• Invade Syria already, we know you will: Islamic State in Syria abducts at least 150 Christians (Reuters)
• Greece Struggles to Get Citizens to Pay Their Taxes (WSJ)
• Doubts Shadow Deal to Extend Greek Bailout (WSJ)
• In surprise result, Chicago's Mayor Emanuel faces election run-off (Reuters)
• Obama vetoes Keystone pipeline bill (Reuters)
• Another sign of the top: Cushman & Wakefield Going Up for Sale (WSJ)
• Elizabeth Warren's Next Target Is The Fed's Top Lawyer (HuffPo)
• Lure of Wall Street Cash Said to Skew Credit Ratings (BBG) ... and threat of DOJ lawsuits also
• Oil rises to $59 as Saudis say demand growing (Reuters)
• China Said to Prepare Steps to Counter Housing Market Slump (BBG)
• World stocks near all-time highs after Fed signals (Reuters)
• What Clever Robots Mean for Jobs (WSJ)
• RBS Said to Plan Cutting Footprint to 13 Nations in Revamp (BBG)
• Eliminate Phantom Liquidity in Currency Markets, BlackRock Says (BBG)
• Buffett sets sights on German companies (Reuters)
• AmEx Said to Increase Rates for More Than 1 Million Cardholders (BBG)

Overnight Media Digest

WSJ

* Federal Reserve Chairwoman Janet Yellen, sounding upbeat about the economy, started laying the groundwork for interest-rate increases later this year. (http://on.wsj.com/1LAdDuI)

* A jury on Tuesday convicted Eddie Ray Routh of killing the former U.S. Navy sharpshooter whose autobiography became the movie "American Sniper." Routh, a 27-year-old Marine, was found guilty of killing former Navy SEAL Chris Kyle and Kyle's friend Chad Littlefield at a Texas shooting range in 2013. (http://on.wsj.com/1EOZ4kR)

* Chad's army has been on the offensive in Nigeria, swinging momentum in a conflict that has cost tens of thousands of lives, displaced more than a million people and seen Boko Haram abduct perhaps thousands of adolescents. (http://on.wsj.com/1D9ApFf)

* The Italian family that controls Cushman & Wakefield, one of the world's largest real-estate services firms, is putting the company up for sale as rising property prices push up the value of rivals. (http://on.wsj.com/1MPE0Ao)

* Several oil companies have turned on Enterprise Products Partners LP, complaining it is trying to dominate the lucrative oil-export business and muscle out competitors. (http://on.wsj.com/18jfPL2)

* Capital One Financial said the U.S. Justice and Treasury departments are looking into possible money-laundering violations. (http://on.wsj.com/1GrrgLT)

* JPMorgan is aiming to reduce certain deposits by up to $100 billion by the end of the year and is preparing to charge large institutional customers for some deposits thanks to new rules that make holding money for the clients too costly. (http://on.wsj.com/1D8q2Sd)

* Health insurer Anthem Inc said the database that was penetrated in a previously-disclosed hacker attack included personal information for 78.8 million people. (http://on.wsj.com/1vxre3V)

* Regulators are scrutinizing acquisitions by one of Canada's largest banks after finding fault with its risk management, according to people familiar with the matter, even as a new CEO looks for businesses to buy in the U.S. (http://on.wsj.com/1Es4DYA)

* Sycamore Partners has abandoned its attempt to buy women's clothing retailer Chico's FAS Inc after failing to line up financing for the deal on acceptable terms, according to a person familiar with the matter. (http://on.wsj.com/1GrmoX1)

FT

British Prime Minister David Cameron announced plans to send military trainers to Ukraine, marking a significant escalation of Britain's involvement in the country's fight with Russian backed rebels.

UK's Labour will announce plans on Wednesday to extend the reach of its bank bonus tax, amid anxiety in Downing Street that pay awards this week by state-controlled Royal Bank of Scotland and Lloyds Banking Group will stoke further public anger.

HSBC Holdings Plc group Chairman Douglas Flint and Chief Executive Stuart Gulliver have been hastily summoned before a parliamentary committee amid a scandal over alleged tax-dodging by clients of the company's Swiss private banking arm.

Royal Bank of Scotland Plc will appoint Rory Cullinan as the new head for its struggling investment bank as the UK government-controlled lender steps up efforts to shrink the loss-making unit back to its domestic roots.

NYT

* Senior Republicans conceded on Tuesday that the grueling fight with President Obama over the regulation of Internet service appears over, with the president and an army of Internet activists victorious.(http://nyti.ms/1DSh27B)

* Janet Yellen, the Federal Reserve chairwoman, told Congress on Tuesday that the central bank is pleased with recent economic growth but convinced there is room for improvement and still pondering when to start raising interest rates.(http://nyti.ms/1FWiFmT)

* Home price appreciation in general is slowing, with the Standard & Poor's/Case-Shiller index report on Tuesday showing a pace of growth in the single digits. In this environment, builders are turning to the wealthy as the most reliable market on which to place their bets.(http://nyti.ms/1LBKUpk)

* J.P. Morgan Chase & Co on Tuesday went on the offensive against growing questions from analysts and investors on whether the company needs to be broken up. (http://nyti.ms/1wmXJm1)

* Charles Ergen, the billionaire who controls the satellite-TV provider Dish Network Corp, and his company are about to make a cool $3.25 billion, courtesy of the American taxpayer.(http://nyti.ms/1zG2ouY)

* The insider-trading trial of the troubled Brazilian businessman Eike Batista could be thrown into disarray after the judge in charge of his case was found to have been driving one of Batista's seized cars.(http://nyti.ms/1D9BXPE)

Canada

THE GLOBE AND MAIL

** As promised, U.S. President Barack Obama vetoed Keystone XL approval legislation Tuesday, escalating the confrontation with Congress over the controversial Canadian project to ship Alberta oil sands crude cross the United States to the Texas Gulf Coast. (http://bit.ly/1aisRcn)

** Canadian special-forces soldiers providing counterterrorism training in Niger have been forced to pack up from a border region and relocate to another part of the African country in order to stay out of the way of fighting between Boko Haram extremists and government troops. (http://bit.ly/1MQNoUm)

** An Alberta online bank is believed to be the first Canadian financial institution to deny service to Americans, citing the burden of complying with strict new U.S. tax rules. Canadian Direct Financial, a subsidiary of Edmonton-based Canadian Western Bank, is refusing to open new Internet accounts for U.S. citizens, even to those living in Canada. (http://bit.ly/1D8H5U9)

** Turquoise Hill Resources has reached a deal to sell its remaining stake in SouthGobi Resources Ltd, a coal mining business in Mongolia. It says a private Chinese company, Novel Sunrise Investments, has agreed to buy 48.7 million shares in SouthGobi for 35 cents per share in cash. (http://bit.ly/1LG5pDc)

NATIONAL POST

** Canadian National Railway Co has agreed to pay into a union action fund as part of the 11th-hour deal reached with Unifor on Monday night - but not the same fund it had opposed on principle earlier in the negotiations. (http://bit.ly/1zewWCZ)

** The Florida health department has fined the head of an alternative health clinic for practicing medicine without a licence, citing his "unproven and possibly dangerous" treatment of two cancer-stricken Ontario girls. (http://bit.ly/17WRNUY)

** Tim Hortons is the newest corporate sponsor to help keep a batch of outdoor ice rinks open in Toronto after a private trash collector pulled its initial $100,000 offer in what the mayor called a "small hiccup". (http://bit.ly/18kvDgy)

Hong Kong

HONG KONG, Feb 25 (Reuters) - These are some of the leading stories in Hong Kong newspapers on Wednesday. Reuters has not verified these stories and does not vouch for their accuracy.

SOUTH CHINA MORNING POST

-- Hong Kong Chief Executive Leung Chun-ying said he would raise the possibility of limiting the number of mainlanders visiting Hong Kong when he meets central government officials in Beijing next month. (http://bit.ly/17vTclF)

-- The concentration of ozone in Hong Kong's air has increased by a third in the last 15 years, highlighting yet again the severity in regional air pollution, preliminary government data has shown. Ozone concentrations at general stations were up 7 percent from 2013 to 46 micrograms per cubic metre of air last year. (http://bit.ly/1EOuYxM)

THE STANDARD

-- The Chinese University of Hong Kong plans to start construction on a HK$6 billion ($773.54 million) private hospital in the first quarter of next year, with a completion target of 2019. (http://bit.ly/1FqgrIQ)

-- Financial Secretary John Tsang Chun-wah will announce record-high government spending of HK$440 billion ($56.73 billion) and hand out more than HK$20 billion in sweeteners in the budget, sources said. Spending is up 11 percent, while the surplus will be more than the HK$20.3 billion this year. (http://bit.ly/1zEYvXo)

-- Hang Seng Bank has no intention yet of selling its remaining 5.87 percent stake in Industrial Bank or its holdings in Shandong-based Yantai Bank, vice chairman and chief executive Rose Lee Wai-mun said. (http://bit.ly/1JJgdTB)

HONG KONG ECONOMIC JOURNAL

-- Steel products trader Novo Group Ltd said it has received enquiries from independent third parties for investing in the company and discussions are at a preliminary stage but have not reached any agreement.

MING PAO DAILY

-- Macau's Secretary for Social Affairs and Culture Alexis Tam said in a radio talk show that the government would hold talks with mainland authorities to review policy and the city's capability in dealing with the increasing number of mainland visitors, and may consider restricting the number arrivals from Chinese cities.

Britain

The Times

GREECE BACKS DOWN TO SECURE ITS BAILOUT

After Greece secured a four-month bailout by abandoning key policy promises on which the ruling party Syriza swept to power, there were reports of backlash among supporters and a stormy cabinet as ministers learnt of the compromises. (http://thetim.es/1ag5ShZ)

AVIVA INVESTORS FOOTS 150 MLN POUNDS BILL FOR FUND BIAS

The Financial Conduct Authority fined Aviva Investors 17.6 million pounds ($27.23 million) yesterday for failing to control conflicts of interest that meant that its fund managers had incentives to direct investments to customers that paid top-notch performance fees. This has cost Aviva's investment business almost 150 million pounds in fines and compensation. (http://thetim.es/17w0ANE)

The Guardian

HOUSING BODY CALLS FOR RIGHT-TO-BUY CRACKDOWN

The Chartered Institute of Housing, which represents the property industry, said exempting rural communities from right-to-buy and cracking down on fraudulent purchases are among measures that should be considered by the government to stem the loss of social housing. (http://bit.ly/1MPLfYR)

WONGA TO CUT THIRD OF STAFF

Controversial lender Wonga said it is slashing 325 jobs in the United Kingdom and Ireland - about a third of its workforce - to cut costs as it responds to a wider clampdown on unfair practices in the payday lending market. (http://bit.ly/1AoXLJK)

The Telegraph

TROIKA RAISES FRESH CONCERNS OVER GREECE'S DEBT DEAL

The "Troika" of the European Commission, European Central Bank and International Monetary Fund have warned that the Greek government reforms are not enough to unlock the vital funding needed to keep the country afloat. (http://bit.ly/1Es1qs3)

MORRISONS TO APPOINT FORMER TESCO DIRECTOR AS CEO

WM Morrison Supermarkets Plc is set to appoint former Tesco Corp director David Potts as its new chief executive as early as Wednesday. Potts will take over from Dalton Philips, who was ousted last month. (http://bit.ly/1MPOorJ)

Sky News

OIL GROUP GULF KEYSTONE TO SIGNAL SALE TALKS

Gulf Keystone Petroleum Ltd, one of London's most controversial listed companies, is poised to say that its board is considering a sale or merger amid protracted talks with the Kurdistan Regional Government (KRG) over delayed payments for oil exports, Sky News learns. (http://bit.ly/1afU3bQ)

RBS WEALTH CHIEF TAPNER TO LEAVE QUEEN'S BANK

Sky News has learned that Rory Tapner, chief executive of Royal Bank of Scotland's wealth arm is to step down. Tapner, one of the City's most senior bankers, is to leave Coutts, which counts Her Majesty The Queen among its clients, in the coming months. (http://bit.ly/1ErYA6e)

The Independent

SWISS FRANC SURGE LEADS OFFICIALS TO BLOCK PIZZA DELIVERY

Uli Burchardt, the mayor of Constance in Germany, which borders Switzerland to the northeast, told the Wall Street Journal that German vans have been stopped by Swiss customs officials after they were found to be delivering up to 60 pizzas at a time. Following the decision to lift the 1.20 euros ($1) cap in January, the Swiss have been crossing the border to do their weekly shopping, visit the dentist etc., getting more for their money. (http://ind.pn/1BkhYml)

OSBORNE TO ANNOUNCE FINES FOR BANKS INVOLVED IN TAX EVASION

George Osborne, the British Chancellor, will use his final major policy statement before the May election to fine banks, accountants and companies that help people evade tax. The fines will be announced in next month's budget following the scandal at HSBC's Swiss division. (http://ind.pn/17tiqRn)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS
Domestic economic reports scheduled for today include:
New home sales for January at 10:00--consensus down 2.3% to 471K rate
DOE petroleum inventory reports for week of Feb. 20 at 10:30

ANALYST RESEARCH

Upgrades

Axiall (AXLL) upgraded to Sector Perform from Underperform at RBC Capital
Daimler AG (DDAIF) upgraded to Outperform from Neutral at Credit Suisse
IAMGOLD (IAG) upgraded to Overweight from Neutral at HSBC
Omega Healthcare (OHI) upgraded to Buy from Hold at Stifel
Smith Micro (SMSI) upgraded to Buy from Hold at Needham

Downgrades

Boston Beer (SAM) downgraded to Market Perform from Outperform at Cowen
Coeur Mining (CDE) downgraded to Underweight from Neutral at JPMorgan
Crestwood Midstream (CMLP) downgraded to Hold from Buy at Stifel
EPR Properties (EPR) downgraded to Market Perform from Outperform at FBR Capital
Inergy Midstream (NRGM) downgraded to Hold from Buy at Stifel
Marvell (MRVL) downgraded to Hold from Buy at Stifel
ONEOK (OKE) downgraded to Hold from Buy at Evercore ISI
ONEOK (OKE) downgraded to Neutral from Buy at Goldman
QEP Resources (QEP) downgraded to Market Perform from Outperform at BMO Capital
Rosetta Resources (ROSE) downgraded to Hold from Buy at Wunderlich (yesterday)
Ross Stores (ROST) downgraded to Neutral from Buy at MKM Partners
Societe Generale (SCGLY) downgraded to Neutral from Overweight at HSBC
Trex Company (TREX) downgraded to Hold from Buy at Stifel
Vitamin Shoppe (VSI) downgraded to Equal Weight from Overweight at Barclays

Initiations

Catalyst Pharmaceutical (CPRX) initiated with a Buy at SunTrust
Earthstone Energy (ESTE) initiated with a Buy at Canaccord
Limoneira (LMNR) initiated with a Buy at Janney Capital
Memorial Resource (MRD) initiated with a Buy at SunTrust

COMPANY NEWS

HP (HPQ) lowered FY15 free cash flow view to $3.5B-$4B from prior view $6.5B-$7B 
Benefitfocus (BNFT) said Mercer, a subsidiary of Marsh & McLennan (MMC), bought 2.8M shares of Benefitfocus for $26.50 per share
Community Bank System (CBU) and Oneida Financial (ONFC) announced the signing of a definitive agreement pursuant to which Community Bank System will acquire Oneida Financial, parent company of Oneida Savings Bank in Oneida, NY, for approximately $142M in Community Bank System stock and cash, or $20 per share
Google (GOOG) acquired Toro, terms not disclosed
JPMorgan (JPM) said in a filing that it is in talks with the DOJ over auto loan pricing

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
HP (HPQ), Lowe's (LOW), R.R. Donnelley (RRD), Royal Bank of Canada (RY), Memorial Production (MEMP), ICON plc (ICLR), JAKKS Pacific (JAKK), Sapiens (SPNS), Magna (MGA), Republic Airways (RJET), Kraton Performance (KRA), Papa John's (PZZA), TPG Specialty Lending (TSLX), Imprivata (IMPR), Nektar (NKTR), Hackett Group (HCKT), Benefitfocus (BNFT), Fleetmatics (FLTX), Greatbatch (GB), GenMark (GNMK), AAC Holdings (AAC), American Water (AWK), Ixia (XXIA), Nordson (NDSN), Stone Energy (SGY), Huron (HURN), Dycom (DY), Tandem Diabetes (TNDM), Boston Beer (SAM), Range Resources (RRC), Alleghany (Y), Verisk Analytics (VRSK), Continental Resources (CLR), La Quinta (LQ), Bravo Brio Restaurant (BBRG), Matson (MATX), Textura (TXTR), ProAssurance (PRA), NuVasive (NUVA), Jazz Pharmaceuticals (JAZZ), Merit Medical (MMSI), Kona Grill (KONA), First Solar (FSLR), Chicago Bridge & Iron (CBI), Rubicon Project (RUBI), WebMD (WBMD), Infinity Pharmaceuticals (INFI), Edison International (EIX), Foundation Medicine (FMI), Healthways (HWAY)

Companies that missed consensus earnings expectations include:
Orexigen (OREX), Encana (ECA), Ormat Technologies (ORA), American Capital (ACAS), SM Energy (SM), HEICO (HEI), Masonite (DOOR), DCP Midstream (DPM), CoreLogic (CLGX), Gladstone Land (LAND), National Interstate (NATL), Safety Insurance (SAFT), ARC Document (ARC), EXCO Resources (XCO), QEP Resources (QEP), Hortonworks (HDP), Annaly Capital (NLY), DreamWorks Animation (DWA), Amyris (AMRS), Tornier (TRNX), HomeAway (AWAY), Big 5 Sporting (BGFV), Century Aluminum (CENX)

Companies that matched consensus earnings expectations include:
Copart (CPRT), Exelixis (EXEL), MannKind (MNKD), NanoString (NSTG), Smith Micro (SMSI), LendingClub (LC), Curis (CRIS), VIVUS (VVUS)

NEWSPAPERS/WEBSITES

Anthem (ANTM) states hack compromised data on 78.8M people, WSJ reports
Sycamore cancels attempt to buy Chico's (CHS), WSJ reports
JPMorgan (JPM) to close 300 bank branches over two years, AP reports
BNY Mellon (BK) said to be in FX settlement talks with U.S. DOJ, NY AG, Reuters reports
American Express (AXP) raising rates on credit cards for over 1M holders, Bloomberg reports
Amazon (AMZN) said to reduce tablet orders to Compal, Quanta by 30%, DigiTimes says

SYNDICATE

AMAG Pharmaceuticals (AMAG) files to sell $125M in common stock
Armstrong World (AWI) files automatic mixed securities shelf
CVSL Inc. (CVSL) files automatic common stock shelf
Celldex (CLDX) files to sell 7.25M shares of common stock
Curis (CRIS) files to sell common stock, no amount given
Guidance Software (GUID) files $30M mixed securities shelf
Macquarie Infrastructure (MIC) announces 4.375M share offering
QTS Realty Trust (QTS) 9.35M share Secondary priced at $34.75
Relypsa (RLYP) files to sell $130M in common stock
Royal Caribbean (RCL) files automatic mixed securities shelf
Spirit Airlines (SAVE) files automatic mixed securities shelf
Spirit Airlines (SAVE) requests withdrawal of registration statement
Strategic Hotels (BEE) files automatic mixed securities shelf
Tandem Diabetes (TNDM) files to sell $60M in common stock
Ultra Petroleum (UPL) files automatic mixed securities shelf
Xencor (XNCR) 5.5M share Secondary priced at $14.25
Zayo Group (ZAYO) files to offer $500M of common stock

• Goldman Employees Reaped $2 Billion From 2008 Options Last Year (BBG)
• On Bush turf, Obama blames immigration woes on Republicans (Reuters)
• Tougher Internet rules to hit cable, telecoms companies (Reuters)
• Russia's Gazprom says can exempt rebel-held areas from Ukraine gas contract (Reuters)
• Allianz Says Pimco Seeing ‘Substantially’ Lower Outflows (BBG)
• Next Goal for Walmart Workers: More Hours (NYT)
• Merkel Faces Stepped-Up Dissent on Greek Bailout in Party (BBG)
• SEC Probes Companies’ Treatment of Whistleblowers (WSJ)
• 2-Year Trek From Turf to Table Delays Cheaper U.S. Beef (BBG)
• Turkish jets violate Greek air space (Kathimerini)
• Standard Chartered CEO Peter Sands Resigns After Unrest at Bank (WSJ)
• Oil rises above $62 after Saudi comments on demand (Reuters)
• China submarines outnumber U.S. fleet: U.S. admiral (Reuters)
• U.S., Israel Trade Barbs Over Iran Talks (WSJ)
• Euro-Area Consumers Help Recovery as Confidence Rises (BBG)

Fly On The Wall Pre-Market Buzz

WSJ

* Morgan Stanley agreed to pay $2.6 billion to settle U.S. claims stemming from the sale of mortgage bonds, handing the Wall Street firm its biggest legal bill from the financial crisis. (http://on.wsj.com/1By9vMr)

* The Nasdaq Composite Index's longest winning streak in more than five years ended with a whimper at the hands of a surprising culprit: a pullback in the world's most valuable company, Apple Inc. (http://on.wsj.com/1By7Ar9)

* Top U.S. officials sharpened efforts to undermine Israeli Prime Minister Benjamin Netanyahu ahead of his visit to Washington next week as tensions rose over his push to scuttle a possible nuclear deal with Iran. (http://on.wsj.com/1By6Zpn)

* Three Brooklyn, N.Y., men were arrested Wednesday and accused of plotting to join or aid Islamic State in Syria, offering a glimpse into the militant group's recruiting tactics-and how U.S. counterterrorism officials are fighting back.(http://on.wsj.com/1By86p9)

* Citigroup Inc said on Wednesday the Treasury Department and California regulators are looking into its Banamex USA unit. (http://on.wsj.com/1By9NTE)

* Hedge fund Standard General LP will lead the bidding at a bankruptcy auction of 1,700 or more RadioShack Corp stores, as the electronics retailer tries to save some of its struggling business. (http://on.wsj.com/1ByaMmG)

* The Federal Communications Commission's plan for regulating how Internet providers treat traffic on their networks is expected to unleash a number of court challenges and put pressure on Congress to settle the legal morass through legislation. (http://on.wsj.com/1Byb3pC)

FT

Morgan Stanley has agreed to settle with the U.S. Department of Justice and pay $2.6 billion over allegations of mis-selling mortgage backed securities before the global financial crisis.

Google has decided to unify its two different European units into one, after years of local setbacks and legal challenges have grown into company-wide issues. Matt Brittin, who was heading the company's northern and west-European arm will now head the combined unit and will be based in London.

U.S. drugmaker Pharmacyclics is considering a sale that could fetch it about $19 billion, according to people familiar with the matter. Johnson & Johnson is said to be one of the interested buyers, one of the people said.

A little known company called Smartflash has won a legal battle against iPhone-maker Apple Inc, that would make the Cupertino-based company cough up $532.9 million in damages. Smartflash, founded in 2000, sued Apple in 2013 claiming the company had infringed on its patents through iTunes and the App Store.

NYT

* This week, Google Inc, the search giant, is expected to propose new headquarters - a series of canopylike buildings from Heatherwick Studio, a London design firm known for works like the fiery caldron at the 2012 Olympics, and Bjarke Ingels, a Danish architect known for his innovative designs. (http://nyti.ms/1ArgHYd)

* Morgan Stanley said on Wednesday that it had reached a $2.6 billion settlement with the Justice Department over the sale of mortgage securities before the financial crisis. (http://nyti.ms/1DVDZ9J)

* With some progress on the hourly wage front with Wal-Mart Stores Inc, labor activists are highlighting another longstanding demand: more hours - and more consistent hours - for hourly-wage workers, something they say will make as much a difference to workers' pocketbooks as an increase in wages. (http://nyti.ms/1LKpvwe)

* Hewlett-Packard CO is in talks to buy Aruba Networks Inc, a maker of WiFi access equipment for businesses, people briefed on the matter said on Wednesday. (http://nyti.ms/1LGCTQ5)

* Silicon Valley has lately come to the realization that it is not the meritocracy it has long pretended to be - at least not for women and most minorities. Now, after years of ignoring the issue, and some serious prodding by the likes of the Reverend Jesse Jackson, tech companies say they will do something about the hiring gap between white and Asian men and nearly everyone else. (http://nyti.ms/1wgWoaG)

* First in Detroit, then in Stockton, California, and now in New Jersey, judges and other top officials are challenging the widespread belief that public pensions are untouchable. (http://nyti.ms/1LKq60K)

* Joseph Baratta, the head of private equity at the Blackstone Group LP, the biggest alternative investment firm, said at a conference in Berlin on Tuesday that the firm was speaking with large investors about a new investment structure that would aim for lower returns over a longer period of time. (http://nyti.ms/180tkOC)

Canada

THE GLOBE AND MAIL

** Ford Motor Co will add 400 new jobs in Oakville, Ontario, to assemble the redesigned Ford Edge crossover vehicle for global markets in another sign that healthy vehicle sales are boosting the auto sector in Canada. (http://bit.ly/1BfYjCw)

** Ontario is expanding funding of one of the world's most expensive drugs to cover sufferers of a life-threatening genetic disease that damages vital organs, a move that counts as a victory for patients but raises questions about how provincial governments decide which high-priced medications to pay for. (http://bit.ly/1LJOFuS)

** Bombardier Inc is banking on the C Series to carry aerospace revenue over the next two decades as its CRJ regional jets fade into history. But even as the larger - and more popular - version of the plane is about to make its maiden flight, major hurdles remain in the company's path. (http://bit.ly/1AapLMh)

NATIONAL POST

** Start-up airline Canada Jetlines Ltd is in strategic talks with Halifax-based CanJet Airlines, as well as multiple other companies that could either merge with or take a stake in the fledgling no-frills carrier, the Financial Post has learned. (http://bit.ly/1DtkDrl)

** Bloomberg Television is set to launch in Canada this spring, sources confirmed to the Financial Post, with an announcement of the news expected as early as Thursday. (http://bit.ly/1wgDJfk)

** The Irving family, one of Canada's richest and New Brunswick's most powerful, appears to be at odds over the routing of TransCanada Corp's proposed Energy East pipeline. J.D. Irving Ltd, the family-owned forest products, logistics and shipbuilding company headed by James Irving and sons James and Robert, has filed an application with the National Energy Board saying it is "vitally concerned" about the portion of the pipeline that would pass through its Crown-leased lands in New Brunswick. (http://bit.ly/1MUj0bD)

Hong Kong

SOUTH CHINA MORNING POST

-- Macau's gross gaming revenue this month is set to drop 50 percent from a year ago, analysts say, as initial data from the first few days of the Lunar New Year, a peak season for mainland gamblers, showed a much weaker performance than anticipated. (http://bit.ly/17Zoq4y)

-- Tourists from the mainland made more than five million trips abroad during the Lunar New Year holiday, a 10 percent rise on the same period last year. China National Tourism Administration said the increase was partly prompted by favourable exchange rates and eased visa policies for Chinese visitors. (http://bit.ly/1FuBgmg)

THE STANDARD

-- Details of a government proposal for a Future Fund of at least HK$220 billion ($28.37 billion) will be unveiled on Monday. In committing to the savings war chest, Financial Secretary John Tsang said it can be used for infrastructure projects, even when budgets are in deficit, as well as to reduce the impact from an aging population. (http://bit.ly/1Et8lkB)

-- Beijing has already reached a decision on the number of times a person with a multiple-entry permit may visit Hong Kong, according to local NPC deputy Michael Tien Puk-sun. In a radio interview, Tien said Beijing and the Hong Kong government agreed on 52 visits last year but had suspended implementing the quota due to dissatisfaction with the city's retail sector. (http://bit.ly/1alTlcZ)

HONG KONG ECONOMIC JOURNAL

-- The number of small- to medium-size flats in Hong Kong sold by mainlanders accounted for 4.6 percent of the total transaction volume in 2014, up 1.1 percentage point from the previous year, according to Centaline Property Agency research director Wong Leung Sing, suggesting mainlanders are unloading their assets in the red hot local property market.

MING PAO DAILY

-- China's retail sales and restaurants turnover during the first six days of the Lunar New Year amounted to 678 billion yuan ($108.32 billion), up 11 percent from the same period a year ago, in their slowest growth since 2010, according to data from the Ministry of Commerce.

Britain

The Times

SHORT-SELLERS CASH IN AS AO WORLD TUMBLES

Short-sellers in AO World reaped 26 million pounds ($40.37 million) after the former stock market darling issued a shock profits warning nearly a year to the day after it floated, sending its value crashing by 358 million pounds. (thetim.es/1zJdf7I)

HSBC MAN'S 12-YEAR NON-DOM TAX PERKS

HSBC's chief executive enjoyed significant "non-dom" tax breaks despite living in Britain for more than a decade and educating his children here, MPs heard yesterday. (thetim.es/1zJdteV)

The Guardian

ALMOST 700,000 PEOPLE IN UK HAVE ZERO-HOURS CONTRACT AS MAIN JOB

Nearly 700,000 people are on zero-hours contracts in their main job - a rise of more than 100,000 on a year ago - according to new official figures. (bit.ly/1vyV6wH)

HSBC SCANDAL CAUSED HORRIBLE DAMAGE TO BANK'S REPUTATION, SAYS CHAIRMAN

HSBC is suffering "horrible reputational damage" as a result of the exposure of the systematic aiding of tax avoidance in its Swiss subsidiary, the bank's chairman has conceded before MPs. (bit.ly/1MSPyTj)

The Telegraph

BRITAIN TO LEAD THE WORLD IN ISLAMIC FINANCE

London has set its sights on becoming the world centre for the Islamic finance industry, according to the UK's foreign office minister for the Middle East. (bit.ly/1DbZzTO)

ODEON CINEMAS TO BE SOLD LATER THIS YEAR FOR UP TO 1 BLN STG

Private equity group Terra Firma is planning to launch the sale of its European cinema chain Odeon & UCI Group toward the end of the year in a potential 1 billion pounds deal, its chairman has revealed. (bit.ly/1DV7Yi2)

Sky News

RBS CHIEF MCEWAN TO FORFEIT 1 MLN STG 'ALLOWANCE'

Ross McEwan, the chief executive of Royal Bank of Scotland , is to hand back a 1 million pounds chunk of his 2015 pay package, cementing his status as the lowest-paid bank boss in the FTSE-100. (bit.ly/1LEqlJ1)

FORMER TESCO EXEC SCOULER TO JOIN TALKTALK

John Scouler, one of the executives who left Tesco PLC in the wake of its 263 million pounds profits overstatement, is to take on a senior role at TalkTalk, the home communications group. (bit.ly/1AM0lsj)

The Independent

SUPERGROUP FINANCE CHIEF REMOVED FROM POSITION AFTER BEING DECLARED BANKRUPT

SuperGroup, known for its Superdry branded clothing, has been forced to oust Finance Director Shaun Wills after he was declared personally bankrupt. (ind.pn/1JM0jYu)

MORRISONS NAMES NEW CHIEF EXECUTIVE - FORMER TESCO ASIA OPERATIONS BOSS DAVID POTTS

WM Morrison has named its new chief executive - and the man in question actually started his career as a shelf stacker at rival Tesco. David Potts will replace former boss Dalton Philips, who was sacked last month. (ind.pn/1FWWpt3)

Fly on the Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Consumer Price Index for January at 8:30--consensus down 0.6%
Durable goods orders for January at 8:30--consensus up 1.6%
Jobless claims for week of February 21 at 8:30--consensus 290K
FHFA house price index for December at 9:00--consensus up 0.5%
EIA natural gas storage change for week of Feb. 20 at 10:30
Kansas City Fed manufacturing index for February at 11:00--consensus 3

ANALYST RESEARCH

Upgrades

AcelRx (ACRX) upgraded to Buy from Neutral at Mizuho
AllianceBernstein (AB) upgraded to Buy from Neutral at BofA/Merrill
American Express (AXP) upgraded to Buy from Hold at Deutsche Bank
Columbia Property (CXP) upgraded to Neutral from Sell at Goldman
Gruma (GMK) upgraded to Overweight from Equal Weight at Barclays
Isle of Capri (ISLE) upgraded to Outperform from Neutral at Macquarie
T-Mobile (TMUS) upgraded to Buy from Neutral at Citigroup
Vulcan Materials (VMC) upgraded to Outperform from Sector Perform at RBC Capital

Downgrades

Bill Barrett (BBG) downgraded to Neutral from Buy at SunTrust
Cablevision (CVC) downgraded to Sell from Hold at Brean Capital
Chesapeake (CHK) downgraded to Hold from Buy at Johnson Rice
Chesapeake (CHK) downgraded to Neutral from Buy at UBS
Commerce Bancshares (CBSH) downgraded to Equal Weight from Overweight at Barclays
DineEquity (DIN) downgraded to Neutral from Overweight at JPMorgan
Dollar Tree (DLTR) downgraded to Hold from Buy at Stifel
Lamar Advertising (LAMR) downgraded to Neutral from Buy at Citigroup
Lumber Liquidators (LL) downgraded to Hold from Buy at Evercore ISI
Pacira (PCRX) downgraded to Underperform from Neutral at BofA/Merrill
Pall Corp. (PLL) downgraded to Neutral from Buy at BofA/Merrill
Paramount Group (PGRE) downgraded to Sell from Neutral at Goldman
State Street (STT) downgraded to Neutral from Buy at Citigroup
State Street (STT) downgraded to Neutral from Outperform at Credit Suisse
Suez Environnement (SZEVY) downgraded to Neutral from Buy at Citigroup
Verisk Analytics (VRSK) downgraded to Market Perform from Outperform at Raymond James
Waddell & Reed (WDR) downgraded to Neutral from Buy at BofA/Merrill

Initiations

1st Source (SRCE) initiated with a Neutral at DA Davidson
Credit Suisse (CS) initiated with an Underperform at Exane BNP Paribas
Deutsche Bank (DB) initiated with an Underperform at Exane BNP Paribas
Dice Holdings (DHX) initiated with a Neutral at B. Riley
Expedia (EXPE) initiated with an Underweight at Morgan Stanley
Groupon (GRPN) initiated with an Equal Weight at Morgan Stanley
GrubHub (GRUB) initiated with an Overweight at Morgan Stanley
HomeAway (AWAY) initiated with an Underweight at Morgan Stanley
IAC (IACI) initiated with an Underweight at Morgan Stanley
LinkedIn (LNKD) initiated with an Overweight at Morgan Stanley
Meredith (MDP) initiated with a Market Perform at Wells Fargo
Monster Worldwide (MWW) initiated with a Buy at B. Riley
Priceline (PCLN) initiated with an Equal Weight at Morgan Stanley
UBS (UBS) initiated with an Underperform at Exane BNP Paribas
Yelp (YELP) initiated with an Overweight at Morgan Stanley

COMPANY NEWS

Morgan Stanley (MS) agreed to $2.6B mortgage settlement with U.S
Sears (SHLD) said targeting REIT formation in May or June
RBS (RBS) confirmed Howard Davies to succeed Philip Hampton as chairman
RBS (RBS) announced sale of North American loan portfolio to Mizuho (MFG)
Standard Chartered (SCBFF) named William Winters as CEO, effective in June
Viacom's (VIA) Nickelodeon announced launch of Noggin mobile subscription service
Town Sports International Holdings (CLUB) said it hired Deutsche Bank to explore strategic alternatives, including a possible sale of the company
Avago Technologies (AVGO) and Emulex Corporation (ELX) announced that they have entered into a definitive agreement under which Avago will acquire Emulex in an all-cash transaction valued at approximately $606M, or $609M net of cash and debt acquired

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
American Woodmark (AMWD), Mitel (MITL), Progressive Waste (BIN), Magellan Health (MGLN), Carter's (CRI), Western Refining Logistics (WNRL), AES Corp. (AES), Swift Energy (SFY), Catamaran (CTRX), CIBC (CM), Transocean (RIG), Tronox (TROX), Aegion (AEGN), Orion Marine (ORN), AB InBev (BUD), MGE Energy (MGE), TeleTech (TTEC), Wright Medical (WMGI), EPAM Systems (EPAM), CoStar Group (CSGP), Sturm, Ruger (RGR), Southwest Gas (SWX), Quality Distribution (QLTY), Ferro (FOE), California Water Service (CWT), Concho Resources (CXO), Chemtura  (CHMT), WPX Energy (WPX), Kadant (KAI), Kennedy Wilson (KW), Solar Senior Capital (SUNS), FARO Technologies (FARO), Babcock & Wilcox (BWC), Marchex (MCHX), eHealth (EHTH), China Cord Blood (co), LeMaitre (LMAT), Anika Therapeutics (ANIK), Halcon Resources (HK), Monarch Casino (MCRI), Medivation (MDVN), Globus Medical (GMED), Avago (AVGO), Applied Optoelectronics (AAOI), Antero Resources (AR), Sprouts Farmers Markets (SFM), Carriage Services (CSV), STAAR Surgical (STAA), BioMarin (BMRN), Gulfport Energy (GPOR), L Brands (LB), DexCom (DXCM), Cempra (CEMP), AmSurg (AMSG)

Companies that missed consensus earnings expectations include:
Olympic Steel (ZEUS), NTELOS (NTLS), Higher One (ONE), ACI Worldwide (ACIW), Hoegh LNG (HMLP), Northern Tier (NTI), Ballard Power (BLDP), Transocean Partners (RIGP), Volaris (VLRS), Assured Guaranty (AGO), Seadrill (SDRL), UIL Holdings (UIL), Ensco (ESV), North Atlantic Drilling (NADL), Assured Guaranty (AGO), Approach Resources (AREX), PGT, Inc. (PGTI), Great Plains Energy (GXP), RLJ Lodging Trust (RLJ), Westar Energy (WR), Legacy Reserves (LGCY), LHC Group (LHCG), Martin Midstream Partners (MMLP), Churchill Downs (CHDN), Oasis Petroleum (OAS), CafePress (PRSS), Endologix (ELGX), Intralinks (IL), DryShips (DRYS), Erickson (EAC), Ocean Rig UDW (ORIG), MercadoLibre (MELI), Penn Virginia (PVA), Ardelyx (ARDX), Clovis (CLVS), bluebird bio (BLUE)

Companies that matched consensus earnings expectations include:
Vical (VICL), Popeyes (PLKI), Workday (WDAY), Salesforce.com (CRM)

NEWSPAPERS/WEBSITES

Aruba Networks (ARUN) in talks to be acquired by Hewlett-Packard (HPQ), Bloomberg reports
YouTube (GOOG) revenue growing but did not contribute to earnings, WSJ reports
Lenovo (LNVGY) website taken down by cyberattack, WSJ reports
Google (GOOG) considering making investment in Jawbone, Re/code reports
RBS (RBS) to greatly reduce investment bank unit, Financial Times reports
Boeing (BA), FedEx (FDX) oppose punishing Gulf airlines for alleged subsidies, Reuters says
Google (GOOG) unifying EU units amid regulatory pressures, FT says

SYNDICATE

AMAG Pharmaceuticals (AMAG) 3.98M share Secondary priced at $44.00
Boot Barn (BOOT) 5.4M share Secondary priced at $23.50
Celldex (CLDX) 7.25M share Secondary priced at $24.00
CollabRx (CLRX) 2.36M share Spot Secondary priced at $1.27
Enbridge Energy (EEP) files automatic mixed securities shelf
Lion Biotechnologies (LBIO) files to sell common stock, no amount given
Macquarie Infrastructure (MIC) 5.31M share Secondary priced at $80.00
Newfield Exploration (NFX) files to sell 18M shares of common stock
Noble Energy (NBL) files to sell 21M shares of common stock
Plains All American (PAA) files to sell 21M shares of common stock
Platform Specialty Products (PAH) files to sell 22.1M shares of common for holders
Relypsa (RLYP) 3.4M share Secondary priced at $38.50
Rovi (ROVI) files to sell $300M in convertible senior notes due 2020
Sovran Self Storage (SSS) files to sell 1M shares of common stock
Strategic Hotels (BEE) enters $250M equity distribution agreement
WashingtonFirst Bankshares (WFBI) files to sell 8,898 shares of preferred for holders
Williams Partners (WPZ) files to sell $1B of common units representing limited partner

• Central Banks With Negative Rates Spur Question of How Low to Go (BBG)
• DHS to keep running: Congress edges toward domestic security funding patch (Reuters)
• Setbacks for Tsipras Stir Discord in Greek Ruling Party (BBG)
• Greece’s Challenge: Appeasing Its Creditors and Its Population (WSJ)
• Buffett, a cheerleader for America, takes his checkbook abroad (Reuters)
• Oil’s Big Swings Are the New Normal: Market has rarely been more volatile (WSJ)
• Ukraine Left Behind as Russian Stock Gains Are Unmatched (BBG)
• Brent rises to $61, set for first monthly gain since July (Reuters)
• Gilead Avoids Billions in U.S. Tax on Its $1,000-a-Pill Drug (BBG)
• Argentine judge says no evidence government tried to derail bombing probe (Reuters)
• GOP hopeful Scott Walker compares labor unions to ISIS (Reuters)
• Ukraine Crisis Prompts German Debate on Restocking Military (NYT)
• Italian, German state inflation edges higher (FT)

Fly On The Wall Pre-Market Buzz

WSJ

* United States' largest health insurer, UnitedHealth Group Inc, is imposing tighter controls on its coverage for hysterectomies after more than a year of debate over a medical device that was found to spread hidden cancer in some women undergoing the procedure. (http://on.wsj.com/1asyXqx)

* Bill Winters, a former deputy to JPMorgan Chase & Co Chief Executive James Dimon, is the latest ex-executive to helm a large financial firm, U.K. bank Standard Chartered Plc . (http://on.wsj.com/1BEDm5N)

* Shoppers are making a comeback especially to retailers catering to lower income Americans, a sign that a battered segment of consumers is on the mend. Kohl's Corp and J C Penney Co Inc on Thursday both said more shoppers visited their stores in the fourth quarter and spent more money on each trip compared with a year ago, echoing similar results from Wal-Mart Stores Inc and Target Corp. (http://on.wsj.com/1Dxh9Eg)

* The Obama administration is pushing China to back away from proposed new bank-technology rules that have drawn protests from foreign tech companies, the United States' top trade official said. (http://on.wsj.com/1wo39rx)

* Coca-Cola Co's bond sale is the largest euro-denominated bond from an U.S. firm on record and the second-largest by any company in the currency. (http://on.wsj.com/1Dggogk)

* Royal Bank of Scotland Group Plc will dismantle its global investment bank, including cutting more than 1,000 investment-banking jobs in the United States. (http://on.wsj.com/1AQ744g)

* The three founders of private-equity firm Carlyle Group LP reaped an $800 million bounty in 2014 that reflects the big payouts the firm made to investors as it seized on buoyant markets and acquisition-hungry corporations to cash out of investments. (http://on.wsj.com/1Ewc5BM)

* International Business Machines Corp is in the same bind as many of its corporate-tech peers: how to foster fast-growing but unproven initiatives while lucrative older businesses are slowing down. At an annual meeting with analysts Thursday, IBM said it will shift $4 billion in 2015 spending to what it calls the "strategic imperatives" of cloud, analytics, mobile, social and security technologies. (http://on.wsj.com/1E2jZE8)

FT

New York's Department of Financial Services probe into rigging the foreign exchange markets has held up the settlement that Barclays is willing to accept with other U.S. and U.K. authorities. Sources close to the matter say that Barclays will be reluctant to settle with other regulatory agencies in a separate deal.

Offshore drillers such as Norway's Seadrill have warned that the number of scrapped deepwater rigs is set to be the highest in two decades. The drillers have also forecasted that the current downturn in oil companies due to falling crude prices may last another two years.

U.S. retailer Gap has warned that the current downturn with American ports -- including those at California, Oregon and Washington -- will reduce its current year's earnings by about four percentage points, as wearables like t-shirts and sweaters get delayed.

Real-estate billionaire Mort Zuckerman has hired Lazard to look for a potential buyer for his tabloid New York Daily News, which he has owned since 1993.

NYT

* The Federal Communications Commission voted on and approved new rules to regulate broadband Internet service as a public utility, a milestone in regulating high-speed Internet service into American homes.(http://nyti.ms/1zLenaM)

* David Ganek sued U.S. prosecutor Preet Bharara on Thursday, claiming that the government violated his constitutional rights by fabricating accusations against him. The lawsuit against Bharara also named as defendants the federal prosecutors and some FBI agents.(http://nyti.ms/1JTbfna)

* The three founders of the private equity giant Carlyle Group LP received more than $800 million combined in 2014, a regulatory filing on Thursday showed.(http://nyti.ms/1LPv8sS)

* Standard Chartered Plc announced on Thursday a sweeping overhaul including the departure of its chief executive, its chairman, the head of Asian markets and several directors.(http://nyti.ms/1zMmgNf)

* Irving Kahn, who made his first stock trade in June 1929 - turning a tidy profit from the stock market crash four months later - and persevered for more than eight decades to become Wall Street's oldest living active professional investor, died on Tuesday at his home in Manhattan. He was 109.(http://nyti.ms/18sqaEB)

* Amazon.com Inc, a technology company obsessed with secrecy, is hiring Jay Carney, a former press secretary in President Obama's administration.(http://nyti.ms/1asCJAm)

Canada

THE GLOBE AND MAIL

** Oil-service firms are slashing jobs and pay for executives as the fallout from tumbling crude prices spreads through the energy industry's supply chain. Trican Well Service Ltd and Calfrac Well Services Ltd are among the latest Canadian service companies to feel the pinch from deep cuts in oil producers' capital spending and a slowdown in drilling activity across North America. (http://bit.ly/1BFZxbX)

** Ford Motor Co needs to invest in an engine factory in Windsor, Ontario, now that it has pumped $700 million into its vehicle assembly plant in Oakville, Ontario, Unifor president Jerry Dias says. (http://bit.ly/1vFoC3U)

NATIONAL POST

** This week's veto by Barack Obama of a bill to approve the Keystone XL oil pipeline has sparked renewed interest in a climate change pact between Canada and the United States. The latest suggestion came from Michael Bloomberg, the former New York City mayor and the UN secretary-general's special envoy for cities and climate change, who argued that Canada could offer up progress on climate change as a quid-pro-quo for the President's KXL approval. (http://bit.ly/1G0rPP9)

** The long-running and multi-million-dollar legal dispute between David Berry and his former employer, Bank of Nova Scotia , has been settled - sparing the two parties what was expected to be a particularly costly, public trial. The settlement comes almost 10 years after Berry, the former head of preferred-share trading at Scotia and at one point the bank's highest-paid employee, was terminated. Terms of the settlement are confidential. (http://bit.ly/1G0srV8)

China

CHINA SECURITIES JOURNAL

- China's labour productivity in 2014 was 72,313 yuan ($11,554) per person, up 7 percent from the year before, according to data from China's statistics bureau on Thursday.

- China will invest over 450 billion yuan ($71.90 billion) to construct expressways and connect up road systems, transportation officials told the paper on Thursday.

SECURITIES TIMES

- The Shenzhen Stock Exchange is making preparations for China's shift from the current initial public offering (IPO) approval mechanism to a registration-based IPO system, a source close to the exchange told the paper.

PEOPLE'S DAILY

- China is launching unprecedented reforms, which is the fundamental way to purify and improve the Communist Party, the paper which acts as the mouthpiece for the Party said in an editorial.

CHINA DAILY

- China's top anti-graft watchdog will set up eight new offices in central government departments this year to tighten supervision over officials, the watchdog's deputy head said.

- U.S. law firms are investigating Chinese online lottery firm 500.com Ltd over allegations of insider trading and disclosure irregularities. The firm is listed on the New York Stock Exchange.

SHANGHAI DAILY

- Police in Shanghai are looking for an executive at a peer-to-peer lender (P2P) accused of running off with 226 million yuan of investors' money, officials told the state paper on Thursday.

Britain

The Times

B&Q ATTACKED OVER PAY-TO-STAY 'THREATS'

B&Q is facing claims that it threatened its suppliers by demanding they pay hundreds of thousands of pounds to stay on its books. (http://thetim.es/1FZLBKD)

RBS'S COUTTS INVESTIGATED OVER SWISS 'TAX EVASION'

The Swiss division of Coutts, the private bank owned by Royal Bank of Scotland, is being investigated by German prosecutors over allegations that it helped wealthy clients to evade tax. (http://thetim.es/1EvJlcy)

The Guardian

GEORGE OSBORNE REBUKED FOR BOASTING HE HALVED 1.7 BLN STG EU SURCHARGE

MPs have criticised George Osborne for exaggerating claims that he halved a 1.7 billion pound ($2.62 billion) surcharge imposed by Brussels last year when Britain's rebate automatically cut the figure to 850 million pounds. (http://bit.ly/1FAw0h8)

BANK OF ENGLAND TO BOOST WATCHDOG ROLE AFTER FAILING TO SPOT FOREX RIGGING

The Bank of England plans to beef up its watchdog role after it failed to spot one of the biggest scandals in the City's recent history. (http://bit.ly/1LMuMkQ)

The Telegraph

STANDARD CHARTERED CHIEF AND CHAIRMAN TO LEAVE IN DRAMATIC 6-MAN BOARD EXODUS

Standard Chartered has announced a dramatic exodus from its board that will see both its chief executive and chairman leave the struggling bank. (http://bit.ly/1LOxhVV)

GLAXOSMITHKLINE BRIBERY SCANDAL LED TO 13-FOLD INCREASE IN CHINA WHISTLEBLOWER REPORTS

A 15-month bribery investigation into GlaxoSmithKline by Chinese authorities has led to a dramatic increase in whistleblower reports from the company's operation in the country, its annual report has disclosed. (http://bit.ly/1Ay6lpx)

Sky News

RBS POSTS 3.5 BLN STG LOSS AS BOSS HANDS BACK 1 MLN STG

A 4 billion pound writedown on its U.S. business meant Royal Bank of Scotland remained in the red in 2014, with the bank confirming a 3.5 billion pound loss. (http://bit.ly/1FZMzGL)

U.S. REGULATORS STEP UP FOREX SETTLEMENT TALKS

Barclays will more than double its 500 million pound provision for foreign exchange-rigging fines next week, Sky News learns. (http://bit.ly/1vD0Pl9)

The Independent

OUTRIGHT HOMEOWNERS OVERTAKE MORTGAGE HOLDERS FOR FIRST TIME

For the first time, the proportion of households where the property is owned outright by its inhabitants has overtaken those that have a mortgage. The finding highlights the changing financial make-up of the country's households and is likely to embolden those arguing that the Bank of England can safely begin to increase interest rates without threatening the recovery. (http://ind.pn/1JPrgL3)

MOD WASTED 33 MLN STG ON BOTCHED PRIVATISATION ATTEMPTS, REPORT CLAIMS

The Ministry of Defence wasted 33 million pounds on botched attempts to semi-privatise the 14 billion pound budget agency that buys military equipment, according to report published by the National Audit Office.

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Second estimate of Q4 GDP growth at 8:30--consensus 2.0%
Q4 GDP price index at 8:30--consensus flat for the quarter
Chicago PMI for February at 9:45--consensus 58.0
U. of Michigan consumer sentiment for February at 10:00--consensus 94.0
Pending home sales for January at 10:00--consensus up 2.0%

ANALYST RESEARCH

Upgrades

Acura Pharma (ACUR) upgraded to Buy from Hold at MLV & Co.
Alaska Air (ALK) upgraded to Strong Buy from Outperform at Raymond James
Almost Family (AFAM) upgraded to Outperform from Neutral at RW Baird
CSX (CSX) upgraded to Outperform from Market Perform at BMO Capital
FedEx (FDX) upgraded to Outperform from Neutral at Credit Suisse
Fresenius Medical (FMS) upgraded to Neutral from Underweight at HSBC
InterContinental (IHG) upgraded to Buy from Neutral at BofA/Merrill
Kohl's (KSS) upgraded to Outperform from Market Perform at Telsey Advisory
Rexford Industrial (REXR) upgraded to Buy from Hold at Jefferies
Silver Bay Realty (SBY) upgraded to Outperform from Market Perform at JMP Securities
UIL Holdings (UIL) upgraded to Neutral from Underweight at JPMorgan
Zions Bancorp (ZION) upgraded to Outperform from Neutral at Macquarie

Downgrades

Akorn (AKRX) downgraded to Hold from Buy at Needham
Allscripts (MDRX) downgraded to Market Perform from Outperform at Leerink
Bank of America (BAC) downgraded to Neutral from Buy at UBS
CA Technologies (CA) downgraded to Underperform from Neutral at Credit Suisse
CBOE Holdings (CBOE) downgraded to Neutral from Buy at BofA/Merrill
CONE Midstream (CNNX) downgraded to Sector Perform from Outperform at RBC Capital
Calamos (CLMS) downgraded to Underperform from Neutral at Credit Suisse
Crane (CR) downgraded to Market Perform from Outperform at FBR Capital
Dick's Sporting (DKS) downgraded to Equal Weight from Overweight at Barclays
Hercules Offshore (HERO) downgraded to Sell from Buy at Deutsche Bank
Intelsat (I) downgraded to Underperform from Neutral at Credit Suisse
Laredo Petroleum (LPI) downgraded to Market Perform from Outperform at Northland
Mavenir Systems (MVNR) downgraded to Equal Weight from Overweight at Morgan Stanley
Memorial Production (MEMP) downgraded to Underperform from Perform at Oppenheimer
NTELOS (NTLS) downgraded to Market Perform from Outperform at Wells Fargo
Pharmacyclics (PCYC) downgraded to Neutral from Buy at Goldman
Potbelly (PBPB) downgraded to Underweight from Overweight at Piper Jaffray
SYNNEX (SNX) downgraded to Hold from Buy at Stifel
Safe Bulkers (SB) downgraded to Neutral from Outperform at Credit Suisse
Seadrill Partners (SDLP) downgraded to Sector Perform from Outperform at RBC Capital
Spirit Realty (SRC) downgraded to Sector Perform from Outperform at RBC Capital
WCI Communities (WCIC) downgraded to Neutral from Buy at Citigroup
Walter Investment (WAC) downgraded to Neutral from Outperform at Credit Suisse

Initiations

Colfax (CFX) initiated with an Outperform at Cowen
Global Eagle (ENT) initiated with a Buy at Citigroup
ITT Corp. (ITT) initiated with an Outperform at Cowen
Laclede (LG) initiated with an Outperform at RBC Capital
Restaurant Brands (QSR) initiated with a Perform at Oppenheimer
Unilever (UN) initiated with an Overweight at HSBC

COMPANY NEWS

Bank of America (BAC) said in a filing that Chief Accounting Officer Neil Cotty and directors Charles O. Holliday, Jr. and Clayton S. Rose will step down. Rudolf Bless has been appointed CAO
Lloyds Banking (LYG) to recommend a dividend resumption of 0.75p per share
Ericsson (ERIC) filed two complaints with the ITC and seven complaints in the U.S. District Court for the Eastern District of Texas against Apple (AAPL) asserting 41 patents covering many aspects of Apple's iPhones and iPads
J.C. Penney (JCP) CEO Ullman said company 'back and competing effectively'
Monster Beverage (MNST) announced an expanded partnership with Coca-Cola (KO)
Vitae (VTAE) said partner Boehringer Ingelheim put BI 1181181 put on voluntary clinical hold for safety evaluation

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Exelis (XLS), Aqua America (WTR), Nelnet (NNI), Belmond Ltd (BEL), Ziopharm (ZIOP), Universal Health (UHS), Southwestern Energy (SWN), Seacor (CKH), MasTec (MTZ), US Ecology (ECOL), Amerisafe (AMSF), Bio-Rad (BIO), Northern Oil and Gas (NOG), Comfort Systems USA (FIX), Aegerion (AEGR), TubeMogul (tube), EnerNOC (ENOC), Procera Networks (PKT), Clean Energy (CLNE), RealPage (RP), OmniVision (OVTI), ServiceSource (SREV), Aspen Aerogels (ASPN), SandRidge Energy (SD), A.V. Homes (AVHI), Mentor Graphics (MENT), DigitalGlobe (DGI), Encore Capital (ECPG), 2U (TWOU), Pegasystems (PEGA), Interval Leisure (IILG), McGrath RentCorp (MGRC), Outfront Media (OUT), Infoblox (BLOX), Envestnet (ENV), Power Solutions (PSIX), Herbalife (HLF), Aruba Networks (ARUN), Tumi (TUMI), Federated National (FNHC), Air Lease (AL), Air Methods (AIRM), Monster Beverage (MNST), American Public Education (APEI), Autodesk (ADSK), Splunk (SPLK), Lombard Medical (EVAR), Ross Stores (ROST), Intersect ENT (XENT), Nimble Storage (NMBL), Gap (GPS)

Companies that missed consensus earnings expectations include:

HMS Holdings (HMSY), Goodrich Petroleum (GDP), Northwest Natural Gas (NWN), Del Frisco's (DFRG), Buenaventura (BVN), Safe Bulkers (SB), Summit Midstream (SMLP), Nevsun Resources (NSU), Third Point Reinsurance (TPRE), Ascent Capital (ASCMA), Bonanza Creek (BCEI), Stonegate Mortgage (SGM), Immersion (IMMR), Synageva (GEVA), Novavax (NVAX), Rose Rock Midstream (RRMS), TetraLogic (TLOG), SemGroup (SEMG), Alphatec (ATEC), Entravision (EVC), ICF International (ICFI), Raptor Pharmaceuticals (RPTP), Universal Display (OLED), SBA Communications (SBAC), American Vanguard (AVD), Tutor Perini (TPC), Solazyme (SZYM), Performant Financial (PFMT), Ingram Micro (IM), Rockwell Medical (RMTI), ACADIA (ACAD), J.C. Penney (JCP), Cerus (CERS), National CineMedia (NCMI), Boingo Wireless (WIFI), HFF Inc. (HF), Insulet (PODD), Mavenir Systems (MVNR)

Companies that matched consensus earnings expectations include:

Ritchie Bros. (RBA), Kindred Healthcare (KND), Quaker Chemical (KWR), Capital Senior Living (CSU), Envision Healthcare (EVHC), Live Nation (LYV), Weight Watchers (WTW), Allscripts (MDRX)

NEWSPAPERS/WEBSITES

Barclays (BCS) likely to delay forex settlement, FT reports
Google Ventures' (GOOG) European arm takes stake in Kobalt, FT reports
AstraZeneca (AZN) turning antibiotic R&D into separate subsidiary, Reuters reports
PGGM calls for new directors at American Realty (ARCP), WSJ reports
Texas company sues Apple (AAPL) over additional alleged patent violations, Reuters reports

SYNDICATE
Bloomin' Brands (BLMN) files to sell 18.31M shares of common stock for holders
Boeing (BA) files automatic mixed securities shelf
Concho Resources (CXO) files to sell 5.6M shares of common stock
CyberArk (CYBR) files $200M ordinary share offering
Eaton (ETN) files automatic mixed securities shelf
Echo Global (ECHO) files $450M mixed securities shelf
MoSys (MOSY) files to sell common stock, no amount given
PG&E (PCG) enters $500M equity distribution agreement
Q2 Holdings (QTWO) 5.122M share Secondary priced at $19.75
Tandem Diabetes (TNDM) 5.25M share Secondary priced at $11.50
Transgenomic (TBIO) raises $6.2M through an equity offering
WashingtonFirst Bankshares (WFBI) files $50M mixed securities shelf

• Hilsenrath: Fed Ushering in New Era of Uncertainty on Rates (WSJ)
• Is Supreme Court's chief justice ready to take down ObamaCare? (The Hill)
• Netanyahu arrives in U.S., signs of easing of tensions over Iran speech (Reuters)
• Nemtsov Murder Fuels Suspicion, Fails to Spur Russia Selloff (BBG)
• ECB uncomfortable with leading role in Greek funding drama (Reuters)
• Video shows Los Angeles police shooting homeless man dead (Reuters)
• Iraq Military Begins Campaign to Reclaim Tikrit (WSJ)
• How Billionaires in London Use Secret Luxury Homes to Hide Assets (BBG)
• European Banks’ Reciprocity Draws Scrutiny (WSJ)
• Berkshire insurance 'superstar' could fill Buffett's shoes (Reuters)
• RadioShack Gifts That Don't Keep On Giving (BBG)
• HSBC Whistleblower Says He Can Prove HSBC Knew of Tax Abuses (BBG)
• 1 semiconductor + 1 semiconductor = 1 conductor? NXP to buy Freescale, create $40 billion company (Reuters)
• Apple’s Looming Watch Spurs Frenzy of Upgrades for Android Timepieces (BBG)

Overnight Media Digest

WSJ

* Thousands of Russians marched in Moscow in memory of opposition leader Boris Nemtsov, whose slaying has sent shock waves through society as the highest-profile assassination in Russia during the Putin era. (http://on.wsj.com/1N7hdA6)

* A showdown this week between the White House and Israel's Netanyahu has far-reaching implications for ties between the two countries and the shape of power and influence in the Middle East. (http://on.wsj.com/1BvVE7H)

* Telecom firms trying to connect billions more people to the Web are not sure if Facebook Inc is their friend or foe. Tensions between the phone and Internet industries will be on display at the Mobile World Congress in Barcelona. (http://on.wsj.com/1vQTb6W)

* Ajit Jain, who runs Berkshire Hathaway Inc's reinsurance business, and Greg Abel, who runs the conglomerate's energy business, have emerged as favorites to succeed Warren Buffett as CEO. (http://on.wsj.com/1EEnLm5)

* NXP Semiconductors and Freescale Semiconductor have agreed to merge in a deal that values Freescale at $11.8 billion and would create a combined company with a market value of more than $30 billion. (http://on.wsj.com/1N7hrqW)

* A surprise rate cut by China's central bank underscores the increasingly aggressive measures the leadership is relying on to rev up activity in the world's second-largest economy. (http://on.wsj.com/1vQS7A0)

* Rebekah Brooks, the former News Corp executive who resigned in 2011 amid the phone-hacking scandal at the now-defunct UK tabloid the News of the World, is close to finalizing a deal to return to the company, people familiar with the matter said. (http://on.wsj.com/1E8kvAw)

FT

Luxury sports car brand Aston Martin is set to revamp its image of an iconic British carmaker and focus on women and youth in its forthcoming models and designs. Andy Palmer, Aston Martin's CEO, who joined the Warwickshire-based carmaker in October, will tell the Geneva motor show that they plan to add two new product lines.

NXP Semiconductors, makers of chips that are used in credit and debit cards, has bought its rival Freescale in a deal that would create a company with a total value of $40 billion.

Russian billionaire Mikhail Fridman has threatened to go to court if the British government tries to block a 5 mln euro deal that will give Fridman ownership of RWE Dea, the oil and gas arm of Germany's RWE.

French telecom operator Orange is eyeing a partnership with its Italian rival Telecom Italia to create further consolidation in the European telecom market. Orange CEO Stephane Richard said in an interview to French weekly Journal du Dimanche that a tie-up "would be an attractive European consolidation opportunity."

NYT

* Controlling China's sprawling food supply chain has proved a frustrating endeavor. Now, with a quick scan of a code with a smartphone, shoppers can look up a fruit's complete journey from the field to a bin in a Beijing supermarket. The smartphone feature, which also details soil and water tests from the farm, is intended to ensure that a fruit has not been contaminated anywhere along the way. (http://nyti.ms/1K6hV1s)

* Wells Fargo & Co, one of the largest subprime car lenders, is pulling back from that roaring market, a move that is being felt throughout the broader auto industry. Wells Fargo has imposed a cap for the first time on the amount of loans it will extend to subprime borrowers. (http://nyti.ms/1K6ipVh)

* On the 35th floor of a two-bedroom rental overlooking the East River, Dennis Kozlowski lives with his new wife, Kimberly, in relative modesty - at least compared with his previous life as the extravagant chief of Tyco International Plc. (http://nyti.ms/1K6iEjn)

* Rebekah Brooks, the former head of Rupert Murdoch's media holdings in Britain, acquitted last year on charges related to the phone hacking scandal, is likely to return to News Corp to focus on new avenues for digital and social media, people familiar with the company's plans said. (http://nyti.ms/1K6jf4s)

* NXP Semiconductors NV said on Sunday it would buy a smaller peer, Freescale Semiconductor Ltd, in an $11.8 billion deal that would create a big maker of chips for industries as varied as automobiles and mobile payments. (http://nyti.ms/1K6jGvC)

* AT&T Inc, the second-largest wireless carrier in the United States, says it is has found life beyond being a phone carrier. The company said that this year it is poised to become a more diversified company, with money coming in from connected cars and the "Internet of Things." AT&T also says that business solutions, or services it offers to businesses, will be its largest source of income. (http://nyti.ms/1K6k4KE)

Hong Kong

SOUTH CHINA MORNING POST

-- At least 16 People's Liberation Army major generals have been taken away for investigation in relation to graft cases involving their former superiors, according to sources close to the military. Two independent sources close to the PLA said most of the officers were either secretaries or relatives of former military commanders or senior officers. (bit.ly/1vPY540)

-- A 61-year-old man has become the first person in Hong Kong to die of H7N9 bird flu this season, after contracting the virus during a visit to the mainland. It came as three more adults died from H3N2 influenza on Sunday, taking the total deaths from flu this year to 307, higher than that from the Sars outbreak in 2003, which claimed 299 lives in Hong Kong. (bit.ly/1AWzMR5)

-- The boost to Hong Kong Exchanges and Clearing's turnover from the Shanghai stock connect scheme in recent months has brokers expecting good profit growth figures when the local bourse announces its results on Thursday. Credit Suisse expects HKEx to report HK$5.08 billion ($655.15 million) net profit for last year, up 12 percent from 2013. (bit.ly/18Cwx8g)

THE STANDARD

-- More than 60 percent of Hongkongers feel the Legislative Council should pass the government's political reform package while 30 percent disagree, according to the pro-establishment Democratic Alliance for the Betterment and Progress of Hong Kong. It said the survey was conducted on its behalf by the Hong Kong Public Opinion Research Centre. (bit.ly/1M2xmoS)

-- Hong Kong Financial Secretary John Tsang Chun-wah set up his Facebook account last month to better communicate his eighth budget to Hongkongers. Writing in his blog, Tsang said it is the first time he is using Facebook to communicate with the public and some have even mocked him for being "out" late on social media. (bit.ly/1Dsifi8)

-- Several online lottery sales platforms in the mainland have been closed, reflecting Beijing's determination to clean up the industry. Alibaba said it has suspended sales of lotteries on Taobao Lottery platform in response to an order from the Ministry of Civil Affairs, while Tencent confirmed that all lottery business on its QQ and PC platform has been suspended. (bit.ly/1E7SDwu)

MING PAO DAILY

-- The number of public phone booths in Hong Kong fell to 1,630 from 1,920 in the year 2000, amid advances in mobile telecommunications technology and the popularity of smartphones, according to data from the city's Office of the Communications Authority.

Britain

The Times

Abu Dhabi's sovereign wealth fund Abu Dhabi Investment Authority tabled a 1.6 bln pound takeover bid for Maybourne Hotel Group, owner of Claridge's, the Berkeley and the Connaught in London. (http://thetim.es/1Bv3b6G)

Stephen Schwarzman, the boss of the world's largest buyout firms, Blackstone, took home $690 mln last year in one of the biggest paydays in Wall Street history. (http://thetim.es/1Bv3lev)

The Guardian

More than 300 young people have been groomed and sexually exploited by gangs of men in Oxfordshire in the past 15 years, a damning report into the failures of police and social services to stop years of sexual torture, trafficking and rape will reveal, the Guardian has learned. (http://bit.ly/1Bv3JJK)

A coalition row about limiting free speech on university campuses to ban hate preachers has broken out with the Tories saying their default position is now that any extremist speaker should be banned, given the potential damage they can do. (http://bit.ly/1Bv3Q8a)

The Telegraph

The Liberal Democrats plan to hit the UK banking industry with an additional 1 bln pound tax bill, which the party says will help eliminate the country's deficit. The supplementary charge will be in addition to the existing bank levy, which is on track to raise 8 bln pounds in this parliamentary session, said Danny Alexander, the Liberal Democrat chief secretary to the Treasury. (http://bit.ly/1BuJuMv)

German finance minister Wolfgang Schaeuble has softened his hard-line attitude towards Greece, saying its new left-wing Syriza government needs "a bit of time" but appears to be able to work towards resolving its debt crisis. (http://bit.ly/1Bv453b)

Sky News

Energy price comparison websites have been "duping" customers into switching to deals that are not the cheapest on the market and should pay them compensation, a group of MPs have said. Energy and Climate Change Committee said some sites had used misleading language to dupe consumers into options that only displayed commission-earning deals. (http://bit.ly/1Bv4eUm)

The Rail, Maritime and Transport union is organising gatherings in London, Doncaster and Edinburgh to protest against the East Coast Main Line being handed over to Virgin and Stagecoach. (http://bit.ly/1Bv4nqF)

The Independent

The BBC will back a radical overhaul of the licence fee, paving the way for the end of the current system of funding the state broadcaster, the Corporation's head, Tony Hall, is expected to say today. (http://ind.pn/1Bv5S8r)

Lloyds is to pay its first dividend since the financial crisis but faces a growing controversy over the huge rewards handed to its executives as a result, including £11.5m to boss Antonio Horta-Osorio. (http://ind.pn/1Bv65sn)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Personal income for January at 8:30--consensus up 0.4%
Personal spending for January at 8:30--consensus down  0.1%
Markit manufacturing PMI for February at 9:45--consensus 54.3
ISM manufacturing index for February at 10:00--consensus 53.0
Construction spending for January at 10:00--consensus up 0.3%

ANALYST RESEARCH

Upgrades

Alaska Air (ALK) upgraded to Buy from Hold at Stifel
Digital Realty (DLR) upgraded to Buy from Hold at Stifel
Jack Henry (JKHY) upgraded to Outperform from Perform at Oppenheimer
OM Asset Management (OMAM) upgraded to Buy from Neutral at Citigroup
Telefonica (TEF) upgraded to Outperform from Sector Perform at RBC Capital
United Rentals (URI) upgraded to Overweight from Equal Weight at Morgan Stanley

Downgrades

Ashford Hospitality (AHT) downgraded to Neutral from Outperform at Credit Suisse
Bank of Ireland (IRE) downgraded to Hold from Buy at Deutsche Bank
BlackRock (BLK) downgraded to Neutral from Buy at Citigroup
CONE Midstream (CNNX) downgraded to Equal Weight from Overweight at Barclays
Cloud Peak (CLD) downgraded to Hold from Buy at Brean Capital
Cracker Barrel (CBRL) downgraded to Hold from Buy at Miller Tabak
Crane (CR) downgraded to Underperform from Neutral at BofA/Merrill
DDR Corp. (DDR) downgraded to Neutral from Buy at Goldman
IBM (IBM) downgraded to Underweight from Neutral at Atlantic Equities
InterXion (INXN) downgraded to Hold from Buy at Stifel
Isis Pharmaceuticals (ISIS) downgraded to Hold from Buy at Brean Capital
Lumber Liquidators (LL) downgraded to Equal Weight from Overweight at Morgan Stanley
MarkWest Energy (MWE) downgraded to Hold from Buy at Wunderlich
Michaels (MIK) downgraded to Neutral from Buy at Goldman
Navient (NAVI) downgraded to Equal Weight from Overweight at Barclays
Navient (NAVI) downgraded to Neutral from Buy at Compass Point
Northern Oil and Gas (NOG) downgraded to Neutral from Buy at SunTrust
Oasis Petroleum (OAS) downgraded to Neutral from Buy at Guggenheim
PTC Therapeutics (PTCT) downgraded to Neutral from Overweight at JPMorgan
SBA Communications (SBAC) downgraded to Outperform from Top Pick at RBC Capital
Safe Bulkers (SB) downgraded to Neutral from Buy at Citigroup
Spirit Airlines (SAVE) downgraded to Hold from Buy at Stifel
Sucampo (SCMP) downgraded to Underperform from Neutral at Credit Suisse
Synageva (GEVA) downgraded to Neutral from Overweight at JPMorgan
TCP International (TCPI) downgraded to Neutral from Overweight at Piper Jaffray
Walter Investment (WAC) downgraded to Underperform from Market Perform at FBR Capital
Wayfair (W) downgraded to Neutral from Buy at Citigroup

Initiations

Chemtura (CHMT) initiated with an Outperform at RW Baird
Euronav NV (EURN) initiated with an Overweight at JPMorgan
LabCorp (LH) initiated with an Overweight at Barclays
Quest Diagnostics (DGX) initiated with an Equal Weight at Barclays
TerraForm (TERP) initiated with a Buy at UBS

COMPANY NEWS

NXP Semiconductors (NXPI), Freescale (FSL) announced $40B merger agreement
Buffett said sold entire Exxon Mobil (XOM) stake in Q4, said that his likely cost for IBM (IBM) shares is around $170
Mitel (MITL) agrees to acquire Mavenir Systems for $560M
Samsung (SSNLF) announced the Galaxy S6 and Galaxy S6 edge phones and Samsung Pay mobile payment system
U.S. DOE to end contracts with Navient's (NAVI) Pioneer Credit, other agencies. Navient said losses Department of Education contract worth $65M in 2014
BlackBerry (BBRY) unveils software and services vision, expands cross platform strategy across all smartphone and tablets running iOS (AAPL), Android (GOOG), and Windows (MSFT) operating systems

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Intercept (ICPT), Dresser-Rand (DRC), Cleco (CNL)

Companies that missed consensus earnings expectations include:
Emerge Energy (EMES), Pattern Energy (PEGI), Gran Tierra (GTE), OPKO Health (OPK), Cleco (CNL)

LSB Industries (LXU) reports Q4 adjusted EPS 9c vs. (42c) a year ago
Pattern Energy (PEGI) reports Q4 EPS (36c) vs. (17c) a year ago
Berkshire Hathaway (BRK.A) reports Q4 operating EPS $2,412 vs. $2,297 in Q413
Cleco (CNL) sees FY15 EPS $2.28-$2.38, consensus $2.51
Vermilion Energy (VET) reports Q4 EPS 55c vs. 50c a year ago

NEWSPAPERS/WEBSITES

Citi (C) CEO, CFO may be pressured to leave if bank fails stress test, FT reports
Alibaba (BABA) to invest $316M in Taiwan entrepreneurs, WSJ reports
Lumber Liquidators (LL) linked to health and safety violations, CBS' 60 Minutes says
Samsung (SSNLF) expects Galaxy S6 to become company's best-selling model, DigiTimes reports
Wells Fargo (WFC) to place limit on subprime auto loans, NY Times reports
EMC (EMC) decides against spinning off stake in VMware (VMW), Reuters reports
Google (GOOG) shares could rise 5%-10% with a dividend, Barron's says
American Express (AXP) shares could rally 15%, Barron's says
Campbell Soup (CPB) could drop 5%-10%, Barron's says

SYNDICATE

Alliance Resource Partners (ARLP) files automatic mixed securities shelf
Aqua America (WTR) files automatic mixed securities shelf
Bank of America (BAC) files mixed securities shelf
Cleveland BioLabs (CBLI) files to sell 2.07M shares of common stock for holders
Continental Building (CBPX) files to sell $22.5M in common stock for holder
Empire State files to sell 15.74M shares of Class A common stock for holders
Essent Group (ESNT) files automatic mixed securities shelf
Essent Group (ESNT) files to sell 41.01M shares of common stock for holders
Healthcare Trust (HTA) files automatic mixed securities shelf
Healthcare Trust (HTA) files to sell 2.5M shares of Class A common for holders
Hess Corp. (HES) files automatic mixed securities shelf
Ignyta (RXDX) files $150M mixed securities shelf
Kimco Realty (KIM) announces $500M 'at the market' equity offering program
Kimco Realty (KIM) files automatic mixed securities shelf
LifePoint (LPNT) files automatic mixed securities shelf
ModusLink (MLNK) files $100M mixed securities shelf
Nationstar (NSM) files automatic mixed securities shelf
Organovo (ONVO) files $190M mixed securities shelf

• 3 days after Zero Hedge, here's Bloomberg: Company Cash Bathes Stocks as Monthly Buybacks Set Record (BBG)
• Israel's Netanyahu to address Congress in speech that has strained ties with Obama (Reuters), Risks Diplomatic, Political Pain If Speech Falls Flat (BBG)
• Before Key Speech, Netanyahu Hails U.S. Ties (WSJ)
• $1.92 bilion FX rigging charge: Barclays Posts Loss as Foreign-Exchange Provisions Rise (WSJ)
• Barclays Awards Jenkins First Bonus as CEO, Cuts Pay Pool (BBG)
• Exxon’s Russia Exposure Surges as Long View Outweighs Sanctions (BBG)
• Obama says Iran must halt key nuclear work for at least a decade (Reuters)
• Yellen Turning from Friend to Foe for Dollar Bulls (BBG)
• Google to launch small US mobile network (FT)
• Jeff Immelt’s Overhaul of GE Impeded by Falling Oil Prices (WSJ)
• Iraqi forces try to seal off Islamic State around Tikrit (Reuters)
• Best Buy to Buy Back Shares, Raise Dividends After Earnings Surge (WSJ)

Overnight Media Digest

FT

Google will launch its own mobile network in the United States, threatening the traditional carriers with competition if they don't innovate quickly to better improve Internet connectivity.

According to a September 2013 audit report, the U.S. Office of Personnel Management's inspector general had warned Anthem of vulnerabilities in its computer system two years before online criminals broke into its records and stole personal information belonging to about 80 million people.

Veteran investor Bill Gross has criticised the move by global economies to cut interest rates, opining that the move would hinder rather than help growth. "Low interest rates globally destroy financial business models that are critical to the functioning of modern day economies," Gross wrote.

USA Today publisher Gannett Co Inc. has settled a corporate governance dispute with activist investor Carl Icahn ahead of its spin-off of its publishing arm. In January, Icahn, who holds a 6.6 percent interest in the company, alleged that the company's board might take steps to prevent the takeover of its publishing arm.

NYT

* Energy prices began falling last summer, but economists are stumped on what consumers are doing with the extra money. They are not shopping. One hint at what consumers might be thinking came Monday, when new government data on the economy showed a healthy gain for wages and salaries in January, even as spending by consumers inched lower for the second month in a row. (http://nyti.ms/1vWdAaD)

* The diverging prospects for JPMorgan's biggest businesses are reflective of a split within the broader financial industry. (http://nyti.ms/1Ge1ayq)

* How Etihad Airways runs and is financed are central in a fight with airlines in the United States, which accuse Persian Gulf carriers of stealing passengers. (http://nyti.ms/1Ckyi6u)

* A growing number of the wealthy British residents do not have to pay tax on their foreign income or assets, thanks to an Edwardian-era law. (http://nyti.ms/1wO95dA)

* A little over a month ago, Carl Icahn seemed poised for a fight at the Gannett Co Inc. Now, the veteran activist investor is backing down. Gannett disclosed on Monday that Icahn had withdrawn his two nominees for its board, as well as his corporate governance proposals that would have made it easier to sell the media company. (http://nyti.ms/1Nb2pAp)

* Convicted in 2005 of looting nearly $100 million from Tyco International, L. Dennis Kozlowski was the face of Wall Street gluttony. Now a free man, he speaks for the first time of his more modest life. (http://nyti.ms/1AtyysV)

* Under a government crackdown on for-profit schools that leave students with useless credentials and punishing debt, some colleges have converted to nonprofits, in lucrative deals. (http://nyti.ms/1wO8gBw)

Canada

THE GLOBE AND MAIL

** The Canadian government is actively searching for a new top military commander to succeed General Tom Lawson after he asked that his three-year appointment not be extended. (bit.ly/1AAJp4j)

** Oxford Properties Corp and Ivanhoe Cambridge Inc, two of the country's largest landlords have moved quickly to snap up 11 of their best leases from insolvent Target Canada for what it describes as a premium price, underlining their urgency to take back control of their retail space. (bit.ly/1wLOzKz)

 
** For a new advertising campaign for McDonald's Canada, launched on Monday evening, a small film crew crisscrossed the country interviewing more than 450 McDonald's customers, staff, and suppliers. Some of those people will be the face of the "Welcome to McDonald's" campaign. (bit.ly/1vXqx4d)

NATIONAL POST

** Ottawa's bumpy mission to foster fiercer wireless competition across the country is set to reach a climax when Industry Canada reveals the results of the AWS-3 spectrum auction to be held on Tuesday. (bit.ly/1EdoTww)

** Two transactions in Toronto that saw institutional buyers swoop in and make offers to condo developers for entire buildings, squeezing out all the small-time investors, have caught the eye of people in the high-rise industry. (bit.ly/1EJ1eVq)

** Refugee immigrants are reporting higher incomes to the Canada Revenue Agency than investor-class immigrants, according to data compiled by Citizenship and Immigration Canada. The rate of investor immigrants reporting any income whatsoever is far below the Canadian average. (bit.ly/1DCZ5pM)

** Concerns that arms could end up "in the hands of extremists" made Ottawa reluctant to support the Syrian opposition in the aftermath of the August 2013 chemical weapons attack in Damascus, newly released documents show. (bit.ly/1AALmOa)

** The Ontario government has opened the possibility of appealing a court ruling, which allowed a young aboriginal girl with leukemia to abandon chemotherapy, after an unusual, belated decision to get involved in the contentious case. (bit.ly/1EdyCTu)

China

CHINA SECURITIES JOURNAL

- China's banking industry should accelerate the transformation of the way it makes profits, improve innovation capacity and further develop risk-control management in order to better adapt to the "new normal" of the Chinese economy, Shang Fulin, president of the China Banking Regulatory Commission, wrote in a state-owned magazine recently.

- The revenue and profits made by 421 companies on Shenzhen's ChiNext board, China's Nasdaq-style board of high-growth companies, hit a three-year high in 2014, according to company results posted on the exchange website.

SECURITIES TIMES

- China Vanke Co Ltd, the nation's biggest property developer, denied a rumor that the company plans to lay off staff to improve profits amid the ailing property market.

SHANGHAI SECURITIES NEWS

- Starting April 1, all Chinese trust companies are required to allocate one percent of their total assets to a trust insurance fund, the paper reported citing a recent internal statement circulated by the China Banking Regulatory Commission. The trust was set up to reduce financial risk in shadow banking.

- China has imposed a total of 72.3 million yuan ($11.53 million) of fines in 136 environment pollution cases since the revision of the environmental law, said Pan Yue, vice-minister of the Ministry of Environmental Protection.

CHINA DAILY

- Attempts to promote a separatist agenda in the Hong Kong Special Administrative Region will be futile, according to an editorial in the official paper. It will only lead the city to a political and economic dead end, said the editorial.

Britain

The Times

HOUSE PRICES FALL FOR FIRST TIME IN FIVE MONTHS

House prices fell for the first time in five months in February as the property market slowed more sharply than expected, according to figures from Nationwide. (http://thetim.es/18fVfua)

UK MANUFACTURING HITS SEVEN-MONTH HIGH

The UK's manufacturing output has reached a seven-month high in the latest sign that the economy is gathering pace after a slowdown towards the end of last year. (http://thetim.es/1BQ8UWH)

The Guardian

THOUSANDS MISS FIRST SECONDARY SCHOOL CHOICE AS DEMAND RISES ACROSS UK CITIES

Tens of thousands of children have missed out on their first choice of secondary school this year as pressure on places mounts, with almost half failing to get into their top preference in some areas of London. (http://bit.ly/1aJagGB)

MPS CALL FOR END TO INDEFINITE DETENTION OF MIGRANTS

A cross party-group of MPs has called for an end to the indefinite detention of migrants, warning that too many people are being unnecessarily detained, sometimes for as long as four years, under a system they characterise as "expensive, ineffective and unjust". (http://bit.ly/1NadIc7)

The Telegraph

CO-OP BANK EXECUTIVE LEAVES IN LATEST HIGH-PROFILE EXIT

A senior executive at the Co-operative Bank has left the company after little more than a year, in the latest high-profile departure from the troubled bank. (http://bit.ly/1zBKqJh)

RUSSIANS TO FIGHT UK'S NORTH SEA GASFIELDS DECISION

A group of billionaire Russian investors plans to challenge a UK decision to block their attempt to seize control of a clutch of North Sea gasfields worth billions. (http://bit.ly/1vVoSfq)

Sky News

STANCHART RISKS REIGNITING BANK BONUS ROW

The emerging markets bank Standard Chartered Plc will risk reigniting a row over City bonuses this week when it reveals that it is cutting bonuses by a smaller percentage than its decline in profits. (http://bit.ly/1GJAiUt)

TWO-THIRDS OF 'CHESHUNT NINE' LEAVE TESCO

Two-thirds of the executives suspended over Tesco Plc's 263 million stg profits overstatement scandal have left the supermarket giant. (http://bit.ly/18hpK2N)

The Independent

LLOYDS TO PAY FIRST DIVIDEND SINCE 2008 BAILOUT

Lloyds Banking Group, which is backed by the taxpayer, is to pay its first dividend since 2008 as its chief executive collected a 7.4 million stg bonus. (http://ind.pn/1LQmPNv)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

No major domestic economic reports scheduled for today.

ANALYST RESEARCH

Upgrades
Citi (C) upgraded to Overweight from Neutral at JPMorgan
DURECT (DRRX) upgraded to Buy from Hold at Cantor
LabCorp (LH) upgraded to Buy from Hold at Canaccord
NXP Semiconductors (NXPI) upgraded to Neutral from Sell at Goldman
Quest Diagnostics (DGX) upgraded to Buy from Hold at Canaccord

Downgrades

AK Steel (AKS) downgraded to Neutral from Buy at Nomura
American Express (AXP) downgraded to Underperform from Neutral at Macquarie
Cerner (CERN) downgraded to Hold from Buy at Topeka
Fifth Third (FITB) downgraded to Market Perform from Outperform at Keefe Bruyette
Freescale (FSL) downgraded to Neutral from Overweight at Piper Jaffray
KBR (KBR) downgraded to Hold from Buy at Jefferies
LTC Properties (LTC) downgraded to Neutral from Buy at Mizuho
MannKind (MNKD) downgraded to Sell from Neutral at Goldman
Mavenir Systems (MVNR) downgraded to Hold from Buy at Deutsche Bank
Medifast (MED) downgraded to Underperform from Neutral at BofA/Merrill
Micron (MU) downgraded to Neutral from Buy at Nomura
PVH Corp. (PVH) downgraded to Neutral from Conviction Buy at Goldman
U.S. Steel (X) downgraded to Neutral from Buy at Nomura
Vivendi (VIVHY) downgraded to Underperform from Hold at Jefferies
Yum! Brands (YUM) downgraded to Neutral from Outperform at RW Baird

Initiations

Easterly Government Properties (DEA) initiated with an Outperform at RBC Capital
Hilton (HLT) initiated with an Outperform at RBC Capital
MPLX (MPLX) initiated with a Hold at Evercore ISI
Marriott (MAR) initiated with an Outperform at RBC Capital
Nexvet Biopharma (NVET) initiated with an Outperform at JMP Securities
Shell Midstream (SHLX) initiated with a Buy at Evercore ISI
Starwood (HOT) initiated with a Sector Perform at RBC Capital
Sunoco Logistics (SXL) initiated with a Hold at Evercore ISI
Syneron Medical (ELOS) initiated with a Buy at Brean Capital
Tesoro Logistics (TLLP) initiated with a Buy at Evercore ISI
Valero Energy Partners (VLP) initiated with a Buy at Evercore ISI
Vista Outdoor (VSTO) initiated with a Buy at CRT Capital

COMPANY NEWS

Boise Cascade (BCC) announces 2M share repurchase program
Bristol-Myers (BMY) reports hepatitis C cure rate of 97% in study 
Cisco (CSCO), Telecom Italia announce intent to enter cloud services agreement
Citi (C) confirms sale of OneMain Financial To Springleaf to $4.25B
FMC Corporation's (FMC) sale of Alkali business to Tronox clears antitrust review
Intuitive Surgical (ISRG) awarded $430M government contract
Jiayuan.com (DATE) receives 'going private' proposal
Macau reports February casino revenue down 48.6% to 19.54B patacas
Ocwen (OCN) hired Moelis, Barclays to explore strategic options
Ocwen (OCN) not anticipating any material fines from regulators
Petrobras (PBR) announces $13.7B two-year divestment plan
Pluristem (PSTI) announce data showing PLX-R18 cells improve bone marrow transplant
STAAR Surgical (STAA) appoints Caren Mason as CEO
Salix (SLXP) discloses internal probe of disclosures of wholesaler inventory levels
Scientific Games (SGMS) signs contract with ALC to provide lottery game system
SunOpta (STKL) announces $30M share repurchase program

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Tarena (TEDU), Avolon (AVOL), Stage Stores (SSI), JD.com (JD), Nortek (NTK), Halozyme (HALO), Puma Biotechnology (PBYI), Meadowbrook Insurance (MIG), Acura Pharma (ACUR), Diplomat Pharmacy (DPLO), Altisource (ASPS), Opower (OPWR), Intrexon (XON), DTS, Inc. (DTSI), MBIA (MBI), Guidewire (GWRE), McDermott (MDR), Fox Factory (FOXF), DURECT (DRRX), Matador (MTDR), Everyday Health (EVDY), Nutrisystem (NTRI), IGI Laboratories (IG), RigNet (RNET), Palo Alto (PANW), CNinsure (CISG), Epiq Systems (EPIQ), Chuy's (CHUY)

Companies that missed consensus earnings expectations include:
SunOpta (STKL), Nabors Industries (NBR), FS Investment (FSIC), Compass Diversified (CODI), Baltic Trading (BALT), Mid-Con Energy (MCEP), New Mountain Finance (NMFC), Cumulus Media (CMLS), Sanchez Energy (SN), Aerie Pharmaceuticals (AERI), Arena Pharmaceuticals (ARNA), Carmike Cinemas (CKEC), Salix (SLXP), Caesars Acquisition (CACQ), Caesar's (CZR), Portfolio Recovery (PRAA), DXP Enterprises (DXPE)

Companies that matched consensus earnings expectations include:
KYTHERA (KYTH), Chimera (CIM), Revance (RVNC), Mylan (MYL)

NEWSPAPERS/WEBSITES

Apple (AAPL)-Google (GOOG) proposed $415M settlement headed towards approval, Reuters says
Judge pauses attorney general piracy probe against Google (GOOG), AP says
Obama task force on police doesn't call for body cameras (TASR, DGLY), NY Times says
Taiwan orders Alibaba (BABA) to withdraw from country, Financial Times reports
Toyota (TM) promises to stay profitable in Russia, Financial Times reports

SYNDICATE

Callidus Software (CALD) files to sell 4M shares of common stock
Concert Pharmaceuticals (CNCE) files $125M mixed securities shelf
Diamond Resorts (DRII) files to sell 4.83M shares for holders
General Finance Corp (GFN) files to sell 4.4M shares of common stock
Harman (HAR) files to sell 839,673 shares of common stock for holders
Heartland Express (HTLD) files to sell 3.25M shares of common stock for holders
Markel (MKL) files automatic mixed securities shelf
NorthStar Asset Management (NSAM) files automatic mixed securities shelf
Northstar Realty (NRF) files to sell 60M shares of common stock
Oaktree Capital (OAK) files to sell 4M Class A units
Pfizer (PFE) files automatic mixed securities shelf
Santander Consumer (SC) files to sell 245.6M shares for holders
TESARO (TSRO) files to sell $150M of common stock
Taylor Morrison (TMHC) files to issue 1.4M shares of Class A stock to holders

• ECB Starts Buying German, Italian Government Bonds Under QE Plan (BBG)
• Creditors Reject Greece's Reform Proposals (BBG)
• Is Apple Watch the Timex digital watch of the Internet era? (Reuters)
• Tesla shedding jobs in China as sales target missed (Reuters)
• Malaysia Airlines says expired battery on MH370 did not hinder search (Reuters)
• Gunmen kill more than 12 Islamic State militants in eastern Syria (Reuters)
• GM Plans Share Buyback, Averting Proxy Fight (WSJ)
• Wisconsin capital marked by third day of protests after police shooting (Reuters)
• Hedge Funds Are Losing Faith in Oil Rally While Inventory Swells (BBG)
• German exports post biggest drop in five months in January (Reuters)
• Whiting Petroleum Seeks Buyer Amid Plunge in Crude Prices (WSJ)
• Birinyi Says Six-Year Bull Run Won’t End Until Skeptics Muzzled (BBG)
• Goldman Says $40 Oil Call May Be Too Low as Demand Surprises (BBG)

Overnight Media Summary

WSJ

* Under an agreement set to be announced Monday with New York, Equifax Information Services LLC, Experian Information Solutions Inc and TransUnion LLC, the three biggest companies that collect and disseminate credit information on more than 200 million Americans, will change the way they handle errors and list unpaid medical bills as part of the broadest industry overhaul in more than a decade. (http://on.wsj.com/1GwASHR)

* In a string of recent oil train derailments in the United States and Canada, new and sturdier railroad tanker cars being built to carry a rising tide of crude oil across the continent have failed to prevent ruptures. (http://on.wsj.com/1BXiyoF)

* Federal investigators suspect potential brake problems caused a Delta Air Lines jet to skid off a snowy runway last week at New York's La Guardia Airport, according to people familiar with the probe. (http://on.wsj.com/1A6cLI2)

* Facebook, Snapchat and streaming-startup Vessel are promising large TV-channel owners better terms for their video programming than Google's YouTube, hoping to capitalize on mounting frustration with the Web giant. (http://on.wsj.com/1KIZyjr)

* General Motors Co as soon as Monday will disclose plans to return billions of dollars to shareholders, a move that is expected to avoid a potential proxy fight with investor Harry J. Wilson, said people familiar with the matter. (http://on.wsj.com/1Hk8uX6)

* Vivendi's chairman and largest shareholder, Vincent Bollore, is sitting on a multibillion-dollar reserve that is swelling from asset sales. Now a question is swirling: What will he do with the company's cash? (http://on.wsj.com/1Hk8uX6)

* Many Swiss banks are saddled with a batch of accounts by clients who have refused to declare them. Now, they must soon be disclosed to the IRS thanks to recently implemented U.S. law. (http://on.wsj.com/1A9shUg)

* With its Apple Watch, set to be released next month, Apple Inc is crossing into high-end fashion, with a device that blurs the lines between jewelry and gadgetry. (http://on.wsj.com/1wSGEkn)

* Turbulence is in store for municipal-bond investors following a record run, as a gathering U.S. economic recovery pushes interest rates higher and issuance grows. (http://on.wsj.com/1NyN0Ks)

* OPEC's top official said Sunday that the cartel's decision to continue pumping crude in the face of collapsing prices is hurting the U.S. shale-oil industry and that a global pullback on investment could lead to a shortage that will push the market upward again. (http://on.wsj.com/1NyN0Ks)

FT

Britain's Serious Fraud Office is calling former traders of Barclays Plc and Deutsche Bank for interviews as part of its investigation of whether the Euribor benchmark interest rate was rigged.

Margrethe Vestager, Europe's new antitrust chief, warned the telecom sector, that mergers should not affect the "affordable prices" for consumers.

In a statement filed with a court in Parana, a former Petrobras executive said that he laundered about $100 million in bribes partly through a web of accounts in several Swiss banks.

According to a report by Open Europe, banks, insurers and other financial services would be most affected if Britain leaves the European Union.

NYT

* Analysts and investors are worried about the prospect of Goldman Sachs getting barred by regulators from buying back its own stock or increasing dividends after performing poorly in the Federal Reserve stress tests last week.(http://nyti.ms/1x7YSZF)

* Among all the major racial and ethnic groups in the United States, only Hispanics, as of late last year, had returned to their unemployment levels before the recession, according to the recent Economic Report of the President. (http://nyti.ms/1CTetmS)

* Companies like Ford Motor Co, Procter & Gamble , Under Armour and the Spanish bank BBVA are working to outmaneuver start-ups for dominance on mobile devices. (http://nyti.ms/1BnmgGx)

* Payment start-up Square has gone beyond its credit card reader and introduced new products in the last year. On Monday, it will introduce two services that it says will help small businesses. (http://nyti.ms/1BnmgGx)

* Yik Yak, a social media app that serves as a local bulletin board, has proved popular especially on college campuses, but the cover of anonymity it offers allows for some unfettered nastiness. (http://nyti.ms/1A8ICsw)

* Black Mask Studios does not have the name recognition of DC or Marvel Comics, but officials at the company hope that will soon change. The publishing and media company will unveil a series of YouTube channels devoted to comics on Monday, and release "Godkiller," its first animated movie, this summer. Black Mask also is developing several television series and its comics. (http://nyti.ms/1GwCjpL)

China

CHINA DAILY

- Japan's attendance in China's military parade this year to mark the victory in the anti-fascist war would be a good opportunity for Tokyo to throw away the burden of the war by facing up to its past, the official newspaper said in an editorial.

CHINA SECURITIES JOURNAL

- State-owned companies in Shanghai have stepped up efforts to securitise their assets as part of the country's state sector reforms, sources told this newspaper.

SHANGHAI SECURITIES NEWS

- China is considering amending rules on stock margin trading to tighten supervision after a surge in the business since the second half of last year, propelled by a recovery in the domestic stock market, Xiao Gang, Chairman of the China Securities Regulatory Commission, said.

NATIONAL BUSINESS DAILY

- Sinopec Marketing Co Ltd, a subsidiary to be set up by Chinese oil giant Sinopec, will seek regulatory approval to go public after conditions are mature, spokesman Lu Dapeng told this newspaper.

PEOPLE'S DAILY

- China has pledged to continue the search for a Malaysian Airlines flight which vanished a year ago.

Britain

The Times

TAXPAYER FOOTS THE BILL FOR RISKY BUSINESS LOANS

The government has admitted that 20.2 percent of enterprise finance guarantee (EFG) loans went sour, raising fresh questions about a scheme that is the subject of an internal investigation by Royal Bank of Scotland. The default rates - about 15 percent higher than would be expected under normal commercial lending - will heighten concerns that banks abused the scheme to pass risky small business liabilities on to the taxpayer.(http://thetim.es/1EtUyvj)

FORMER MORRISONS BOSS IS IN THE MONEY

WM Morrison Supermarket PLC's former boss, Dalton Philips, is set to pocket about 3 million pounds ($4.52 million) as the chain reveals its latest slump in annual profits this week. (http://thetim.es/18tgqc3)

The Guardian

GREECE THREATENS NEW ELECTIONS IF EUROZONE REJECTS PLANNED REFORMS

Greece's anti-austerity government has raised the spectre of further political strife in the crisis-plagued country by saying it will consider calling a referendum, or fresh elections, if its eurozone partners reject proposed reforms from Athens.(http://bit.ly/1BheK10)

EX-BP BOSS AIMS TO BUILD MAJOR ENERGY INDUSTRY PLAYER FROM SCRATCH

Lord Browne, the former BP PLC chief executive, plans to exploit the collapse in oil prices to build a major new company using $10 billion of Russian cash.(http://bit.ly/18tjTYa)

The Telegraph

TESCO BOSS IN CHARGE OF HARRIS+HOOLE AND GIRAFFE LEAVES

Michael Holmes, the chief executive of new food experiences at Tesco PLC, has left the company in a clear sign that one of former boss Philip Clarke's key initiatives has failed. Holmes is understood to have fallen victim to new boss Dave Lewis's brutal clear-out at the company. (http://bit.ly/1C0F5CC)

MARKS & SPENCER TO OFFER GIFT CARD TO SHAREHOLDERS INSTEAD OF DIVIDEND

Long-suffering Marks and Spencer Group shareholders are to be offered a discounted gift card instead of a dividend payment as part of an overhaul of the perks the high street retailer offers to its investors. These investors will now be able to exchange the cash they receive from their annual dividend payment for an in-store gift card. (http://bit.ly/1wShG4v)

Sky News

TUNGSTEN BANKING ARM UNVEILS DEPOSITS DRIVE

Tungsten Corp PLC, which is headed by Edi Truell, the former chief executive of private equity group Duke Street Capital, will say Monday that it is to start taking deposits. (http://bit.ly/192OP2P)

The Independent

ED DAVEY REJECTS BAN ON STANDARD ENERGY TARIFFS

Calls for variable energy tariffs to be cut to reduce the number of people overpaying for gas and electricity have been rejected by the Energy and Climate Change Secretary, Ed Davey, on competition grounds.(http://ind.pn/18tgWXI)

CITY IS STILL VULNERABLE TO SUDDEN FINANCIAL SHOCK, MPS WARN TREASURY

Politicians have called on the Treasury to undertake a series of war games with regulators and the Bank of England to combat a "surprising and urgent gap" in its readiness for another financial crisis. (http://ind.pn/18thsVF)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Labor market conditions index for February at 10:00--prior 4.9

ANALYST RESEARCH

Upgrades

Aveo Pharmaceuticals (AVEO) upgraded to Sector Perform at RBC Capital
D.R. Horton (DHI) upgraded to Outperform from Market Perform at JMP Securities
DiamondRock (DRH) upgraded to Outperform from Neutral at RW Baird
Eni SpA (E) upgraded to Buy from Neutral at UBS
Gigamon (GIMO) upgraded to Overweight from Equal Weight at Barclays
Juniper (JNPR) upgraded to Buy from Neutral at Goldman
KB Home (KBH) upgraded to Outperform from Market Perform at JMP Securities
Netgear (NTGR) upgraded to Neutral from Sell at Goldman
Oasis Petroleum (OAS) upgraded to Neutral from Reduce at SunTrust
Reckitt Benckiser (RBGLY) upgraded to Buy from Hold at Jefferies
Ryland Group (RYL) upgraded to Outperform from Market Perform at JMP Securities
Statoil (STO) upgraded to Buy from Neutral at UBS
UTi Worldwide (UTIW) upgraded to Outperform from Market Perform at FBR Capital

Downgrades

Amazon.com (AMZN) downgraded to Neutral from Buy at SunTrust
Arrow Electronics (ARW) downgraded to Neutral from Buy at Longbow
Avnet (AVT) downgraded to Neutral from Buy at Longbow
BlackBerry (BBRY) downgraded to Sell from Neutral at Goldman
F5 Networks (FFIV) downgraded to Underweight from Equal Weight at Barclays
Quality Systems (QSII) downgraded to Underperform from Sector Perform at RBC Capital
Royal Dutch Shell (RDS.A) downgraded to Neutral from Buy at UBS
TSMC (TSM) downgraded to Underperform from Sector Perform at Pacific Crest
The Fresh Market (TFM) downgraded to Neutral from Buy at BofA/Merrill
WESCO (WCC) downgraded to Hold from Buy at BB&T

Initiations

AtriCure (ATRC) initiated with a Buy at Needham
Inovalon (INOV)  initiated with a Neutral at Piper Jaffray
Inovalon (INOV) initiated with a Buy at UBS
Inovalon (INOV) initiated with a Neutral at BofA/Merrill
Inovalon (INOV) initiated with a Neutral at Citigroup
Inovalon (INOV) initiated with a Neutral at Goldman
Inovalon (INOV) initiated with an Outperform at RW Baird
Invitae (NVTA) initiated with an Outperform at Cowen
Invitae (NVTA) initiated with an Overweight at JPMorgan
Lion Biotechnologies (LBIO) initiated with an Overweight at Piper Jaffray
Vanda (VNDA) initiated with a Buy at Jefferies

COMPANY NEWS

Intuit (INTU) confirmed information requests from U.S. government
T. Boone Pickens resigned from board of EXCO Resources (XCO)
Kate Spade (KATE), Lucky Brand entered transfer and settlement agreement
News Corp. (NWSA) acquired VCCircle, terms not disclosed

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
LightInTheBox (LITB), 58.com (WUBA)

LightInTheBox (LITB) sees Q1 revenue $89M-$91M, consensus $114.93M
Alkermes (ALKS) cuts FY15 non-GAAP EPS to (37c)-(50c) from (27c)-(40c), consensus (32c)
Sky-mobi (MOBI) reports Q4 EPS 2, one estimate 7c
58.com (WUBA) sees Q1 revenue $82M-$84M, consensus $78.50M

NEWSPAPERS/WEBSITES

GM (GM) expected to announce large share buyback, WSJ reports
Whiting Petroleum (WLL) in midst of auction process, sources say, WSJ reports
Novartis (NVS) expects to lead way for big pharma efficiency, Financial Times says
Apple Watch (AAPL) shipments expected to reach 4.8M in Q1, DigiTimes reports
Honeywell (HON) looks for deals, targets $10B in acquisitions by 2018, Bloomberg reports
Netflix (NFLX) looks to launch in Spain in 2015, Variety reports
Google (GOOG) to create version of Android to run virtual reality apps, WSJ reports
BNY Mellon (BK) could rise 20%, Barron's says
Foot Locker (FL) could return 20% more, Barron's says
Berkshire Hathaway (BRK.A), Wells Fargo (WFC) could be next in DJIA, Barron's says

SYNDICATE

Capstead Mortgage (CMO) files to sell 15M shares of common stock shelf
Eagle Pharmaceuticals (EGRX) files to sell 1.5M shares for holders
Gyrodyne (GYRO) files to sell $5.56M of common stock
Ladder Capital (LADR) files to sell 80.96M shares of Class A common stock for holders
Sanchez Production (SPP) files $500M mixed securities shelf
Ventas (VTR) files automatic mixed securities shelf

• Hilsenrath: Fed to Markets: No More Promises (WSJ)
• Fed set to ditch 'patient' rate vow as it eyes U.S., world growth (Reuters)
• Fannie, Freddie could need another bailout (Reuters)
• Alibaba Stock-Sale Lockup Is Ending (WSJ)
• Netanyahu Sweeps Aside Herzog’s Challenge to Win Israel Vote (BBG)
• Oil Bonds Lose Investors $7 Billion in 10 Days (BBG)
• There’s a mysterious $1.1 trillion in spending cuts in the House GOP’s budget (WaPo)
• ECB's Celebration of Its New $1.4 Billion Tower Is Spoiled by Protesters (BBG)
• IMF Considers Greece Its Most Unhelpful Client Ever (BBG)
• Facebook enters money transfer market (FT)
• Billions in Mortgage Aid Flow Through Group in Turmoil (BBG)
• Greece rejects 'blackmail', seeks meeting with top EU leaders (Reuters)
• Three dead, four hurt in shooting at northern California market (Reuters)
• Investors Waiting for U.S. Consumer Profits to Match Share Hype (BBG)
• Everyone Hates U.S. Stocks (BBG)
• U.S. to roll back 'lost pleasure' approach on health rules (Reuters)

Overnight Media Digest

WSJ

* Conservative Prime Minister Benjamin Netanyahu pulled ahead of his main challenger in Israeli elections with most of the votes counted early Wednesday, a strong showing after he hammered away at security issues in the final hours of the campaign. (http://on.wsj.com/1bet0hw)

* Moshe Kahlon, who left Likud after a personal falling out with Prime Minister Benjamin Netanyahu, led his new center-right party, Kulanu, to a strong finish in a tight race. (http://on.wsj.com/1besZKj)

* American Express Co will unveil plans Wednesday to team up with big-name companies such as Macy's Inc and Exxon Mobil Corp to launch a loyalty program this spring, the latest move by the credit card company to appeal to a wider customer base. (http://on.wsj.com/1betYdz)

* Car makers such as Audi favor Mexico over the U.S. South as a site for North American plants partly owing to Mexico's free-trade agreements. (http://on.wsj.com/1ADl9jh)

* After years of reassuring the public that interest rates would stay low, the Federal Reserve is about to create some uncertainty by veering away from such promises. (http://on.wsj.com/1MIrtxx)

* Citigroup Inc and Barclays Plc are expected to pay as much as $800 million combined to settle a lawsuit with investors who say the banks manipulated foreign-exchange rates. (http://on.wsj.com/19x8zM1)

* Mortgage-finance companies Freddie Mac and Fannie Mae on Tuesday said they are changing the way they modify some loans in anticipation of an influx of borrowers struggling to make payments on loans with rising interest rates. (http://on.wsj.com/1EpwlkR)

* French fashion house Chanel said it would increase prices in Europe on some handbags while slashing them in China in a bid to eliminate a growing price gap caused by the weakened euro. (http://on.wsj.com/1HYczRd)

* The boards of cement companies Holcim and Lafarge met separately on Tuesday to try to save their proposed $44-billion tie-up, and discussions on both sides hinged on the future of one man: Lafarge CEO Bruno Lafont. (http://on.wsj.com/1EuNNXJ)

* Alibaba Group Holding Ltd's executives often tout their 102-year vision for the Chinese e-commerce company. But some investors don't have to stick around past Wednesday. That is when several big institutional investors who bought stakes in Alibaba before its September initial public offering will be free to sell about 340 million shares when some "lockup" agreements expire. (http://on.wsj.com/1MM8hx6)

* A proposed mall merger turned into a battle royal, with two of the country's largest retail landlords trading barbs and jostling for better position in a $16 billion takeover offer. Los Angeles-based Macerich Co, the third-largest mall owner in the U.S. by market value, on Tuesday rejected an offer by its larger rival, Indianapolis-based Simon Property Group Inc , to buy the company for $91 per share in cash and stock. (http://on.wsj.com/1GUJapS)

FT

France's Orange will spend 15 billion euros ($15.89 billion) to upgrade its fibre and mobile networks for the next three years as it continues to tackle with competition from low-cost rivals in its domestic market.

Russian billonaire Mikhail Fridman is preparing to sell North Sea gasfields, at the heart of a fierce clash in Britain over his ownership, in a move to side step a legal battle with the UK government.

The UK financial watchdog has taken its maiden public enforcement actions against a trader, accusing him of manipulating the London interbank offer rate. The accused, a former trader at Dutch lender Rabobank, will be banned from financial services industry.

($1 = 0.9440 euro) (Compiled by Rama Venkat

NYT

* Top officials from Emirates Airline and Etihad Airways on Tuesday praised the virtues of open-skies agreements between countries, saying passengers had benefited from more competition, better service and lower fares. They shot back at American rivals who had accused them of unfair competition, saying attempts to review the agreements amounted to protectionist measures by United States carriers.(http://nyti.ms/1EuKvnl)

* Facebook Inc, the social networking company, announced Tuesday that American users of its Messenger app would be able to link their debit cards to the service and use it to message money to one another just as easily as they send a snapshot or text. (http://nyti.ms/1GTgQEl)

* Nintendo Co Ltd said on Tuesday it had formed a partnership with another Japanese company that specializes in mobile games, DeNA, to develop games based on Nintendo brands for smartphones and tablets. (http://nyti.ms/1Bwe4jI)

* Biomet disclosed on Tuesday that the Justice Department is investigating whether the company helped bribe government officials in Mexico and Brazil, a painful reminder of an earlier bribery case it settled in 2012. (http://nyti.ms/1FyMFUG)

China

CHINA SECURITIES JOURNAL

- A plan for three trial free-trade zones in the Chinese cities of Guangdong, Tianjin and Fujian has been passed to the State Council for review, a spokesman for the country's commerce ministry said on Tuesday.

CHINA DAILY

- China is planning third-party audits of foreign assets owned by the country's powerful state-owned enterprises, according to a notice from the State-owned Assets Supervision and Administration Commission on Tuesday.

- Chinese eastern metropolis Shanghai will spend 100 billion yuan ($16 billion) on environmental protection over the next three years, according to the city's government.

- A Chinese local government has approved Shandong Hi-Speed Group Co Ltd's purchase of a 49.9 percent stake in France's fourth-largest airport, Toulouse-Blagnac.

SHANGHAI DAILY

- Chinese authorities have arrested a man who allegedly cheated investors out of 30 million yuan (US$4.8 million) through a spurious foreign exchange trading scheme, Shanghai district prosecutors said on Tuesday.

Britain

The Times

E-CIGS DROP INTO ONS NEWLY UPDATED SHOPPING BASKET

E-cigarettes and craft beer have become so popular that they have been included in the basket of goods by the Office for National Statistics to calculate the cost of living in Britain.(http://thetim.es/1bedkut)

FITNESS FIRST FOR MICROSOFT AS IT TAKES ON APPLE

Microsoft Corp is to launch its fitness band in the UK next month, a week before the Apple Watch goes on sale. While the Microsoft Band does not compete with the Apple Watch on style, it performs many of the same functions, including telling the time, and the company hopes it will appeal to users who value utility and cost over glamour and kudos.(http://thetim.es/1bedv9p)

The Guardian

NEW BHS OWNERS CONSIDER SALE OR CLOSURE OF 50 STORES

Just days after taking over the BHS store chain its new owners have enlisted property agents to review options for nearly a third of the chain's 171 stores, including sale or possible closure.(http://bit.ly/1AUW9TR)

OFCOM FINES BT FOR DELAY IN PROVIDING TEXT-TO-VOICE SERVICE

The telecoms regulator has fined BT Group Plc 800,000 pounds ($1.18 million) for failing to provide an improved text-to-voice service for customers with hearing or speech impairments between April and September last year.(http://bit.ly/1bee1Eb)

The Telegraph

UBER OFFICES RAIDED BY POLICE IN PARIS

French police have raided the Paris offices of the Uber taxi app company as part of an investigation into its controversial ride-sharing service. The headquarters of the French branch of the US-based firm was targeted at the request of the Paris prosecutor's office.(http://bit.ly/18EoBCK)

YOU CAN NOW USE FACEBOOK TO SEND MONEY TO YOUR FRIENDS

Facebook Inc is to start letting users send money to friends via its Messenger mobile app. The free service will be offered "in the coming months", according to a Facebook statement, and will put the social network in direct competition with services such as Square Cash and Venmo.(http://bit.ly/1BRSsDq)

Sky News

OSBORNE CRITICISED OVER NEW BANK SWITCH PLAN

A Government-backed scheme to stimulate competition in one of the most concentrated areas of the banking sector is being launched prematurely in order for ministers to claim that they are helping consumers, the industry is warning.(http://bit.ly/1MLm1Z1)

The Independent

GREEK BAILOUT CRISIS: WE SHOULD PAY REPARATIONS FOR NAZI WAR CRIMES, SAY TOP GERMAN POLITICIANS

Senior German politicians have broken ranks with Angela Merkel's government to demand that Germany pay reparations to Greece for Nazi crimes committed during the Second World War.(http://ind.pn/1MLmOJm)

INTERNET EXPLORER BRAND KILLED OFF BY MICROSOFT, MAKING WAY FOR NEW, RENAMED BROWSER

Microsoft Corp has confirmed that it will not use the Internet Explorer name for its new browser, putting an end to the well-known - if not always well-liked -brand.(http://ind.pn/1MLna2C)

Fly On The Wall Pre-market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
DOE petroleum inventory reports for week of March 13 at 10:30
FOMC meeting announcement at 14:00
Fed Chair Yellen to hold press conference at 14:30

ANALYST RESEARCH

Upgrades

Calumet Specialty Products (CLMT) upgraded to Outperform at RBC Capital
Kronos Worldwide (KRO) upgraded to Neutral from Reduce at SunTrust
Lifeway Foods (LWAY) upgraded to Outperform from In-Line at Imperial Capital
Monro Muffler (MNRO) upgraded to Buy from Neutral at SunTrust
Pandora (P) upgraded to Buy from Fair Value at CRT Capital
T2 Biosystems (TTOO) upgraded to Outperform from Market Perform at Leerink

Downgrades

FX Energy (FXEN) downgraded to In-Line from Outperform at Imperial Capital
iRobot (IRBT) downgraded to Outperform from Strong Buy at Raymond James
Macerich (MAC) downgraded to Sell from Neutral at UBS
MercadoLibre (MELI) downgraded to Neutral from Overweight at JPMorgan
Navistar (NAV) downgraded to Underweight from Equal Weight at Morgan Stanley
RSP Permian (RSPP) downgraded to Neutral from Buy at Roth Capital
Ryerson (RYI) downgraded to Neutral from Overweight at JPMorgan
Salix (SLXP) downgraded to Hold from Buy at Jefferies
St. Jude Medical (STJ) downgraded to Market Perform from Outperform at Wells Fargo
USG (USG) downgraded to Neutral from Outperform at RW Baird
Vectrus (VEC) downgraded to Fair Value from Buy at CRT Capital

Initiations

Columbia Pipeline (CPPL) initiated with a Buy at Citigroup
Columbia Pipeline (CPPL) initiated with a Neutral at Goldman
Columbia Pipeline (CPPL) initiated with an Equal Weight at Barclays
Columbia Pipeline (CPPL) initiated with an Overweight at JPMorgan
Crown Holdings (CCK) resumed with a Buy at Citigroup
Genocea (GNCA) initiated with an Overweight at Piper Jaffray
NiSource (NI) initiated with a Neutral at JPMorgan
NiSource (NI) reinstated with an Outperform at Credit Suisse
On Deck Capital (ONDK) initiated with a Sell at Compass Point
Shutterfly (SFLY) initiated with a Buy at Axiom

COMPANY NEWS

JPMorgan (JPM) formally authorized $6.4B equity repurchase program
Kraft Foods (KRFT) voluntarily recalling approximately 242,000 cases of the Original flavor of Kraft Macaroni & Cheese Dinner due to the possibility that some boxes may contain small pieces of metal
Oracle (ORCL) raised its quarterly dividend 25% to 15c per share and said it is growing faster than Salesforce.com (CRM)
Terry Myerson, executive VP of Windows at Microsoft (MSFT), announced that Windows 10 will launch in 190 countries and 111 languages around the world this summer
Vermillion (VRML) announced a new commercialization and services agreement with Quest Diagnostics (DGX) related to Vermillion's OVA1 ovarian cancer test
Ignyta (RXDX) acquired four oncology R&D assets from Teva (TEVA) in exchange for 1.5M shares of common stock
Akorn (AKRX) said it will restate 2Q14, 3Q14 financial statements
Nektar Therapeutics (NKTR) said NKTR-102 trial did not achieve statistical significance
CARBO Ceramics (CRR) cut quarterly dividend to 10c from 33c per share
Chimera (CIM) announced 1-for-5 reverse stock split and raised quarterly dividend 7% to 9.6c per share

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Tenax Therapeutics (TENX), Aeterna Zentaris (AEZS), Quiksilver (ZQK), CareDx (CDNA), Entellus Medical (ENTL), Celator Pharmaceuticals (CPXX), Adobe (ADBE)

Companies that missed consensus earnings expectations include:
Leju (LEJU), Five Prime (FPRX), Macrocure (MCUR), Navigator Holdings (NVGS), Papa Murphy's (FRSH), Evolving Systems (EVOL), Great Ajax (AJX)

Companies that matched consensus earnings expectations include:
Oracle (ORCL)

NEWSPAPERS/WEBSITES

American Express (AXP) to launch Plenti loyalty program this spring, WSJ reports (M, XOM, T, RAD)
Google (GOOG) sees self-driving car on market within five years, Re/code reports
iPhone 6 (AAPL) shipments expected to reach 53M, DigiTimes reports
Herbalife (HLF) wins dismissal of 'pyramid scheme' lawsuit, Bloomberg reports
Time Warner (TWX), CBS (CBS) CEOs discussed possible merger last year, Bloomberg reports
Discovery (DISCA), Viacom (VIA) in talks to be on Apple TV (AAPL) service, WSJ reports

SYNDICATE

Anthera Pharmaceuticals (ANTH) files to sell common stock, no amount given
Atlas Resource Partners (ARP) files to sell 24.71M common units for holders
DryShips (DRYS) files to sell 180M shares of common stock for holders
Epizyme (EPZM) 6M share Secondary priced at $20.75
Esperion (ESPR) files to sell $150M of common stock
Goldman Sachs BDC (GSBD) 6M share IPO priced at $20.00
HubSpot (HUBS) 4.114M share Secondary priced at $37.00
Ocean Rig UDW (ORIG) files to sell 90M shares of common stock for holders
RSP Permian (RSPP) 9M share Spot Secondary priced at $25.80

• Clinton Charity Tapped Foreign Friends (WSJ)
• Dollar Set for Worst Week Since ’13; S&P Futures Rise (BBG)
• Shale Producers Have Found Another Lifeline: Shareholders (BBG)
• BOJ Kuroda says no sign of 'currency war' brewing in world (Reuters)
• Fed Is Pushing and Pulling on Rates Riddle (WSJ
• Brent oil falls towards $54 on OPEC output, Iran (Reuters)
• Iran Talks Stall Over Ending of Sanctions (WSJ)
• Credit Suisse Faces Italy Suit, Probe as Litigation Persists (BBG)
• How Google Skewed Search Results (WSJ)
• Wages Haven’t Been This Crucial to U.S. Economy in Half Century (BBG)
• Inside the U.S. Antitrust Probe of Google (WSJ)
• Emails sought of nearly a dozen U.S. State Department workers under Clinton (Reuters)
• U.S. regulators give Amazon go-ahead for drone tests (Reuters)

Overnight Media Digest

WSJ

* Officials at the Federal Trade Commission concluded in 2012 that Google Inc used anticompetitive tactics and abused its monopoly power in ways that harmed internet users and rivals, a far harsher analysis of Google's business than was previously known. (http://on.wsj.com/1GvxMRq)

* The Clinton Foundation swore off donations from foreign governments when Hillary Clinton was secretary of state. That did not stop the foundation from raising millions of dollars from foreigners with connections to their home governments, a review of foundation disclosures shows. (http://on.wsj.com/1GxuOvN)

* Tesla Motors Inc is positioning itself as a software company, as well as an automaker, committing to a series of upgrades for its Model S electric cars that it will start delivering to owners via the Internet within the next 10 days. (http://on.wsj.com/1EwGfRR)

* Israeli Prime Minister Benjamin Netanyahu reversed himself for the second time in a week on support for a Palestinian state and said he would back it under the right conditions, a turnaround that the U.S. and Palestinians dismissed as unconvincing. (http://on.wsj.com/1AMAD4s)

* A long-running corruption investigation into whether BSG Resources Ltd paid bribes to secure mining rights in Guinea could yield up to a half-dozen indictments in the United States, according to people familiar with the matter. In a briefing last month, U.S. prosecutors told Guinean government officials that senior executives at BSG were among some of the people who could be indicted. (http://on.wsj.com/1FMseUf)

FT

Tag Heuer, French luxury group LVMH's biggest watch maker, said it was teaming up with Google Inc and Intel Corp to develop a smartwatch, signalling its intention to compete with Apple's smartwatch.

Shareholders in Irish cement firm CRH approved a 6.5 billion euro ($6.93 billion) deal to buy assets from Lafarge and Holcim even as the executives of two cement makers continue to argue over who would lead the combined company.

Two big investors in Standard Chartered Plc want the bank to consider moving its domicile away from London because of the chancellor's decision to raise the UK bank levy by one-third.

NYT

* Elon Musk, chief executive of Tesla Motors Inc, announced on Thursday that the maker of high-end electric cars would introduce autonomous technology by this summer. The technology would allow drivers to have their cars take control on what he called "major roads" like highways. (http://nyti.ms/18N2l9Y)

* The Federal Trade Commission on Thursday faced renewed questions about its handling of its antitrust investigation into Google Inc, after documents revealed that an internal report had recommended stronger action. (http://nyti.ms/1FMsbaR)

* The Bank of New York Mellon will pay $714 million to settle accusations that it cheated government pension funds and other investors for more than a decade, federal and state authorities announced on Thursday. (http://nyti.ms/1BEw8Ip)

* A National Labor Relations Board judge ruled on Wednesday that the employment policies of the wireless carrier T-Mobile violated United States labor law by restricting workers' ability to organize and other rights, setting a potentially important precedent for unions. (http://nyti.ms/1xle8I7)

* Federal regulators have given Amazon.com Inc a green light to begin testing drones, but it will most likely take years before the online retailer can start delivering packages from the air to peoples' homes. (http://nyti.ms/1x7shbE)

Canada

THE GLOBE AND MAIL

** As Canadian television moves to an unbundled world over the next two years, experts say cable companies will face some revenue pressures but broadcasters will be hit harder. The Canadian Radio-television and Telecommunications Commission issued its long-awaited "pick-and-pay" ruling on Thursday, confirming that by the end of 2016, television distributors will have to offer a basic package capped at C$25 ($20) and give customers the ability to add individual channels or small bundles on top of that. (bit.ly/1FJ29FE)

** Extending Canada's military mission in Iraq is a matter of "moral clarity" that all political parties should support, Foreign Affairs Minister Rob Nicholson said. (bit.ly/18Ob0Ji)

** U.S. Ambassador Bruce Heyman said "challenges" are inevitable in the complex Canada-United States relationship, but is playing down suggestions of a chill showing up in his troubled first year as envoy in Canada. (bit.ly/1Lz3TX3)

NATIONAL POST

** Alberta Premier Jim Prentice's musings about the need for a new approach to energy, the environment and climate change has stirred debate in the province about what that could look like, including an option that could surprise many, a broader carbon tax similar to that implemented by its greener neighbor, British Columbia. (bit.ly/19969SJ)

** The federal government extended a work program for 50 developmentally disabled Ottawa workers on Thursday in the face of public outrage that they had been cut loose after dedicating decades of their working lives to sorting and disposing of federal documents. (bit.ly/195DIVU)

** Loyola High School has won its six-year legal battle over the mandatory "Ethics and Religious Culture" (ERC) course taught in Quebec schools. In a decision published on Thursday, the Supreme Court of Canada ordered Quebec's Department of Education to grant the private Catholic boys' school the exemption it had sought from teaching the course and "to offer an equivalent course to the ERC Program in line with Loyola's proposal and the guidelines we have outlined." (

Hong Kong

SOUTH CHINA MORNING POST

-- More Chinese are expected to apply for the United States' investor visa as people embrace an expanded immigrant quota and promising business opportunities, while better education and more diversified investment opportunities are behind the choice of the wealthy Chinese, according a report by the Chinese Academy of Social Sciences and the Centre for China and Globalisation. (http://bit.ly/1967PfM)

-- The falling euro is putting pressure on local retailers and exporters but some stores are taking advantage by offering consumers cheap products from Europe. Snack shop 759 Store's owner, Coils Lam Wai-chun, said he planned to increase the proportion of European food items on its shelves from 15 percent to 25 percent in the coming three months. (http://bit.ly/1bj5H62)

-- China Mobile could be poised to broaden its 14-month-old alliance with Apple as the U.S. technology giant prepares to release its new wearable smart device, the Apple Watch, next month on the mainland, according to Chairman Xi Guohua. (http://bit.ly/1xDpYYN)

THE STANDARD

-- China Merchants Bank Co Ltd is considering spinning off its wealth management and credit card business, Chief Executive Tian Huiyu said, adding the Shenzhen-based lender had a variety of businesses, many of which can exist as separate entities. (http://bit.ly/1GwA96n)

-- A proposal for the government to conduct a poll on political reform when it is unveiled next month is gaining traction among pro-establishment groups. The poll, suggested by Basic Law Committee member Albert Chan Hung-yee, would be led by former chief justices or judges with local universities involved. (http://bit.ly/1H8gdKz)

HONG KONG ECONOMIC JOURNAL

-- William Fung, the chairman of global exporter Li & Fung Ltd, which posted an 18 percent drop in core operating profit in the first year of its three-year growth plan in 2014, said the target set for the plan was too high and the company could hardly meet it.

BRitain

The Times

IFS QUESTIONS LACK OF DETAIL IN BUDGET WELFARE PLANS

George Osborne's budget received a chilly verdict from the Institute for Fiscal Studies (IFS), which attacked the chancellor for his silence on 10 billion pounds ($14.76 billion) of planned welfare cuts and said coalition tax and benefit reforms had hit the poorest most.(http://thetim.es/1C29VsG)

ELECTION UNEASE DAMPENS MORTGAGE LENDING

Mortgage lending slumped by nearly 10 percent in February as would-be buyers held off amid jitters surrounding the forthcoming general election.(http://thetim.es/1C2acvM)

The Guardian

SPORTS DIRECT'S MIKE ASHLEY UNDER NEW PRESSURE TO APPEAR BEFORE PARLIAMENT

MPs have attempted to raise the pressure on billionaire Mike Ashley to explain what "immovable commitments" are preventing him from appearing before a parliamentary committee examining the use of zero-hours contracts and 200 job losses at his Sports Direct group.(http://bit.ly/1C2aSl1)

CHALLENGER ALDI CONSIDERS A MOVE INTO BRITISH ONLINE SALES

Aldi is considering moving into online retailing in the UK, and possibly elsewhere, opening a new front in the discounter's challenge to the major supermarkets.(http://bit.ly/1C2b0kq)

The Telegraph

RYANAIR FORCED TO ADMIT IT IS NOT CONSIDERING TRANS-ATLANTIC FLIGHTS AFTER ALL

The board of Ryanair Holdings Plc has been forced to admit it is not considering flying across the Atlantic just days after it said it was. In a brief stock exchange statement, the Irish airline said it had not approved any such plans, nor would it.(http://bit.ly/1C2cZoS)

AMAZON CLEARED TO TEST DRONES IN US

Amazon.com Inc has won approval to test delivery drones in the U.S., despite public concerns over the safety and privacy implications.(http://bit.ly/1C2cZoS)

Sky News

PENNON LURES CITY GRANDEE PARKER AS NEW CHAIR

One of the UK's biggest publicly listed water companies, Pennon Group Plc, has lured Sir John Parker, the architect of a push to improve boardroom diversity, as its new chairman.(http://bit.ly/1B72knZ)

COUNCIL SPENDING CUTS SPUR SAGA HEALTH SALE

Saga Plc, the FTSE-100 travel and financial services group for the 'grey market', has appointed Greenhill, an investment bank, to sell the public sector operations of Allied Healthcare.(http://bit.ly/1C2bJ5b)

The Independent

KRAFT, CADBURY AND KELLOGG'S IN TOTAL RECALL: HOW PULLING A PRODUCT AFFECTS BUSINESS

Kraft Foods Group Inc is the latest company to make headlines for recalling a product - 6.5 million of them. It was forced to ask customers to return 7.25-ounce packets of macaroni and cheese after metal bits were discovered in the food by eight separate customers.(http://ind.pn/1C2c9bL)

WALKABOUT'S NEW OWNERS BETTER CAPITAL PLOT NEW PUBS

Walkabout, the bar chain that this week saw a customer tumble into the Thames to be rescued by one of its barman, assured the public that its own business will stay afloat after pulling off a financial restructuring and setting out expansion plans.(http://ind.pn/1C2clri)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Baker Hughes U.S. rig count for week of March 20 at 13:00--prior 1125

ANALYST RESEARCH

Upgrades

Honeywell (HON) upgraded to Conviction Buy from Buy at Goldman
Nintendo (NTDOY) upgraded to Buy from Hold at Deutsche Bank
Owens Corning (OC) upgraded to Overweight from Equal Weight at Barclays
Pier 1 Imports (PIR) upgraded to Outperform from Perform at Oppenheimer
STMicroelectronics (STM) upgraded to Equal Weight from Underweight at Morgan Stanley
Yamana Gold (AUY) upgraded to Overweight from Neutral at HSBC

Downgrades

Actuant (ATU) downgraded to Hold from Buy at Stifel
Campus Crest (CCG) downgraded to Underperform from Sector Perform at RBC Capital
Care.com (CRCM) downgraded to Neutral from Overweight at JPMorgan
Electrolux AB (ELUXY) downgraded to Neutral from Overweight at JPMorgan
Ericsson (ERIC) downgraded to Equal Weight from Overweight at Morgan Stanley
Extreme Networks (EXTR) downgraded to Market Perform from Outperform at Raymond James
TD Ameritrade (AMTD) downgraded to Neutral from Buy at Goldman
Tableau (DATA) downgraded to Neutral from Buy at Mizuho
Tesoro (TSO) downgraded to Market Perform from Outperform at Wells Fargo
Vince Holding (VNCE) downgraded to Neutral from Overweight at Piper Jaffray

Initiations

Benefitfocus (BNFT) initiated with an Outperform at Wells Fargo
Boston Scientific (BSX) initiated with an Outperform at Raymond James
Carnival (CCL) initiated with a Neutral at Wedbush
Castlight Health (CSLT) initiated with a Market Perform at Wells Fargo
Cooper Companies (COO) initiated with an Overweight at Piper Jaffray
eHealth (EHTH) initiated with a Market Perform at Wells Fargo
FleetCor (FLT) initiated with a Perform at Oppenheimer
Headwaters (HW) initiated with a Buy at SunTrust
Information Services (III) initiated with a Buy at B. Riley
Maximus (MMS) initiated with an Outperform at Wells Fargo
Norwegian Cruise Line (NCLH) initiated with an Outperform at Wedbush
Perceptron (PRCP) initiated with a Buy at Canaccord
Royal Caribbean (RCL) initiated with a Neutral at Wedbush
The Medicines Co. (MDCO) initiated with a Neutral at Mizuho
Trimble (TRMB) initiated with a Neutral at Goldman
WEX Inc. (WEX) initiated with an Outperform at Oppenheimer
WageWorks (WAGE) initiated with an Outperform at Wells Fargo

COMPANY NEWS

FedEx (FDX) said it paid $1.4B for GENCO, $43M for Bongo international
Ryanair (RYAAY) said it has not considered or approved transatlantic project
American Airlines (AAL) to replace Allergan (AGN) in S&P 500 as of 3/20 close, Hanesbrands (HBI) to replace Avon Products (AVP) in S&P 500 as of 3/20 close, SL Green Realty (SLG) to replace Nabors Industries (NBR) in S&P 500 as of 3/20 close, Equinix (EQIX) to replace Denbury Resources (DNR) in S&P 500 as of 3/20 close
The boards of Holcim (HCMLY) and Lafarge (LFRGY) reached an agreement on revised terms for the merger of equals between both companies. Both parties agreed on a new exchange ratio of 9 Holcim shares for 10 Lafarge shares. A new CEO for the combined group, to be proposed by the Lafarge board and accepted by the Holcim board, will be appointed as from the closing of the transaction
Prothena (PRTA) reported positive results from Phase 1 study of PRX002
SeaWorld (SEAS) named Joel Manby as president and CEO

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Ctrip.com (CTRP), Cerulean (CERU), Nike (NKE), Gordmans Stores (GMAN), Zafgen (ZFGN)

Companies that missed consensus earnings expectations include:
Star Bulk Carriers (SBLK), AK Steel (AKS), New Source Energy (NSLP), Rally Software (RALY), Veracyte (VCYT), New York & Co. (NWY), Mattress Firm (MFRM)

Companies that matched consensus earnings expectations include:
Vital Therapies (VTL)

Nike (NKE) sees Q4 revenue in constant dollars up low double digits, sees FY15 revenue in constant dollars up low teens, sees FY16 EPS up high-single digits to low double digits
New York & Co. (NWY) sees Q1 adjusted EPS "approximately breakeven", consensus 2c
Mattress Firm (MFRM) sees FY15 adjusted EPS $2.50-$2.70, consensus $2.77

NEWSPAPERS/WEBSITES

2012 antitrust report calls Google (GOOG) harmful to market, WSJ reports
Sharp (SHCAY) not planning to spin off LCD business, Reuters reports
Bank of America (BAC) faces pressure to defend structure, Financial Times reports
Global smartphone shipments to reach 1.4B units in 2015, DigiTimes Research says (GOOG, AAPL, MSFT, BBRY)
GM (GM) CEO to be questioned October 8 over ignition failures, AP reports

SYNDICATE

Biodel (BIOD) files to sell $30M of common stock
ING Groep (ING) files automatic mixed securities shelf
National Fuel (NFG) files automatic mixed securities shelf
Tekmira (TKMR) 7.5M share Secondary priced at $20.25
Trade Street Residential (TSRE) files to sell 9.32M shares for holders

• ECB Tells Greek Banks Not to Boost Exposure to Athens Government’s Debt (WSJ)
• Search teams probe wreckage of jet in French Alps (Reuters)
• Flight Recorders Offer Best Hope of Explaining Jet’s Fatal Drop (BBG)
• Yemen Houthi militia sweeps toward Aden in threat to president (Reuters)
• In Nigeria, Oil Price’s Slide Deters Theft (WSJ)
• Saudi Arabia building up military near Yemen border (Reuters)
• Quant Who Shook the Financial World Tries More Humble Approach (BBG)
• Executive Pensions Are Swelling at Top Companies (WSJ)
• Carney’s Revamp Chief Drives BOE Shakeup as Staff Say ‘Gosh’ (BBG)
• Biotech’s Rally Fuels Bubble Fears (WSJ)
• Rising Rents Are Finally Forcing Millennials to Buy Houses (BBG) - If by that you mean move back with their parents...
• Kraft, Heinz deal to form North America's No.3 food company (Reuters)
• A New Rule Could End Up Punishing the Wrong Banks (BBG)

Overnight Media Digest

WSJ

* Top U.S. executives get paid a lot to do their jobs. Now many are also getting a big boost in what they will be paid after they stop working. Executive pensions are swelling at such companies as General Electric Co, United Technologies Corp and Coca-Cola Co. (http://on.wsj.com/1EQRVBu)

* As the federal government was wrapping up its antitrust investigation of Google Inc, company executives had a flurry of meetings with top officials at the White House and Federal Trade Commission, the agency running the probe. (http://on.wsj.com/1CX0Qny)

* With Morgan Stanley's current finance chief Ruth Porat announcing Tuesday that she was leaving for Google Inc, chief executive James Gorman selected as her successor Jonathan Pruzan, a 46-year-old investment banker who once reported to Porat and later co-led the team that advises banks and other financial-services companies. (http://on.wsj.com/1CoAvfX)

* The most anticipated energy deal of the year is off the table. Whiting Petroleum said Tuesday it isn't "pursuing any significant strategic transaction" and that it would issue more equity and take on more debt. (http://on.wsj.com/1xxgLXD)

* A former Federal Reserve governor who expressed concern that central bank policies could spark financial instability is headed for the world of hedge funds. Jeremy Stein signed up as a paid consultant to BlueMountain Capital Management LLC, the New York hedge-fund firm confirmed. (http://on.wsj.com/1y4d4Dn)

FT

Renault has offered to double pay of its Chief Executive Officer Carlos Ghosn despite opposition by the French state, which voted against the decision. Ghosn is set to receive 7.2 million euros ($7.86 million) in cash and shares for 2014. (http://on.ft.com/1FTYAMK)

HSBC Plc is to base its "ring-fenced" British retail and business banking operations in Birmingham, England, shifting about 1,000 staff there from its London headquarters.

British inflation fell to zero last month, official figures showed on Tuesday driven by lower prices for food, cost of transport, food and non-alcoholic beverages. The news hit sterling, which was down 0.4 percent against the euro.

Finnish mobile game maker Supercell tripled sales last year on the back of hit titles Clash of Clans, Hay Day and Boom Beach, the company said on Tuesday. With just 150 employees, the Finnish company made 1.55 billion euros in revenues in 2014, up from 519 million euros a year earlier.

NYT

* Brazilian investment firm 3G Capital - through the ketchup maker H.J. Heinz, which it owns with the billionaire Warren Buffett - is in talks to buy Kraft Foods, a source familiar with the matter said on Tuesday, in a deal that could exceed $40 billion. (http://nyti.ms/19Oc6px)

* Wynn Resorts in a letter on Tuesday urged its stockholders to reject co-founder Elaine Wynn's bid to remain on the board of the casino-resort giant she built with her ex-husband and the company's chairman and chief executive, Stephen Wynn. The letter came as Elaine Wynn, 72, began a week of meetings to woo Wall Street institutional investors, whose support she will need to win re-election to the board. (http://nyti.ms/1C9rW7q)

* Greece will present a detailed list of proposed overhauls to its eurozone partners by Monday, a government spokesman said, as Prime Minister Alexis Tsipras met supporters and leading government ministers on his first official visit to Germany. (http://nyti.ms/1C9sSbG)

* Lyle Gramley, who served as a White House economic adviser and a Federal Reserve governor in the late 1970s and early 1980s, died on Sunday at his home in Potomac, Maryland. He was 88. (http://nyti.ms/1C9sKsZ)

Canada

THE GLOBE AND MAIL

** Canada's automotive trade deficit topped C$10 billion ($8.00 billion) last year and threatens to deepen as more assembly plant closings loom and free-trade agreements with the European Union and South Korea take effect. (http://bit.ly/1bswGwe)

** The Ontario Provincial Police force has identified a number of security gaps, including a lack of cameras inside Parliament, as part of its review of the police response to the Ottawa shooting of Oct. 22, sources say. (http://bit.ly/19OW5zH)

** Ontario Premier Kathleen Wynne is leaving the door open to allowing new brewer-owned craft beer specialty shops, a major challenge to The Beer Store's current monopoly on most beer sales in the province. (http://bit.ly/1Iu0P9j)

NATIONAL POST

** Just ahead of Thursday's belt-tightening budget, Alberta Premier Jim Prentice announced a new way of managing the oil-rich province's finances as it struggles with a revenue gap that could exceed C$7 billion. (http://bit.ly/1OyJ4ty)

** Seven years ago, with the Olympics fast approaching, newly elected Vancouver Mayor Gregor Robertson vowed to marshal the city's "brightest minds" and end homelessness once and for all by 2015. On Tuesday, Robertson acknowledged that the pledge was an obvious failure, but provided an explanation: Vancouver is too balmy. (http://bit.ly/1BlG3nB)

** Prime Minister Stephen Harper said on Tuesday that Canada intends to fight the Islamic State of Iraq and Al-Sham for as long as the militant group poses a threat. (http://bit.ly/1xg7faL)

China

 SECURITIES JOURNAL

- Heilongjiang, Shandong, Guangxi, Chongqing, Shaanxi and Qingdao will be pilot regions for rolling out reforms to car insurance, the China Insurance Regulatory Commission said.

SECURITIES TIMES

- China Vanke said in an announcement it planned to issue 9 billion yuan ($1.45 billion) medium-term notes in the interbank market.

SHANGHAI SECURITIES NEWS

- Sixty percent of listed companies performed very well in 2014, according to data gathered by the newspaper from companies' 2014 annual reports, with electrical equipment and textiles as the standout sectors.

CHINA DAILY

- The Asian Infrastructure Investment Bank (AIIB) will be "reciprocal, efficient and inclusive", a contrast to the World Bank which is dominated by the United States and its veto power, an editorial in the newspaper said.

For Hong Kong and South China newspapers see....

Britain

The Times

RAIL STRIKE LOOMS IN WEEKS AFTER UNION REJECTS NEW PAY DEAL

The first national rail strike in 20 years could be called within weeks after workers rejected a four-year pay deal. Members of the Rail, Maritime and Transport union could down tools by the end of April causing chaos on the railways in the run-up to the general election in early May. (http://thetim.es/1N61LmR)

TAXPAYERS WILL PROVIDE A 499 POUNDS IPAD FOR EVERY MP

MPs will be handed new iPads after the general election, at a cost of 1 million pounds ($1.48 million) to the taxpayer. The House of Commons Commission says that offering each of the 650 members an iPad Air 2, costing 499 pounds each, will save money. (http://thetim.es/1BLjCqO)

The Guardian

UK INFLATION HITS ZERO FOR THE FIRST TIME ON RECORD

Inflation has fallen to zero for the first time on record in Britain, boosting incomes in real terms and handing the chancellor a pre-election advantage. The consumer prices index dropped in February from 0.3 percent in January, bringing the United Kingdom to the brink of a spell of deflation that is expected in the coming months. (http://bit.ly/1HyprA1)

GREECE PLEDGES FULL LIST OF REFORMS WITHIN THE WEEK

Greece has pledged to pull together a comprehensive list of reforms by the start of next week, in an attempt to unlock fresh funds before Athens runs out of cash in April. Government spokesman Gabriel Sakellaridis said that the programme demanded by Greece's increasingly impatient creditors would be finished within days. (http://bit.ly/1BjiZ8O)

The Telegraph

JEREMY CLARKSON TO BE SACKED BY THE BBC

Jeremy Clarkson is to be sacked as Top Gear presenter after a BBC investigation concluded he did attack a producer on the programme. Lord Hall, the director general of the BBC, is expected to announce his decision on Wednesday after considering the findings of an internal investigation. (http://bit.ly/1CWjFXT)

TELEFONICA AGREES 10.25 BILLION POUNDS SALE OF O2 TO HUTCHISON WHAMPOA

O2, Britain's second-largest mobile operator, has been sold to Hutchison Whampoa Ltd, the owner of rival operator Three, for 10.25 billion pounds, to create a giant that will control 40 percent of the market. Telefonica, the Spanish parent of O2, said it had agreed final terms with Hong Kong conglomerate after two months of exclusive negotiations and due diligence. (http://bit.ly/1HxKdfF)

Sky News

BANKS TO CARRY ON CLOSING DESPITE CABLE DEAL

Britain's banks will pledge this week to continue investing in their branch networks "for decades to come" despite signing an agreement enabling them to close outlets even when they are the final one in a local community. (http://bit.ly/1HBuYFU)

BRITISH NATIONALS 'LIKELY' ON CRASHED PLANE

A number of British nationals are thought to have been on board the Germanwings aircraft which crashed in the French Alps, says Foreign Secretary Philip Hammond. Recovery teams have been flown in by helicopter and one of the black box flight recorders, crucial in piecing together what happened, has been found.(http://bit.ly/19NASGb)

The Independent

TESCO SHAREHOLDERS TAKE ACTION OVER OVERSTATED PROFITS

Tesco Plc has another battle on its hands after a group of shareholders has emerged seeking compensation for overstated profits. The group is a non-profit organisation under the name Tesco Shareholders Claims Limited. (http://ind.pn/1FTZw3D)

McDonald's UK boss Jill McDonald to take the wheel at Halfords

Halfords has appointed McDonald's UK boss Jill McDonald as the new chief executive of the bike to car parts business. Jill McDonald replaces former boss Matt Davies, who left earlier this year to join Tesco Plc as head of the UK business after his predecessor, Chris Bush, left in the wake of the accounting scandal that hit the supermarket. (http://ind.pn/1EF2hBO)

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Durable goods orders for February at 8:30--consensus up 0.2%
DOE petroleum inventory reports for week of March 20 at 10:30

ANALYST RESEARCH

Upgrades

Alliant Energy (LNT) upgraded to Outperform from Neutral at RW Baird
American Water (AWK) upgraded to Outperform from Neutral at RW Baird
Aqua America (WTR) upgraded to Outperform from Neutral at RW Baird
Artesian Resources (ARTNA) upgraded to Outperform from Neutral at RW Baird
Estee Lauder (EL) upgraded to Overweight from Neutral at Piper Jaffray
General Dynamics (GD) upgraded to Outperform from Sector Perform at RBC Capital
Hawaiian Holdings (HA) upgraded to Outperform from In-Line at Imperial Capital
Middlesex Water (MSEX) upgraded to Outperform from Neutral at RW Baird
Otter Tail (OTTR) upgraded to Outperform from Neutral at RW Baird
PNM Resources (PNM) upgraded to Outperform from Neutral at RW Baird
Xcel Energy (XEL) upgraded to Outperform from Neutral at RW Baird

Downgrades

AB InBev (BUD) downgraded to Reduce from Overweight at HSBC
BreitBurn Energy (BBEP) downgraded to Sell from Neutral at UBS
Finish Line (FINL) downgraded to Neutral from Buy at B. Riley
iDreamSky (DSKY) downgraded to Neutral from Overweight at JPMorgan
ING Groep (ING) downgraded to Neutral from Buy at Goldman
Informatica (INFA) downgraded to Neutral from Buy at Mizuho
Kofax (KFX) downgraded to Hold from Buy at Canaccord
LRR Energy (LRE) downgraded to Sell from Neutral at UBS
Orbital ATK (OA) downgraded to Market Perform from Outperform at Wells Fargo
PCTEL, Inc. (PCTI) downgraded to Neutral from Buy at B. Riley
SJW Corp. (SJW) downgraded to Neutral from Outperform at RW Baird
Sonus (SONS) downgraded to Hold from Buy at Wunderlich
Tesla (TSLA) downgraded to Underperform from Outperform at CLSA

Initiations

Aerie Pharmaceuticals (AERI) initiated with a Buy at Brean Capital
Brunswick (BC) initiated with a Buy at Stifel
Fox Factory (FOXF) initiated with a Buy at DA Davidson
Harley-Davidson (HOG) initiated with a Buy at Stifel
Jason Industries (JASN) initiated with a Buy at Stifel
Micron (MU) initiated with a Neutral at MKM Partners
Neff (NEFF) initiated with a Market Perform at Wells Fargo
Polaris Industries (PII) initiated with a Buy at Stifel
Stericycle (SRCL) initiated with an In-Line at Imperial Capital
Ultragenyx (RARE) initiated with a Buy at CRT Capital
United Rentals (URI) initiated with an Outperform at Wells Fargo

COMPANY NEWS

Kraft Foods (KRFT), H.J. Heinz announce definitive merger agreement. Under the terms of the agreement, which has been unanimously approved by both Heinz and Kraft's boards, Kraft shareholders will own a 49% stake in the combined company and  shareholders will receive stock in the combined company and a special cash dividend of $16.50 per share. The aggregate special dividend payment of approximately $10B is being fully funded by an equity contribution by Berkshire Hathaway (BRK.A) and 3G Capital
Lexmark (LXK) to acquire Kofax (KFX) for $11 per share in cash, or a total enterprise value of approximately $1B
Great Wolf Resorts, which is currently controlled by funds affiliated with Apollo Global (APO), to be acquired by affiliate of Centerbridge Partners
Stamps.com (STMP) said it intends to acquire Endicia from Newell Rubbermaid (NWL) for $215M in cash
Rocket Fuel (FUEL) appointed Monte Zweben as interim CEO and reiterated Q1 non-GAAP revenue guidance
Achillion Pharmaceuticals (ACHN) said Chief Regulatory Officer Dr. Gautam Shah is departing company
Lpath (LPTN) said Phase 2a Asonep study did not meet primary endpoint
Merck (MRK) announced new $10B share repurchase program

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Leidos (LDOS), Sonic (SONC), Christopher & Banks (CBK), HealthEquity (HQY), Christopher & Banks (CBK), Sonic (SONC), Steelcase (SCS)

Companies that missed consensus earnings expectations include:
Yingli Green reports Q4 adjusted EPS (49c)

Companies that matched consensus earnings expectations include:
Turquoise Hill (TRQ), EXFO Inc. (EXFO)

Sonic (SONC) sees 25%-27% EPS growth in FY15
Christopher & Banks (CBK) sees Q1 revenue $90M-$94M, consensus $108.18M, sees FY15 revenue $422M-$432M, consensus $438.56M
HealthEquity (HQY) sees FY16 EPS 28c-30c, consensus 32c
Leidos (LDOS) sees FY15 EPS $2.20-$2.45, consensus $2.53
Steelcase (SCS) sees Q1 adj. EPS 13c-17c, consensus 15c

NEWSPAPERS/WEBSITES

Google (GOOG) working on project to add bill pay function to Gmail, Re/code reports
Apple Watch (AAPL) has faced yield, manufacturing issues "at every stage of the development," AppleInsider reports
YouTube (GOOG) to relaunch livestreaming platform, Daily Dot says (AMZN)
Nielsen says to unveil way to measure Netflix viewing by midyear, Bloomberg reports
Facebook (FB) leaks announcements from F8 conference, including Parse for IoT, Messenger as a platform, Business Insider reports

SYNDICATE

Cellectis (CLLS) 5.5M share Secondary priced at $41.50
EnLink Midstream (ENLK) files to sell 22.8M common units representing limited partners
La Quinta (LQ) 20.75M share Secondary priced at $23.71
Mast Therapeutics (MSTX) files $150M mixed securities shelf
Nationstar (NSM) files to sell 17.5M shares of common stock
Novavax (NVAX) files to sell $175M in common stock
Southern Missouri Bancorp (SMBC) files $75M mixed securities shelf
Unit Corp. (UNT) files automatic mixed securities shelf
ZS Pharma (ZSPH) 4.01M share Secondary priced at $46.25

• Samaras Says He’d Join Alliance to Keep Greece in Euro (BBG)
• Tensions with Warren camp could loom over Clinton campaign (Reuters)
• Ackman Report on Herbalife in China Figures in Probe (WSJ)
• Al Shabaab storms Kenyan university, 14 reported killed (Reuters)
• Iraq’s Four-Mile Line of Supertankers Fuels Shipping-Rates Surge (BBG)
• Menendez's fate could sharpen Republicans' edge in Senate (Reuters)
• IRS Chief Chides Ted Cruz Over 'Abolish the IRS' Mantra (BBG)
• Yemen Houthi fighters backed by tanks reach central Aden (Reuters)
• EU Lays Groundwork for Antitrust Charges Against Google (WSJ)
• Patient evaluated for Ebola at Colorado hospital after seeing symptoms (Reuters)
• RadioShack Is Dead, Long Live RadioShack (WSJ)
• Iron ore falls below US$50 a tonne, heaping pressure on Joe Hockey (Guardian)
• No Sleeping In for Stock Jocks Awaiting Good Friday Jobs Report (BBG)
• TV Everywhere Gets So Popular Many Now Watch It. . . On TV (Reuters)
• Another "hedge fund" using Twitter for stock tips (BBG)

Overnight Media Digest

WSJ

* Europe's competition regulator is preparing to move against Google Inc. in the next few weeks, a person familiar with the matter said Wednesday, setting the stage for charges against the U.S. Internet-search giant in a five-year-old investigation that has stalled three times and sparked a political firestorm. (http://on.wsj.com/1DxOGAh)

* McDonald's Corp plans to raise wages by more than 10 percent for workers at U.S. restaurants it operates - fresh evidence of the rising wage pressure in the American labor market. (http://on.wsj.com/1DxOW2d)

* Federal prosecutors have begun to look at a presentation organized by investor William Ackman on Herbalife's operations in China, as part of a probe into potential market manipulation of the company's stock, according to people familiar with the matter. (http://on.wsj.com/1DxPB3C)

* After a brush with liquidation last week, a reincarnated version of the RadioShack electronics chain will debut later in April under the ownership of hedge fund Standard General LP with an assist from Sprint Corp. (http://on.wsj.com/1DxQ5GO)

* The U.S. commodities regulator sued giant food companies Kraft Foods Group Inc and Mondelez Global LLC over alleged manipulation of wheat prices in 2011, marking a fresh crackdown on how companies outside the financial industry use derivatives markets. (http://on.wsj.com/1DxQR6G)

* The Securities and Exchange Commission announced a settlement Wednesday with KBR Inc over allegations it used employment agreements that could have muzzled whistleblowers, a move that marks the agency's first-ever enforcement action of this kind. (http://on.wsj.com/1DxQKYR)

FT

The Bishop of Birmingham, Reverend David Urquhart, will be a part of the team gathered by Dame Colette Bowe, chair of the Banking Standards Board, to oversee the task of restoring faith in UK's banking sector.

Opposition party Labour said critics of party Leader Ed Miliband's business are "well-known supporters, peers and donors" of the Conservative party.

UBS Group AG will make top executives convince shareholders whether they are worth the 58 million swiss franc ($60.04 million) variable pay they received last year. As part of its new plan, the Swiss bank is putting variable pay for its executive board and the remuneration for directors in 2015 and 2016 to a shareholder vote at its May 7 annual meeting.

Technology start-ups in London received about $682 million in funding in the first three months of 2015, according to data from the Mayor of London's promotional body, London & Partners.

NYT

* In an announcement circulated and recirculated among incredulous gay-rights advocates, Wal-Mart Stores Inc. posted a statement in its Twitter feed that asked the governor of Arkansas, its home state, to reject a legislation that critics say could allow discrimination against lesbians and gay men.(http://nyti.ms/1ISRgkq)

* Luxury car exporter Alibek Turkayev's nearly two-year legal battle to recover a Porsche Cayenne and $120,786 seized by United States authorities has ended with federal prosecutors in South Carolina agreeing to return the property and drop a civil forfeiture lawsuit. (http://nyti.ms/1ISRtUT)

* Federal prosecutors said in a court filing on Wednesday that HSBC Holdings PLC - the British bank which avoided criminal prosecution in 2012, on charges of money laundering and transferring funds for Iran and other blacklisted nations, was going slow on making changes. Prosecutors found fault in the bank for weaknesses in spotting suspicious transactions and for enabling a corporate culture resistant to change. (http://nyti.ms/1ISSdcx)

* President Obama on Wednesday signed an executive order aimed at retaliating against foreign-based online attacks on the United States as the government scrambles to catch up to national security threats that are evolving in a world of fast-changing technology. (http://nyti.ms/1ISSmg0)

* Yukos, the defunct Russian oil giant whose dismantling a decade ago came to define a country's flawed property rights system, announced on Wednesday that it had reached a final legal settlement with NK Rosneft OAO, the state oil company that prospered from the breakup. (http://nyti.ms/1ISSEDD)

China

 SECURITIES JOURNAL

- Housing in 100 Chinese cities was valued at 10,523 yuan ($1,698) per square meter, down 0.15 percent from a month earlier, indicating an easing in home price decline, according to a China Index Academy report.

CHINA BUSINESS NEWS

- China will adopt higher quality fuel and gasoline standards by the end of 2016, a year ahead of schedule, the newspaper said in an exclusive report, without citing sources.

SECURITIES TIMES

- Both Shanghai Pudong Development Bank (SPDB) and Shanghai Rural Commercial Bank (SRCB) said they "have no idea" about the speculation that the SPDB is planning to purchase SRCB stakes.

CHINA DAILY

- Beijing's new air pollution emergency response program, which controls the number of vehicles on roads at times of high pollution, lowers the threshold for issuing air pollution alerts and increases penalties for violators, will be more effective in combating air pollution than existing measures, according to an editorial in the newspaper.

SHANGHAI DAILY

- A hundred Chinese start-ups will be provided with 100 million yuan worth of free software and cloud services, Microsoft said on Wednesday, the newspaper reported.

Britain

The Times

PANIC IN THE MARKETS AS POLL JITTERS HIT STERLING

Jitters hit the markets yesterday as analysts warned investors that Britain faced the prospect of a weak and ineffective government after a dead-heat election. (thetim.es/1I63sk6)

QUINDELL'S BLUNDER REFLECTS BADLY ON AIM

The credibility of the London stock exchange's junior market was brought into question yesterday by the latest debacle at Quindell Plc. Shares in the troubled insurance services company were suspended after it admitted to a glaring error in a statement to the stock market on Monday. (thetim.es/1NKe0pE)

The Guardian

BG GROUP CONCEDES FAILINGS OVER CEO HELGE LUND'S 25 MLN STG PAY DEAL

The BG Group board has admitted it "did not strike the correct balance" on pay when it offered a 25 million pounds ($37.06 million) package to lure the Norwegian oil boss Helge Lund to the company as chief executive. (bit.ly/1xZO5GS)

HSBC MUST DO MORE TO CLEAN UP OPERATIONS, SAYS REPORT

HSBC needs to do more to clean up the way it does business and overhaul the culture that exists in some of its operations, according to a report for the U.S. authorities. (bit.ly/1EGA03d)

The Telegraph

DEALMAKERS TOAST BEST START TO THE YEAR SINCE 2007 M&A BOOM

Bankers believe the United Kingdom will continue to attract overseas buyers, despite potential disruptions from the election. Dealmakers around the world started the year with a bang after more than $902 billion of mergers and acquisitions were announced in the first quarter, the highest three-month total since the pre-crash boom in 2007. (bit.ly/1GhTF8q)

SPORTS DIRECT VALUATION HIT BY GOVERNANCE WORRIES

Worries about corporate governance at Sports Direct have forced an influential broker to cut its estimate of the retailer's valuation by a fifth. While analysts at Morgan Stanley on Wednesday started coverage of the FTSE 100 company with an "overweight" recommendation - the equivalent of a "buy" - because of the opportunities for Sports Direct to expand in Europe, they also cautioned that governance at the business is "an issue" and was deterring institutional investors from buying the stock. (bit.ly/1I655hO)

Sky News

INSURER HASTINGS MOTORS TOWARDS £1BN LISTING

The owners of Hastings, one of the United Kingdom's fastest-growing insurers, have appointed investment bankers to steer the company towards a 1 billion pounds post-lection flotation. (bit.ly/1ImAEke)

KURT GEIGER TO TRY ON ANOTHER NEW OWNER

The upmarket shoe retailer Kurt Geiger is preparing to try on another new owner less than a year after its last buyout. (bit.ly/1Dwufn8)

The Independent

TWO THIRDS OF ECONOMISTS SAY COALITION AUSTERITY HARMED THE ECONOMY

A host of eminent economists have given a thumbs-down to the Coalition's controversial austerity policies in a major new poll. (ind.pn/1EE4LWA)

BUSINESS LEADERS MIGHT NOT BE AS ANTI-LABOUR AS THAT LETTER WOULD HAVE YOU BELIEVE

Business will not be voting Labour. That's the impression left by an open letter to The Daily Telegraph signed by 103 business leaders. The signatories said a "change in course" from the economic path laid out by "this Conservative-led Government" would "threaten jobs and deter investment". But we should be wary of assuming the views of the 103 signatories are representative of the views of the entire business community in the UK. There are around five million private sector businesses according to the latest estimates. (ind.pn/19HyPD5)

Fly on the Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Jobless claims for week of March 28 at 8:30--consensus 285K
International trade balance for February at 8:30--consensus deficit $41.2B
ISM New York for March at 9:45--consensus 62.0
Factory orders for February at 10:00--consensus down 0.4%
EIA natural gas storage change for week of March 27 at 10:30

ANALYST RESEARCH

Upgrades

CRH (CRH) upgraded to Neutral from Underperform at Exane BNP Paribas
Dick's Sporting (DKS) upgraded to Positive from Neutral at Susquehanna
Franklin Street (FSP) upgraded to Hold from Sell at Stifel
Macerich (MAC) upgraded to Neutral from Sell at UBS
Macerich (MAC) upgraded to Neutral from Underperform at Credit Suisse
Mosaic (MOS) upgraded to Sector Performer from Underperformer at CIBC
Steven Madden (SHOO) upgraded to Overweight from Neutral at Piper Jaffray
World Point Terminals (WPT) upgraded to Buy from Neutral at BofA/Merrill

Downgrades

Garmin (GRMN) downgraded to Neutral from Buy at Goldman
Iconix Brand (ICON) downgraded to Market Perform from Outperform at Cowen
Infinera (INFN) downgraded to Neutral from Buy at Goldman
NewLink Genetics (NLNK) downgraded to Hold from Buy at Jefferies
Phibro Animal Health (PAHC) downgraded to Neutral from Outperform at Macquarie
Stryker (SYK) downgraded to Underweight from Equal Weight at Barclays
Webster Financial (WBS) downgraded to Neutral at Boenning & Scattergood

Initiations

A.O. Smith (AOS) initiated with a Perform at Oppenheimer
AerCap (AER) initiated with an Outperform at Macquarie
Agile Therapeutics (AGRX) initiated with an Outperform at FBR Capital
Air Lease (AL) initiated with an Outperform at Macquarie
Avolon (AVOL) initiated with a Neutral at Macquarie
BioDelivery Sciences (BDSI) initiated with an Outperform at FBR Capital
CDK Global (CDK) initiated with a Hold at Evercore ISI
Cinedigm (CIDM) initiated with a Neutral at Macquarie
Cnova (CNV) initiated with a Neutral at Goldman
Liberty Interactive (QVCA) initiated with a Buy at Brean Capital
Lion Biotechnologies (LBIO) initiated with an Outperform at FBR Capital
Lumenis (LMNS) initiated with a Buy at Maxim
Mettler-Toledo (MTD) initiated with an Equal Weight at Morgan Stanley
Mueller Water (MWA) initiated with an Outperform at Oppenheimer
Rexford Industrial (REXR) initiated with a Buy at Wunderlich
Spectrum (SPPI) initiated with an Outperform at FBR Capital
Speedway Motorsports (TRK) initiated with an Outperform at Macquarie
Summit Therapeutics (smmt) initiated with an Outperform at JMP Securities
Targa Resources Partners (NGLS) resumed with a Neutral at Citigroup
Targa Resources (TRGP) resumed with a Buy at Citigroup
TrueCar (TRUE) initiated with a Sell at B. Riley

COMPANY NEWS

Kraft (KRFT), Mondelez (MDLZ) charged with manipulation of wheat futures by CFTC
Pershing Square said 'confident' Herbalife (HLF) violating Chinese law prohibiting direct selling and pyramid sales
Urban Outfitters (URBN) said Q1 comps up mid single-digit thus far
Repros Therapeutics (RPRX) announced FDA acceptance for filing of enclomiphene citrate product NDA
TCP International (TCPI) said product validation proceeding as expected
Intrexon (XON) signed CRADA with NCI for RTS platform
Allegiant Travel (ALGT) said holiday weekend pilots' strike averted

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Micron (MU), Progress Software (PRGS), National American University (NAUH), Sigma Designs (SIGM), Sportsman's Warehouse (SPWH)

Companies that missed consensus earnings expectations include:
Franklin Covey (FC)

Micron (MU) sees Q3 revenue $3.85B-$4.05B, consensus $4.29B
Progress Software (PRGS) sees Q2 EPS 29c-32c, consensus 34c, lowers FY15 EPS view to $1.35-$1.45 from $1.37-$1.47
Sportsman's Warehouse (SPWH) sees Q1 EPS (4c)-(3c), consensus (1c), sees FY15 EPS 56c-63c, consensus 64c

NEWSPAPERS/WEBSITES

China slams Google (GOOG) for web security comments, Financial Times reports
EU move suggests Google (GOOG) antitrust lawsuit coming soon, WSJ reports
Pfizer (PFE) ends vaccine operations in China after Prevenar expiration, WSJ reports
Apple (AAPL) dealings with record labels scrutinized by EC, Financial Times reports
Report: Samsung (SSNLF) sees 15% of management resign in 2014, DigiTimes reports
Oasis Petroleum (OAS) considering MLP for North Dakota gas processing plant, Reuters reports

SYNDICATE

Aquinox (AQXP) enters $25M common stock sales agreement with Cowen
Axalta Coating (AXTA) 40M share Secondary priced at $28.00
Conatus (CNAT) files to sell common stock, no amount given
Foamix (FOMX) files to sell ordinary shares, no amount given
HealthEquity (HQY) files $75M common stock shelf
Kornit Digital (KRNT) 7.1M share IPO priced at $10.00
ORBCOMM (ORBC) files to sell 3.91M shares of common stock for holders
Poage Bankshares (PBSK) files to sell 106,834-144,540 shares of common stock at $12.73
Raptor Pharmaceuticals (RPTP) 9.5M share Secondary priced at $9.00
Salix Pharmaceuticals requests withdrawal of registration statement
Summit Hotel Properties (INN) files to sell 352,103 shares of common stock for holders
Summit Hotel Properties (INN) files to sell 412,174 shares of common stock for holders
Ziopharm (ZIOP) files to sell 11.72M shares of common stock for holders

In lieu of a market wrap piece today, because frankly there was no "market" to speak of, just a couple of made by/for HFT stop hunts, we will instead pay homage to the man who made all this commentary on farcial, broken markets possible.

Ben Bernanke.

But first we will let Ben speak for himself.

Humble, daring, courageous. All words that promptly come to mind upon reading the following excerpt, and we are confident the Goldman Sachs preface will surely add "patriotic"to the trio of adjectives.

And while we know it will be next to impossible to wait until October when this book of toner repair and printer cartridge replacement wisdom comes out, here is a sampling of timeless soundbites by the former Fed Chairman and current blogger, that should be enough to hold readers over.

* * *

10/1/00 – Article published in Foreign Policy Magazine

A collapse in U.S. stock prices certainly would cause a lot of white knuckles on Wall Street. But what effect would it have on the broader U.S. economy? If Wall Street crashes, does Main Street follow? Not necessarily.

7/1/05 – Interview on CNBC

INTERVIEWER: Ben, there's been a lot of talk about a housing bubble, particularly, you know [inaudible] from all sorts of places. Can you give us your view as to whether or not there is a housing bubble out there?

BERNANKE: Well, unquestionably, housing prices are up quite a bit; I think it's important to note that fundamentals are also very strong. We've got a growing economy, jobs, incomes. We've got very low mortgage rates. We've got demographics supporting housing growth. We've got restricted supply in some places. So it's certainly understandable that prices would go up some. I don't know whether prices are exactly where they should be, but I think it's fair to say that much of what's happened is supported by the strength of the economy.

7/1/05 – Interview on CNBC

INTERVIEWER: Tell me, what is the worst-case scenario? We have so many economists coming on our air saying ‘Oh, this is a bubble, and it’s going to burst, and this is going to be a real issue for the economy.’ Some say it could even cause a recession at some point. What is the worst-case scenario if in fact we were to see prices come down substantially across the country?

BERNANKE: Well, I guess I don’t buy your premise. It’s a pretty unlikely possibility. We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.

10/20/05 – Testimony before the Joint Economic Committee, Congress

House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.

11/15/05 – Confirmation Hearing before Senate Banking Committee

SEN. SARBANES: Warren Buffet has warned us that derivatives are time bombs, both for the parties that deal in them and the economic system. The Financial Times has said so far, there has been no explosion, but the risks of this fast growing market remain real. How do you respond to these concerns?

BERNANKE: I am more sanguine about derivatives than the position you have just suggested. I think, generally speaking, they are very valuable… With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly. The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well-managed and do not create excessive risk in their institutions.

3/6/07 – At bankers’ conference in Honolulu, Hawaii… as delinquencies in the subprime mortgage sector rise

The credit risks associated with an affordable-housing portfolio need not be any greater than mortgage portfolios generally.

3/28/07 – Testimony before the Joint Economic Committee, Congress

Although the turmoil in the subprime mortgage market has created severe financial problems for many individuals and families, the implications of these developments for the housing market as a whole are less clear…At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.

5/17/07 – Remarks before the Federal Reserve Board of Chicago

...we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system. The vast majority of mortgages, including even subprime mortgages, continue to perform well.

8/31/07 – Remarks at the Fed Economic Symposium in Jackson Hole

It is not the responsibility of the Federal Reserve--nor would it be appropriate--to protect lenders and investors from the consequences of their financial decisions. But developments in financial markets can have broad economic effects felt by many outside the markets, and the Federal Reserve must take those effects into account when determining policy.

1/10/08 – Response to a Question after Speech in Washington, D.C.

The Federal Reserve is not currently forecasting a recession.

2/27/08 – Testimony before the Senate Banking Committee

I expect there will be some failures [among smaller regional banks]… Among the largest banks, the capital ratios remain good and I don’t anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system.

4/2/08 – New York Times article after the collapse of Bear Stearns

“In separate comments, Mr. Bernanke went further than he had in the past, suggesting that the Fed would remain aggressive and vigilant to prevent a repetition of a collapse like that of Bear Stearns, though he said he saw no such problems on the horizon.”

6/10/08 – Remarks before a bankers’ conference in Chatham, Massachusetts

The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.

7/16/08 – Testimony before House Financial Services Committee

[Fannie Mae and Freddie Mac are] adequately capitalized. They are in no danger of failing… [However,] the weakness in market confidence is having real effects as their stock prices fall, and it’s difficult for them to raise capital.

9/24/08 – Response to a question after JEC testimony… during the TARP debate, two weeks before the Fed initiates its liquidity facility for commercial paper markets

I see the financial markets as already quite fragile. The credit markets aren’t working. Corporations aren’t able to finance themselves through commercial paper. Even if the situation stayed as it did today, that would be a significant drag on the economy.

3/16/09 – Interview on CBS’s 60 Minutes

It’s absolutely unfair that taxpayer dollars are going to prop up a company (AIG) that made these terrible bets, that was operating out of the sight of regulators.

5/5/09 – Response to Questioning at Senate Joint Economic Committee Hearing

The forecast we have is for the economy, in terms of growth, to begin to turn up later this year, but initially not to grow at the rate of potential, which means that unemployment and resource slack will continue to rise into 2010. We think that the unemployment rate will probably peak early in 2010 and then come down relatively slowly after that. Um, currently, we don’t think it’s going to get to 10 percent, we’re somewhere in the 9’s, but clearly, that’s way too high.

7/21/09 – Testimony before the House Committee on Financial Services

A perceived loss of monetary policy independence could raise fears about future inflation, leading to higher long-term interest rates and reduced economic and financial stability.

* * *

And of course...

* * *

So while we all wait feverishly for several hundred pages of ghost written truth upon truth, those who have some free time may want to consider boosting google's bottom line with some High Frequency Clicking. After all, every time someone clicks on Bernanke's ad, blogger Ben has to pay GOOG $1 for the courtesy.

Source: CEPR

Via ConvergEx's Nichaolas Colas,

How many stocks are in the small cap Russell 2000 index?  Nope, not 2,000… The answer is currently 1,987.  The Russell 1000 (large caps) has 1,036 names, and the Russell 3000 (essentially the whole U.S. market) has 3,023.  Yes, the world of indexing is complex.  Another more practical and immediate example: every May/June, Russell goes through the process of rebalancing their indices, and we are quickly coming up to an important series of deadlines in that workflow.

 

Today, with a lot of help from the Convergex Portfolio Trading group, we summarize what this all means.

 

Two key takeaways. One, Health Care sees the largest changes of any sector with many names moving from the 2000 to the 1000.  Two, several hundred individual names stand to move into/out of the Russell 2000 across all industry groups. Also, June 2015 will almost certainly be more volatile than June 2014, when the average CBOE VIX Index was just 11.5.  With over $4 trillion invested in Russell index-linked products, this year’s rebalance combined with the “Will they/won’t they” Fed rate increase debate could make for an eventful start to summer.

Investing may be an old concept, dating back through the millennia, but the notion of measuring asset price performance through the lens of an index goes back less than 120 years. The oldest such measurement that market participants still use today is actually not even an index at all. It is the Dow Jones Industrial Average, which is price weighted.  That’s because Charles Dow’s solution for aggregating and explaining the market action of various stocks was to add up their prices into one measure. A $100 stock has more influence than a $10 one. And that’s exactly how the Dow has been calculated since 1896.
 
Fast forward to March 4th 1957 and Standard & Poor’s launches a true “Index” of 500 large capitalization U.S. stocks.  The firm used the now-common approach of market capitalization weighting, giving more influence in the new “S&P 500” to the largest companies in a given industry or relative to the market overall. Then in 1984 Frank Russell started the Russell 1000, 2000, and 3000 benchmarks to evaluate manager performance for the firm’s advisory practice. The three indexes track Large Caps, Small Caps, and the entire U.S. market (about 98% of it, to be precise), respectively.
 
Between the Russell 1000, 2000, and 3000, there is approximately $4.4 trillion of investor capital tracking these benchmarks and their offshoots. And, unlike many other index providers, Russell (now owned by the London Stock Exchange Group) resets their indices just once a year. In the case of the Russell 2000, for example, there is some $952 billion invested in this small cap index and its Growth and Value variants. And every year all of it gets rejiggered as Russell reevaluates which stocks should be in the 1000 (Large Cap) and 2000 (Small Cap) benchmarks.
 
So…  A trillion dollars of gross capital moving through a wide range of U.S. small cap stocks. What could go wrong? The short answer is that nothing much tends to go awry, because Russell is very transparent throughout the reweighting/reconstitution process. By the time comes for all the capital dedicated to these indices to move with the annual changes, there are very few surprises.
 
That doesn’t make the “Russell Rebalance” – the nicely alliterative label for these index changes – easy to understand for those unfamiliar with the intricacies of indexing (we can alliterate with the best of them). Today we’ll lean on the expertise of our Program Trading desk, which has done the heavy lifting here. The bottom line is that the Russell Rebalance is sufficiently all encompassing that it touches +95% of the entire U.S. stock market by capitalization. That means that any equity you own – or are thinking of buying or selling – is very likely touched by the upcoming rebalance.
 
Now that I have your attention, here are the particulars:

#1: When does all this happen?  Since effectively communicating the changes to the indices limits the volatility on the actual date of the reconstitution, Russell is very transparent about its evaluation process. The key dates this year are as follows, with descriptions from Russell regarding what happens when:

• May 29. “May is ‘ranking’ month when the largest global companies are lined up to form the preliminary reconstitution portfolios. In 2015, the last business day falls on Friday, May 29.”  Keep in mind that the Russell indices include/exclude names primarily on a market capitalization basis with some basic liquidity and float requirements layered on top.  If the 3000th name by market cap in the U.S. equity market has a capitalization of $173 million, then any company with a lower market cap will not make it in.
•  June 12th.  “Preliminary lists are communicated to the market place.”
•  June 19 & 26.  Updates to the lists are provided.
•  June 26th.  “Newly reconstituted indexes take effect after the close.”

 In case you don’t have a calendar in front of you, there are 2 days after the Russell Rebalance before we close the books on Q2 2015.  That’s a positive for both the rebalance process and markets as a whole, since the volumes related to the rebalance will not come on the last day of a quarter.

 

#2: Is there anything new about the reconstitution process this year?  The short answer is “Yes”. Companies with multiple share classes (think Google, with its GOOG and GOOGL symbols) where the securities individually meet the criteria for index inclusion have the chance to get both stocks into the relevant Russell index. This is not something unique to the Russell indices, by the way. Fun fact: there are 503 stocks in the S&P 500 because of the same process as Russell is using here. Google’s two classes of stock have an aggregate 1.64% weight in the 500, broken up into GOOG (0.81%) and GOOGL (0.81%).

 

#3: What are the large scale impacts of the 2015 Russell Rebalance? Courtesy of the Convergex Program Trading Desk, a few points:

• Any U.S. company with a market cap of $173.3 million or higher should be in the Russell 2000 if they meet the liquidity and float requirements. For the Russell 1000 Large Cap index, that number is an estimated $3.3 billion. For example, if a company went from a $100 million market last year to $200 million this year, it should be added to the Russell 2000 as long as it trades more than the average global stock and has +5% of its shares available to trade.
•  We expect 212 companies to be deleted from the Russell 2000 this year for falling below the market cap cutoff, and 102 to be added.  For the Russell 1000, we expect those counts to be 9 added, 3 deleted, and 40 to move from the Russell 2000 to the 1000 because their market caps have increased.
• Given that Health Care stocks have done very well over the past year, it should be no surprise that this group sees the most names migrating from the Russell 2000 (small caps) to the Russell 1000 (large caps).  But that also means that the aggregate weighting of Health Care in the Russell 2000 will decline, from 15.6% to 14.3%.  Financial Services will pick up some of the slack in the 2000, going from 24.9% to 25.4%.

 #4: How do I make money from this trade?  The most common strategy is to try to predict what stocks will make their debut appearance in the Russell 2000.  Since that’s not especially hard to figure out once you have a sense of the market cap cutoff (that $173.3 million number we referenced), it is safe to say that a lot of traders have the same idea. For those of you curious to see the list of these names on the cusp of Russell index inclusion just ping me and we’ll put you in touch with our Program Trading team.

 

#5: How do I not lose money from this trade?  This is the more important question, for imbedded in these lists of potential Russell adds, changes and deletes are hundreds of equities that you may see as a potential investment, or something you own that you may want to sell. In these cases, trading the name during June becomes distinctly more challenging. After all, there will be plenty of traders trying to work out how much Russell-linked funds they will have to buy or sell on June 26th.

The analogy that comes to mind is walking into a bar and discovering it is karaoke night, and everyone has to sing. You think you are just going out for a quick beer, but unbeknownst to you the Russell Rebalance means you’re soon on a stage with a mic in your hand.  And maybe it’s OK, because the song is “Born to be Wild”.  Or maybe it’s “Total Eclipse of the Heart”. And that’s not OK.  As an institutional investor or trader, you need to know which it is going to be. And that means having the Russell add/delete/change list close at hand in June.
 
The bottom line is that the Russell Rebalance is, in many ways, the biggest trade of the year. Lots of capital tracks these indices, and much of it centers on smaller capitalization names. The information is all there to assess the annual Reconstitution’s effect on individual securities, so there’s no excuse for not knowing.

After weeks of overnight turbulence following every twist and turn in the Greek drama, this morning has seen a scarcity of mostly gap up (or NYSE-breakding "down") moves, and S&P500 futures are unchanged as of this moment however the Nasdaq is looking set for another record high at the open after last night's better than expected GOOG results which sent the stop higher by 11% of over $40 billion in market cap. We expect this not to last very long as the traditional no volume, USDJPY-levitation driven buying of ES will surely resume once US algos wake up and launch the self-trading spoof programs. More importantly: a red close on Friday is not exactly permitted by the central planners.

Light newsflow has failed to provide European equities with any substantial direction (Euro Stoxx: -0.1%). Market attention will be on today's German parliamentary vote on Greek reforms which is said to conclude at around 1200BST/0600CDT and is widely expected to be approved: after all the ECB needs to be paid with money effectively from the ECB.

Bunds have outperformed their US counterparts during the European session, undertaking a bid tone this morning as some desks attribute the move to the aforementioned German vote, despite expectations for the vote to comfortably pass.

Asian equities traded mostly higher taking a positive lead from Wall Street , where the Nasdaq-100 reached 15-yr highs following strong earnings from Netflix and Google, with latter rising by 12% in after-market trade. Hang Seng (+1.0%) and Shanghai Comp. (+3.5%) outperformed following reports that China Securities Finance Co. won CNY 2trl worth of credit to support Chinese stocks. Nikkei-225 (+0.3%) rose, with the index now on course to post its best week since Nov'14. Finally, JGBs gained overnight with the BoJ conducting its large purchase program.

In FX, central bankers remain in focus heading into the final session of the week, as has been the case throughout the week, with GBP/USD the notable outperformer at one point rising by over 50 pips this morning as European participants react to further hawkish comments by BoE's Carney from last night, who stated UK interest rates could rise "at the turn of this year". As such, EUR/GBP has continued its recent decline reaching its lowest level since 2007.

Elsewhere, the USD-index resides in modest negative territory (-0.1%) to come off its recent highs which came on the back of hawkish comments from Fed's Yellen in her semi-annual testimony to congress over the past 2 days.

In terms of Asian-Pacific currencies, USD/JPY broke above the 124.00 handle to trade at its highest level for almost a month, while NZD/USD came off its multi-year lows after finding support at the 0.6500 level, which provided some respite following the continued decline which saw the pair fall by over 2 points in the past 2 days.

In the commodity complex price action has been relatively subdued with the exception of copper and platinum, with the latter falling to 6.5 year lows after dipping below USD 1,000/oz. Copper futures slid after the crossover of its 50 and 100DMA, followed by the overlap of the 100 and 200DMA to exacerbate the move to the downside. While the energy complex has seen WTI (+USD 0.14) and Brent crude (+USD 0.02) reside in neutral territory which a lack of fundamental catalysts driving much direction in prices.

Looking ahead, today sees US CPI, housing starts, building permits and University of Michigan preliminary reading as well as comments from Fed's Fischer and Canadian CPI.

Bulletin Headline Summary

• GBP/USD is the notable outperformer as European participants react to last nights comments by BoE's Carney.
• The USD-index resides in modest negative territory to pare some of its Fed's Yellen semi-annual testimony inspired gains.
• US CPI, housing starts, building permits and University of Michigan preliminary reading, Canadian CPI and comments from Fed's Fischer.
• Treasury curve flattens in overnight trading sending 5/30 curve (+143bps) to its lowest level since June 16 ahead of today’s CPI release.
• Flattening of 5/30 curve a reflection of lower commodity prices indicating lack of inflation and willingness by bond investors to set-up for a rate hike in September, ED&F Man head strategist Tom di Galoma says in note
• Wherever you look, central bankers are moving markets with ECB support for Greece and stimulus measures spurring gains in bonds; signs Britain is moving closer to raising interest rates sending the pound to a seven-year high
• It’s become more difficult to buy and sell securities as Greece’s financial crisis curbs risk taking and dealers scale back trading activity to meet regulations introduced since the financial crisis
• China has created what amounts to a state-run margin trader with $483 billion of firepower, its latest effort to end a stock-market rout that threatens to drag down economic growth and erode confidence in the government
• Bank of England Governor Mark Carney said the end of record- low interest rates is in sight and the time for such a move will become much clearer by the end of the year
• The European Union’s 7 billion-euro ($7.6 billion) loan to keep Greece afloat until its full bailout is approved will have two layers of guarantees and will be finalized by midday in Brussels
• Growing dissent in Chancellor Angela Merkel’s party bloc makes the lower-house vote on Friday the latest test of her struggle to persuade Germans that Greece is still worth helping
• IMF’s Lagarde states Greece needs debt forgiveness
• Sovereign 10Y bond yields mostly lower, led by Greek 10Y (-26bps). European stocks mixed, Asia rises, U.S. equity- index futures mixed. Crude oil, copper and gold fall

US Event Calendar

• 8:30am: Housing Starts, June, est. 1.106m (prior 1.036m)
  • Housing Starts, June, 6.7% (prior -11.1%)
  • Building Permits, June, est. 1.150m (prior 1.275m, revised 1.250m)
  • Building Permits, June, est. -8.0% (prior 11.8%, revised 9.6%)
• 8:30am: CPI, June, est. 0.3% (prior 0.4%)
  • CPI Ex Food and Energy, June, est. 0.2% (prior 0.1%)
  • CPI y/y, June, est. 0.1%  (prior 0%)
  • CPI Ex Food and Energy y/y, June, est. 1.8% (prior 1.7%)
  • CPI Index NSA, June, est. 238.632 (prior 237.805)
  • CPI Core Index SA, June, est. 242.098 (prior 241.76)
  • Real Avg Weekly Earnings y/y, June (prior 2.2%)
• 10:00am: U. of Mich. Sentiment, July preliminary, est. 96 (prior 96.1)
  • U. of Mich. Current Conditions, July (prior 108.9)
  • U. of Mich. Expectations, July (prior 87.8)
  • U. of Mich. 1 Yr Inflation, July (prior 2.7%)
  • U. of Mich. 5-10 Yr Inflation, July (prior 2.6%)

DB's Jim Reid completes the overnight event recap

A combination of decent US earnings and more progress in Greece, including the news that EU Finance Ministers have agreed in principle to a bridge loan helped propel equity markets higher on both sides of the pond yesterday. Indeed in Europe the Stoxx 600 closed up +1.35%, a seventh consecutive daily gain and helping to cap its longest winning streak since January having rebounded 8.8% now off the early July lows. There were similar gains for the DAX (+1.53%), CAC (+1.47%), IBEX (+1.54%) and FTSE MIB (+1.67%) too. Over in the US the S&P 500 finished up +0.80% to take it back to within just 0.3% of its all-time high, while the NASDAQ (+1.26%) went one better to close at a record high as earnings out of Netflix and eBay helped cap a good day for equity bulls.

Before we dig deeper, with the exception of China it’s been a fairly subdued end to the week across bourses in Asia this morning. Chinese equities are on track to close the week on a positive note however with the Shanghai Comp (+1.37%), Shenzhen (+2.64%) and CSI 300 (+1.56%) all up. The Nikkei (+0.05%) and ASX (-0.02%) are more or less unchanged while the Kospi (-0.57%) has declined. Credit markets across Asia, Japan and Australia are around 2bps tighter while S&P 500 futures are flat. Meanwhile Treasuries are mostly unchanged this morning while the Dollar index has dropped back a touch (-0.2%).

Onto Greece now. On the back of the parliamentary approval late Wednesday night, at yesterday’s ECB meeting we saw the Governing Council approve a €900m increase to the ELA cap. The small increase largely endorsed the improving but fragile picture with our European colleagues expecting capital controls to remain until Q4 when the bank recapitalization has been completed but with the ECB continuing to review ELA within its rules. For now the bank holiday has been extended through July 19th. Away from the ELA update the other headline yesterday was the news that EU Finance Ministers have agreed in principle on a €7bn bridge loan for Greece from the EFSF which will be needed to help repay €3.5bn of bonds to the ECB on Monday. According to Bloomberg, the deal is expected to be announced formally today after national parliaments have approved the proposals (Bundestag is set to vote today). Meanwhile, there is yet to be any response from Tsipras with regards to a cabinet reshuffle following Wednesday’s vote although it’s possible that we hear at any moment. For now it certainly feels like headlines are abating and attention is slowly moving to events elsewhere.

Some of that attention is now turning to earnings in the US which were generally better than expected on the whole yesterday and helped support part of the better tone in markets. As well as the contributions from the aforementioned tech names, Citigroup, Intel (post market Wednesday), Philip Morris, Goldman Sachs and UnitedHealth all reported beats, although the latter two did see some weakness in the details which disappointed the market slightly. Google meanwhile reported after the closing bell, with results ahead of consensus and sending the share price 10% higher in aftermarket trading.

It’s still early days so far but of the 52 S&P 500 companies to have reported, 73% have beaten earnings expectations, although the split is more 50/50 at the top line while the stronger Dollar has continued to play out as a theme for a number of the corporates this reporting period.

Elsewhere, there was little new to report from Fed Yellen’s testimony in front of the Senate yesterday which largely reflected her speech on Wednesday, including that she favours tightening in a ‘prudent and gradual manner’.10y Treasuries did end the day more or less unchanged (-0.2bps) at 2.351% while the Dollar index firmed for a second consecutive session, closing +0.52%. In terms of the data flow in the US, initial jobless claims declined for the first time in four weeks, falling 15k to 281k (vs. 285k expected), the 19th consecutive week below 300k now. The NAHB housing market index was unchanged for July at 60 (vs. 59 expected), however the Philadelphia Fed business outlook dropped in July (5.7 vs. 12.0 expected) having bounced to 15.2 in June with both new orders and the employment index down.

Over in the Europe meanwhile 10y Bunds also had a quiet session, closing 0.5bps higher at 0.831%. Led by a tightening across the Greek curve, 10y yields in Spain (-3.7bps), Italy (-1.5bps) and Portugal (-1.5bps) all finished tighter. Credit markets also continued to rebound with Crossover and Main 11bps and 3bps tighter respectively. There were signs yesterday too of the primary market for European credit coming back to life having stalled with the volatility around Greece after a couple of decent sized bond issues yesterday.

Aside from the obvious focus on Greece, there was no change in the ECB’s monetary policy stance yesterday. The Governing Council reiterated their ability to use all instruments available within its mandate in the face of any material change in the outlook for price stability while Draghi said that ‘economic risks have been contained as a result of our monetary policy’ and the overall picture of the economy was largely seen as unchanged. On the data front, there were no revisions to the final Euro area CPI prints for June at either the headline (+0.2% yoy) or the core (+0.8% yoy). The May trade balance for the region showed a slightly smaller than expected surplus (€21.2bn vs. €22.0bn expected).

Staying on the Central Bank theme, the Bank of England’s Governor Carney was vocal once again, this time narrowing his time frame slightly saying that ‘the decision as to when to start such a process of adjustment will likely come into sharper relief around the turn of the year’. Carney also said that ‘interest rate increases would proceed slowly and rise to a level in the medium term that is perhaps about half as high as historic averages’. The Governor did cite risks to the world outlook from Greece and China, saying that ‘we can expect the global economy to proceed at a solid, not spectacular pace’. His comments came post market close, with 10y Gilts earlier finishing 4bps tighter at 2.075%. Sterling saw a modest spike up following the comments, but pared those moves to finish down 0.19% versus the Dollar.

Looking at today’s calendar now, it’s a particularly quiet morning in Europe with no significant data due with the focus likely to be on further Greek developments and the Bundestag vote. It’s all eyes on the US this afternoon however where we get the June CPI report with our US colleagues expecting higher energy costs to help push the headline up +0.3% (in line with market) in the month. At the core, the market is looking for a +0.2% mom reading. Along with the inflation numbers, average weekly earnings are also expected along with housing starts, building permits and the July University of Michigan consumer sentiment print.

Google's result were good (even if the top-line revenue missed), but what investors were looking for, and what had pressured GOOG's stock price for the past year, was concern that runaway hiring and spending were eating away at the bottom line. And that is precisely what Ruth Porat, who was poached from Morgan Stanley in March, decided to give to investors when she said just two words on the call: "expense management."

For those who thought $70M was too rich for a CFO... All Ruth Porat said was "expense management" and Google's market cap soars $56B.

— Erik Schatzker (@ErikSchatzker) July 17, 2015

What happened next is the single biggest surge in GOOG market cap in history: at last check the stock was up 14% on the day, equivalent to about $55 billion increase in market cap in just one day.

Putting this in perspective, just today, the value of Google has increased by more than the market cap of 415 S&P 500 companies!

Below is a representative sample showing how the $55 billion intraday increase stacks relative to the market cap of some other S&P 500 companies.

This old clip seems very appropriate... Full Throttle until around 2:00... everyone smiling as the 'boat' surges ever faster... then hubris gets its revenge...

Just as we said this morning...

We expect the traditional no volume, USDJPY-levitation driven buying of ES will surely resume once US algos wake up and launch the self-trading spoof programs.

 

And Volume just got worse and worse all week...

Some context that Greece doesn't matter... On the week...

• Nasdaq +4.1% to record highs - best week since Bullard bounce in October
• S&P +2.3% - best week since March

Trannies and Small Caps disappointed on the week...

On the day - Nasdaq started off crazy right after the close as GOOG hit then just squeezed higher to fresh record highs... S&P unch, Dow down...

But Small Caps were ugly today...

But all the exuberance in Nasdaq is focused in an ever-shrinking number of names...

Note that once the short squeeze had ended there was no follow through at all in the major indices... and in fact shorts started gathering pace again...

Google had a day...

And Netflix had a week...

ETSY Soared because Goldman mentioned it in a Google call... and shorts got "Volkwagen'd"

• VIX -28% - biggest drop since Jan 2013

• Energy Stocks XLE -1.3% - down a record 11 straight weeks to Jan 2013 lows
• Financial Stocks XLF +2.75% - best week since Feb
• Greek Stocks (GREK) -8.2% - worst week since January

It is pretty clear who won and who lost from the Greek bailout...

• China ASHR +0.37% - not exactly the 'recovery' that all that intervention hoped for
• China FXI +0.17% - first gain in 4 weeks

• 30Y TSY -11bps - best week since May

And where do rates go next? if the lagged correlation with crude holds up, considerably lower...

• USD Index  +1.9% - best week since May
• EURUSD -2.5% - worst week since May

JPY flatlined today... and thus so did stocks. But it has been a one way street for USD strength, everything else weakness this week...

And digging into the details a little more, your daily FX roundup (courtesy of ForexLive):

• Silver -4.1% - down 8 of last 9 weeks
• Gold -2.2% - down 7 of lats 9 weeks, worst week since March

Ugly for precious metals leaves them still massively outperforming Nasdaq since the dotcom bubble...

• WTI Crude -4.3% - 5th losing week in a row... worst 3-week loss in 2015)

Charts: Bloomberg

Overnight we saw a flush in precious metals, with no apparent catalyst, and now we are seeing US Treasuries extreme volatility as earlier strength extending gains from last week, are unceremoniously and suddenly dumped after Fed's Bullard warned markets that the probability of a September rate hike is now above 50%. Of course, thanks to meltups pre-market in FB, GOOG, and AAPL, stock indices don't care at all.

• *BULLARD: PRUDENT TO RAISE RATES OFF ZERO, GO MEETING-BY-MEETING
• *BULLARD: ECONOMY DOESN'T NEED EMERGENCY POLICY SETTING ANY MORE
• *BULLARD: GREECE, CHINESE STOCK MARKET MOVES WON'T HURT U.S.
• *BULLARD: ASSET PRICES NOT IN BUBBLE TERRITORY BUT IT'S A RISK

Suddenly Treasuries were dumped...

Though we suspect the kneejerk will retrace as hiking rates has been bullish for the long-end as of late.

Either way, we are sure that when rate hikes come, the market has it all priced in...

Charts: Bloomberg

Submitted by David Stockman via Contra Corner blog,

Let’s see. Google’s record market cap gain on Friday was actually a squeaker. At $66.9 billion it easily passed in one day the entire $50 billion market cap of Caterpillar’s global heavy machinery and engine franchise built up over a century. But only by a hair did it best Cisco’s $66.0 billion gain on April 17, 2000.

But perish the thought that Friday’s fireworks had any resemblance to the shooting star act of Cisco and hundreds of other tech high-flyers 15 years ago or the epic bloodbath that commenced shortly thereafter.

Then again, something was going on with the GOOG beyond the fundamentals. Notwithstanding that Google is one of the most fantastic value creating enterprises on the planet, there was nothing in Friday’s earnings report for Q2 that warranted a 16% re-rating of its market cap.

Indeed, the $345 million or 9.6% gain in net income from the prior quarter was not much of a talisman. Fully 75% of the gain was accounted for by a lower tax rate (from 22.1% to 20.7%) and a cutback of what had been ballooning G&A expenses (from 8.8% of sales to 8.2%). Aside from these benefits at the margins of what is a $70 billion sales machine, net income grew at an unremarkable 2.9% over prior quarter and 7.4% over prior year.

Yet Friday’s re-rating was considerable on a valuation basis. GOOG is entering corporate middle age as it presses upon the law of large numbers, and even with the Q2 uplift its financials clearly show its age. During the three and one-half years since CY 2011, Google’s growth rate for both sales and net income has slowed to 15% per annum.

Consequently, it is hard to see why its LTM net income of $15.1 billion was re-rated from 26X to 31X in less than two hours’ trading. That’s especially the case because 90% of GOOG’s revenues are from advertising, and even the digital ad portion of that space is slowing and getting saturated by GOOG’s preponderant market share.

To wit, the global market for digital advertising outside of China (which lies unavailable behind red-coded firewalls) is projected at $140 billion for 2015. This means that GOOG’s projected digital ad sales of $65 billion this year will compute to a 46% worldwide market share.

Moreover, digital ads already account for 35% of the total worldwide ex-China advertising spend. So the easy digital share gains have been had and no one—–not even the madcap money printers running the central banks—-has eliminated either the business cycle or the cyclicality of ad spending.

Stated differently, GOOG is hurtling fast toward single-digit growth land.  It has not invented a new product that’s on a 100X or 1000X market penetration ramp. Instead, its captured an impressive share of the old-line advertising spend that amounts to $190 billion in the US and $500 billion worldwide ex-China, and which will head south as it always does during the very next recession.

Its probably even worse. GOOG’s estimated 2015 advertising revenues of $65 billion compares to about $44 billion in 2012 before the tech sector was ignited by a tsunami of VC funding and soaring pre-IPO valuations. So some considerable portion of that $21 billion revenue gain may well represent burn-rate money from start-up customers that most definitely will not be around after the next day of reckoning in Silicon Valley.

Never mind. When all else fails, there is nothing like a spree of PE multiple re-ratings to keep the Wall Street party going a few additional months.

But don’t call them re-ratings. After all, this time is different because nothing which happened during the last two Wall Street crashes is remotely relevant to today’s awesome outlook. For example, here’s a real yucker from Morgan Stanley’s ultra-bullish chief US equity strategist, Adam Parker. Unlike during the last tech-wreck, he avers, we are dealing with real companies with substantial sales and earnings, not dotcom eyeball candy:

Today’s tech companies bear little resemblance to the makeshift operations that quickly burned through cash more than a decade ago,says Adam Parker, Morgan Stanley & Co.’s Chief US Equity Strategist. In 1999, fewer than half of tech companies were profitable. With some notable exceptions, around 90% of tech firms now have positive operating margins.

Undoubtedly, Mr. Parker was still guzzling beer in his dorm room during the last tech crash, but that doesn’t excuse his abysmal ignorance of the historical facts. In the Great DeformationI tracked the fate of the dozen big cap tech companies before and after the dotcom crash. These included Cisco, Dell, Intel, Microsoft, Lucent Technologies, Juniper Networks, Hewlett-Packard, Nortel, WorldCom and Global Crossing—–with General Electric and AIG thrown in for spice.

Needless to say, these weren’t “makeshift operations”. Among them they had posted in excess of $300 billion in sales and $50 billion in net income at the turn of the century.

But here’s what happened. During the time between Greenspan’s infamous “irrational exuberance” speech in December 1996 and the March 2000 dotcom peak, the aggregate market cap of these dozen high flyers soared from $600 billion to $3.8 trillion. Notwithstanding respectable rates of sales and earnings growth, operating performance of these big cap tech giants did not remotely justify a 6X gain in market cap during this 39 month period.

For once Greenspan had been right. It was irrational exuberance on steroids——a proposition validated in spades by subsequent events. To wit, during the next 18 months a stunning $2.7 trillion of this market cap vanished and never returned. In fact, by 2012 four of these companies had disappeared and the market cap of those which remained was just $850 billion or 22% of the peak level.

But here’s the stunner. The market value gain of this dozen highflyers between Greenspan’s irrational exuberance mutterings and the end of 2012 amounted to the grand sum of 2.5% per annum.

So beware of the re-rating game. It works in both directions, and violently so when it goes into reverse. And in any event, young Mr. Parker should flunk freshman economics for missing the $3 trillion elephant in the room. Makeshift operations, indeed.

Nor did history put a crimp in the re-ratings game this time around. On Friday, Wall Street sounded just like February 2000:

And at least five brokerages — J.P. Morgan, Bernstein Research, Nomura Research, Jefferies and Evercore — think Google’s stock will can and will go still higher. After Google reported a sharp rise in earnings and sales that trumped Wall Street’s expectations, they all raised their 12-month targets on the company’s stock Friday morning to $800. At that price, Google’s market cap would catapult above the half-trillion-dollar mark to $547 billion, making Google only the second company, along with Apple AAPL, +0.86% to be valued above the half-trillion-dollar threshold. Apple is currently trading at a $740 billion valuation.

Indeed, the Cisco story alone is dispositive. At the time of its $66 billion one-day surge, Cisco was posting about $15 billion of net sales and $2.5 billion of net income. Not at all makeshift.

CSCO Market Cap data by YCharts

Needless to say, that didn’t stop its $555 billion peak market cap from being ionized during the tech wreck. By October 2002, $475 billion or 85% of that total had disappeared, and 15 years later Cisco’s market cap is still only 25% of its once and glorious top.

Yet this is not because CSCO slide down the tubes as an operating company in the interim. In fact, its current $49 billion of LTM sales are triple its year 2000 level and net income of $9 billion is nearly 4X higher than it was then.

In short, even as Cisco did become “all things digital” and a dominant behemoth in its server, router and internet equipment space, it got “re-rated” downward with a vengeance as it became clear that it was not Jack’s financial beanstalk after all. That is, its results kept on growing, but just not to the sky.

CSCO Net Income (TTM) data by YCharts

In the Cisco case, the downward rerating after the dotcom crash was considerable, to say the least. At the time of the April 2000 crash it was trading a 220X LTM reported earnings. That compares to 13X today.

And that gets to the real truth about the Wall Street bubblies which were flowing last Friday. Morgan Stanley’s chief equity strategist, like the rest of the sell-side stock peddlers, has it exactly upside down; and the proof of the pudding in this instance lies is in Morgan Stanley’s own “New Tech” index of 16 high flyers of the present era.

This charmed circle includes Google, Amazon, Baidu, Facebook, Saleforce.com, Netflix, Pandora, Tesla, LinkedIn, ServiceNow, Splunk, Workday, Ylep, Priceline, QLIK Technologies and Yandex. Taken altogether, their market cap clocked in at $1.3 trillion on Friday. That compares to just $21 billion of LTM net income for the entire index combined.

The talking heads, of course, would urge not to be troubled. After all, what’s a 61X trailing PE among today’s leading tech growth companies?

As it happens, quite a bit. When you take GOOG’s middle-aged profits machine out of the mix, you get something altogether more frisky. Namely, a collective market cap of $840 billion for the other 15 names in the Morgan Stanley index and LTM net income of exactly $6.0 billion.

As we said at the top—-let’s see. That’s a PE multiple of 140X. That’s February 2000 all over again.

Take cover. The Wall Street bubblies are back!

Via ConvergEx's Nick Colas,

Even though we are an institutional brokerage firm, we always keep a weather eye on the state of retail investing in the U.S.  There is, of course, the old saw that this batch of buyers doesn’t get involved until the top; therefore, it makes sense to see if they are getting too “Bulled up”.Then there is the fact that retail “Cult” stocks can hold premium valuations far longer than those without such sponsorship.

 

To get a look at retail’s top stocks, we went to Fidelity’s website, which shows to anyone interested what 10 names their retail customers traded most today. From the top of this list: AAPL (4,500 orders, better to buy), FB (2,200 orders, much better to buy), GPRO (1,400 orders, better to buy) and so forth.

 

 

The rest of the list is in this note, but we also took a look at another vector:  how often does the general public “Google” a particular symbol over time, and who exactly is doing the searching?  That’s where the notion of “Retail interest” in a stock gets, well, interesting. As it turns out, the vast majority of Google searches for “AAPL”, “TSLA”, and “MSFT” come from the cities where these companies are headquartered.  If that’s good or bad we’ll leave it up to you to decide.

Apple’s stock is trading down after hours as I write this note, which likely means that tomorrow’s news will include a healthy dose of “Apple has to buy something!  Some company with a large addressable market!”  OK, they’ve been saying that for a while now, I know…  But at least some market commentators will say the lack of transparency on Apple Watch sales means the Cupertino-based company should enter new markets and jump start that initiative with a meaningful acquisition. Will it be in automobiles?  Or other electronic gadgets?  Social networking?  Over the years Apple’s cash hoard has made it “Potential Buyer #1” in what must be thousands of investment banking pitch books to a slew of companies, public and private.

So what happens when you type “Apple buys…” into Google?  The search engine has an autofill function that tries to finish this phrase, based on what other users have entered before you.  Most of the autofill answers include things like “Beats”, the headphone company, or “Linx”, the maker of camera components.  Both of those are announced transactions, so that makes sense.  After that, Google’s users have a pretty wide arrange of ideas, presented here with no additional comment: Tesla, Android, Samsung, and Spotify. 

The institutional side of Wall Street often looks at retail investors – the type that create such lists – with a combination of a bemused and jaundiced eye.  On the one hand, retail sponsorship of a stock is a powerful factor in creating a “Cult” following and a premium equity valuation.  Steve Jobs, Lee Iacocca, Andy Grove, Lou Gerstner, and Jack Welch are historical examples and you can likely name a few of more recent vintage as well.  And yet for their ability to identify superstar individuals, retail investors have a reputation for getting too optimistic at the top and too cautious at the bottom. 

One exercise I regularly perform is to look at Fidelity’s website, where the online retail brokerage lists daily the top 10 names in terms of buy/sell orders.  If you are a client ($2,500 minimum), you can actually see the top 30 names, but we’ll respect their terms of use and just outline what is visible to the outside world.  Here are the key takeaways from today’s action:

Retail investors still trade a lot of single stocks rather than exchange traded funds.  In Fidelity’s Top 10, there is only one ETF listed: NUGT, a 3X leveraged play on gold miners. Trading was pretty even on this name today, with roughly 600 orders each to buy and sell. 

 

The top 3 names in terms of order flow today were: Apple, Facebook and GoPro. To give you a little sense of history, we did the same analysis three months ago and the top three names were Apple, Netflix and Facebook.  NFLX was the 5^th most traded name today, with PayPal slotting in at #4.

 

Every name on Fidelity’s Top 10 list had more “Buy” orders than “Sell” orders today, except one: Microsoft, with just over 200 “Buys” and 700 “Sells”.  The rest of the list after the six already mentioned are: IBM, TSLA, MSFT, and LOCK. The last one isn’t commonly on the list, but today’s drop in price evidently brought in some purchase interest.

 

Last time around – 3 months ago – when we did this exercise the remainder of the list was: Schlumberger, GE, Alibaba, American Express, AT&T, and Bank of America.

So we know what retail investors think Apple should buy, and we can track which individual stocks have their favor – but what about some more information, like who searches for “AAPL” and “NFLX” and “GOOG”?  Where do the individuals who have an interest in public market stocks live?  There is a way to find out – just look at Google Trends, the online tool that allows you to track how many times a search user enters any word or phrase.  Not only will you get a time series of the frequency of the search, but also where the search was done.  Here’s what we found out for a few of the names mentioned above:

"AAPL”.  Over the last 12 months, Google users have been searching less for this symbol.  From a peak last September indexed to 100, the last full week count is just 37.  No, we haven’t done an in-depth regression of what this means to stock prices, so maybe this is just noise.  What isn’t just chatter is the search user location for “AAPL” – virtually all of it comes from Cupertino, Sunnyvale and Santa Clara. In other words, plenty of people have a deep interest in Apple’s stock, and they probably work for the company or its ecosystem. 

 

“NFLX”.  Interest in Netflix stock peaked just last week in terms of Google search trends.  Unlike “AAPL”, the geographic locations of this search are quite diverse, including heavy traffic from San Francisco, New York, San Jose and Seattle.

 

“TSLA”.  Search interest here is stable, according to Google search trend data.  Like Apple’s search concentration near its home office, almost all the search interest comes from Fremont CA, the site of the company’s manufacturing plant, with a few other California cities mixed in: Mountain View, Sunnyvale, and San Francisco.

 

“MSFT”.  Search interest for Microsoft’s symbol is steady over the past year, and interest in “MSFT” is very heavily concentrated in Washington State.  The only city that cracks the top 5 for MSFT searches is San Francisco, but on a scale of 100 (Kirkland, near the Redmond Microsoft HQ), it is a 6.

 

“GOOG” and “GOOGL”.  Taken together, interest in Google’s two symbols is modestly lower over the last year. Geographic interest is quite diverse, with New York taking second place for “GOOG”, ahead of San Francisco in fourth.

If you would like to see how much the search data matches up with your ideas of how popular these names are among retail investors or the market as a whole, just go to Google Trends and enter the relevant symbols.  We didn’t try symbols like “FB” or “GM” because they have other, non-equity market, meanings or online uses.  And – again – there’s no backtest that can prove the data is predictive of future stock price moves.  We use the work exactly as we’ve discussed here – as a piece of the retail investor mosaic.

In a note by BofA's Michael Hartnett titled "When Supercycles end", the bank looks at the latest EPFR fund flows and concludes that the wave of commodity "capitulation" revulsion selling has finally arrived.

Specifically, looking at fund flows, the most recent week saw the biggest outflow from precious metals in four months and emerging market fund outflows reaching $10 billion over the last two weeks leading Hartnett to conclude that "capitulation is beginning in EM/resources/ commodities."

This is what the most recent flows looked like:

The fund flow details indicate a "Great Rotation" out of commodities, Emerging Markets and, curiously, the US, and into bonds and continued flows into Europe, which has now seen 10 straight weeks of inflows with the latest one of $6.0 billion also the largest in the past 4 months.

Inflows into fixed income have been across the board:

• $1.9bn inflows to IG bond funds (first inflows in 3 weeks)
• $0.5bn inflows to HY bond funds (2 straight weeks)
• $0.3bn inflows to EM debt funds (modest inflows but largest in 11 weeks)
• $2.1bn inflows to govt/tsy funds (3 straight weeks)
• $0.2bn inflows to muni bond funds (first in 7 weeks)

While in equities it has been a tale of two flow directions: out of the US and into Europe (and to a lesser extent Japan):

• Japan: first outflows in 8 weeks ($0.5bn)
• Europe: $6.0bn inflows (10 straight weeks & largest in 4 months)
• EM: $3.3bn outflows (2 straight weeks)
• US: $3.7bn outflows (outflows from both mutual funds & ETFs)

By sector, inflows to secular growth areas of healthcare ($1.3bn) & technology ($0.4bn)

To be sure, the best example of the paper flow capitulation is where else but gold, where in the past week algo, 1% of total gold/silver AUM has been wihdrawn!

But while gold has seen its share of pounding in the past 5 years, it is modest compared to the revulsion experienced by companies that have economic exposure to Emerging Markets. As BofA notes "US companies with high economic exposure to Emerging Markets at close to 13-year lows vs broad US equities."

The last chart may also explains why Ray Dalio, after largely ignoring the bursting of China's three bubbles (as shown here previously) finally threw in the towel, became bearish on China and admitted that "There Are No Safe Places Left To Invest." It also explains why increasingly fewer are "buying the dip" across markets despite one-off superstars like GOOG and AMZN.

"It's all noise," squeaks Laszlo Birinyi, deflecting concerns about revenues, earnings, Europe, China, commodities, and rates as he unleashes his latest extrapolation. "If we continue to grow at 11 bps per day, the S&P will be at 3,200 within 2 years," adding "you can dismiss 40% of the S&P", supposedly the 40% that is not going up, he warbles as he hopes his ruler - which missed its 2013 projection by 1100 points or 40% - is is more accurate at forecasting this time.

Good luck with the ruler this time Laszlo.

This would represent a 24x multiple on Goldman Sachs' already exuberant $134 estimate for 2017 earnings, which in turn assumes oil soars back to $100 or higher, and S&P earnings grow by almost 20% over the next two years. Dare we suggest that in order for the S&P to reach 3,200 within 2 years, the dollar will have to collapse in a Venezuela-esque hyperinflation. By then, the real question will be not if 3,200 but whether 32,000 or 320,000...

Finally, his 2013 "forecast" aside, here is what he said would happen entering the biggest economic and market collapse in US history:

LASZLO BIRINYI, PRESIDENT, BIRINYI ASSOCIATESA

 

Wall Street veteran who landed his first job at a financial services firm, Auerbach, Pollack & Richardson, in 1972, Birinyi has seen many market crises. The current one doesn't faze him much: "Based on historical data, I articulated a principle some years ago that has been very profitable for me," he says. According to Birinyi's "Cyrano principle,""if the concerns of the market are as obvious as the nose on your face, the market and monetary policymakers will have an amazing ability to adapt and adjust." He believes the Fed will do what it takes to calm the credit crisis.

 

Birinyi thinks the bull market that started in 2002 is still very much intact. He expects the current economic expansion to continue, with 5% corporate earnings growth helping to propel the Dow to 15,000 by the end of 2008. The signs of a market top, which include speculative fervor and rising stock valuations, "really aren't present," he adds. At 15 to 18 times estimated earnings—the exact number depends on how you measure earnings—stock market values are neither cheap nor expensive. If the market were a traffic light, Birinyi says, it would be flashing a yellow signal now.

 

Birinyi sees "pockets of value." With risk aversion rising, he thinks investors will pay more for such predictable growth stocks as Google (GOOG) and Deere (DE). He expects commodity prices to keep rising "as the emerging markets continue to emerge." He also favors buying stocks which were "excessively punished" in the recent subprime-related meltdown. They include retailers Tiffany (TIF), Nordstrom (JWN), J. Crew (JCG), and financial giant American International Group (AIG).

Source: Bloomberg, December 2007