The Kerry Konfusion Kontinues: Kerry urges Kurds to save Iraq from collapse (Reuters) Because the recovery: Avon to Cut 600 Jobs as CEO McCoy Seeks to Trim Expenses (BBG) Iraqi Parties Pressure Prime Minister Nouri al-Maliki to Step Down (WSJ) Ukraine Rebels Call Cease-Fire to Match Government Truce (BBG) IRS accused of obstruction over lost emails in Tea Party affair (Reuters) IRS chief scorched as 'liar' (WND) Big Investors Missed Stock Rally (WSJ) U.K. Jury Finds Coulson Guilty of Conspiracy to Intercept Phone Voice-Mail Messages (WSJ) HSBC to halve countries served by private bank, sells assets (Reuters) Bond Market Has $900 Billion Mom-and-Pop Problem When Rates Rise (BBG) Egypt's president says will not interfere in judicial rulings (Reuters) Goodbye Boeing "durable orders": Officials at Ex-Im Bank Face Investigations (WSJ) Who Gets Into NYC's Elite Schools? Wrong Mix of Kids, De Blasio Says, Fighting Test (BBG) Apple’s Big IPhones Said to Start Production Next Month (BBG) Iran seeks to resolve HSBC freeze on some trade financing (Reuters) Ex-Millennium Fund Manager Gets Four Years in Prison (BBG)
Overnight Media Digest
WSJ
* Avon Products Inc plans to reduce its headcount by an additional 600 positions, largely in its corporate staff and North America business, part of the beauty-products company's continuing turnaround efforts. (http://on.wsj.com/1nZ7bEi)
* Seven major auto makers on Monday disclosed they combined would recall millions of vehicles equipped with air bags that could explode under certain circumstances. The moves expand on earlier efforts to find and fix potentially defective air bag inflators made by Takata Corp and highlight the challenges for auto makers to contain mass recalls. (http://on.wsj.com/1uZISqS)
* Amazon.com Inc has reversed a halt on preorders of movie discs from Time Warner Inc's Warner Bros studio as the two sides near a resolution to a pricing dispute, according to people familiar with the matter. (http://on.wsj.com/1sABnea)
* The head of Delta Air Lines Inc is expected to back the Export-Import Bank of the United States providing some support for sales of Boeing Co's biggest jets, softening his stance even as the agency's political critics step up a campaign to have it abolished. (http://on.wsj.com/1wq8PT4)
* Abbott Laboratories agreed to acquire Russian drug maker Veropharm for up to $495 million, a deal that would give the U.S. pharmaceutical company a manufacturing presence in that country. (http://on.wsj.com/UD9HpD)
* Payments business Comdata Inc is fielding interest from potential buyers after filing for an initial public offering earlier this year, according to people familiar with the matter. (http://on.wsj.com/1sAGomX)
FT
The US secretary of state John Kerry is scrambling to head off the break-up of the country by a surging rebel alliance and has called on Iraq's leaders to immediately form a new government that includes all the country's political and religious factions.
Tony Blair is apparently attempting to expand his role as a behind-the-scenes business and political broker in the Middle East and is looking to open an office in Abu Dhabi, the increasingly assertive oil-rich emirate.
Britian's Labour party will target big outsourcing companies if it wins the election and try to reduce their role in delivering the government's back-to-work programme.
Emirates Airline has said it would take a fresh look at the case for buying Airbus long-range passenger jets, in a head-to-head contest with Boeing's 787 Dreamliner, giving Airbus a second chance to sell its new A350 aircraft to the fast-growing Gulf carrier.
Poland's foreign minister has claimed in a secretly taped conversation that the British Prime Minister David Cameron had "messed up" his handling of the EU.
NYT
* Dean Foods Co has been asked to supply documents to the Federal authorities as part of an investigation into well-timed trades placed by the championship golfer Phil Mickelson and the well-known sports gambler William Walters. (http://nyti.ms/1sAH1wG)
* Seven automakers said that they were recalling more than three million vehicles worldwide because their air bags, made by Takata Corp, could rupture and send debris flying inside a car. The move is the latest in a series of recalls related to air bags made by Takata, one of the world's top automotive supply firms, which has run afoul of regulators and prosecutors. (http://nyti.ms/1wqeqsx)
* The Supreme Court on Monday endorsed the Obama administration's efforts to regulate greenhouse gas emissions from sources like power plants, even as it criticized what it called the administration's overreaching. The decision is one in a recent string of rulings upholding the Environmental Protection Agency's authority to issue Clean Air Act regulations to curb climate change, and the agency celebrated the decision. (http://nyti.ms/1iAygyj)
* Three technology stock traders have left the Boston office of Steven Cohen's nearly $10 billion family office over the last week in a new round of defections at a firm that is still dealing with the fallout from a significant insider trading investigation. (http://nyti.ms/1rsFJPW)
* Allergan Inc told its shareholders on Monday not to hand over any stock to Valeant Pharmaceuticals International Inc, which last week offered to exchange $72 in cash and 0.83 of a Valeant share for each unit of Allergan stock. (http://nyti.ms/T4mQH4)
* Goldman Sachs Group Inc has been hired by Shire PLC as the London-listed drug maker confronts a takeover offer, people briefed on the matter told the New York Times. (http://nyti.ms/1iAzfyy)
Canada
THE GLOBE AND MAIL
* A magnitude-8.0 earthquake was felt in communities along Alaska's sparsely populated Aleutian Islands on Monday but there were no immediate reports of damage. All tsunami advisories have been cancelled following the earthquake. (bit.ly/1lm4PQ0)
* Ontario Premier Kathleen Wynne is splitting her finance department in half, appointing a powerful minister whose sole job is to wrestle down the massive deficit and deal with record-high debt. (bit.ly/1pHDZ6i)
Reports in the business section:
* South Africa might be on the brink of recession and refusing to sign any foreign investment treaties these days but it will remain the linchpin of Canada's economic strategy on the African continent, International Trade Minister Ed Fast said. (bit.ly/1sAZ85J)
NATIONAL POST
* Com Dev International Ltd, a Canadian space company, is seeking millions of dollars in compensation after the Conservative government scuttled the launch of a satellite because it was scheduled to be sent into orbit on a Russian rocket. (bit.ly/1meodyw)
FINANCIAL POST
* Bell Media Inc plans to lay off about 5 percent of its Toronto workforce due to "financial pressure" in its advertising and subscription TV services. (bit.ly/1wqYhmG)
* The Canada Pension Plan Investment Board is making its first infrastructure investment in India by taking a $332-million stake in a toll road company. CPPIB will invest in L&T Infrastructure Development Projects Ltd in two tranches through a wholly owned subsidiary. (bit.ly/1wr0myW)
China
SOUTH CHINA MORNING POST
-- Hong Kong's former central banker Joseph Yam Chi-kwong has warned that the city could lose its status as China's top financial centre if political developments unnerve the country's leaders. Hong Kong Exchanges and Clearing Chairman Chow Chung-kong weighed in by warning that the increasingly tense political atmosphere could shake the confidence of international investors. (bit.ly/1qFGR5n)
-- Up to 40 per cent of cyber attacks on the website used to run Occupy Central's unofficial plebiscite on electoral reform came from computers registered to mainland firms in Hong Kong, said an IT expert who advised the poll's organisers. (bit.ly/1j9eHZ1)
-- Hong Kong entrepreneur Allan Zeman revealed that it was the government that was forcing him out as Ocean Park chairman. Zeman, who made his name establishing the Lan Kwai Fong nightlife district, said he was sure the government knew he wanted to continue in the post he had occupied for 11 years. (bit.ly/1jKbEq4)
THE STANDARD
-- Beijing knows the views of Hong Kong people on visits by mainlanders but has not reached any decision, Hong Kong's Secretary for Commerce and Economic Development Gregory So Kam-leung said. (bit.ly/UCvcaj)
-- An extra HK$9 billion ($1.16 billion) a year will be required if building of the third runway at Chek Lap Kok extends beyond 2023, the Airport Authority warned. The authority estimated the budget for the third runway at HK$136.2 billion when it announced its master plan for the project in June 2011. (bit.ly/1qtsqz3)
-- A total of 117 market participants will be ready for Shanghai Hong Kong Stock Connect when it is launched in October and that will account for 86 percent of the total amount of stock market transactions, Hong Kong Exchanges and Clearing said. (bit.ly/1nzmWyE)
HONG KONG ECONOMIC JOURNAL
-- Printer and publisher Hong Kong Economic Times Holdings Ltd said revenue rose 3 percent to HK$1.07 billion ($138.04 million) for the year ended March while profit plunged 55 percent to HK$28.1 million without any one-off gain.
HONG KONG ECONOMIC TIMES
-- Mainland online KTV operator Tiange Group (IPO-TIGP.HK) is expected to raise up to HK$1.6 billion ($206.41 million) in an initial public offering in Hong Kong, selling new shares in a range of HK$4.50 to HK$5.3 apiece, according to a term sheet.
MING PAO DAILY NEWS
-- Hong Kong recorded an average rent of HK$22.9 per sq ft for the city's 85 residential developments in May, up 1.3 percent from April's HK$22.6 per sq ft in its biggest gain since July 2013, according to property agency Centaline.
APPLE DAILY
-- Privately held Chow Tai Fook Enterprises and Far East Consortium said they would team up with Australian casino operator Echo Entertainment to bid for a resort and casino project at Brisbane in Australia.
Britain
The Telegraph
LENDERS PREDICT MORTGAGE APPROVALS WILL FALL IN THE COMING MONTHS
Bank of England's quarterly credit conditions survey suggests lenders are becoming more cautious ahead of an expected move by Governor Mark Carney and the Financial Policy Committee (FPC) to rein in the market.
BRITAIN'S NUCLEAR CLEAN-UP BILL SOARS TO 110 BLN STG
The bill for cleaning up Britain's nuclear waste has topped 110 billion pounds, after a 6.6 billion pound increase in the cost estimate for work required over the next 120 years.
The Guardian
ASOS TO MARK RETURN TO SELLING AFTER WAREHOUSE FIRE WITH HUGE SUMMER SALE
Passengers flying to France and beyond this week could face disruption as a strike by French air traffic controllers has forced airlines to cancel dozens of flights.
Thousands of small companies hit with huge losses because of the mis-selling of complex financial products have been "failed" by official compensation, according to a victims group, with affected businesses instead preparing to turn to the courts for redress.
Shire waxed lyrical about the sales potential of its pipeline of drugs in development as the pharmaceuticals group shored up its defences against a 27 billion pound bid approach from AbbVie, its American rival.
The Independent
AA GROUP RAISES 1.4 BILLION STG IN LONDON FLOAT BUT SHARES SLUMP
The roadside assistance group AA group was valued at 1.4 billion pounds as it joined the London Stock Exchange, completing one of the most anticipated flotations in recent years. However, despite the fanfare surrounding the float, shares slumped 7.2 percent below the 250p offer price.
BNP PARIBAS CLOSE TO $9 BILLION SETTLEMENT WITH US AUTHORITIES
BNP Paribas, the French bank with 7500 staff in the UK, is expected to pay to $9 billion to settle allegations it broke US trade sanctions, according to reports.
Fly On The Wall 7:00 AM Market Snapshot
ECONOMIC REPORTS
Domestic economic reports scheduled today include: FHFA house price index for April at 9:00--consensus up 0.5% for the month S&P Case-Shiller 20-city composite index for April at 9:00--consensus up 11.4% y/y New Home Sales for May at 10:00--consensus up 1.4% to 441K rate Consumer confidence for June at 10:00--consensus 83.7
ANALYST RESEARCH
Upgrades
CGG SA (CGG) upgraded to Buy from Hold at Societe Generale Hercules Technology (HTGC) upgraded to Outperform from Market Perform at Wells Fargo IDEXX (IDXX) upgraded to Buy from Hold at Canaccord Spirit Realty (SRC) upgraded to Buy from Neutral at BofA/Merrill Wisconsin Energy (WEC) upgraded to Outperform from Market Perform at Wells Fargo
Downgrades
Aviva (AV) downgraded to Neutral from Buy at UBS Cabot Oil & Gas (COG) downgraded to Equal Weight from Overweight at Morgan Stanley Covidien (COV) downgraded to Market Perform from Outperform at Leerink Dr Pepper Snapple (DPS) downgraded to Neutral from Buy at Citigroup Enanta (ENTA) downgraded to Neutral from Outperform at RW Baird ITG (ITG) downgraded to Neutral from Overweight at JPMorgan IntercontinentalExchange (ICE) downgraded to Market Perform at Wells Fargo MICROS (MCRS) downgraded to Sector Perform from Outperform at RBC Capital National Retail Properties (NNN) downgraded to Neutral from Buy at BofA/Merrill Web.com (WWWW) downgraded to Neutral from Buy at B. Riley
Initiations
Advance Auto Parts (AAP) initiated with an Overweight at Morgan Stanley AerCap (AER) initiated with a Buy at UBS Air Lease (AL) initiated with a Neutral at UBS AutoZone (AZO) initiated with an Equal Weight at Morgan Stanley Bed Bath & Beyond (BBBY) initiated with an Underweight at Morgan Stanley Best Buy (BBY) initiated with an Overweight at Morgan Stanley Charles River Labs (CRL) initiated with a Neutral at SunTrust Chimerix (CMRX) initiated with a Buy at Brean Capital Costco (COST) initiated with an Overweight at Morgan Stanley Covance (CVD) initiated with a Neutral at SunTrust Cyberonics (CYBX) initiated with a Buy at Sterne Agee Dick's Sporting (DKS) initiated with an Underweight at Morgan Stanley Ducommun (DCO) initiated with a Hold at Topeka GNC Holdings (GNC) initiated with an Equal Weight at Morgan Stanley Home Depot (HD) initiated with an Equal Weight at Morgan Stanley Johnson Controls (JCI) initiated with a Neutral at Susquehanna LeMaitre (LMAT) initiated with a Buy at Stifel Lennox (LII) initiated with a Neutral at Susquehanna Lowe's (LOW) initiated with an Equal Weight at Morgan Stanley Lumber Liquidators (LL) initiated with an Equal Weight at Morgan Stanley O'Reilly Automotive (ORLY) initiated with an Overweight at Morgan Stanley Office Depot (ODP) initiated with an Equal Weight at Morgan Stanley PAREXEL (PRXL) initiated with a Buy at SunTrust PetSmart (PETM) initiated with an Underweight at Morgan Stanley Ply Gem (PGEM) initiated with an In-Line at Imperial Capital Quintiles (Q) initiated with a Neutral at SunTrust Ruckus Wireless (RKUS) initiated with a Market Perform at Wells Fargo Sensata (ST) initiated with an Overweight at Atlantic Equities Target (TGT) initiated with an Underweight at Morgan Stanley Tower Semiconductor (TSEM) initiated with an Outperform at Imperial Capital Tractor Supply (TSCO) initiated with an Equal Weight at Morgan Stanley Williams-Sonoma (WSM) initiated with an Overweight at Morgan Stanley
COMPANY NEWS
Micron (MU) said revenues for both DRAM and NAND Flash products were down slightly for Q3 vs. Q2. The company said it has no plans to expand wafer production in 2015 Avon Products (AVP) announced a workforce reduction of approximately 600 Google (GOOG) entered domain registration with new beta website (WWWW, WIX, VRSN, NSR) KKR (KKR) to pay EUR 417M to take 33% stake in Acciona's renewables business Harbinger (HRG) offered $750M in cash for Central Garden & Pet (CENT, CENTA) pet segment Zhaopin Ltd (ZPIN) said Tiger Global reported a 18.6% passive stake in the company. Abbott (ABT) said it would acquire Russian drug maker Veropharm for $295M-$495M
EARNINGS
Companies that beat consensus earnings expectations last night and today include: Micron (MU), Sonic (SONC)
Giga-tronics (GIGA) reports Q4 EPS (25c) vs.(31c) Adamis Pharmaceuticals (ADMP) reports FY EPS ($1.22) Xcel Energy (XEL) backs FY14 EPS view $1.90-$2.05, consensus $2.00 Sonic (SONC) sees FY14 EPS up 14%-15%, consensus 83c
NEWSPAPERS/WEBSITES
Dean Foods (DF) subpoenaed in insider trading probe, WSJ reports Amazon (AMZN), Warner Bros. (TWX) near resolution of pricing dispute, WSJ reports Shire S(HPG) hires Goldman (GS) as it confronts takeover offer, NY Times reports Apple (AAPL) to mass produce 12-inch MacBook Air in Q3, DigiTimes says Seven autoamkers (F, FIATY, TM, NSANY, HMC) to repair air bag problems in vehicles, Detroit News says American Apparel (APP) co-chairman says firm not up for sale, Reuters reports Microsoft (MSFT) making foray into quantum computing, NY Times reports Allergan (AGN) CEO says firm targeting upped earnings guidance, Reuters says
SYNDICATE
AmSurg (AMSG) files to sell 8.5M shares of common, 1.25M shares of convert preferred Atlanticus Holdings (ATLC) announces $100M 'modified dutch auction' Brixmor (BRX) files to sell 25M shares of common stock for holders Descartes Systems (DSGX) files to sell 9.5M shares of common stock Diamondback Energy (FANG) files to sell 2M shares for holders G-III Apparel (GIII) files to sell 1.5M shares of common stock Hilton (HLT) files to sell 90M shares for holders KNOT Offshore Partners (KNOP) files to sell 4.6M common units Prothena (PRTA) files to sell $115M of ordinary shares Vince Holding (VNCE) files to sell 3.55M shares for holders Xunlei (XNET) 7.315M share IPO priced at $12.00
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