Frontrunning: March 1

Tyler Durden's picture
  • US braced as cuts deadline passes (FT)
  • U.S. stares down start of steep "automatic" budget cuts (Reuters)
  • Yeltsin-Era Tycoons Sell Resources for Distance From Kremlin (BBG)
  • Italy's center-left leader rules out coalition with Berlusconi (Reuters)
  • Apple Required Executives to Hold Triple Their Salary in Stock (WSJ)
  • BOJ Seen Spiking Punchbowl in April Under New Chief Kuroda (BBG)
  • Diplomatic fallout from EU bonus cap (FT)
  • Italy’s Stalemate Jeopardizes Resolution of Crisis, Finland Says (BBG)
  • Chinese trader accused of busting Iran missile embargo (Reuters)
  • JPMorgan No. 1 Investment Bank Amid a Flurry of New Deals (BBG)
  • Eurotunnel’s Ferry Strategy at Risk as Rivals Cry Foul (BBG)
  • Telepathic rats team up across continents (FT)

Overnight Media Digest


* The $85 billion in so-called sequester cuts take effect Friday if, as expected, U.S. President Obama and congressional leaders find no way to avoid them.

* Libya's sovereign-wealth fund said it is cooperating with the U.S. Securities and Exchange Commission in the ongoing investigation into Goldman Sachs Group Inc over the securities firm's dealings with the fund when Col. Muammar Gaddafi was in power.

* Some of the biggest U.S. banks were on pace to find a higher rate of past foreclosure mistakes than regulators disclosed in January when they halted a review in favor of a $9.3 billion settlement for homeowners.

* Groupon Inc ousted Chief Executive Andrew Mason a day after reporting a quarterly loss that heightened scrutiny of the company's business model.

* Best Buy Co ended talks with founder Richard Schulze over a deal in which he and a group of buyout firms were proposing to take a minority stake in the firm in exchange for three seats on the board, according to people familiar with the matter.

* Apple Inc earlier this month reversed its stance on a corporate-governance measure related to executive compensation, implementing a new rule that executives must hold triple their base salary in company stock.

* Mexico's political parties are coming together to take on the country's three most powerful businessmen, including the world's richest man Carlos Slim, by negotiating a broad set of constitutional overhauls to boost competition in the country's telephone and television markets.

* A federal jury in Manhattan ordered ESPN Inc to pay Dish Network Corp $4.86 million in damages in a dispute over licensing rates for sports broadcasts.



The United States is braced for automatic across-the-board spending cuts which are set to kick in on Friday under a process known as sequestration.

Groupon co-founder Andrew Mason was fired as chief executive of the daily deals company on Thursday.

RBS Chief Executive Stephen Hester on Thursday signalled that the British bank could be ready for reprivatisation as early as next year.

Lloyds Banking Group will set aside an additional 1.4 billion pounds to cover the mis-selling of payment protection insurance.

European Council president Herman Van Rompuy said Europe would not prioritise treaty change despite British Prime Minister David Cameron's desire for a new settlement to put to a referendum.

Executives at European banks have warned that they are in danger of losing key traders and managers to U.S. and other international rivals after the EU provisionally agreed to a bonus cap for banks.

Carl Icahn and Herbalife have reached an agreement to nominate two directors to the company's board



* U.S. President Obama will formally notify government agencies on Friday that an obscure process known as sequestration is in effect, triggering deep, across-the-board budget cuts that will force federal spending to shrink.

* The American economy grew just barely in the last quarter of 2012. Output expanded at an annual rate of 0.1 percent, far below the growth needed to get unemployment back to normal. However, the economy did not shrink, as the Commerce Department estimated in January.

* One of Citigroup Inc's internal hedge fund units is spinning off, free from its corporate parent and the restrictions that have come with new banking regulations.

* Investment firm Paulson & Company, the largest shareholder in MetroPCS Communications Inc, announced that it would oppose a planned merger with T-Mobile USA, saying the deal would saddle the new company with too much debt.

* After spending four years leading the investigations of some of the world's biggest banks, Lanny Breuer plans to leave the U.S. Justice Department on Friday, then interview at law firms.

* Daily deals website Groupon Inc reported weak fourth-quarter earnings on Wednesday, and fired its chief executive, Andrew Mason, a day later.

* Talks between Best Buy Co Inc and a group comprising its founder and three private equity firms have ended, people briefed on the matter said. By the end, the company's founder, Richard Schulze, had been seeking an enlarged minority stake.




* As Alberta's controversial C$10 million inquiry into queue jumping in the healthcare system ended on Thursday after months of testimony - and a few revelations - the retired judge at the helm accused the Alison Redford government of "interference" with the commission's independence.

* Ontario's elementary teachers' union has advised members to continue boycotting students' clubs, sports teams and other after-school activities, sparking parent outrage and raising tensions in the province's public schools.

Reports in the business section:

* The Canadian government is opening a vast new frontier for oil and gas activity in Nunavut's high Arctic with a call for companies to indicate their interest in bidding for exploration rights.


* Renewables could make up as much as 30 percent to 40 percent of the global energy mix by 2060 as oil loses its reign as the world's biggest energy source, Royal Dutch Shell Plc said in a forecast on the energy sector's changing landscape.

* ConocoPhillips said moves by Ottawa to limit foreign investment in Canada's resources have made it more difficult for some buyers.




- In a front-page opinion article commenting on two recent alleged investment scams involving Chinese hedge funds, the author says China's hedge fund industry is suffering from a trust gap that must be addressed with more transparency.


- Analysts expect the Government Work Report, which is yet to be approved at the National People's Congress, will set a GDP growth target of 7.5 percent, an inflation target of below 4 percent, and a foreign trade growth target of 8 percent for 2013. The report will keep current "relaxed fiscal policy, prudent monetary policy" stance unchanged.


- Beijing's second land auction of the year showed strong demand from developers, with 35 developers spending 10.7 billion yuan on 13 parcels of land.


- Naw Kham, the Burmese drug lord convicted for the murder of 13 Chinese sailors in 2011, will be executed on Friday in Yunnan province along with three accomplices.


- China should encourage consumer finance operations to boost domestic demand, said a commentary in the newspaper.


Fly on the Wall 7:00 AM Market Snapshot



Aflac (AFL) upgraded to Overweight from Equal Weight at Evercore
Alcatel-Lucent (ALU) upgraded to Market Perform from Underperform at Bernstein
Autodesk (ADSK) upgraded to Buy from Hold at Jefferies
HCP Inc. (HCP) upgraded to Market Perform from Underperform at BMO Capital
Illumina (ILMN) upgraded to Buy from Neutral at UBS
International Paper (IP) upgraded to Outperform from Sector Perform at RBC Capital
Intuitive Surgical (ISRG) upgraded to Buy from Hold at Cantor
Sequenom (SQNM) upgraded to Overweight from Neutral at Piper Jaffray
Target (TGT) upgraded to Outperform from Market Perform at Wells Fargo
Telefonica (TEF) upgraded to Equal Weight from Underweight at Barclays
Telefonica (TEF) upgraded to Neutral from Conviction Sell at Goldman
Westlake Chemical (WLK) upgraded to Overweight from Neutral at JPMorgan (PCLN) upgraded to Buy from Neutral at Lazard Capital


AIG (AIG) downgraded to Equal Weight from Overweight at Evercore
CNOOC (CEO) downgraded to Reduce from Neutral at Nomura
Cincinnati Bell (CBB) downgraded to Outperform from Strong Buy at Raymond James
Darden (DRI) downgraded to Neutral from Buy at UBS
Deutsche Bank (DB) downgraded to Sell from Neutral at Goldman
Duke Energy (DUK) downgraded to Hold from Buy at Deutsche Bank
Duke Energy (DUK) downgraded to Neutral from Buy at Citigroup
Fulton Financial (FULT) downgraded to Neutral from Buy at Sterne Agee
Health Care REIT (HCN) downgraded to Underperform from Market Perform at BMO Capital
MICROS (MCRS) downgraded to Hold from Buy at Jefferies
OmniVision (OVTI) downgraded to Market Perform from Outperform at Raymond James
Royal Bank of Scotland (RBS) downgraded to Hold from Buy at Societe Generale
Triangle Capital (TCAP) downgraded to Market Perform from Outperform at Raymond James
U.S. Silica (SLCA) downgraded to Equal Weight from Overweight at Morgan Stanley
Ventas (VTR) downgraded to Underperform from Market Perform at BMO Capital
Weatherford (WFT) downgraded to Underperform from Market Perform at BMO Capital
Wendy's (WEN) downgraded to Underweight from Equal Weight at Morgan Stanley


Acuity Brands (AYI) initiated with a Market Perform at Northland Securities
Aixtron (AIXG) initiated with an Underperform at Northland Securities
Coronado Biosciences (CNDO) initiated with an Overweight at Piper Jaffray
Cree (CREE) initiated with an Outperform at Northland Securities
Enphase Energy (ENPH) initiated with an Outperform at Northland Securities
First Solar (FSLR) initiated with an Underperform at Northland Securities
Gladstone Land (LAND) initiated with an Outperform at JMP Securities
Horizon Technology (HRZN) initiated with a Buy at Wunderlich
Nanosphere (NSPH) initiated with a Buy at Canaccord
Norwegian Cruise Line (NCLH) initiated with a Hold at Deutsche Bank
Power-One (PWER) initiated with an Outperform at Northland Securities
SunPower (SPWR) initiated with an Outperform at Northland Securities
TCP Capital (TCPC) initiated with a Buy at Wunderlich
Tesla (TSLA) initiated with an Outperform at Northland Securities
Veeco (VECO) initiated with a Market Perform at Northland Securities
Western Gas Equity (WGP) initiated with a Hold at Deutsche Bank
Western Refining (WNR) initiated with an Overweight at Barclays
WhiteHorse Finance (WHF) initiated with a Buy at Wunderlich


Groupon (GRPN) named Executive Chairman Eric Lefkofsky and Vice Chairman Ted Leonsis to newly created Office of the Chief Executive, replacing CEO Andrew Mason
Paulson & Co. to vote against MetroPCS (PCS) merger as currently structured
Flowers Foods (FLO) won Hostess bread assets with $360M bid
Sinclair Broadcast (SBGI) to purchase broadcast assets of 18 television stations owned by Barrington Broadcasting Group for $370M
Sky (BSYBY) to acquire Telefonica (TEF) UK’s broadband and fixed-line telephony business
Fitch upgraded Host Hotels (HST) IDR to 'BB+' from 'BB', outlook stable
Dresser-Rand (DRC) sees 2013 new unit bookings $1.8B-$2B
Morgan Stanley (MS) sold legacy ownership interest in DigitalGlobe (DGI)
Greenbrier (GBX) sold wheelset roller bearing reconditioning business to Timken (TKR)
Publix (PUSH) considering bid for Harris Teeter (HTSI), Bloomberg reports
Magnum Hunter (MHR) to delay filing Form 10-K


Companies that beat consensus earnings expectations last night and today include:
Great Plains Energy (GXP), Universal Health (UHS), Rosetta Stone (RST), Air Lease (AL), SandRidge Energy (SD), (CRM), Deckers Outdoor (DECK), Gap (GPS)

Companies that missed consensus earnings expectations include:
Buenaventura (BVN), Atlantic Power (AT), Morgans Hotel (MHGC), Dresser-Rand (DRC), McDermott (MDR), Sotheby's (BID)

Companies that matched consensus earnings expectations include:
Autobytel (ABTL), Cell Therapeutics (CTIC)


  • Drugstore chains (CVS, WAG, RAD) are branching out into health-care services, as a way to counter a slowdown in prescription drug sales and evolve beyond just dispensing pills. They see big opportunities as millions of uninsured Americans pick up health coverage next year. The upside is in making sure current patients stay on their medications or providing alternative venues for medical treatment, even if it is done virtually, the Wall Street Journal reports.
  • What happens when the "bundle" begins to unravel? The question is taking on intense importance for the cable-TV business (CVC, TWX, NWSA, DIS, VZ, CMCSA, DTV). Attacks on the bundle approach have escalated. Now pay-TV executives, as well as its customers, are openly pondering a world where the bundle no longer reigns, even though such a scenario could be years away, the Wall Street Journal reports.
  • Glencore (GLNCY) supplied thousands of tons of alumina to the Iranian Aluminum Company (Iralco) that has provided aluminum to Iran's nuclear program, intelligence and diplomatic sources say, Reuters reports
  • The $85B in across-the-board "sequestration" cuts designed to hit most U.S. government programs were set to begin today. What they were not likely to do, at least as far as financial markets were concerned, was cause enough damage to derail a U.S. economy that has been gaining momentum, Reuters reports
  • The firing of Groupon (GRPN) CEO Andrew Mason puts pressure on Chairman Eric Lefkofsky to find a replacement who can create a money-making business after the daily-deal provider lost $723.8M in the past three years, Bloomberg reports
  • Two Chinese Manufacturing indexes revealed a slower-than-estimated pace of expansion, a signal that the nation’s economic recovery may be losing steam, Bloomberg reports


Campus Crest Communities (CCG) 22.2M share Spot Secondary priced at $12.25
DCP Midstream Partners  (DPM) 11M share Secondary priced at $40.63
Icahn Enterprises (IEP) 3.175M share Spot Secondary priced at $63.00
Pzena Investment (PZN) files to sell 529,590 shares of Class A common stock
Safe Bulkers (SB) files $300M mixed securities shelf

S.A.C. Capital Advisors reports 5.0% passive stake in Annie's (BNNY)
Waterfall Asset Management reports 9.98% passive stake in Jacksonville Bancorp (JAXB)

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Temporalist's picture
Dark days of despair drive many to the final option

"Scourge of depression sees rising number of suicides, report Cang Wei and Song Wenwei in Nanjing.

Every three minutes, a person suffering from depression commits suicide in China and a further 11 people attempt to take their own lives.

Every year in China, 287,000 people end their lives by suicide, while another 2 million contemplate the act, 70 percent of them because of depression."

TideFighter's picture

I figured that if Obama was juvenilistic enough to let thousands of people out of jail to prove the sequester is dangerous, then he certainly would let PPT have a day off today to accomplish the same goal. Turned out I was right, and I scored a nice chunka change. 

GetZeeGold's picture



Maxine Waters predicts 'over 170 million' jobs lost...


Well......that would be pretty much all of them.


March 1, 2013.....the day we called those idiot's bluff.

Sudden Debt's picture


  • Telepathic rats team up across continents (FT)
  • WTF!!!

    Scientists trained rats in Durham, North Carolina and Natal, Brazil to work together to solve problems in return for a drink of water....


    Scientists who train politicians to work together to solve problems in return for... their salary?


     The best decoder rats correctly mimicked their corresponding encoder partners 70 per cent of the time.



    css1971's picture

    Hmm, do I want to spend £7.99 a month to learn about telepathic rats? Must think about this one.

    Ghordius's picture

    damn, you could have told me years ago

    btw, those rats are linked by... the internet

    it's not really telepathy, it's more a (quite exciting) thing about brain-computer interfaces

    goldfish1's picture

    Israel's health ministry is investigating claims that Ethiopian women are being injected with a controversial contraceptive without their knowledge or consent. Thousands of Ethiopian women are said to be receiving shots of Depo-Provera every three months in Israeli clinics. The contraceptive stops menstruation and has been linked to fertility problems and osteoporosis.

    Ghordius's picture

    strange if you think how much effort Israelis put in that project of repatriating their Ethiopian correligionists

    Sudden Debt's picture




    I could tell you everything I know...

    but than there wouldn't be a reason anymore to print books...



    toady's picture

    Telepathic rats? I thought they were called vampire squid...

    kralizec's picture

    US braced, US stares down budget cuts, deep across the board budget cuts, . . .

    That illustrates the problem right there, when the first words out of the Democrat-Media Complex are pure lies and nobody objects, you deserve the ass-kicking that's coming!

    fredquimby's picture

    sequesters are not cuts to spending; rather, they are reductions in planned increases in spending.

    The reductions amount to about two cents for every planned dollar of increased spending for every federal department.



    dragoneyes74's picture

    In a normal universe, yesterday's equity action was another, and possibly the final, piece of the topping puzzle of the last month.  In Bernanke's universe where gravity only affects buy buttons, who knows.  I may allow stupidity to get the better of me and go short, especially if we rally out the gates and then lose the open.  This is what tops look like.  How can it not be?  

    css1971's picture

    Nooooo!! Grannies in the streets eating cat food! What have you done!!!

    booboo's picture

    "Steep (Automatic) Cuts"

    Just checking in, southern district calling world, anybody out there? I'm scared, anyone out there? All, I hear is birds chirping, no traffic, no airplanes overhead.

    OK, this will be my first entry into the log:

    3/1/13 07:46 hour.

    I have reasont to believe that I am the last man on earth, I will venture out later in my Urban Survival Vehicle (otherwise known as my Toyota Truck) with my dog and confirm my deep fears; EVERYONE IS DEAD! I have some food stores (Beanie Weanie and a bag of microwave popcorn but there may not be power on since we have no government to make power, plant and harvest corn and truck it to the shelves. I am told that they do all this stuff for us by my square lit box on the wall and since they have shut down I must surmise that the consumers have died overnight.

    Signing off


    TideFighter's picture

    Just don't step on your glasses.

    Titus Flavius Caesar Vespasianus Augustus's picture

    Apropos of little:  Do you guys post on Krugman's articles or blogposts?  I'm just wondering what, if any, impact might be had if the ZH regulars all swarmed onto one of his next posts...  at very least it would serve to perplex his army of sycophants.  Parenthetically, I don't think he believes in the efficacy of his own prescriptive economics.  I think he' a paid shill for the large banks.  Evil, not stupid, as it were.

    A comment by a Mr. Fred Dorbsky amongst a few others {not me or anyone I know} struck me as a nice break from the chorus of cuntery that comprises roughly 85% of the posts there...   I wonder if Krugbearpig reads 'em at all.

    Awakened Sheeple's picture

    I'm in as long as my criticism gets to include a comment about him furiously masterbating.

    dragoneyes74's picture

    That appears to be the silver reversal.  The stops are run.  Maybe we'll get to the top of the channel now. 

    Edward Fiatski's picture

    Just in:


    U.S. Personal Income for Jan is -3.6% on Exp -2.4%, Prev 2.6%


    ShrNfr's picture

    For those who do not subscribe to the FT, here is another source on the rat story: