuesday.

 

NYT

* Drugmaker AbbVie Inc disclosed on Tuesday that its board plans to reconsider recommending that shareholders vote in favor of its $54 billion takeover of its Irish-based, London-listed counterpart Shire. AbbVie directors will meet on Oct. 20 to decide whether to change its mind about the deal, which would let their company reincorporate in Britain to take advantage of a lower tax rate. (http://nyti.ms/1o9Ov8M)

* The housing bust ended several years ago, but the big mortgage banks are still acting as if the home loan business were fraught with peril. Their caution has restricted the availability of home loans, preventing many seemingly creditworthy people from obtaining mortgages. And on Tuesday, executives from Wells Fargo & Co, the nation’s biggest mortgage bank, said that important changes had to be made before they might consider increasing the flow of credit. (http://nyti.ms/1u34qlu)

* U.S-based footwear maker Converse says some of the core elements of its widely recognizable Chuck Taylor sneakers – black stripes and a rubber toe topper – are being co-opted by Wal-Mart Stores Inc, Kmart, Skechers USA Inc and others. And it is taking them to court, accusing 31 companies of trademark infringement in 22 separate lawsuits filed Tuesday in United States District Court in Brooklyn. (http://nyti.ms/1qqKjwq)

* A senior currency trader at JPMorgan Chase & Co in London has left the bank after he was placed on paid leave last year amid regulatory inquiries into potential manipulation of the foreign exchange market by currency traders. (http://nyti.ms/1u36Pg4)

* Geberit AG of Switzerland said on Tuesday that it had offered to acquire the Sanitec Corp, a Finnish maker of toilets and bathroom ceramics, for about $1.35 billion in cash. (http://nyti.ms/1sPJ7rm)

 

Canada

THE GLOBE AND MAIL

** Canadian stocks hit a record high six weeks ago, but have been on a downhill run ever since as nervous investors act on growing worries about deteriorating global conditions and their debilitating effect on demand for Canada’s energy and other resources. (http://bit.ly/1r8wu5g)

** The Canadian government is backing New Zealand’s bid for a temporary seat on the UN Security Council, throwing its support behind a long-time ally that’s promising a stronger voice for less-influential countries if it’s elected. (http://bit.ly/1nlE3u8)

** John Tory is promising no services will be cut if he is elected mayor, saying he would keep tax increases at or below the rate of inflation by finding efficiencies and wringing more money for Toronto out of the federal and provincial governments. (http://bit.ly/1tsWRu3)

NATIONAL POST

** Canada’s finance minister expects the economy to remain on track for solid growth this year and next, an outlook shared by private-sector economists who met with Joe Oliver on Tuesday as part of the government’s pre-budget consultations. (http://bit.ly/1r8xVkb)

** Tom Mulcair, leader of the New Democratic Party, said Canada “can’t afford not to” spend C$5-billion ($4.40 billion) a year on a new plan to create or maintain one million childcare spaces. The goal, he said, is to make sure that parents don’t pay more than C$15 a day for a childcare space. (http://bit.ly/1qrDV8a)

** Just five months after announcing that it was shelving its massive C$11-billion Joslyn oil sands mine – a decision that fueled wider concerns about the economic viability of the oil patch – the Canadian arm of French energy giant Total SA has confirmed that it is forging ahead with an application to expand the project by 60 percent. (http://bit.ly/1tsYXdu)

 

China

CHINA SECURITIES JOURNAL

– The central government has approved plans by Sichuan province to set up the new Tianfu business district as part of plans to accelerate development in western China.

SHANGHAI SECURITIES NEWS

– Luzhou Lao Jiao Co said in a statement that it had filed a lawsuit against the Agricultural Bank of China Ltd’s Changsha branch after about 150 million yuan ($24.5 million) of the company’s deposit was found missing.

21st CENTURY BUSINESS HERALD

– The National Development and Reform Commission has suspended approvals of auctioning corporate bonds this week, sources told the newspaper, amid plans to crack down on corruption and irregularities in the bond market.

SECURITIES TIMES

– China Minsheng Banking Corp Ltd entered into an agreement with Tesla Motors Inc for the U.S. carmaker to build at least 400 charging points in business offices of Minsheng Bank and local financial stores in more than 20 Chinese cities.

SHANGHAI DAILY

– The 4.5-generation mobile network, which is three to 10 times faster than the 4G network, will be used commercially network in 2016, Huawei Technologies Co said on Tuesday.

CHINA DAILY

– Structured products will be the most popular financial instrument and the United States will be the investment destination of choice for China’s wealthy in the coming 12 months, according a report co-released by Julius Baer Group and Bank of China Co Ltd.

PEOPLE’S DAILY

– Anyone who cares and loves Hong Kong should firmly support the Hong Kong government and allow them to carry out their official duties under the basic laws, a commentary carried by the mouthpiece of the ruling Communist Party of China said.

Britain

The Times

TESCO SUSPENSIONS ADD TO CHAOS AT TOP

An investigation into Tesco’s 250 million pound ($397 million) accounting crisis has prompted the suspension of three more executives, stoking concern about a disruption to its preparations for the crucial Christmas shopping season. (http://thetim.es/1w7aRsa)

WARRING SAUDIS OVER A BARREL ON FALLING OIL PRICE

Prince Alwaleed bin Talal expressed his “astonishment” that Ali al-Naimi, the Saudi oil minister, had played down the impact of prices falling below $100 a barrel. In his open letter to Saudi ministers, posted on Twitter, he noted that 90 percent of the country’s revenues come from oil. (http://thetim.es/1wCrSIQ)

The Guardian

UK INFLATION FALLS TO FIVE-YEAR LOW OF 1.2 PCT

Inflation has slumped to its lowest rate for five years, hitting 1.2 percent in September and taking pressure off the Bank of England to raise interest rates in coming months. (http://bit.ly/1r169WO)

IRELAND TO ABOLISH CONTROVERSIAL ‘DOUBLE IRISH’ TAX ARRANGEMENT

Ireland has officially announced the phased abolition of its controversial “double Irish” tax scheme that has enabled multinationals such as Apple to dramatically cut down their tax bills. (http://bit.ly/1yzUGpO)

The Telegraph

BIS WARNS ON ‘VIOLENT’ REVERSAL OF GLOBAL MARKETS

Global financial markets are dangerously stretched and may unwind with a shock as liquidity dries up, the Bank of International Settlements has warned. Guy Debelle, head of the BIS’s market committee, said investors have become far too complacent, wrongly believing that central banks can protect them, many staking bets that are bound to “blow up” at the first sign of stress. (http://bit.ly/1sOIm1Z)

HOUSE PRICES: THE NORTH-SOUTH DIVIDE IS NOW WIDER THAN EVER

The gap between the average prices of property in London and the northeast grew to its widest in history in August, according to data released from the Office of National Statistics. A home in the capital cost an average 514,000 pounds, the monthly analysis showed, compared with just 154,000 pounds in the northeast of England – an area of the country out of reach of the London “ripple” affect. (http://bit.ly/1xOqhAW)

Sky News

STRUGGLING BALFOUR BEATTY PICKS NEXT CHIEF

Balfour Beatty, the beleaguered construction group, will hand Qinetiq Chief Executive Leo Quinn the task of reviving its fortunes. (http://bit.ly/1vsGGx2)

OVER-55s TO USE PENSION POTS LIKE BANK ACCOUNTS

People reaching the age of 55 are to be given more flexibility over what they can do with their pension pots as they approach retirement. Chancellor George Osborne will announce that the over-55s will be able to withdraw several lump sums instead of just one. (http://bit.ly/1sASYB7)

The Independent

MULBERRY AND BURBERRY HIT BY LUXURY SLOWDOWN AS RICH TOURISTS STAY AWAY

The state of the luxury market was laid bare after Mulberry issued its third profit warning this year and larger rival Burberry warned the outlook for the sector was getting tougher, prompting both stocks to tumble in London IPO trading. (http://ind.pn/1sIOARI)

BOX’S FOUNDER AARON LEVIE ADMITS HE ANNOUNCED IPO PLANS TOO SOON

Aaron Levie, founder of Silicon Valley cloud-storage firm Box, on a visit to Box’s European headquarters in London, has admitted he was too quick to announce plans for his now-postponed stock-market float. (http://ind.pn/ZCReMd)

 

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Empire State manufacturing survey for October at 8:30–consensus 20.5
Retail sales for September at 8:30–consensus down 0.1%
Producer Price Index for September at 8:30–consensus up 0.1%

ANALYST RESEARCH

Upgrades

Applied Materials (AMAT) upgraded to Buy from Neutral at BofA/Merrill
Baker Hughes (BHI) upgraded to Buy from Neutral at Sterne Agee
Banco Bilbao (BBVA) upgraded to Buy from Hold at Deutsche Bank
BorgWarner (BWA) upgraded to Buy from Neutral at Sterne Agee
C.H. Robinson (CHRW) upgraded to Neutral from Underperform at Macquarie
CBS (CBS) upgraded to Buy from Neutral at Citigroup
Cavium (CAVM) upgraded to Outperform from Market Perform at JMP Securities
Charles River Labs (CRL) upgraded to Buy from Neutral at SunTrust
Daimler AG (DDAIF) upgraded to Overweight from Underweight at Barclays
Diodes (DIOD) upgraded to Strong Buy from Outperform at Raymond James
Grand Canyon (LOPE) upgraded to Outperform from Neutral at RW Baird
Host Hotels (HST) upgraded to Overweight from Equal Weight at Barclays
Lithia Motors (LAD) upgraded to Overweight from Underweight at Morgan Stanley
Micron (MU) upgraded to Overweight from Neutral at JPMorgan
Sabra Health Care (SBRA) upgraded to Buy from Neutral at BofA/Merrill
Sabra Health Care (SBRA) upgraded to Overweight from Equal Weight at Barclays
Sanofi (SNY) upgraded to Outperform from Neutral at Credit Suisse
Solvay (SVYZY) upgraded to Overweight from Equal Weight at Barclays
Sun Bancorp (SNBC) upgraded to Buy from Neutral at Sterne Agee
United Natural Foods (UNFI) upgraded to Overweight from Neutral at Piper Jaffray

Downgrades

Intel (INTC) downgraded to Underweight from Equal Weight at Morgan Stanley
Masco (MAS) downgraded to Neutral from Outperform at Macquarie
Northfield Bancorp (NFBK) downgraded to Neutral from Buy at Sterne Agee
Occidental Petroleum (OXY) downgraded to Neutral from Outperform at Credit Suisse
TreeHouse Foods (THS) downgraded to Underweight from Hold at KeyBanc

Initiations

Ambarella (AMBA) initiated with an Outperform at Pacific Crest
Baker Hughes (BHI) initiated with a Buy at Citigroup
CrossAmerica (CAPL) initiated with an Equal Weight at Barclays
Globe Specialty Metals (GSM) initiated with a Buy at Stifel
GoPro (GPRO) initiated with a Sector Perform at Pacific Crest
Green Bancorp (GNBC) initiated with an Outperform at Keefe Bruyette
Halliburton (HAL) initiated with a Neutral at Citigroup
Helmerich & Payne (HP) initiated with a Neutral at Citigroup
NIC Inc. (EGOV) initiated with a Hold at Maxim
Nabors Industries (NBR) initiated with a Buy at ISI Group
Orion Engineered (OEC) initiated with an Overweight at JPMorgan
Patterson-UTI (PTEN) initiated with a Buy at Citigroup
Pharmacyclics (PCYC) initiated with a Buy at Citigroup
RPC, Inc. (RES) initiated with a Buy at Citigroup
Receptos (RCPT) initiated with a Buy at Goldman
Schlumberger (SLB) initiated with a Neutral at Citigroup
Sensata (ST) resumed with a Buy at Citigroup
Sierra Wireless (SWIR) initiated with an Outperform at Northland
Superior Energy (SPN) initiated with a Neutral at Citigroup
Syntel (SYNT) initiated with a Buy at Maxim
Weatherford (WFT) initiated with a Neutral at Citigroup

COMPANY NEWS

AbbVie (ABBV) board reconsidering recommendation to holders to accept Shire (SHPG) merger
Qualcomm (QCOM) to acquire CSR (CSRE) for GBP 9.00 per share
BG Group (BRGYY) named Statoil’s (STO) Helge Lund as CEO, effective March 2, 2015; Statoil named Eldar Saetre as acting president and CEO
Google (GOOG) said researchers discovered vulnerability in SSL encryption
IndiGo signed MOU for 250 Airbus (EADSY) A320neo aircraft
Ann Inc. (ANN) announced a nondisclosure agreement with Golden Gate Capital.
Palo Alto (PANW) CEO told CNBC ‘not concerned’ about margins

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Intel (INTC) PNC Financial (PNC), BlackRock (BLK), ADTRAN (ADTN), Bank of the Ozarks (OZRK), Bank of the Ozarks (OZRK), Synergetics (SURG), Consumer Portfolio (CPSS), CSX (CSX)

Companies that missed consensus earnings expectations include:
KeyCorp (KEY), Linear Technology (LLTC), Healthcare Services (HCSG), Marten Transport (MRTN)

Companies that matched consensus earnings expectations include:
iGATE (IGTE)

Intel (INTC) sees Q4 revenue $14.7B, plus or minus $500M, consensus $14.49B
Wet Seal (WTSL) expects Q3 EPS (28c), consensus (26c)
CSX (CSX) sees sustaining double-digit earnings growth and margin expansion in 2015

NEWSPAPERS/WEBSITES

HP (HPQ), EMC (EMC) halt merger agreement discussions, Reuters reports
Avista (AVA) ‘quietly’ seeks buyer, Berkshire (BRK.A) interested, TheDeal.com reports (MDU)
Facebook (FB), Samsung (SSNLF) could collaborate to develop mobile content, Korea Times reports
Apple (AAPL) asks permission to lodge objections to GT bankrupcy in secret, Re/code says
Toyota (TM) to manufacture SUVs in Turkey starting in 2016, Nikkei reports
JPMorgan (JPM) looks like a buy, Barron’s says

SYNDICATE

CubeSmart (CUBE) files to sell 6.5M shares of common stock
Dominion Midstream (DM) 17.5M share IPO priced at $21.00
Esperion (ESPR) files to sell $85M in common stock
EveryWare Global (EVRY) files to sell 2.11M shares for holders
Forward Pharma (FWP) 10.5M share IPO priced at $21.00
Great Western (GWB) 16M share IPO priced at $18.00
Inogen (ingn) files to sell $50M of common stock for holders
Lpath (LPTN) files to sell 3.6M shares of common stock for holders
Memorial Production (MEMP) files to sell $250M of common units for limited partners
STAG Industrial (STAG) offers 5M shares of common stock

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