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Thursday, March 28, 2024

Frontrunning: October 30

Courtesy of ZeroHedge. View original post here.

Submitted by Tyler Durden.

  • “Soaring consumer confidence” – How the Economy Is Stoking Voter Anger at Incumbent Governors (WSJ)
  • Euro zone deflation worries shield German Bunds from upbeat Fed (Reuters)
  • Greece’s Euro Dilemma Is Back as Minister Sees Volatility (BBG)
  • Ukraine gas supplies in doubt as Russia seeks EU payment deal (Reuters)
  • Sterling Lads Chats Show FX Traders Matching Fix Orders (BBG)
  • NATO Tracks Large-Scale Russia Air Activity in Europe (WSJ)
  • U.K. SFO Charges Ex-Tullett Prebon Broker in Libor-Rigging Probe (BBG)
  • Jerusalem on edge after shooting of rabbi (FT)
  • Israeli police kill Palestinian suspected of shooting far-right activist (Reuters)
  • Samsung seeks smartphone revamp to arrest profit slide (Reuters)
  • Barclays sets aside £500m for forex probe (FT)
  • Maine nurse fights Ebola quarantine, says will not be bullied (Reuters)
  • Why Oil Prices Went Down So Far So Fast (BBG)
  • Washington state support for gun control measure strong before vote (Reuters)
  • Microsoft launches wearable fitness device for $199 (Reuters)

 

Overnight Media Digest

WSJ

* The Federal Reserve said it would end its long-running bond-purchase program, concluding a historic experiment that stirred disagreement among policy makers, economists and investors about its impact even though the central bank said it helped accomplish its goal of reducing unemployment. (http://on.wsj.com/13eYOPn)

* Russian military aircraft conducted aerial maneuvers around Europe this week on a scale seldom seen since the end of the Cold War, prompting NATO jets to scramble in another sign of how raw East-West relations have grown. (http://on.wsj.com/1nS0Z4t)

* The two-year anniversary of superstorm Sandy was marked across the region Wednesday by somber speeches and events that put a spotlight on the rebuilding projects happening since the devastating storm. (http://on.wsj.com/1E4azVI)

* The Obama administration issued new rules that threaten to strip funding from thousands of for-profit college programs, part of a White House attempt to address college costs and rein in student debt, which has doubled since 2007. (http://on.wsj.com/1024GcQ)

* Oil prices would need to fall at least another $20 a barrel to choke off the U.S. energy boom, industry experts say, though some smaller American producers would face serious problems from a more modest decline. (http://on.wsj.com/1q1cdzj)

* China is taking a step toward easing its grip on credit cards, potentially allowing foreign companies like Visa, MasterCard and other electronic payment processors to have a greater presence there. (http://on.wsj.com/1DzN9FG)

* The Securities and Exchange Commission plans to open an inquiry into American Realty Capital Properties Inc’s accounting, according to a person familiar with the matter. (http://on.wsj.com/1q0bgY1)

* Citing a less favorable outlook for inflation, Brazil’s central bank on Wednesday raised its benchmark interest rate, in a move that wasn’t expected by markets. (http://on.wsj.com/1zLYKop)

* Fiat Chrysler Automobiles NV will spin off Ferrari through an initial public offering next year as Chief Executive Sergio Marchionne seeks to unlock the value of the sports-car brand and fund an ambitious five-year plan. (http://on.wsj.com/1p4lvQa)

* European prosecutors and tax authorities are expanding an investigation into complex stock trades that global banks allegedly used to help their clients fraudulently earn tax rebates, according to government officials and lawyers familiar with the probe. The investigation, being led by German prosecutors and tax officials, has recently broadened to involve tax authorities and prosecutors in other countries. (http://on.wsj.com/1wHsYFr)

 

FT

The heated arguments over Britain’s 1.7 billion pounds (2.72 billion US dollar) bill for extra EU budget contributions have shadowed the fact that Britain’s net payment to Brussels have almost doubled to over 8 billion pounds over the last five years.

John Manzoni, the new chief executive of the British civil service, will step down as a board member of brewer SABMiller Plc next summer after a group of 70 charities and medical professionals raised serious concerns that the brewery job was “inexplicable and troubling” and showed a “direct conflict of interest with British public health policy goals.”

Britain’s Serious Fraud Office (SFO) has added tensions to the supermarket chain Tesco Plc’s accounting issues by launching a criminal investigation. Tesco said in a statement that it will co-operate with the SFO’s investigation. Royal Bank of Scotland Group Plc has warned that about 16,500 customers have had more than 1 million pounds taken away from their bank accounts by brokers offering payday loans since July.

 

NYT

* Microsoft Corp has created a wrist-worn fitness device, Microsoft Band, and a related online service, Microsoft Health, that will analyze the data from the band and other devices to help people with their fitness goals. Microsoft is charging $199 for the device. (http://nyti.ms/1p4ENF0)

* Facing pressure from supporters of Apple Inc’s new mobile payment system, the consortium of major retailers, Merchant Customer Exchange, creating a rival system said on Wednesday that it might adjust its strategy. (http://nyti.ms/10AcNOu)

* The Food and Drug Administration said on Wednesday that it had approved Pfizer Inc’s vaccine for a dangerous strain of meningitis that caused outbreaks last year at Princeton and the University of California, Santa Barbara. (http://nyti.ms/1rTmcaC)

* Facing increasing scrutiny of how it handled the recall of dangerously defective airbags, the nation’s auto safety regulator, National Highway Traffic Safety Administration, sent a letter on Wednesday to 10 major automakers and Takata Corp , the airbags’ maker, urging a faster response. (http://nyti.ms/1FXD4Xf)

* Fiat Chrysler Automobiles said on Wednesday that it planned to spin off Ferrari, the Italian luxury sports car maker, listing its shares in New York and possibly in Europe. (http://nyti.ms/13hgtG4)

 

Canada

THE GLOBE AND MAIL

** The Conservative government will announce an income-splitting tax break for parents on Thursday, sources say. The measure will allow the higher-earning parent of children up to 18 years of age to transfer as much as C$50,000 ($44,639) of income to the lower-earning spouse for tax purposes. (http://bit.ly/1tRRkNk)

** The Toronto District School Board has officially severed its ties to a Confucius Institute subsidized and controlled by the government of China. Trustees overwhelmingly voted on Wednesday night in favor of terminating an agreement that would have taught elementary students Mandarin and other cultural programs controlled by China’s Ministry of Education. (http://bit.ly/1tEO9XZ)

** A 30-year-old assault-rifle collector from Pakistan has been arrested on allegations that he is a terrorist threat to Canada. The new case shows how the Canadian government’s approach to suspected extremists may be evolving. (http://bit.ly/1q2bca9)

NATIONAL POST

** Bank of Canada Governor Stephen Poloz estimates that if the low price of oil persists, it will knock a quarter-point off the growth of Canada’s gross domestic product in 2015. (http://bit.ly/1yJ76cp)

** The shooter in last week’s deadly attack in Ottawa was a criminal, but not a terrorist, according to New Democratic Party Leader Tom Mulcair. His comments were met with immediate condemnation from Conservatives and the leader of the Liberal party. (http://bit.ly/1tjGNcz)

** A security alert sent to federal public servants at the height of last week’s attack in Ottawa was in English only, which the country’s languages watchdog says represents a “critical failure” during a potential life-and-death situation. (http://bit.ly/1E4Q0IZ)

 

China

CHINA SECURITIES JOURNAL

– Net profits at nine listed banks in the first three months of the year rose 9 percent from a year early, but their non-performing loan ratios jumped 35.5 percent, according to the newspaper’s calculations.

– The World Bank said in a report that China’s economic growth is expected to slow to 7.4 percent for this year.

CHINA DAILY

– A credible and trusted judiciary is the last line of defence for fairness and justice in society, an editorial said. Whether or not the Communist Party’s latest decision to govern in accordance with law can bear fruit rests ultimately on whether or not it can build a government which is in awe of the law, it said.

SHANGHAI DAILY

– China’s twin-engine ARJ21 regional jet began a month-long set of trial flights at more than 10 airports in the country’s southwest to test its reliability before starting commercial flights early next year.

PEOPLE’S DAILY

– Cadres and the masses, and especially leaders at all levels, should take the road of socialism with Chinese characteristics and the rule of law, and promote the national governance system and the modernization of governance to achieve the great Chinese dream of the rejuvenation of the Chinese nation and to provide effective legal protections, an editorial said.

Britain

The Times

DIAGEO PUTS 50 MLN POUND NEW DISTILLERY ON ICE Plans by Diageo Plc for a new 50 million pound ($79.87 million) malt whisky distillery at Teaninich, in the Scottish Highlands, have been put on hold as the biggest Scotch whisky maker responds to a slowdown in demand for a dram around the world. The Johnnie Walker and J&B owner has also delayed investments in some of its existing distilleries, including an 18 million pound expansion of the Mortlach distillery in Speyside and a 30 million pound project at Clynelish distillery in Sutherland. (http://thetim.es/1Duz1xw) HEATHROW FEELS THE PINCH AS IT AWAITS EXPANSION DECISION

Heathrow, Europe’s largest airport, is running out of steam, according to the latest financial and operational data, as it awaits a decision on whether it will be allowed to build at least one new runway. Five of its seven key markets are slowing, rate of spending by passengers has been pegged back and the airport is braced for a significant brake in revenues from charging airlines as a tough five-year regulatory settlement kicks in. (http://thetim.es/1sHpm04)

The Guardian

CRIMINAL INVESTIGATION LAUNCHED INTO TESCO’S ACCOUNTING Britain’s Serious Fraud Office has launched a formal criminal investigation into accounting practices at Tesco Plc, which led to a 263 million pound profit overstatement at Britain’s biggest retailer. The inquiry, which was confirmed by the watchdog on Wednesday, will supercede an investigation by the Financial Conduct Authority (FCA), the financial regulator, which has been halted with immediate effect. It is not clear whether it will affect the launch of an inquiry by the accountancy watchdog, the Financial Reporting Council (FRC), which is also being considered. (http://bit.ly/1E1qfcu)

YORKSHIRE BUILDING SOCIETY FINED 4 MLN STG FOR UNFAIR TREATMENT OF BORROWERS Britain’s financial watchdog Financial Conduct Authority has fined Yorkshire Building Society 4.1 million pounds for unfairly treating mortgage borrowers when they were struggling with repayments. The building society is repaying a total of 8.4 million pounds to 34,000 mortgage customers. (http://bit.ly/1u99bjs)

The Telegraph

TESCO TO BE INVESTIGATED BY SERIOUS FRAUD OFFICE

The Serious Fraud Office is to investigate Tesco over the accounting irregularities that created a 263 million pound shortfall in the company’s profits. The SFO has notified Tesco that it will launch a formal criminal investigation into accounting practices at the company. The intervention by the SFO heightens the crisis facing Britain’s biggest retailer, which attempted to draw a line under the accounting scandal when it presented interim results last week. It means that the company and individuals could face criminal charges. As a result of the SFO’s intervention, the Financial Conduct Authority will halt its own investigation into Tesco. (http://bit.ly/1thgnIp)

JAGUAR LAND ROVER TO BUILD DISCOVERYS IN BRAZIL

British luxury carmaker Jaguar Land Rover has announced that its Discovery Sport will be one of the first vehicles to be built at its new plant in Brazil as the company looks to improve its penetration into foreign markets. The company said the plant at Itatiaia, in the west of South American country, will have the capacity to build 24,000 vehicles a year once production starts there in 2016. The plant will initially create 400 jobs and this is expected to near double by the end of the decade. A further 1,000 jobs are expected to be completed created in the local supply chain. (http://bit.ly/1E3FhOU)

EXITING UK IS ‘ABSOLUTE PRIORITY’, SAYS CLYDESDALE AND YORKSHIRE BANK OWNER

The Australian owner of Clydesdale and Yorkshire banks has made exiting Britain its “absolute priority”, and is exploring options that could see the two lenders floated on the stock market. National Australia Bank said its “clear focus” is on its home market and New Zealand, and highlighted the need for “greater urgency” in dealing with “low-returning assets”. Clydesdale and Yorkshire have dragged down the wider group in recent years, with the crisis-hit British economy faring much worse than those of Australia and New Zealand. (http://bit.ly/1zLrBth)

Sky News

BRITISH BANKS TO TAKE 1 BLN STG HIT AS FOREX DEAL LOOMS

Three of the Britain’s biggest banks are poised to set aside roughly 1 billion pound for settlements with regulators during the next week following a probe into the abuse of critical foreign exchange benchmarks. Barclays Plc, HSBC holdings Plc and Royal Bank of Scotland Group Plc plan to make the aggregate provision as part of their third-quarter results during the next week. (http://bit.ly/1FW9y42) FORMER BBC CHIEF TO JOIN STATE ASSETS BODY

A former BBC executive will on Thursday be appointed to the board of the body which oversees state-owned assets weeks before the completion of an inquiry into how such businesses are sold. Caroline Thomson, who stepped down as the BBC’s chief operating officer in 2012, will become a non-executive director of the Shareholder Executive. (http://bit.ly/1wGKnOL)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of October 25 at 8:30–consensus 280K
Q3 GDP at 8:30–consensus up 3.0%

ANALYST RESEARCH

Upgrades

Ally Financial (ALLY) upgraded to Buy from Hold at Deutsche Bank
Cree (CREE) upgraded to Neutral from Underperform at BofA/Merrill
Finish Line (FINL) upgraded to Overweight from Neutral at Piper Jaffray
Grand Canyon (LOPE) upgraded to Overweight from Neutral at Piper Jaffray
Ignite Restaurant (IRG) upgraded to Market Perform from Underperform at Raymond James
Lowe’s (LOW) upgraded to Buy from Neutral at Goldman
MakeMyTrip (MMYT) upgraded to Buy from Hold at Deutsche Bank
MicroStrategy (MSTR) upgraded to Overweight from Equal Weight at First Analysis
PG&E (PCG) upgraded to Neutral from Sell at Goldman
STMicroelectronics (STM) upgraded to Neutral from Sell at UBS
Sealed Air (SEE) upgraded to Market Perform from Underperform at Wells Fargo
Sprint (S) upgraded to Neutral from Underperform at Credit Suisse
SunPower (SPWR) upgraded to Buy from Hold at Canaccord
Take-Two (TTWO) upgraded to Buy from Hold at Brean Capital
Visa (V) upgraded to Outperform from Market Perform at FBR Capital

Downgrades

Associated Estates (AEC) downgraded to Hold from Buy at Wunderlich
C.H. Robinson (CHRW) downgraded to Underperform from Neutral at Credit Suisse
CNOOC (CEO) downgraded to Hold from Buy at Jefferies
Carlyle Group (CG) downgraded to Neutral from Buy at BofA/Merrill
Dixie Group (DXYN) downgraded to Outperform from Strong Buy at Raymond James
DreamWorks Animation (DWA) downgraded to Neutral from Buy at Janney Capital
Edison International (EIX) downgraded to Neutral from Buy at UBS
Evolving Systems (EVOL) downgraded to Neutral from Buy at B. Riley
Haverty Furniture (HVT) downgraded to Market Perform from Outperform at Raymond James
Healthcare Trust (HTA) downgraded to Hold from Buy at Wunderlich
Kraft Foods (KRFT) downgraded to Neutral from Outperform at Credit Suisse
PAREXEL (PRXL) downgraded to Neutral from Outperform at RW Baird
SPX Corp. (SPW) downgraded to Market Perform from Outperform at FBR Capital
SPX Corp. (SPW) downgraded to Neutral from Buy at Goldman
Southern Company (SO) downgraded to Underperform from Neutral at BofA/Merrill
Trustmark (TRMK) downgraded to Underperform from Market Perform at Keefe Bruyette

Initiations

Achaogen (AKAO) initiated with a Buy at Cantor
Brown Shoe (BWS) initiated with an Underweight at Morgan Stanley
Citizens Financial (CFG) initiated with a Neutral at RW Baird
DSW (DSW) initiated with an Underweight at Morgan Stanley
Deckers Outdoor (DECK) initiated with an Overweight at Morgan Stanley
Genesco (GCO) initiated with an Equal Weight at Morgan Stanley
Kate Spade (KATE) initiated with a Neutral at Mizuho
Skechers (SKX) initiated with an Overweight at Morgan Stanley
Southwestern Energy (SWN) initiated with an Outperform at Imperial Capital
Steven Madden (SHOO) initiated with an Equal Weight at Morgan Stanley
Wolverine World Wide (WWW) initiated with an Equal Weight at Morgan Stanley

COMPANY NEWS

Shutterfly (SFLY) said it will “remain independent at this time”
Royal Dutch Shell (RDS.A) said Charles Holliday will be next chairman
Samsung (SSNLF) sees demand for smartphone, tablet to increase during Q4
Appellate court upheld $203M judgement against Wells Fargo (WFC)
Novavax (NVAX) received FDA fast track designation for H7N9 VLP
Starboard Value urged RealD (RLD) board to engage in dialogue
Visa (V) authorized new $5B share repurchase program

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

DreamWorks Animation (DWA), Strayer (STRA), Progressive Waste (BIN), PBF Energy (PBF), ExlService (EXLS), Banc of California (BANC), Gentherm (THRM), Auxilium (AUXL), Ball Corp. (BLL), Air Products (APD), Quintiles (Q), MEDNAX (MD), Cigna (CI), Aegion (AEGN), Methanex (MEOH), EnPro (NPO), Care.com (CRCM), Vector Group (VGR), Hudbay Minerals (HBM), Silicon Motion (SIMO), Atlantic Tele-Network (ATNI), Ensco (ESV), American Railcar (ARII), United Insurance (UIHC), Barrick Gold (ABX), Brookline Bancorp (BRKL), Range Resources (RRC), TriCo Bancshares (TCBK), California Water Service (CWT), Hyster-Yale Materials (HY), Oceaneering (OII), Noble Corp. (NE), Pilgrim’s Pride (PPC), LifeLock (LOCK), Questar (STR), HomeTrust (HTBI), SS&C Technologies (SSNC), Curtiss-Wright (CW), Amerisafe (AMSF), CoStar Group (CSGP), Peregrine (PSMI), Macquarie Infrastructure (MIC), Murphy Oil (MUR), Retail Opportunity (ROIC), Image Sensing Systems (ISNS), Masimo (MASI), Digital River (DRIV), CACI (CACI), CBRE Group (CBG), Glu Mobile (GLUU), Avis Budget (CAR), Moelis (MC), Quantum (QTM), Hornbeck Offshore (HOS), MobileIron (MOBL), Lincoln National (LNC), Superior Energy (SPN), AXIS Capital (AXS), Assurant (AIZ), Smith Micro (SMSI), Fleetmatics (FLTX), RingCentral (RNG), FormFactor (FORM), Anika Therapeutics (ANIK), Con-way (CNW), McGrath RentCorp (MGRC), Weight Watchers (WTW), Grand Canyon (LOPE), Westell Technologies (WSTL), Veeco (VECO), Support.com (SPRT), Arch Capital (ACGL), Cempra (CEMP), Charles River Labs (CRL), Vistaprint (VPRT), Legacy Reserves (LGCY), MedAssets (MDAS), Credit Acceptance (cacc), Cavium (CAVM), Danaos (DAC), Cardtronics (CATM), Pacific Ethanol (PEIX), Capital Product (CPLP), Take-Two (TTWO), JDSU (JDSU), Insight Enterprises (NSIT), Calix (CALX), CTI BioPharma (CTIC), Carriage Services (CSV), Flextronics (FLEX), ARRIS (ARRS), RF Micro Devices (RFMD), Norwegian Cruise Line (NCLH), PAREXEL (PRXL), International Rectifier (IRF), Hanesbrands (HBI), Allstate (ALL), F5 Networks (FFIV), MetLife (MET), Visa (V), NCI, Inc. (NCIT), Akamai (AKAM), Whiting Petroleum (WLL), Acadia Healthcare (ACHC), Silicon Graphics (SGI), Forrester (FORR), Blackbaud (BLKB), QuickLogic (QUIK), Cardiovascular Systems (CSII), Cirrus Logic (CRUS)

Companies that missed consensus earnings expectations include:

Apollo Global (APO), NiSource (NI), PBF Logistics (PBFX), Bunge (BG), Harte-Hanks (HHS), LPL Financial (LPLA), USA Compression (USAC), M.D.C. Holdings (MDC), Time Warner Cable (TWC), Xcel Energy (XEL), AudioCodes (AUDC), Marlin Midstream (FISH), Terex (TEX), Kraton Performance (KRA), NewMarket (NEU), Sturm, Ruger (RGR), Agnico-Eagle (AEM), Kirby (KEX), Kearny Financial (KRNY), Service Corp. (SCI), Haverty Furniture (HVT), ARMOUR Residential (ARR), Fox Chase Bancorp (FXCB), PGT, Inc. (PGTI), Alon USA Partners (ALDW), Access Midstream (ACMP), Intersil (ISIL), Aspen Insurance (AHL), General Cable (BGC), KapStone (KS), Penn Virginia (PVA), TTM Technologies (TTMI), K2M Group (KTWO), Comfort Systems USA (FIX), Roadrunner (RRTS), Yamana Gold (AUY), Alliance Fiber Optic (AFOP), Williams (WMB), Equinix (EQIX), TFS Financial  (TFSL), Martin Midstream Partners (MMLP), Accuray (ARAY), American Capital Mortgage (MTGE), Intrepid Potash (IPI), Shutterfly (SFLY), Rosetta Stone (RST), MDC Partners (MDCA), Ignite Restaurant (IRG), Heritage Financial (HBOS), Fortune Brands (FBHS), Unum Group (UNM)

Companies that matched consensus earnings expectations include:

Vical (VICL), Enterprise Products (EPD), Greenbrier (GBX), Triumph Group (TGI), Royal Gold (RGLD), Celadon Group (CGI), Cloud Peak (CLD), Hudson Technologies (HDSN), ManTech (MANT), Atmel (ATML), Trulia (TRLA), Steiner Leisure (STNR), QIAGEN (QGEN), Century Aluminum (CENX)

NEWSPAPERS/WEBSITES

HBO (TWX) sees opportunity to offer streaming option through Apple TV (AAPL), Xbox (MSFT), WSJ says (AMZN)
Microsoft (MSFT) reduces 3,000 jobs, completes workforce reduction plan, Reuters reports
Amazon.com (AMZN) opens overseas websites to Chinese consumers, China Daily says
Twitter’s (TWTR) head of product engineering to leave company, Re/code reports
DHS says spies targeted control systems made by Siemens (SIEGY), GE (GE), WSJ reports

SYNDICATE

Acadia Realty Trust (AKR) files to sell 3.4M shares of common stock
Boot Barn (BOOT) 5M share IPO priced at $16.00
Carlyle Group (CG) files to sell 460K common units for holders
Chimerix (CMRX) announces commencement of $105M common stock offering
Chimerix (CMRX) files $150M common stock shelf
Facebook (FB) files to sell 162.7M shares for WhatsApp stockholders
Fifth Street Asset (FSAM) 6M share IPO priced at $17.00
Inogen (ingn) 2.1M share Secondary priced at $21.50
Western Gas Partners (WES) files to sell 7.5M common units

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