- Einhorn's advice to investors: don't take my advice (Reuters)
- Next: floating dead vegetables: Chinese inflation rises on soaring vegetable prices (FT)
- The scramble for the bottom dollar is on: McDonald's, Wendy's Battle for Value-Centric Customers (WSJ)
- Cheaper iPhone coming after all: Apple supplier Pegatron boosts China workforce by 40 percent in second quarter (Reuters)
- House set to pass tactical Republican debt bill (Reuters)
- Underwriting bonanza: Goldman Said to Earn $500 Million Arranging Malaysia Bond (BBG)
- G7 finance chiefs to discuss bank reform push (Reuters)
- Big Banks Push Back Against Tighter Rules (WSJ)
- University endowments trim holdings in US Treasuries (FT)
- Ex-Pakistan PM's son abducted as Taliban threaten poll (Reuters)
- China Dowry Filled With Gold Signals Gains for Jewelers (BBG)
- As discussed here over a year ago: China inflation data shows central bank policy dilemma (Reuters)
- Police Report Describes Nightmare Scenario of Three Women Chained in Cleveland Home (WSJ)
- GM Says Most Silverado Sales This Year Will Be Old Truck (BBG)
Overnight Media Digest
WSJ
* The nation's biggest banks are going on the offensive to fend off growing efforts in Washington to rein them in.
* Across the U.S., earnings season came and went with few signs that companies are taking advantage of the SEC's green light to tweet or post market moving information.
* Enron's former president and CEO Jeffrey Skilling and the Justice Department have reached an agreement that would cut his federal prison sentence to as little as 14 years from 24 years.
* In-flight Internet speeds could rival those on the ground under a proposal expected to move forward on Thursday. U.S. airlines have been rolling out internet service on flights for several years. But the service, which typically uses Earth-based antennas, is often too slow for today's data-guzzling Web apps.
* Samsung's Galaxy S4 smartphone takes advantage of the South Korean electronics company's chip and display manufacturing prowess to get its materials costs close to Apple's iPhone 5.
FT
Former Enron CEO Jeffrey Skilling could see his sentence shortened by 10 years as part of a deal with the U.S. Department of Justice.
JPMorgan has been warned that the U.S. Federal Energy Regulatory Commission "intends to recommend" an enforcement action against the bank and "certain firm personnel."
Coca-Cola will adopt clearer calorie-count labels, promote diet drinks and back a pledge not to market to children under 12 in an attempt to help fight obesity.
BAE forecast modest growth as it attempts to offset shrinking defence spending in the U.S. and Europe with new business from countries like Saudi Arabia.
Sainsbury Chief Executive Justin King has asked the government to "think hard" on the lack of a level playing field on tax between international internet retailers and high street stores.
The Financial Conduct Authority has begun a new probe looking at banks and asset managers' activities that help pension funds make significant changes to their investment portfolios.
Prime Minister David Cameron made immigration the central point of his Queen's Speech in an attempt to slow down the rise of the UK Independence party.
NYT
* Three weeks after checks sent to homeowners as compensation for foreclosure abuses were rejected for insufficient funds, Rust Consulting, the consulting firm at the center of the mishap, erred again: a fresh round of checks was written for the wrong amounts.
* With fair-trade coffee and organic fruit now prolific, consumers concerned with working conditions and environmental issues are demanding more disclosure about what they wear.
* The advocacy group Fwd.Us, created by Facebook's Mark Zuckerberg and others, has shocked some liberals with its tactics in a campaign to support immigration reform.
* Should U.S. President Barack Obama approve the 1,700-mile Keystone XL pipeline, some foes of the project say he ought to address climate policy at the same time.
* A bipartisan group of senators introduced legislation that would deny the Iranian government access to its foreign exchange reserves parked in the banks of other countries, estimated to be worth as much as $100 billion, mostly in euros.
* A combination of weak exports and slowly rising consumer spending in China prompted concerns among economists about sustaining even modest growth.
Canada
THE GLOBE AND MAIL
* Canada's Natural Resources Minister Joe Oliver is raising the prospect of a trade fight with the European Union over its proposal to label oil sands crude as dirty even as both sides try to seal a major deal to liberalize two-way trade.
* The Quebec government is preparing to table a Mining Act that will require companies to be socially and environmentally accountable to the local communities they operate in while being closely monitored to ensure the rules will be followed.
Reports in the business section:
* Wireless upstart Mobilicity has scoured the globe to find a willing buyer but despite "extensive marketing efforts," the Vaughan, Ontario-based carrier has yet to clinch a binding sale agreement. And time is running out for it to do so before its debt holders vote on two plans of arrangement related to its restructuring later this month.
NATIONAL POST
* Amid rising speculation about a suspicious package found at Department of National Defence headquarters, an Ottawa bomb squad commander said Wednesday it contained "elements" of an improvised explosive device, but lacked the crucial explosive materials needed to make a real bomb.
* Ontario Premier Kathleen Wynne has reshuffled her cabinet after one of her ministers was rushed to hospital. Officials say Government Services Minister Harinder Takhar has resigned due to medical issues after being rushed to hospital during his mother's funeral.
FINANCIAL POST
* Canada's condominium sector continues to show signs of a serious slowdown and a report Wednesday suggests lenders are growing wary of the country's largest highrise market.
* First Nations from British Columbia urged Enbridge Inc on Wednesday to start an exit strategy for its proposed Northern Gateway oil sands pipeline, or face lengthy legal action. But Chief Executive Al Monaco said Enbridge is focused on the regulatory review that is nearing completion and that the company wants to continue to engage with those affected to build a better project.
China
SHANGHAI SECURITIES NEWS
-- China has already drafted plans to crack down on the issue of oversupply in industries including steel, cement and glass, authoritative sources told the official paper. All new projects will be strictly controlled, while those that go against regulations will be harshly punished.
-- Surprisingly good export data has been met with some mistrust in China. The official paper asked whether Wednesday's data showed real improvement or was just a "flash in the pan".
CHINA SECURITIES JOURNAL
-- China is currently formulating policies to assist top agriculture companies establish co-operatives. Bodies including the agriculture and finance ministries will allocate 5 billion yuan ($814.20 million) to fund the development with the aim of boosting agricultural productivity.
CHINA DAILY
-- China plans to double its number of offshore air patrols by 2015 as tensions continue to simmer in the East and South China Seas, according to a official report from the China Institute for Marine Affairs.
SHANGHAI DAILY
-- China's financial hub is set to launch a plan to remove toxic materials from the soil around former industrial and chemical sites, Wu Qizhou, deputy director of the Shanghai Environment Protection Bureau said on Wednesday.
-- The number of cases involving financial fraud in Shanghai rose to 2,490 in 2012, a 78.5 percent increase against a year earlier, according to data from the Shanghai City Procuratorate.
PEOPLE'S DAILY
-- China's public expenditure on education hit 2.2 trillion yuan ($358.25 billion) in 2012, accounting for 4 percent of the country's GDP, the Ministry of Finance said on Wednesday.
Fly On The Wall 7:00 AM Market Snapshot
ANALYST RESEARCH
Upgrades
American Water (AWK) upgraded to Outperform from Market Perform at Wells Fargo
Banco Bilbao (BBVA) upgraded to Buy from Hold at Societe Generale
Maidenform (MFB) upgraded to Buy from Hold at Brean Capital
Rackspace (RAX) upgraded to Overweight from Equal Weight at Stephens
ViaSat (VSAT) upgraded to Outperform from Perform at Oppenheimer
Downgrades
BlackRock (BLK) downgraded to Neutral from Buy at Citigroup
Chesapeake Lodging (CHSP) downgraded to Hold from Buy at Deutsche Bank
Compass Diversified (CODI) downgraded to Neutral from Buy at Janney Capital
LivePerson (LPSN) downgrade to Underperform from Neutral at Credit Suisse
Orthofix (OFIX) downgraded to Market Perform from Outperform at JMP Securities
Orthofix (OFIX) downgraded to Neutral from Buy at Janney Capital
Orthofix (OFIX) downgraded to Neutral from Buy at Mizuho
Rackspace (RAX) downgraded to Equal Weight from Overweight at Evercore
Rackspace (RAX) downgraded to Sector Perform from Outperform at RBC Capital
Rackspace (RAX) downgraded to Sell from Underperform at CLSA
Tesla (TSLA) downgraded to Neutral from Buy at Goldman
Tim Hortons (THI) downgraded to Equal Weight from Overweight at Barclays
Transcept (TSPT) downgraded to Market Perform from Outperform at Leerink
Transmontaigne Partners (TLP) downgraded to Neutral from Buy at BofA/Merrill
Tumi (TUMI) downgraded to Neutral from Buy at Citigroup
Initiations
Chicago Bridge & Iron (CBI) initiated with a Buy at Deutsche Bank
Fluor (FLR) initiated with a Buy at Deutsche Bank
Infinity Pharmaceuticals (INFI) initiated with an Outperform at Wells Fargo
Jacobs Engineering (JEC) initiated with a Hold at Deutsche Bank
KBR (KBR) initiated with a Buy at Deutsche Bank
MasTec (MTZ) initiated with a Buy at Deutsche Bank
McDermott (MDR) initiated with a Hold at Deutsche Bank
Merit Medical (MMSI) initiated with a Hold at Benchmark Co.
Ocean Power (OPTT) initiated with a Strong Buy at Ascendiant Capital
Quanta Services (PWR) initiated with a Buy at Deutsche Bank
HOT STOCKS
Green Mountain (GMCR), Starbucks (SBUX) entered into long-term strategic partnership
JPMorgan (JPM) received 'wells-type' notice from Federal Energy Regulatory Commission
on energy probe, Bloomberg reports
MarkWest Energy (MWE) to acquire certain midstream assets in the Anadarko Basin from a Chesapeake Energy (CHK) subsidiary for $245M
Greenlight Capital’s (GLRE) David Einhorn said he was bullish on Oil States International (OIS) at the Sohn Conference
Aflac's (AFL) A+ rating affirmed by A.M. Best
Six Flags (SIX) announced two-for-one stock split
Outdoor Channel (OUTD) to receive $10.25 per share in merger with Kroenke Sports
EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Visteon (VC), Delek US (DK), Sun Life Financial (SLF), Neenah Paper (NP), RLJ Lodging Trust (RLJ), Medifast (MED), Sunoco Logistics (SXL), Tesla (TSLA), Rosetta Stone (RST), CenturyLink (CTL), Activision Blizzard (ATVI), Green Mountain (GMCR)
Companies that missed consensus earnings expectations include:
Bombardier (BDRBF), AES Corp. (AES), Kronos Worldwide (KRO), Regency Energy Partners (RGP), Cenveo (CVO), Transocean (RIG), McDermott (MDR), Quantum (QTM), Monster Beverage (MNST)
Companies that matched consensus earnings expectations include:
Fifth Street Finance (FSC), Denison Mines (DNN), Groupon (GRPN), News Corp. (NWSA)
NEWSPAPERS/WEBSITES
- The rush into junk bonds passed another milestone, showing investors are putting aside concerns about the health of the U.S. economy. The Barclays U.S. Corporate High Yield index fell to a record low of 4.96%, only the second time the benchmark tracking debt issued by weaker U.S. companies dropped below 5%, the Wall Street Journal reports
- McDonald’s (MCD) and Wendy’s (WEN) are struggling to attract cost-conscious consumers who are demanding better deals than even these low-price fast-food chains offer, the Wall Street Journal reports
- Greenlight Capital’s (GLRE) David Einhorn, one of the most closely followed managers in the $2T hedge fund industry, had some blunt advice for his fellow investors: "It doesn't make sense to blindly follow me or anyone else into a stock. "Do your own work," Reuters reports
- Pegatron Corp, an assembler of Apple’s (AAPL) iPhone and iPad, said it would increase its number of workers in China by up to 40% in the second half of the year, fueling market speculation of a new cheaper iPhone, Reuters reports
- Mining companies led by BHP Billiton (BHP) are holding the biggest ever sale of assets this year--about $48B--just as commodity prices head into a bear market. What’s bad timing for the miners might be the opposite for private equity, Bloomberg reports
- Citigroup (C) reduced Deutsche Bank’s (DB) lead as the biggest currency trader in a Euromoney Institutional Investor poll, helped by its larger share of emerging-market transactions, Bloomberg reports
SYNDICATE
American Residential Properties (ARPI) 13.7M share IPO priced at $21.00
Cyan (CYNI) 8M share IPO priced at $11.00
Ellington Financial (EFC) announces public offering of 5M common shares
Emerge Energy Services (EMES) 7.5M share IPO priced at $17.00
Health Care REIT (HCN) 20M share Spot Secondary priced at $73.50
Isis Pharmaceuticals (ISIS) 9M share Secondary priced at $19.00
PennyMac Financial (PFSI) 11.1M share IPO priced at $18.00
Quintiles Transnational (Q) 23.68M share IPO priced at $40.00
Receptos (RCPT) 5.2M share IPO priced at $14.00
Resolute Energy (REN) 13.25M share Secondary priced at $8.00
SS&C Technologies (SSNC) files to sell 7.5M shares for holders
TriState Capital (TSC) 5.7M share IPO priced at $11.50
ACTIVIST/PASSIVE FILINGS
SAC Capital reports 5.3% passive stake in Nexstar (NXST)
Corvex confirms 5.77% stake in tw telecom (TWTC)