Facebook Researchers Manipulated News Feeds in 2012 Study (BBG)
Argentina at Brink of Default as $539 Million Payment Due (BBG)
Hedge fund correlation risk alarms investors (FT)
As China Flexes Muscle, Obama Frets Over Rival’s Weakness (BBG)
As caliphate declared, Iraqi troops battle for Tikrit (Reuters)
Dubai Caps Worst Month Since 2008 as Real Estate Stocks Tumble (BBG)
Russian Advisers Ready Iraq to Use New Combat Aircraft (BBG)
Blackstone Readies Big-Bet Hedge Fund (WSJ) - so what was GSO?
Pope says communists are closet Christians (Reuters)
Thomson Reuters revising FX trading standards (Reuters)
Scotland Holds Billions of Barrels of Shale Oil, Report Says (BBG)
U.S. Investment Firms Challenge Puerto Rico Restructuring Law (WSJ)
BNP Paribas Dollar-Clearing Ban Said to Start in 2015 (BBG)
BlackRock ETFs near $1 trillion as it loses market share to Vanguard (Reuters)
U.S. government to unveil near $9 billion fine for France's BNP (Reuters)
Soros Caught in ClickSoftware Rout That Puzzles Analysts (BBG)

Overnight Media Digest

WSJ

* The extremist group known as the Islamic State of Iraq and al-Sham (ISIS) is expanding its foothold in Syria after recent gains in neighboring Iraq, intensifying its clashes here against other Islamist rebel factions. (http://on.wsj.com/1sQ8xXl)

* Funds managed by Franklin Templeton Investments and OppenheimerFunds Inc asked the U.S. District Court for the District of Puerto Rico to block a new law that allows some public agencies to restructure their debt, arguing that only Congress is allowed to create bankruptcy rules. (http://on.wsj.com/1jB9WYr)

* After a series of high-profile data breaches and warnings, corporate boards are waking to cyberthreats, grappling with security issues they once relegated to technology experts. So far this year, 1,517 companies traded on the New York Stock Exchange or Nasdaq Stock Market listed some version of the words cybersecurity, hacking, hackers, cyberattacks or data breach as a business risk in securities filings, according to a Wall Street Journal analysis. (http://on.wsj.com/1m1kfJe)

* Blackstone is quietly laying plans to start a hedge fund that will make big, bold bets, an effort it hopes will eventually rival some of the largest firms in the business. (http://on.wsj.com/V0fExi)

* The landmark settlement expected Monday between U.S. authorities and BNP Paribas SA began to take shape last summer, after bank executives flew to New York to share an embarrassing admission: The French bank had been processing potentially illicit dollar transactions with countries blacklisted by Washington years after the U.S. began investigating the lender. (http://on.wsj.com/TIB9BB)

* As soon as the U.S. Supreme Court rendered its long-awaited decision on securities class-action litigation last week, a fight brewed over who won the case. (http://on.wsj.com/1nWPeVo)

* A social-network furor has erupted over news that Facebook Inc in 2012, conducted a massive psychological experiment on nearly 700,000 unwitting users. To determine whether it could alter the emotional state of its users and prompt them to post either more positive or negative content, the site's data scientists enabled an algorithm, for one week, to automatically omit content that contained words associated with either positive or negative emotions from the central news feeds of 689,003 users. (http://on.wsj.com/1nVk7IC)

Jean-Claude Juncker, the president-designate of the European Commision, told David Cameron that he was "fully committed" to finding solutions to UK's political concerns, despite the British prime minister's bid to block his nomination for EU's top job.

BNP Paribas SA has negotiated a partial concession with U.S. authorities on its $8.9 billion settlement, relating to alleged sanction violations by the French bank.

The partners in Israel's giant natural gas field have signed a preliminary agreement on a deal worth $30 billion to supply British oil and gas company BG Group with gas via a new undersea pipeline.

Senior executives at GlaxoSmithKline, which is facing allegations of bribery in China, on Sunday received a secretly-filmed sex tape of the drugmaker's top manager in the country.

The value of mergers and acquisitions touched its highest level since 2007, rising 75 percent to hit $1.75 trillion in the first six months of the year.

The Bank for International Settlements warned that 'euphoric' financial markets were out of step with reality, and urged governments to scrap policies that could lead to asset bubbles.

Brokers have warned that rising competition between global reinsurers is forcing these companies to provide cover for terrorism, forcing them to revisit terms they have sought to avoid since the 9/11 attacks.

NYT

* Facebook revealed that for one week in January 2012, it had manipulated the news feeds of over half a million randomly selected users to change the number of positive and negative posts they saw. It was part of a psychological study to examine how emotions can be spread on social media. (http://nyti.ms/1q7fO1p)

* Kenneth Feinberg, a prominent compensation expert hired by General Motors, is scheduled to announce a plan on Monday to distribute money to victims of accidents caused by the automaker's defective ignition switch. (http://nyti.ms/1m1j7VZ)

* An organization representing the world's main central banks warned on Sunday that dangerous new asset bubbles were forming even before the global economy has finished recovering from the last round of financial excess.(http://nyti.ms/1qpCSde)

* Verizon Communications is preparing to move its corporate offices from downtown back into far smaller quarters inside the former New York Telephone building at 1095 Avenue of the Americas, at 42nd Street. Its diminished presence parallels the steady erosion of demand for its original business: providing plain old telephone service over landlines. The number of landlines Verizon has left in New York State is down to about 3 million from 12 million. (http://nyti.ms/1r3wtEO)

* The day after the Supreme Court ruled against Aereo in a copyright case brought by the nation's major broadcasters, Mark Ely, chief executive of streaming television service Simple.TV, was trying to scoop up Aereo customers by promoting his start-up on social media. (http://nyti.ms/1mxLmaJ)

Canada

THE GLOBE AND MAIL

* Brian Storseth, Conservative party MP from Alberta, is speaking out against Employment Minister Jason Kenney's changes to the temporary foreign worker program, calling for an exception to be made for the province. (http://bit.ly/1iMhA7x)

* A group of prominent General Motors of Canada Ltd dealers is suing the company and its parent General Motors Co, saying the auto maker has ignored their repeated pleas for financial help to address a dramatic drop in sales and market share. (http://bit.ly/1qqnyNH)

Reports in the business section:

* BCE Inc, Rogers Communications Inc, Shaw Communications Inc and the Canadian Broadcasting Corp, Canada's biggest broadcast companies are at odds with each other over consumer choice and support for local programming, setting the stage for a debate at September hearings that could reshape the way Canadians watch and pay for television. (http://bit.ly/1lIwf2I)

NATIONAL POST

* Four federal by-elections in Toronto and Alberta on Monday will provide a test of just how far back from the wilderness the Liberals have come under the leadership of Justin Trudeau. The most crucial test will likely be in Trinity-Spadina, where the Liberals are going all-out to steal a seat held by the New Democratic Party since 2006 by Olivia Chow, the widow of beloved former party leader Jack Layton. (http://bit.ly/1z1F1hU)

* Canadian doctors are looking at offering a fascinating new procedure for saving the fertility of pre-pubescent cancer patients, where pieces of ovary or testicle are frozen before toxic treatments, then transplanted back years or decades later. Scientific and ethical questions still hang over the concept, and a little-known Canadian law could actually prevent lab research on it. (http://bit.ly/1mMtXQl)

FINANCIAL POST

* Spanish billionaire behind the Zara retail banner, Amancio Ortega Gaona, is buying into Toronto's upscale Yorkville commercial district, paying $255 million for 150 Bloor St. W., a 270,000-square-foot mixed retailing and office building, sources tell the Financial Post. (http://bit.ly/1qqoKRc)

China

- China urgently needs to launch a deposit insurance system to help its interest rate reforms, says a report.

- The current corrective period in China's housing market is not likely to end soon, says a commentary.

CHINA BUSINESS NEWS

- Reports that the United States has reached agreements with 86 countries to investigate tax payments of U.S. citizens outside the country will help China's anti-corruption campaign.

- The Chinese government has started deploying eight inspection teams across the country to investigate how regional governments are implementing central policies and will hold accountable those found wanting.

SHANGHAI SECURITIES NEWS

- Many Chinese mutual funds believe that China's stock market is likely to walk out of years of weakness in the second half of this year, partly driven by official efforts to reform the country's capital markets.

CHINA DAILY

- China, the largest contributor of personnel to U.N. peacekeeping, will provide more expertise and training to fight against crime on top of its traditional role of maintaining order and security.

PEOPLE'S DAILY

- Hong Kong must abide by Chinese laws related to the Hong Kong Special Administrative Region, the newspaper said in a commentary after Hong Kong lawyers protested against what they see as Chinese interference on Friday.

Britain

The Telegraph

ABBVIE ON SHIRE COURTSHIP TRIP TO LONDON

The boss of US drug-maker AbbVie Inc is flying into London this week to court Shire's shareholders and try to convince them of the merits of a potential takeover.

INDEPENDENT SCOTLAND RISKS BEING DESTABILISED BY BANKS

An independent Scotland would be even more exposed to its banking sector than Iceland was at the height of the financial crisis if the country's biggest institutions remained there.

ADDISON LEE OWNER FLAGS SALE

The American backer of Addison Lee, the London minicab firm, is to explore a possible sale of the firm just over a year after taking control.

The Guardian

LABOUR OFFERS OLIVE BRANCH TO BUSINESS BY TARGETING TAX AND INVESTMENT

Ed Balls is to launch a bid to bolster Labour's credibility with business by promising to keep a low rate of corporation tax and attract long-term investors to Britain, as he brushed off criticism from the policy chief Jon Cruddas that a "profound dead hand" within the party is blocking bold reforms.

HOPES RAISED THAT TAKEOVER WILL SAVE MILFORD HAVEN OIL REFINERY JOBS

Hundreds of workers at the Milford Haven oil refinery in south-west Wales are awaiting confirmation that their jobs have been saved after weekend reports that a deal to sell the plant was close.

The Times

OSBORNE'S GRAND PLAN TO JOIN UP INCOME TAX AND NATIONAL INSURANCE

Income tax and national insurance will be merged under plans being lined up as a key element of the next Conservative manifesto.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Chicago PMI business barometer for June at 9:45--consensus 64.0
Pending home sales for May at 10:00--consensus up 1.0% for the month

ANALYST RESEARCH

Upgrades

Amedisys (AMED) upgraded to Hold from Sell at Deutsche Bank
Canadian National (CNI) upgraded to Overweight from Equal Weight at Barclays
Charter (CHTR) upgraded to Overweight from Equal Weight at Evercore
CoStar Group (CSGP) upgraded to Outperform from Market Perform at JMP Securities
DreamWorks Animation (DWA) upgraded to Neutral from Underweight at Piper Jaffray
KLA-Tencor (KLAC) upgraded to Buy from Neutral at B. Riley
Norfolk Southern (NSC) upgraded to Overweight from Equal Weight at Barclays
Ryanair (RYAAY) upgraded to Neutral from Underperform at BofA/Merrill
TransCanada (TRP) upgraded to Buy from Neutral at Citigroup
Yahoo (YHOO) upgraded to Overweight from Neutral at Piper Jaffray

Downgrades

Fresenius Medical (FMS) downgraded to Underperform from Hold at Jefferies
Rayonier (RYN) downgraded to Sector Perform from Outperform at RBC Capital
Syngenta (SYT) downgraded to Underweight from Neutral at JPMorgan
Unitil (UTL) downgraded to Hold from Buy at Brean Capital

Initiations

Altisource Residential (RESI) initiated with a Neutral at Citigroup
DaVita (DVA) initiated with a Buy at Jefferies
Kona Grill (KONA) initiated with a Buy at KeyBanc
Marrone Bio (MBII) initiated with an Outperform at RW Baird
Williams Partners (WPZ) initiated with a Buy at UBS

COMPANY NEWS

American Apparel (APP) adopts stockholder rights plan
BlackRock (BLK) Advisors receives Wells Notice
Carlyle Group (CG) to conduct tender offer for SBI Mortgage Co
Gabelli files to nominate three to board of Superior Industries (SUP)
Illumina (ILMN) announces agreements with Genoma, two others
InterOil (IOC) sells downstream businesses for $525.6M
Kindred Healthcare (KND) sends letter to Gentiva Health (GTIV) board
MannKind (MNKD) confirms FDA approval of Afrezza
PetroQuest (PQ) enters JV with Midstates Petroleum in Louisiana
Philips (PHG) to combine LED components, Automotive lighting businesses
Raytheon (RTN) awarded $275.4M government contract modification
Ryanair (RYAAY) Deputy CEO and CFO Howard Millar to step down

NEWSPAPERS/WEBSITES

Adobe (ADBE) shares could climb 20%, Barron's says
Anglo American (AAUKY) looks to sell up to $4B in mining assets, Sunday Times says
Blackstone (BX) prepares to start 'big-bet' hedge fund, WSJ says
Boeing (BA), Airbus submit offers for $1.38B South Korean order, Reuters says
Chevron (CVX) has 30% upside potential, Barron's reports
Chico's FAS (CHS) looks tempting for LBO, Barron's says
Concerns about Valero (VLO) look overblown, Barron's says
Facebook (FB) experiment on users creates backlash, WSJ says
General Motors (GM) could still face criminal charges, NY Times says
Microsoft (MSFT) may be planning to halt Surface Min production, DigiTimes reports
Murphy Oil (MUR) in talks to sell UK refinery Milford Haven, Reuters says
NXP Semiconductors (NXPI) technology rumored to be in iPhone 6, WSJ says
NetApp (NTAP) could gain 25%, Barron's says
ResMed (RMD) shares could fall at least 15%, Barron's says

SYNDICATE

Malibu Boats (MBUU) files to sell 4M shares of Class A common stock
Speed Commerce (SPDC) files to sell 4.4M shares of common stock for holders

Ceasefire over, Ukraine forces attack rebel positions (Reuters)
No Good Iraq Options for Obama as Russia, Iran Jump In (BBG)
Japan’s Cabinet Agrees to Allow Military to Help Defend Allies (BBG)
Obama says to reform immigration on his own, bypassing Congress (Reuters)
South Stream Pipeline Project in Bulgaria Is Delayed (NYT)
Foreign Banks Still in the Dark About Missing Metals in China (WSJ)
Quelle indignity: several bankers at French bank BNP Paribas will face demotions and cuts to their pay and bonuses (FT)
Symantec Warns of Hacker Threat Against Energy Companies (BBG)
Shrinking Office Spaces Slow Recovery (WSJ)
Rand Paul Slams ‘Fat Cats’ With Hedge Fund in Top Donors (BBG)
After BNP, U.S. targets range of firms in crackdown on illicit money flows (Reuters)
Singer Says Argentina Won’t Negotiate as Default Looms (BBG)
Singapore Home Prices Post Longest Losing Streak in 5 Years (BBG)
Threat of Costly West Coast Port Shutdown Spurs Pay Talks (BBG)
Israel bombs Gaza sites hours after bodies of Israeli teens found (Reuters)
Richest Ukrainian Walks $13 Billion Tightrope (BBG)
Fear, suspicion undermine West Africa's battle against Ebola (Reuters)

Overnight Media Digest

WSJ

* President Barack Obama said Monday he would begin using his authority to bolster border security and consider taking other steps on his own to change the nation's immigration policy, after angrily declaring that Republicans had finally killed off any chances for immigration legislation this year. (http://on.wsj.com/1mD0nIl)

* BNP Paribas SA agreed to pay nearly $9 billion and plead guilty to violating U.S. sanctions against Sudan, Iran and other countries, an unprecedented settlement that includes a year-long ban on the French bank's ability to transact in U.S. dollars. (http://on.wsj.com/1lu8A1m)

* The U.S. Supreme Court in a 5-4 split said private companies can on religious grounds opt out of a federal health-care law requirement that companies provide contraception coverage for employees. (http://on.wsj.com/1sTdoqy)

* General Motors' compensation plan for victims of 2.6 million defective small cars would offer payments for any accidents in which the air bags in the cars failed to deploy, and may offer increased payouts to victims who accepted out-of-court settlements before the auto maker recalled the vehicles. GM also said it will recall an additional 8.45 million vehicles in North America from the 1997 to 2014 model years, most due to an unintended ignition key rotation. (http://on.wsj.com/1m4dNkF)

* Hewlett-Packard said it reached a settlement in three shareholder lawsuits related to its 2011 acquisition of software firm Autonomy, in another sign the personal-computer maker is seeking to put the costly deal behind it. (http://on.wsj.com/1r9Gksv)

* To fix Nestlé's sagging U.S. business, Paul Grimwood has been slashing the number of product variations, and deciding which brands need attention, like Lean Cuisine. (http://on.wsj.com/1nYkJNo)

* Argentina will send a delegation to meet with a court-appointed lawyer on July 7 as it tries to resolve a dispute with a small group of creditors that could see the South American country default for a second time in 13 years. (http://on.wsj.com/1vqrzzi)

* Salesforce.com Inc has recruited an executive from Autodesk Inc as its new chief financial officer. The San Francisco-based company, which offers online software to automate sales and other functions, said Mark Hawkins will start as finance chief on Aug. 1. He has served for five years as CFO of Autodesk, whose software is used for tasks that include designing buildings, cars and other consumer products. (http://on.wsj.com/V5M49A)

* Amherst Securities Group LP and Pierpont Securities LLC are set to merge in a deal aimed at creating a bigger player in underwriting and trading mortgage-related securities, businesses that some larger banks have retreated from in recent years. The companies plan to announce the tie-up on Tuesday morning, they said, declining to disclose terms. (http://on.wsj.com/1sTeF0K)

Several bankers at French bank BNP Paribas will face demotions and cuts to their pay and bonuses, according to sources, following the payment of a record $8.9 billion fine to U.S. federal and state authorities.

China's investment firm Citic Group, which is in the midst of a broad restructuring, is considering giving up its U.S. bank branches, according to several of its senior executives.

Europe's biggest defence contractor BAE Systems said it would reorganise its interests in Saudi Arabia to reap the benefits of a government programme meant to help the world's largest oil producer expand its industrial base in the country.

General Motors recalled a further 8.23 million cars on Monday over faulty ignition switches and said three people might have died because of the problems, deepening the automaker' s ongoing safety crisis.

The U.S. Supreme Court has shielded HSBC, UniCredit and UBS from legal claims in excess of $10 billion relating to the Bernard Madoff Ponzi scheme.

Pension consultants in the UK should be regulated in order to rein in the power of a group of investment advisory firms, Britain's Law Commission said in a report on Monday

NYT

* General Motors on Monday announced the recall of 8.4 million more vehicles worldwide - most of them for an ignition defect similar to the flaw that the company failed to disclose in other models for more than a decade. The announcement came hours after Kenneth Feinberg, a compensation expert hired by GM, unveiled a plan to pay victims of accidents involving GM vehicles, promising more than $1 million for families of those who died. (http://nyti.ms/1qdcMbX)

* BNP Paribas SA on Monday admitted to doing billions of dollars in deals with Iran and other countries blacklisted by the United States and agreed to pay a record $8.9 billion penalty to state and federal authorities. (http://nyti.ms/TKUguN)

* Russian hackers have been systematically targeting hundreds of Western oil and gas companies, as well as energy investment firms, according to private cyber security researchers. The motive behind the attacks appears to be industrial espionage - a natural conclusion given the importance of Russia's oil and gas industry, the researchers said. (http://nyti.ms/1pRSZNb)

* More than a million people risk losing their federally insured pensions in just a few years despite recent stock market gains and a strengthening economy, a new government study said on Monday. The people at risk have earned pensions in multi-employer plans, in which many companies band together with a union to provide benefits under collective bargaining. (http://nyti.ms/1m4l97J)

* Regulatory filings posted on Monday night show that Dov Charney, the recently ousted founder of American Apparel , bought 27 million shares of American Apparel stock last week, which gives him a total stake of about 43 percent. If he can persuade an additional 7 percent or so of shareholders to support him, he might be able to get his company back. (http://nyti.ms/1jER6iU)

* The U.S. Supreme Court on Monday allowed a case accusing Google of wire-tapping to proceed, undermining the search company's efforts to put a troublesome episode to rest even as it plans to become more deeply embedded in consumers' lives. Google maintains it was not wire-tapping as part of Street View. Its failure to persuade the Supreme Court to hear its appeal means the case will go forward in the lower court. (http://nyti.ms/1o1AyEv)

* Cosmetics maker L'Oréal USA, a subsidiary of L'Oréal SA, has agreed to settle complaints in the United States that advertisements for its skin care products Lancôme Génifique and L'Oréal Paris Youth Code were deceptive, the Federal Trade Commission said on Monday. (http://nyti.ms/VBt5Eq)

* A California prosecutor on Monday charged General Motors with unfair business practices and deceptive marketing for concealing ignition-related defects and others in order to boost its bottom line. The lawsuit, filed by District Attorney Tony Rackauckas of Orange County, accuses G.M. of "half-truths and omissions." (http://nyti.ms/1nYmxpC)

Canada

THE GLOBE AND MAIL

** Justin Trudeau's Liberal Party emerged victorious in Monday's by-election races, stealing a seat from the New Democratic Party and boosting its vote share across the board. Liberal candidate Adam Vaughan, a former city councillor and broadcaster, nabbed the Toronto riding of Trinity-Spadina from the NDP, while Liberal Arnold Chan boosted the party's vote in holding the long-time stronghold of Scarborough-Agincourt, another Toronto riding. (http://bit.ly/1jFtuL3)

** Sixty days after Rob Ford took a leave from city hall under the pall of fresh drug allegations, Toronto's controversial leader marched back into the spotlight, his voice catching as he acknowledged the damage his alcohol and drug use has done and pledging an "unwavering" commitment to "clean living" and a change in the company he keeps. (http://bit.ly/1nYKQE3)

Reports in the business section:

** Alberta has turned the corner following the global economic meltdown of 2008, according to budget numbers released on Monday. According to the final report, the province brought in more than $45 billion in revenue in the fiscal year that ended March 31. That's 17 percent more than expected, credited mainly to higher than forecast energy and tax revenues. (http://bit.ly/1pSvAej)

NATIONAL POST

** Journalists and columnists at the Globe and Mail refused to attach their names to their work on Monday, as negotiations between the union and the paper's management neared a breaking point. With the Globe's union, Unifor's Southern Ontario Newsmedia Guild, backed with a 97 percent strike mandate, the byline strike came just hours before the collective agreement for editorial, advertising and circulation staff reached its Tuesday expiry date. (http://bit.ly/1jDSRNr)

** Prosecutors are seeking 15 years in prison for a Canadian businessman Cy Tokmakjian, who was arrested in a high-profile crackdown on corruption, Cuban authorities said on Monday. (http://bit.ly/1iQqXmE)

FINANCIAL POST

** It could be just the impact of all those home-renovation television programs, but Canadians are fixing up their properties like never before, according to a new report. Renovation spending has been rising for 15 straight years and reached a record $63.4 billion in 2013, which accounted for 3.7 percent of total Canadian gross domestic product, Toronto-based real estate consultants Altus Group said. (http://bit.ly/TLwPle)

** Growth in the Canadian economy stalled in April, edging up just 0.1 percent - the same pace as the previous month - with wholesale and retail activity contributing only meager growth, while mining and construction output weakened. Economists had forecast gross domestic product - the largest measure of economic health - to advance by 0.2 percent in April. (http://bit.ly/1lMG6Vm)

China

CHINA SECURITIES JOURNAL

- The Chinese economy will continue to face downward pressure in the second half of 2014, according to industry sources. The front-page article also said liquidity is expected to remain loose and the possibility that the central bank would cut interest rates cannot be ruled out if third- and fourth- quarter economic data remain weak.

- China plans to speed up a batch of major energy projects and may start a nuclear power project soon, said Wu Xinxiong, director of National Energy Administration.

CHINA BUSINESS NEWS

- A total of 633.5 billion yuan ($102.12 billion) worth of real-estate trust will mature in 2014, Haitong Securities calculated.

CHINA DAILY

- Short-term measures by Chinese local governments to boost the housing market will not be beneficial for the local economy, and officials should focus on supporting the real economy, the newspaper said in an editorial.

PEOPLE'S DAILY

- The expulsion of former Vice Chairman of the Central Military Commission, Xu Caihou, reflects the policy of the Chinese Communist Party and shows its determination to fight corruption.

Britain

The Telegraph

SSP SHARES TO PRICE AT BETWEEN 200 PENCE AND 240 PENCE

SSP Group Ltd, the owner of Upper Crust and Caffe Ritazza, is expected to become the latest company to float in London at the lower end of expectations.

The Guardian

THE CO-OP GROUP LOOKS TOWARDS RADICAL IDEAS ON PATH TO REDEMPTION

"It could be one of the biggest and best turnarounds in corporate history," says Steve Murrells, head of Co-operative Group's retail arm, as he contemplates the companies rising phoenix-like from the ashes of controversy and financial mismanagement.

The Times

TEN YEARS TO SWITCH-ON FOR NEW REACTORS AT SELLAFIELD

The Franco-Japanese consortium planning to build the next generation of nuclear power stations at Sellafield has claimed that three new reactors at the Cumbrian site will be ready to be switched on by 2024.

The Independent

MORTGAGE APPROVALS FALL TO 11-MONTH LOW AS HOUSING MARKET COOLS DOWN

Mortgage approvals fell to an 11-month low in May, confirming that the lending market was already losing some steam before the Bank of England announced new curbs last week.

Sky News

LLOYDS BUYOUT GROUP MAY SELL OR LIST BEVERAGE CO FEVER-TREE

Fever-Tree, the maker of premium drinks mixers, is preparing to toast a change of ownership that could involve a London Stock Exchange flotation.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Markit’s final manufacturing PMI for June at 9:45--consensus 57.5
ISM manufacturing index for June at 10:00--consensus 55.6
Construction spending for May at 10:00--consensus up 0.5%

ANALYST RESEARCH

Upgrades

Amicus Therapeutics (FOLD) upgraded to Buy from Neutral at Janney Capital
Amicus Therapeutics (FOLD) upgraded to Outperform from Market Perform at Leerink
Endurance Specialty (ENH) upgraded to Buy from Neutral at BofA/Merrill
H&E Equipment (HEES) upgraded to Buy from Hold at KeyBanc
iGATE (IGTE) upgraded to Buy from Hold at Jefferies
Nabors Industries (NBR) upgraded to Outperform from Market Perform at Raymond James
Netflix (NFLX) upgraded to Buy from Neutral at Goldman
comScore (SCOR) upgraded to Buy from Neutral at Goldman
iGATE (IGTE) upgraded to Buy from Hold at Jefferies

Downgrades

21st Century Fox (FOXA) downgraded to Buy from Conviction Buy at Goldman
Franklin Resources (BEN) downgraded to Neutral from Buy at UBS
Goldman Sachs (GS) downgraded to Market Perform from Outperform at Bernstein
Heritage-Crystal Clean (HCCI) downgraded to Neutral from Outperform at RW Baird
MannKind (MNKD) downgraded to Hold from Buy at MLV & Co.
Midstates Petroleum (MPO) downgraded to Market Perform from Outperform at Northland
Sunstone Hotel (SHO) downgraded to Market Perform from Outperform at Wells Fargo
Symantec (SYMC) downgraded to Market Perform from Outperform at BMO Capital
Time Warner (TWX) downgraded to Neutral from Buy at Goldman
Triumph Group (TGI) downgraded to Underperform from Sector Perform at RBC Capital
Xerox (XRX) downgraded to Neutral from Buy at Citigroup

Initiations

ARC Group (ARCW) initiated with an Outperform at Imperial Capital
Agios Pharmaceuticals (AGIO) initiated with a Buy at Citigroup
Arista Networks (ANET) initiated with a Buy at BofA/Merrill
Arista Networks (ANET) initiated with a Buy at Deutsche Bank
Arista Networks (ANET) initiated with a Hold at Stifel
Arista Networks (ANET) initiated with an Outperform at RBC Capital
Arista Networks (ANET) initiated with an Outperform at Wells Fargo
Arista Networks (ANET) initiated with an Overweight at Barclays
BPZ Resources (BPZ) initiated with a Buy at Brean Capital
Coty (COTY) initiated with an Outperform at BMO Capital
Expedia (EXPE) initiated with an Outperform at Oppenheimer
Intercept (ICPT) initiated with an Outperform at RBC Capital
JD.com (JD) initiated with a Buy at Jefferies
JD.com (JD) initiated with a Buy at SunTrust
JD.com (JD) initiated with a Neutral at BofA/Merrill
JD.com (JD) initiated with a Neutral at Piper Jaffray
JD.com (JD) initiated with an Overweight at Barclays
Kona Grill (KONA) initiated with an Outperform at Raymond James
NorthStar Asset Management (NSAM) initiated with a Buy at Deutsche Bank
Orbitz (OWW) initiated with a Perform at Oppenheimer
Priceline (PCLN) initiated with an Outperform at Oppenheimer
Synageva (GEVA) initiated with a Neutral at Citigroup
TechTarget (TTGT) initiated with a Buy at Jefferies

COMPANY NEWS

Actavis (ACT) receives FTC clearance for proposed acquisition of Forest Labs (FRX)
Autodesk (ADSK) CFO Hawkins resigns to become CFO of Salesforce.com (CRM)
BNP (BNPQY) pleads guilty to sanctions and faces $8.9B fine
Cooper Companies (COO) to acquire Saulfon Pharmaceuticals for $1.2B
GE (GE) water business to acquire Monsal
Gentiva (GTIV) board rejects unsolicited offer from Kindred (KND)
HP (HPQ) agrees to settle shareholder litigation over Autonomy deal
Hormel Foods (HRL) to acquire maker of Muscle Milk sports nutrition products for $450M
Pinnacle Foods (PF) terminates merger agreement with Hillshire Brands
Sport Chalet (SPCHA) to be acquired by Vestis Retail for $1.20 per share
Transcept Pharmaceuticals (TSPT), Paratek Pharmaceuticals sign merger agreement
Twitter (TWTR) confirms acquisition of TapCommerce

NEWSPAPERS/WEBSITES

Bulgaria blocking major natural gas pipeline, NY Times says
Microsoft's (MSFT) new smartband to be released in October, TomsHardware.com says
Morgan Stanley (MS) mulls financial adviser pay reductions, Reuters says
Nestle (NSRGY) U.S. CEO cutting products to simplify operations, WSJ reports
Novartis (NVS) faces charges in Japan over data manipulation, Financial Times says
Wells Fargo (WFC) looks pricey, Barron's says

SYNDICATE

Investar Holding (ISTR) 2.875M share IPO priced at $14.00
Minerva (NERV) 5.455M share IPO priced at $6.00
TECO Energy (TE) files to sell 15.5M shares of common stock
US Antimony (UAMY) 1.45M share Secondary priced at $1.40
Unilife (UNIS) files to sell 600,000 shares for holders
Unity Bancorp Inc (UNTY) commences $6.2M rights offering
Western Gas Equity (WGP) 5M share Spot Secondary offered at $60.19, last sale $62.70

Submitted by Michael Krieger of Liberty Blitzkrieg blog,

In the walls of the cubicle there were three orifices. To the right of the speakwrite, a small pneumatic tube for written messages, to the left, a larger one for newspapers; and in the side wall, within easy reach of Winston’s arm, a large oblong slit protected by a wire grating. This last was for the disposal of waste paper. Similar slits existed in thousands or tens of thousands throughout the building, not only in every room but at short intervals in every corridor. For some reason they were nicknamed memory holes. When one knew that any document was due for destruction, or even when one saw a scrap of waste paper lying about, it was an automatic action to lift the flap of the nearest memory hole and drop it in, whereupon it would be whirled away on a current of warm air to the enormous furnaces which were hidden somewhere in the recesses of the building.

He who controls the past controls the future. He who controls the present controls the past.

- From George Orwell’s 1984

The reason Big Brother and his band of technocrat authoritarians spend so much time and effort erasing history in the classic novel 1984, is because they are a bunch of total criminals and they know it. Their grip on power is made so much easier if the proles are kept ignorant, confused and in the dark. This strategy is not just fiction, it is the philosophy of tyrants and authoritarians throughout history.

While the internet is an amazing tool for communication and free speech, we must also be aware of how it can be abused by those in power who wish to whitewash history. For more on this epic struggle, read the post, Networks vs. Hierarchies: Which Will Win? Niall Furguson Weighs In. In it, Mr. Furguson explains that the biggest threat to networks overcoming hierarchies is if government technocrats are able to gain a hold of the technological tools we now use to communicate with each other. He fears this is already happening with the NSA’s PRISM program and the complicity of all the major tech companies in the agency’s unconstitutional spying.

So it appears Orwell’s feared “memory hole” has begun to emerge in Europe. This shouldn’t be seen as a surprise considering the region’s devastating youth unemployment rate and angst throughout society. The way censorship is gaining a foothold in the region is through something known as a “right to be forgotten” ruling issued by the European Court of Justice. This ruling states that Google must essentially delete “inadequate, irrelevant or no longer relevant” data from its results when a member of the public requests it.

Of course this is incredibly vague, and who is to decide what it “no longer relevant” anyway? Seems quite subjective. This is clearly an attempt to take a tool designed to decentralize information flow (the internet) and centralize and censor it. As such, it must be resisted at all costs.

So far, we know of two major media organizations that have been informed of deleted or censored articles, the BBC and the Guardian. The BBC story is the one that has received the most attention because the content related to former ex-Merrill Lynch CEO Stan O’Neal, who received a $161.5 million golden parachute compensation package after running the Wall Street firm into the ground and playing a key role in destroying the U.S. economy. The BBC reports that:

A blog I wrote in 2007 will no longer be findable when searching on Google in Europe.

Which means that to all intents and purposes the article has been removed from the public record, given that Google is the route to information and stories for most people.

So why has Google killed this example of my journalism?

Well it has responded to someone exercising his or her new “right to be forgotten”, following a ruling in May by the European Court of Justice that Google must delete “inadequate, irrelevant or no longer relevant” data from its results when a member of the public requests it.

Now in my blog, only one individual is named. He is Stan O’Neal, the former boss of the investment bank Merrill Lynch.

My column describes how O’Neal was forced out of Merrill after the investment bank suffered colossal losses on reckless investments it had made.

Is the data in it “inadequate, irrelevant or no longer relevant”?

Hmmm.

Most people would argue that it is highly relevant for the track record, good or bad, of a business leader to remain on the public record – especially someone widely seen as having played an important role in the worst financial crisis in living memory (Merrill went to the brink of collapse the following year, and was rescued by Bank of America).

To be fair to Google, it opposed the European court ruling.

Maybe I am a victim of teething problems. It is only a few days since the ruling has been implemented – and Google tells me that since then it has received a staggering 50,000 requests for articles to be removed from European searches.

I asked Google if I can appeal against the casting of my article into the oblivion of unsearchable internet data.

Google is getting back to me.

Since the original post, the author has provided an update:

So there have been some interesting developments in my encounter with the EU’s “Right to be Forgotten” rules.

It is now almost certain that the request for oblivion has come from someone who left a comment about the story.

So only Google searches including his or her name are now impossible.

Which means you can still find the article if you put in the name of Merrill’s ousted boss, “Stan O’Neal”.

In other words, what Google has done is not quite the assault on public-interest journalism that it might have seemed.

I disagree with his conclusion, and here is why. As is noted on this Yahoo post:

We don’t know whether it was O’Neal who asked that the link be removed. In fact, O’Neal’s name may be being dragged through the mud unnecessarily here. Peston believes it may be someone mentioned by readers in the comments section under his story about the ruling.

He suggests that as a “Peter Dragomer” search triggers the same disclosure that a result may have been censored, that perhaps it was not O’Neal who requested the deletion. In an amazing coincidence, the person posting as “Peter Dragomer” claims to be an ex-Merrill employee.

Of course, it’s not an amazing coincidence. In fact, going forward someone else can just post a comment below an article on a high profile person to get the article removed so that the person in the article can pretend it wasn’t his doing. In any event, someone who voluntarily leaves a comment should have zero say under this law. They went ahead and made the comment in the first place. Now you want an article article removed because of a comment you made? Beyond absurd.

Now here’s the Guardian’s take:

When you Google someone from within the EU, you no longer see what the search giant thinks is the most important and relevant information about an individual. You see the most important information the target of your search is not trying to hide.

Stark evidence of this fact, the result of a European court ruling that individuals had the right to remove material about themselves from search engine results, arrived in the Guardian’s inbox this morning, in the form of an automated notification that six Guardian articles have been scrubbed from search results.

The first six articles down the memory hole – there will likely be many more as the rich and powerful look to scrub up their online images, doubtless with the help of a new wave of “reputation management” firms – are a strange bunch.

The Guardian has no form of appeal against parts of its journalism being made all but impossible for most of Europe’s 368 million to find. The strange aspect of the ruling is all the content is still there: if you click the links in this article, you can read all the “disappeared” stories on this site. No one has suggested the stories weren’t true, fair or accurate. But still they are made hard for anyone to find.

As for Google itself, it’s clearly a reluctant participant in what effectively amounts to censorship. Whether for commercial or free speech reasons (or both), it’s informing sites when their content is blocked – perhaps in the hope that they will write about it. It’s taking requests literally: only the exact pages requested for removal vanish and only when you search for them by the specified name.
But this isn’t enough. The Guardian, like the rest of the media, regularly writes about things people have done which might not be illegal but raise serious political, moral or ethical questions – tax avoidance, for example. These should not be allowed to disappear: to do so is a huge, if indirect, challenge to press freedom. The ruling has created a stopwatch on free expression – our journalism can be found only until someone asks for it to be hidden.

Publishers can and should do more to fight back. One route may be legal action. Others may be looking for search tools and engines outside the EU. Quicker than that is a direct innovation: how about any time a news outlet gets a notification, it tweets a link to the article that’s just been disappeared. Would you follow @GdnVanished?

This last idea is actually a great one. Every time an article gets censored it should be highlighted. If we could get one Twitter account to aggregate all the deleted stories (or perhaps just the high profile ones) it could make the whole censorship campaign backfire as the stories would get even more press than they would have through regular searches. Ah…the possibilities.

Interestingly, due to all the controversy, a European Commission spokesman has come forth to criticize Google for removing the BBC article. You can’t make this stuff up. From the BBC:

Google’s decision to remove a BBC article from some of its search results was “not a good judgement”, a European Commission spokesman has said.

A link to an article by Robert Peston was taken down under the European court’s “right to be forgotten” ruling.

But Ryan Heath, spokesman for the European Commission’s vice-president, said he could not see a “reasonable public interest” for the action.

He said the ruling should not allow people to “Photoshop their lives”.

The BBC understands that Google is sifting through more than 250,000 web links people wanted removed.

Perhaps it wasn’t in “good judgment ” to issue this idiotic ruling in the first place. Just another government shit-show. As usual.

Bond Anxiety in $1.6 Trillion Repo Market as Failures Soar (BBG), as reported first by Zero Hedge
As Food Prices Rise, Fed Keeps a Watchful Eye (WSJ)
Yellen’s Economy Echoes Arthur Burns More Than Greenspan (BBG)
Draghi’s $1.4 Trillion Shot: Silver Bullet or Misfire? (BBG)
Israel's Netanyahu phones father of murdered Palestinian teen (Reuters)
Ukraine says forces will press forward after taking rebel stronghold (Reuters)
Goldman Sachs Brings Forward Rate Forecast as Treasuries Drop (BBG)... you mean rise?
Super typhoon takes aim at Japan (Reuters)
Kidnapped Nigerian girls 'escape from Boko Haram abductors' (Independent)
Merkel says U.S. spying allegations are serious (Reuters)
Chinese Tycoon Guo Copying Buffett Rises From Bread to Club Med (BBG)
Samsung Electronics faces falling profits as succession looms (Reuters)
G.M. OnStar Data Has Potential as Safety Tool (NYT) but not really
The Future of the Workforce May Be Part-Time, Says Google CEO Larry Page (Recode)
Shocking: Many Pick Electric Jolt Over Solitude in Study (BBG)
Egypt to raise fuel prices by up to 78 percent from midnight (Reuters)
Ex-Soviet minister and Georgia leader Shevardnadze dies (Reuters)

Overnight Media Digest

WSJ

* Ukraine neared a final showdown with pro-Russia rebels on Sunday, after Kiev forced insurgents to retreat to the last major city they control and Moscow showed no signs of intervening to help them (http://on.wsj.com/1jXJ30Z)

* Hillary Clinton, a presumed presidential candidate for 2016, has made clear she wouldn't be running for a de facto third Obama term. (http://on.wsj.com/TXugwu)

* Somali militants claimed responsibility Sunday for twin attacks in eastern Kenya that aid organizations said killed at least 22 people-the second such strike in the region in less than three weeks (http://on.wsj.com/VRpbr7)

* Expedia bid 703.1 million Australian dollars (US$657.2 million) for Wotif.com as the U.S. online-travel site widens its exposure to fast-growing Asia-Pacific markets (http://on.wsj.com/1moLBcv)

* Passengers boarding U.S.-bound flights at "certain overseas airports" may be asked to turn on electronic devices including cellphones, and won't be allowed to bring on the plane any devices that are out of battery power, the Transportation Security Administration said Sunday (http://on.wsj.com/1lMhQ0I)

* The first criminal trial linked to the Boston Marathon bombing is slated to begin in Boston on Monday with opening statements expected in the case of a former college student accused of taking evidence from the alleged bomber's dorm room (http://on.wsj.com/1moKUzU)

Goldman Sachs is looking to capitalise on the domain of centuries-old private banks in Europe by services offered by its European wealth management business and offfering loans to rich clients in the region.

Growing security concerns in Iraq is rattling western banks, forcing them to tighten controls on clients' funds and pull senior staff out of the country.

Spanish wireless networks provider Gowex was forced to declare bankruptcy and admit that the company's head had falsified accounts for at least the past four years.

Rosneft is setting out long-term targets and its CEO Igor Sechin is openly talking about the Russian state oil producer's large ambitions, although the U.S. government has imposed sanctions of its head and is threatening broader sanctions against the Russian oil industry.

A former JPMorgan Chase & Co trader has filed an appeal with a London tribunal court to challenge civil findings made by Britain's financial watchdog against the bank over the "London Whale" debacle of 2012.

A committee of MPs has asked the most senior official at the Home Office for an explanation as it how his department lost 114 files relating to child sex abuse in Westminster in the 1980s.

NYT

* For most of America, Reno stirs images of worn-out casinos, strip clubs and quick divorces. But it is trying to change that reputation and reduce its reliance on gambling by taking advantage of its location and low taxes to gain a solid footing in the new economy. Instead of poker payouts, Reno now boasts of e-commerce ventures, an Apple data center and a testing ground for drones. It also hopes to attract a large factory to build batteries for Tesla's electric vehicles. (http://nyti.ms/1myPzB1)

* As government regulators crack down on the financing of terrorists and drug traffickers, many big banks are abandoning the business of transferring money from the United States to other countries, moves that are expected to reverse years of declines in the cost of immigrants sending money home to their families. (http://nyti.ms/1r1Lftn)

* General Motors' OnStar system provides streams of data about the performance of GM vehicles, but the automaker says little about how it uses this information to investigate problems. (http://nyti.ms/1qCnfhi)

* Twitter Inc's top executive ranks have been transformed in the last year, from its general counsel to, most recently, its chief financial officer. But in one very important area of the company - Twitter's ad business - the leadership has remained relatively untouched. (http://nyti.ms/1myQelL)

* The Obama administration on Sunday sought to play down new disclosures that the National Security Agency has swept up innocent and often personal emails from ordinary Internet users as it targets suspected terrorists in its global surveillance for potential threats. (http://nyti.ms/1r1LRiM)

* As Google engine restores links that it had removed to comply with a court order, its handling of the "right to be forgotten" becomes murkier. (http://nyti.ms/1xDCtot)

Hong Kong

SOUTH CHINA MORNING POST

-- Mainland loan guarantors have found themselves ensnared in the woes of the underground banking sector following a fresh wave of bankruptcies. (bit.ly/1j7kjIC)

-- Employee protection will be a key consideration for lawmakers deciding whether to support the introduction of U.S. style Chapter 11 bankruptcy legislation in Hong Kong, the South China Morning Post has been told. (bit.ly/1r1GY9b)

-- Beijing has announced a new regulation designed to improve the central government's tax collection from overseas mainland companies, including those controlled in Hong Kong. (bit.ly/1pTh4rk)

THE STANDARD

-- Financial Secretary John Tsang Chun-wah has voiced concern that the Legislative Council will not be able to complete vetting of the more than 50 funding requests and government bills with just a week left before the summer recess. (bit.ly/1qCiwMv)

-- The Hong Kong Journalists Association has set up a self-censorship monitoring committee, after saying press freedom is facing its darkest period in decades. (bit.ly/1qCiDHU)

HONG KONG ECONOMIC JOURNAL

-- Hong Kong Airlines is preparing to raise a combined US$500 million, which could be Hong Kong's first initial public offering to raise funds in yuan and Hong Kong dollars, according to a source.

-- Two second-hand apartments were sold for a record sum on Sunday for an estate in New Territories as demand for secondary units keeps rising due to limited supply.

HONG KONG ECONOMIC TIMES

-- Ka-keung Chan, Secretary for Financial Services and the Treasury, said risks for the city's real estate market have not subsided from two years ago and the government would not loosen property tightening measures after global hot money started flowing into Hong Kong recently.

MING PAO

-- Financial Secretary John Tsang Chun-wah said in his blog Hong Kong may record a "significant increase" for home prices in May.

China

PEOPLE'S DAILY

- China marks the 77th anniversary of the start of its anti-Japanese war on Monday, vowing that it will not let historical tragedy to repeat, the newspaper, which is the mouthpiece of the ruling Communist Part of China, said in an editorial.

CHINA DAILY

- Germany is willing to help China's relatively backward western part achieve sustainable development during its ongoing urbanisation, Chancellor Angela Merkel said in the southwestern Chinese city of Chengdu on Sunday.

CHINA SECURITIES JOURNAL

- Chinese stock regulator's move towards strengthening delisting rules and their implementation will help improve the health of the stock market and the quality of listed companies, analysts say.

- Speculation about new listings in China's stock market will cause investors dearly and damage the health of the market, the newspaper said in a commentary.

SHANGHAI SECURITIES NEWS

- China is likely to relax rules on how asset managers can utilise their quotas under the Renminbi Qualified Foreign Institutional Investor (RQFII) programme, that permits overseas investors to use offshore yuan funds to invest in the mainland's capital markets.

CHINA BUSINESS NEWS

- Chinese regulators have apparently stepped up their efforts to clamp down on inside trading and clean up the stock market with an announcement of more fund managers being handed over to police for irregularities, analysts say.

Britain

The Times

HINDUJAS URGE UK TO FINANCE MUMBAI-BANGALORE CORRIDOR

Britain's wealthiest family has called on David Cameron to finance one of India's most ambitious infrastructure projects to boost business ties between the countries.

CRACKDOWN ON CONMEN WHO USE FAKE GOVERNMENT WEBSITES

Five men have been arrested for allegedly running "copycat" government websites that dupe Britons into paying unnecessary "administration fees" when ordering new passports or car tax discs online.

REGIONS GET 6 BLN STG INJECTION FROM 'ECONOMIC REVOLUTION'

Businesses and councils across England have been handed 6 billion pounds ($10.2 billion) of public money in what the government called a "revolution in the way our economy is run".

The Guardian

EDF IN LINE FOR 800 MLN STG WINDFALL FROM SUBSIDY SCHEME TO KEEP LIGHTS ON

EDF, which operates most of Britain's nuclear power stations, could be in line for an 800 million pound windfall via a loophole in a government subsidy scheme aimed at keeping the lights on at times of peak demand.

IMF CHIEF HINTS AT CUT IN GROWTH FORECASTS

Global economic activity should strengthen in the second half of the year and accelerate in 2015, although momentum could be weaker than expected, Christine Lagarde, head of the International Monetary Fund, said on Sunday, hinting at a slight cut in the fund's growth forecasts.

The Telegraph

SNP'S 'RETRIBUTION THREAT' TO PRO-UK SCOTTISH FIRMS

Business leaders have been threatened with "retribution" by the SNP if they speak out against Scottish independence, it will be claimed on Monday.

Sky News

CBI'S RAKE BOWS OUT OF RACE FOR BARCLAYS JOB

The CBI president Sir Mike Rake has bowed out of the race to become the next chairman of Barclays, even as the bank attempts to contain the fallout from a string of new regulatory probes.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

No major domestic economic reports scheduled for today.

ANALYST RESEARCH

Upgrades

Acuity Brands (AYI) upgraded to Buy from Hold at BB&T
Alliance Holdings (AHGP) upgraded to Strong Buy from Market Perform at Raymond James
Applied Industrial (AIT) upgraded to Buy from Hold at BB&T
Applied Materials (AMAT) upgraded to Overweight from Neutral at JPMorgan
Associated Banc-Corp (ASBC) upgraded to Market Perform at Raymond James
Century Aluminum (CENX) upgraded to Neutral from Sell at Goldman
Charles Schwab (SCHW) upgraded to Market Perform from Underperform at Raymond James
Devon Energy (DVN) upgraded to Buy from Neutral at Citigroup
King Digital (KING) upgraded to Overweight from Neutral at Piper Jaffray
Norcraft (NCFT) upgraded to Buy from Hold at KeyBanc
SeaWorld (SEAS) upgraded to Buy from Neutral at Longbow
Southern Copper (SCCO) upgraded to Outperform from Market Perform at BMO Capital
Ultratech (UTEK) upgraded to Buy from Neutral at BofA/Merrill
Vantiv (VNTV) reinstated with an Overweight from Equal Weight at Barclays
Western Refining (WNR) upgraded to Buy from Neutral at Citigroup
Williams-Sonoma (WSM) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Bed Bath & Beyond (BBBY) downgraded to Underperform from Neutral at BofA/Merrill
CDW Corporation (CDW) downgraded to Market Perform from Outperform at Raymond James
Cinemark (CNK) downgraded to Neutral from Buy at B. Riley
Coeur Mining (CDE) downgraded to Hold from Buy at Deutsche Bank
Enanta (ENTA) downgraded to Market Perform from Outperform at JMP Securities
GT Advanced (GTAT) downgraded to Hold from Buy at Canaccord
GT Advanced (GTAT) downgraded to Neutral from Buy at UBS
Insight Enterprises (NSIT) downgraded to Underperform at Raymond James
JAVELIN Mortgage (JMI) downgraded to Sell from Neutral at Citigroup
Peabody (BTU) downgraded to Hold from Buy at Deutsche Bank
Regado Biosciences (RGDO) downgraded to Hold from Buy at Needham
Tidewater (TDW) downgraded to Underweight from Overweight at Morgan Stanley
UMB Financial (UMBF) downgraded to Underperform from Market Perform at Raymond James

Initiations

Bazaarvoice (BV) coverage resumed with a Buy at B. Riley
Golar LNG (GLNG) initiated with a Buy at BofA/Merrill
Horizon Pharma (HZNP) assumed with an Overweight at Piper Jaffray
MobileIron (MOBL) initiated with a Buy at Goldman
MobileIron (MOBL) initiated with a Buy at Stifel
MobileIron (MOBL) initiated with an Overweight at Barclays
MobileIron (MOBL) initiated with an Overweight at Morgan Stanley
Nordic American Offshore (NAO) initiated with a Neutral at JPMorgan
Nordic American Offshore (NAO) initiated with an Outperform at Credit Suisse
Nordic American Offshore (NAO) initiated with an Overweight at Morgan Stanley
Rocket Fuel (FUEL) initiated with a Market Perform at Wells Fargo
Third Point Reinsurance (TPRE) assumed with a Neutral at Citigroup

COMPANY NEWS

Archer Daniels (ADM) announced plans to acquired WILD Flavors GmbH for EUR2.3B
Expedia (EXPE) said it will buy Australia's Wotif Group for A$703M
Anglo American (AAUKY) to sell 50% interest in Lafarge Tarmac for minimum value of $1.5B to Lafarge (LFRGY)
SABMiller (SBMRY) to sell stake in Tsogo Sun Holdings through a combination of an institutional placing and a buy back buy Tsogo Sun following the completion of a strategic review

EARNINGS

Penford (PENX) reports Q3 EPS 24c, one estimate 21c

NEWSPAPERS/WEBSITES

Lion Capital demands Charney reinstated to American Apparel (APP), Bloomberg reports
American Apparel (APP) in financing talks with Standard General, WSJ reports
Amazon's (AMZN) Luxembourg operations included in EU tax inquiry, WSJ reports
Microsoft taxes probed as EU questions Luxembourg, Bloomberg says
Boeing (BA) assesses damage to aircraft parts from train derailment, WSJ reports (BRK.A, SPR)
BHP Billiton (BHP) has six potential suitors looking at Nickel West unit, AFR reports
HSBC (HSBC) plans to shut Libyan operations, Bloomberg says
Google (GOOG) may have invested up to $500M to expand Shopping Express, Re/code says
Tesla (TSLA) to investigate fire in stolen Models S crash, Bloomberg says
DISH (DISH) could climb 20%, Barron's says
PetSmart (PETM) could be smart bet, Barron's says
Weight Watchers (WTW) still looks attractive, Barron's says
Realogy (RLGY) could rebound to about $48, Barron's says
Qualcomm (QCOM), NVIDIA (NVDA), Apple (AAPL), Google (GOOG) could benefit from connected cars, Barron's says

SYNDICATE

Malibu Boats (MBUU) files to sell 4M shares of common stock
ModusLink (MLNK) files $100M mixed securities shelf
Repros Therapeutics (RPRX) files $100M mixed securities shelf

Headline of the day: Complacency Breeds $2 Trillion of Junk as Sewage Funded (BBG)
Israel intensifies Gaza offensive after surge in rocket fire (Reuters)
Profits plunge at Vatican bank (FT)
Investors Are Buying Troubled Golf Courses and Giving Them Makeovers (NYT)
Pimco Dissidents Challenge Bill Gross in ‘Happy Kingdom (BBG)
That's a new one: Marks and Spencer blames new website for sales drop (Reuters)
Iran's Supreme Leader calls for more enrichment capacity (Reuters)
Boeing Faces Long-Term Credit Risk if Ex-Im Bank Closed, S&P Says (WSJ) not to mention the collapse risk to US durable goods orders
U.K. Manufacturing Unexpectedly Slumps Most in 16 Months (BBG)
Some Still Lack Coverage Under Health Law (WSJ)
Samsung earnings slide, Smartphones weigh on Samsung Electronics as guidance disappoints (Reuters)
Coconut Water Beating Hedge Funds Lures Ex-Trader (BBG)
CIA had role in Germany spy affair (Reuters)
Global Borrowers Avoid $70 Billion Debt Distress in U.K. Courts (BBG)
Afghanistan's Abdullah rejects election result as 'coup' against people (Reuters)
Amazon rainforest grew after climate change 2,000 years ago (Reuters)

Overnight Media Digest

NYT

* State and federal authorities have begun settlement talks with Commerzbank, Germany's second-largest lender, over the bank's dealings with Iran and other countries blacklisted by the United States, according to people briefed on the matter. (http://nyti.ms/1jjrlKw)

* In response to intelligence reports about plots being hatched by Al Qaeda's affiliate in Yemen, the United States has, for the first time, asked officials at more than a dozen foreign airports to confiscate from passengers any electronic devices that cannot be turned on. (http://nyti.ms/1thUOIO)

* Lenders Agree to Give Puerto Rico Electric Power Authority More Time to Repay Debt. The agreement to delay certain payments for three more weeks forestalls a possible restructuring by the Puerto Rico Electric Power Authority. (http://nyti.ms/1oD58WE)

* A group of technology companies led by Intel announced on Tuesday the formation of the Open Interconnect Consortium. The group, which also includes Atmel, Broadcom, Dell, Samsung and Wind River, will focus on creating an open-source standard for wirelessly connecting devices to one another and to the Internet. Like other open-source projects, the member companies pledge to donate intellectual property, or IP, that all members and others can work on and use. (http://nyti.ms/1kysb0D)

* General Motors has resisted recalling almost 1.8 million full-size pickup trucks and sport utility vehicles from the 1999 to 2003 model years for corrosion-related brake failures, saying the issue is one of maintenance. (http://nyti.ms/1zlGQGp)

Canada

THE GLOBE AND MAIL

** Thousands of New Brunswickers cope without electricity, phones, hot water and gas while the province cleans up after post-tropical-storm Arthur. Most of the 86,000 customers still without electricity may have to wait until Wednesday evening for it to be restored. (http://bit.ly/1tfSemT)

** The federal government's prostitution bill is vulnerable to a constitutional challenge, a Canadian lawyers group says - a warning that comes as Justice Minister Peter MacKay revealed the government wrote the bill without outside legal opinions but expects it to pass muster. (http://bit.ly/TOda3E)

Reports in the business section:

** Canada's largest telecom company BCE Inc is crying foul over Ottawa's announcement that it will set aside 60 percent of the airwaves in a new public auction for small wireless players in another attempt to jump-start a fourth national carrier. (http://bit.ly/1mAyBSJ)

NATIONAL POST

** In a vote split down ideological lines, Toronto City Council voted Monday to appoint Ceta Ramkhalawansingh, an activist and retired civil servant, as the new councillor for the downtown ward of Trinity-Spadina. Adam Vaughan, the elected councillor, stepped down earlier this year. He was elected as Liberal MP for Trinity-Spadina in a byelection last week. (http://bit.ly/1qerPA3)

** Toronto Police are not ruling out a connection between a missing Mississauga family and a charred car with three bodies found north of Barrie. (http://bit.ly/1jknyNc)

FINANCIAL POST

** WestJet Airlines Ltd is moving farther away from its roots as a low-cost carrier with plans to add widebody planes to its fleet - a move that will allow it to expand overseas, putting it in closer competition with Air Canada at a time when Canada's largest airline is flying fuller planes than ever before. WestJet says it will introduce the larger planes in the fall of 2015. (http://bit.ly/1qemngw)

** About one month after BENEV Capital and Difference Capital Financial, its largest shareholder, agreed to patch up their differences and end a proxy contest, tensions between the two have resurfaced. (http://bit.ly/1mE8qdR)

Hong Kong

SOUTH CHINA MORNING POST

-- Hong Kong Monetary Authority (HKMA) Chief Executive Norman Chan Tak-lam said on the city's de facto central bank website that he would continue to support the local dollar's peg to the US currency when his second term starts in October. (bit.ly/1j9OsXu)

-- HKT, the telecommunications arm of Richard Li Tzar-kai's PCCW, has unveiled a three-brand mobile strategy, a retail network of 137 shops, streamlined pricing plans and the widest range of smartphones on offer in Hong Kong as it marked 55 days since its HK$2.43 billion takeover of rival CSL New World Mobility. (bit.ly/1mCKjwc)

-- Chun Wo Development Holdings Ltd, one of the largest construction companies in Hong Kong, said its controlling shareholder GT Winners has entered into an agreement to sell all or part of its 610 million shares, or a 56.3 percent stake, to an unnamed independent third party.

THE STANDARD

-- Hong Kong Exchanges and Clearing Ltd shares rose to a three-year high even as HSBC cut its rating for local equities to "underweight" from "neutral" on concerns over Occupy Central. (bit.ly/1mCJ4NA)

-- The market should disregard the short-term performance of the Exchange Fund, said Hong Kong Monetary Authority chief executive Norman Chan Tak-lam. (bit.ly/VBzD5D)

-- Hong Kong's home prices and rents rose for two consecutive months in April and May, while developers continued to put new units up for sale. (bit.ly/1macUHS)

HONG KONG ECONOMIC JOURNAL

-- Galaxy Entertainment Group vice-chairman Francis Lui expected the company's gambling revenue to grow at least 10 percent this year.

-- Hedge fund Elliott Management increased its stake in Wing Hang Bank Ltd to near 7.8 percent, a move that could affect Oversea-Chinese Banking Corp Ltd's plan to take Wing Hang Bank private.

HONG KONG ECONOMIC TIMES

-- Centaline Property Agency said the consolidation mode has ended for Hong Kong's property market and home prices will reach another record high in the third quarter, while Ricacorp Properties expected new and second home transactions to gain 38 percent from the first half.

MING PAO

-- Hong Kong's home prices rose to a record high in May, with small and medium-sized units posting the biggest increase, official data showed.

Britain

The Times

BIG GUNS ANNOUNCE 250 MLN STG MISSILE DEAL ON ARRIVAL IN INDIA

A 250 million pound ($425.4 million) weapons deal that should create hundreds of British jobs was the centrepiece of the opening day of George Osborne and William Hague's business mission to India.

VAUXHALL SPEEDS AWAY FROM GERMAN DECLINE WITH 550 NEW JOBS IN BRITAIN

Carmaker Vauxhall, which is owned by General Motors of the US, announced plans to create 550 new British jobs, offering 250 jobs at its Luton van-making plant and another 300 at Ellesmere Port in Cheshire, the home of the Astra.

WASHINGTON BLAMES UK TAX RISES FOR COLLAPSING NORTH SEA OIL HOPES

The US Energy Department has issued a blistering indictment of the UK government's tax raid on North Sea oil and gas revenues, warning that prohibitive costs threaten much of Britain's energy industry.

The Guardian

BRITAIN'S BIGGEST BUY-TO-LET LANDLORDS TO SELL ENTIRE PORTFOLIO OF PROPERTIES

Britain's biggest buy-to-let landlords, Fergus and Judith Wilson, are to withdraw from the property business, selling their entire portfolio of nearly 1,000 homes in the Ashford and Maidstone area in a deal likely to net the controversial duo at least 100 million pounds - and spark speculation that property prices have peaked.

The Telegraph

AIRPORT SECURITY: YOU WON'T FLY TO THE U.S. IF YOUR MOBILE PHONE BATTERY IS DEAD

Holidaymakers and business travellers who arrive at airport security with uncharged mobile phones or other electrical items will be stopped from boarding planes bound for the United States.

TOUR DE FRANCE WILL RETURN TO BRITAIN, SAYS RACE DIRECTOR

Britain will rekindle its love affair with the Tour de France, the race's director has promised, after six million people turned out to give the event the most spectacular start in its 111-year history.

Sky News

LLOYDS PICKS NEW CHIEF AMID BANK IT SCRUTINY

Britain's biggest high street lender will this week appoint a new IT chief as the banking sector seeks to overhaul creaking computer systems following a series of reputation-damaging failures.

The Independent

THE DECISION ON SCOTLAND IS 'IRREVERSIBLE', SAYS ALISTAIR DARLING

The impact of Scotland voting for independence could be more damaging for the UK than the 2008 banking crisis, Alistair Darling has warned.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
NFIB small business optimism for June at 7:30--consensus 97.0
JOLTs job openings for May at 10:00--consensus 4.35M
Consumer credit for May at 15:00--consensus $20.0B

ANALYST RESEARCH

Upgrades

Aimco (AIV) upgraded to Buy from Neutral at UBS
Celadon Group (CGI) upgraded to Buy from Hold at Stifel
Groupon (GRPN) upgraded to Buy from Neutral at B. Riley
Guess (GES) upgraded to Overweight from Neutral at Piper Jaffray
Rio Tinto (RIO) upgraded to Overweight from Equal Weight at Barclays
Waddell & Reed (WDR) upgraded to Buy from Neutral at Sterne Agee

Downgrades

Bruker (BRKR) downgraded to Neutral from Buy at ISI Group
Horsehead Holding (ZINC) downgraded to Market Perform from Outperform at FBR Capital
Karyopharm (KPTI) downgraded to Perform from Outperform at Oppenheimer
The Fresh Market (TFM) downgraded to Sell from Neutral at Goldman
Verastem (VSTM) downgraded to Perform from Outperform at Oppenheimer
Vertex (VRTX) downgraded to Perform from Outperform at Oppenheimer
Zebra Technologies (ZBRA) downgraded to In-Line from Outperform at Imperial Capital

Initiations

A.O. Smith (AOS) initiated with an Outperform at Northland
Abengoa Yield (ABY) initiated with a Buy at BofA/Merrill
Abengoa Yield (ABY) initiated with a Buy at Citigroup
Abengoa Yield (ABY) initiated with an Outperform at RBC Capital
Aflac (AFL) initiated with a Buy at Drexel Hamilton
Aspen Aerogels (ASPN) initiated with a Buy at Canaccord
Aspen Aerogels (ASPN) initiated with a Neutral at Citigroup
Aspen Aerogels (ASPN) initiated with a Neutral at RW Baird
Aspen Aerogels (ASPN) initiated with an Overweight at JPMorgan
Boston Scientific (BSX) initiated with a Buy at CRT Capital
CSC (CSC) initiated with an Underweight at Morgan Stanley
Intuitive Surgical (ISRG) initiated with a Neutral at BTIG
Masimo (MASI) initiated with a Buy at BTIG
Memorial Resource (MRD) initiated with a Buy at Citigroup
Memorial Resource (MRD) initiated with a Buy at Stifel
Memorial Resource (MRD) initiated with an Outperform at BMO Capital
Memorial Resource (MRD) initiated with an Outperform at RBC Capital
Memorial Resource (MRD) initiated with an Outperform at Wells Fargo
Memorial Resource (MRD) initiated with an Overweight at Barclays
MetLife (MET) initiated with a Buy at Drexel Hamilton
Mueller Water (MWA) initiated with a Market Perform at Northland
New York REIT (NYRT) initiated with a Market Perform at JMP Securities
NorthStar Asset Management (NSAM) initiated with a Market Perform at Keefe Bruyette
Ophthotech (OPHT) initiated with an Outperform at Oppenheimer
Prudential (PRU) initiated with a Buy at Drexel Hamilton
Silicon Laboratories (SLAB) initiated with a Buy at MKM Partners
St. Jude Medical (STJ) initiated with a Buy at CRT Capital
Starwood Waypoint (SWAY) initiated with an Outperform at Keefe Bruyette
T-Mobile (TMUS) initiated with an Outperform at BMO Capital
TherapeuticsMD (TXMD) initiated with an Outperform at FBR Capital
Waddell & Reed (WDR) initiated with an Outperform at William Blair
Xerox (XRX) initiated with an Overweight at Morgan Stanley

COMPANY NEWS

American Apparel (APP) said Standard General entered into a letter agreement with the company's founder, Dov Charney
Fifth Street Finance (FSC) increased its monthly dividend by 10% to 9.17c per share
Philips Healthcare (PHG) CEO Deborah DiSanzo will step down after Q2 EBITA below expectations
Macquarie Infrastructure (MIC) to acquire remainder of IMTT for $1.025B in cash, stock
KLA-Tencor (KLAC) board announced a $1B share repurchase authorization and increased its quarterly dividend 11% to 50c per share
Volkswagen (VLKAY) Passenger Cars said delivered over 3M vehicles in 1H, 514,900 models in June
Baker Hughes (BHI) reported June international rig count down 14 to 1,336

EARNINGS

Companies that missed consensus earnings expectations include:
Intellipharmaceutics (IPCI)
Samsung (SSNLF) reports Q2 sales of approximately 52T won vs. 57.46T won last year
CA Technologies (CA) lowers FY15 EPS view to $2.42-$2.49 from $2.45-$2.52
Axcelis (ACLS) lowers Q2 EPS view to (7c)-(5c) from (2c)-0c, consensus (1c)

NEWSPAPERS/WEBSITES

Boeing faces risk to long-term credit if Export-Import Bank is closed, WSJ says
Apple (AAPL) CEO seeks expansion of board, WSJ reports
General Motors (GM) elects not to recall trucks with brake problems, NY Times reports
Commerzbank (CRZBD) expected to pay at least $500M in settlement, NY Times says
Ford (F) initiates six new recalls that cover 101,000 vehicles, Detroit News reports
Crumbs Bake Shop (CRMB) closing all stores, evaluating options, WSJ reports
Tesla (TSLA) faces trademark infringement suit in China, Reuters reports
Applied Materials (AMAT) shares could rise 30%, Barron's says

SYNDICATE

bluebird bio (BLUE) announces proposed public offering of $100M of common stock
CatchMark Timber (CTT) files to sell 10M shares of Class A common stock
Eros International (EROS) files to sell 7M A ordinary shares
Gevo (GEVO) files to sell 17.5M shares for selling stockholders
Macquarie Infrastructure (MIC) files to sell $250M of convert senior notes, 10M shares
TC PipeLines (TCP) files to sell $200M in common units
Ultragenyx (RARE) announces proposed public offering of 2.02M shares

Xi Says China Conflict With U.S. Would Be Disaster (BBG)
Short selling drops to lowest level since Lehman (FT)
Scoping the new subprime as watchdogs cry 'bubble' (Reuters)
Carlos Slim to break up América Móvil empire (FT)
Jury Acquits Rengan Rajaratnam in Insider-Trading Case (WSJ)
Hamas rockets land deep in Israel as it bombards Gaza Strip (Reuters)
Hong Kong Buyers Queue for New Homes After Prices Plunge (BBG)
Rebel Stronghold in Ukraine Braces for Its Showdown (WSJ)
Tiny Houses Big With U.S. Owners Seeking Economic Freedom (BBG)
Chinese Cash-Bearing Buyers Drive U.S. Foreign Sales Jump (BBG)
Portugal Bonds Drop With Europe Stocks as Gold Advances (BBG)
Why UBS Says Brazil’s 7-1 Trouncing Is Bearish for Stocks (BBG)
Both candidates in Indonesia election claim victory (Reuters)
Citigroup Nears Deal to Resolve Mortgage Probe (WSJ)

Overnight Media Digest

WSJ

* President Barack Obama is seeking $3.7 billion in funding and legal changes to stem the surge in children and families illegally entering the United States, creating new tensions within his party as he works to confront a crisis that is overwhelming the government's ability to hold young migrants. (http://on.wsj.com/1jnW60X)

* Israel stepped up its attacks in what it called the beginning of a prolonged assault on Palestinian militants and their infrastructure in the coastal enclave. (http://on.wsj.com/1xPSRlO)

* Medicare allowed $1.7 billion in 2010 payments to clinical laboratories for claims that raised red flags, according to a report to be released Wednesday, the latest example of how the federal insurance program for the elderly and disabled is susceptible to misspending and abuse. (http://on.wsj.com/1ncG2P0)

* The Justice Department and Citigroup are close to a deal for the bank to pay about $7 billion to settle allegations the bank sold shoddy mortgages in the run-up to the financial crisis. (http://on.wsj.com/TRFG4t)

* NorthStar Realty Finance Corp is in exclusive talks to buy Griffin-American Healthcare REIT II, a large owner of senior housing, skilled nursing facilities, hospitals and other properties, according to two people familiar with the negotiations. The cash-and-stock deal, which would value the real-estate investment trust at $3.5 billion to $3.7 billion, isn't final and could still fall apart. (http://on.wsj.com/1xPMbEq)

* Federal prosecutors suffered the first defeat in their half-decade-long crackdown on insider trading Tuesday with the acquittal of Raj Rajaratnam's younger brother, a bracing reversal after a string of 81 convictions. (http://on.wsj.com/VVXtcK)

* The SEC said a Utah accounting firm and two of its partners botched the audits of a chicken company based in China that faces allegations of defrauding investors. Child Van Wagoner & Bradshaw of Salt Lake City, Utah, along with partners Russell Anderson and Marty Van Wagoner, was deficient in its 2009 and 2010 audits of Yuhe International Inc, a Chinese provider of broiler chickens, the SEC said. (http://on.wsj.com/TRAy0d)

* Amazon, amid tense negotiations with Hachette, proposed letting the publisher's authors keep 100 percent of the revenue from their e-books until a contract is reached. Hachette rejected the proposal. (http://on.wsj.com/1zog0gP)

* The Financial Industry Regulatory Authority is pressing retail brokers for details about how they route customer orders amid mounting concerns some brokers might be sending orders to venues that provide the highest payments but not the best price for investors. (http://on.wsj.com/1r6P5Bu)

* A combative, at times emotional Donald Sterling said in court testimony Tuesday that he is fighting a $2 billion deal to sell the Clippers because he believes the basketball team will be worth more money once its television contracts are renegotiated. (http://on.wsj.com/1lSG0qt)

* Google Cloud Platform offered two terabytes of free storage for a year, through one of its partners, a startup called Panzura. The move highlights the battle among Google , Amazon and Microsoft to provide companies with remote storage, computing power and other technology services, which reduce companies' need to buy and run their own equipment. Some industry insiders predict storage will soon be free. (http://on.wsj.com/1qhLTSb)

* After another attempt to take over Newmont Mining Corp failed in April, many investors have lost patience. They are urging the miner to either rekindle this year's aborted deal with No. 1 Barrick Gold Corp, or break itself up. (http://on.wsj.com/1xQ5oFX)

After delivering a fierce speech to foreign diplomats in Moscow last week where he accused the United States of using cold war tactics, Russian President Vladimir Putin has gone oddly silent following the Ukrainian army's swift advance against pro-Russian separatists.

Hedge funds have taken the decision to reduce their bearish bets that the value of stocks is about to fall, with the share of stocks identified for short selling at its lowest level since before the financial crisis of 2007.

Rengan Rajaratnam, the younger brother of convicted Galleon Group founder Raj Rajaratnam, was on Tuesday cleared of a charge that he conspired to engage in insider trading while working at the $8 billion hedge fund.

Danish oil and shipping group AP Moeller-Maersk revealed a $1.7 billion hit to its Brazilian oil assets, becoming the latest company to face issues trying to exploit the country's deepwater fields.

U.S. drugmaker AbbVie hiked its offer for Shire to 30 billion pounds, even as it urged its shareholders to encourage the UK-listed drugmaker to partake in a friendly deal.

The UK Serious Fraud Office has arrested and questioned four individuals at Airbus as part of a probe its long-standing investigation into alleged corruption in Saudi Arabia by a unit of the planemaker.

NYT

* Citigroup and the Justice Department are nearing a deal that could cost the bank roughly $7 billion to settle a civil investigation into the sale of mortgage investments, people briefed on the matter said on Tuesday. (http://nyti.ms/1me9QdR)

* After just under four hours of deliberation, a federal jury of eight women and four men found Rengan Rajaratnam, 43, not guilty of conspiracy to commit insider trading with his brother. (http://nyti.ms/U2tWfP)

* América Móvil said Tuesday that it would sell off parts of its Mexican unit, an unexpected capitulation by its controlling shareholder, Carlos Slim Helú, to strong new antimonopoly rules. (http://nyti.ms/1ozMWfg)

* A Canadian firm, 1832 Asset Management, disclosed in a filing with the Securities and Exchange Commission on Tuesday that it had sold about 11.5 million shares of American Apparel stock, or about 6.6 percent of the company's outstanding shares, liquidating its entire holding in the company. (http://nyti.ms/1rPNwud)

* New York's attorney general said on Tuesday that he had reached an agreement with Uber, the car-summoning start-up, that would limit the cost of using the company's service during emergencies. The new agreement, according to the attorney general's office, would cap Uber's surge prices during "abnormal disruptions of the market," typically citywide emergencies, in accordance with the City of New York's law against price gouging, passed in 1979. (http://nyti.ms/1kCd4mQ)

* Yelp, the online service increasingly popular on both sides of the Atlantic, has joined the critics formally opposing the European Union's proposed antitrust settlement with Google. Google officials declined to comment on the Yelp complaint. (http://nyti.ms/1jcTTVK)

* Amazon has proposed giving Hachette's authors all the revenue from their e-book sales on Amazon as the parties continue to negotiate a new contract. Hachette's response on Tuesday was to suggest that the retailer was trying to make it commit suicide. (http://nyti.ms/1zoeKdI)

Canada

THE GLOBE AND MAIL

** Toronto Mayor Rob Ford's staff called police after protesters disrupted a press conference on Tuesday, but an officer ended up accusing the mayor's sobriety coach of kicking a demonstrator. A handful of protesters, some of whom removed their shirts, loudly called on the mayor to resign as he spoke out against a proposal to redesign Eglinton Avenue West to make it more attractive to pedestrians and cyclists. (http://bit.ly/1k4MNxH)

** Toronto Councillor Doug Ford said a window on his SUV was smashed on Monday night, and he alleged that the incident may have been politically motivated. The outspoken councillor, who is running the re-election campaign for his brother, Mayor Rob Ford, told reporters at City Hall on Tuesday morning that the rear window on his car had been vandalized. (http://bit.ly/1r6gOT1)

Reports in the business section:

** General Electric Co chairman and chief executive officer Jeff Immelt said Canada's energy industry needs to make the crude wrung from the Alberta oil sands competitive with other sources around the world in terms of greenhouse gas emissions, and is positioning the industrial conglomerate to play a key role. (http://bit.ly/1meIswy)

NATIONAL POST

** A 31-year-old teacher is dead and two others are seriously injured after one or more people opened fire outside a public housing building in North York just after midnight on Tuesday. Abshir Hassan, 31, a supply teacher at Lawrence Heights Middle School, died at the scene, police said. The other two victims are a 22-year-old man and an 18-year-old woman. (http://bit.ly/1pZ1I4w)

** Alleged Anonymous hacker Matt DeHart has been put on suicide watch and his refugee hearing has been postponed. Instead of appearing before a Toronto refugee tribunal Tuesday he was confined in a suicide watch cell after returning to jail from hospital, where he was treated after another suicide attempt. (http://bit.ly/1lTn7DZ)

FINANCIAL POST

** Saskatchewan, and perhaps one or more Atlantic provinces, will join Ontario and British Columbia in Ottawa's proposed national securities watchdog, sources say. Finance Minister Joe Oliver will announce that Saskatchewan will sign onto the fledgling Co-operative Capital Markets Regulator, according to sources. (http://bit.ly/1qiD7mX)

** Canada's banking system isn't as solid as it was a year ago because of the federal government's plan to implement a bail-in regime for domestic, systemically important banks, but there remains little to worry about when it comes to the overall strength of the country's biggest lenders, says Moody's Investor Services Inc. (http://bit.ly/1qUEvQA)

China

CHINA SECURITIES JOURNAL

- A total of 122,727 investors opened A-share trading accounts last week, down 11.7 percent from the week before last.

SHANGHAI SECURITIES NEWS

- The city of Daqing in Heilongjiang province, known as the oil capital of China, has outlined plans to boost development of the photovoltaic industry as part of the city's efforts to move its economy away from traditional energy to new energy sources.

SECURITIES TIMES

- China's finance ministry said it plans to improve subsidies to rural financial institutions in order to direct social funds into the agriculture sector.

SHANGHAI DAILY

- Firms and individuals in the Sino-Singapore Tianjin Eco City on Tuesday received a 2-billion-yuan ($322 million) quota from China's central bank for cross-border yuan investment and borrowing as part of efforts to promote the international use of the yuan. The People's Bank of China has allowed companies in the zone to borrow yuan from banks in Singapore, use equity funds to invest overseas, and individuals to transact yuan under direct investment and current accounts.

CHINA DAILY

- The Chinese government will increase its input and encourage social capital to enter the industry to provide better healthcare services, Premier Li Keqiang said on Tuesday. These moves will help to minimize patients' out-of-pocket expenses and create more quality healthcare resources, he said.

Britain

The Times

FIRMS GET MORE POWER TO FIGHT ENERGY GIANTS

Small companies are to be given more help to challenge large energy suppliers as part of a drive to update or scrap red tape that acts as a "drag on jobs and growth".

The Guardian

LABOUR PLANS PUBLIC CONTRACTS SHAKEUP

Under a Labour government, only social enterprises with a public service mission will be allowed to bid for some government contracts in an effort to break the stranglehold of big corporate suppliers on public procurement, shadow minister Chi Onwurah will say on Wednesday.

The Telegraph

HMRC RAID ON BANK ACCOUNTS GOES AGAINST MAGNA CARTA, SAY MPS

British tax authorities have been accused of attempting to ride roughshod over Magna Carta in pursuit of new powers that will allow them to raid the bank accounts of those who fail to pay their dues.

VINCE CABLE 'CONFIDENT' IN FACE OF A FRESH PFIZER APPROACH

Pfizer would be required to make meaningful commitments to Britain's science base should it resume its takeover play for AstraZeneca in future, the Business Secretary has said.

THE MOST LOYAL SAVERS ARE PAID HALF BANK RATE, REGULATOR FINDS

Banks and building societies are exploiting their most loyal savers with rates that average a fraction of the Bank Rate, the city regulator has found.

Sky News

MOULTON IN TALKS OVER UNIPART RESCUE DEAL

City financier Jon Moulton is in talks to rescue Unipart Automotive, Britain's biggest independent car parts supplier, in a deal that could save more than 1,500 jobs.

GOODWIN HELPS RACK UP 400,000 STG RBS LEGAL BILL

Royal Bank of Scotland (RBS) has spent hundreds of thousands of pounds on law firms acting for Fred Goodwin and other former directors during the early stages of legal actions brought by thousands of its shareholders.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
FOMC minutes for June 17-18 meeting to be released at 14:00

ANALYST RESEARCH

Upgrades

American Express (AXP) upgraded to Buy from Neutral at Guggenheim
Apollo Investment (AINV) upgraded to Buy from Neutral at SunTrust
Broadcom (BRCM) upgraded to Outperform from Perform at Oppenheimer
CARBO Ceramics (CRR) upgraded to Neutral from Sell at Guggenheim
Deutsche Bank (DB) upgraded to Overweight from Neutral at JPMorgan
GOL Linhas (GOL) upgraded to Outperform from Market Perform at Raymond James
HollyFrontier (HFC) upgraded to Outperform from Market Perform at Wells Fargo
KKR (KKR) upgraded to Outperform from Neutral at Credit Suisse
Royal Dutch Shell (RDS.A) upgraded to Buy from Hold at Deutsche Bank
Schlumberger (SLB) upgraded to Overweight from Neutral at HSBC
Seattle Genetics (SGEN) upgraded to Buy from Neutral at UBS
Umpqua Holdings (UMPQ) upgraded to Equal Weight from Underweight at Barclays

Downgrades

Apollo Global (APO) downgraded to Neutral from Buy at Citigroup
Artisan Partners (APAM) downgraded to Neutral from Buy at Citigroup
BP (BP) downgraded to Hold from Buy at Deutsche Bank
Carlyle Group (CG) downgraded to Neutral from Buy at Citigroup
Garmin (GRMN) downgraded to Underperform from Sector Perform at Pacific Crest
Gigamon (GIMO) downgraded to Buy from Strong Buy at Needham
Gigamon (GIMO) downgraded to Market Perform from Outperform at William Blair
Gigamon (GIMO) downgraded to Neutral from Buy at Goldman
Gigamon (GIMO) downgraded to Underperform from Neutral at BofA/Merrill
International Paper (IP) downgraded to Sector Perform from Outperform at RBC Capital
Louisiana-Pacific (LPX) downgraded to Sector Perform from Outperform at RBC Capital
Marvell (MRVL) downgraded to Underperform from Perform at Oppenheimer
McGraw Hill Financial (MHFI) downgraded to Market Perform at Raymond James
Moody's (MCO) downgraded to Market Perform from Outperform at Raymond James
Plum Creek Timber (PCL) downgraded to Sector Perform from Outperform at RBC Capital
Potash (POT) downgraded to Neutral from Overweight at JPMorgan
RGS Energy (RGSE) downgraded to Market Perform from Outperform at Cowen
Taminco (TAM) downgraded to Neutral from Buy at Citigroup
Vectren (VVC) downgraded to Hold from Buy at KeyBanc

Initiations

21st Century Fox (FOXA) initiated with an Overweight at Barclays
Ardmore Shipping (ASC) initiated with a Buy at Canaccord
Brixmor (BRX) initiated with an Outperform at RW Baird
CBS (CBS) initiated with an Equal Weight at Barclays
CTPartners (CTP) initiated with a Buy at B. Riley
Cavium (CAVM) initiated with an Outperform at Imperial Capital
ConnectOne Bancorp (CNOB) initiated with a Buy at Guggenheim
DHT Holdings (DHT) initiated with a Buy at Canaccord
Discovery (DISCA) initiated with an Overweight at Barclays
Disney (DIS) initiated with an Equal Weight at Barclays
F5 Networks (FFIV) initiated with a Buy at DA Davidson
HomeAway (AWAY) initiated with a Neutral at Macquarie
ITT Corp. (ITT) initiated with a Perform at Oppenheimer
Infosys (INFY) initiated with a Hold at Stifel
KLA-Tencor (KLAC) assumed with an Overweight at Piper Jaffray
Kate Spade (KATE) initiated with an Outperform at BMO Capital
Lam Research (LRCX) assumed with an Overweight at Piper Jaffray
MEDNAX (MD) initiated with a Positive at Susquehanna
Navios Acquisition (NNA) initiated with a Hold at Canaccord
NetApp (NTAP) initiated with a Buy at DA Davidson
Nordic American Tankers (NAT) initiated with a Sell at Canaccord
Regency Energy Partners (RGP) reinstated with an Equal Weight at Barclays
SAIC (SAIC) initiated with a Hold at Stifel
SPX Corp. (SPW) initiated with a Hold at Jefferies
Scorpio Tankers (STNG) initiated with a Hold at Canaccord
TCP Capital (TCPC) initiated with a Neutral at Citigroup
Time Warner (TWX) initiated with an Equal Weight at Barclays
Trulia (TRLA) initiated with an Outperform at Macquarie
Tsakos Energy (TNP) initiated with a Buy at Canaccord
Vantiv (VNTV) coverage resumed with an Overweight at Morgan Stanley
Viacom (VIAB) initiated with an Underweight at Barclays
Winnebago (WGO) initiated with a Neutral at SunTrust
Zillow (Z) initiated with an Outperform at Macquarie

COMPANY NEWS

Boeing (BA), Emirates finalized an order for 777Xs valued at $56B
KKR (KKR) acquired majority interest in OEG Offshore, terms not disclosed
Alcoa (AA) expects Q3 EPS to 'continue to build on strong second quarter,' continues to see 2014 global aluminum demand growth of 7%
Salix (SLXP) said it will combine with Cosmo Technologies. The transaction is expected to be modestly accretive to Salix’s EPS in FY16 and increasingly accretive thereafter
Bob Evans (BOBE) sees 1Q15 SSS down 2.5%-down 3%; sees Q2 SSS flat to up low single digits; sees Q3, Q4 SSS up in high single-digit
Gaming Partners (GPIC) announced that Michael Mann resigned from position of CFO

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Alcoa (AA), AeroVironment (AVAV), Bob Evans (BOBE)

Companies that missed consensus earnings expectations include:
Synergy Resources (SYRG), Healthcare Services (HCSG), Container Store (TCS)

AeroVironment (AVAV) sees FY15 revenue $250M-$270M, consensus $256.2M
Silicon Image (SIMG) lowers Q2 revenue guidance to $58M-$60.5M from $71M-$76M
Bob Evans (BOBE) sees Q1 EPS 6c-12c, may not compare to consensus 54c
Container Store (TCS) now sees FY14 EPS 49c-54c, consensus 57c
Bob Evans (BOBE) sees FY14 EPS $1.90-$2.20, consensus $2.56

NEWSPAPERS/WEBSITES

Citigroup (C) near $7B settlement with U.S. over mortgage probe, NY Times reports
Allergan (AGN) plans broad restructuring plan, Bloomberg says
Amazon (AMZN) proposes e-book authors keep 100% of revenue, WSJ reports
AbbVie (ABBV) forced to retract CEO comments about in Shire (SHPG) takeover battle, Reuters reports
Pentagon says no decision has been made on whether grounded F-35s (LMT) will be ready for air show, Reuters reports
GM (GM) CEO, general counsel to testify before Senate subcommittee, WSJ reports
America Movil (AMX) to break up Mexico unit by divesting assets, Bloomberg reports
Delta Air Lines (DAL) shares look cheap, Barron's says

SYNDICATE

bluebird bio (BLUE) 3M share Secondary priced at $34.00
Remark Media (MARK) files to sell 2.07M shares for holders
Rentech (RTK) files to sell up to 45.05M shares for holders
Ultragenyx (RARE) 2.017M share Secondary priced at $40.00

Espirito Santo Financial Suspends Shares, Bonds on ESI Exposure (BBG)
Europe Stocks Drop for Fifth Day as Espirito Santo Sinks (BBG)
Espirito Santo Creditors Doubt Containment on Missed Payment (BBG)
French Stocks Seen Extending Losses on Economy Concern (BBG)
Stocks Slide With Portugal Bonds as Yen Gains; Oil Drops (BBG)
U.S. Probes Hacking of Government Computers at Personnel Agency (WSJ)... finds terabytes of porn
It's Congress' fault: Obama rejects criticism over border crisis (Reuters)
Israel Mobilizes 20,000 Troops for Possible Gaza Invasion (BBG)
Chinese hackers pursue key data on U.S. workers (NYT)
Donetsk Primed for Siege as Ukraine Army Hems In Rebels (BBG)
Regulators Ready Money-Fund Rules (WSJ)
Are Investors Complacent About Risk? Concern Raised in June Fed Meeting (BBG)
Gaza Rockets Threaten Nuclear Plant as Israel Vows Force (BBG)
China June trade data misses forecasts, doubts over economy linger (Reuters)

Overnight Media Digest

WSJ

* Federal Reserve officials agreed at June's policy meeting to end their bond-buying program in October, putting an explicit end date on the experiment for the first time. Most officials at the June meeting also indicated that they expect an interest rate hike to come next year. (http://on.wsj.com/VLc1vo)

* IBM on Wednesday pledged to spend $3 billion over five years on semiconductor research. The money will be directed toward two major tasks: tackling technical obstacles to the miniaturization of circuitry on conventional silicon chips and developing alternative materials and technologies to keep boosting computing speed while consuming less energy. (http://on.wsj.com/1nffCfJ)

* The Education Department says it was unaware of the dire state of Corinthian Colleges Inc's finances before it moved June 12 to restrict access to federal student-aid dollars, which made up 80 percent of Corinthian's revenue. The aid freeze was designed to pressure the company to comply with an investigation into recruiting tactics, administration officials say, not to force its closure. (http://on.wsj.com/1szTnRZ)

* Chinese exports grew in June on the back of strengthening U.S. consumer demand, in a positive sign for China's crucial factory sector and for the global outlook. The pace of export growth disappointed some economists, though others blamed the lingering impact of distortions in last year's Chinese trade numbers used to make the comparison. (http://on.wsj.com/1ra3L2H)

* European Union antitrust officials have started questioning rival firms about Facebook Inc's proposed $19 billion acquisition of messaging service WhatsApp, ahead of a formal review that could be a test case for how to apply EU competition law to the new world of social media. (http://on.wsj.com/1n7ifLz)

* U.S. regulators are poised to complete long-awaited rules intended to prevent a repeat of the investor stampede out of money-market mutual funds that threatened to freeze corporate lending during the 2008 financial crisis. The Securities and Exchange Commission is expected to vote on a plan as early as this month that would require certain money funds catering to large, institutional investors to abandon their fixed $1 share price and float in value like other mutual funds, these people said. (http://on.wsj.com/1ol2KkG)

AbbVie Chief Executive Richard Gonzalez was on Wednesday forced to retract comments made by him while discussing shareholder support for the U.S. drugmaker' s 30 billion pound ($51.1 billion) bid for Shire after being caught out by British takeover rules.

Citigroup Inc is close to shelling out more than $7 billion to resolve a long-running investigation by the U.S. government into its sale of mortgage-backed securities, according to people familiar with the matter.

Germany's Lufthansa may launch a no-frills long-haul airline as part of wider plans by the company to stave off competition from low-cost and Middle Eastern carriers.

European Union antitrust regulators fined have fined six drugmakers including France's Servier a whopping 428 million euros ($583.8 million) for blocking the entry of cheaper generic competition to an expensive branded drug.

Britain's financial watchdog is launching a review of competition in the wholesale securities market as it eyes the practices used by high-frequency traders to get ahead on other investors.

Germany's Aldi is the global leader among discount food retailers that offer limited assortment grocery. Schwarz, which owns Lidl, took second place, according to a study by research firm Planet Retail.

A cross-selection of peer-to-peer (P2P) loans has gotten a credit rating from Standard & Poor's, marking the first time that a major credit rating agency has agreed to formally evaluate a securitisation from the fast-growing P2P sector.

NYT

* With countries in the European Union obliged to reduce their debt as a percentage of their economies, the quantifying of vice is expected to make growth rates look rosier. (http://nyti.ms/1ol0Twa)

* Chinese hackers in March broke into the computer networks of the United States government agency that houses the personal information of all federal employees, according to senior American officials. They appeared to be targeting the files on tens of thousands of employees who have applied for top-secret security clearances. (http://nyti.ms/1mL8sRb)

* A growing category in health care promises an alternative to the hospital emergency room and perhaps the family practitioner, with low fees and extended hours. Once derided as "Doc in a Box" medicine, urgent care has mushroomed into an estimated $14.5 billion business. (http://nyti.ms/1mBdPAK)

* Europe's top antitrust enforcer said several drug makers, including Servier, kept more affordable forms of a popular heart treatment off the market. (http://nyti.ms/1mBehix)

* The Taxi and Limousine Commission declared Lyft, a car-summoning start-up, an "unauthorized service" in New York City on Wednesday, two days before its planned debut. The start-up, however, did not come to an operation agreement with New York City regulators beforehand, prompting the commission's action on Wednesday evening. (http://nyti.ms/1xVJoJD)

* In small trials, two drugs go far in soothing symptoms of Eczema and Psoriasis. An experimental drug for eczema relieved severity of symptoms in 85 percent of those who took it. A drug for psoriasis cut severity of symptoms in as many as 82 percent of those who took it. (http://nyti.ms/1mLqVgH)

* A merger of Comcast and Time Warner Cable and a joining of AT&T and DirecTV would both pose competitive threats, Dish said. (http://nyti.ms/1mLnQNn)

* Harley-Davidson is recalling 66,421 Touring and CVO Touring motorcycles from the 2014 model year because their front wheels can lock up without warning. The company said it knew of five crashes and two minor injuries related to the defect, which it discovered last fall through warranty claims.(http://nyti.ms/TU7QMr)

Canada

THE GLOBE AND MAIL

** Heavy rain is not the only reason the Assiniboine River is flooding in the height of summer and threatening a swath of communities across southern Manitoba this week, a new report suggests. The elimination of vast numbers of small ponds and wetlands across the Canadian prairie has removed a crucial buffer that can temporarily store water on the landscape during periods of excessive precipitation. (http://bit.ly/1rawNiP)

** Canada should "come off the sidelines" to take a more active role in South Sudan as that country's humanitarian crisis deepens, the head of Amnesty International's Canadian branch says. Alex Neve made the comments after a 10-day visit to South Sudan, where a violent conflict is causing widespread upheaval in the world's newest country. (http://bit.ly/1ngOQU2)

Reports in the business section:

** Multimillionaire geologist Charles "Chuck" Fipke has sold his remaining stake in Ekati, the first-ever Canadian diamond mine he discovered two decades ago in the Arctic tundra of the Northwest Territories. The native Albertan sold his 10 percent interest to Dominion Diamond Corp for a total of $67 million (http://bit.ly/1nad8KL)

NATIONAL POST

** A father opened fire at a suburban Houston home Wednesday, killing four of his children as well as two adults who were with them, and critically wounding his 15-year-old daughter, authorities said. The suspected gunman eventually surrendered after a three-hour standoff with deputies who had cornered him. (http://bit.ly/1rayexz)

** The Conservative government is examining a whole new business model to effectively buy, sell and use the time and skills of federal employees: Meet the BURO-crat. The government has been planning a pilot project at some federal agencies that would apply "market principles" to more efficiently use federal bureaucrats and help smooth out busy and slow work periods, according to government records. (http://bit.ly/W05QUP)

FINANCIAL POST

** The Canadian arm of China Petrochemical Corp may shelve work on its Northern Lights oil sands lease or sell the property entirely, as Chinese companies begin to rethink future investment prospects in the world's No. 3 crude reserve. Sinopec, as the company is known, could delay efforts to develop the property or seek to sell its interest in the lease entirely as it consolidates its North American assets, a person familiar with board-level discussions in Beijing said. (http://bit.ly/U5bLX7)

** CNOOC Ltd subsidiary Nexen Energy ULC is restructuring its operations and letting go staff despite pledges to Ottawa by China's largest offshore oil producer to keep all employees and senior management and turn the Calgary-based company into a platform for growth, industry sources say. (http://bit.ly/1tquxZ3)

China

CHINA SECURITIES JOURNAL

Qianhai, the special economic zone in China's southern city of Shenzhen, plans to publish new rules that will expedite investment by Hong Kong companies and accelerate financial cooperation between the two neighbouring cities.

SHANGHAI SECURITIES NEWS

China has vowed to improve insurance services to stimulate innovation in social governance, the State Council said in a statement on Wednesday. Competent insurers are encouraged to roll out commercial pension and health care plans, invest in the pension sector, participate in the integration of the health sector and develop new products. Insurance will be incorporated into the disaster prevention system and funds will be encouraged to invest in urbanization, infrastructure and residential renovations.

21st CENTURY BUSINESS HERALD

- A residential land parcel in downtown Shanghai was sold at a record price of nearly 60,000 yuan per square metre, making it the most expensive plot sold in the country so far this year. The 6.885-square metre plot was acquired by a subsidiary of Lai Fung Holdings Ltd, which is the property and investment arm of the Lai Sun Group.

SHANGHAI DAILY

- China's chief climate official, Xie Zhenhua, said the nation should not be subject to the same rules for greenhouse gas emissions as the U.S. and other developed countries, and that Beijing will oppose attempts to impose them on China at next year's world climate conference.

CHINA DAILY

- Bank of China on Wednesday denied helping to launder money for people planning to emigrate by ignoring the annual cap on foreign exchange for individuals. According to a report by broadcaster CCTV, the country's largest foreign exchange bank has frequently allowed wealthy customers to transfer as much money as they want overseas.

Britain

The Times

CABLE HIRES MYNERS TO DEFUSE FLOAT ANGER

Vince Cable has attempted to head off what will be an excoriating attack on him by MPs later this week over the sale of Royal Mail by calling in a former Labour City minister to head an inquiry into government privatisations.

APPLAUSE FILLS AISLES AS KING CHECKS OUT

In the end there was no valedictory, no finger pointing and no barracking from the floor. Justin King stood down as the chief executive of J Sainsbury after ten years and fifteen weeks yesterday with the sound of applause ringing in his ears.

INSURERS PROMISE TO BE MORE OPEN WITH CUSTOMERS ON COSTS

Motorists and householders renewing their annual insurance policies could be told at the same time what their cost of cover was the previous year under an industry drive to be more open with customers.

The Guardian

BANK OF ENGLAND'S NEMAT SHAFIK SIGNALS THAT INTEREST RATE RISE EDGES CLOSER

The Bank of England's new deputy governor has signalled that an interest rate rise is edging closer after telling MPs the amount of spare capacity in the economy is lower than the bank predicted in May.

MONTHLY HOUSE PRICES FOR JUNE DROP 0.6 PCT, HALIFAX REPORTS

House prices experienced a bigger monthly fall than analysts had expected in June, knocking 1,100 pounds ($1,900) off the average property value, according to a survey carried out by mortgage lender Halifax.

The Telegraph

UBS PREDICTS SAVINGS FLIGHT FROM SCOTLAND IN THE EVENT OF 'YES' VOTE

Savers may rapidly move their money south of the border if Scotland were to vote for independence, analysts at one of Europe's biggest banks have predicted.

QATAR CUTS HOLDING IN LONDON STOCK EXCHANGE BY A THIRD

Qatar Holding is to trim its 15 percent stake in the owner of the London Stock Exchange by a third ahead of a $1.6 billion rights issue by the British bourse to fund its acquisition of Russell Investments.

SHALE 'COULD MEET 41 PCT OF UK'S GAS NEEDS', SAYS NATIONAL GRID

Shale gas produced in the UK could provide more than a third of the nation's gas supplies within 20 years, a report has found.

Sky News

RAC OWNER CARLYLE HOLDS TALKS ABOUT 2 BLN STG SALE

The owners of the RAC roadside recovery service have been holding secret talks about a 2 billion pound sale in the wake of a modest stock market debut by the AA, its main rival.

SYRIA 'LIKELY' USED UK CHEMICALS TO MAKE SARIN

Chemicals exported by British firms to Syria in the 1980s are likely to have been used to make the nerve agent sarin, UK Foreign Secretary William Hague said.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of July 5 at 8:30--consensus 315K
Wholesale trade inventories for May at 10:00--consensus up 0.6%

ANALYST RESEARCH

Upgrades

Alcoa (AA) upgraded to Overweight from Equal Weight at Morgan Stanley
Allscripts (MDRX) upgraded to Strong Buy from Buy at ISI Group
Autodesk (ADSK) assumed with an Overweight from Equal Weight at Barclays
CommonWealth REIT (CWH) upgraded to Buy from Hold at Stifel
MB Financial (MBFI) upgraded to Buy from Neutral at Sterne Agee
MRC Global (MRC) upgraded to Neutral from Underperform at BofA/Merrill
PrivateBancorp (PVTB) upgraded to Buy from Neutral at Sterne Agee
Starwood (HOT) upgraded to Buy from Hold at MLV & Co.
TCF Financial (TCB) upgraded to Buy from Neutral at Sterne Agee
Tractor Supply (TSCO) upgraded to Outperform from Neutral at Credit Suisse

Downgrades

Lumber Liquidators (LL) downgraded to Hold from Buy at Jefferies
Lumber Liquidators (LL) downgraded to Neutral from Outperform at Credit Suisse
T. Rowe Price (TROW) downgraded to Equal-Weight from Overweight at Evercore
UnitedHealth (UNH) downgraded to Hold from Buy at Jefferies
Waddell & Reed (WDR) downgraded to Neutral from Buy at Citigroup

Initiations

American Express (AXP) initiated with an Underperform at Macquarie
Aon plc (AON) initiated with an Overweight at Evercore
Associated Banc-Corp (ASBC) assumed with a Neutral at Sterne Agee
CIT Group (CIT) initiated with an Underperform at Macquarie
Cepheid (CPHD) initiated with an Outperform at Wells Fargo
Discover (DFS) initiated with an Outperform at Macquarie
EZCORP (EZPW) initiated with a Neutral at Macquarie
Envision Healthcare (EVHC) initiated with an Outperform at RW Baird
Exterran Partners (EXLP) initiated with a Neutral at Goldman
FirstMerit (FMER) initiated with a Neutral at Sterne Agee
Foresight Energy (FELP) initiated with an Outperform at Cowen
Freeport McMoRan (FCX) initiated with an Overweight at HSBC
MDU Resources (MDU) initiated with a Market Perform at Wells Fargo
Marsh & McLennan (MMC) initiated with an Overweight at Evercore
Model N (MODN) initiated with an Outperform at Northland
Nexstar (NXST) initiated with a Hold at Noble Financial
NorthStar Asset Management (NSAM) initiated with an Outperform at FBR Capital
QIAGEN (QGEN) initiated with a Market Perform at Wells Fargo
Quidel (QDEL) initiated with a Market Perform at Wells Fargo
Santander Consumer (SC) initiated with a Neutral at Macquarie
ServiceNow (NOW) initiated with a Neutral at BofA/Merrill
Springleaf (LEAF) initiated with a Neutral at Macquarie
TAL International (TAL) initiated with a Neutral at Macquarie
Team Health (TMH) initiated with an Outperform at RW Baird
Textainer (TGH) initiated with a Neutral at Macquarie
Trovagene (TROV) initiated with a Buy at Maxim
Willis Group (WSH) initiated with an Equal-Weight at Evercore
World Acceptance (WRLD) initiated with a Neutral at Macquarie

COMPANY NEWS

Boeing (BA) projected demand for 36,770 new airplanes over the next 20 years valued at $5.2T
IBM (IBM) announced a $3B cloud, big data systems research initiative
Harley-Davidson (HOG) recalled 66,421 motorcycles due to potential wheel lock-up
Google Ventures (GOOG) said it would launch a new venture fund in Europe with initial funding of $100M
Costco (COST) reported June SSS up 6%
Zynga (ZNGA) appointed Google (GOOG) executive Dr. Regina Dugan to the company's board
Regado Biosciences (RGDO) said the FDA placed a clinical hold on the company's ongoing Phase 3 REGULATE-PCI trial
Worldwide PC shipments totaled 75.8M units in Q2, a 0.1% increase from 2Q13. According to IDC's Worldwide Quarterly PC Tracker, worldwide PC shipments totaled 74.4M units in Q2 (HPQ, TOSBF, AAPL, MSFT, IBM)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
DragonWave (DRWI), CHC Group (HELI)

Companies that missed consensus earnings expectations include:
Helen of Troy (HELE), WD-40 (WDFC)

Lumber Liquidators (LL) sees Q2 EPS 59c-61c, may not compare to consensus 90c
Lumber Liquidators (LL) lowers FY14 EPS view to $2.65-$3.00 from $3.25-$3.60
DragonWave (DRWI) sees Q2 revenue growth 25%-40% relative to Q1
Ventas (VTR) sees Q2 normalized FFO at least $1.09, consensus $1.09
Helen of Troy (HELE) backs 2015 adjusted EPS view $4.30-$4.40, consensus $4.38
Zumiez (ZUMZ) raises Q2 EPS, revenue outlook

NEWSPAPERS/WEBSITES

HP (HPQ) sources deny bid made for Rackspace (RAX), Re/code reports
Holder refuses meeting with BofA (BAC) CEO, Reuters says
News Corp's (NWSA) HarperCollins selling books directly to readers to bypass Amazon (AMZN), FT reports
Shareholders urge Allergan (AGN) to make large acquisition, FT reports
Bank of America (BAC) requests 5c dividend reapproval, WSJ reports
Commerzbank (CRZBD) could resolve U.S. probe by paying $600M-$800M, Reuters says
Investigation into ousted American Apparel (APP) CEO to end soon, Reuters reports
Schlumberger (SLB) can continue higher, Barron's says

SYNDICATE

Crestwood Equity (CEQP) files to sell 26.3M common units for holders
Eros International (EROS) 7M share Secondary priced at $14.50
Kosmos (KOS) files to sell 17M shares of common stock
Malibu Boats (MBUU) 4.8M share Secondary priced at $18.50
Memorial Production (MEMP) files to sell 8.6M common units for partners
Ocera Therapeutics (OCRX) files to sell common stock
Sotherly Hotels (SOHO) announces $23.4M 'at-the-market' equity offering

Secret Path Revealed for Chinese Billions Overseas (BBG)
Traders Flood U.S. With $3.4 Trillion of Bond-Auction Demand (BBG)
Just in time to cover bad earnings in a massive $3.8 billion "one-time charge": Citi says to pay $7 billion to settle securities investigation (Reuters)
Troubled Epirito Santo family loosens grip on Portugal's BES (Reuters)
BES puts in place new executives after central bank push (Reuters)
Bank of China-CCTV drama may reveal power struggle in Beijing (SCMP)
Portugal speeds up Banco Espírito Santo management changes (FT)
Russia Vows to Respond After Shelling From Ukraine (BBG)
Dark pool probe builds pressure on Barclays boss (Reuters)
Ukraine forces end rebel airport blockade (Reuters)
Obama Contends With Arc of Instability Unseen Since '70s (WSJ)
Oil Hedging Seen in Decline as Banks Exit Commodities (BBG)
Renaissance Probed by Senate Panel on Tax Maneuver (BBG)
North Dakota oil groups strike $6bn deal, Kodiak Oil acquired below its Friday closing price (FT)
Investigators Probe the Ways a Swiss Broker Courted Libyan Business (WSJ)

Overnight Media Digest

WSJ

* Thousands of Palestinians in the northern Gaza Strip fled their homes for UN shelters after the Israeli military warned residents to evacuate ahead of an intensified offensive. (http://on.wsj.com/U90kO2)

* As big banks with large trading operations report second-quarter earnings results this week, investors and analysts will be trying to find out whether the slowdown is a temporary funk or a lasting shift. (http://on.wsj.com/1m92WSB)

* Chinese prosecutors indicted a foreign husband-and-wife investigation team for illegally obtaining private information on Chinese citizens, in a case that has drawn attention to their work with U.K. drug giant GlaxoSmithKline and to China's judicial system. (http://on.wsj.com/1nm2rF6)

* Spanish banks say a modest decline in bad loans marks a post-crisis turning point. But analysts warn that a more comprehensive measure of the banks' health points to a longer road to recovery. (http://on.wsj.com/1n0rpzF)

* Central-bank economic models failed to foresee the storm that devastated the global economy in 2008. Stephen Poloz, the head of Canada's central bank, is trying an alternative approach he thinks will have better foresight: actual human beings. (http://on.wsj.com/1r9BxYq)

* A $7 billion deal between Citigroup and the Justice Department expected to be unveiled Monday nearly fell apart one day last month. Government officials, frustrated by months of back-and-forth haggling, warned the bank that a lawsuit would be filed the next day. But hours before the deadline expired, the Justice Department put its plans on hold. (http://on.wsj.com/1oy2Jd0)

* General Motors Co Chief Executive Mary Barra returns to Capitol Hill this week for what may be her last and toughest hearings with U.S. lawmakers over the auto maker's botched response to a faulty ignition switch that has landed GM in hot water with federal regulators and the Justice Department. (http://on.wsj.com/1oVcNjv)

* U.S. and U.K. investigators who are examining how Western investment firms won business in Gadhafi's Libya are looking at Tradition Financial Services and parties that it held for Libyan officials in Marrakesh. (http://on.wsj.com/1q998lN)

* The U.K. government said it would stiffen laws governing foreign takeovers of British companies, potentially raising new hurdles for overseas acquirers. (http://on.wsj.com/1tGno6V)

Prosecutors from the U.S. Department of Justice are offering immunity deals to junior traders in London as they continue to investigate the alleged rigging of foreign exchange rates by banks and senior traders, according to sources.

Boeing said it was unlikely to increase revenue at its defence business before the end of the decade due to spending cuts by western governments, but vowed to compete aggressively for new U.S. military contracts that could provide growth after 2020.

North Dakota-based Whiting Petroleum said it would buy Kodiak Oil and Gas in an all-stock deal worth about $6 billion including debt.

The Bank of England has been lobbying for the easing of global capital requirements for small banks, concerned that the rules could make it harder for them to compete with larger rivals when offering mortgages and small business loans.

Some of the Bank of Cyprus customers whose deposits were seized as part of an extraordinary move to rescue the island from financial collapse are selling stakes in the bank at a discount.

NYT

* Sotheby's, the blue-chip auction house, and eBay Inc plan to announce Monday that they have formed a partnership to stream Sotheby's sales worldwide. (http://nyti.ms/WbEqeJ)

* On Monday, Illinois is expected to become the first state to bring legal action against debt settlement companies in connection with their student loan practices, contending in two separate lawsuits that Broadsword Student Advantage and First American Tax Defense duped vulnerable borrowers into paying for help that never arrived. (http://nyti.ms/1zAjYmP)

* BitTorrent, a purveyor of file-sharing technology that is widely used to gain free access to music and films, has come up with a bold proposition for its tens of millions of daily users: Spend $9.95 to help finance a planned new science fiction series and gain viewing rights to its eight episodes. Or fail to pay up, and the shows will never be made. (http://nyti.ms/U8XCYV)

* Swiss chocolate maker Chocoladefabriken Lindt & Spruengli AG is closing in on a deal to acquire Russell Stover Candies, the storied American boxed-chocolate maker, according to a person briefed on the matter. Earlier this year, another person briefed on the process said Russell Stover was expected to sell for about $1 billion. (http://nyti.ms/1yfblMN)

* Whiting Petroleum Corp on Sunday said it would buy Kodiak Oil & Gas Corp for $3.8 billion in stock, and assume $2.2 billion of Kodiak's debt. (http://nyti.ms/1nvKrgg)

* The head of Boeing Co's commercial aircraft division said on Sunday that he was optimistic that the United States Congress would ultimately agree to reauthorize funding to the Export-Import Bank, which guarantees billions of dollars in loans to foreign buyers of its airplanes. (http://nyti.ms/1nmeTol)

Canada

THE GLOBE AND MAIL

** The Canadian government has given itself broad new powers to share Canadian immigration files and other information with foreign governments - a practice that could have far-reaching implications for individuals who cross borders. (http://bit.ly/1jqqfMZ)

** Power has been restored to the remaining homes and businesses in Nova Scotia affected by a powerful post-tropical storm, but thousands of New Brunswickers remained without power more than a week after the system hit the Maritimes. (http://bit.ly/1kUfsWj)

Reports in the business section:

** Canada's airlines and airports are gearing up to fight Ontario's plan to more than double the tax on aviation fuel, arguing it will increase the number of Canadians traveling out of U.S. airports where taxes and fees are substantially lower. (http://bit.ly/1oVn4Ms)

NATIONAL POST

** Carleton University journalism professor Allan Thompson will announce Monday that he wants to run as a Liberal candidate in the next federal election. Thompson, who covered federal politics during his 17-year career with the Toronto Star, will seek the Liberal nomination in the rural Ontario riding of Huron-Bruce, where he grew up. (http://bit.ly/1qXxqx2)

** Terrorists are deliberately placing people in the path of an Israeli offensive aimed at stopping rocket attacks from Gaza, says Prime Minister Stephen Harper. Harper says there is evidence that Hamas, listed by Canada as a terrorist organization, is using human shields in its attempts to stave off the Israeli offensive. (http://bit.ly/W2P0El)

FINANCIAL POST

** Royal Bank of Canada, which was looking to raise C$750 million ($698.6 million), ended up receiving orders of C$1-billion of 10-year Basel-111 compliant debt that can be called after five years. (http://bit.ly/1nwB8fY)

China

CHINA SECURITIES JOURNAL

- New local-currency loans extended by Chinese banks are expected to reach around 10 trillion yuan this year, up from 8.89 trillion yuan in 2013, as the government takes measures to boost China's slowing economic growth, analysts forecast.

- Nobel laureate Thomas Sargent, while speaking at a global asset management conference in eastern Chinese city of Hangzhou, said he is still optimistic about the prospects of China's economy despite the recent slowdown in its growth.

SHANGHAI SECURITIES NEWS

- China's property market will not crash but is in a normal corrective period after a decade of rapid growth, said Qin Hong, head of the policy research institute at the Ministry of Housing and Urban-Rural Development.

CHINA DAILY

- The luxury vehicle sector in China continued to expand in the first half of the year despite worries about a drop in sales due to the government's frugality campaign.

- Police nationwide have arrested 108 Internet football gamblers and confiscated 18 billion yuan ($2.9 billion) in illegal assets during the FIFA World Cup in Brazil, the Ministry of Public Security said.

PEOPLE'S DAILY

- Chinese President Xi Jinping on Sunday vowed to further enhance the comprehensive strategic partnership with Greece in a meeting with Greek Prime Minister Antonis Samaras. Xi stopped off in Greece on his way to South America, the second high-level visit to the southern European country in a month.

Britain

Sunday Times:

BANKS CASH IN AS MOUCHEL TAKES 500 MLN STG ROAD TO MARKET

Mouchel, the road repairs and outsourcing company, is believed to have appointed investment bank Rothschild to explore a stock market flotation or trade sale.

The company, swallowed by its banks during the financial crisis, is plotting a comeback that could value it at up to 500 million pounds.

BESTWAY EMERGES AS FAVORITE FOR CO-OP GROUP'S PHARMACIES

Bestway Group is expected to be named the preferred bidder this week for the 700 pharmacies put up for sale by the Co-operative Group. Bestway, which was competing against the likes of Lloyds Pharmacy, Alliance Boots and Carlyle, could pay about 600 million pounds.

GERMANY DRAWS UP DOSSIER TO CURB POWER OF GOOGLE, OTHERS

Germany's Federal Cartel Office has drawn up a 30-page document with proposals that would muzzle Google if Berlin judged it too influential.

ARRIVA TO JOIN BATTLE FOR EAST COAST RAIL LINE

Arriva, the international arm of Germany's Deutsche Bahn, has submitted plans for a new service linking West Yorkshire and Lincolnshire to London.

LLOYDS-OWNED TECH COMPANY EYES AIM LISTING

ULS Technology, 38-percent owned by the buyout unit of Lloyds Banking Group, is working with stockbrokers Numis on a possible AIM listing that could value it at up to 50 million pounds.

PATRON CAPITAL IN TALKS TO BUY PETROL STATIONS

Patron Capital, owner of the Powerleague football chain, is in talks to buy 450 Murco petrol stations across Britain for up to 200 million pounds.

PRIORY IN BID TO BUY RIVAL VOYAGE CARE FOR 400 MLN STG

Priory Group, owner of a chain of clinics known for treating celebrities' addictions, is in talks to buy its smaller rival Voyage Care for about 400 million pounds.

Sunday Telegraph:

PAYDAY FIRMS FACE CAP AS REGULATOR ACTS TO CURB PROFITS

Britain's financial regulator, the Financial Conduct Authority, is preparing to impose a cap on the amount of interest charged by payday lenders in a bid to ease fears about profits in the sector. As early as Tuesday, the watchdog will set out details of an industry consultation which will lead to a cap being in place by the start of next year.

FRANCE HAS OPTION TO UP STAKE IN EUROSTAR

France has an option to buy the UK government's 40 percent holding in Eurostar if a process to find another buyer is inconclusive, it has emerged.

Mail on Sunday:

CO-OP GIVES BANK 100 MLN STG TO HELP FILL 1.5 BLN SHORTFALL

The Co-operative Bank has received a 100 million pound cash injection from its former parent as part of attempts to fill a 1.5 billion pound black hole.

BRITISH BUSINESS BANK TO PUT UP 10 MLN STG VIA PEER-TO-PEER LENDER

The government-owned British Business Bank will next week begin lending 10 million pounds through peer-to-peer lender RateSetter.

Financial Times:

FIRSTGROUP RULES OUT BREAKUP

FirstGroup PLC Chairman ruled out a break-up of the UK-based bus and rail group, saying the demands from U.S. activist investor Sandell Asset Management lacked financial logic.

OPPENHEIMER EUROPE CONSIDERS ADVISORY ROLE

The European arm of U.S. financial services group Oppenheimer & Co is considering entering the market for independent corporate advice.

$3.5 BILLION PULLED OUT OF FIDELITY FUNDS

Fidelity and Capital Group, the largest active fund managers, are losing market share to index trackers and niche rivals as changing investor demands reshape the $30 trillion mutual fund industry.

BOE EYES CURBS ON USE OF COCO BONDS

The Bank of England said it may limit the ability of a bank to use coco bonds when calculating its leverage ratio, or even prevent their use in the ratio altogether.

Sunday Express:

JIGSAW PLOTTING INTERNATIONAL EXPANSION

British fashion retailer Jigsaw, owned by the Robinson family, plans to open three international stores this year as part of its plan to expand in Asia, Europe and the Middle East.

CARE UK PLANNING 170 MLN STG INVESTMENT

Care UK, owned by private equity firm Bridgepoint, is investing more than 170 million pounds in building 26 new care homes, which will create more than 1,000 new jobs, as part of major expansion plans.

BT TO RING THE CHANGES BY RE-ENTERING MOBILE PHONE MARKET

British Telecom is set to return to the mobile phones market after a 13-year gap when it unveils its plans for a business-focused service on Thursday.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

No major domestic economic reports scheduled for today.

ANALYST RESEARCH

Upgrades

AllianceBernstein (AB) upgraded to Outperform from Market Perform at Keefe Bruyette
Apple (AAPL) upgraded to Overweight from Equal Weight at Barclays
Avago (AVGO) resumed with a Buy from Neutral at Citigroup
Brinker (EAT) upgraded to Overweight from Neutral at JPMorgan
Informatica (INFA) upgraded to Overweight from Equal-Weight at Evercore
Lear (LEA) upgraded to Overweight from Equal Weight at Barclays
NASDAQ (NDAQ) upgraded to Overweight from Equal-Weight at Evercore
NIC Inc. (EGOV) upgraded to Strong Buy from Outperform at Raymond James
Reynolds American (RAI) upgraded to Outperform from Sector Perform at RBC Capital
Signature Bank (SBNY) upgraded to Buy from Neutral at Sterne Agee
WhiteHorse Finance (WHF) upgraded to Buy from Hold at Wunderlich

Downgrades

Artisan Partners (APAM) downgraded to Market Perform from Outperform at Keefe Bruyette
Calamos (CLMS) downgraded to Underperform from Market Perform at Keefe Bruyette
Continental Building (CBPX) downgraded to Sector Perform at RBC Capital
Covidien (COV) downgraded to Neutral from Overweight at Piper Jaffray
Dana Holding (DAN) downgraded to Neutral from Buy at Goldman
DreamWorks Animation (DWA) downgraded to Neutral from Buy at B. Riley
E2open (EOPN) downgraded to Neutral from Buy at BofA/Merrill
FMC Corporation (FMC) downgraded to Hold from Buy at Jefferies
TripAdvisor (TRIP) downgraded to Neutral from Buy at Nomura
USG (USG) downgraded to Sector Perform from Outperform at RBC Capital
Visteon (VC) downgraded to Equal Weight from Overweight at Barclays
Wells Fargo (WFC) downgraded to Neutral from Overweight at JPMorgan

Initiations

Ardelyx (ARDX) initiated with a Buy at Citigroup
Ardelyx (ARDX) initiated with an Outperform at JMP Securities
Charles Schwab (SCHW) initiated with a Buy at Jefferies
E-Trade (ETFC) initiated with a Hold at Jefferies
Foresight Energy (FELP) initiated with a Buy at Citigroup
Foresight Energy (FELP) initiated with a Buy at Stifel
Foresight Energy (FELP) initiated with a Neutral at Goldman
Foresight Energy (FELP) initiated with a Neutral at JPMorgan
Foresight Energy (FELP) initiated with an Overweight at Barclays
Foresight Energy (FELP) initiated with an Overweight at Morgan Stanley
Global Logistics Properties (GBTZF) initiated with an Overweight at Barclays
Intercept (ICPT) initiated with a Buy at Deutsche Bank
MTS Systems (MTSC) initiated with a Buy at Needham
Markit (MRKT) initiated with a Buy at BofA/Merrill
Markit (MRKT) initiated with a Buy at Deutsche Bank
Markit (MRKT) initiated with a Neutral at Citigroup
Markit (MRKT) initiated with a Neutral at Goldman
Markit (MRKT) initiated with a Neutral at JPMorgan
Markit (MRKT) initiated with a Neutral at UBS
Markit (MRKT) initiated with an Equal Weight at Barclays
Markit (MRKT) initiated with an Equal Weight at Morgan Stanley
Parnell (PARN) initiated with a Buy at Jefferies
Parnell (PARN) initiated with an Outperform at JMP Securities
Parnell (PARN) initiated with an Overweight at Piper Jaffray
TD Ameritrade (AMTD) initiated with a Hold at Jefferies
Veritiv (VRTV) initiated with an Overweight at Barclays
Viper Energy (VNOM) initiated with an Outperform at Wells Fargo
Viper Energy (VNOM) initiated with an Overweight at Barclays
Yelp (YELP) initiated with an Underweight at Evercore
ZS Pharma (ZSPH) initiated with an Outperform at BMO Capital
ZS Pharma (ZSPH) initiated with an Overweight at JPMorgan

COMPANY NEWS

Citigroup © reached $7B settlement to resolve mortgage probe
Shire (SHPG) said willing to recommend AbbVie's (ABBV) GBP53.20 per share takeover offer
Whiting Petroleum (WLL) to acquire Kodiak Oil & Gas (KOG) in $6B transaction
AECOM (ACM) Technology to acquire URS (URS) for $56.31 per share
Abbott (ABT) to sell developed markets generics pharmaceuticals business to Mylan (MYL) in all-stock transaction valued at about $5.3B
Boeing (BA) selected as preferred bidder for Monarch Airlines fleet replacement
Yahoo (YHOO) acquired Israeli video startup RayV, terms not disclosed

EARNINGS

AECOM backs FY14 EPS view in lower range of $2.50-$2.60, consensus $2.49
Platinum Group (PLG) reports Q3 EPS C(2c), one estimate 0c
Schmitt Industries Inc (SMIT) reports Q4 EPS (5c) vs. (12c) a year ago
Flexible Solutions (FSI) reports Q2 top-line revenue $4.08M, one estimate $4.1M

NEWSPAPERS/WEBSITES

J.C. Penney (JCP) CEO successor search faces setback, WSJ says
YouTube (GOOG) mulls funding production to add premium content, Reuters reports
Sotheby's (BID), eBay (EBAY) to stream auctions, NY Times reports
Boeing (BA) “comfortable” with range amid Airbus (EADSY) overhaul plan, Reuters says
Apple (AAPL) assures China iPhone no security risk, Bloomberg reports
ABI Research: Over 24M cars to be fitted with Apple (AAPL) CarPlay, DigiTimes reports
Lockheed Martin (LMT) to invest on offshoot of joint strike fighter program, WSJ says
Dover (DOV) shares could rise another 10%-15%, Barron's says
GoPro (GPRO) could be vulnerable to smartphones, Barron's says
OmniVision (OVTI) could see improvement after Apple (AAPL), Barron's says
Orange SA (ORAN) shares could return 30% in next year, Barron's says
Rayonier Advanced Materials (RYAM) could reward investors, Barron's says
Johnson Controls (JCI) shares could rise 20%, Barron's says
GameStop (GME), TJX (TJX), Staples (SPLS), Bed Bath & Beyond (BBBY), Whole Foods (WFM) look cheap, Barron's says

SYNDICATE

Alcoa (AA) files $5B mixed securities shelf
Applied Genetic (AGTC) files to sell 2M shares of common stock
Memorial Production (MEMP) to offer additional 1.29M common units
inContact (SAAS) files to sell 4.26M shares for holders

Bubble Paranoia Setting in as S&P 500 Surge Stirs Angst (BBG)
But how will math PhDs determine "fair value" - Wall Street Techs Take Secrets to Next Job at Their Peril (BBG)
U.S., EU Escalate Russia Sanctions as Putin Holds Firm (Bloomberg)
Australia Becomes First Developed Nation to Repeal Carbon Tax (WSJ)
Gaza humanitarian truce goes into force, hours after tunnel clash (Reuters)
Barclays, Deutsche Bank Said to Face U.S. Senate Hearing (BBG)
ECB Asset Buying Far Off and May Not Come, Hansson Says (BBG)
Time Warner win would make Murdoch U.S. media king (Reuters)
Costly Vertex Drug Is Denied, and Medicaid Patients Sue (WSJ)
China Rallying for All Wrong Reasons to Top-Rated Analyst (BBG)
GM recalls some cars with problematic switches; judges others safe (Reuters)
Boeing Buoyed at Show With $46 Billion in Day-Three Sales (BBG)
Reserves Break $3 Trillion Mark in Emerging Markets (BBG)
China Plays a Big Role as U.S. Treasury Yields Fall (WSJ)

Overnight Media Digest

WSJ

* Israel agreed to a five-hour cease-fire on Thursday to allow aid into Gaza as the country came under pressure over mounting civilian casualties that included four Palestinian boys killed as they played on a beach. At the same time, officials warned that the chances of a ground invasion of Gaza are very high and growing with each day that militants keep firing rockets into Israel. (http://on.wsj.com/1jzWlWx)

* After almost a decade of heated political debate, Australia has become the world's first developed nation to repeal carbon laws that put a price on greenhouse gas emissions. (http://on.wsj.com/WcXOrx)

* The Obama administration escalated its sanctions against Russia over its alleged interference in Ukraine, imposing restrictions on the Russian state-controlled oil giant Rosneft and other top firms. (http://on.wsj.com/Wc8uq9)

* Vertex Pharmaceuticals' $300,000-a-year cystic-fibrosis drug has sparked a legal battle in Arkansas, illustrating the dilemma faced by cash-strapped government insurance programs. (http://on.wsj.com/1nyBPk8)

* Time Warner rejected an $80 billion offer made by Rupert Murdoch's Twenty-First Century Fox Inc that would have united the media giants. (http://on.wsj.com/1pbBsyP)

* The retail sector continues to confound billionaire investor Warren Buffett and his Berkshire Hathaway partner Charlie Munger, who have bemoaned their bad luck in retail investing for years. (http://on.wsj.com/1jA2DWi)

* Bank of America Corp and the Justice Department remain far apart on a possible mortgage-securities settlement even though the bank offered $13 billion to resolve the civil probe. The bank on Wednesday announced it had reached a $650 million settlement in a mortgage-securities lawsuit brought by American International Group Inc. (http://on.wsj.com/WiU73U)

* Low interest rates are continuing to pressure banks at a time when lending activity is picking up. U.S. Bancorp and PNC Financial Services Group Inc the two largest U.S. regional banks by assets, saw a key measure of lending profitability decline in the second quarter, due in part to low rates. (http://on.wsj.com/UdkmXE)

Time Warner rejected an audacious $80 billion bid from Rupert Murdoch's Twenty-First Century Fox on Wednesday, setting up a stand-off between two of the biggest names in media.

Dubai's Emirates could buy an additional 60 to 80 Airbus A380s if the four-engined superjumbo were revamped with more fuel-efficient engines by 2020, the airline's Chief Executive Officer Tim Clark said.

If Apple Inc loses its appeal in a price-fixing case, it has agreed to pay $400 million to U.S. consumers as compensation for overcharging for ebooks.

Cyber attacks on eBay user data dragged on the online retailer's quarterly sales and drove it to scale back its full-year revenue guidance.

A substantial minority of Experian shareholders revolted against the world's biggest credit checking company's decision to replace its chairman with its chief executive officer, saying it contravened Britain's Corporate Governance Code.

NYT

* Microsoft Corp plans to announce layoffs on Thursday that will substantially exceed the largest layoffs in the company's history, according to several people briefed on the decision who spoke only on the condition of anonymity. Previously, the largest layoffs were in 2009, when 5,800 or so people were affected. (http://nyti.ms/1r5aMCV)

* Rupert Murdoch's 21st Century Fox Inc said it has made an $80 billion takeover offer for Time Warner Inc, which would be the biggest media deal in more than a decade. While Time Warner has rebuffed his effort and no talks are underway, Murdoch is determined and unlikely to walk away anytime soon, people briefed on the matter said. (http://nyti.ms/1nI1try)

* Funding Circle, a so-called peer-to-peer lending network, announced that it had raised $65 million in new funding and appointed Robert Steel, the chief executive of Perella Weinberg, to its board. (http://nyti.ms/1paKzQi)

* Apple Inc might have to pay $400 million to consumers to settle charges of conspiring with publishers to raise e-book prices. Apple last month agreed to settle a class action brought by attorneys general in 33 states. They had sought hundreds of millions of dollars in damages from Apple, claiming it had colluded with book publishers to inflate e-book prices. (http://nyti.ms/1oKB3BT)

* Once again, Bank of America's troubled past is clouding its present and future. After months of negotiations, a possible settlement with the Justice Department is in jeopardy over a disagreement on the bank's liability for the suspected mortgage misdeeds of its Countrywide Financial and Merrill Lynch units, people briefed on the matter said. (http://nyti.ms/1qJ5Q4K)

* The Federal Reserve's chairwoman, Janet Yellen, said on Wednesday that it would be a "grave mistake" for Congress to adopt legislation proposed by House Republicans constraining the Fed's management of monetary policy. (http://nyti.ms/1mVyUGi)

Canada

THE GLOBE AND MAIL

* The Royal Canadian Mounted Police are expected to lay charges against Senator Mike Duffy on Thursday in connection with improper expense claims charged to taxpayers, a development that would add fresh fuel to the controversy surrounding this Prime Minister Stephen Harper appointee to the Red Chamber. (http://bit.ly/1l6XfoC)

* The Royal Canadian Navy has opened another investigation into three incidents of alleged misconduct in San Diego by the crew of HMCS Whitehorse, including whether there was a "failure of leadership." (http://bit.ly/1nzCyli)

Reports in the business section:

* Barrick Gold Corp's new chairman John Thornton eliminated the chief executive position in a management shakeup that sees Jamie Sokalsky leave as CEO and cements the former banker's authority at the top of the world's biggest gold producer. (http://bit.ly/1tUN5kh)

NATIONAL POST

* Ontario's opposition parties said on Wednesday the Liberal government is not being honest with people about its plans to "maximize" the value of provincial assets like the Liquor Control Board, Ontario Power Generation and Hydro One. (http://bit.ly/1mhSKHk)

* A graduate student from Tunisia arrested over an Al-Qaeda plot to derail a Toronto-bound train tried to send $3,000 to terrorists in Syria and Mali, a lawyer said on Wednesday. The terror financing allegation against Chiheb Esseghaier came as a New York judge sentenced one of his former associates, Ahmed Abassi, to 15 months for U.S. immigration violations. (http://bit.ly/1oLEo3E)

FINANCIAL POST

* In a sign of the mounting tensions over new energy infrastructure, Enbridge Inc has raised the possibility of an "attack" on one of its pipelines. (http://bit.ly/UbYQSK)

* In a move that adds uncertainty to PetroChina's plans for Canada, Zhiming Li, the PetroChina executive who built and headed the Chinese company's operations in this country for the past four years, has been arrested by the Chinese government. (http://bit.ly/1r60VN6)

China

CHINA SECURITIES JOURNAL

- Qin Hong, the director of the policy research centre in the Ministry of Housing and Urban, said they would strive to curb property investment and speculative demand to protect reasonable housing demand in the next six months with a hope that the market will be better than the first half of the year.

- The Guangxi Zhuang Autonomous Region plans to expand the scale of its investment and speed up railway construction to invest a total of 15 billion yuan ($2.42 billion) in 2014 which can go up to 20 billion yuan. And, the investment scale for the coming years will be 30 billion yuan per year.

- China Life Insurance Co Ltd said its insurance premium income nearly hit 200 billion yuan in the first half of this year.

SHANGHAI SECURITIES NEWS

- Bank of Nanjing said it would raise 8 billion yuan through a private placement.

CHINA BUSINESS NEWS

- China's central authorities issued guidelines on Wednesday on the supply and use of government vehicles in an effort to cut spending, which industry experts predict would reduce expenditure by 150 billion yuan per year.

- Banks' non-performing loans in Fujian province increased more than 90 percent in 2013, according to official data released on Wednesday.

21st CENTURY BUSINESS HERALD

- Regulators are considering easing the lending policy for China's small companies, which may allow them to extend loans.

China Daily

- Guangdong, China's largest provincial economy, plans to make further cuts in obsolete manufacturing capacity for iron, steel and cement by 2017, according to a draft plan by the province's development and reform commission.

- Japanese Prime Minister Shinzo Abe is losing the public's trust thanks to his lifting of the ban on collective self defense and other rightists moves, China Daily said in an editorial.

Britain

The Times

ASHLEY PULLS OUT OF 200 MLN STG SHARE PLAN

The billionaire founder of Britain's biggest sportswear chain, Sports Direct, has withdrawn from a controversial bonus scheme just weeks after forcing through the award. (http://thetim.es/1l5BCVM)

SHAREHOLDER BACKLASH FORCES ICAP TO REVIEW BONUSES

Interdealer broker ICAP is to go into talks with shareholders over its executive bonus scheme after a third of investors voted against its pay policy at the annual meeting. (http://thetim.es/1kxiArm)

FRENCH ACCUSE ROYAL MAIL OF BREACHING ANTITRUST LAW

Royal Mail has been caught up in a competition investigation after French regulators accused one of its subsidiaries of breaching antitrust laws. (http://thetim.es/Ud5EQm)

CONFUSED.COM ABOUT CAR INSURANCE? SO IS THE CITY REGULATOR

Britain's biggest price comparison websites are being ordered to address insurance listings that mislead or confuse their users.

The websites sometimes failed to provide the right information to users buying motor and household insurance, the Financial Conduct Authority said in a report. (http://thetim.es/1jQFfEn)

The Guardian

REGULATOR'S REPORT ON BANKS PROMPTS SPECULATION ABOUT COMPETITION INQUIRY

Britain's new competition watchdog will release the outcome of an initial study into the banking sector on Friday, prompting speculation about a full-blown investigation into the industry. (http://bit.ly/1tTfrvl)

The Telegraph

RUPERT MURDOCH'S LEGACY CAN ONLY BE SECURED WITH TOTAL MEDIA CONTROL

With his jaw-dropping $80 billion approach to buy U.S. media giant Time Warner Inc, Rupert Murdoch has made his intentions crystal-clear: he wants to become the undisputed global "king of content", and is willing to pay a fortune at the top of the market to get his way.

The deal was rebuffed, of course, but Murdoch, who has bounced back from the UK phone-hacking scandal and the split of his corporate empire with remarkable ease, will be back. (http://bit.ly/1mW1Tty)

THE LETTER SENT TO LLOYDS CUSTOMERS UNDER A LAW FIRM'S NAME

Lloyds Banking Group has sent Chairman of the Treasury Select Committee Andrew Tyrie an example of the letters it sent customers who owed the bank money under the name of a defunct law firm. (http://bit.ly/1r52kDH)

FIRSTGROUP VOWS 'DEEP REVIEW' OF PAY AFTER INVESTOR REVOLT

FirstGroup Chairman John McFarlane yesterday pledged a "deep review" of the company's executive pay policies in the wake of criticism of the near 2 million pound ($3.43 million)package received by Chief Executive Tim O'Toole last year. (http://bit.ly/1rscptL)

Sky News

INVESTORS REVOLT AGAINST GULF KEYSTONE BOSS

Some investors in Gulf Keystone Petroleum, the London-listed oil explorer, have lodged votes opposing the re-election of founder Todd Kozel as an executive director. (http://bit.ly/UabXEc)

The Independent

POUND SOARS AS INFLATION LEAPS AND FED CHIEF JANET YELLEN TALKS DOWN U.S. ECONOMY

The pound surged to new six-year highs against the dollar last night as an inflation shock fuelled expectations of UK interest rate rises while a dovish Federal Reserve Chair Janet Yellen warned over "false dawns" for the U.S. economy. (http://ind.pn/1paXMbL)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of July 12 at 8:30--consensus 310K
Housing starts for June at 8:30--consensus up 1.9% to 1.02M rate
Housing permits for June at 8:30--consensus up 3.0% to 1.035M rate
Philadelphia Fed business conditions index for July at 10:00--consensus 16.9

ANALYST RESEARCH

Upgrades

Aflac (AFL) upgraded to Outperform from Market Perform at Raymond James
Allegiant Travel (ALGT) upgraded to Buy from Fair Value at CRT Capital
Clarcor (CLC) upgraded to Outperform from Neutral at RW Baird
Endurance Specialty (ENH) upgraded to Buy from Neutral at Janney Capital
First Republic Bank (FRC) upgraded to Strong Buy from Outperform at Raymond James
International Game (IGT) upgraded to Neutral from Sell at Goldman
Kayne Anderson (KED) upgraded to Buy from Hold at Stifel
SM Energy (SM) upgraded to Buy from Neutral at Guggenheim
Time Warner (TWX) upgraded to Buy from Neutral at Guggenheim
Time Warner (TWX) upgraded to Buy from Neutral at Janney Capital

Downgrades

Charter (CHTR) downgraded to Hold from Buy at Jefferies
Covidien (COV) downgraded to Hold from Buy at Needham
GNC Holdings (GNC) downgraded to Hold from Buy at Jefferies
International Game (IGT) downgraded to Market Perform from Outperform at Wells Fargo
PetSmart (PETM) downgraded to Sector Perform from Outperform at RBC Capital
Rexam (REXMY) downgraded to Hold from Buy at Deutsche Bank

Initiations

A10 Networks (ATEN) initiated with a Neutral at Buckingham
ACI Worldwide (ACIW) initiated with an Outperform at BMO Capital
AIG (AIG) initiated with an Outperform at RBC Capital
Aerohive Networks (HIVE) initiated with a Buy at Buckingham
Agilent (A) initiated with a Neutral at Citigroup
Antero Resources (AR) initiated with a Buy at Canaccord
Aruba Networks (ARUN) initiated with a Neutral at Buckingham
Bed Bath & Beyond (BBBY) initiated with a Neutral at Nomura
Blackhawk (HAWK) initiated with a Market Perform at BMO Capital
Bruker (BRKR) initiated with a Buy at Citigroup
Cabot Oil & Gas (COG) initiated with a Hold at Canaccord
CalAmp (CAMP) initiated with an Outperform at William Blair
Container Store (TCS) initiated with a Hold at BB&T
EQT Corporation (EQT) initiated with a Buy at Canaccord
Esterline (ESL) initiated with a Buy at Drexel Hamilton
Ethan Allen (ETH) initiated with a Neutral at Nomura
Fiserv (FISV) initiated with an Outperform at BMO Capital
FleetCor (FLT) initiated with a Neutral at Piper Jaffray
Fleetmatics (FLTX) initiated with an Overweight at Piper Jaffray
Gastar Exploration (GST) initiated with a Buy at Canaccord
Global Payments (GPN) initiated with a Market Perform at BMO Capital
Gulfport Energy (GPOR) initiated with a Buy at Canaccord
Heartland Payment (HPY) initiated with a Market Perform at BMO Capital
Illumina (ILMN) initiated with a Buy at Citigroup
Jazz Pharmaceuticals (JAZZ) initiated with a Neutral at SunTrust
Mallinckrodt (MNK) initiated with an Outperform at Oppenheimer
Meritor (MTOR) initiated with an Overweight at Piper Jaffray
Mettler-Toledo (MTD) initiated with a Neutral at Citigroup
Navistar (NAV) initiated with an Overweight at Piper Jaffray
PerkinElmer (PKI) initiated with a Buy at Citigroup
Pier 1 Imports (PIR) initiated with a Buy at Nomura
Range Resources (RRC) initiated with a Buy at Canaccord
Restoration Hardware (RH) initiated with a Buy at Nomura
Rex Energy (REXX) initiated with a Hold at Canaccord
Rice Energy (RICE) initiated with a Buy at Canaccord
Riverbed (RVBD) initiated with a Neutral at Buckingham
Seventy Seven Energy (SSE) initiated with an Equal Weight at Morgan Stanley
Sigma-Aldrich (SIAL) initiated with a Neutral at Citigroup
Thermo Fisher (TMO) initiated with a Buy at Citigroup
Vantiv (VNTV) initiated with a Market Perform at BMO Capital
Waters (WAT) initiated with a Neutral at Citigroup
Williams-Sonoma (WSM) initiated with a Buy at Nomura

COMPANY NEWS

Liberty Global (LBTYA) acquired a 6.4% stake in ITV (ITVPF) from BSkyB (BSYBY) for GBP481M. Liberty said that while it does not intend to make a takeover offer for ITV, it does reserve the right to announce an offer within the next six months
Starboard Value announced that it has sent a letter to Darden's (DRI) board seeking new leadership
Carl Icahn said he has not sold any shares of Herbalife (HLF); Icahn also said Apple (AAPL) CEO Tim Cook doing a "good job" and "disappointed" Dollar General (DG) CEO leaving
Legion Partners called on Perry Ellis (PERY) to review strategic alternatives
Danaher (DHR) said it would acquire Siemens Healthcare Diagnostics' (SIEGY) clinical microbiology unit

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
eBay (EBAY), KeyCorp (KEY), Fifth Third Bancorp (FITB), Baker Hughes (BHI), Orbital (ORB), First Cash Financial (FCFS), WNS Holdings (WNS), UnitedHealth (UNH), Danaher (DHR), HNI Corporation (HNI), Navient (NAVI), Blackhawk (HAWK), BankMutual (BKMU), Central Valley Community Bancorp (CVCY), United Rentals (URI), SanDisk (SNDK), Select Comfort (SCSS), RLI Corp. (RLI), Plexus (PLXS)

Companies that missed consensus earnings expectations include:

Mattel (MAT), Novartis (NVS), El Paso Pipeline (EPB), Kinder Morgan (KMI), Yum! Brands (YUM), Universal Forest (UFPI), Platinum Underwriters (PTP), Las Vegas Sands (LVS)

Companies that matched consensus earnings expectations include:
East West Bancorp (EWBC)

NEWSPAPERS/WEBSITES

Siemens (SIEGY) preparing bid for Dresser-Rand (DRC), Manager Magazin reports
Microsoft (MSFT) layoffs could be announced today, NY Times reports
Report says VW (VLKAY) in talks to buy Fiat (FIATY), Reuters says
General Motors (GM) hires outside law firm to review litigation practices, WSJ says
Defense Department to seek rival bids for satellite launches, WSJ reports (BA, LMT)
Intel (INTC) looks like a hold, Barron's says

SYNDICATE

CareDx (CDNA) 4M share IPO priced at $10.00
Colony Financial (CLNY) files to sell 15M in common stock
Orbitz (OWW) files to sell 20M shares of common stock
Roka Bioscience (ROKA) 5M share IPO priced at $12.00
TreeHouse Foods (THS) 4.3M share Secondary priced at $75.50

TedBits Weekly Wrap - July 18, 2014

There is no shortage of interesting items to choose from. The world is unraveling fast and the absurdities just keep piling up. Here are a few from the last week…

The Wizards of Liberty Street

Big Buyers in a Fool's Paradise

Is the TOP in for European Banks?

Spanish Banks, Lying with Numbers

David Letterman's Top 10 Reasons to vote Democrat

Huckabee and the Truth about the US Border Crisis

The REAL cost of Illegal Immigration

Militarization of the United States

Honest Abe and Three Benedict Arnolds

The Wizards of LIBERTY Street

Most everybody has seen the Wizard of Oz, but most don’t understand that it is a story about the removal of Gold from behind the dollar and the Federal Reserve at that time. The wizard was supposed to be the Federal Reserve chairman of that time, pulling levers on the economy and managing it from the seat of his pants. Well, nothing has changed. Fed chair, Yellen, commenting on recent legislation urging the Fed to create some rule like the Taylor rule (mathematical rule to guide interest rate decisions based upon GDP growth and inflation) to guide future interest rate decisions.

"It would be a grave mistake for the Fed to commit to conduct monetary policy according to a mathematical rule," - Janet Yellen

Keep in mind the fed has been flying by the seat of its pants since the Global financial crisis erupted. Policies previously UNSEEN in history (other than Zimbabwe, the Weimar republic, Argentina and previous hyperinflations) such as UNLIMITED money printing and zero bound interest rates for almost 6 years are illustrations of financial and monetary system on life support. Money at no cost to the banks and government but priced expensively for the public, and savers who earn nothing on their accumulated life savings.

The very idea that unaccountable mandarins of money need to play with no rules or guidelines should have been halted decades ago. Now, it is TOO LATE to DO SO. Normalization of rates will bring down more things than any of us can imagine as the world is awash in financial assets which yield little or nothing. Malinvestments in the classic Austrian definition.

Big Buyers in a fools paradise

The mortgage markets are dead meat to investors unless the issues are “government guaranteed” and it would appear much of the US treasury market is unattractive to the private sector as well. Taking a look at treasury issuance since January, the vast majority of them have been hoovered up by central banks, most notably the Federal Reserve, Bank of China and Japan.

Looking closely at the purchases reveals the fed is the dominant buyer. It has monetized over 50% of US debt since 2009. Is it for quantitative easing purposes as they say or FUNDING of the DEFICIT? To me, it is the latter, regardless of the story they say. In real terms, inflation is probably 9 to 10%.

At 2% on a ten year treasury, you are guaranteed to lose half of the purchasing power if held to maturity and CAPITAL risk is enormous as any backup in rates (higher) will rob investors of virtually all the coupons. But big buyers can be seen globally as a quick glance at global yields REVEALS:

A SHOCKING picture of NOTHINGNESS when it comes to returns and the United States paying the HIGHEST yields of all. They are all IOU’s denominated in IOU’s. The markets are saying that the US creditworthiness is the WEAKEST of them all. No doubt those spreads will be arbed out so lower rates would appear to be on the horizon. France, a mathematically insolvent sovereign is paying the lowest rate since Napoleon walked the earth. Japan yields reflect the government controlled market it is. Is all of this a picture of unfolding deflation? In contrast to their levels of indebtedness, you would think, "who are these fools?" Deficits which except for Germany and Switzerland is SPIRALING HIGHER.

This does not include unfunded liabilities such as pensions and healthcare. It is obvious they are pricing in the money printing to come for the USA versus the others. This is also a breathtaking display of willful blindness of the buyers of the insolvency of many of the sovereigns as well. Officially, this is deemed RISK FREE; in REALITY it will never BE REPAID. The question becomes what happens when they WAKE UP and FLEE?

Is the TOP in for European Banks?

Last week Portugal’s second largest Bank Espirito Santo parent company missed a bond payment and markets reacted accordingly by tanking. Regular readers to this missive know that none of the banking problems in the European banking systems has even been remotely addressed. The next exercise in HOT AIR and PR is currently underway as the European Banking Authority and the ECB work together to boost CONFIDENCE with the AQR (asset quality review). I can confidently tell you in advance that ALL IS WELL. Maybe one or two banks will fail to provide the veneer of robust exams but the result was written before the test if past episodes are prologue.

Europe’s problems have not been addressed: Quoting Allianz SE’s chief Investment officer Max Zimmerer (Europe’s largest insurer managing assets of over $757 BILLION dollars) and owner of PIMCO:

“The fundamental problems are not solved and everybody knows it”… “The euro crisis in not over”… “Countries are still building their debt piles and that’s storing up trouble for the future”. “There is only one country where the debt level last year was lower than 2012 and this is a signal the debt crisis can’t be over, only a recognition of the debt crisis has changed”… If the debt levels are not going down in the end we will have a problem, that is for sure.”

Thank you Max for a very candid assessment of what lies ahead and Max is NOBODYS FOOL. Both the banks and Sovereigns are in worse shape than ever. The only thing that has recovered is the perception of the health of the nations and banks and for that we can thank the main stream media and morally and fiscally bankrupt politicians throughout the continent. Add to this the $30 Trillion dollars ($30 million million also known as a lot of ROTTING paper/cabbage) created out of thin air since 2008 desperately seeking a home anywhere a yield can be found (regardless of the risk). Although the markets MAY NOT BE FOOLED:

That’s a BIG head and shoulders TOP and fully active in technical terms projecting a 15%+ decline from here. We shall soon see if it is reflective of the CREDIT and SOLVENCY crisis returning which is baked in the cake. The only question is WHEN WILL PEOPLE WAKE UP? Is the next wave of insolvency beginning NOW?

Spanish Banks, Lying with numbers.

Throughout the EU the official story is one of recovery in economies and the financial system. Neither could be further from the truth in my opinion. It is all HOT AIR courtesy of the MAIN STREAM media and the people that control them. Supposedly Spain has bitten the bullet and is firmly on the road to recovery financially and economically. But a close look at the banks REAL condition tell a different story. It is a story of selective presentation of the numbers and SPIN. Politicians and bank analysts are pointing to a leveling off of NON PERFORMING loans. Upon closer inspection their condition are barely improving and probably a result of accounting magic. Take a look at this chart of the 5 biggest banks showing the headline NON PERFORMING LOANS numbers in dark blue and the real numbers in light blue of NON PERFORMING LOANS and ASSETS combined:

“Nonperforming assets are a better measure of banks' health, some analysts say, because the metric shows the full extent of bad debts the lenders have to work through and provide a more realistic picture of the continued drag on earnings that banks face. It captures foreclosed homes a bank will have to try to sell and repeatedly refinanced loans to property developers or other businesses that are unlikely to be paid.” - Wall Street Journal

Merrill lynch reports their estimate of total non-performing assets to be euro 433 billion or $588 billion ($588,000 million) dollars or 40% of Spanish GDP. Doing the math: Non-performing assets are 22% of their balance sheets and their reserves barely 10%, simply doing the math says they are operating in BANKRUPTCY and negative equity of 12%. When will the RUNS BEGIN? Loan growth to the private sector is still CONTRACTING and buying of government debt still BALLOONING. Recent bond offerings of the banks have been gobbled up just as in all of Europe including GREECE. It’s all a con game. Who are these FOOLS?

David Letterman’s top 10 reasons to vote democrat

I received this on the internet and sometimes we all need a good laugh... Enjoy

#10. I vote Democrat because I love the fact that I can now marry whatever I want. I've decided to marry my German shepherd.
#9. I vote Democrat because I believe oil companies' profits of 4% on a gallon of gas are obscene, but the government taxing the same gallon at 15% isn't.
#8. I vote Democrat because I believe the government will do a better job of spending the money I earn than I would.
#7. I vote Democrat because Freedom of Speech is fine as long as nobody is offended by it.
#6. I vote Democrat because I'm way too irresponsible to own a gun, and I know that my local police are all I need to protect me from murderers and thieves. I am also thankful that we have a 911 service that gets police to your home in order to identify your body after a home invasion.
#5. I vote Democrat because I'm not concerned about millions of babies being aborted so long as we keep all death row inmates alive and comfy.
#4. I vote Democrat because I think illegal aliens have rights to free health care, education, and Social Security benefits, and we should take away Social Security from those who paid into it.
#3. I vote Democrat because I believe that businesses should not be allowed to make profits for themselves. They need to break even and give the rest away to the government for redistribution as the Democrat Party sees fit.
#2. I vote Democrat because I believe liberal judges need to rewrite the Constitution every few days to suit fringe kooks who would never get their agendas past the voters.

… And, the #1 reason I vote Democrat is because I think it's better to pay $billions$ for oil to people who hate us, but not drill our own because it might upset some endangered beetle, gopher, or fish here in America. We don't care about the beetles, gophers, or fish in those other countries.

Thinking about it should we laugh or cry? Democrats are Marxist socialist wolves working to rob you of your freedom, Heritage and futures. Please vote.

"The difference between genius and stupidity is that genius has its limits" - Albert Einstein

Huckabee and the true story of the border crisis

This weekend’s Huckabee on Fox news was a real eye opener. A gentleman covering the immigration crisis on the Southern US border reported that the government in DC has placed the Border enforcement headquarters almost 50 miles from the border they are assigned to patrol.

Then he showed a film illustrating that they have them working by day and stopping at the end of the day until the following morning. I bet you can guess what happens then? A flood of immigrants into the US overnight. The report highlighted the intent of the Central government in DC: FOMENTING a HUMANITARIAN DISASTER! Then Jon Voight gave a stirring presentation to the president:

https://www.youtube.com/watch?v=V-726MZt_14

Thank you for covering and saying what the main stream media will not... of course the MSM stand for none of what Huckabee and Voight do. True patriots.

The REAL cost of Illegal Immigration

I am a supporter of immigration reform and legal immigration. My wife is Chinese and received her citizenship on July 4^th; she plays by the rules, pays her taxes and works as a manager for a local company. The president is asking for $3.7 billion dollars for the crisis on the border his executive orders created. The money he requests does not go to fix the borders, it goes for the health and welfare of the children going forward to the tune of almost $70,000 dollars per person for healthcare, attorneys, resettlement and other benefits. Well, who wouldn’t come to the US and get paid for coming? I received the rest of this in an email and decided to pass it along: Many seniors are losing more and more benefits…. They are getting blamed for the country going broke. It's easy to dismiss individual programs that benefit non-citizens until they're put together and this picture emerges. Someone did a lot of research to put together a lot this data. Often these programs are buried within other programs making them difficult to find. I got this via email from a reader.

WHY is the USA BANKRUPT? Read this: We have been hammered with the propaganda that it was the Iraq war and the war on terror that is bankrupting us. I hope the following 14 reasons are forwarded over and over again until they are read so many times that the readers get sick of reading them. I also have included the URL's for verification of all the following facts.

http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">$11 Billion to $22 billion is spent on welfare to illegal aliens each year by state governments. Verify At: http://www.fairus.org/site/PageServer?pagename=iic_immigrationissuecenters7fd8
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">$22 Billion dollars a year is spent on food assistance programs such as food stamps, WIC, and freeschool lunches for illegal aliens. Verify at: http://www.cis.org/articles/2004/fiscalexec.HTML
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">$2.5 Billion dollars a year is spent on Medicaid for illegal aliens. Verify at: http://www.cis.org/articles/2004/fiscalexec.HTML<http://www.cis.org/articles/2004/fiscalexec.HTML>
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">$12 Billion dollars a year is spent on primary and secondary school education for children here illegally and they cannot speak a word of Verify At:http://transcripts.cnn.com/TRANscriptS/0604/01/ldt...0.HTML
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">$17 Billion dollars a year is spent for education for the American-born children of illegal aliens, known as anchor babies. Verify At http://transcripts.cnn.com/TRANscriptS/0604/01/ldt.01.HTML
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">$3 Million Dollars a DAY is spent to incarcerate illegal aliens. Verify at: http://transcripts.cnn.com/%20TRANscriptS/0604/01/ldt.01.HTML
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">30% percent of all Federal Prison inmates are illegal aliens. Verify at: https://owa.slugger.com/owa/UrlBlockedError.aspx
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">$90 Billion Dollars a year is spent on illegal aliens for Welfare &Social Services by the American taxpayers. Verify At: http://premium.cnn.com/TRANSCIPTS/0610/29/ldt.01.HTML
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">$200 Billion dollars a year in suppressed American wages are caused by the illegal aliens. Verify At: http://transcripts.cnn.com/TRANSCRI
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">In 2006, illegal aliens sent home $45 BILLION in remittances to their countries of origin. Verify At: http://rense.com/general75/niht.htm
http://tedbits.com/mailchimp_template/tb-2014/images/arrow.gif); ">The dark side of illegal immigration: Nearly One million sex crimes committed by illegal immigrants in the United States. Verify At: http:// www.drdsk.com/articleshtml

The total cost is a whopping $ 338.3 BILLION DOLLARS (338,000 Million) A YEAR AND, IF YOU'RE LIKE ME, HAVING TROUBLE UNDERSTANDING THIS AMOUNT OF MONEY, IT IS $338,300,000,000.00 WHICH WOULD BE ENOUGH TO STIMULATE THE ECONOMY FOR THE CITIZENS OF THIS COUNTRY.

I support immigration reform that gives current illegals a path to legitimacy. For my wife the legal path took seven years. Jeb Bush said illegal immigration was an act of love. For most illegals, this is a true. The children are just part of the story. The president needs to just move the budget around. The real crime is a government that fails to create the tax and regulatory structures that allow our economy to thrive and grow. In a growing country there are jobs for everyone. Growth in anything but debt (who does this benefit? Can you say banksters?) is prohibited by LAW. This issue like all of them in the US is a MAN MADE disaster courtesy of Washington DC.

Author’s Note: In my opinion the greatest manmade disaster and OPPORTUNITY in history is unfolding in every corner of the world. Are you diversified or operating with EYES WIDE SHUT? Are you prepared to turn it into opportunity by properly diversifying your portfolio? Adding absolute return investments which are designed with the potential to thrive (up and down markets) regardless of what unfolds economically or politically? This is what I do for investors; help them diversify into investments which are created to potentially thrive in the storm. For a personal consultation, CLICK HERE!

Militarization of the UNITED STATES

For many years now astute observers of the Government have been watching preparations being made for CONFLICT between Government and the Public at large. The department of homeland security is nothing but a domestic POLICE force similar to that of the GESTAPO of NAZI Germany. In fact Gestapo in German is the word for homeland security. Government CEASED to be the servant to citizens many years ago and now the public serves Leviathan government. It has taken place slowly but surely since Breton woods II removed the shackles of sound money and created the ability for unlimited borrowing. Kind of like the frog in water as it slowly rises to boiling, that is what is transpiring today to the middle class. They are being SLOWLY BOILED into a totalitarian system and are so dumbed down they can’t see it. Whether it is the 1.5 billion bullets that have been purchased by domestic branches of government, Fema camps, marshal law being imposed on Boston during the bombing, BLM police forces, EPA thugs, or RUNAWAY swat teams it all adds up to very disturbing conclusions. Now we get this little illustration courtesy of Peter Degraaf’s market report (I highly recommend this commentary very insightful and affordable):

The government is preparing for nationwide martial law when the system collapses, it is called Cloward Piven and Rules for Radicals, (look them up and weep as the fingerprints are clear) The only thing holding them back is the guns you keep in your home and the big collapse has not occurred YET. Support the NRA. Vote to limit government and support the constitution. And PRAY to God.. Now for a History lesson.

Honest Abe and three Benedict Arnolds

If you recall Abraham Lincoln fought the CIVIL war, ENDED SLAVERY and was a God fearing, bible toting leader as so many of our founding fathers that went before him. To him the thought of slavery and one man taking the fruits of another man’s labor by FORCE was repulsive, Immoral and he died ending it. Now slavery is commonplace in the US as Government takes at the point of a government gun from the hardest working and most prudent among us and redistributes it to those who REFUSE to live prudent, hard working lives and calls it FAIRNESS. To him the constitution was inspired by God and I believe this also. Americans have forgotten the lessons of history, the constitution or should I say many were never taught them. It extends right up to the man in the white house and those who support him. This image is from the ROLLS report (I highly recommend it), but it says it all about how far we have slid down the slippery slope to socialism, destroyed the constitutional government we once had and are now led by a quasi-SOCIALIST/Marxist DICTATOR:

I have written regularly about the unfolding constitutional crisis and this is a SMALL example of it and the IGNORANCE and lack of Knowledge of the history and laws of the United States among the electorate. The constitution, bill of rights and the reasons for divided government were taught to me in civics class in grade school, now it is purposely buried to prevent the ultimate uprising which will occur if we are to regain our freedom, a better future for our children and prosperity. FYI, money printed out of thin air was also PROHIBITED by the constitution but Woodrow Wilson (created the federal reserve monopoly owned by private banks) and Richard Nixon (converted the last vestiges of sound money to worthless IOU’s at Breton woods II) Betrayed us all.

Now the piper must be paid for all of this BETRAYAL of the people by many generations of leaders and the central government in Washington DC with the blood of patriots, Lets pray to God for their success.. A lot of turmoil and social unrest will unfold as the Socialists/Marxist system IMPLODES under its own weight as they have throughout HISTORY.

In closing, I hope you enjoyed these short vignettes on unfolding topics. They are a compendium of my daily exercises at our Austrian Blog: www.TedBits.com that you can have it daily and so much more by stopping by the website. The latest TedBits Newsletter will be released tomorrow: Useful Idiots and the Something for Nothing Society. It is a tour de force on the malignancy which has brought about the demise of almost every great empire in history, and the hows and whys of its evolution. It’s a man made disaster. Don’t miss it. Would you like this delivered into your inbox? Subscriptions for the weekly wrap and Tedbits Austrian Commentary are free at CLICK HERE.

May God Bless you, Ty

DISCLAIMER AND TERMS OF USE: While TedBits strives to present accurate and useful information, we make no guarantee of accuracy or completeness. All information and opinion expressed herein is subject to change without notice. Opinions and recommendations contained herein should not be construed as investment advice. Under no circumstances does the information in this column represent a recommendation to buy or sell any securities or commodities. Do not assume that any recommendations, insights, charts, theories or philosophies will ensure profitable investment. The information contained herein is for personal use only. Any redistribution of this information is strictly prohibited.

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Ukraine Says Malaysian Airliner Shot Down Near Russian Border (BBG)
Downing of airliner seen as pivotal moment in Ukraine crisis (Reuters)
Malaysian Air Flight Took Route Avoided by Qantas, Asiana (BBG)
Russian-Made Missile Hit Malaysia Jet, U.S. Officials Say (BBG)
Netanyahu Orders Military to Ready Wider Gaza Incursion (BBG)
Silvio Berlusconi Underage Sex Conviction Overturned (WSJ)
But... but... "economic patriotism" - AbbVie to Buy Shire for $54.8 Billion as Drug Deals Surge (BBG)
SEC targets 10 firms in high frequency trading probe - SEC document (Reuters)
Art bubble pop: Sotheby's to Lay Off 'Modest' Number of Employees (WSJ)
Moar Abenomics: Hermes Sales Trail Estimates as Japanese Revenue Declines (BBG)
Clinton Says EU Must Lead Response to Plane Downing (BBG)
Under Pressure, Twitter Tries to Resize Itself (WSJ)
RBS Said to Be Unwinding Distressed Unit as Head Departs (BBG)
China Finds Debt Addiction Hard to Break in Growth Quest (BBG)
Bitcoins Can’t Shake Bubble Image in Poll After 45% Drop (BBG)

Overnight Media Digest

WSJ

* A Malaysia Airlines plane carrying 283 passengers and 15 crew crashed Thursday in the battle-torn east Ukraine region of Donetsk, where U.S. intelligence agencies say it was struck by a ground-to-air missile. The U.S. agencies are divided over whether the missile was launched by the Russian military or by pro-Russia separatist rebels, who officials say lack the expertise on their own to bring down a commercial airline in midflight. (http://on.wsj.com/1mZNwEO)

* The White House late Thursday said the United States is "shocked" by the downing of a Malaysia Airlines flight near the Ukraine-Russian border and blamed Russia for fueling tensions that may have led to the disaster. (http://on.wsj.com/1tccimf)

* SoftBank Corp said Friday that Google Inc Chief Business Officer Nikesh Arora will join the company in October as vice chairman and chief executive of SoftBank Internet and Media. (http://on.wsj.com/1tYxssg)

* Microsoft said it plans to eliminate up to 18,000 jobs and take charges to earnings of up to $1.6 billion over the next year to streamline its operations following the recent acquisition of Nokia's devices and services business. (http://on.wsj.com/1wCkRXL)

* Twitter Inc is expected to unveil as many as four new metrics later this month that it hopes will illustrate its reach beyond the 255 million users that log in at least once a month, according to people familiar with the matter. (http://on.wsj.com/Wgx0Xb)

* The Justice Department charged FedEx with transporting prescription painkillers that the United States said had been sold illegally. (http://on.wsj.com/1qMBRJ7)

* Federal energy regulators said parts of a proposal to beef up the electric grid's security were inadequate and asked for revisions from the industry group that wrote it. In an unusual move for the Federal Energy Regulatory Commission, the agency on Thursday told the group that it should correct weaknesses in its proposed plan. The commission said to consider broadening the definition of equipment and facilities deserving protection and asked the group to allow the federal government to designate additional facilities eligible for increased security. (http://on.wsj.com/1rlC3mm)

* The U.S. Department of Justice is suing energy company Entergy Corp for failing to submit required proof of its affirmative-action programs. The complaint, filed in U.S. District Court in New Orleans Thursday, alleges Entergy has refused repeated requests from the Department of Labor's Office of Federal Contract Compliance Programs. (http://on.wsj.com/1zOYJOf)

* Sotheby's plans to lay off a "modest" number of its global workforce by the end of the year as it takes a harder look at its operations, according to a statement issued by the auctioneer on Thursday. (http://on.wsj.com/1zOZ5nX)

* Airbus and Boeing padded their deep order backlogs with $115.5 billion in jet deals at the Farnborough air show. Airbus beat Boeing in the annual air-show bragging-rights contest, recording deals for 496 jets compared with the 201 plane sales that Boeing made. Airlines typically get big discounts, and several of the deals still need to be finalized. (http://on.wsj.com/1p1DvH5)

* A New Zealand court stalled Danone SA's legal action against Fonterra Co-Operative Group, saying it was best to wait for the outcome of a separate international-arbitration hearing. The French food maker is seeking compensation for costs incurred last year when it was forced to recall baby-milk products following a food-safety scare associated with dairy products supplied by Fonterra. (http://on.wsj.com/1p1DAL2)

* Investigators are examining nearly four dozen hedge funds, asset managers and other investment firms to determine whether they violated insider-trading rules after receiving a tip from a Washington research firm. (http://on.wsj.com/1latqU4)

Google's net revenues rose 25 percent during the second quarter, driven by new forms of product-related search advertising. However higher operating costs left its earnings below Wall Street expectations.

Sue Wagner, a co-founder of the world's biggest money manager BlackRock, has been appointed to Apple's board, becoming the company's second female director as part of a push for greater diversity by Chief Executive Tim Cook.

Time Warner shares rose further above Twenty-First Century Fox's $80 billion offer on Thursday as analysts calculated that Rupert Murdoch's television and film empire could raise the bid that the media group behind HBO and Warner Bros rebuffed.

British Competition and Markets Authority is set to recommend a full-blown inquiry on Friday into small business lending and current accounts.

As it conducts a strategic review of its wealth management business, Royal Bank of Scotland is mulling the sale of the overseas operations of it private banking arm Coutts, which counts the Queen among its clients.

NYT

* Microsoft Corp said on Thursday that it was laying off up to 18,000 employees, in an attempt at reinvigoration. The cuts are the first major change made by Satya Nadella, the company's new chief executive, who said Microsoft needed to be more nimble and focused. (http://nyti.ms/WevUv7)

* The biggest deal of the year is set to be announced on Friday morning, as the pharmaceutical giant AbbVie Inc plans to announce a $53 billion acquisition of Shire Plc , according to people briefed on the matter. (http://nyti.ms/1qjvYHl)

* China's Alibaba Group Holding Ltd <IPO-BABA.N> has decided that it is not worth sprinting toward its long-awaited initial public offering ahead of the unofficial late-summer market slowdown. The company will instead price its offering sometime after Labor Day, people with knowledge of the matter said on Thursday. (http://nyti.ms/1rvu4ke)

* General Motors Co Chief Executive Mary Barra, who appeared before senators during the Senate Commerce subcommittee hearing on Thursday, said the company will not expand its compensation program for victims and will not waive its protection from lawsuits gained in bankruptcy reorganization. She also said that the company will not dismiss the company's general counsel, Michael Millikin, despite several senators' calls to do so. (http://nyti.ms/1rlHiSQ)

* FedEx Corp, the world's second-largest package-delivery company, was indicted Thursday in connection with a Justice Department investigation into illegal pharmaceutical shipments, according to a person with knowledge of the government's long-running investigation. (http://nyti.ms/1r7QCbj)

* Fiat SpA denied a report on Thursday that it was in merger talks with its German rival Volkswagen AG, deflating speculation that caused a brief furor on stock markets even though analysts dismissed a deal as implausible. (http://nyti.ms/1mXVfTD)

Canada

THE GLOBE AND MAIL

* Police Chief Bill Blair has withdrawn a request to the Toronto Police Services Board to deny reimbursing a former drug squad officer for legal fees after charges against him in a police corruption case were thrown out. (http://bit.ly/1nSkTtQ)

* Flames from a fast-moving wildfire have forced the evacuation of more than 2,500 residents from several neighbourhoods in British Columbia's Okanagan region. (http://bit.ly/1swFoz8)

Reports in the business section:

* A sweeping management shuffle at Loblaw Companies Ltd signals that the Weston family, the grocer's largest shareholder, is moving to further assert control at a time of massive change at the retailer. (http://bit.ly/1r6A0AI)

NATIONAL POST

* Suspended senator Mike Duffy will vigorously defend himself, his lawyer said on Thursday after a staggering 31 criminal charges were laid against him for fraud, breach of trust and even bribery. (http://bit.ly/1rw0Pxu)

* There may be only one winnable Alberta seat for the Liberals in next year's federal election - and two prominent Liberals both appear to want it. Kent Hehr, a quadriplegic lawyer who has represented much of the area as a provincial MLA for six years, has announced he will seek the federal nomination for Calgary Centre. Also in the race is Calgary Mayor Naheed Nenshi's chief of staff Chima Nkemdirim, who had long been tapped to run for the nomination. (http://bit.ly/1pin6wx)

FINANCIAL POST

* The Canadian Bond Investors' Association is lashing out at Royal Bank of Canada, accusing the country's largest bank by revenue of shirking its duty to investors in issuing the country's first-ever non-viable contingent capital (NVCC) subordinated debenture earlier this month. (http://bit.ly/1zPZ9nx)

* Many Western Canadians are critical of the energy sector's environmental performance and actively raise funds for or donate money to environmental causes, but still believe oil and gas development should be expanded, according to a new survey commissioned by Canada West Foundation. (http://bit.ly/1oQlust)

Hong Kong

SOUTH CHINA MORNING POST

-- Ozone pollution in Hong Kong is at its worst in nearly a decade, indicating the deteriorating air quality, environmental group Clean Air Network found. (bit.ly/1svsb9T)

-- Nearly 30 percent of Hong Kong-based manufacturers with factories in the Pearl River Delta plan to scale back their investment in the area. The Chinese Manufacturers' Association of Hong Kong said 29.6 percent of the manufacturers it interviewed would reduce investment in the Pearl River Delta in the next three years, up from 26.9 per cent last year. (bit.ly/1nRcXJg)

THE STANDARD

-- Hongkongers will soon be able to book taxis using the WeChat app on their smartphones. Mainland IT giant Tencent and Easy Taxi teamed up to launch the service in Singapore and are believed to be now eyeing Hong Kong. (bit.ly/1kB96ez)

-- Cheung Kong Holdings priced units at its Mont Vert project in Tai Po as low as HK$1.65 million ($212,900) after discounts. A 194-sellable-sq-ft unit is among the first batch of 260 flats being put on the market. (bit.ly/1lagHRq)

HONG KONG ECONOMIC JOURNAL

-- A total of 8,135 new homes have been registered so far in 2014, and the number of new homes accounted for 25 percent of the total home sales, the highest in percentage term in 10 years, according to data from a property agent.

Britain

The Telegraph

ABBVIE TO ANNOUNCE FIRM BID FOR SHIRE

AbbVie is expected to unveil a 31 billion pound ($52.97 billion) bid for FTSE 100 pharmaceutical group Shire on Friday morning, making it the latest U.S. company to use an overseas acquisition to lower its tax bill. (http://bit.ly/1mT0G74)

UK BANKS FACE BREAK-UP AS COMPETITION INQUIRY LOOMS

Britain's biggest high street banks face being broken up as the result of a landmark competition inquiry which is expected to be announced on Friday. (http://bit.ly/1suYl5c)

GRANGEMOUTH TO CLINCH U.S. SHALE DEAL WITH 230 MLN STG GOVERNMENT BACKING

The British government has given a 230 million pound loan guarantee to secure the future of Grangemouth in a move that is being seen as highly political, as well as economic, just two months before the Scottish independence referendum. (http://bit.ly/1qLTUza)

HAS SPIRE'S IPO BEEN KNOCKED BY THE NHS?

Spire Healthcare, one of the country's biggest private hospital operators, is expected to debut on the London Stock Exchange today at the bottom of its price range amid investor concerns about its exposure to the NHS and the PIP faulty breast implant scandal. (http://bit.ly/UevZhc)

The Times

BT SENDS WARNING MESSAGE TO RIVALS WITH BUSINESS SMARTPHONE LAUNCH

Telecoms company BT Group has launched the "One Phone", a cloud-based smartphone system that acts like a desk phone when it is used in the office and a normal mobile phone when a worker is on the road. (http://thetim.es/1wBqW6G)

The Guardian

BSKYB SELLS ITV SHARES TO VIRGIN MEDIA OWNER LIBERTY GLOBAL

Virgin Media owner Liberty Global has acquired BSkyB's 6.4 percent stake in ITV for 481 million pounds. (http://bit.ly/Wepb4p)

Sky News

GERMANS SEEK TO LAND GATWICK AIR TRAFFIC ROLE

Germany's state-owned airspace controller Deutsche Flugsicherung is vying with its principal British rival National Air Traffic Services to land a 10-year deal to run air traffic services at the UK's second-busiest airport. (http://bit.ly/1ngksuf)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
U. of Michigan consumer confidence for July at 9:55--consensus 83.0
Leading indicators for June at 10:00--consensus up 0.5%

ANALYST RESEARCH

Upgrades

America Movil (AMX) upgraded to Equal Weight from Underweight at Barclays
American Homes 4 Rent (AMH) upgraded to Strong Buy from Outperform at Raymond James
Andersons (ANDE) upgraded to Buy from Hold at BB&T
Plexus (PLXS) upgraded to Buy from Neutral at Longbow
Sandy Spring Bancorp (SASR) upgraded to Outperform at Raymond James
Sandy Spring Bancorp (SASR) upgraded to Outperform from Neutral at RW Baird

Downgrades

AMD (AMD) downgraded to Market Perform from Outperform at FBR Capital
AMD (AMD) downgraded to Underperform from Neutral at BofA/Merrill
AU Optronics (AUO) downgraded to Underperform from Market Perform at Bernstein
Alliance Data (ADS) downgraded to Neutral from Outperform at RW Baird
Anadarko (APC) downgraded to Market Perform from Outperform at Bernstein
AutoZone (AZO) downgraded to Hold from Buy at Stifel
Dunkin' Brands (DNKN) downgraded to Neutral from Buy at Janney Capital
EOG Resources (EOG) downgraded to Market Perform from Outperform at Bernstein
Equity Residential (EQR) downgraded to Market Perform at Raymond James
Fibria Celulose (FBR) downgraded to Sell from Neutral at Goldman
Iron Mountain (IRM) downgraded to Neutral from Outperform at RW Baird
LG Display (LPL) downgraded to Underperform from Market Perform at Bernstein
Mattel (MAT) downgraded to Hold from Buy at Needham
Nu Skin (NUS) downgraded to Underperform from Neutral at BofA/Merrill
O'Reilly Automotive (ORLY) downgraded to Hold from Buy at Stifel
Platinum Underwriters (PTP) downgraded to Market Perform at Keefe Bruyette
RealPage (RP) downgraded to Market Perform from Outperform at JMP Securities
RealPage (RP) downgraded to Underperform from Outperform at William Blair
iGATE (IGTE) downgraded to Reduce from Neutral at Nomura

Initiations

Blackhawk (HAWK) resumed with a Buy at Citigroup
Encore Capital (ECPG) initiated with a Neutral at Citigroup
FLIR Systems (FLIR) initiated with an Outperform at Oppenheimer
Jack in the Box (JACK) initiated with a Neutral at Buckingham
Kona Grill (KONA) initiated with an Outperform at Wedbush
Masonite (DOOR) initiated with an Outperform at Wedbush
Qlik Technologies (QLIK) initiated with a Market Perform at BMO Capital
Splunk (SPLK) initiated with a Market Perform at BMO Capital
Tableau (DATA) initiated with an Outperform at BMO Capital

COMPANY NEWS

AbbVie (ABBV) to acquire Shire (SHPG) for 52.48 pounds per share in cash, stock; merger worth GBP32B
FedEx (FDX) indicted for its role in distributing controlled substances. The company said it is "innocent" of the charges and said a loss from the DOJ suit "could be material" if convicted
Sony (SNE) said in a tweet that PlayStation4 is top selling next-gen console in June for U.S. (MSFT, NTDOY)
GE (GE) CEO Jeff Immelt: The environment continues to be generally positive
IBM (IBM) expects revenue growth to accelerate in 2H14
Twitter (TWTR) acquired CardSpring
Google (GOOG) said Chief Business Officer Nikesh Arora leaving to join Softbank (SFTBF)
HP (HPQ) appointed CEO Meg Whitman Chairman, Alcoa's (AA) CEO Klaus Kleinfeld joins board
Gentiva (GTIV) received $17.25 all-cash takeover bid, rejected Kindred's (KND) $16 per share offer

EARNINGS

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

IBM (IBM), Shire (SHPG), Huntington Bancshares (HBAN), Cytec Industries (CYT), Baylake Corp. (BYLK), Celanese (CE), Skyworks (SWKS), Western Alliance (WAL), BancFirst (BANF), Matthews (MATW), Premiere Global (PGI), Capital One (COF), Electronics for Imaging (EFII), athenahealth (ATHN), Hub Group (HUBG)

Companies that missed consensus earnings expectations include:

Google (GOOG), Bank of Kentucky (BKYF), Taylor Capital (TAYC), Independent Bank (INDB), AMD (AMD), American National Bankshares (AMNB), B&G Foods (BGS), First Financial (FFIN)

Companies that matched consensus earnings expectations include:

General Electric (GE), Valmont (VMI), Associated Banc-Corp (ASBC), Cepheid (CPHD), Stryker (SYK), Seagate (STX), Resources Connection (RECN)

NEWSPAPERS/WEBSITES

RBS (RBS) unwinding distressted-debt unit, Bloomberg reports
Sotheby's (BID) planning to lay off 'modest' number of global workforce, WSJ reports
Document reveals SEC examining firms in high-frequency trading probe, Reuters reports
Starbucks (SBUX) to test mobile phone ordering, Re/code reports
RBS (RBS) considers selling Coutts' overseas operations, FT reports
American Apparel (APP) investor close to buying Lion's $10M loan, Bloomberg says
Microsoft (MSFT) still looks attractive, Barron's says

SYNDICATE

NanoViricides (NNVC) files to sell 3.07M shares of common stock for holders
Sage Therapeutics (SAGE) 5M share IPO priced at $18.00
Teekay LNG (TGP) files to sell 2.8M common units for limited partners
TerraForm Power (TERP) 20.065M share IPO priced at $25.00
Trupanion (TRUP) 7.125M share IPO priced at $10.00
TubeMogul (tube) 6.25M share IPO priced at $7.00
Uranerz Energy (URZ) raises common stock offering to 9.6M shares

Despite a full court press of PR to confirm HFT firms are friends of retail investors and do no wrong; the SEC, it appears, sees it differently. While Mary White has confidently explained the market is not rigged, her agency is now actively seeking tips, complaints, or referrals that show, as The Chicago Tribune reports, evidence of abuse of order types, as well as traditional forms of abusive trading like "layering" or "spoofing" and other issues relating to high-frequency trading that might be violations of the law. Here are the 10 firms (including poster child holy-grail trader Virtu Financial) that the SEC is probing... can you spot the oddly missing one...

Via The Chicago Tribune,

The U.S. Securities and Exchange Commission has been seeking information on 10 registered broker dealers as part of an ongoing investigation into high-frequency trading strategies, according to an internal SEC document reviewed by Reuters.

The firms listed are Allston Trading LLC; Hudson River Trading LLC; Jump Trading LLC; Latour Trading LLC, which is an affiliate of Tower Trading; Merrill Lynch, Pierce, Fenner & Smith, owned by Bank of America Group; Octeg LLC, which has been merged into a unit of KCG Holdings Inc; Tradebot Systems Inc; Two Sigma Investments LLC; Two Sigma Securities LLC; and Virtu Financial.

They are all some of the largest trading firms in the U.S. Allston and Jump are both based in Chicago. Hudson River, Latour, Merrill, Two Sigma, and Virtu are headquartered in New York. KCG is in Jersey City, New Jersey, and Tradebot is based in Kansas City, Missouri.

Jump, Latour, Bank of America, Hudson River, Tradebot and KCG declined to comment. The other firms did not immediately respond to a request for comment.

Their number and the open-ended quest for information shows that the SEC is casting a wide net as it looks to unearth wrongdoing in the marketplace.

...

A number of government agencies, including the SEC, New York State Attorney General Eric Schneiderman's office, the Commodity Futures Trading Commission and the Federal Bureau of Investigation have said they had active probes into high-speed and automated trading.

The SEC has been seeking evidence of abuse of order types, as well as traditional forms of abusive trading like "layering" or "spoofing"and other issues relating to high-frequency trading that might be violations of the law, SEC Director of Enforcement Andrew Ceresney told Reuters in May.

Spoofing and layering are tactics where traders places orders that they cancel before they are executed to create the false impression of demand, aiming to trick others into buying or selling a stock at the artificial price.

* * *
While this list is notable (and wide) as Reuters notes, there is one name missing that surprised us... arguably the ibggest of all - Citadel... (too busy enabling the NYFed's VIX-selling machinations we assume is not considered rigging)

EU Works to Punish Russia as MH17 Bodies Leave Rebel Area (BBG)
Bodies From Malaysia Airlines Flight Begin Long Trip to Netherlands (WSJ)
Israel pounds Gaza as Kerry arrives (Reuters)
U.S. judge dismisses Republican lawsuit over Obamacare subsidy for Congress (Reuters)
Israel Soldier Missing Amid Assault on Hamas in Gaza (WSJ)
Detroit Retirees Vote in Favor of Pension Cuts (WSJ)
Russia Axes 1st Bond Sale in 3 Months as Ukraine Drives Up Yield (BBG)
Wall Street Cut From Guest List for Jackson Hole Fed Meeting (BBG)
Credit Suisse to Exit Commodities, Posts Big Quarter Loss (BBG)
Draghi Cedes Euro Control to Yellen on Fed Rate Wagers (BBG)
Turkish Businesses Boycotting Israeli Products Because of Gaza (INN)
Soros Chart Shows Euro-Yen Reaching 2008 High (BBG)
Next iPhone Will Offer Bigger Screens; Apple Tells Suppliers to Gear Up for 4.7-inch and 5.5-Inch Screen Sizes (WSJ)
Sterling Trust Could Face Default on Loans if Clippers Aren't Sold, CFO Says (WSJ)
Saudi to Open Up $531 Billion Stock Market to Foreigners (BBG)

Overnight Media Digest

WSJ

* Separatists in Ukraine released the bodies of victims in the downing of Malaysia Airlines Flight 17 and agreed to hand over the aircraft's data recorders, allowing the focus to tighten on establishing who brought the jetliner down. (http://on.wsj.com/Uoe1bR)

* Workers and retirees approved pension cuts in Detroit's bankruptcy, the city said Monday, a crucial step to emerging from the largest municipal insolvency in U.S. history. The city disclosed results from two months of balloting, which ended July 11. (http://on.wsj.com/1wTrViJ)

* European ministers are expected to approve sanctions that will target Russian oligarchs in response to the suspected downing of a Malaysian jetliner by Moscow-backed rebels in eastern Ukraine. (http://on.wsj.com/1nvUB1w)

* Apple Inc is preparing for its largest initial production run of iPhones this year, betting that larger-screen models will lure consumers now attracted to similar phones from Samsung Electronics Co. The company is asking suppliers to manufacture between 70 million and 80 million units, larger than the initial order last year of 50 million to 60 million versions of the iPhone 5S and 5C. (http://on.wsj.com/1qZBAm3)

* The U.S. owner of a meat supplier in Shanghai apologized and promised a swift response after McDonald's Corp and Yum Brands Inc suspended purchases in China in the wake of allegations it sold expired chicken and beef to restaurants. China's Food and Drug Administration halted on all business activities of Shanghai Husi and launched a nationwide investigation of the company. (http://on.wsj.com/1jSycdP)

* Washington's regulatory machine is altering Wall Street in fundamental ways, four years after the Dodd-Frank financial law became reality. Banks are selling off profitable business lines, pulling back from the short-term funding market, cutting ties with businesses that could attract extra regulatory scrutiny, and building up defenses to help weather future crises. (http://on.wsj.com/1ua2Eoi)

* Spending on mobile ads is expected to jump 83 percent this year, but given how much time Americans spend on their devices, mobile-ad spending could be much higher. (http://on.wsj.com/1loxQqs)

* The family trust that owns the Los Angeles Clippers is in danger of defaulting on loans if a planned sale of the NBA team doesn't go through, an executive testified Monday. (http://on.wsj.com/Wuj8sv)

* Allergan, which is trying to avoid being acquired by Valeant Pharmaceuticals International Inc, said it would cut 13 percent of its work force and reduce drug research, to boost its profits over the next six years. Valeant also had similar plans of restructuring, if it acquired Allergan. (http://on.wsj.com/WzRuuz)

* Netflix Inc said its second quarter earnings more than doubled as it added 1.7 million subscribers world-wide but cautioned that a more aggressive international expansion would hurt profits in third quarter. (http://on.wsj.com/1wTaZc1)

* Venezuela's auto industry, once the third largest in South America, is seizing up as manufacturers struggle to produce a few vehicles a day. Car makers like Ford Motor Co, Fiat Chrysler Automobiles, General Motors and Toyota Motor Corp, have cut output by more than 80 percent in the first six months of the year, due to lack of dollars to pay part suppliers. (http://on.wsj.com/1nv5BMM)

* Activist investor Jana Partners LLC has built a stake worth more than $1 billion in Apache Corp and is calling on the oil and gas producer to sell off its international holdings to drill exclusively on American soil. It also wants the company to exit some projects to free up cash flow. (http://on.wsj.com/UkTOUB)

* Crocs is trimming jobs and reducing the number of stores as the maker of colorful plastic clogs said it needs to get smaller to improve profitability. (http://on.wsj.com/1u9SQuJ)

Time Warner Cable Inc, which owns cable networks TNT and CNN, scrapped a rule that allows investors to call a shareholder meeting in a bid to block a potential hostile takeover by Rupert Murdoch's Twenty-First Century Fox.

Portugal's largest-listed lender, Banco Espirito Santo is to appoint a special financial adviser to help improve its balance sheet days after one of its holding companies filed for creditor protection.

Barclays Plc U.S. dark pool slips from second to 12th place in terms of volumes traded as customers flee following a lawsuit that alleged the lender misled clients about frequency activity in its private trading venue.

China's MMG Ltd shareholders approve purchase of the Las Bambas copper project in Peru from Glencore Plc for $5.85 billion.

British engineering contractor Babcock International's order book for the coming year rose to 13.5 billion pounds ($23.1 billion), helped by recent contract wins and its acquisition of helicopter transport firm Avincis.

NYT

* Netflix Inc reported its business grew in the second quarter thanks to international customers and little adverse effect from an announced price increase. The company said it surpassed 50 million total members for its streaming service, including free trial memberships, in the second quarter of this year. Netflix has announced plans to introduce its service to a number of European markets in September, including Austria, Belgium, France, Germany, Luxembourg and Switzerland. (http://nyti.ms/1lodcae)

* In response to an article about the political connections of some of its shareholders, Alibaba Group Holding Ltd <IPO-BABA.N> discounted the notion that their backgrounds helped drive its business. In a strongly worded statement on Monday in Chinese on its account on Weibo, a Twitter-like social media network, Alibaba said The Times article "mistakenly described" Alibaba's relationship with the investors. (http://nyti.ms/1n7qLzq)

* Yahoo Inc announced Monday that it had agreed to acquire Flurry, a mobile ad and analytics company. Flurry's advertising expertise could help Yahoo as it tries to build a meaningful mobile ad business. Although more than half of Yahoo's monthly audience visits come on mobile devices, revenue from mobile ads is still so small that the company does not break it out. (http://nyti.ms/Ul2utY)

* Time Warner Inc on Monday amended its corporate bylaws and removed a provision that allowed shareholders to call a special board meeting. In a filing with the Securities and Exchange Commission, Time Warner said the change was effective immediately. Without the ability to call a special meeting, shareholders supportive of a Twenty-First Century Fox offer would not be able to replace Time Warner's board of directors before the company's next annual meeting, which would likely come next June. (http://nyti.ms/UodPcn)

* Malaysia Airlines' two crashes in less than five months are sending tremors through the aviation insurance market - not least because the carrier's $2.25 billion overall liability policy is mysteriously missing a standard clause that usually limits insurers' payments for search-and-rescue costs. (http://nyti.ms/1wTlbS7)

* A Senate investigation has found that hedge funds - in particular, James Simons' Renaissance Technologies - used complex financial structures to claim billions of dollars in tax savings. Between 1998 and 2013, more than a dozen hedge funds conducted hundreds of billions of dollars in trades using hundreds of structures, known as "basket options," created by Barclays Plc and Deutsche Bank AG, the Senate Permanent Subcommittee on Investigations said in a report on Monday. (http://nyti.ms/1n7EsOT)

* Goodwill Industries International, a nonprofit agency that operates thrift stores around the country, said on Monday that it was investigating a potential security breach that may have led to the theft of customers' credit card data. (http://nyti.ms/1qZZ5vl)

* Hedge funds are not new to farmland. For nearly a decade they have scoured the corners of the globe for cheap land as food prices have soared, positioning themselves to profit from the growing demand. Hedge funds now have $14 billion invested in farmland, according to the data provider Preqin. With its steady income stream, farmland is proving to be a ripe offering for sophisticated investors. (http://nyti.ms/1nPkbc0)

Canada

THE GLOBE AND MAIL

* A Chinese man accused of being the "directing mind" behind a corporate-espionage conspiracy to steal jet-fighter secrets from Pentagon contractors is a Canadian immigrant who is being stripped of his residency status. (http://bit.ly/1n8LvH3)

* The mysterious shooting death of a respected Florida law professor originally from Toronto took a sinister turn on Monday as investigators revealed that Dan Markel was the victim of a targeted attack. (http://bit.ly/1A0wwEi)

Reports in the business section:

* Mark Brock has been growing corn near London, Ontario, for decades but he has never seen a market quite like this with prices plummeting so fast he may not even try to sell some of his crop this year. Like many farmers, Brock has been trying to protect his profits by forward selling as much of his corn as possible. (http://bit.ly/1uaPR4Z)

NATIONAL POST

* The New Democratic Party is vigorously defending allegations it improperly put parliamentary staff in so-called satellite offices in Quebec before a meeting by the House of Commons panel that monitors spending by members of parliament. (http://bit.ly/WvqFqU)

* Senator Mike Duffy allegedly charged the Senate for personal travel to funerals, and disbursed money to three people for illegitimate expenses under the guise of a consulting contract. The allegations are contained in newly released court documents. The documents were made public on Monday, several days after the Royal Canadian Mounted Police announced that it was charging the suspended senator with 31 criminal counts. (http://bit.ly/1lppSgW)

FINANCIAL POST

* Rogers Publishing announced a small shakeup to its magazine mastheads on Tuesday, with three top editors cut loose, as part of an effort to streamline its editorial structure. According to an internal staff memo, the position of editor-at-large, held by Dianne de Fenoyl, would be eliminated, and de Fenoyl would be leaving after nearly a decade with the company. (http://bit.ly/1n8QZ4q)

* Fashion industry veteran Mario Grauso has been promoted to president of Loblaw Companies Ltd's in-house apparel brand Joe Fresh. The move comes as part of a major management shuffle at the country's biggest grocery chain last week, which saw Galen Weston named president of the retailer and the exit of president Vicente Trius. (http://bit.ly/1kONJqg)

China

SHANGHAI DAILY

- New residential property sales remained sluggish in Shanghai, staying below the 150,000-sq. m. threshold for the second straight week. In the nearby city of Hangzhou, home buyers remain reluctant to buy property even though housing prices have started to fall, as they expect prices to decline further.

CHINA DAILY

- China Mobile Ltd, the world's No. 1 telecom carrier by subscriber numbers, said on Monday it was removing its premium customer lounges at the nation's airports in a bid to cut back on operating expenses. The firms also plans to close down the majority of its customer clubs, a type of value-added service introduced a few years ago to lure new subscribers.

- China's railway track should total more than 200,000 km by 2030, in line with the nation's economic goals, and at least 10 percent of it will be for high-speed rail, the former chairman of China South Locomotive and Rolling Stock Co Ltd, and an adviser to the China Institute for Innovation and Development Strategy, said. China had 103,144 km of track, including 11,028 km for high-speed rail, the longest in the world.

CHINA SECURITIES JOURNAL

- China Financial Futures Exchange Board Chairman Zhang Shenfeng wrote an article advocating further reform and technical improvements to the market interest rate system.

Hong Kong

SOUTH CHINA MORNING POST

-- Hong Kong does not need a controversial HK$30 billion ($3.87 billion) upgrade of its centralised wastewater treatment system as the water in the harbour is clean enough, at least for now, the city's environment officials say. (bit.ly/1rlh3uf)

-- The chief executive of the Hong Kong Monetary Authority, Norman Chan Tak-lam, defended the city's strict banking rules as some of the best in the world, amid a flurry of recent international concern over the territory's banking system. (bit.ly/1jSmZKm)

THE STANDARD

-- Health and wellness products retailer OTO Holdings has been censured by the Hong Kong stock exchange for breaching the bourse's listing rules of twice failing to timely disclose its weaker results, along with its executive directors neglecting their undertaking to the bourse. (bit.ly/1rwQHHv)

-- Electronic books could soon turn a page to greater popularity in Hong Kong, says an e-book provider. Sino United Electronic Publishing content director Ivan Tsoi Yiu-ming said he is optimistic about e-books due to the popularity of tablet computers and smartphones. (bit.ly/UnUCHM)

-- Tissue paper firm Vinda International said net profit fell 21.8 percent in the first half to HK$222.18 ($28.66) million, from a year earlier, due to foreign exchange losses as the yuan weakened against the U.S. dollar. (bit.ly/1qZjEYT)

HONG KONG ECONOMIC JOURNAL

-- Morgan Stanley has raised its stake in Wing Hang Bank to 5.03 percent from 4.84 percent, according to data from the Hong Kong stock exchange.

HONG KONG ECONOMIC TIMES

-- HK Electric Investments Ltd posted a profit of HK$967 million ($124.75 million) for the first half of 2014 while distributable income amounted to HK$1.46 billion.

MING PAO DAILY NEWS

-- The average monthly rental of Hong Kong's 85 major residential developments stood at HK$23.2($2.99) per square foot in June, the highest monthly rental in 19 years, according to a report from property agent Centaline.

Britain

The Times

RBS PAYS 900,000 POUNDS FINE FOR AUSTRALIAN RATE-RIGGING

(http://thetim.es/1pxlC1F) Australian regulators have fined Royal Bank of Scotland nearly 900,000 pounds after the bank admitted its role in attempts to manipulate the country's equivalent of the Libor benchmark borrowing rate.

BANK OF ENGLAND'S COURT OPENS DOOR TO WOMEN CHIEFS

(http://thetim.es/1p3Lpgp)

The female chief executives of the telecoms company TalkTalk and the Yorkshire-based power plant Drax are among the new appointees to the board of the Bank of England, which was heavily criticised for having insufficient women in senior positions.

The Guardian

HEDGE FUNDS USED 'DUBIOUS' MEANS TO BYPASS TAX RULES, SENATORS SAY

(http://bit.ly/1sH5Wh8)

More than a dozen hedge funds, with assistance of Barclays and Deutsche Bank, used "dubious" financial products to claim billions in unjustified tax savings and circumvent rules meant to limit risky bets, a Senate subcommittee investigation has found.

COMPETITION REGULATOR MUST FORCE BANKS TO IMPROVE SERVICE, MPS SAY

(http://bit.ly/1ySroAs)

MPs have called on the competition watchdog to force high street banks to improve standards and the way they treat their customers after the Competition and Markets Authority signalled it would investigate the industry.

The Telegraph

ESPIRITO SANTO CRISIS COULD AFFECT PORTUGAL'S ECONOMY, WARNS PRESIDENT ANIBAL CAVACO SILVA

(http://bit.ly/Wt84vU)

The president of Portugal has warned that the financial crisis gripping the Espirito Santo family could affect the country's economy.

JUNCKER FACES POLITICAL TEST AS FINES LOOM ON ILLEGAL GERMAN TRADE SURPLUS

(http://bit.ly/UnMual)

Germany's current account surplus is the largest ever recorded in proportional terms and far above the threshold for EU sanctions, posing a major political test for the incoming commission of Jean-Claude Juncker.

Sky News

GLENFIDDICH EYES 100 MLN STG DRAMBUIE SCOTCH MERGER

(http://bit.ly/1p8mlrp)

The family-owned business behind Glenfiddich and Grant's is examining a 100 million pound takeover of Drambuie, the liqueur reputed to be made from a recipe concocted by Bonnie Prince Charlie.

BBA IN TALKS ABOUT PAYMENTS COUNCIL MERGER

(http://bit.ly/1wQFvUa)

The banking industry's main lobbying group, British Bankers' Association, is considering proposals to merge with at least two of its peers amid pressure from leading members to reduce costs levied by trade organisations.

Fly On The Wall Pre-Market Buzz

ANALYST RESEARCH

Upgrades

Allergan (AGN) upgraded to Buy from Neutral at UBS
American Axle (AXL) upgraded to Neutral from Underweight at JPMorgan
Diamondback Energy (FANG) upgraded to Buy from Neutral at Roth Capital
Digital Realty (DLR) upgraded to Buy from Hold at Deutsche Bank
Five Below (FIVE) upgraded to Outperform from Market Perform at Wells Fargo
Gas Natural (EGAS) upgraded to Buy from Hold at Wunderlich
Hasbro (HAS) upgraded to Overweight from Equal Weight at Barclays
Huntington Bancshares (HBAN) upgraded to Outperform at Keefe Bruyette
Realogy (RLGY) upgraded to Buy from Neutral at Citigroup
Sanmina (SANM) upgraded to Hold from Sell at Deutsche Bank
Trex Company (TREX) upgraded to Buy from Hold at Stifel
VCA Inc. (WOOF) upgraded to Hold from Sell at Stifel
Valspar (VAL) upgraded to Conviction Buy from Neutral at Goldman

Downgrades

Amazon.com (AMZN) downgraded to Neutral from Buy at Citigroup
Arcos Dorados (ARCO) downgraded to Underweight from Neutral at HSBC
Cadence Design (CDNS) downgraded to Neutral from Overweight at JPMorgan
Matador (MTDR) downgraded to Hold from Buy at Stifel
SunTrust (STI) downgraded to Equal-Weight from Overweight at Evercore

Initiations

Abengoa Yield (ABY) initiated with an Equal Weight at Morgan Stanley
Actinium Pharmaceuticals (ATNM) initiated with a Buy at Canaccord
Chambers Street Properties (CSG) initiated with a Neutral at SunTrust
Minerals Technologies (MTX) initiated with an Outperform at Wedbush
NextEra Energy Partners (NEP) initiated with a Buy at BofA/Merrill
NextEra Energy Partners (NEP) initiated with a Hold at Deutsche Bank
NextEra Energy Partners (NEP) initiated with a Hold at KeyBanc
NextEra Energy Partners (NEP) initiated with a Neutral at Goldman
NextEra Energy Partners (NEP) initiated with a Neutral at UBS
NextEra Energy Partners (NEP) initiated with an Equal Weight at Morgan Stanley
NextEra Energy Partners (NEP) initiated with an Outperform at BMO Capital
QIWI (QIWI) initiated with a Positive at Susquehanna
Quality Systems (QSII) initiated with a Buy at Topeka
Trinseo S.A. (TSE) initiated with a Buy at Deutsche Bank
Trinseo S.A. (TSE) initiated with a Buy at Goldman
Trinseo S.A. (TSE) initiated with a Buy at Jefferies
Trinseo S.A. (TSE) initiated with a Neutral at Citigroup
Trinseo S.A. (TSE) initiated with an Equal Weight at Morgan Stanley
Trinseo S.A. (TSE) initiated with an Outperform at Wells Fargo
Washington Prime Group (WPG) initiated with a Neutral at SunTrust

COMPANY NEWS

Johnson & Johnson (JNJ) announced a $5B share repurchase program
Credit Suisse (CS) said it will exit commodities trading business
CIT Group (CIT) to acquire OneWest Bank for $3.4B in cash and stock
Time Warner (TWX) amended by-laws to block holders ability to call special meeting (FOXA)
TG Therapeutics announced preliminary clinical results from its ongoing Phase I study of TG-1101, and said 100% of CLL/SLL patients had significant nodal reduction with either a normalization of or greater than or equal to 80% reduction in Blood Lymphocyte Count.
Kindred Healthcare (KND) offered to acquire Gentiva Health (GTIV) for $17.25 per share. Kindred said it is willing to consider further increasing its offer for Gentiva
Netflix reported Q2 total streaming net additions of 1.69M. Said policy goal is for DOJ/FCC to block Comcast (CMCSA), TWC (TWC) deal

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Verizon (VZ), Polaris Industries (PII), Signature Bank (SBNY), New Oriental Education (EDU), PLX Technology (PLXT), Crocs (CROX), First Interstate (FIBK), First Defiance Financial (FDEF), Helix Energy (HLX), Crown Holdings (CCK), Ultra Clean (UCTT), Texas Instruments (TXN), Artisan Partners (APAM), Zions Bancorp (ZION), PolyOne (POL), Waste Connections (WCN), Woodward (WWD), Rambus (RMBS), Cadence Design (CDNS), Sanmina (SANM), Trustco Bank (TRST), Chipotle (CMG), MainSource Financial (MSFG)

Companies that missed consensus earnings expectations include:
Carlisle (CSL), Del Frisco's (DFRG), Brown & Brown (BRO), BBCN Bancorp, Inc. (BBCN), Old Line Bancshares (OLBK), AptarGroup (ATR), EMC Insurance (EMCI), TG Therapeutics (TGTX), Wilshire Bancorp (WIBC), Washington Trust Bancorp (WASH), Netflix (NFLX)

Companies that matched consensus earnings expectations include:
Regions Financial (RF), DuPont (DD), BancorpSouth (BXS), Steel Dynamics (STLD), Consumer Portfolio (CPSS), Healthstream (HSTM), Rent-A-Center (RCII), Hexcel (HXL)

NEWSPAPERS/WEBSITES

Apple (AAPL) asking suppliers to produce 80M large-screen iPhones, WSJ reports
JANA investor letter discloses $1B position in Apache (APA), Bloomberg says
China food scandal spreads, drags in Starbucks (SBUX), Burger King (BKW) and McDonald's (MCD) products in Japan, Reuters reports
Yahoo (YHOO) paying over $200M for Flurry, TechCrunch reports
Viacom's (VIA) music group and Spotify form music streaming partnership, WSJ reports
Global notebook shipments to increase 4.3% in Q3, DigiTimes Research says
McDonald's (MCD) stock doesn't look ready for gains, Barron's says

SYNDICATE

Blue Hills Bank (BHBK) 27.8M share Secondary priced at $10.00
Diamondback Energy (FANG) 5M share Secondary priced at $87.00
FBR & Co. (FBRC) announces self-tender offer to purchase up to 1M shares
Pretium Resources (PVG) files to sell $60M in common stock
Regency Energy Partners (RGP) files to sell 8.3M units for limited partners
Tallgrass Energy (TEP) files to sell 7M units representing limited partners

Here come the gates which we predicted in 2010: SEC Is Set to Approve Money-Fund Rules (WSJ)
Dick's cuts 400 jobs as golf now less popular (MW)
Kerry arrives in Israel, pushes for peace (Reuters)
Pay Penalty Haunts Recession Grads as U.S. Economy Mends (BBG)
Appeals Courts Issue Conflicting Rulings on Health-Law Subsidies (WSJ)
Rebel Stronghold Donetsk Holds Breath as Shellfire Mounts (BBG)
Business executive wins Georgia Republican runoff in U.S. Senate race (Reuters)
Five held in China food scandal probe, including head of Shanghai Husi Food (Reuters)
Jobs Hold Sway Over Yellen-Carney as Central Banks Splinter (BBG)
With sales sputtering, Apple's iPad looks to IBM alliance (Reuters)
Plane with first coffins of Malaysian airliner victims leaves Ukraine (Reuters)
Saudi Stock Opening Shut to Some as Hot Money Unwanted (BBG)

Overnight Media Digest

WSJ

* Two U.S. appeals courts issued conflicting rulings on subsidies for health coverage purchased on federal insurance exchanges, clouding a major part of Obama's health law. (http://on.wsj.com/1pb81yo)

* The Federal Reserve Bank of New York found that Deutsche Bank AG's U.S. operations suffer from a litany of serious financial reporting problems that the lender has known about for years but not fixed. (http://on.wsj.com/1jUoOXe)

* The U.S. barred flights to Israel's main international airport outside Tel Aviv for at least 24 hours after a rocket from Gaza landed nearby, angering Israel, which said the ban was a boon to Hamas's efforts to isolate the country. (http://on.wsj.com/1mCogQJ)

* The new rules by Securities and Exchange Commission are likely aimed at avoiding a repeat of investor stampede out of the $2.6 trillion industry that threatened to freeze corporate lending during the 2008 financial crisis. According to the plan, "prime" money funds whose shares are held by corporations and large institutional investors will have to abandon a stable $1-a-share price and float in value like other mutual funds. The plan also would allow all funds to temporarily stop investors from redeeming shares in times of market tumult or impose fees on them to do so. (http://on.wsj.com/1udyPmN)

* A group of cosmetics and fragrances workers at a Macy's store in Massachusetts are a big enough lot to try to unionize, the National Labor Relations Board decided in a ruling that could advance organized labor's quest to unionize subsets of workers in varied industries. (http://on.wsj.com/WAEFQe)

* Apple Inc reported a 12 percent profit growth and strong sales of iPhone. It sold about 35.2 million iPhones in the quarter, up 12.7 percent. But Apple struggled for the second consecutive quarter to sell iPads, with unit sales falling 9.2 percent after a 16 percent drop three months earlier. (http://on.wsj.com/UrjgHL)

* CIT Group Inc agreed to buy OneWest Bank NA's parent company for $3.4 billion in the largest full-bank acquisition announced since 2012. The takeover of IMB Holdco LLC, which is OneWest's parent company, will bump CIT's assets up to $67 billion. (http://on.wsj.com/1na529W)

* Blackstone Group has agreed to buy a majority stake in auto-repair shop chain Service King Collision Repair Centers from Carlyle Group LP with a view to fund the company's future growth. The deal values Service King at about $650 million. (http://on.wsj.com/1rzPuPB)

* Dick's Sporting Goods Inc is cutting hundreds of jobs in its golf division as fewer Americans hit the links. A spokeswoman for the PGA of America said more than 400 of its members who were employed as golf instructors at Dick's were notified Tuesday that they would be laid off. (http://on.wsj.com/WCcYHb)

* J.P Morgan Chase & Co is nearing a deal to sell half its stake in the portfolio of its buyout arm, One Equity Partners. J.P. Morgan is in advanced discussions with investment firms Lexington Partners LP and Carlyle Group LP's AlpInvest Partners unit, to sell half of the roughly $4.5 billion in investments One Equity manages for the bank. (http://on.wsj.com/1jUt9K9)

* William Ackman had promised a "death blow" against Herbalife Ltd, Wall Street instead gave new life to the nutritional-supplement company's stock. Ackman on Tuesday sought to prove once and for all his longstanding allegation that Herbalife is a fraud and a pyramid scheme. In a presentation, Ackman unveiled what he described as new evidence supporting his argument that the company is a "criminal enterprise." (http://on.wsj.com/1qzaUwQ)

Brussels is considering whether to reopen draft antitrust settlement with Google Inc, a move that could pose regulatory challenges to the Internet giant's European operations.

ARM Holdings reported a royalty revenue rise of just 2 percent from chips shipped in products such as Samsung's and Apple's smartphones, and said it expected royalty revenue growth to reaccelerate towards a more normal level in the second half.

Respondents to a UK Treasury review have warned of potential risk to the UK and other non-euro states of losing their influence over financial legislation as a report cited significant benefits from access to the single market in financial services and the free movement of capital.

The Blue Note Milano became the first jazz club to list its shares on a stock exchange, and raised 1.4 million pounds by listing 40 of its shares on the Milan AIM Small-Cap Index.

Secure Trust Bank, which was spun out of the Arbuthnot Banking Group in 2011 and is its retail banking arm, aims to launch an invoice financing business this quarter.

NYT

* President Obama, citing a "skills gap" that prevents many unemployed workers from qualifying for new jobs, signed legislation on Tuesday to strengthen federal job-training programs. The new law seeks to impose more accountability on the federal-state training partnerships by requiring a "job-driven checklist" to ensure that federal money is used effectively and by providing data-driven tools to give workers better information about career prospects. (http://nyti.ms/1sOqeFL)

* On Tuesday, U.S. small-business lender CIT Group Inc said it would acquire the bank that rose from IndyMac's ashes - OneWest Bank Group LLC - paying $3.4 billion in cash and stock to its hedge fund and private equity owners. The deal illustrates how casualties of the financial crisis have moved on, and even prospered. (http://nyti.ms/1udFCNx)

* Despite widespread anger over the Malaysia Airlines plane's downing, European nations have shied away from measures that would further isolate Russia. At a meeting in Brussels, foreign ministers of the European Union's 28 member states agreed to draw up a new, broader list of targets for sanctions, including Russian individuals and entities, said Catherine Ashton, the European Union's foreign affairs chief. (http://nyti.ms/1nSXB2c)

* State attorneys general must investigate, and consider taking legal action against, e-cigarette companies that appear to be using some of the same advertising tactics that once drew young adults into smoking, a Kentucky deputy attorney general told his law enforcement colleagues gathered in Park City, Utah for a retreat to discuss emerging legal issues in states nationwide. (http://nyti.ms/1ty37g8)

* Top properties in Hong Kong are resisting market forces. While cooling measures have affected most real estate, the very rich are holding onto the city's most expensive homes.(http://nyti.ms/1txRxBv)

* For Apple Inc, the iPhone continues to be the device that makes the company tick. While top rivals like Samsung Electronics are starting to show weakness in phone sales, Apple sold 35.2 million iPhones in the third fiscal quarter, up 13 percent from the period a year ago. (http://nyti.ms/1p8NIic)

* Microsoft Corp Chief Executive Satya Nadella said the two most important trends for the company's future are mobile and cloud computing. But it is much better in cloud computing than in mobile. (http://nyti.ms/1lsY4Iv)

* Chrysler Group LLC said on Tuesday that it was recalling an undisclosed number of older Jeep SUVs to correct an ignition-related stalling problem similar to the flaw that has consumed General Motors Co this year. The recall could potentially cover 792,300 Jeep Commanders and Grand Cherokees worldwide that were manufactured between 2005 and 2007. (http://nyti.ms/1nSQK8W)

* Deutsche Bank AG's primary regulator in the United States, the Federal Reserve Bank of New York, has found serious problems with the bank's financial reporting procedures and oversight. (http://nyti.ms/1yZyoLQ)

* LinkedIn Corp made its second acquisition in as many weeks, agreeing to buy the marketing firm Bizo for about $175 million. Last week, LinkedIn bought Newsle, a start-up that searches the Internet for relevant articles. (http://nyti.ms/1rqTEI5)

Canada

THE GLOBE AND MAIL

* U.S. ambassador to Canada Bruce Heyman had little to say on Tuesday about a possible decision on the controversial Keystone XL pipeline project, but that didn't stop Canada's ambassador to the United States from bluntly stating there's no proof that the pipeline shouldn't be built. (http://bit.ly/1A4JPDx)

* U.S. flights to Israel were grounded on Tuesday by the Obama administration, fearing missile strikes at Tel Aviv's airport could imperil U.S. airliners and passengers. Air Canada also canceled its Tuesday evening overnight flight. (http://bit.ly/1p7mrg8)

Reports in the business section:

* Target Corp is pushing its suppliers in Canada to give it a 2 percent cost break to help the U.S. discounter turn around its struggling Canadian operations and win an increasingly tough retail battle. (http://bit.ly/WCzaRw)

NATIONAL POST

* Canadian Prime Minister Stephen Harper does not intend to testify in the trial of suspended senator Mike Duffy because he doesn't have any useful information to offer, his office said on Tuesday. The Royal Canadian Mounted Police laid 31 criminal charges against Duffy last week, and experts say Harper could be called to testify, although he could invoke parliamentary privilege to avoid the witness box. (http://bit.ly/WCAh3y)

* The federal New Democratic Party (NDP) wants the House of Commons to pay for the party's legal costs in a lawsuit it filed against the House board that monitors spendings of members of Parliament. The NDP made the request on Tuesday during a closed-door meeting of the Board of Internal Economy. (http://bit.ly/1x02lIU)

FINANCIAL POST

* Ulyanovsk in Russia will be home to Bombardier Inc's newest factory if a planned joint venture comes to fruition. But the escalating crisis in Ukraine and the threat of additional sanctions against Moscow could halt progress on those talks just as Bombardier gets set to grab a piece of the growing Russian aviation market. (http://bit.ly/Us3VGM)

* Canadian negotiators will meet with their Japanese counterparts next week in Ottawa for another round of talks on a free-trade agreement between the two countries. (http://bit.ly/1ueqe3n)

China

CHINA SECURITIES JOURNAL

- The risk of credit default may increase significantly as the number of bonds due to mature rises, along with the pressure of high yields and a slowdown in economic growth, the newspaper said in a commentary.

SHANGHAI DAILY

- Chinese consumers in Shanghai will be entitled to a no-questions-asked refund for products bought online, according to a new local law approved by the Shanghai People's Congress. China's e-commerce sector has been booming, creating the need for greater consumer protection online.

CHINA DAILY

- In the wake of typhoon Rammasun, the strongest typhoon to hit southern China in four decades, 800,000 people have been resettled and 240,000 are in urgent need of basic necessities, local authorities told the paper.

Hong Kong

SOUTH CHINA MORNING POST

-- A radar station that is sitting on public land at the top of Tai Mo Shan in Hong Kong has been secretly handed to the People's Liberation Army, according to lawmaker Kenneth Chan Ka-lok, who is threatening to take the government to court for keeping the public in the dark. (bit.ly/1pCIKvL)

-- Twelve mainland airports will be hit by widespread delays until the middle of next month because of what are believed to be PLA military exercises. China's civil aviation regulator said that flights in and out of airports, including in Shanghai, Nanjing and Wuhan, would be affected. (bit.ly/Ur1sfT)

-- Confidence among Hong Kong's small and medium-sized enterprises is improving but investment sentiment has fallen for two consecutive quarters, a new survey for the Hong Kong Productivity Council shows. (bit.ly/1pbuQSq)

THE STANDARD

-- Next Media Ltd boss and strident Beijing critic Jimmy Lai Chee-ying said he did nothing wrong in donating some HK$40 million ($5.2 million) to pan-democrats, including five legislators, insisting it was his own personal money to hand out and not received from foreign governments. (bit.ly/1wY2jBc)

-- Retail rents at top-tier districts in Hong Kong may fall up to 8 percent this year amid a slowdown in sales and high rents. Cushman & Wakefield Executive Director Michelle Woo said cautious sentiment and high rents in Central, Causeway Bay and Tsim Sha Tsui are forcing retailers to leave. (bit.ly/1nSz5hP)

-- China Telecom launched its 4G service covering 16 mainland cities, offering monthly plans ranging from 59 yuan ($9.51) to 599 yuan. (bit.ly/1kb3Qnp)

HONG KONG ECONOMIC JOURNAL

-- Macau is expected to post another month of decline in gaming revenue, down 2 to 4 percent year on year in July to between 28.5 billion patacas ($3.57 billion) and 29 billion patacas, according to analyst estimates.

Britain

The Times

RBS IN THE DOCK OVER CLAIMS IT MISLED MPS

(http://thetim.es/1pCr8jw)

Royal Bank of Scotland has been heavily criticised for misleading MPs over its contentious division for struggling businesses.

WEIR'S NOT FINISHED WITH ITS PLANS FOR EXPANSION

(http://thetim.es/UqRKdb)

Weir Group, which tried and failed to tie up with Metso, has since been weighing whether to bid for Outotec , another Helsinki-listed company in much the same market of producing industrial pumps for the mining industry.

The Guardian

MEDIACITY LEADS TO SALFORD BECOMING THE UK'S PROPERTY HOT SPOT

(http://bit.ly/1o7GKgZ)

Property values in the Greater Manchester city of Salford have risen faster than in any other town in Britain since the start of 2014, as the area continues to benefit from the relocation of the BBC and other broadcasters to the waterfront MediaCity development.

EU REPORT FINDS NO EVIDENCE TO SUPPORT SWEEPING IMMIGRATION REFORMS

(http://bit.ly/1nkxfKx)

A government review looking into freedom of movement across the EU has not recommended any sweeping reforms to immigration rules in a report likely to disappoint Conservative Eurosceptics.

The Telegraph

EUROPE BRACED FOR ANY GAS CRISIS AS RUSSIA SANCTIONS ESCALATE

(http://bit.ly/UqRLOs)

Europe has enough spare capacity in liquefied natural gas to meet a large part of the region's needs if Russia retaliates against the latest EU sanctions by restricting gas supplies.

ESPIRITO SANTO HOLDING FIRM PLACED IN RECEIVERSHIP

(http://bit.ly/1rq7fz8)

The Espirito Santo family's holding company has been placed in receivership. Luxembourg's district court said it had agreed to a request from Espirito Santo International that it be placed under "controlled management".

Sky News

UK PREPARES FOR EU RULING ON ENERGY STATE AID

(http://bit.ly/1sMCfeK)

The European Commission is likely to announce its ruling after several months examining a form of subsidy guaranteeing long-term prices to companies for supplying renewable energy sources.

BANKS FACE 1.5 BLN STG HIT FROM PPI CLAIMS DELUGE

(http://bit.ly/1rn55At)

Britain's largest high street banks will announce next week that they are setting aside more than 1 billion pound ($1.71 billion)in additional provisions to compensate customers who were mis-sold payment protection insurance.

The Independent

PAUL FISHER: "THE BANK DELIVERED THE RECOVERY"

(http://ind.pn/1rIk4nK)

Paul Fisher, who has left the Bank of England's Monetary Policy Committee after five years, defends decisions made at the height of the crisis in an interview.

ROYAL MAIL FRETS OVER AMAZON THREAT TO PARCELS BUSINESS

(http://ind.pn/1rIk4nK)

Shares in Royal Mail today touched their lowest level since October's privatisation as it delivered the gloomy news that revenues at its crucial parcel division are being threatened by strong competition from Amazon.

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
MBA mortgage applications for week of July 18 at 7:00

ANALYST RESEARCH

Upgrades

Allscripts (MDRX) upgraded to Buy from Hold at Jefferies
Intuitive Surgical (ISRG) upgraded to Buy from Hold at Stifel
Intuitive Surgical (ISRG) upgraded to Outperform from Market Perform at Raymond James
Kimberly Clark (KMB) upgraded to Equal Weight from Underweight at Barclays
Lennox (LII) upgraded to Buy from Neutral at Goldman
Microsoft (MSFT) upgraded to Neutral from Underperform at BofA/Merrill
Microsoft (MSFT) upgraded to Outperform from Sector Perform at Pacific Crest
Munich Re (MURGY) upgraded to Overweight from Neutral at JPMorgan
Prologis (PLD) upgraded to Hold from Sell at Stifel
Spansion (CODE) upgraded to Buy from Hold at Jefferies

Downgrades

21st Century Fox (FOXA) downgraded to Market Perform from Outperform at Cowen
Brinker (EAT) downgraded to Sector Perform from Outperform at RBC Capital
Cubist (CBST) downgraded to Market Perform from Outperform at JMP Securities
DuPont (DD) downgraded to Neutral from Overweight at JPMorgan
FirstMerit (FMER) downgraded to Neutral from Overweight at JPMorgan
Hexcel (HXL) downgraded to Hold from Buy at Canaccord
Juniper (JNPR) downgraded to Neutral from Buy at BofA/Merrill
King Digital (KING) downgraded to Neutral from Buy at BofA/Merrill
Lexmark (LXK) downgraded to Underperform from Market Perform at Raymond James
Liberty Property (LPT) downgraded to Market Perform from Outperform at Wells Fargo
Liberty Property (LPT) downgraded to Neutral from Buy at UBS
Lufthansa (DLAKY) downgraded to Neutral from Buy at Nomura
McDonald's (MCD) downgraded to Neutral from Outperform at RW Baird
McDonald's (MCD) downgraded to Neutral from Positive at Susquehanna
New Oriental Education (EDU) downgraded to Hold from Buy at Jefferies
New Oriental Education (EDU) downgraded to Perform from Outperform at Oppenheimer
Nintendo (NTDOY) downgraded to Hold from Buy at Jefferies
Time Warner (TWX) downgraded to Market Perform from Outperform at Cowen
Timmins Gold (TGD) downgraded to Market Perform from Outperform at Cowen
United Technologies (UTX) downgraded to Market Perform from Outperform at Wells Fargo
Viacom (VIAB) downgraded to Market Perform from Outperform at Cowen
Xilinx (XLNX) downgraded to Market Perform from Outperform at BMO Capital
Xilinx (XLNX) downgraded to Market Perform from Outperform at William Blair
Xilinx (XLNX) downgraded to Neutral from Buy at BofA/Merrill

Initiations

Actavis (ACT) initiated with a Buy at Deutsche Bank
Aimco (AIV) initiated with a Neutral at Mizuho
American Realty (ARCP) initiated with a Perform at Oppenheimer
AvalonBay (AVB) initiated with a Neutral at Mizuho
Brandywine Realty (BDN) initiated with a Neutral at Mizuho
Columbia Property Trust (CXP) initiated with a Perform at Oppenheimer
Douglas Emmett (DEI) initiated with a Buy at Mizuho
Endo (ENDP) initiated with a Buy at Deutsche Bank
Envision Healthcare (EVHC) initiated with a Market Perform at Wells Fargo
Equity Residential (EQR) initiated with a Neutral at Mizuho
Essex Property Trust (ESS) initiated with a Buy at Mizuho
Gentherm (THRM) initiated with an Overweight at JPMorgan
HCP Inc. (HCP) initiated with a Buy at Mizuho
Health Care REIT (HCN) initiated with a Neutral at Mizuho
Hospira (HSP) initiated with a Hold at Deutsche Bank
Jazz Pharmaceuticals (JAZZ) initiated with a Buy at Deutsche Bank
Mallinckrodt (MNK) initiated with a Buy at Deutsche Bank
Mellanox (MLNX) initiated with an Outperform at Imperial Capital
Mid-America Apartment (MAA) initiated with an Outperform at Oppenheimer
Mylan (MYL) initiated with a Buy at Deutsche Bank
Parkway Properties (PKY) initiated with a Neutral at Mizuho
Perrigo (PRGO) initiated with a Buy at Deutsche Bank
Retail Opportunity Investments (roic) initiated with a Neutral at Citigroup
Salix (SLXP) initiated with a Hold at Deutsche Bank
Teva (TEVA) initiated with a Buy at Deutsche Bank
Trinseo S.A. (TSE) initiated with an Equal Weight at Barclays
Valeant (VRX) initiated with a Hold at Deutsche Bank
Ventas (VTR) initiated with a Buy at Mizuho

COMPANY NEWS

Apple (AAPL) said it sold sold 35.2M iPhones in Q3
Safeway (SWY) received subpoena from U.S. DEA concerning the company’s record keeping, reporting and related practices associated with the loss or theft of controlled substances
Broadcom (BRCM) said it will wind down the cellular baseband chip business
Unwired Planet (UPIP) filed a lawsuit against Microsoft (MSFT) for breach of contract
Ballard Power Systems (BLDP) received a purchase order from New Flyer Industries for the delivery of Ballard's first next-generation FCvelocity-HD7 fuel cell power module to a North American bus manufacturer
Puma Biotechnology (PBYI) reported positive top line results from Phase III PB272 trial
Chrysler (FIATY) recalled older-model SUVs over ignition switch concerns

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Apple (AAPL), Thermo Fisher (TMO), Juniper (JNPR), Broadcom (BRCM), Customers Bancorp (CUBI), MarketAxess (MKTX), Air Products (APD), Evercore Partners (EVR), W.R. Grace (GRA), TE Connectivity (TEL), Check Point (CHKP), BE Aerospace (BEAV), STMicroelectronics (STM), Flagstar Bancorp (FBC), Linear Technology (LLTC), Merchant Bancshares (MBVT), Cathay General (CATY), Rush Enterprises (RUSHA), ViewPoint Financial (VPFG), Trustmark (TRMK), Xilinx (XLNX), FMC Technologies (FTI), ACE Limited (ACE), Vascular Solutions (VASC), Xoom (XOOM), Exponent (EXPO), Meridian Interstate Bancorp (EBSB), ZixCorp (ZIXI), IDEX Corp. (IEX), Discover (DFS), Manhattan Associates (MANH), Covanta (CVA), iRobot (IRBT), Electronic Arts (EA), Hawaiian Holdings (HA), VMware (VMW), Cubist (CBST)

Companies that missed consensus earnings expectations include:

Microsoft (MSFT), Potlatch (PCH), Praxair (PX), Whirlpool (WHR), JAKKS Pacific (JAKK), ClickSoftware (CKSW), Unisys (UIS), Fulton Financial (FULT), Eagle Materials (EXP), Forward Air (FWRD), Intuitive Surgical (ISRG), Bridge Capital Holdings (BBNK)

Companies that matched consensus earnings expectations include:

Pacific Premier (PPBI), First Midwest (FMBI), First Busey (BUSE), F.N.B. Corp. (FNB), UMB Financial (UMBF), Eagle Bancorp (EGBN), Ameris Bancorp (ABCB), Pzena Investment (PZN), Pzena Investment (PZN), Total System (TSS)

NEWSPAPERS/WEBSITES

DuPont (DD) to lay off 'low single digits' of employees, Bloomberg reports
Pepsi (PEP) called on by Calstrs to give Trian place on board, FT reports
GM (GM) for years changed auto ignitions over stalling, WSJ reports
StubHub (EBAY) accounts targeted by cyber thieves, AP reports
YouTube's (GOOG) Chris LaRosa quits as music head, WSJ reports
JPMorgan (JPM) in advanced talks to sell half its stake in buyout arm, WSJ says
Repsol (REPYY) exploring bid for Talisman Energy (TLM), Bloomberg reports
Google (GOOG), Spotify didn't talk about a deal, Re/code says

SYNDICATE

BofI Holding (BOFI) files to sell $50M in common stock
Farmland Partners (FPI) files to sell 3.72M shares of common stock
La Jolla (LJPC) files to sell common stock
Medical Transcription Billing (MTBC) 4.08M share IPO priced at $5.00
MeetMe (MEET) announces proposed public offering of common stock

EU to weigh extensive sanctions on Russia (FT)
U.S. lifts flight ban to Israel (Reuters)
Russia says will cooperate with MH17 probe led by Netherlands (Reuters)
Norway faces ‘concrete and credible’ terrorist threat (FT)
Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
But... but... PMI: Unilever Sales Growth Misses Estimates on Asian Slowdown (BBG)
World’s Biggest Wealth Fund Reviews $8 Billion Russian Stake (BBG)
Qualcomm latest US tech company to reverse in China (FT)
Hamptons Home Sales Rise as Buyers Find More Inventory (BBG)
Ex-Goldman Trader’s Bitcoin Exchange to Fill Mt. Gox Void (BBG)
Mutiny at the BOJ: Bank of Japan Majority Won’t Be Swayed by Kuroda Ideology (BBG)
Singapore Home Prices Set to Extend Drop, Keppel Land Says (BBG)

Overnight Media Digest

WSJ

* Two Ukrainian fighter jets were shot down Wednesday over separatist-held territory not far from the site of the Malaysia Airlines crash as international outrage over the tragedy has done little to slow fighting in eastern Ukraine. (http://on.wsj.com/1pc31qs)

* The Obama administration, Israel and other Middle East allies are refashioning an Egyptian cease-fire proposal to assure Hamas that Gaza's economic interests would be addressed if the Islamist group stops rocket attacks, senior U.S. and Arab officials said. (http://on.wsj.com/1sUzA2G)

* The largest public pension fund in the U.S., the California Public Employees' Retirement System, or Calpers is expected to cut its hedge-fund investments this year by 40 percent to $3 billion. Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns. (http://on.wsj.com/1nWeo4p)

* A number of major banks are looking to simultaneously settle probes into allegations of foreign-exchange rate-rigging with the U.K.'s Financial Conduct Authority, according to people familiar with the matter. Banks like Barclays PLC and UBS AG are aiming to reach individual settlements with regulators that will be announced at the same time, these people say. (http://on.wsj.com/1oeuZ8p)

* The U.S. airline industry's newfound health is breeding something not seen in years: a flock of startups. Two fledging carriers already have taken off. One is a reincarnation of the old People Express Airlines. Others are still in various stages of incubation, hoping to raise sufficient funds and receive government clearance to take wing. (http://on.wsj.com/1jWkYwU)

* Gilead Sciences Inc's Hepatitis C pill, Sovaldi, notched $3.5 billion in second-quarter sales, catapulting Gilead into the ranks of the top-selling pharmaceutical companies.(http://on.wsj.com/1z5gIi5)

* The U.S. government has asked big banks whether it should issue bonds that mature in more than 30 years. The treasury department asked 22 primary dealer banks, which underwrite U.S. government debt sales, about possible demand for ultra-long-term sovereign bonds. (http://on.wsj.com/1tDbW8r)

* Cable magnate John Malone said in an interview that Twenty-First Century Fox has long been eyeing a takeover bid for Time Warner Inc and isn't likely to face competing bidders, pouring cold water on speculation that tech companies could emerge as rival suitors for the TV and movie company. (http://on.wsj.com/1z5upNS)

* J.P. Morgan Chase & Co has sharply pulled back from a popular mortgage-lending program this year, blaming Obama administration's zeal for litigation. (http://on.wsj.com/1pdsn7k)

* The Securities and Exchange Commission told Standard & Poor's Ratings Services that it could face an enforcement action for alleged securities fraud regarding six commercial real-estate deals in 2011, according to a Wednesday filing by S&P parent McGraw Hill Financial Inc (http://on.wsj.com/1lxLKXn)

BSkyB is expected to announce its European expansion on Friday, by buying Rupert Murdoch's pay-TV assets in Italy and Germany, two people familiar with the deal said.

Standard Chartered Plc Chairman Sir John Peace is weighing a succession plan, and has been urged to conduct a search both internally and externally over the next 12 months, three people familiar with the matter said.

Britain's Department of Energy and Climate Change will appeal a High Court decision which overruled its plans to drop one of Drax Group's coal-to-biomass conversion projects from a new renewable energy subsidy scheme.

UK wealth managers are facing "considerable uncertainty" as lower trading commissions in the last quarter hurt managers including Brewin Dolphin and Charles Stanley.

The Bank of England is weighing up conflicting data on Britain's labour market as it prepares to start raising interest rates off their record low of the last five years, BoE Governor Mark Carney said.

NYT

* From factory inspections to product recalls, laboratory testing to prosecutions, China's emergent food-quality apparatus has turned into reform on the fly, with ever-changing threats and setbacks. (http://nyti.ms/1sVA3la)

* Facebook Inc posted higher revenue and profit for the second quarter, driven by revenue from apps on mobile devices and advertisements shown in the news feeds. Mobile devices accounted for nearly two-thirds of the company's revenue, which rose 61 percent over the same quarter last year. (http://nyti.ms/1x33wHJ)

* The White House Rural Council will announce plans on Thursday to start a $10 billion investment fund that will give pension funds and large investors the opportunity to invest in agricultural projects. Those include wastewater systems, energy projects and infrastructure development in rural America. (http://nyti.ms/1sVilhy)

* General Motors Co recall covers 800,000 more vehicles. The auto company announced six more recalls on Wednesday for various flaws, and its worldwide recall total for 2014 is 29 million.(http://nyti.ms/1ravFed)

* For years, the wind industry has been hampered by such a severe lack of transmission lines that when the wind is strong, a local power surplus forces some machines to be shut down. Now, Texas is out to change that by conducting a vast experiment that might hold lessons for the rest of the United States. Supporters say the experiment is essential if states want to reduce reliance on fossil fuels and meet new federal rules on carbon emissions. (http://nyti.ms/1rw5Mre)

* The new rules by the U.S. Transportation Department would include measures to enhance the safety of oil trains, some of which had already been adopted by railroads on a voluntary basis in recent months, like notifying state emergency responders about train traffic, reducing speed limits or picking the safest route. (http://nyti.ms/1kcXjst)

* The resignation of Prime Minister Plamen Oresharski and his cabinet comes as Bulgaria's worst banking crisis since the 1990s threatens to take an economic toll on local businesses and foreign investors. And there may be no quick resolution of a rescue plan for troubled Corporate Commercial Bank. (http://nyti.ms/1pdV0nN)

* Nearly six years since the panic after the collapse of Lehman Brothers Holdings Inc, the Securities and Exchange Commission's new rules are intended to prevent investors from dumping their shares in funds during times of stress. (http://nyti.ms/1rMIJHU)

* After a riveting corporate shake-up that began last month after the firing of its controversial founder and chief executive, Dov Charney, American Apparel named four new members to its board. (http://nyti.ms/1sVCLqT)

Canada

THE GLOBE AND MAIL

* Canada is facing criticism over provincial jails bursting with prisoners who are presumed innocent, creating in effect a system of punishment without trial. (http://bit.ly/1pewcvI)

* The Arctic may be a hot commodity, with remarkable resource and tourism opportunities, but a conference has heard that Canada and the United States are barely out of the ice age when it comes to harnessing its growth. (http://bit.ly/WF26IL)

Reports in the business section:

* Bombardier Inc is reorganizing its operations into four divisions in a move that will cause 1,800 job losses and the retirement of Bombardier Aerospace president Guy Hachey, who held overall responsibility for the struggling C Series airplane program. (http://bit.ly/1pKtDQQ)

NATIONAL POST

* An international alert accusing a man living north of Toronto of being a mob boss went ignored by Canadian police because Canada does not recognize the crime of Mafia association, the tool used by the Italian government to tackle powerful organized crime groups, an immigration hearing heard on Wednesday. (http://bit.ly/WIsUHN)

* A Canadian group is planning to bring about 1,000 litres of water from Windsor to Detroit to protest thousands of residential service shutoffs by Detroit's water department. (http://bit.ly/1kXgS2E)

FINANCIAL POST

* Calgary, Canada's oil capital, has surpassed Ottawa as the city with the nation's highest family incomes, new data show. The median family income in the southern Alberta city rose 5.2 percent to C$98,300 ($91,700) in 2012, the most-recent reporting period, to snag top spot in the nation, Statistics Canada said on Wednesday. (http://bit.ly/1rDi4zN)

* Bombardier Inc's chief operating officer and president of the aerospace division Guy Hachey is retiring as part of a sweeping restructuring, the company said late on Wednesday. The move comes amid multiple delays in development of the flagship CSeries jet. (http://bit.ly/1peDwVB)

Britain

The Times

ANGRY STANDARD CHARTERED INVESTORS HEAP PRESSURE ON SANDS

(http://thetim.es/1nWbkFu)

One top-ten shareholder of the Standard Chartered, speaking on condition of anonymity, voiced a growing frustration that the bank needed a hands-on manager rather than a high-level thinker.

BG GROUP PONDERS 1 BLN STG NORTH SEA SALE

(http://thetim.es/1x3xwmP)

BG Group is understood to have appointed Rothschild to advise on a restructuring in a move that could result in the sale of its Armada, Everest and Lomond platforms.

The Guardian

RYANAIR TOLD TO PAY BACK 10M IN ILLEGAL STATE AID FROM FRANCE

(http://bit.ly/Uu2Oq8)

Low-cost airline Ryanair must repay nearly 10 million euros ($13.46 million) in illegal state aid it received from France for operating at three small regional airports, European Union regulators said.

BANK OF ENGLAND HOLDS INTEREST RATES AMID CONCERN FOR WAGE GROWTH

(http://bit.ly/1mGqui2)

Bank of England policymakers are growing increasingly uneasy about the UK's record low interest rates - but signalled on Wednesday that the first rise will not come until real wages start to recover.

The Telegraph

ENERGY COMPETITION PROBE TURNS UP HEAT ON THE BIG SIX

(http://bit.ly/1kWahFO)

Britain's top competition watchdog will on Thursday set out a catalogue of concerns about the UK energy sector as it begins an 18-month investigation that could result in the Big Six suppliers being broken up.

SFO TO CHARGE ALSTOM OVER 'CORRUPTION' AND MOVES AGAINST UK ARM

(http://bit.ly/WDCOum)

The Serious Fraud Office has said it will file corruption charges against Alstom "imminently", after starting proceedings against two of the French engineering giant's companies in the UK.

Sky News

SCOTTISH REFERENDUM: BANKS WEIGH NEW WARNINGS

(http://bit.ly/1oepkPZ)

Britain's biggest banks are weighing up plans to outline further risks associated with Scottish independence when they unveil half-year results with less than 50 days to go before the crucial vote.

UKTI CEO HAILS 'OPEN' EXPORTS AMID RUSSIA ROW

(http://bit.ly/1rtiQO5)

The head of the Government's trade promotion agency has hailed Britain's "clear and transparent" export control regime amid a growing row over the number of UK licences allowing arms sales to Russia.

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of July 19 at 8:30--consensus 310K
Markit U.S. manufacturing PMI for July at 9:45--consensus 57.5
New home sales for June at 10:00--consensus down 5.8% to 475K rate

ANALYST RESEARCH

Upgrades

Carmike Cinemas (CKEC) upgraded to Buy from Hold at Topeka
Health Net (HNT) upgraded to Buy from Underperform at BofA/Merrill
MarketAxess (MKTX) upgraded to Outperform from Market Perform at Raymond James
PepsiCo (PEP) upgraded to Buy from Hold at Stifel
SEI upgraded to Outperform from Market Perform at Keefe Bruyette
Western Refining Logistics (WNRL) upgraded to Buy from Neutral at Goldman
Wilshire Bancorp (WIBC) upgraded to Strong Buy from Outperform at Raymond James

Downgrades

Angie's List (ANGI) downgraded to Equal Weight from Overweight at First Analysis
Angie's List (ANGI) downgraded to Neutral from Buy at BofA/Merrill
Angie's List (ANGI) downgraded to Neutral from Buy at Janney Capital
Angie's List (ANGI) downgraded to Neutral from Buy at MKM Partners
Angie's List (ANGI) downgraded to Perform from Outperform at Oppenheimer
Angie's List (ANGI) downgraded to Sector Perform from Outperform at RBC Capital
Boeing (BA) downgraded to Neutral from Buy at BofA/Merrill
Freeport McMoRan (FCX) downgraded to Neutral from Buy at BofA/Merrill
IDEX Corp. (IEX) downgraded to Neutral from Buy at Janney Capital
Magellan Midstream (MMP) downgraded to Neutral from Buy at Goldman
Owens Corning (OC) downgraded to Hold from Buy at Stifel
Pacific Coast Oil (ROYT) downgraded to Market Perform from Outperform at Wells Fargo
Praxair (PX) downgraded to Market Perform from Outperform at William Blair
Qualcomm (QCOM) downgraded to Equal-Weight from Overweight at Evercore
Qualcomm (QCOM) downgraded to Neutral from Positive at Susquehanna
Questar (STR) downgraded to Neutral from Buy at Citigroup
TAL International (TAL) downgraded to Underperform from Neutral at BofA/Merrill
Theravance (THRX) downgraded to Neutral from Buy at BofA/Merrill
Tractor Supply (TSCO) downgraded to Market Perform from Outperform at William Blair
TripAdvisor (TRIP) downgraded to Hold from Buy at Cantor

Initiations

CECO Environmental (CECE) initiated with a Buy at Canaccord
CyrusOne (CONE) initiated with an Equal Weight at Barclays
Equinix (EQIX) initiated with an Equal Weight at Barclays
Markit (MRKT) initiated with a Hold at Jefferies
Zafgen (ZFGN) initiated with an Outperform at Leerink

COMPANY NEWS

Facebook (FB) reported mobile daily active users up 31% year-over-year
Standard Chartered (SCBFF) board dismissed succession plan rumors
McGraw Hill Financial (MHFI) announced that on July 22, it received a "Wells Notice" from the SEC stating that the agency’s staff made a preliminary determination to recommend that the Commission institute an enforcement action against Standard & Poor's Ratings Services, alleging violations of federal securities laws with respect to S&P's ratings of six commercial mortgage backed securities transactions issued in 2011
Spectranetics (SPNC) received FDA clearance for atherectomy products, Turbo-Tandem and Turbo Elite
Engaged Capital reported a 7% stake in Jamba (JMBA) and announced that they had discussions with management
American Apparel (APP) named four new board members, including one woman
Cliffs Natural (CLF) lowered U.S. iron ore production view to low end of prior outlook

EARNINGS

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

Facebook (FB), Qualcomm (QCOM), Ford (F), Wyndham (WYN), Eli Lilly (LLY), Diamond Offshore (DO), Carter's (CRI), Patterson-UTI Energy (PTEN), Starwood (HOT), Proto Labs (PRLB), Potash (POT), Logitech (LOGI), Weatherford (WFT), CoStar Group (CSGP), O'Reilly Automotive (ORLY), PTC Inc. (PTC), CVB Financial (CVBF), Ethan Allen (ETH), Core Laboratories (CLB), Oceaneering (OII), Teradyne (TER), Horizon Bancorp (HBNC), IPC The Hospitalist Co. (IPCM), Graco (GGG), Cliffs Natural (CLF), Susquehanna (SUSQ), Astoria Financial (AF), Equifax (EFX), Berkshire Hills Bancorp (BHLB), Raymond James (RJF), Fortinet (FTNT), Tyler Technologies (TYL), WesBanco (WSBC), Quantum (QTM), Financial Institutions (FISI), Everest Re (RE), Allegiant Travel (ALGT), Assurant (AIZ), Polycom (PLCM), E-Trade (ETFC), Umpqua Holdings (UMPQ), Illumina (ILMN), Covenant Transportation (CVTI), Skechers (SKX), Citrix (CTXS), CA Technologies (CA), NeuStar (NSR), Sangamo (SGMO), F5 Networks (FFIV), TriQuint (TQNT), Healthways (HWAY), QCR Holdings (QCRH), AngioDynamics (ANGO), Hanesbrands (HBI), Gilead (GILD), Banner Corp. (BANR), Chemed (CHE), Cirrus Logic (CRUS)

Companies that missed consensus earnings expectations include:

AT&T (T), TripAdvisor (TRIP), Encana (ECA), NorthWestern (NWE), NorthWestern (NWE), WESCO (WCC), Cabot Microelectronics (CCMP), Quality Systems (QSII), Precision Castparts (PCP), The Bancorp (TBBK), MSA (MSA), Heritage-Crystal Clean (HCCI), Terex (TEX), TAL International (TAL), TriState Capital (TSC), Old Second Bancorp (OSBC), Morningstar (MORN), TESSCO (TESS), Interface (TILE), Horace Mann (HMN), Allied World (AWH), CoreLogic (CLGX), Cheesecake Factory (CAKE), InspireMD (NSPR), Flowserve (FLS), StanCorp (SFG), Torchmark (TMK), Angie's List (ANGI)

Companies that matched consensus earnings expectations include:

Sequans (SQNS), Dunkin' Brands (DNKN), Capital Bank (CBF), Radware (RDWR), United Community Banks (UCBI), Sallie Mae (SLM), Guaranty Bancorp (GBNK), United Financial (UBNK), OFG Bancorp (OFG), United Stationers (USTR), Allison Transmission (ALSN), 8x8, Inc. (EGHT), Datawatch (DWCH), Tractor Supply (TSCO)

NEWSPAPERS/WEBSITES

Qualcomm (QCOM) confirmed in China as having monopoly, China Daily reports
Watchdog says Google (GOOG) evokes memories meant to be omitted, Bloomberg reports
Bombardier (BDRBF) to cut 1,800 aerospace jobs in revamp, Reuters reports
Carlyle (CG) to be last PE firm to face bid-rigging trial, NY Post reports
Deutsche Bank (DB) CFO faces internal criticism following financial reporting exposure, WSJ reports
Police arrest seven in connection to StubHub (EBAY) cyberfraud case, Re/code reports
Investors shouldn't wait too long to buy Apple (AAPL), Barron's says

SYNDICATE

Government Properties (GOV) 13.5M share Spot Secondary priced at $23.50
Immune Design (IMDZ) 5M share IPO priced at $12.00
Intersect ENT (XENT) 5M share IPO priced at $11.00
JMP Group (JMP) files $100M mixed securities shelf
NRG Yield (NYLD) 10.5M share Secondary priced at $54.00
Pfenex (PFNX) 8.33M share IPO priced at $6.00
Townsquare Media (TSQ) 8.3M share IPO priced at $11.00

Argentine holdout NML says government "choosing" to default (Reuters)
Crunch time for Gaza truce talks as death toll passes 800 (Reuters)
Don’t Tell Anybody About This Story on HFT Power Jump Trading (BBG)
U.S. Accuses Russia of Shelling Eastern Ukraine (BBG)
France’s Wheat Exports in Question as Rain Spoils Quality (BBG)
Tapering in action: Lower printer sales hurt Xerox's revenue (Reuters)
No liquidity? No Problem, there's an ETF for that: Bond ETFs Swelling in Europe as Trading Debt Gets Tougher (BBG)
Herbalife hires ex-Biden chief to fend off regulators (NYPost)
GM recalls far from calamity for some dealers who find new customers, business (Reuters)
Bad weather likely cause of fatal Air Algerie crash: French officials (Reuters)
White House bemoans lawmakers' delay on U.S. border crisis funds (Reuters)
Murdoch's 21st Century Fox pledges to extend buybacks (Reuters)
Google’s $1B purchase of Twitch confirmed — joins YouTube for new video empire (VentureBeat)
UN Seeks Swiss Private Banker Funding for Geneva Facelift (BBG)

Overnight Media Digest

WSJ

* The U.S. believes Russia is firing artillery across its border at Ukrainian military positions, the State Department said, an assertion that Moscow is playing a more direct role in the conflict. (http://on.wsj.com/1jXUWsX)

* An Air Algérie jetliner with at least 116 people on board crashed in northern Mali on Thursday, the airline and officials in Africa said. (http://on.wsj.com/1nYQ7uJ)

* Demand for new homes slowed sharply during the first half, a development that threatens to reverberate beyond the housing market and throughout the broader economy. Sales of new single-family homes fell 4.9 percent through the first six months of the year and June sales fell 8.1 percent from the prior month, according to Commerce Department data. (http://on.wsj.com/1x9huHU)

* After years of fighting for survival, U.S. airlines are finally able to show investors the money. American Airlines Group Inc said on Thursday it will buy back $1 billion of its stock and begin paying a quarterly cash dividend of 10 cents a share. United Continental Holdings Inc said it will launch a $1 billion share repurchase plan over the next three years. (http://on.wsj.com/1qDpgwf)

* GM on Thursday reported a profit of $278 million, off 80 percent from a year earlier. A $2.5 billion pretax bill for safety recalls and a victims' compensation fund slashed General Motors Co's second-quarter profit and highlighted the work it must do to close a profitability gap with rival Ford Motor Co, which reported stronger results for the quarter ahead of a critical product launch. (http://on.wsj.com/1kXV3A9)

* Argentina hasn't made many friends on Wall Street. But that hasn't stopped bankers from trying to bring the country back into the bond market. The largest financial firms spent much of the first part of 2014 devising an escape route for Argentina from a legal standoff with some hedge-fund bondholders that threatens to throw the nation into default for the second time in 13 years. (http://on.wsj.com/1qDqBmH)

* Wal-Mart Stores Inc's U.S. chief, Bill Simon, will leave the company on Aug. 8 and will be replaced by Asia head Greg Foran, a New Zealander who has never worked in the United States. Foran steps into the job at a time when Wal-Mart's U.S. namesake stores are stuck in a rut. (http://on.wsj.com/1pOQLxL)

* Barclays PLC fired back against New York Attorney General Eric Schneiderman, arguing that the prosecutor used misleading information and cherry-picked facts to support his allegation that the bank lied to its clients about the activity of high-speed traders in its "dark pool." (http://on.wsj.com/1rAXUES)

* OSI received one of its first pieces of good news in days as McDonald's said it would stick with the meat provider in China, using OSI's other factories in China, despite saying earlier this week it may have been misled by officials at Shanghai Husi Food. The burger giant's vote of confidence signaled OSI's importance to McDonald's and points to the close ties the companies have formed over six decades. (http://on.wsj.com/1rEFRiL)

* Investors are selling junk bonds at the fastest pace in more than a year, as fresh interest-rate fears and geopolitical turmoil amplify valuation concerns following a long rally. Prices on bonds issued by lower-rated U.S. companies tumbled to a three-month low this week, according to a Bank of America Merrill Lynch index. (http://on.wsj.com/1mLki8q)

* Zillow Inc is in advanced talks to buy rival online real-estate information service Trulia Inc, in a deal that could give their fast-growing websites even more power in the home-sale market. Terms of the potential deal couldn't be learned, but Trulia's stock-market value was nearly $2 billion. (http://on.wsj.com/1nzadQt)

* Comcast Corp, the largest cable operator in the United States, has quietly begun extending fiber optic cable all the way to customers' homes in certain parts of its service area, a significant shift that could help the company better compete with all-fiber providers like Verizon Communications Inc and Google Inc on internet speeds. (http://on.wsj.com/1lBLeb2)

* Proxy adviser Institutional Shareholder Services is challenging the nearly $49 million 2013 pay package given to Sprint Corp's chief executive and opposing the re-election of a board member to the compensation committee. ISS said it opposes Sprint Chief Executive Dan Hesse's pay package because a special equity award of $18.7 million was entirely time-based, lacking connection to any performance criteria.(http://on.wsj.com/1rQw2f0)

* U.S. President Barack Obama threw himself into the politically charged effort to block U.S. firms from reincorporating overseas for tax reasons, calling the relocations "wrong" and urging Congress to stop them through quick-fix legislation. (http://on.wsj.com/WNHbTz)

Lloyds Banking Group Plc is expected to announce early next week that the British bank would pay between 200 million pounds and 300 million pounds ($509.52 million) to settle benchmark interest rate (LIBOR) fixing allegations.

Balfour Beatty and Carillion Plc, two of Britain's biggest construction companies, are in merger talks to create a 3 billion pound construction giant.

Barclays Plc urged the dismissal of a lawsuit from the New York attorney general alleging the bank lied to clients about its high-speed trading venue.

The European Central Bank said on Thursday its website had been hacked and about 20,000 email addresses and other contact information stolen but insisted no market-sensitive data was compromised.

British insurer Lancashire Holdings' founder Richard Brindle, who stepped down from the company earlier in the year, has left with a third of shareholders' return on equity with his package of cash and warrants.

NYT

* Amazon.com, which is embroiled in a very public conflict with the publisher Hachette, announced second-quarter losses nearly double what Wall Street predicted. (http://nyti.ms/1nYTEZZ)

* The International Monetary Fund said that the world economy was expanding less than it had previously forecasted, slowed by weaker growth in the United States, Russia and developing economies. (http://nyti.ms/1zaqdwo)

* U.S. President Barack Obama on Thursday called for Congress to strip away tax advantages that have encouraged a rush of mergers and acquisitions that give companies an overseas base while they maintain their presence in the United States. (http://nyti.ms/1pORqPE)

* Under pressure to reduce smog and carbon emissions, China is considering a mandatory cap on coal use, but it would be an adjustable ceiling and would allow coal consumption to grow for years. (http://nyti.ms/1zapgEv)

* Of all the financial implosions in the eurozone, few matched last year's collapse of tiny Cyprus in terms of drama and chaos. Frantic Cypriots queued up at banks to drain their accounts. Russian oligarchs scrambled to repatriate hidden fortunes. European officials, fearing another bout of market contagion, orchestrated an audacious 17 billion euro rescue package - forcing depositors to bear a large part of the cost, unlike other bailouts. Now, the foundation of the bailout, an analysis by bond giant Pimco, is being challenged by economists, lawyers and politicians in Cyprus. (http://nyti.ms/1x9tc5i)

* General Motors, hit by a spate of recalls over defective ignitions and other safety related charges that cost the company $3.8 billion, would be in worse shape financially without the surging sales of its large sport utility vehicles, which many once wrote off as artifacts of prerecession excess. (http://nyti.ms/1kevDn2)

* Morgan Stanley and securities regulators finalized a $275 million settlement on Thursday stemming from the Wall Street bank's role in the sale of securities backed by subprime mortgages. (http://nyti.ms/1rEI11J)

* The International Accounting Standards Board, issued a new accounting rule that will give banks much more leeway to write down the value of loans, something that both regulators and bankers demanded in the wake of the financial crisis. Yet the rule could also make it less attractive for banks to make loans in the first place because every loan will lead to an immediate reported loss. (http://nyti.ms/UwEZ0Z)

Canada

THE GLOBE AND MAIL

** Toronto mayoral candidate John Tory has written to the city's integrity commissioner, asking whether her investigation involving current Mayor Rob Ford will be completed in time for the October election. (http://bit.ly/WOuNm2)

** Two children and a woman on her first overseas trip are among five Canadians missing after an Air Algerie flight carrying 116 people across the Sahara desert changed course to avoid a storm, disappeared from radar and crashed. (http://bit.ly/1zbrN16)

Reports in the business section:

** If BlackBerry Ltd Chief Executive John Chen is worried about International Business Machines Corp and Apple Inc combining their efforts in enterprise technology, he's not letting on. In an interview with the Financial Times, he likened the team-up to when "two elephants start dancing," and suggested that his drive to transform the troubled handset maker is making the company nimble enough to compete with all. (http://bit.ly/1um0JNM)

NATIONAL POST

** A United Nations committee has told Canada it should free the man with no name - an immigrant who has been detained for seven years because the Canadian government can't identify who he is, or to where he should be deported. (http://bit.ly/1jYWEKA)

** An Ottawa doctor who caused a public health scare in 2011 after her endoscopy clinic failed a health inspection has agreed never to practise medicine again. Dr. Christiane Farazli was publicly reprimanded Thursday by the Ontario College of Physicians and Surgeons for disregarding the safety of patients and ignoring the fundamental principles of infection control. (http://bit.ly/1keQtCS)

FINANCIAL POST

** Malaysia's Petroliam Nasional Bhd is seeking potentially billions in tax relief from the Canadian government in exchange for opening new markets for Canadian natural gas, as it inches closer to a final investment decision on a British Columbia export terminal. (http://bit.ly/1lCLl6i)

** Making improvements to its fresh food business helped Loblaw Companies Ltd stay at the leading edge of a brutally competitive grocery sector in the second quarter. (http://bit.ly/1rQgwQn)

China

CHINA SECURITIES NEWS

- The China Banking Regulatory Commission (CBRC) told banks on Thursday to properly set loan terms for small and micro enterprises in order to avoid a mismatch between loan term and operating cycle. The commission also asked lenders to diversify loan products to better meet financing needs of companies and reduce their repayment burdens.

SHANGHAI SECURITIES NEWS

- The Agricultural Bank of China, the country's third-largest lender, will start offering interest rate discounts for first-home mortgages next month in Shanghai. The bank will offer discounts of 5 percent from the benchmark lending rate for customers with sound credit history, the bank said.

SECURITIES TIMES

- The China Banking Regulatory Commission rolled out specific measures on Thursday asking financial institutions to facilitate loan renewals for eligible small and micro enterprise without limited frequency.

SHANGHAI DAILY

- The Shanghai Audit Office reported that 3.09 billion yuan ($498.8 million) from 67 government-invested or dominated projects was misappropriated in 2013, while about 24 projects had cost overruns on unauthorised changes on project construction or deviation from original pricing plan.

PEOPLE'S DAILY

- China should take the Sino-Japanese War of 1894 as a lesson and be alert to the challenges presented by hegemonism and power politics, the paper said in a commentary.

Britain

The Times

RECKITT TO INVEST 100 MLN STG IN HULL R&D

(http://thetim.es/1rErYAW)

Reckitt Benckiser Group Plc said it would spend 100 million pounds creating a research and development facility for its consumer healthcare division in Hull.

UNIPART AUTOMOTIVE COLLAPSES WITH LOSS OF 1,250 JOBS

(http://thetim.es/1qDfryc)

Almost 1,250 British jobs are lost as one of the largest independent suppliers of car parts, workshop tools and garage equipment, Unipart, was plunged into administration.

The Guardian

ROYAL MAIL SHOULD TAKE LEGAL ACTION OVER UNIVERSAL DELIVERY MANDATE, UNION SAYS

(http://bit.ly/1phoqi2)

Trade unionists have called for Royal Mail Plc to take legal action if its mandate to deliver to even the most remote homes in the UK comes under threat.

BARCLAYS DEFENDS ITSELF AGAINST US ALLEGATIONS OVER 'DARK POOL' TRADING

(http://bit.ly/1nF9xdK)

Barclays Plc is mounting a vigorous defence against allegations that it defrauded its customers - accusations levelled by the US attorney general last month that sparked a fall in its share price and led to customers withdrawing their business.

The Telegraph

40 MLN STG 'BRIBE' FOR COMMUNITIES TO CONSIDER RADIOACTIVE WASTE DUMP BENEATH THEM

(http://bit.ly/UwcDUx)

Communities are to be paid 1 million pound a year simply to discuss the possibility of having a radioactive dump built beneath them, under the latest Government attempts to find a burial site for Britain's nuclear waste.

OFFSHORE WIND FARMS IN DOUBT AS SUBSIDY POT CAN FUND JUST ONE PROJECT

(http://bit.ly/1lBhriF)

Wind farm developers who fail to secure a subsidy contract this year will be forced to wait and attempt to secure funding in future years, with no guarantee of how much money - if any - will be available.

Sky News

BALFOUR AND CARILLION IN 3 BLN STG MERGER TALKS

(http://bit.ly/1pg4g86)

Two of Britain's biggest construction firms Balfour Beatty Plc and Carillion Plc are in merger talks to create a 3 billion pound powerhouse whose flagship projects would include London's Olympics Aquatics Centre and the redevelopment of Liverpool's Anfield home.

CABLE TO LAUNCH PROBE INTO COMET LIQUIDATORS

(http://bit.ly/1ojbnjF)

Business Secretary Vince Cable will say on Friday that the Insolvency Service, a Government agency, is referring three partners of Deloitte, the professional services firm, to ICAEW, which has the power to impose substantial fines or strip accountants of their licence to operate.

Fly On The Wall Pre-market Buzz

FUTURES:

Near 7:00 am ET:
S&P: -5 vs. fair value
Dow: -46 vs. fair value
Nasdaq: -17 vs. fair value

ECONOMIC REPORTS

Domestic economic reports scheduled include:
Durable goods orders for June at 8:30--consensus up 0.5%

ANALYST RESEARCH

Upgrades

Deckers Outdoor (DECK) upgraded to Buy from Hold at Jefferies
Gildan Activewear (GIL) upgraded to Outperform from Sector Perform at RBC Capital
Logitech (LOGI) upgraded to Neutral from Underweight at JPMorgan
Northern Trust (NTRS) upgraded to Neutral from Underweight at JPMorgan
Overstock.com (OSTK) upgraded to Buy from Neutral at B. Riley
Patterson-UTI Energy (PTEN) upgraded to Outperform at Raymond James
Petrobras (PBR) upgraded to Overweight from Equal Weight at Barclays
Popular (BPOP) upgraded to Buy from Neutral at Guggenheim
VeriSign (VRSN) upgraded to Neutral from Sell at Citigroup

Downgrades

Amazon.com (AMZN) downgraded to Fair Value from Buy at CRT Capital
Amazon.com (AMZN) downgraded to Neutral from Buy at B. Riley
BreitBurn Energy (BBEP) downgraded to Market Perform from Outperform at Raymond James
Brightcove (BCOV) downgraded to Neutral from Buy at B. Riley
Brightcove (BCOV) downgraded to Sector Perform from Outperform at Pacific Crest
Brightcove (BCOV) downgraded to Sector Perform from Outperform at RBC Capital
Cabot Oil & Gas (COG) downgraded to Neutral from Outperform at RW Baird
Cenovus Energy (CVE) downgraded to Equal Weight from Overweight at Barclays
Centene (CNC) downgraded to Market Perform from Outperform at Wells Fargo
Crown Castle (CCI) downgraded to Sector Perform from Outperform at Pacific Crest
D.R. Horton (DHI) downgraded to Neutral from Buy at MKM Partners
Domtar (UFS) downgraded to Outperform from Top Pick at RBC Capital
Exxon Mobil (XOM) downgraded to Underweight from Equal Weight at Barclays
General Motors (GM) downgraded to Hold from Buy at Deutsche Bank
Informatica (INFA) downgraded to Neutral from Outperform at Credit Suisse
Informatica (INFA) downgraded to Neutral from Outperform at RW Baird
Interpublic Group (IPG) downgraded to Neutral from Overweight at Atlantic Equities
Liberty Property (LPT) downgraded to Perform from Outperform at Oppenheimer
Maxim Integrated (MXIM) downgraded to Neutral from Buy at MKM Partners
Mylan (MYL) downgraded to Neutral from Buy at Citigroup
Netgear (NTGR) downgraded to Market Perform from Outperform at Raymond James
Precision Castparts (PCP) downgraded to Buy from Conviction Buy at Goldman
QR Energy (QRE) downgraded to Market Perform from Outperform at Raymond James
Questcor (QCOR) downgraded to Perform from Outperform at Oppenheimer
Starwood (HOT) downgraded to Market Perform from Outperform at Wells Fargo
WellCare (WCG) downgraded to Market Perform from Outperform at Wells Fargo

Initiations

Burlington Stores (BURL) initiated with a Buy at Buckingham
Ophthotech (OPHT) initiated with a Neutral at Goldman
PetroQuest (PQ) initiated with an In-Line at Imperial Capital
Twitter (TWTR) initiated with a Market Perform at Raymond James

COMPANY NEWS

21st Century Fox (FOXA) will transfer Sky Italia and its 57.4% interest in Sky Deutschland to BSkyB (BSYBY). In exchange for the transfer, 21st Century Fox will receive approximately $9.3B in value from BSkyB comprised of approximately $8.6B in cash and BSkyB’s 21% interest in National Geographic Channels International, raising 21st Century Fox’s ownership stake to 73%
Fox (FOXA) promised to to continue share buyback program in FY15
Lloyds (LYG) confirmed late stage settlement discussions with agencies
GM (GM) said 45 state AGs investigating ignition recalls
Amazon (AMZN) said Fire Phone can be viable product independently
James Schiro retired from the board of Goldman Sachs (GS), PepsiCo (PEP) due to health reasons

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Aon plc (AON), Arctic Cat (ACAT), Prosperity Bancshares (PB), Silicon Laboratories (SLAB), Covidien (COV), Stanley Black & Decker (SWK), Basic Energy (BAS), Deckers Outdoor (DECK), Sensient (SXT), Universal Health (UHS), Olin Corp. (OLN), Southside Bancshares (SBSI), Cape Bancorp (CBNJ), NewBridge Bancorp (NBBC), Dime Community (DCOM), Symetra Financial (SYA), Marketo (MKTO), Reinsurance Group (RGA), Celestica (CLS), LogMeln (LOGM), Republic Services (RSG), SPS Commerce (SPSC), Leggett & Platt (LEG), Altera (ALTR), QLogic (QLGC), Constant Contact (CTCT), Validus (VR), Ingram Micro (IM), Bryn Mawr Bank (BMTC), Dolby (DLB), AtriCure (ATRC), Proofpoint (PFPT), NetSuite (N), VeriSign (VRSN), Mellanox (MLNX), Pebblebrook Hotel (PEB), C.R. Bard (BCR), Freescale (FSL), Flextronics (FLEX), Chubb (CB), Qlik Technologies (QLIK), Abaxis (ABAX), BJ's Restaurants (BJRI), Principal Financial (PFG), MDC Partners (MDCA), WSFS Financial (WSFS), Align Technology (ALGN), Pacific Biosciences (PACB), Echo Global (ECHO), Visa (V), Starbucks (SBUX), Netgear (NTGR), RF Micro Devices (RFMD), Monolithic Power (MPWR), Pandora (P), Acacia Research (ACTG), Lattice Semiconductor (LSCC), Columbia Sportswear (COLM), Datalink (DTLK)

Companies that missed consensus earnings expectations include:

Amazon.com (AMZN), Riverbed (RVBD), WABCO (WBC), Heritage Commerce (HTBK), WellCare (WCG), Builders FirstSource (BLDR), Simpson Manufacturing (SSD), Glacier Bancorp (GBCI), First Business Financial (FBIZ), Key Technology (KTEC), Gigamon (GIMO), Callaway Golf (ELY), Tempur Sealy (TPX), Altra Holdings (AIMC), Monarch Casino (MCRI), Federated Investors (FII), KLA-Tencor (KLAC), SBA Communications (SBAC), IGI Laboratories (IG), National Bank (NBHC), Spectranetics (SPNC), Uroplasty (UPI), Streamline Health (STRM), TESARO (TSRO), Heritage Financial (HBOS), Encore Wire (WIRE)

Companies that matched consensus earnings expectations include:

Barnes Group (B), Investors Bancorp (ISBC), Hancock Holding (HBHC), Universal Truckload (UACL), Shore Bancshares (SHBI), Digi International (DGII), Microsemi (MSCC), Informatica (INFA), Mettler-Toledo (MTD), Stericycle (SRCL), Oritani Financial (ORIT), Swift Transport (SWFT), Cerner (CERN), Regal Entertainment (RGC), HomeAway (AWAY)

NEWSPAPERS/WEBSITES

Google (GOOG) to buy Twitch for $1B, VentureBeat reports
China Telecom (CHA) to start selling Microsoft's (MSFT) Xbox One in September, WSJ reports
Intel (INTC) to launch Core M for use in notebook/tablet models in Q4, DigiTimes says
Herbalife hires ex-Biden chief Alan Hoffman to fend off regulators, NY Post reports
Russian watchdog looks to bar certain McDonald's (MCD) products, Reuters reports
Loan write down standards changed for non-U.S. banks, NY Times reports
Ford (F) shares look attractive, Barron's says

SYNDICATE

Advanced Drainage Systems (WMS) 14.5M share IPO priced at $16.00
Applied Genetic (AGTC) 2M share Secondary priced at $15.00
Compressco (GSJK) 15.28M share Secondary priced at $23.50
DragonWave (DRWI) files to sell C$21.5M of units
El Pollo Loco (LOCO) 7.142M share IPO priced at $16.00
Farmland Partners (FPI) 3.717M share Secondary priced at $12.50
Innocoll (INNL) 6.35M share IPO priced at $9.00
Ocular Therapeutix (OCUL) 5M share IPO priced at $13.00

Let's take a look at the amount of
settlements/fines from various banks and financial institutions around the world
since the crisis. There are probably a lot of settlements/fines I have missed, frankly the amount below is already staggering, so this is a very rough estimate. Some perspective, most of these individual banks have now paid more in fines then the value of most countries GDP's. Total tally from the listed Fines/Settlements below is $163,007,800,000. Reminder: Jail time served by any board members or CEO's of the following TBTF list=0. #FreeCorzine. Meanwhile, Supreme Leader Obama is going on and on about making the system "fair" and for the people to stop being so "cynical" and instead be more "hopeful," while the same people who caused the last financial crisis are the same people still in charge.

2006

*AIG 1.6 Billion Settlement with SEC, New York
State over securities fraud

2008

*Bank of America $8.4 Billion Countrywide
Predatory Lending Settlement

2010

*Goldman Sachs $550 Million Settlement to SEC
for Subprime Mortgage CDO

2011

*KPMG $37 Million Settlement over Auditing at
Wachovia

*Wells Fargo $590 Million Settlement in Claims
over Wachovia

*Bank of America $8.5 Billion Settlement with
BNY Mellon over Mortgages

*Bank of America $1.6 Billion Assuared Guarantee
Settlement

*Bank of America $1.5 Billion Fannie Mae
Settlement

*Citigroup $285 Million Settlement with SEC over
Fraud Charges

*UBS $2.5 Million Fine to FINRA over Lehman
Notes

2011 Total $12,514,000,000

2012

*Deutsche Bank $202 Million to Settle Misleading
Department of Housing and Urban Development on Mortgages

*JPM $1.8 Billion Settlement Nationwide
Settlement over Improper Foreclosures

*JPM $269.9 Million Settlement with SEC over
Creation and Underwriting of MBS

*JPM $20 Million Settlement Mishandling of
Lehman Funds

*Ally/GMAC, BofA, Citi, JPM, Wells Fargo $25
Billion National Mortgage Settlement

*UBS 1.5 Billion Settlement over Rate
Rigging

*Barclays $453 Million Settlement over Libor
Probe

*Bank of America $2.4 Billion Merrill Lynch
Securities Fraud Settlement

*Bear Stearns $275 Million Settlement with
Shareholders

2012 Total $31,919,000,000

2013

*JPM $13 Billion Civil Settlement with Justice
Department for Mortgage Lending Practices

*JPM $110 Million Settlement on manipulation of
Japanese version of Libor

*JPM $4.5 Billion to 21 Institutional Investors
to Settle losses tied to Mortgage-Backed Securities

*JPM $100 Million Settlement to CFTC for London
Whale Trades

*JPM $920 Million Settlements with OCC, SEC,
FED, UK Fin. Conduct Authority over London Whale

*JPM $410 Million Settlement over California
Electricity Rigging

*JPM $5.1 Billion FHFA Settlement

*Deutsche Bank $1.9 Billion Settlement with FHFA

*Deutsche Bank €725 Million Settlement for
Euribor and Yen Libor Rigging

*Bank of America $11.2 Billion Fannie Mae
Settlement

*Bank of America $2.9 Billion Settlement with
FED and OCC

*Bank of America $1.7 Billion MBIA Settlement

*Bank of America $131.8 Million SEC Settlement
over Mortgage Deals

*Societe Generale €446 Million Settlement
Euribor Manipulation

*RaboBank $475 Million Settlement over Libor
Manipulation

*UBS $885 Million Settlement over FHFA Lawsuit

*RBS €391 Million Interest Rate Rigging

*Goldman Sachs & Morgan Stanley $557 Million
Settlement over Foreclosures

*Wells Fargo $541 Million Fannie Mae Loan
Settlement

*MF Global $100 Million to CFTC

*Citigroup $3.5 Billion FHFA Settlement

2013 Total $49,591,800,000

2014

*JPM $2.6 Billion Settlement related to
Madoff Fraud

*Morgan Stanley $1.25 Billion Mortgage
Settlement

*Bank of America $6.3 Billion Settlement of
Mortgage Securities Suit

*Citi $7 Billion Settlement for Mortgage
Probe

*US Bancorp $200 Million Settlement with DOJ
over bad Mortgage-Loan Apps

*Credit Suisse $885 Million Settlement over
FHFA

*JPM $4 Billion Settlement over FHFA
Lawsuit

*Deutsche Bank $1.9 Billion Settlement over
FHFA Lawsuit

*Credit Suisse Guilty with $2.6 Billion fine
over Tax Evasion

*Bank of America $16.6 Million Settlement over
Sanctions Violations

*Bank of America $9.5 Billion FHFA Settlement

*Morgan Stanley $275 Million SEC Settlement over
Risky Mortgages

*Citigroup $5 Million SEC Settlement over
Lavaflow

*BNP Paribas $8.9 Billion PLEADS GUILTY

*Pending Bank of America $13 Billion Settlement
over U.S. Mortgage Probe

2014 Total $58,431,600,000

Total Penalties $163,007,800,000.

Submitted by David Stockman of Contra Corner blog,

The attached Barron’s article appeared in December 2007 as an outlook for the year ahead, and Wall Street strategists were waxing bullish. Notwithstanding the advanced state of disarray in the housing and mortgage markets, soaring global oil prices and a domestic economic expansion cycle that was faltering and getting long in the tooth, Wall Street strategists were still hitting the “buy” key. In fact, the Great Recession had already started but they didn’t have a clue:

Against this troubling backdrop, it’s no wonder investors are worried that the bull market might end in 2008. But Wall Street’s top equity strategists are quick to dismiss such fears.

Indeed, with the S&P 500 at an all-time high of 1460, the dozen top Wall Street prognosticators surveyed by Barron’s anticipated still more index gains during 2008:

….. the dozen seers we’ve surveyed all have penciled in higher stock prices in 2008, although their estimated gains vary widely, from 3% to 18%. On average, the group sees the Standard & Poor’s 500 at 1,640 by the end of next year….

That 12% gain didn’t happen! The market ended 2008 in an altogether different place—–that is, about 45% lower at around 900.And is shown below it still wasn’t done, until the capitulation low was reached in early March 2009 at 675.

In truth, this Barron’s article needs no time stamp. Every one of the arguments being made today were trotted out in almost identical form then. Front and center was the usual canard that the market is cheap on a forward PE basis. For what was surely the 17th time in as many years, Goldman’s Abby Joseph Cohen claimed the market was trading at well below its long term multiple:

….the S&P 500 trades today at just 15.6 times average 2008 estimated earnings — well below the average P/E of 18.6 times earnings during periods when inflation was at similarly muted levels in the past 57 years, notes Goldman’s Cohen.

There were three big clouds in Cohen’s perennially bullish crystal ball.

First, inflation didn’t stay so benign. During the next year oil soared to $150 per barrel, bringing the CPI up by 2.9%.

Secondly, 2008 earnings did not come in at $100 per share per the Wall Street hockey-stick, but plunged to $55 on a so-called “ex-items” basis (excluding one time or non-recurring expenses which continuously seem to recur anyway). And actual 2008 earnings for the S&P 500 came in at just $15 on a honest GAAP basis as reported to the SEC under penalty of criminal charges for deliberate misstatement.

But most importantly, Cohen’s 57 years of historical benchmarks were irrelevant. That’s because these historical cycles reflected a reasonably vibrant mechanism of “price discovery” based on traders assessing, weighing and perpetually re-calibrating the in-coming facts from the macro-economy and individual company performance. But by December 2007, price discovery had long ago been destroyed by the Greenspan era policy of financial repression, wealth effects and the Fed’s “put” under the market averages.

Like now, the short-interest had been driven out of the market and, as is evident from the chart above, the fast money crowd had been handsomely rewarded for buying the dips—-confident that the Fed had their backs. Indeed, the bullish case was overwhelming pinned to the expectation that the Fed and other central banks would not let the economy falter, and that a new round of interest rate cuts and other stimulus initiatives would keep the party going:

THE STREET’S BULLISH consensus is particularly impressive considering that all 12 strategists also take a dim view of the U.S. economy’s prospects and expect the Fed to keep cutting interest rates to spur spending.

….Although Wall Street was bitterly disappointed by the Fed’s decision Tuesday to cut interest rates by just a fourth of a percentage point instead of a half-point, more rate cuts could be on tap in 2008, both in the U.S. and Europe. In the meantime, the U.S. central bank took a bold step Wednesday to ease the global credit crunch by announcing plans to offer up to $40 billion in special loans to banks in coming days. Central banks in Europe and Canada are planning similar measures.

Meanwhile, the facts on the ground in the financial markets were getting worse by the day.

Stock buybacks and cash M&A deals were at peak historical levels, thereby adding further momentum to a market that was already trading upward on a one-way basis. Likewise, the junk bond market had exploded to new heights, as had issuance of other dodgy late cycle securities like “cov lite” term loans, pay-in-kind junk bonds and collateralized loan obligations (CLOs), which amount to leveraged funds which issue debt against debt.

And this was to say nothing of Wall Street balance sheets which were bloated with giant inventories of sub-prime and other low grade mortgagees waiting to be sliced and diced into CDO’s, CDOs squared and other toxic exotica. All of this financed on the margin with “hot money”—that is, repo and unsecured wholesale credit.

Beyond this, the LBO financing market was totally out of control, sending a tsunami of cash into the stock market to buy out public companies at absurdly high double digit multiples of cash flow. In the Great Deformation, I tracked 30 mega-LBOs during this period which were taken out at a combined market value of about $500 billion, causing $375 billion of fresh cash to flow to stockholders. Like today, the latter was funded with massive new layers of junk bonds, PIK bonds, second lien loans and other bank credit.

Needless to say, the foundation underneath the market was rotten because honest price discovery was no longer operating. The momentum from vast inflows of underpriced debt and dip-buying by hedge funds betting on the Fed’s “put” caused the actual fundamentals to be largely ignored. For instance, during late 2007 the reported LTM earnings per share for the S&P 500 was about $75. That means the actual PE multiple was 19.5X as the Barron’s year-end revelers talked up the market for the year ahead. It was sitting, therefore, at a dangerously high plateau even by historic standards.

When the market plunged by nearly 50% during the latter months of 2008 and early 2009, the speed and violence of the decline was striking evidence that monetary central planning has doubly destructive effects on the financial markets. In the first instance, it causes bubbles to inflate to exceedingly artificial and excessive levels owning to the inflow of cheap cash and momentum chasing bids from the Fed-following fast money. But in the process it also vaporizes the braking and checking mechanisms—such as short-sellers buying to harvest their gains—that allow markets to correct without collapsing.

A case in point is the Russell 2000, which had climbed a 5-year wall of worry from about 350 to 820 as of late 2007. But when the market broke hard after the Lehman event, nearly the entire 20%/year compound gain was ionized in just 15 violent trading days during the next several months. In short, by turning financial markets into gambling casinos, the central banks have sown the seeds of vast and recurring financial instability. Bubble tops get more and more exaggerated. Bubble collapses become increasingly swift, violent and overdone.

Needless to say, after six years of ZIRP, QE and generally far more extreme monetary expansion than occurred in the run-up to the 2008 financial crisis, every one of the bubble top symptoms described above and completely ignored by the Wall Street bulls cited in the timeless Barron’s piece posted below have reappeared. If anything, the carry trades, vast chains of asset re-hypothecation and momentum based speculation is far more extreme than last time around; and the broad market is also once again precariously positioned at the tippy top of its historic trading range.

The honest LTM earnings of the S&P 500, for instance, are now about $100 per share, adjusted for a pension accounting change that did not exist in 2007. So we are right at that very same 19.5X valuation that was posted at the top last time around. But this replay is occurring in a market that is far more precarious—that is, it is faced with interest rate normalization in the years ahead and that will cause earnings to fall. Also, it is a market that reflects profits rates on income and GDP that are off the charts historically, and are far more likely to regress to the mean than stay perched at their current nosebleed levels.

And most of all the business cycle today is already 60 months old, but unlike 2007 it is far weaker and less stable. Indeed, unlike the 2002-2007 credit-fueled recovery, this “peak debt” constrained expansion has not even recovered its previous cyclical high based on economic fundamentals like breadwinner jobs, real capital investment in plant and equipment and real household incomes.

So based on the stock chart below, now might be a good time to re-read the Barron’s piece from late 2007. Its real message, as it turned out, was “look-out below!”

By Kopin Tan at Barron’s, December 17, 2007

THE STOCK MARKET HAS JUST EXPERIENCED its most volatile year since the current bull market began. Corporate profits shrank in the third quarter for the first time since early 2002. Record oil prices, housing deflation, rising loan defaults and tighter credit conditions threaten to tip the U.S. economy into recession. And a few weeks ago, it looked as if 2007′s gains might disappear before the first strains of Auld Lang Syne.

Against this troubling backdrop, it’s no wonder investors are worried that the bull market might end in 2008. But Wall Street’s top equity strategists are quick to dismiss such fears.

Indeed, the dozen seers we’ve surveyed all have penciled in higher stock prices in 2008, although their estimated gains vary widely, from 3% to 18%. On average, the group sees the Standard & Poor’s 500 at 1,640 by the end of next year (editor’s note: actual was 45% lower at 903), or about 10% higher than the recent 1486 with global growth and a benevolent Federal Reserve serving as twin crutches for the aging bull.

THE STREET’S BULLISH consensus is particularly impressive considering that all 12 strategists also take a dim view of the U.S. economy’s prospects and expect the Fed to keep cutting interest rates to spur spending. Since September, Fed Chairman Ben Bernanke and his colleagues have lowered the benchmark federal-funds rate three times, to 4.25% from 5.25%, including Tuesday’s quarter-point reduction. Still, none of the leading strategists is forecasting a recession, although one Wall Street economist — Richard Berner of Morgan Stanley — last week predicted a “mild recession,” with no growth for a year.

“We expect the U.S. economy to show the strains of the deflating housing market and credit-market disruptions in early 2008,” says Goldman Sachs strategist Abby Joseph Cohen. But “recession likely will be avoided, due to strength in exports and capital spending by corporations and government.”

Credit Suisse equity strategist Jonathan Morton agrees. “Conditions for a hard economic landing — like slack in the labor market and weak balance sheets — are still largely absent,” he says……
IF THE CASE FOR U.S. STOCKS is built on global growth and lower interest rates, other factors, too, suggest that the market is heading higher. For one, Washington is determined to avert a financial disaster, particularly in an election year, and already has unveiled a plan to freeze mortgage-rate re-sets on some teaser loans to stem an expected wave of foreclosures among troubled borrowers.

Although Wall Street was bitterly disappointed by the Fed’s decision Tuesday to cut interest rates by just a fourth of a percentage point instead of a half-point, more rate cuts could be on tap in 2008, both in the U.S. and Europe. In the meantime, the U.S. central bank took a bold step Wednesday to ease the global credit crunch by announcing plans to offer up to $40 billion in special loans to banks in coming days. Central banks in Europe and Canada are planning similar measures.

Another potential plus for stocks: Investment funds controlled by foreign governments are likely to step up their hunt for attractive assets in the U.S., which still is the world’s largest economy. While buying power has been shifting from consumer countries like the U.S. to commodity producers, “some of that wealth is starting to get recycled back to the consumer countries,” says Morgan Stanley’s chief global equity strategist, Abhijit Chakrabortti. “It isn’t going just to traditional investments like Treasuries, but right to the capital-starved parts of the U.S. market that need it most.”
The latest example is Abu Dhabi’s $7.5 billion investment in Citigroup. Merrill Lynch expects so-called sovereign-wealth funds to double or triple their share of riskier global assets by 2010, nudging the tally to $8 trillion by 2011.

IN 2007, WORRIED INVESTORS LUNGED for the safety of bonds. Treasuries may hold less appeal next year, the Street’s leading strategists say. Many of those we surveyed see the yield on 10-year Treasuries, now near a three-year low of 4%, increasing in 2008, albeit at a genteel pace that won’t spook the market.

The strategists note, as well, that bull markets rarely end when the earnings yield on stocks — now around 6% — is higher than benchmark bond yields.

S&P 500 earnings are expected to climb 4%, to an average of $92 a share this year. The Street’s 2008 estimates range from a low of $85.65 to just over $100. Corporate profits are likely to decline in the early part of the year, but face easier comparisons with ’07 results in the second half.

While some fear this year’s peak profit margins will wane, Bear Stearns’ Jonathan Golub says “margins will prove sticky at a high level” after years of cost-cutting. A 35% decline in leverage (outside of the financial sector) in the past five to seven years has made for healthier balance sheets, and continued stock buybacks are likely to keep boosting earnings per share.

Then there’s the market’s modest valuation. As this year has proven, valuation alone is no reason to buy stocks; a low price/earnings multiple failed to lure buyers frightened by falling profits, surging oil prices and steadily worsening news from the housing and banking sectors. That said, the S&P 500 trades today at just 15.6 times average 2008 estimated earnings — well below the average P/E of 18.6 times earnings during periods when inflation was at similarly muted levels in the past 57 years, notes Goldman’s Cohen.

To many strategists, stocks now discount an economic slowdown. Ian Scott, Lehman Brothers’ London-based global equity strategist, says profits conceivably could fall as much as 45% if the U.S. slips into recession. But the stock market likely would fall no more than 10% to 15% from current levels even in this worst-case scenario. Citi’s Levkovich says prices already anticipate earnings growth that is 20% to 25% below the 20-year average. He calls stocks “screamingly cheap relative to bonds.”

……Merrill’s Bernstein was among those to forecast this year’s surge in stock-market volatility, and he continues to steer the firm’s clients toward high-quality bonds, defensive sectors in the U.S. and consumer-oriented sectors abroad — essentially a play on the rise of the overseas consumer. He also likes large-cap stocks in the U.S. and smaller stocks abroad, as well as dividends and cash for more risk-averse investors.

When Bernstein huddles with money managers these days, the No. 1 question he’s asked is: Are financials cheap? Apparently, he isn’t the only one, and some strategists expect bottom-fishing in financials to become a popular sport in 2008.

Its dangers are clear to see. The Financial Select Sector SPDRXLF -0.56%Select Sector SPDR-Financial (XLF), an exchange-traded fund that tracks the financial stocks in the S&P 500, has sunk 20% this year, to the bear-market depths. Financial-services-industry profits are expected to fall further as loan-loss provisions increase, and if home prices — and related mortgage securities — continue to slide. Tighter credit also threatens to choke off the private-equity and merger boom, and a skittish market has discouraged stock offerings, all of which means lesser fees for big brokerage firms.

Given the depth of the housing market’s decline, which is hard to calculate even at this point, bottom-fishers must be prepared to swim deeper and stay underwater longer. Chakrabortti expects financial-company earnings to fall 5% to 10% in 2008, a stark contrast with the Street’s consensus call for 16% profit growth. He thinks financials could pull back another 20% before “the downturn in this credit cycle is fully discounted.”

Thomas Lee begs to differ, however. “While the first half may look like death, second-half earnings will improve as the rate cuts take effect” and as easier comparisons take hold, says Lee, who became JPMorgan’s main U.S. strategistafter Chakrabortti left for Morgan Stanley earlier this year. A year ago, when he was still at JPMorgan, Chakrabortti had advised investors to underweight financials — but Lee now expects the sector to “lead markets higher in 2008, even with the worst of the bad news on structured investment vehicles and write-offs still ahead.”

Rate cuts and a steepening yield curve will help. Also, the financial sector swiftly purges itself of bad businesses and excess capacity — one reason the sector has suffered consecutive bad years only once in the past four decades, and why a down year frequently is followed by double-digit gains the next year, Lee says. He thinks a consensus will emerge in 2008 that financial stocks present investors with the most appealing risk-reward profile.

WHAT ABOUT OTHER MARKET SECTORS? Deutsche Bank Alex. Brown’s Larry Adam likes technology’s global prospects as the world strides toward wireless transmission of voice, data and video. “All those buildings are being built in China, and the next step is to make them more efficient,” he says. The ongoing push to get the world wired spells technology demand.

In addition to benefiting from global growth, technology has no direct exposure to housing. But Bear Stearns’ Golub says that between 20% and 30% of technology spending is tied to the weakening financial sector, and he questions whether that has been considered fully by technology bulls.

Credit Suisse’s Jonathan Morton likes pharmaceutical stocks, despite worries about the political risks to industry profits. Among other things, he says, drug companies have plenty of “self-help potential” — that is, the ability to reduce their sales forces relatively easily, cut costs and take on debt. By levering their balance sheets to just half the level of the market norm, they could raise enough cash to buy back 10% of the sector’s shares.

Consumer-staples stocks have been a popular refuge in times of market turmoil, but this sector now holds limited appeal for Lehman’s Scott. “Valuations have gotten quite high, and pressures from high raw-material costs may not be as fully considered,” he notes.

Consumer Discretionary Select SPDRXLY is down 15% from its July peak. But consumer-discretionary stocks rise and fall with oil prices and the Fed’s benchmark interest rate. As both retreat next year, the sector will enjoy a “double boom,” ISI’s Trahan says.

“The consumer is not dead!” declares Citi’s Levkovich. While the decline in home sales and home values has been pernicious, household net worth increased some $18.5 trillion in the past five years, with just $4.4 trillion coming from real-estate gains. What’s more, the richest 20% of Americans drive 40% of the country’s consumer spending, and their outlays are less restrained by rising gasoline prices and higher mortgage rates.

Compared with the average American, the rich also have a smaller portion of their net worth tied up in homes — and more of it invested in the financial markets…..

Yet if Wall Street’s strategists are right about the market, the rich will get richer in 2008, along with most other equity investors. Chances are, the ride won’t be smooth and the direction won’t always be clear — but by now we’re used to that.

Read more here - http://online.barrons.com/news/articles/SB119768725735731187

EU finalises Russian sanctions as BP warns of impact on business (FT)
Geopolitical Risk Rises for Global Investors (BBG)
Jaded Argentines brace for looming debt default (Reuters)
In Argentina, Mix of Money and Politics Stirs Intrigue Around Kirchner (WSJ)
Mom ‘Trusting God’ for Ebola-Infected U.S. Doctor’s Life (BBG)
Thanks NSA: Tech Companies Reel as NSA's Spying Tarnishes Reputations (BBG)
Goldman unit eyes foray into China amid metals financing scandal (Reuters)
Cash out time: London’s Gherkin Tower Offered for Sale by Its Lenders (BBG)
Apenomics strikes again: McDonald’s Japan axes profit guidance amid food safety scandal (FT)
Do you see what happens Larry when you are the only USDJPY bid? Nomura Profit Falls More Than Estimated on Broking Slump (BBG)
UBS, Deutsche drawn into ‘dark pool’ probes (FT)
Morgan Stanley Said to Boost Junior Banker Salaries 25% (BBG)
Ban gold, diamonds? Gold, diamonds feed Central African religious violence (Reuters)
Italian police seize €104m from Nomura after fraud probe (FT)
Deutsche Bank Reports Rise in Pretax Profit (WSJ)

Overnight Media Digest

WSJ

* Israel's leaders said they were escalating the military campaign in Gaza and told the country to prepare for a prolonged operation, defying international demands for an immediate cease-fire. (http://on.wsj.com/1rLLcop)

* Pro-Russia rebels in eastern Ukraine saw some of their worst battlefield setbacks in weeks Monday as the West agreed on tougher sanctions aimed at forcing Moscow to cut support for the militias-posing fresh challenges on two fronts for Russian President Vladimir Putin. (http://on.wsj.com/UHNOF3)

* The battle for America's poorest consumers intensified on Monday with Dollar Tree Inc's agreement to buy rival Family Dollar Stores Inc for about $8.5 billion. (http://on.wsj.com/X3tX58)

* Negotiations between Bank of America Corp and the Justice Department have hit a snag over whether the firm should pay a cash penalty for the dealings of Countrywide Financial Corp and Merrill Lynch & Co Inc. (http://on.wsj.com/1rzefYR)

* Money-laundering allegations against Argentine businessman Lázaro Báez are focusing attention on the wealth of Argentine President Cristina Kirchner and her late husband Néstor Kirchner. (http://on.wsj.com/1tV7Cl8)

* A Chinese government anticorruption investigation that already has swept aside dozens of officials is now stretching into Canada. A shake-up has hit state-run China National Petroleum Corp.'s Canadian operations and a billion-dollar oil-sands project is now in limbo. (http://on.wsj.com/WL2fu2)

* Zillow Inc and Trulia Inc, the two online real-estate giants that announced plans to merge, have a message for real-estate agents that have grown increasingly concerned about their market clout: We're partners, not competitors. (http://on.wsj.com/1o6txQV)

* Hundreds of small and regional banks are clinging to a practice that can cause consumers to incur multiple overdraft fees in the same day, even as the biggest lenders are backing away. (http://on.wsj.com/1l8XwHW)

* Oracle Corp cut its yearly stock-option grants to Chief Executive Larry Ellison and other top executives nearly a year after a wave of shareholder opposition to compensation paid to the chief. (http://on.wsj.com/1l8VvM1)

Officials from China's State Administration for Industry and Commerce conducted unannounced visits on Monday to some of Microsoft Corp's local offices, making it the latest U.S. company to be targeted by an antitrust investigation in China.

Bank of Cyprus has raised 1 billion euros ($1.34 billion) from selling shares to investors including U.S. private equity specialist Wilbur Ross and the European Bank for Reconstruction and Development.

Aberdeen Asset Management Chief Executive Officer Martin Gilbert shrugged off the investment group's fifth successive quarter of outflows as its exposure to emerging markets proved costly.

Dollar Tree has said it will buy Family Dollar for $8.5 billion, marrying two of the United States' largest discount stores at a time when changing consumer habits are piling pressure on retailers across the country.

China's Baidu, a search engine that has mimicked U.S. technology group Google Inc's biggest innovations, is now experimenting with its own version of a "highly autonomous" self-driving car.

NYT

* An international court has awarded the shareholders of the defunct Yukos oil company more than $50 billion, ruling that the Russian government wrongly seized the company from one of the country's most powerful oligarchs. (http://nyti.ms/1tUR50D)

* China has named Microsoft among the foreign technology companies likely to come under tighter government checks for security risks after the revelations by Edward Snowden about the U.S. government surveillance. Officials from the State Administration for Industry and Commerce visited Microsoft offices in Beijing, Shanghai, Guangzhou and Chengdu, Joanna Li. (http://nyti.ms/1nBlXCs)

* The United States and Europe agreed to sharply escalate economic sanctions against Russia amid worries that Moscow is stepping up its intervention in Ukraine and may be setting the stage for an outright invasion. The two sides settled on measures that would target Russia's financial, energy and military sectors. (http://nyti.ms/1qcc2l1)

* Dollar Tree Inc proposed an $8.5 billion takeover of Family Dollar Stores Inc that will form a new giant of the dollar-discount industry. By buying Family Dollar, Dollar Tree will expand markedly, to 13,000 stores in 48 states and in Canada, as well as to $18 billion in annual revenue. (http://nyti.ms/1rZLeGN)

* Wall Street investment banks, led by JPMorgan Chase & Co and Goldman Sachs Group Inc, are estimated to have collected, or will soon collect, nearly $1 billion in fees over the last three years advising and persuading American companies to move the address of their headquarters abroad. (http://nyti.ms/1Asfmzz)

* Clarence Otis, chairman and CEO of Darden Restaurants Inc, will step down when the board chooses his successor, or by the year end. The move came on the day that Darden completed the sale of the Red Lobster, the seafood chain that gave rise to the restaurant's empire, in a transaction that was hotly opposed by the activist investors. (http://nyti.ms/1tl8Yba)

* Morgan Stanley plans to increase base salaries for junior and mid level bankers by as much as 25 percent. The change will apply to associates and vice presidents in investment banking and capital markets. The bump in base salary is intended to provide the bankers with more cash in the near term, since bonuses are often deferred into the future. (http://nyti.ms/1nPCkwl)

* The Lloyds Banking Group agreed to pay more than $380 million to British and United States authorities to resolve investigations into the manipulation of rates, including one used to determine fees paid by Lloyds for taxpayer-backed funding during the financial crisis. (http://nyti.ms/1rz3GoL)

* The Federal Aviation Administration said on Monday it planned to fine Southwest Airlines $12 million for repair violations on some of its Boeing 737 jets, citing some faulty repairs the airlines made since 2006. Southwest has 30 days to respond to the complaint and can negotiate to reduce the fine. (http://nyti.ms/1tlcO4c)

* Governor Andrew Cuomo delivered a feisty and unrepentant defense of his handling of an anti-corruption panel he created and then abruptly shut down, after five days in seclusion during which he encountered some of the harshest criticism he has faced as governor. (http://nyti.ms/X7yDqG)

* Virgin America, the sleek low-cost American airline partly owned by Richard Branson, filed for an initial public offering on Monday after posting its first annual profit. The airline gave a placeholder fund-raising target of $115 million, a figure used only to determine filing fees. (http://nyti.ms/1oE8Ctq)

* A judge issued a sweeping victory Monday for Rochelle Sterling, ruling that she had the authority to sell the Los Angeles Clippers to the businessman Steve Ballmer, who has agreed to pay a record $2 billion for the franchise. (http://nyti.ms/1AstfO0)

Canada

THE GLOBE AND MAIL

* Things became chaotic even before a Toronto mayoral election debate began on Monday as Mayor Rob Ford and his team drew police intervention during a dispute with organizers.(http://bit.ly/1lQP7J6)

* A dispute between Toronto's city council and Ontario's alcohol licensing board has left many new restaurants in the city facing months-long delays in obtaining a liquor licence, which they say may prevent them from opening at all. (http://bit.ly/1nCc7Ar)

Reports in the business section:

* Ottawa will auction a prime chunk of the public airwaves in March next year, raising at least C$162-million for federal coffers and it hopes to prompt more competition in Canada's mobile phone market. (http://bit.ly/1l9c8XJ)

NATIONAL POST

* Toronto Deputy Mayor Norm Kelly says it is "not unreasonable" to call on integrity commissioner Janet Leiper to complete an investigation into allegations of misconduct by Toronto Mayor Rob Ford and Councillor Doug Ford in time for the October provincial election. (http://bit.ly/1nCtuAW)

* The Canadian Department of Foreign Affairs, Trade and Developments wants to operate a shuttle service for employees between its three main buildings, two of which are only a three-minute walk apart. The department outlined the plan for the dedicated shuttle service in a tender posted earlier this month on a government website. (http://bit.ly/1k5eT1f)

FINANCIAL POST

* Merger and acquisition activity is on the rise globally, and some 40 percent of Canadian firms expect to grow through deals over the next three years, a survey by Grant Thornton LLP said.(http://bit.ly/1AsCtdh)

* The Canada-based energy firm Athabasca Oil Corp's shares fell more than 7 percent on Monday as the company sought to reassure investors over receipt of a cash payment from Chinese energy giant, PetroChina Co Ltd. (http://bit.ly/1rMuIwk)

Hong Kong

SOUTH CHINA MORNING POST

-- The head of Hong Kong's de facto central bank has rejected calls from some lawmakers to use part of the city's HK$3 trillion Exchange Fund to pay for infrastructure projects or for social welfare. Norman Chan Tak-lam, the chief executive of the Monetary Authority, said the fund needs every penny to cope with unexpected financial crises. (http://bit.ly/1uBAoev)

-- One in five diabetics in Hong Kong is under the age of 40 and the number is expected to double by 2030. A Chinese University of Hong Kong study has found that diabetes is being diagnosed in Hongkongers at a younger age, with the median age now 50, down from 57 in 1990. The youngest person with diabetes in the study was just 3 years old. (http://bit.ly/1k4Pgxr)

-- The five leading business chambers in Hong Kong formed a united front to oppose Occupy Central, warning that the pro-democracy civil disobedience movement might damage the city's economy like that caused by the political protests in Thailand. (http://bit.ly/1l8uo3D)

THE STANDARD

-- Singapore is expected to return to Hong Kong an 11-year-old boy who was found wandering along Marina Promenade in the city state last week after he was allegedly dumped by his father. The father has been questioned by Hong Kong police and is out on bail. (http://bit.ly/1zomo6Z)

-- Chun Wo Development will explore overseas business through joint ventures and may introduce strategic shareholders, Chairman Dominic Pang Yat-ting said. (http://bit.ly/1zon24o)

HONG KONG ECONOMIC JOURNAL

-- Investment fund Pacific Alliance Asia Opportunity Fund plans to sell 250 million shares, or 3.3 percent of the issued share capital, of China South City Holdings Ltd raising up to HK$1.025 billion ($132.3 million), according to a share-sale document.

HONG KONG ECONOMIC TIMES

-- The retail portion of the initial public offering of China's pork company WH Group Ltd is seen eight times oversubscribed in Hong Kong, according to market sources.

APPLE DAILY

-- Some 77 percent of 1,249 Hong Kong people interviewed in the past two days said they will not visit McDonald's restaurants in the city in the short term after the latest food scandal, according to a survey conducted by Apple Daily.

Britain

The Times

MYSTERY ABERDEEN CLIENT PULLS OUT 4.2 BLN STG

Fears of a renewed emerging markets sell-off by investors have been fuelled after it was revealed that an anonymous client withdrew 4.2 billion pounds ($7.13 billion) from Aberdeen Asset Management, Europe's largest fund manager. (http://thetim.es/1qHXzCd)

ASTRA ENLISTS RIVALS IN PLAN TO DEVELOP CANCER TESTS

AstraZeneca has signed up Swiss and Dutch rivals to create blood tests to help identify patients that will benefit from its lung cancer drugs. (http://thetim.es/1rZi4HS)

SKY'S THE LIMIT AS GHERKIN SALE LOOMS

Agents have been appointed to sell the "Gherkin" skyscraper in what will be one of the most closely watched property sales in the Square Mile for years. (http://thetim.es/1mWvv60)

The Guardian

LLOYDS SUSPENDS SEVEN PEOPLE AFTER 226 MLN STG BILL FOR RIGGING INTEREST RATES

Lloyds Banking Group have suspended seven employees after it was hit with a 226 million pound bill from regulators on both sides of the Atlantic for rigging crucial interest rates. (http://bit.ly/1uAusSY)

RECKITT BENCKISER SET TO FLOAT U.S. ARM RB PHARMACEUTICALS

Reckitt Benckiser, the consumer goods giant that makes Nurofen and Dettol, plans to spin off its U.S.-based pharmaceutical business. (http://bit.ly/1o7UnIi)

The Telegraph

SHOULD BANKERS HAVE TO SWEAR AN OATH? SIR RICHARD LAMBERT SEEMS TO THINK SO

The head of the review into standards in the British banking industry is this week expected to reignite the question of whether an oath for bankers is needed despite rejecting the idea when producing his original report. (http://bit.ly/X6BnVc)

VIRGIN AMERICA FILES FOR U.S. IPO

Billionaire entrepreneur Richard Branson could be in line for a $220 million windfall, after a bold gamble to launch Virgin America, his low-cost U.S. airline, in the teeth of the biggest crisis the industry had ever seen. (http://bit.ly/1ArCXAp)

Sky News

EX-TESCO CHIEF TO CHAIR STRUGGLING MORRISONS

Andrew Higginson, a former finance director of Tesco , is to become the next chairman of Wm Morrison, the UK's fourth-biggest grocer, as it combats falling sales amid competition from lower-priced rivals. (http://bit.ly/X559tx)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Case-Shiller 20-city home price index for May at 9:00--consensus up 9.9% from last year
Consumer confidence for July at 10:00--consensus 85.5

ANALYST RESEARCH

Upgrades

Albemarle (ALB) upgraded to Buy from Hold at Topeka
Costco (COST) upgraded to Conviction Buy from Neutral at Goldman
Family Dollar (FDO) upgraded to Neutral from Underweight at Piper Jaffray
Ferrellgas Partners LP (FGP) upgraded to Neutral from Sell at Citigroup
Higher One (ONE) upgraded to Overweight from Underweight at Piper Jaffray
MarkWest Energy (MWE) upgraded to Buy from Hold at Wunderlich
Matador (MTDR) upgraded to Outperform from Market Perform at BMO Capital
MicroStrategy (MSTR) upgraded to Outperform from Market Perform at JMP Securities
Sally Beauty (SBH) upgraded to Buy from Neutral at Citigroup
Zions Bancorp (ZION) upgraded to Market Perform from Underperform at Bernstein

Downgrades

AcelRx (ACRX) downgraded to Neutral from Overweight at Piper Jaffray
Alliance Fiber Optic (AFOP) downgraded to Neutral from Buy at B. Riley
Allstate (ALL) downgraded to Market Perform from Outperform at William Blair
Avery Dennison (AVY) downgraded to Hold from Buy at Topeka
Barnes Group (B) downgraded to Hold from Buy at Deutsche Bank
Black Diamond (BDE) downgraded to Neutral from Overweight at Piper Jaffray
BreitBurn Energy (BBEP) downgraded to Neutral from Buy at Citigroup
CoreLogic (CLGX) downgraded to Market Perform from Outperform at Keefe Bruyette
Dollar Tree (DLTR) downgraded to Market Perform from Outperform at BMO Capital
First Potomac (FPO) downgraded to Market Perform from Outperform at Raymond James
Golar LNG Partners (GMLP) downgraded to Neutral from Buy at Citigroup
Horizon Pharma (HZNP) downgraded to Neutral from Overweight at Piper Jaffray
Legacy Reserves (LGCY) downgraded to Neutral from Buy at Citigroup
RBC Bearings (ROLL) downgraded to Neutral from Buy at Goldman
Regal Entertainment (RGC) downgraded to Hold from Buy at Ascendiant
Thoratec (THOR) downgraded to Market Perform from Outperform at Wells Fargo
Trulia (TRLA) downgraded to Hold from Buy at Needham
Vanguard Natural (VNR) downgraded to Neutral from Buy at Citigroup
Wal-Mart (WMT) downgraded to Neutral from Buy at Goldman

Initiations

Abengoa Yield (ABY) initiated with a Neutral at HSBC
Boston Scientific (BSX) initiated with a Neutral at Sterne Agee
St. Jude Medical (STJ) initiated with a Neutral at Sterne Agee

COMPANY NEWS

Darden (DRI) Chairman and CEO Clarence Otis to step down, board to separate roles. The company appointed lead independent director Charles Ledsinger, Jr., as independent non-executive chairman
Darden (DRI) completed sale of Red Lobster to Golden Gate Capital
UBS (UBS) said 'responding to inquiries' on dark pools
Airbus (EADSY) terminated purchase order with Skymark Airlines for A380s
Carlyle Group (CG) to purchase full ownership stake of Acosta from Thomas H. Lee firm
Arrowhead Research (ARWR) CEo Christopher Anzalone told CNBC he is optimistic on Hep B trial data out in Q3 and that the company has enough cash through Phase 3

EARNINGS

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

Aetna (AET), BP (BP), United Therapeutics (UTHR), M.D.C. Holdings (MDC), Spirit Airlines (SAVE), ExlService (EXLS), Headwaters (HW), Portland General Electric (POR), PGT, Inc. (PGTI), Great Southern Bancorp (GSBC), Silicon Motion (SIMO), Anthera Pharmaceuticals (ANTH), Eastman Chemical (EMN), German American Bancorp (GABC), American Financial Group (AFG), Masco (MAS), Seacoast Banking (SBCF), HealthSouth (HLS), Park National (PRK), Advent Software (ADVS), Denny's (DENN), Mavenir Systems (MVNR), Luminex (LMNX), Cognex (CGNX), Innophos Holdings (IPHS), Alliance Fiber Optic (AFOP), Intevac (IVAC), GigOptix (GIG), Ducommun (DCO), Bank of Hawaii (BOH), Integrated Device (IDTI), W. R. Berkley (WRB), XL Group (XL), Plum Creek Timber (PCL), Greenhill & Co. (GHL), Norwegian Cruise Line (NCLH), Heartland Financial (HTLF), J & J Snack Foods (JJSF)

Companies that missed consensus earnings expectations include:

Herbalife (HLF), Medidata Solutions (MDSO), Universal American (UAM), Talisman Energy (TLM), AudioCodes (AUDC), Jacobs Engineering (JEC), HomeStreet (HMST), Crane (CR), Seaspan (SSW), PRGX Global (PRGX), Owens & Minor (OMI), Range Resources (RRC), TriCo Bancshares (TCBK), National Interstate (NATL), PartnerRe (PRE), MicroStrategy (MSTR), CNO Financial (CNO), Peregrine (PSMI), Montpelier Re (MRH), Danaos (DAC), Meru Networks (MERU), Tile Shop (TTS), PDF Solutions (PDFS)

Companies that matched consensus earnings expectations include:

Harris (HRS), Sensata (ST), Stock Building Supply (STCK), Heritage Oaks (HEOP), Harmonic (HLIT), Exactech (EXAC), MiMedx (MDXG)

NEWSPAPERS/WEBSITES

Bank of America (BAC), DOJ talks hit snag, WSJ reports
Toyota (TM) should recall older Camry hybrids, Consumer Reports says
AECOM Technology (ACM) said to acquire Hunt Construction, WSJ reports
Dollar General (DG) rejected chance to bid on Family Dollar (FDO), Bloomberg reports (DLTR)
McDonald's (MCD) China will have to obtain meat from local suppliers, McDonald's Japan to shift to Thailand suppliers, China Daily reports
eBay (eBAY) executives Carges, Doerger sold over $2M in stock, Barron's says

SYNDICATE

Brandywine Realty (BDN) files to sell 18M shares of common stock
Meridian Interstate Bancorp (EBSB) 32.5M share Secondary priced at $10.00
Spark Energy (SPKE) 3M share IPO priced at $18.00
TCP Capital (TCPC) files to sell 5.4M shares of common stock
Zoe's Kitchen (ZOES) files to sell 4.6M shares for holders

Fed Decision-Day Guide: QE Tapering to Inflation Debate (BBG)
Obama says strains over Ukraine not leading to new Cold War with Russia (Reuters)
Siemens to BP Prepare for Downward Russia Business Spiral (BBG)
Paying Ransoms, Europe Bankrolls Qaeda Terror (NYT)
Argentina Banks Preparing Bid to Help Argentina Avoid Default (WSJ)
Obama Weighs Fewer Deportations of Illegal Immigrants Living in U.S. (WSJ)
India Warships Off Japan Show Rising Lure as China Counterweight (BBG)
Hong Kong Popping Housing Bubbles London Can’t Handle (BBG)
Carnage at U.N. school as Israel pounds Gaza refugee camp (Reuters)
Loan Snarl Punishes Spain Builder Backed by Soros, Gates (BBG)
California Health Insurance Rates Rise Up to 88% in ’14 (BBG)
Ending ‘Too Big to Fail’ Could Rest on Obscure Contract Language (BBG)
Upstart trading venue IEX may prompt U.S. market rule change (Reuters)
Cohen Still Beating Hedge Funds After Shutting Down SAC (BBG)
Putin Sets $110,000 Bounty for Cracking Tor as Anonymous Internet Usage in Russia Surge (BBG)

Overnight Media Digest

WSJ

* The European Union and the United States adopted broad economic sanctions against Russia on Tuesday to punish Moscow's unbending stance in the Ukraine conflict. (http://on.wsj.com/1klsySg)

* Members of Argentina's banking association, known as Adeba, are working on a last-minute plan to help the country avoid default, according to people familiar with the idea. The association's plan, which hasn't been completely hashed out among the banks, would entail buying the legal claim and paying off the holdout creditors who are suing Argentina in U.S. courts for full payment on bonds the country defaulted on in 2001. (http://on.wsj.com/1ppxMuZ)

* For months, U.S. President Barack Obama said there were limits to his power to protect people living illegally in the U.S. from deportation. Now, he is considering broad action to scale back deportations that could include work permits for millions of people, according to lawmakers and immigration advocates who have consulted with the White House. (http://on.wsj.com/1xwAdxe)

* Israeli forces pounded Hamas symbols of control and Gaza's only power plant in one of the heaviest bombardments in the three-week conflict, trying to raise pressure on the Islamist group to accept Israel's terms for a cease-fire. (http://on.wsj.com/UJEGje)

* A little-known U.S. telecom company has hit upon a creative strategy that could help the industry shield billions of dollars from tax collectors. In a development that caught Wall Street by surprise, Windstream Holdings Inc was cleared by the Internal Revenue Service to reclassify most of its copper and fiber-optic lines as real estate, which could enable it to cut millions of dollars from its annual tax bill. (http://on.wsj.com/1lbOMkc)

* Drug makers and researchers are increasingly concerned that online chatter could unravel the carefully built construct of the 'blind' clinical trial. (http://on.wsj.com/XcHfMP)

* The slow progress in Sprint's pursuit of T-Mobile is in part tied to the public nature of the deal. With all the details out, there isn't as much pressure to make an announcement. (http://on.wsj.com/1oIWU0G)

* Twitter Inc quieted its doubters, at least for now, over its ability to jump-start shrinking user growth in the shadow of larger rival Facebook Inc. The social media company posted strong results across the board. (http://on.wsj.com/1zrH3ah)

* New York's Department of Financial Services is pushing to install monitors inside the U.S. offices of Deutsche Bank AG and Barclays PLC as part of an investigation into possible manipulation in the foreign-exchange market. (http://on.wsj.com/1s0BInK)

* McDonald's Corp could be treated as a joint employer with its franchisees in labor complaints, according to a National Labor Relations Board legal determination that could have far reaching implications. (http://on.wsj.com/UJ2vb6)

* China confirmed it is investigating whether Microsoft Corp broke its antimonopoly laws, the latest sign of growing commercial and policy tensions between the U.S. and China that are roiling technology companies in both countries. (http://on.wsj.com/1klEvHD)

* FedEx Corp pleaded not guilty Tuesday in San Francisco federal court on 15 charges related to transporting painkillers and other prescription drugs that had been sold illegally. (http://on.wsj.com/1klFjfA)

The Bank of England is set to unveil a tough new regime on Wednesday, aimed at stamping out misconduct in Britain's banking industry. The framework includes powers to claw back bonuses up to seven years after they have been paid and a new law that would see reckless bankers sent to jail.

Twitter's New York-listed shares jumped as much as 34 percent in after-hours trading after the online messaging service beat analysts' earnings expectations and reported accelerated user growth in the second quarter.

UBS agreed to pay 300 million euros ($402.27 million) to settle a probe by authorities in Bochum into whether it helped German clients evade taxes, as it reported better-than-expected quarterly results.

Pfizer said it was still interested in deals that would allow it to put offshore revenues beyond the reach of the U.S. taxman as it called for the "fundamental reform" of its domestic tax system.

A top U.S. labour regulator has accused McDonald's of being jointly responsible for working conditions at its franchisees' restaurants, a decision that could deal a blow to the long-running fast food franchise model.

NYT

* Barring a last-minute deal, Argentina will default on billions of dollars of bonds on Wednesday. It would be Argentina's second default in 13 years. A default has been in the making since a group of New York hedge funds gained significant victories in American courts, where they are demanding that Argentina should pay them in full on government bonds that defaulted in 2001. (http://nyti.ms/1tYjH9c)

* The United States and Europe kicked off a joint effort on Tuesday intended to curb Russia's long-term ability to develop new oil resources, taking aim at the Kremlin's premier source of wealth and power in retaliation for its intervention in Ukraine. The goal was not to inhibit current oil production but to cloud Russia's energy future. (http://nyti.ms/1rBMLBL)

* The general counsel of the National Labor Relations Board ruled that McDonald's Corp could be held jointly liable for labor and wage violations by its franchise operators. The ruling comes after the labor board's legal team investigated myriad complaints that fast-food workers brought in the last 20 months, accusing McDonald's and its franchisees of unfair labor practices. (http://nyti.ms/1nEK6Z1)

* After New York proposed the virtual currency regulations two weeks ago, bitcoin enthusiasts have had a mixed reaction on whether the new rules will help legitimize the virtual currency or whether they will thwart innovation and threaten the very freedom that bitcoin was meant to promote. (http://nyti.ms/1pDxAWj)

* Lawmakers in Washington ratcheted up the pressure on Tuesday on companies seeking tax relief by moving overseas, introducing a bill that would withhold government contracts from companies that undertake so-called inversion deals. (http://nyti.ms/1n1bj39)

* Swiss bank UBS AG and Deutsche Bank AG of Germany became the latest banks to disclose that they were facing inquiries from regulators after Attorney General Eric Schneiderman of New York sued the British bank Barclays PLC last month over its private stock trading platform, known as a dark pool. (http://nyti.ms/1pDyhyL)

* The boutique investment bank Qatalyst Partners, which was hired by Trulia Inc three years ago, will also receive the reward of Trulia's sale to Zillow Inc. Qatalyst was unable to strike a deal three years ago and ultimately watched JPMorgan Chase & Co advise Trulia on its IPO. Qatalyst said that its old contract with Trulia was still valid and the fee now paid will be split between Qatalyst and JPMorgan. (http://nyti.ms/1n1dzXY)

* IAC/InterActive Corp said its online tutoring unit, Tutor.com, would buy the Princeton Review, whose test preparation guides are familiar to students studying for the SAT and other standardized tests, from Charles bank Capital Partners, a private equity firm based in Boston. The terms were not disclosed. (http://nyti.ms/1lUkzXb)

* Steven Cohen's renamed firm, Point72 Asset Management, which manages $9 billion to $10 billion of his personal fortune, is proving to be nearly as profitable as his former hedge fund. Over the first six months of this year, the firm generated a profit of nearly $1 billion. (http://nyti.ms/1nGjAP1)

* Twitter Inc reported strong growth in the second quarter, driven in part by heavy use of the service by soccer fans around the world during the month long FIFA World Cup, which spanned June and July. Twitter's results far exceeded Wall Street's expectations, and the company's shares rose about 29 percent in after-hours trading. (http://nyti.ms/1pDvfum)

* Oracle Corp kicked off its new cloud computing technology center in Seattle on Tuesday. On hand were several recruiting executives; initially designed for 100 cloud engineers, the facility is expected to hire a lot more and serve as an education and training facility as well. (http://nyti.ms/1k6nq3V)

Canada

THE GLOBE AND MAIL

* The owners of a sawmill that exploded in Prince George, British Columbia, two years ago, killing two workers, have been fined more than C$700,000 by the workplace safety agency. (http://bit.ly/1lcjTMG)

* An international effort to build an enormous telescope in Hawaii has taken an important step forward, a signal that the Canadian government will have to decide soon if Canadian astronomers will have a share in the instrument's future discoveries. (http://bit.ly/WMNOG1)

Reports in the business section:

* Penn West Petroleum Ltd, one of Canada's largest energy companies, has unveiled details of accounting irregularities and launched a review of its financial statements dating back four-and-a-half years. The company said it has notified securities regulators in Canada and the United States about the issues, which include some entries that reduce expenses. (http://bit.ly/1pEjDHJ)

NATIONAL POST

* The Canadian military is looking for an air defence system to protect its VIP aircraft, including the one used by Canadian Prime Minister Stephen Harper, from surface to air missiles. And one of Israel's top defence contractors, Elbit Systems Ltd , has been working behind-the-scenes for months to get in on the anticipated project. (http://bit.ly/1km1UbH)

* The Canadian military had to send its fledgling fighter pilots to the United States because of continuing problems with training, including several plane crashes, according to documents obtained by Postmedia News. (http://bit.ly/1AxJ0n7)

FINANCIAL POST

* TransCanada Corp expects to file an application for its massive Energy East project as early as next month. Touted as one of North America's largest energy projects at C$12 billion, the proposed conduit will find a new outlet for Alberta's landlocked crude as Canadian pipelines heading south to the U.S. and to the Canadian west coast are facing strong opposition. (http://bit.ly/1qKjyZe)

* Exxon Mobil Corp is assessing a floating liquefied natural gas apparatus on Canada's west coast that could see up to six barges moored in a narrow inlet north of Prince Rupert in British Columbia. (http://bit.ly/1lVIDJf)

China

CHINA SECURITIES JOURNAL

- China has drafted standards for crude oil delivery and inspection to prepare for the launch of crude oil futures trading in Shanghai.

SECURITIES TIMES

- China is preparing a new manufacturing industry plan, said Li Dong, Deputy Director of the Equipment Department of the Ministry in a summit on Tuesday. The plan is expected next year, said the newspaper.

- Wenzhou, a southern Chinese city, has removed eligibility criteria for home buyers, said Wenzhou Municipal Commission of Housing and Urban-Rural Development in a conference on Tuesday.

CHINA DAILY

- Nearly a quarter of employers in China are experiencing hiring difficulties, according to a survey conducted by Manpower Group Inc. Those skilled in trades, such as electricians, and sales representatives are the hardest to find.

SHANGHAI DAILY

- Li Daqiu, a former senior political adviser, has been charged with taking bribes, said China's highest court on Tuesday. Li was the vice chairman of the Guangxi political advisory body from 2003.

Britain

The Times

TULLETT WIELDS THE AXE AS CALM RETURNS

Tullett Prebon is to cut almost 10 percent of its staff as the interdealer broker reels from a slowdown in trading. (http://thetim.es/1rNkE6j)

GUARDIAN CARE HOMES SET TO SUE LLOYDS IN LIBOR CASE

Guardian Care Homes, which was at the centre of a 40 million pound ($67.77 million) settlement with Barclays, is now preparing a new legal action against Lloyds Banking Group that will focus on the taxpayer-backed lender's involvement in rigging borrowing rates. (http://thetim.es/UAbkUM)

The Guardian

BANKERS BRACED FOR NEW UK REGULATORY SCHEME FROM BANK OF ENGLAND

Britain's bankers are braced for the introduction of a tough new regulatory regime to be outlined by the Bank of England on Wednesday, under which they will have to wait longer for their bonuses and could be deemed guilty until proven innocent. (http://bit.ly/1uEeAPq)

BP FEARS SANCTIONS OVER STAKE IN RUSSIAN OIL FIRM WILL HIT PROFITS

British oil and gas group BP has warned investors that its finances and corporate image could be hurt by western sanctions against Russia. (http://bit.ly/1k5Qpop)

VODAFONE CHAIRMAN PROMISES TO PROTECT CUSTOMERS' RIGHT TO PRIVACY

Vodafone's chairman, Gerard Kleisterlee, has promised to protect the right to privacy, saying the mobile network will engage with the UK government's review of how the intelligence agencies intercept and collect data on its customers. (http://bit.ly/1k5MJmH)

The Telegraph

CENTRICA APPOINTS IAIN CONN AS CHIEF EXECUTIVE WITH 3.7 MLN STG PAY PACKAGE

Iain Conn, the veteran BP executive, has been appointed as Centrica chief executive with a pay package worth up to 3.7 million pounds, the British Gas owner announced. (http://bit.ly/1nFDCc9)

MONARCH RESHUFFLES TOP TEAM AHEAD OF CASH INJECTION

Airline and tour operator Monarch has reshuffled its top team at a critical time as it searches for new investors to help it become a more serious contender in the low cost travel market. (http://bit.ly/1nRYBtx)

The Independent

ELECTRA REJECTS ED BRAMSON'S RESTRUCTURING PLAN

Private-equity group Electra has rejected an attack by activist investor Ed Bramson, who wants to sit on the company's board and launch a review of its strategy. (http://ind.pn/1ppjDOl)

NEXT BEATS MARKS & SPENCER AGAIN AS IT RAISES PROFIT FORECAST

Fashion giant Next put rival Marks & Spencer in the shade again today as Chief Executive Simon Wolfson raised its profit forecast following a strong quarter. (http://ind.pn/1lbdeSM)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
ADP employment report for July at 8:15--consensus 235K
First-estimate GDP growth for Q2 at 8:30--consensus 3.1%
FOMC meeting announcement to be released at 14:00

ANALYST RESEARCH

Upgrades

Altisource Residential (RESI) upgraded to Outperform at Keefe Bruyette
C.H. Robinson (CHRW) upgraded to Neutral from Underperform at BofA/Merrill
Financial Engines (FNGN) upgraded to Market Perform from Underperform at Raymond James
Freescale (FSL) upgraded to Equal Weight from Underweight at Morgan Stanley
Intercept (ICPT) upgraded to Buy from Neutral at Nomura
Internap (INAP) upgraded to Outperform from Market Perform at Cowen
InvenSense (INVN) upgraded to Buy from Hold at Ascendiant
Oshkosh (OSK) upgraded to Outperform from Neutral at RW Baird
Prudential (PRU) upgraded to Buy from Hold at Canaccord
Roadrunner (RRTS) upgraded to Outperform from Market Perform at Raymond James
S&T Bancorp (STBA) upgraded to Neutral from Sell at Guggenheim
SEI Investments (SEIC) upgraded to Outperform from Perform at Oppenheimer
Twitter (TWTR) upgraded to Buy from Fair Value at CRT Capital
Twitter (TWTR) upgraded to Buy from Neutral at BofA/Merrill
Twitter (TWTR) upgraded to Market Perform from Underperform at Cowen
Twitter (TWTR) upgraded to Neutral from Sell at UBS
United Continental (UAL) upgraded to Overweight from Neutral at JPMorgan
YRC Worldwide (YRCW) upgraded to Market Perform from Underperform at Raymond James

Downgrades

Aflac (AFL) downgraded to Sector Perform from Outperform at Scotia Capital
Alaska Air (ALK) downgraded to Neutral from Overweight at JPMorgan
American Capital Agency (AGNC) downgraded to Neutral from Buy at UBS
Brandywine Realty (BDN) downgraded to Hold from Buy at Stifel
CBS Outdoor (CBSO) downgraded to Equal Weight from Overweight at Morgan Stanley
Cablevision (CVC) downgraded to Sell from Neutral at Citigroup
Carbonite (CARB) downgraded to Underperform from Neutral at BofA/Merrill
Domtar (UFS) downgraded to Neutral from Buy at Goldman
Eaton (ETN) downgraded to Neutral from Buy at Goldman
Eaton (ETN) downgraded to Neutral from Overweight at JPMorgan
Enbridge (ENB) downgraded to Buy from Conviction Buy at Goldman
FirstEnergy (FE) downgraded to Sell from Neutral at UBS
Impax (IPXL) downgraded to Hold from Buy at WallachBeth
Lamar Advertising (LAMR) downgraded to Equal Weight from Overweight at Morgan Stanley
Maxim Integrated (MXIM) downgraded to Underweight from Equal Weight at Morgan Stanley
Merit Medical (MMSI) downgraded to Outperform from Strong Buy at Raymond James
Michael Kors (KORS) downgraded to Neutral from Outperform at RW Baird
National Oilwell (NOV) downgraded to Hold from Buy at Jefferies
Pacific Sunwear (PSUN) downgraded to Neutral from Buy at B. Riley
Twitter (TWTR) downgraded to Sell from Hold at Pivotal Research
Verizon (VZ) downgraded to Neutral from Outperform at Macquarie
Waddell & Reed (WDR) downgraded to Market Perform from Outperform at Keefe Bruyette
Windstream (WIN) downgraded to Market Perform from Outperform at Raymond James

Initiations

Aerohive Networks (HIVE) initiated with an Outperform at Pacific Crest
Netgear (NTGR) initiated with a Sector Perform at Pacific Crest
NextEra Energy Partners (NEP) initiated with a Market Perform at Wells Fargo
Ruckus Wireless (RKUS) initiated with an Outperform at Pacific Crest

COMPANY NEWS

Amgen (AMGN) said it will reduce global workforce by 12%-15%, or 2,400-2,900 employees, beginning later this year
Icahn reduced stake in Family Dollar (FDO) to 6.03% from 9.39%, citing 'better' return potential elsewhere
Twitter (TWTR) reported Q2 Average Monthly Active Users 271M
RadioShack (RSH) may run through liquidity in 2015, Moody's said
Amazon (AMZN) called on Hachette to lower e-book prices
AstraZeneca (AZN) has entered an agreement to transfer to the company the rights to Almirall’s respiratory franchise for an initial consideration of $875M on completion, and up to $1.22B in development, launch, and sales-related milestones
Twitter (TWTR) acquired Madbits
DreamWorks Animation (DWA) said SEC investigating 'Turbo' writedown

EARNINGS

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

Twitter (TWTR), American Express (AXP), Marriott (MAR), Nutrisystem (NTRI), Panera Bread (PNRA), SPX Corp. (SPW), Simon Property (SPG), Cenovus Energy (CVE), Haemonetics (HAE), ICON plc (ICLR), Newmont Mining (NEM), Ocean Power (OPTT), RockTenn (RKT), U.S. Silica (SLCA), XPO Logistics (XPO), HCC Insurance (HCC), FARO Technologies (FARO), Ameriprise (AMP), Cempra (CEMP), Aegerion (AEGR), AXIS Capital (AXS), M/A-COM (MTSI), NuVasive (NUVA), LeMaitre (LMAT), RingCentral (RNG), Corporate Executive Board (CEB), Team Health (TMH), Invesco Mortgage (IVR), ExamWorks (EXAM), Sequenom (SQNM), Cray (CRAY), Verisk Analytics (VRSK), Trinity Industries (TRN), Huron (HURN), C.H. Robinson (CHRW), Endocyte (ECYT), RenaissanceRe (RNR), International Game (IGT), Express Scripts (ESRX), Cloud Peak (CLD), Calamos (CLMS), U.S. Steel (X), Arthur J. Gallagher (AJG), Calix (CALX), Vertex (VRTX), ZELTIQ (ZLTQ), Power Integrations (POWI), National Instruments (NATI), Blackstone Mortgage (BXMT), NCR Corp. (NCR), Cincinnati Financial (CINF), United Insurance (UIHC), Edwards Lifesciences (EW), Amgen (AMGN), Rubicon Project (RUBI), Covance (CVD), , QIAGEN (QGEN), Global Payments (GPN), Aflac (AFL), Fiserv (FISV), Dyax (DYAX), Amdocs (DOX), Dynamic Materials (BOOM), Buffalo Wild Wings (BWLD), Acadia Healthcare (ACHC), Castlight Health (CSLT), Ultimate Software (ULTI), Plantronics (PLT)

Companies that missed consensus earnings expectations include:

Adeptus Health (ADPT), NICE Systems (NICE), Ballard Power (BLDP), UGI Corporation (UGI), Pulaski Financial (PULB), AmeriGas (APU), Aegion (AEGN), SM Energy (SM), Sturm, Ruger (RGR), Landec (LNDC), AmREIT (AMRE), Innovative Solutions (ISSC), Green Plains (GPRE), XPO Logistics (XPO), Chemtura (CHMT), EXCO Resources (XCO), Access Midstream (ACMP), 1st United Bancorp (fubc), USANA (USNA), Newfield Exploration (NFX), Internap (INAP), Covisint (COVS), Move, Inc. (MOVE), Anadarko (APC), Big 5 Sporting (BGFV), Owens-Illinois (OI), DreamWorks Animation (DWA), Safe Bulkers (SB), Ruby Tuesday (RT), EZCORP (EZPW), Merit Medical (MMSI), Ternium (TX), CAI International (CAP)

Companies that matched consensus earnings expectations include:

Humana (HUM), LPL Financial (LPLA), Humana (HUM), Regal-Beloit (RBC), Marlin Business (MRLN), Genworth (GNW), PCTEL, Inc. (PCTI), Inphi (IPHI), Compuware (CPWR), Applied Micro Circuits (AMCC), InvenSense (INVN)

NEWSPAPERS/WEBSITES

NY regulator seeks monitors in Deutsche Bank (DB), Barclays (BCS), WSJ reports
T-Mobile (TMUS), Sprint (S) merger not anticipated prior to September, Reuters reports
Amazon (AMZN) plans $2B investment in India, WSJ reports
Airbus (EADSY) considers Dassault Aviation stake sale, FT reports
Netflix (NFLX) will pay AT&T (T) to speed up its video streams, Mashable reports
Facebook (FB) shutting down Gifts business, Re/code reports
Baidu (BIDU) developing 'self-driving' car, China Daily reports
UBS (UBS) could have 25% upside, Barron's says

SYNDICATE

Cousins Properties (CUZ) files to sell 18M shares of common stock
Mavenir Systems (MVNR) files to sell 4.5M shares of common stock
TherapeuticsMD (TXMD) files to sell $40M in common stock
Westlake Chemical Partners (WLKP) 11.25M share IPO priced at $24.00

Frontrunning: June 30

Frontrunning: July 1

Internet Censorship Explodes - Google Receives 250,000 "Removal" Requests

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Weekly Wrap - 7/18/2014

TedBits Weekly Wrap - July 18, 2014

Frontrunning: July 18

These Are The 10 "Liquidity-Providing" HFT Firms The SEC Is Investigating

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Settlements and Fines from TBTF Institutions Since the Crisis

Here's What Wall Street Bulls Were Saying In December 2007

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