ZeroHedge – Frontrunning – 16 July 2014

  • ZeroHedgeBRICS set up bank to counter Western hold on global finances (Reuters)
  • Fed’s Yellen Hedges Her View on Rates (Hilsenrath)
  • China GDP Grows 7.5% in Second Quarter (WSJ)
  • Get More Acquainted With Your Knees as Boeing Reworks 737 (BBG)
  • Israel Warns Gazans of New Attack After Hamas Rejects Truce (WSJ)
  • Israel poised for Gaza incursions after truce collapses (Reuters)
  • China Housing Sales Fall in First Half of 2014 (WSJ)
  • IBM to offer iPads and iPhones for business users (Reuters)
  • Fed’s George says strengthening economy warrants quick rate rise (Reuters)
  • European Leaders Expected to Expand Sanctions Against Russia (WSJ)
  • Hedge Funds Turn to Raves, Madoff Claims on Distress Scarcity (BBG)
  • Hedge Funds’ Crop Exodus Seen Extending Price Declines (BBG)

Overnight Media Digest


* Israel threatened to broaden its offensive against Hamas after the Islamists rejected a truce and the army warned tens of thousands of Palestinians in northern Gaza to clear out by Wednesday. (

* JP Morgan and Goldman Sachs posted better-than-expected quarterly results, driven by an unforeseen uptick in key trading businesses in June. (

* Federal Reserve Chairwoman Janet Yellen defended keeping interest rates low before Congress, but opened the door a crack to earlier-than-planned rate hikes if the labor market continues its surprising improvement. (

* The Obama administration joined the growing debate over U.S. companies reincorporating overseas for tax purposes, urging lawmakers to pass legislation to limit the moves. (

* Standard & Poor’s Ratings Services, after more than a year of fighting a crisis-era lawsuit, is willing to reopen discussions with the Justice Department to settle the case. (

* Alibaba Group Holding Ltd <IPO-BABA.N> has been valued as high as about $150 billion in recent private trades of its stock, according to people familiar with the transactions, as the e-commerce company’s perceived market value rises ahead of its initial public offering. (

* Apple Inc and IBM struck an agreement to create simple-to-use business apps and sell iPhones and iPads to Big Blue’s corporate customers. (

* The bankruptcy trustee for Bernard Madoff’s investment firm filed an amended lawsuit against Madoff’s two sons on Tuesday, adding detail to claims that the men were aware of the Ponzi scheme and actively worked to conceal it from the Securities and Exchange Commission by deleting, altering or hiding records during an audit. (

* Former Ford Motor Co Chief Executive Alan Mulally, who flirted with Microsoft Corp’s top job last winter, has joined the board of another tech giant: Google Inc . (

* In a bumpy year for commodities markets, some investors think they have hit on a winning strategy: Wait it out. Extreme weather and an uncertain economic outlook have sent prices for commodities ranging from coffee to natural gas to soybeans on a wild ride this year. In many of these markets, the cost for commodities delivered today is higher than months from now. That is opening up a number of ways for investors to profit. (



Tobacco company Reynolds American said it would buy smaller rival Lorillard for $27.4 billion in a complex four-way deal, creating formidable competition for Marlboro-maker Altria in the world’s most profitable cigarette market.

Goldman Sachs and JPMorgan Chase both posted healthier-than-expected revenues from their fixed income desks that many investors feared were in rapid decline.

Yahoo Inc has struck a deal to keep a larger stake than expected in Chinese ecommerce group Alibaba Group Holding Ltd <IPO-BABA.N> when it goes public in what is expected to be the largest technology IPO this year.

International Business Machines Corp and Apple Inc have sealed an exclusive alliance to turn iPhones and iPads into fully business-friendly devices, marking how deeply “consumerisation” is reshaping corporate technology markets.

Chinese smartphone maker Xiaomi has begun an aggressive push into in India, the world’s largest smartphone market, placing pressure on market leader Samsung Electronics Co Ltd .



* General Motors Co’s response to the car crash that killed Gene Erickson, as well as its replies to queries in other crashes obtained by The New York Times from the National Highway Traffic Safety Administration, casts doubt on how forthright the automaker was with regulators over a defective ignition switch that GM has linked to at least 13 deaths over the last decade.(

* As part of its effort to improve working conditions for its youngest employees in its global corporate and investment banking unit, Bank of America Corp has hired more junior bankers, the latest sign of a shifting corporate culture on Wall Street. The incoming class of full-time analysts and associates, who start work later this month, will be almost 40 percent larger than last year’s class. (

* News on Tuesday that Reynolds American had agreed to buy Lorillard Inc for $27.4 billion, uniting two of the nation’s biggest tobacco companies, highlighted how important e-cigarettes have become to the declining tobacco industry. Both Reynolds and Lorillard have pushed hard into e-cigarettes, which offer a new way of delivering a puff of nicotine. (

* Ralph Whitworth, a longtime activist investor with a large stake in Hewlett-Packard Co, has resigned as interim chairman of the computer company’s board and will take a leave of absence from his investment firm, Relational Investors, HP announced on Tuesday. (

* In a deal that could deepen Apple Inc’s sales to corporations and strengthen International Business Machine’s position in business software, the two companies announced a wide-ranging partnership intended to spread advanced mobile and data analysis technology in the corporate world. (

* As of Tuesday, there were about 780,000 comments on the Federal Communications Commission’s proposed so-called net neutrality rules, which guide how Internet service providers (ISPs) manage web traffic on their networks, far more than for any previous rule-making proceeding before the regulator. The agency is fine-tuning its rules to secure an open Internet, after a federal-court decision in January said it had to rethink its approach. (




** Toronto’s mayoral candidates faced off for the first time since incumbent Rob Ford’s return from rehab, with a raucous debate in Scarborough where they clashed repeatedly over the issue of transit. (

** Canadian Foreign Affairs Minister John Baird is reaching out to a number of Middle Eastern countries in an effort to persuade the Egyptian government to release an imprisoned Canadian journalist. (

Reports in the business section:

** Apple Inc has struck an unlikely alliance with International Business Machines Corp to produce business-focused apps for iPhones and iPads, a threat to BlackBerry Ltd as it tries to refocus and target government and corporate clients. (


** New amendments to the Canadian government’s prostitution bill will give it a better chance of withstanding a constitutional court challenge, says a leading Conservative on the House of Commons justice committee. (

** A Tunisian arrested by the Royal Canadian Mounted Police last year over an alleged plot to derail a passenger train near Toronto spent six weeks training with a man “in direct contact” with the leader of Al-Qaeda, according to a newly released FBI document. (


** Escalating geopolitical tensions between Vladimir Putin and the West may be setting off tremors in Canada’s mining sector, with Russian backers withdrawing from North American assets, creating both big opportunities and major headaches for Canadian firms. (

* Apple Inc and International Business Machines Corp are teaming up to provide business apps for the iPhone and iPad, taking aim at BlackBerry Ltd’s core enterprise client base. After Tuesday’s announcement of the partnership, BlackBerry’s shares fell almost 4 percent in after-hours trading. (




– China International Capital Corp Ltd (CICC) is in touch with underwriters about a listing, but there is little potential for it to do so on the Hong Kong Stock Exchange this year, sources told the newspaper.


– Thirty percent of vehicles purchased by delivery companies in Shanghai will have to be environmentally friendly, a new regulation stipulates.


– Ping An Bank said it would raise 20 billion yuan ($4.83 billion) via preferred shares and 10 billion yuan through a private placement.


The Times


The Financial Stability Board has proposed 15 reforms in the wake of allegations of manipulation, and the launch of dozens of investigations around the world into banks. (


The governor of the Bank of England revealed that his surprise comment about interest rates last month was designed to puncture the complacency of markets and reduce the risk of a destabilising 1994-style bond market crash. (


The management of Blinkx, the online video company hit by a bear raid earlier this year, is poised to launch a share buyback programme to shore up support for its stock after investors told the company to “burn the shorters”. (

The Guardian


Food price rises and delayed summer clothes sales by high street retailers lifted Britain’s inflation rate to a five-month high in June, well above forecasts. (


Richard Baker has taken his first prominent City role since the private equity-backed takeover of Alliance Boots in 2007, succeeding Anthony Habgood as chairman of Whitbread. (


Tesco is facing criticism from farmers for promoting New Zealand lamb at the height of the British season for the meat, despite its promises to back local producers. (

The Telegraph


The governor of the Bank of England has rejected the Bank of International Settlement’s call to raise interest rates faster saying the recommendation was “outside political and economic reality”. (


Lloyds Banking Group is believed to be nearing a settlement with regulators in the U.S. and UK over alleged Libor rigging, making the taxpayer-backed lender the latest in a long line of banks to face heavy fines. (


Matt Hancock’s first major task on stepping into Michael Fallon’s shoes at Britain’s Department of Energy and Climate Change will be to persuade world-scale oil and gas companies to bid in the biggest auction yet to develop shale resources. (

Sky News


Britain’s biggest lenders have been summoned to the Bank of England as the industry prepares to undergo a searching test of its ability to withstand a sterling and housing market crash. (


Fly On The Wall Market Snapshot


Domestic economic reports scheduled for today include:
Producer price index for June at 8:30–consensus up 0.3%
Industrial production for June at 9:15–consensus up  0.4%
Capacity utilization rate for June at 9:15–consensus 79.2%
Housing market index for July at 10:00–consensus 51



FireEye (FEYE) assumed with a Buy from Neutral at Goldman
Intel (INTC) upgraded to Buy from Neutral at B. Riley
Intel (INTC) upgraded to Buy from Neutral at UBS
Mellanox (MLNX) upgraded to Buy from Hold at Jefferies
Rogers Communications (RCI) upgraded to Hold from Sell at Canaccord
SJW Corp. (SJW) upgraded to Outperform from Neutral at RW Baird
Syngenta (SYT) upgraded to Outperform from Neutral at Credit Suisse
Western Digital (WDC) upgraded to Outperform from Neutral at RW Baird


IMAX (IMAX) downgraded to Neutral from Overweight at Piper Jaffray
Michael Kors (KORS) downgraded to Market Perform from Outperform at William Blair
Nationstar (NSM) downgraded to Underperform from Market Perform at Wells Fargo
Ross Stores (ROST) downgraded to Neutral from Buy at Sterne Agee
Walter Investment (WAC) downgraded to Underperform from Market Perform at Wells Fargo
Yahoo (YHOO) downgraded to Fair Value from Buy at CRT Capital


Apple (AAPL) initiated with a Buy at Citigroup
Basic Energy (BAS) initiated with a Neutral at RW Baird
Brookdale Senior Living (BKD) initiated with a Buy at Goldman
Dresser-Rand (DRC) initiated with a Neutral at RW Baird
Eclipse Resources (ECR) initiated with an Overweight at Morgan Stanley (yesterday)
Fortinet (FTNT) initiated with a Neutral at Goldman
Frank’s International (FI) initiated with a Hold at Jefferies
Key Energy (KEG) initiated with an Outperform at RW Baird
Oil States (OIS) initiated with an Outperform at RW Baird
PBF Energy (PBF) initiated with an Equal Weight at Barclays
Palo Alto (PANW) assumed with a Conviction Buy at Goldman
Proofpoint (PFPT) initiated with a Buy at Goldman
Radius Health (RDUS) initiated with a Buy at Canaccord
Radius Health (RDUS) initiated with a Buy at Cantor
Radius Health (RDUS) initiated with a Buy at Jefferies
Radius Health (RDUS) initiated with an Outperform at Cowen
Seventy Seven Energy (SSE) initiated with a Hold at Jefferies
Superior Energy (SPN) initiated with an Outperform at RW Baird
Symantec (SYMC) assumed with a Neutral at Goldman
Trecora Resources (TREC) initiated with a Buy at B. Riley
Ultragenyx (RARE) initiated with an Outperform at RW Baird
United Natural Foods (UNFI) initiated with an Outperform at Oppenheimer
Viper Energy (VNOM) initiated with a Market Perform at Northland


Apple (AAPL), IBM (IBM) announced a partnership to “transform enterprise mobile,” bringing IBM’s big data and analytics capabilities to iPhone and iPad
Intel (INTC) announced an increase of $20B to its share repurchase plan. The company said consumer demand remains challenging, soft, although there is some evidence of renewed PC interest
Google (GOOG) appointed ex-Ford (F) CEO Alan Mulally to board
Hershey (HSY) announced an increase in wholesale prices across the majority of its U.S., Puerto Rico and export portfolio and forecast 2014 sales, EPS growth at lower end of long-term range
International Game (IGT) to be acquired by GTECH for $4.7B cash, stock
Boeing (BA), Qatar Airways finalize order for 50 777Xs
FedEx (FDX), TNT Express (TNTEY) received Statement of Objections from French Competition Authority with respect to alleged anti-competitive behavior in the French parcels delivery sector
Rio Tinto (RIO) reported Q2 global iron ore production up 11% to 73.1M tons, raised FY14 thermal coal production outlook to 17.5M tonnes
Sirius XM (SIRI) announced additional $2B common stock repurchase program


Companies that beat consensus earnings expectations last night and today include:
Intel (INTC), BlackRock (BLK), iGATE (IGTE), Textron (TXT), ADTRAN (ADTN), Renasant (RNST), Cintas (CTAS), , CSX (CSX)

Companies that missed consensus earnings expectations include:
Yahoo (YHOO), Interactive Brokers (IBKR), Nord Anglia (NORD), Marten Transport (MRTN)


Yahoo (YHOO) M&A chief says company not planning to buy AOL (AOL), Re/code reports
CBS (CBS) CEO says ‘willing to talk’ to Aereo, VentureBeat reports
F-35 (LMT, UTX) Farnborough debut cancelled due to engine fire, WSJ says
Paulson sees T-Mobile (TMUS) takeover in high $30s, low $40s ‘reasonable,’ WSJ says (S, SFTBF)
Documents show GM (GM) hid defect from regulators, NY Times reports
Microsoft (MSFT) aims to reduce 1K jobs in Finland, Reuters says
General Motors (GM) shares should climb 30%, Barron’s says
Goldman Sachs (GS) looks undervalued, Barron’s says


Ares Capital (ARCC) files to sell 11.85M shares of common stock
BioAmber (BIOA) files to sell 2.8M shares of common stock
Independence Realty Trust (IRT) 7M share Secondary priced at $9.50
Mavenir Systems (MVNR) files to sell 4.5M shares of common stock
TreeHouse Foods (THS) files to sell $325M of common stock
US Antimony (UAMY) files to sell $1.4M in common stock / link to original article

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