>>> FT : EU citizens show their post-Brexit fears

EU citizens show their post-Brexit fears
Government wants to introduce an Australian-style points-based system for immigration

Over the past 30 days Google’s search data have recorded a noticeable spike in people in the UK looking online for information related to immigration and citizenship after Brexit.

This is hardly an infallible guide — the top search topic was “Bong”, a reference, one assumes, to the heated debate this month over Big Ben and whether it can be brought back into action to mark Brexit day. Nevertheless, the number of queries on “freedom of movement”, “passport” and “visa” demonstrate a level of anxiety over what happens to EU citizens living in Britain after it leaves at 11pm (GMT) on Friday.

As this excellent explainer by the Financial Times’ Jim Brunsden and Sam Fleming points out, nothing changes very much in the short term because of the UK’s post-Brexit transition period — a twilight zone that maintains current trading, immigration and security arrangements until December 31 2020, the deadline for the two sides to agree a new trade deal. 

What happens after that date will depend on the fraught negotiations over the next 11 months. But on the question of migration, a new report may offer some answers as to where the government is heading.

On Tuesday a committee given the task of advising Prime Minister Boris Johnson’s government on the post-Brexit immigration system published a report on what that might look like after January 2021.

The government wants to introduce an Australian-style points-based system that seeks to ensure only high-skilled workers come to the UK from the EU and other parts of the world after Brexit.

Ministers had also previously set a minimum £30,000 annual salary requirement for workers seeking to come to the UK with a job offer.

In a move aimed at addressing concerns that the threshold was too high and could shut out skilled National Health Service workers, care workers and teachers needed by the UK economy, the Migration Advisory Committee’s report recommends the salary requirement should be lowered to £25,600.

But in keeping a threshold in place, the MAC is balancing the need for Mr Johnson’s government to meet voters’ concerns — especially in those so-called left-behind areas of the North and Midlands which voted for the Tories in last month’s election — that cheaper foreign workers are preventing British people from securing jobs.

The MAC was also asked by home secretary Priti Patel to advise on the pros and cons of the UK introducing its own points-based system that could come into force once freedom of movement for EU citizens stops at the end of this year.

Professor Alan Manning, chair of the MAC, said net migration would be cut under the new system but the UK economy would see a hit in terms of economic growth — already a concern with the shape of the UK’s future relationship with its biggest trading partner already in doubt.

“No perfect system exists and there are unavoidable, difficult trade-offs,” Prof Manning said. It is not clear yet whether the government will accept the committee’s recommendations.

For Mr Johnson, immigration remains core to his vision of Brexit — a key part of the Leave campaign’s 2016 mantra to take back control.

But judging by recent polling data from Ipsos Mori, immigration is no longer the hot button topic it was three and a half years ago.

According to Ipsos Mori, immigration peaked as one of the most important issues facing Britain towards the end of 2015 — a few months before the June 2016 vote to leave the EU. At that time slightly less than 60 per cent said it was one of their key concerns. 

By the end of last year it had fallen to slightly more than 10 per cent, below other “more important” issues such as the NHS, the economy and the EU/Europe.

>>> US Gapping up

Gapping up
In reaction to strong earnings/guidance
:

  • XRX +5.2%, CIT +4%, GGG +2.6%, AUDC +2.6%, IBTX +2.3%, BRO +2%, LMT +1.9%, SANM +1.7%, ELS +1.6%, PHM +1.4%, WHR +1.1%, AOS +0.8%

M&A news:

  • DLPH +60.1% (BorgWarner confirms all-stock acquisition of Delphi; also provided guidance)

Other news:

  • XLRN +59.6% (Sotatercept achieves primary and secondary endpoints in Phase 2 trial)
  • NH +38.9% (Nant Health and NantOmics presented an AI based machine-learning digital pathology software for lung cancer by identifying tumor infiltrating killer cells from whole slide images)
  • CLSD +19.5% (Clearside Biomedical and Bausch Health (BHC) announce that Opthalmology published results from the Phase 3 clinical trial (PEACHTREE study) of XIPERE) SURF +10.3% (FDA clears Investigational New Drug applications for its antibody candidates)
  • INCY +4.7% (announces "positive" top-line results from Phase 3 TRuE-AD2 study of ruxolitinib cream)
  • ALKS +3.9% (FDA has accepted for review the company's NDA seeking approval of ALKS 3831 for the treatment of schizophrenia and for the treatment of bipolar I disorder
  • LAUR +2.3% (to explore strategic alternatives for each of its businesses; reaffirms Q4 guidance)

Analyst comments:

  • CGC +4.1% (upgraded to Outperform from Market Perform at BMO Capital Markets)
  • PCG +1.9% (upgraded to Buy from Neutral at Mizuho)
  • WWE +1.3% (initiated with a Buy at Northcoast)
  • UBER +1.2% (initiated with a Buy at UBS)

>>> US Gapping down

Gapping down
In reaction to disappointing earnings/guidance
:

  • MKC -7.4%, HOG -6.9%, RMBS -4.3%, PKI -3.3%, FFIV -3.2%, SAP -3.2%, PHG -2.7%, MMM -2.1%, JJSF -2%, PFE -1.6%, PII -1.5%, JNPR -1.1%, LRN -0.8%, UTX -0.8%

M&A news:

  • BWA -6.9% (BorgWarner confirms all-stock acquisition of Delphi; also provided guidance)

Other news:

  • AVH -21.9% (reports monthly metrics)
  • EROS -5.3% (enters into equity investment facility; may elect to sell up to $50 mln of its A ordinary shares)
  • BYND -2.6% (Judge rules Don Lee Farms likely to obtain a judgment - CFO and others named individually for fraud)
  • GO -2.5% (announces stock offering, reports upside prelim Q4 sales)
  • DNLI -2.1% (files for $150 mln stock offering)

Analyst comments:

  • DDD -5.1% (downgraded to Neutral from Overweight at Piper Sandler)
  • HEXO -3% (downgraded to Neutral from Buy at MKM Partners)
  • DEO -2.5% (downgraded to Underweight from Neutral at JP Morgan)
  • FL -1% (downgraded to Market Perform at Telsey Advisory Group)

>>> Jefferies Reiterates Buy on FB, GOOG, AMZN, SNAP, MTCH, IAC, LYFT, EXPE, GDD

Jefferies Reiterates Buy on FB, GOOG, AMZN, SNAP, MTCH, IAC, LYFT, EXPE, GDDY, WIX, CHGG, YELP, UPWK; Maintains Hold on BKNG, TWTR, TTD, ZG, GRUB, RDFN, SONO
- Reiterates Underperform on EBAY, TRIP, SSTK, EIGI
- Firm is positive on Internet sector fundamentals ahead of 4Q, but remains stock selective
- Firm believes FB is the most de-risked setup in large cap with the FY20 outlook already known and compelling valuation
- Firm also likes GOOG, as estimates seems conservative and the stock trades at a discount to its EBITDA growth
- Firm's S-mid cap picks are WIX and GDDY
- Firm notes TWTR, GRUB and EXPE have the most controversial setups

FT : WhatsApp reported sharp rise in security flaws in 2019

WhatsApp reported sharp rise in security flaws in 2019
Messaging app denies vulnerabilities to blame for hacking of Jeff Bezos’s iPhone

WhatsApp reported a sharp escalation in the number of vulnerabilities it found on its platform in 2019, raising fresh questions about the security of an app that has often been hailed for safe private messaging.

Data from the US National Vulnerabilities Database, a US government repository of flaws, shows that the Facebook-owned messaging service disclosed 12 vulnerabilities last year — seven of which were classified as “critical” — a significant jump from the past few years, when just one or two medium-level vulnerabilities were disclosed.

The platform came under increased scrutiny last week after a report commissioned by Jeff Bezos, Amazon chief executive, alleged that a WhatsApp account used by Saudi Crown Prince Mohammed bin Salman hacked the Amazon founder’s iPhone in 2018 by sending a malicious video message. 

However Mr Bezos’s investigators were unable to uncover enough evidence to show whether weaknesses in either the messaging service or the iPhone X were exploited.

When asked about the hack, Facebook has pointed the finger at iPhone-maker Apple. On Friday, Nick Clegg, Facebook’s head of communications, said that he believed something “affected the phone operating system” and that he was “very, very confident” that WhatsApp’s encryption technology had not been exploited. 

But the jump in WhatsApp vulnerabilities has highlighted other weaknesses that appeared to have gone unaddressed for some time, experts say.

“The fact that they found . . . serious vulnerabilities in 2019 but didn’t find them before doesn’t mean they just appeared,” said Marc Rogers, vice-president of cyber security at Okta and head of the security team for the world’s largest hacking conference, Def Con. “Many of those were likely sitting in there all that time, and there’s a very high chance they were being [exploited].”

He added that the data “strongly suggests” the company had been complacent about the security of the app until fairly recently. “You see this often: a flurry of vulnerabilities being pulled out of an app because someone is suddenly paying attention because they are scared,” he said.

Others have criticised Facebook for appearing to prematurely shift responsibility on to Apple.

“For Facebook to blame Apple, that’s not responsible. They need to be able to fix their vulnerabilities as well,” said Ron Gula, a former employee of the US National Security Agency who founded cyber security group Tenable.

WhatsApp, which was acquired by Facebook in 2014, said it had stepped up its public reporting of flaws last year as part of a “commitment to transparency and support for security experts that help protect people from similar threats”. The vulnerabilities reported in the database were all fixed prior to disclosure.

“The issue at hand remains the proliferation of spyware that takes advantage of vulnerabilities, including those within the operating systems that power our mobile phones,” the company added. 

In its report, FTI Consulting, the lobbying group hired by Mr Bezos to carry out the investigation, was unable to identify any spyware, the malicious software that infiltrates devices to covertly extract sensitive information without a user’s knowledge. But the investigators said they believed some had been planted on the phone via an encrypted media server on the WhatsApp network.

The report suggested that Mr Bezos could have been the victim of malware such as the Pegasus-3 product sold by Israeli company NSO Group, which last year was discovered to have been exploiting a WhatsApp flaw, or the Galileo spyware sold by Italian company Hacking Team.

Others, such as security expert Bruce Schneier, suggested that WhatsApp was merely a conduit that then allowed the hackers to exploit operating system vulnerabilities, adding that no company can effectively police all the traffic that flows over its network. 

Researchers have called for further investigation into the matter, with some questioning the capabilities of Mr Bezos’s investigators. Both Apple and WhatsApp declined to comment.

>>> Europe : Brokers Upgrades & Downgrades - 28th of January 2020 V2(+)

>>> Up
* Arjo Raised to Buy at ABG; PT 52 kronor
* BAE Raised to Overweight at Barclays; PT 760 pence
* Bayer Raised to Buy at MainFirst; PT 93 euros
* Betsson Raised to Hold at ABG; PT 38 kronor
* Edenred Raised to Buy at Oddo BHF; PT 60 euros
* Givaudan PT Raised to 3,600 Swiss francs at Berenberg
* ID Logistics Raised to Buy at Portzamparc; PT 190 euros (+)
* Outokumpu Oyj Raised to Neutral at BofA (+)
* Rapala VMC Oyj Raised to Accumulate at Inderes; PT 3.10 euros (+)
* Standard Chartered Raised to Hold at Investec; PT 660 pence
* Telefonica Deutschland Raised to Overweight at JPMorgan

>>> Down
* Adidas Cut to Hold at Hauck & Aufhaeuser; PT 320 euros (+)
* Aker BP Cut to Hold at Jefferies; PT 300 kroner
* Atresmedia cut to Neutral from Buy, PT€3.40 (+)
* BRAbank ASA Cut to Hold at ABG; PT 0.70 kroner
* Cegedim Cut to Add at Gilbert Dupont; PT 32.50 euros (+)
* Daimler Cut to Sell at AlphaValue
* Diageo Cut to Underweight at JPMorgan; PT 2,800 pence
* Ipsen Cut to Neutral from Buy at UBS ,PT €69 (+)
* Kainos Cut to Sell at Panmure Gordon; PT 750 pence (+)
* K+S PT Cut to 10 euros from 14 euros at Deutsche Bank
* Puma Cut to Hold at Hauck & Aufhaeuser; PT 79 euros (+)
* Varta Cut to Sell at Hauck & Aufhaeuser; PT 54 euros
* Victrex Cut to Reduce at HSBC; PT 1,975 pence

>>> Initiation
* Anima Holding Rated New Buy at HSBC; PT 5.80 euros
* Avast Rated New Sell at Peel Hunt; PT 405 pence
* Azimut Reinstated Buy at HSBC; PT 30.30 euros
* Banca Generali Reinstated Buy at HSBC; PT 36.30 euros
* Deutsche Boerse Reinstated Equal-Weight at Barclays
* Euronext Reinstated Overweight at Barclays; PT 86 euros
* Hipgnosis Songs Fund/The Rated New Hold at Jefferies
* Mediolanum Rated New Buy at HSBC; PT 10.10 euros
* Nexi Rated New Buy at Oddo BHF; PT 16 euros
* NVP Srl Rated New Buy at Fidentiis Equities; PT 5.25 euros

>>> Call
* Bayer Upgraded to Buy on Possible Settlement: MainFirst (+)
* Givaudan PT Raised at Berenberg on 2020 Organic Growth, Margins
* Wacker Neuson Offers Value, Self-Help Opportunities: Jefferies
* Morgan Stanley Sees Cheap Emerging Market Hedges Amid Virus Risk
* SAP Results ‘Mixed,’ New Cloud-Bookings Growth Slows: MainFirst (+)

FT : Airbus reaches deal to settle corruption probes

Airbus reaches deal to settle corruption probes
Aerospace group set to accept hefty fines to end inquiries in three jurisdictions

Airbus has agreed to settle a bribery and corruption probe with regulators in the UK, France and the US, in a move that could see the aerospace group pay billions of dollars in penalties.

Airbus said it has reached an agreement in principle over allegations of bribery and corruption, as well as compliance with US arms trafficking regulations. The agreements still need to be approved by courts in all three countries, and US regulators, the group said in a statement on Tuesday.

Airbus did not provide any further details, but analysts had forecast fines of more than €3bn to follow the complex negotiations between the three agencies. The FT had earlier reported that an agreement was imminent.

The settlement is set to surpass the £671m plea bargain struck by Rolls-Royce in 2017 to settle similar allegations. At the time, the UK share of the settlement, at about £500m, was the largest fine imposed by British regulators on a company for criminal conduct.

People familiar with the matter said Airbus had reached a so-called deferred prosecution agreement with the UK Serious Fraud Office, which would mark a significant milestone for the regulator after a string of defeats.

Under a corporate plea deal, companies are able to avoid criminal prosecution if they admit to wrongdoing, agree to overhaul their businesses, and pay a penalty.

So far the SFO has signed six DPAs but has come under scrutiny for failing to convict senior executives of the companies involved.

For Airbus, the deal would mark the end of a corruption probe lasting nearly four years that has claimed the jobs of some senior executives, even though they were not implicated in any wrongdoing. The board took the view that the company would have a better chance of winning a settlement if an entirely new senior management team was put in place. This was helped by the fact that several executives were approaching retirement age. Tom Enders, chief executive, and Fabrice Brégier, chief operating officer, both stepped down last spring.

The company has also overhauled its ethics and compliance procedures, established an independent review panel of outside experts, and significantly cut down the number of third-party agents used to secure deals.

The SFO’s investigation was launched in 2016 after Airbus revealed that it had uncovered discrepancies in disclosures about third-party consultants used on certain aircraft deals. Parquet National Financier, the French regulator, launched a probe the following year, and the US Department of Justice opened an investigation in 2018.

Since corporate plea deals were introduced to the UK in 2014, Standard Bank, Sarclad, Rolls-Royce, Tesco, Serco and Güralp Systems have all admitted failures and paid fines in exchange for avoiding a criminal conviction.

The SFO is still expected to pursue charges against individuals in relation to Airbus subsidiary GPT, which has been under investigation for eight years.

The SFO launched an inquiry into GPT after the company was accused of making illicit payments to secure a £2bn UK government contract to provide communications and intranet services for the Saudi National Guard, the kingdom’s internal security force which protects the royal family.

The SFO and did not comment.

>>> Stoxx 600 Pre-Market Indications

  • Evraz (EVZ TH) +2.2%
  • Unilever (UNVB TH) +1.8%
  • Glencore (8GC TH) +1.8%
    • Miners May Face Bigger Hit From Coronavirus Than SARS: RBC
  • Glaxo (GS7 TH) +1.6%
  • Telefonica Deutschland (O2D TH) +1.5%
    • Telefonica Deutschland Raised to Overweight at JPMorgan
  • Airbus (AIR TH) +1.2%
    • Airbus Reaches Accord With Authorities to Settle Bribery Cases
  • Bayer (BAYN TH) +1.1%
  • Hochtief (HOT TH) +1%
  • ProSieben (PSM TH) +0.8%
  • K+S (SDF TH) -0.7%
    • K+S PT Cut to 10 euros from 14 euros at Deutsche Bank
  • HelloFresh (HFG TH) -0.7%
  • SAP (SAP TH) -1.2%
    • SAP Raises 2020 Forecast as 4Q Operating Profit Meets Targets
  • Sartorius (SRT3 TH) -1.3%
  • Sartorius Stedim (56S1 TH) -1.8%
    • Sartorius Stedim Sees 2020 Rev. Change Ex-FX +11% To +14%
  • Philips (PHI1 TH) -4.7%
    • Philips 4Q Comp. Sales Miss; 2020 Targets Maintained