- Minorities Seen Driving U.S. Household Growth (Reuters0
- GM prepares to recall some Cruze sedans with Takata air bags (Reuters)
- PBOC Halts Repos as China Money Rate Climbs to Seven-Week High (BBG)
- Ukraine Optimism Wavers on Peace as Cease-Fire Winds Down (BBG)
- Economic Rebound Seen Undercut by Weak Pay as Vote Winner (BBG)
- Cracks Open in Dark Pool Defense With Barclays Lawsuit (BBG)
- The Survivor: How Eric Holder outlasted his (many) critics (Politico)
- IBM, Lenovo Tackle Security Worries on Server Deal (WSJ)
- Militants take Iraqi gas field town, president calls parliament session (Reuters)
- Carney Surprises Confounding Markets as BOE Manages Guidance (BBG)
- Malaysia jet most likely on autopilot when it crashed, Australia says (Reuters)
- Standard Chartered Says First-Half Profit to Drop 20% (BBG)
- Russia must urge Ukraine separatists to disarm ‘in hours’: Kerry (Reuters)
- Mercedes Upstages Rolls-Royce With $1 Million S-Class (BBG)
- Suarez and Uruguay sweat ahead of FIFA ruling on bite (Reuters)
- Treasury Two-Year Yield Gap to Fed Rate Widest Since September (BBG)
Overnight Media Digest
** International Business Machines Corp and Lenovo Group Ltd are grappling with ways to resolve U.S. security concerns over IBM’s proposed $2.3 billion sale of its computer-servers business to the Chinese company. (http://on.wsj.com/TyLkso)
** John Paulson’s hedge-fund firm Paulson & Co has built a $1 billion stake in Allergan Inc and supports a takeover of the Botox maker by Valeant Pharmaceuticals International Inc , according to a person familiar with the matter. (http://on.wsj.com/1rASEQ9)
** General Motors Co on Wednesday temporarily halted U.S. and Canadian sales of its best-selling car, the Chevrolet Cruze, over potential problems with air bags made by Japanese supplier Takata Corp. (http://on.wsj.com/1iI7dBo)
** Bank of America Corp on Wednesday gave layoff notices to 540 workers in its hometown of Charlotte, N.C. (http://on.wsj.com/1qK80nE)
** Barnes and Noble Inc is to split in two, separating its unprofitable Nook digital business from its consumer bookstores, an acknowledgment of the difficulties the retailer faces in competing with bigger companies like Amazon.com Inc in the e-book and hardware sector. (http://on.wsj.com/1mq1NdW)
** General Mills Inc announced plans Wednesday for a cost-cutting initiative, joining other packaged-food companies that are shrinking factory capacity and otherwise slashing expenses to make up for lackluster sales in the United States. (http://on.wsj.com/1pCTjPG)
** Omnicare Inc agreed to pay $124 million to settle allegations the nursing-home pharmacy company offered improper discounts to skilled-nursing facilities and made false billings to federal health programs, the Justice Department said Wednesday. (http://on.wsj.com/1mgxukU)
David Cameron’s European allies abandoned the British prime minister on Wednesday over his opposition to the appointment of Jean-Claude Juncker as president of the European Commission at a high-stakes summit on Friday.
Barclays has been sued by New York’s top securities regulator, which accused the British bank of favouring high-speed traders using its “dark pool” trading venue while misleading institutional investors.
The U.S. economy’s first-quarter Gross Domestic Product figures were down an annualised 3 percentage points more than original estimates after one of the country’s worst winters on record.
Google showed off a range of stripped-down Internet services such as voice-activated search to feature on a coming generation of smartwatches seeking to steal a march on Apple
Banks in the U.S. have been warned by the Federal Reserve that tests of their ability to survive a financial crisis will be made tougher – with new risk assessments and regular checks to ensure they fix any weaknesses identified in the process.
** Ikea AB plans to adopt a wage structure that it says will raise the average hourly minimum wage at its 38 stores in the United States to $10.76 an hour – a 17 percent increase. (http://nyti.ms/1iIdBbP)
** Goldman Sachs Group Inc is combining its consumer retail and health care investment banking groups, according to an internal memorandum sent on Wednesday. The move comes as drug company takeovers and retail advisory deals are on the rise. (http://nyti.ms/1lqXsqw)
** HanesBrands Inc said on Wednesday that it would acquire DBApparel of France from Sun Capital Partners for about 400 million euros in cash, or $544 million. As a result of the deal, Hanes will acquire worldwide rights to the Playtex, Wonderbra and DIM brands. (http://nyti.ms/1jkMmPs)
** General Motors Co ordered dealers to stop selling the 2013 and 2014 versions of its most popular car, the Chevrolet Cruze sedan, because of a problem with air bags made by the Japanese supplier Takata, whose products are already the subject of a large recall of other vehicles. (http://nyti.ms/1pCY6k8)
** The United States Supreme Court ruled Wednesday that Aereo Inc, a streaming TV service, had violated broadcast network copyrights – a decision that may ultimately mean the end of the start-up. (http://nyti.ms/1mgB4eS)
** The top law enforcer in New York State, Eric Schneiderman, filed civil fraud charges on Wednesday against Barclays Plc over its private stock trading platform, contending that it favored high-frequency traders over other investors. (http://nyti.ms/1nG78LT)
THE GLOBE AND MAIL
** Grocer Sobeys Inc is set to announce on Thursday that it is closing underperforming stores and cutting jobs following its $5.8-billion acquisition of rival Safeway Canada as it looks for savings in an intensifying food fight. (http://bit.ly/1plXGmo)
** Waterfront Toronto spent $11,565 for each of the 36 pink umbrellas that dot Sugar Beach and another $529,800 for the lakeside park’s large candy-striped rocks – money spent without public scrutiny by an agency that is running out of cash, said the Toronto councillor who unearthed the spending details. (http://bit.ly/1sHdhhU)
Reports in the business section:
** Google Inc has set the stage for the biggest battle yet in the technology world, unveiling a series of tools and services designed to allow the search giant to compete directly with Apple for control of the nascent but hugely lucrative connected devices market. (http://bit.ly/1lYjnGO)
** A report by the Senate Ethics Office has concluded that Tory Senator Pierre-Hugues Boisvenu broke the upper chamber’s conflict of interest code by intervening on behalf of an employee with whom he had a relationship. (http://bit.ly/1ixRzIP)
** The University of Ottawa has relieved the head coach of its men’s varsity hockey team after an internal investigation of allegations of drinking and sexual misconduct by some players during a trip to Thunder Bay in February. (http://bit.ly/1lYnhiT)
** British Columbia’s minister of natural gas Rich Coleman urged the federal government to keep the doors open on temporary foreign workers as the province looks to head off a skill shortage tied to development of a liquefied natural gas industry. (http://bit.ly/1nGQDzc)
SHANGHAI SECURITIES NEWS
– Chinese insurers had 814.1 billion yuan ($131.12 billion) worth of holdings in stocks and equity funds by the end of May, representing 9.82 percent of total assets, 7.9 billion yuan less than a month earlier.
– Tianhong Asset Management Co, controlled by a unit of Chinese e-commerce company Alibaba Group, will soon announce an incentive scheme that would allow its employees to own stocks in the fund manager.
– China is actively studying measures that would allow qualified developers of commercial properties to raise money via the debt market, marking a possible easing of financing curbs on property companies.
– Chinese recycling tycoon Chen Guangbiao offered a charity lunch for 1,000 “poor and destitute Americans” in New York on June 25. Each participant was also to receive $300.
– Synthetic drugs have become prevalent in China’s southwestern province of Yunnan, posing a challenge to the government’s anti-drug efforts, experts warned ahead of the International Day Against Drug Abuse and Illicit Trafficking.
BANKS SHOULD HAVE FINAL SAY ON MORTGAGE LENDING, SAYS RBS
Royal Bank of Scotland has told Mark Carney that lenders should make decisions about mortgage policy, on the eve of the Bank of England introducing new rules intended to cool the housing market.
BARCLAYS SUED BY NY ATTORNEY GENERAL OVER DARK POOLS
Barclays is being sued over claims it falsified marketing material to mislead people into investing in its dark pools by the New York attorney general.
FURIOUS INVESTORS ATTACK WPP AND RBS OVER EXCESSIVE BONUSES AND PAY
Investors at two FTSE 100 companies have joined the chorus of protests against excessive executive pay, with nearly 30 percent of shareholders at the advertising group WPP refusing to endorse a plan that allowed founder Sir Martin Sorrell to receive a 30 million pound windfall last year while the Royal Bank of Scotland chairman Sir Philip Hampton was forced to defend the bank’s bonus schemes.
US ECONOMY SHRINKS AT FASTEST RATE SINCE RECESSION AS HARSH WINTER BITES
The US economy has shrunk at its fastest rate since the depths of the recession five years ago as it emerged that the harsh winter took a far bigger toll on activity than previously estimated.
BARCLAYS ACCUSED OF DECEIVING INVESTORS
Barclays Bank was last night charged with “fraud and deceit” in its dealings with investors by New York’s attorney general.
BANK’S FPC AIMS TO COOL HOUSING HOTSPOTS
Tougher affordability tests on homebuyers are regarded by bankers as the most likely move to be announced by the Bank of England’s Financial Policy Committee today as it attempts to cool down an overheating housing market.
WONGA ORDERED TO PAY 2.6 MLN STG COMPENSATION AFTER USING FAKE LAW FIRMS TO CHASE DEBTS
The payday lender Wonga is facing the prospect of a criminal investigation after City watchdogs handed police a file detailing how the company lied to hard-up borrowers.
EASYJET’S SIR STELIOS HAJI-IOANNOU TO FLOAT EASYHOTEL ON LONDON’S AIM
EasyJet founder Sir Stelios Haji-Ioannou is set for another punt at the stock markets next week with his latest budget venture, easyHotel. The company plans to raise 30 million pounds by joining London’s junior AIM market, just half of the 60 million pounds the chain had hoped to raise in the latest sign of investor fatigue.
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled today include:
Jobless claims for the week of June 21 at 8:30–consensus 310K
Personal income for May at 8:30–consensus up 0.4%
Consumer spending for May at 8:30–consensus up 0.4%
PCE deflator for May at 8:30–consensus up 0.3% for the month
Fresenius Medical (FMS) upgraded to Outperform from Neutral at Credit Suisse
Hill-Rom (HRC) upgraded to Buy from Neutral at Goldman
NuVasive (NUVA) upgraded to Buy from Neutral at Goldman
PAREXEL (PRXL) upgraded to Outperform from Market Perform at William Blair
PAREXEL (PRXL) upgraded to Outperform from Neutral at RW Baird
Pinnacle Foods (PF) upgraded to Outperform from Sector Perform at RBC Capital
Wisconsin Energy (WEC) upgraded to Neutral from Sell at UBS
zulily (ZU) upgraded to Outperform from Sector Perform at RBC Capital
Estee Lauder (EL) downgraded to Neutral from Buy at B. Riley
Hawaiian Electric (HE) downgraded to Cautious from Neutral at ISI Group
NewBridge (NBBC) downgraded to Market Perform from Outperform at Raymond James
United Continental (UAL) downgraded to In-Line from Outperform at Imperial Capital
21st Century Fox (FOXA) initiated with a Buy at Jefferies
Amazon.com (AMZN) initiated with an Equal Weight at Barclays
Atlantic Power (AT) initiated with an Outperform at Imperial Capital
CBS (CBS) initiated with a Buy at Jefferies
CarMax (KMX) initiated with a Buy at KeyBanc
Cytec Industries (CYT) initiated with a Hold at Topeka
Disney (DIS) initiated with a Buy at Jefferies
EastGroup Properties (EGP) initiated with a Buy at Goldman
eBay (EBAY) initiated with an Equal Weight at Barclays
El Paso Pipeline (EPB) initiated with a Sector Perform at RBC Capital
Facebook (FB) initiated with an Overweight at Barclays
Foundation Medicine (FMI) initiated with a Neutral at Janney Capital
Gannett (GCI) initiated with a Buy at Jefferies
Golar LNG (GLNG) initiated with a Buy at BTIG
Google (GOOG) initiated with an Overweight at Barclays
Harvard Bioscience (HBIO) initiated with a Buy at Janney Capital
Himax (HIMX) initiated with a Hold at Brean Capital
Interpublic Group (IPG) initiated with a Buy at Jefferies
LinkedIn (LNKD) initiated with an Equal Weight at Barclays
MDC Partners (MDCA) initiated with a Buy at Jefferies
Manulife Financial (MFC) initiated with a Neutral at Goldman
Netflix (NFLX) initiated with an Underweight at Barclays
News Corp. (NWSA) initiated with a Buy at Jefferies
Repligen (RGEN) initiated with a Buy at Janney Capital
Sun Life Financial (SLF) initiated with a Buy at Goldman
Time Warner (TWX) initiated with a Buy at Jefferies
Turtle Beach (hear) initiated with an Outperform at Northland
Twitter (TWTR) initiated with an Overweight at Barclays
Veracyte (VCYT) initiated with a Buy at Janney Capital
Viacom (VIAB) initiated with a Buy at Jefferies
Yahoo (YHOO) initiated with an Equal Weight at Barclays
NY AG Eric Schneiderman announced fraud charges against Barclays (BCS) in connection to dark pool
C&J Energy (CJES) will merge with Nabors’ (NBR) completion and production businesses in a transaction valued at $2.86B
Iron Mountain’s (IRM) board approved the company’s conversion to a REIT
Philip Morris (PM) targeting 2015 and near-term EPS growth of 8%-10%
Lennar (LEN) said homebuilding recovery continued progression at slow, steady pace
Bed Bath & Beyond (BBBY) reported weaker than expected Q1 results and Q2 guidance
Companies that beat consensus earnings expectations last night and today include:
Lennar (LEN), Herman Miller (MLHR)
Companies that missed consensus earnings expectations include:
Methode Electronics (MEI), Bed Bath & Beyond (BBBY), Casella Waste (CWST), Cinedigm (CIDM), EXFO Inc. (EXFO)
Companies that matched consensus earnings expectations include:
H.B. Fuller (FUL), American Software (AMSWA)
GM (GM) tells dealers to halt sales of 2013-2014 Chevy Cruze sedans, Reuters says
FDA panel does not back accelerated approval of AstraZeneca (AZN) cancer drug, Reuters reports
Bank of America (BAC) cutting 540 employees in Charlotte, Charlotte Observer reports
Google (GOOG) acquires Appurify, terms not disclosed, Re/code reports
America Movil (AMX, AMOV) forms committee to evaluate options in Mexico, Bloomberg reports
Paulson & Co stake in Allergan (AGN) may give Valeant (VRX) deal a boost, Reuters reports
Monsanto (MON) shares should stay strong after $10B buyback, Barron’s says
Goldman Sachs (GS) combining two investment banking units, NY Times reports
Auspex Systems (ASPX) files to sell $69M of common stock
Brixmor (BRX) 29.95M share Secondary priced at $22.50
Envision Healthcare (EVHC) files to sell 27.5M shares for holders
GoPro (GPRO) 17.8M share IPO priced at $24.00
Karyopharm (KPTI) files to sell 2.2M shares of common stock
ServiceMaster (SERV) 35.9M share IPO priced at $17.00
Vince Holding (VNCE) 4.33M share Secondary priced at $34.50