- Reports on surveillance of Americans fuel debate over privacy, security (Reuters)
- Apple to Yahoo Deny Providing Direct Access to Spy Agency (Bloomberg)
- Misfired 2010 email alerted IRS officials in Washington of targeting (Reuters)
- Spy vs Spy: Cyber disputes loom large as Obama meets China's Xi (Reuters)
- When NSA Calls, Companies Answer (WSJ)
- How the Robots Lost: High-Frequency Trading's Rise and Fall (BBG)
- Japan's Pension Fund to Buy More Stocks (WSJ)
- ‘Frankenstein’ CDOs twitch back to life (FT)
- China’s ‘great power’ call to the US could stir friction (FT)
- Toyota Tries on Corolla Look That’s Just Different Enough (BBG)
- Five criteria Obama may weigh in seeking Bernanke successor (Reuters)
- Forest braces for third bout with Icahn (Reuters)
- Record outflows from US junk bond funds (FT)
Overnight Media Digest
WSJ
* The National Security Agency's monitoring of Americans includes customer records from the three major phone networks as well as emails and Web searches, and the agency also has cataloged credit card transactions.
* The Obama administration acknowledged the existence Thursday of a secret National Security Agency program dubbed Prism, which a senior administration official said targets only foreigners and was authorized under U.S. surveillance law.
* U.S. and British authorities are preparing to bring criminal charges against former employees of Barclays for their alleged roles in trying to manipulate benchmark interest rates.
* Online sports retailer Fanatics raised $170 million in a new funding round that more than doubles the company's valuation to $3.1 billion from just a year ago.
* The net worth of U.S. households rose 4.5 percent, or about $3 trillion, in the first three months of this year to $70.35 trillion, the highest level since at least 2007, according to a Fed report.
* A government panel called for easing restrictions on diabetes drug Avandia, in a remarkable about-face nearly three years after concerns over heart risk led regulators to curtail use of the drug.
* The U.K. has left itself vulnerable to cyber attacks by allowing a Chinese telecommunications company to become a major player in Britain without adequate security checks, a parliamentary committee said.
* The bloom appears to be off the rose at Vera Bradley , an accessories maker known for its floral quilted cotton bags. The stock fell sharply following a profit warning and news that its CEO was stepping down.
FT
A U.S. court heard on Thursday that Bank of America executives and lawyers told bondholders that their "grandchildren would have grandchildren" before they received the $10 billion compensation for bad mortgage-backed securities that they were seeking.
A report published by a British parliamentary committee criticizes the government's failure to inform ministers about BT Group's use of equipment from China's Huawei Technology in the UK national telecommunications network.
Airbus Chief Executive Fabrice Bregier said its planned new A350 aircraft would allow the company to catch up with Boeing Co's lead in the lucrative long-haul passenger jet market.
Facebook Inc's shares fell nearly 21 percent over the past month on investor confusion over the social network's long-term prospects and a recent barrage of negative news.
Virgin Group and Stagecoach Group venture Virgin Rail is suing railway operator Network Rail in an attempt to force the latter into reducing delays on the West Coast mainline.
Dalian Wanda is close to paying 300 million pounds ($465.72 million) for Sunseeker, Britain's largest luxury boatmaker, known for its Predator 108 Special Edition yacht that was used by the villain in the James Bond movie Casino Royale.
NYT
* The federal government has secretly taken information on foreigners overseas for years from companies like Google Inc , Facebook Inc and Apple Inc, according to documents that emerged Thursday and were confirmed by a senior government official.
* More than a year ago, the European Union's top justice official proposed a tough set of measures for protecting the privacy of personal data online.
* General Motors Co's Chief Executive Daniel Akerson stood before a packed hall and took a victory lap of sorts at the company's annual meeting on Thursday, celebrating a new level of financial stability and GM's return to the ranks of the Standard & Poor's 500-stock index.
* A year after a shareholder meeting with strong opposition to Wal-Mart Stores Inc board members after a bribery scandal in Mexico, many investors are asking why more change has not occurred.
* When it comes to advertising, Facebook Inc has decided it needs a new friend: simplicity. On Thursday, the social network announced that it was going to simplify the process of buying ads significantly, starting with the first question posed to a buyer.
Canada
THE GLOBE AND MAIL
* Canadian Broadcasting Corp is acknowledging that it mishandled the rebranding of its French-language services by creating the impression that it was getting rid of the name Radio-Canada.
* The resignation of an Alberta minister of Parliament from the Conservative caucus has left Prime Minister Stephen Harper facing another fire storm, raising new questions about transparency on spending in Ottawa and the role of his staff in steering government.
* The Okanagan wine producer who is giving up his seat for Premier Christy Clark to run in a by-election hopes the Liberal government sticks to its plan to improve liquor and alcohol laws.
Reports in the business section:
* A venture capital firm founded by Peter Thomson is teaming up with a New York private equity company to acquire Public Mobile, in a bet that the wireless startup can become a viable player in a crowded market.
* The new Bank of Canada Governor Stephen Poloz likes to talk in metaphor, suggesting a new approach in communication. He likened the state of the global economy to "postwar reconstruction," a novel way of explaining why growth remains so lackluster nearly five years after the height of the financial crisis.
* Canadian airlines are pushing for new revenue streams from onboard wireless services, including Internet shopping, but questions remains about regulations and the technology infrastructure to support in-flight Wi-Fi in the country.
NATIONAL POST
* Only hours after Brent Rathgeber quit the Tory caucus, there were more people stuffed into the Minister of Parliament's small, Spartan constituency office than at any time previous. He was the center of the whirlwind, having defied the powerful Prime Minister's Office.
But Rathgeber did not blame Prime Minister Stephen Harper, a man he pointedly said he respects.
* Throwing more oil onto the blaze of controversy over transparency in Stephen Harper's government, the opposition Liberals in the Senate are asking that the auditor general do a "comprehensive audit" of the Prime Minister's Office.
FINANCIAL POST
* Battling resistance to its Gateway pipeline on the West Coast, Enbridge Inc is tying the fortunes of the project to British Columbia's liquefied natural gas industry.
* Green Mountain Coffee Roasters Inc is revamping its Canadian manufacturing operations in Montreal as investors savor a tripling in the company's shares over the past year.
* Rather than compete with smartphones and tablets for the attention of wandering eyes, television broadcasters are increasingly trying to embrace these second screens, where the majority of conversations during popular broadcasts and live events are taking place.
China
CHINA SECURITIES JOURNAL
- The Shanghai Futures Exchange said it plans to launch the asphalt futures contract in mid-July, subject to regulatory approvals. Analysts have said that the launch of asphalt futures is a step towards establishing China's crude oil futures contract as asphalt is used heavily in road construction and is an important downstream product of oil.
- The net profit of 16 brokerages jumped 80.14 percent from April to reach 2.45 billion yuan ($399.27 million) in May, according to data by Wind Research.
SECURITIES NEWS
- Ma Huateng, chairman and CEO with Tencent Holding Ltd , said that it will not charge fees for its popular social software, Wechat, and the company is looking for opportunities to cooperate with telecom carriers.
SHANGHAI SECURITIES NEWS
- The China Securities Regulatory Commission said it will accelerate the development of the country's capital market. It will promote IPOs of emerging companies, delisting of some from exchanges and encourage more participation from institutional investors.
- The National Development and Reform Commission, China's powerful economic planning agency, said it is pressing ahead with market reforms. It plans to roll out market-oriented interest rate reforms by this year, expand over-the-counter pilot trading scheme and broadening the scope of private capital investment.
SHANGHAI DAILY
- China Railway Corp, a spinoff of the former Ministry of Railways, said it will revamp its freight transport business to benefit from the logistics market.
- China's Vice Premier Zhang Gaoli said foreign companies should have confidence in China's economic growth and he expects China to import $10 trillion worth of goods and services in the next five years.
CHINA DAILY
- China's emerging western region is increasingly attracting global investors, with money flowing into high-end industries rather than old factories that might have been relocated from coastal areas, said the mayor of Chengdu, the capital city of Sichuan province.
PEOPLE'S DAILY
- Vice Premier Ma Kai met foreign leaders attending the first China-South Asia Expo held in Kunming, capital of southwest China's Yunnan Province. China is willing to make joint efforts with Sri Lanka on deepening bilateral relations, Ma said
Fly On The Wall 7:00 AM Market Snapshot
ANALYST RESEARCH
Upgrades
Abercrombie & Fitch (ANF) upgraded to Buy from Neutral at BofA/Merrill
Brocade (BRCD) upgraded to Buy from Neutral at ISI Group
Coca-Cola Femsa (KOF) upgraded to Neutral from Sell at Citigroup
Deutsche Telekom (DTEGY) upgraded to Buy from Hold at Jefferies
Dun & Bradstreet (DNB) upgraded to Neutral from Underweight at JPMorgan
Main Street (MAIN) upgraded to Outperform from Market Perform at Raymond James
United Continental (UAL) upgraded to Neutral from Sell at Goldman
Vera Bradley (VRA) upgraded to Neutral from Underperform at Sterne Agee
Yum! Brands (YUM) upgraded to Buy from Neutral at UBS
lululemon (LULU) upgraded to Underperform from Sell at CLSA
Downgrades
Bofi Holding (BOFI) downgraded to Market Perform from Outperform at Raymond James
Calgon Carbon (CCC) downgraded to Neutral from Outperform at RW Baird
Insulet (PODD) downgraded to Hold from Buy at Wunderlich
Intel (INTC) downgraded to Underweight from Neutral at Piper Jaffray
Isle of Capri (ISLE) downgraded to Sector Perform from Outperform at RBC Capital
JPMorgan (JPM) downgraded to Neutral from Outperform at Macquarie
MannKind (MNKD) downgraded to Neutral from Buy at BofA/Merrill
MercadoLibre (MELI) downgraded to Neutral from Overweight at JPMorgan
Initiations
American Software (AMSWA) initiated with a Buy at B. Riley
Bank of America (BAC) initiated with an Underperform at Macquarie
Citigroup (C) initiated with an Outperform at Macquarie
Consolidated Water (CWCO) initiated with a Buy at Roth Capital
Crosstex Energy LP (XTEX) initiated with a Buy at Citigroup
Garmin (GRMN) initiated with an Outperform at Raymond James
Morgan Stanley (MS) initiated with an Outperform at Macquarie
Myriad Genetics (MYGN) initiated with a Buy at Cantor
Piedmont Natural Gas (PNY) initiated with a Hold at BB&T
Steven Madden (SHOO) initiated with an Overweight at Piper Jaffray
Take-Two (TTWO) initiated with a Buy at Stifel
Wolverine World Wide (WWW) initiated with a Neutral at Piper Jaffray
HOT STOCKS
Royalty Pharma raised offer for Elan (ELN) to $13 per share plus CVR
Blackstone (BX), partner reached deal to acquire Gafisa (GFA) unit for $1B, Dow Jones reports
AT&T (T), IBM (IBM) announced eCommerce agreement
Monsanto (MON) announced new $2B share repurchase program
Alexander & Baldwin (ALEX) acquired Grace Pacific for $235M, initiates dividend
Quiksilver (ZQK) sees 2H13 adj. EBITDA being greater than the $91M achieved in 2H12
Mad Catz Interactive (MCZ) sees sharp drop in FY14 console product sales
Constellation Energy (CEP), PostRock Energy (PSTR) entered confidentiality agreement
Iron Mountain (IRM): IRS reviewing company request for REIT conversion
EARNINGS
Companies that beat consensus earnings expectations last night and today include:
IDT Corp (IDT), Thor Industries (THO), Rally Software (RALY), SeaChange (SEAC), RealD (RLD)
Companies that missed consensus earnings expectations include:
Quiksilver (ZQK), Vail Resorts (MTN)
NEWSPAPERS/WEBSITES
- Tyson Foods (TSN) CEO Donnie Smith said the planned sale of rival Smithfield Foods (SFD) to China's largest pork processor highlights the intensifying globalization of the agriculture industry and could help increase Tyson's pork exports to the Asian nation along with Smithfield's, the Wall Street Journal reports
- Samsung Electronics (SSNLF) shares fell 6.2% today, their biggest single-day percentage drop in more than nine months, on concerns the company’s new flagship phone, the Galaxy S4, may not be selling as strongly as expected, the Wall Street Journal reports
- The European auto industry (VLKAY, DDAIF, PEUGY) is concerned China could impose retaliatory trade duties on luxury cars imported from the EU, should the EU Commission not back down over unfair trade practices in China, Reuters reports
- Royalty Pharma's $6.4B bid for drug firm Elan (ELN) had been accepted by only 7.5% of the target company's shareholders before the U.S. investment firm extended the closing date by just over two weeks, Reuters reports
- Economists lowered estimates for how much the Fed will reduce the amount of its monthly asset purchases, according to a Bloomberg survey. Policy makers led by Chairman Bernanke will trim their so-called quantitative easing program to $65B from $85B a month at an October 29-30 meeting, according to the median estimate in the survey of 59 economists this week, Bloomberg reports
- Gold traders are the most bullish since before the bear market began two months ago after a retreat in equities from an almost five-year high and a weakening dollar spurred demand for bullion. Nineteen analysts surveyed by Bloomberg expect prices to rise next week, with eight bearish and six neutral, the largest proportion of bulls since March 22, Bloomberg reports
SYNDICATE
Aircastle (AYR) to issue 15.25% of its common shares to Marubeni Corp.
General Motors (GM) 50M share Secondary priced at $34.41
James River Coal (JRCC) files to sell 24.65M shares for holders
PBF Energy (PBF) 15.95M share Secondary priced at $27.00
Textura (TXTR) 5M share IPO priced at $15.00
Thermo Fisher (TMO) 25.73M share Secondary priced at $85.50