Frontrunning: March 18
- Cypriot Bank Levy Is ‘Ominous’ for Bondholders, Barclays Says (BBG)
- Euro, Stocks Drops; Gold, German Bonds Rally on Cyprus (BBG)
- Total chaos:Cyprus tries to rework divisive bank tax (Reuters)
- More total chaos: Cyprus Prepares New Deposit-Tax Proposal (WSJ)
- Euro Slides Most in 14 Months on Cyprus Turmoil; Yen Strengthens (BBG)
- Osborne to admit fresh blow to debt target (FT)
- Even the Finns are giving up: Finnish Government May Relinquish Deficit Target to Boost Growth (BBG)
- Moody’s Sees Defaults as PBOC Warns on Local Risks (BBG)
- Australia Faces ‘Massive Hit’ to Government Revenue, Swan Says (BBG)
- Inside a Warier Fed, Watch the New Guy (Hilsenrath)
- Obama to Tap Perez for Labor Secretary (WSJ) - and with that the "minorities" quota is full
- Finally, this should be good: BuzzFeed to Launch Business Section (WSJ)
Overnight Media Digest
* The U.S. Justice Department trustee overseeing the bankruptcy case of American Airlines parent AMR Corp on Friday filed court papers objecting to certain employee wage increases, as well as a proposed $19.9 million exit package for AMR's chief executive, which are part of AMR and US Airways Group Inc's merger plan.
* The Philippines this weekend launched its bid to become Asia's third gambling hub with the opening of the Solaire, a $1.2 billion casino. Asia is battling the United States for supremacy in the global gambling market.
* U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions, according to people familiar with the probes.
* The Pentagon overrode a politically charged protest from Kansas defense contractor Beechcraft Corp and will work with Sierra Nevada Corp and the defense unit of Brazil's Embraer SA on a $427.5 million contract to build 20 planes for the Afghan air force.
* Many workers who were offered a sum of money to spend on healthcare opted for lower-priced plans that required them to pay more out of their pockets for healthcare.
* Verizon Communications is proposing to shake up the pay-television business based on a simple premise: it wants to tie the fees it pays to carry TV channels to how many people actually watch them.
* Directors of Transocean Ltd are urging shareholders to reject a campaign by activist investor Carl Icahn to increase the offshore-oil-rig company's dividend and name three new members to the board.
* Toronto-based generic-drug maker Apotex Inc has added an extra dose of tension to a drug-industry case involving patent settlements between brand-name companies and generic rivals to delay the potential introduction of copycat pills.
* Booming coffee demand in India is prompting companies like Lavazza SpA, Nestlé SA and Starbucks Corp to set up shop in the traditionally tea-drinking subcontinent, offering growth when returns are harder to come by in more developed markets. Rising consumption in India also is likely to pressure coffee prices.
* The Securities and Exchange Commission is filing significantly fewer civil fraud cases this year, as its efforts to punish misconduct related to the financial crisis start to ebb.
* Volkswagen AG's China unit said it would voluntarily recall cars suspected of having substandard direct-shift gearbox systems, following scrutiny from China's national state-run television broadcaster and after receiving a notification from China's quality watchdog
British finance minister George Osborne is expected to admit in Wednesday's budget that it will take even longer than previously forecast for public sector debt to begin to fall.
Cyprus was in talks with international lenders on Sunday to change the terms of proposed levy on bank deposits demanded as a condition for a bailout.
Thousands of jobs could be cut at HSBC, as Europe's largest bank prepares to unveil the next stage of its strategic overhaul at an investor day meet in two month's time.
Offshore drilling contractor Transocean will formally reject a plan from activist investor Carl Icahn that demands the company to pay a higher dividend and appoint three new directors.
The government is set to pledge ahead of Wednesday's budget, a significant investment into UK's aerospace industry as part of its long-term strategy to spur growth and keep the industry ahead of international competition. European banks will need to trim as much as another 3.4 trillion euros from their balance sheets over the coming years, according to new data, raising fears about a funding gap opening for European companies.
Highbridge Capital, the hedge fund owned by JPMorgan Asset Management, has closed the books on a new $5 billion 'mezzanine' fund, the biggest in six years and the third largest yet. The International Monetary Fund said on Sunday it would continue talks with Egypt on possible financial aid over the coming weeks.
* A decision to impose across-the-board losses on Cypriot depositors as part of a $13 billion bailout has set off increasing outrage and turmoil and fueled fears that bank runs there could spread to countries like Spain and Italy.
* An uncomfortable spotlight has swung back on Jamie Dimon, the influential chief of JPMorgan Chase & Co, as the trading hearing and the Senate panel's report on Friday detailed his role in the trading blowup, potentially creating fresh challenges for a chief executive long praised for his risk-management prowess.
* SAC Capital Advisors sees the $616 million fine as a victory, a good price for peace. Others say the Securities and Exchange Commission could have done far worse to a financier of Steven Cohen's means.
* Matthew Keys, the 26-year-old deputy social media editor at Reuters.com charged with assisting computer hackers, has emerged as the latest lightning rod in the continuing battle between proponents of internet freedom and the Justice Department.
* Each time in recent years that the Federal Reserve has paused in its efforts to stimulate the economy, it has come to regret the decision as premature. Its leading officials say the recovery has been slower as a consequence of those pauses. It is a mistake they do not want to repeat.
* The U.S. government's inquiry into News Corp broadened last year when the Justice Department investigated claims that employees in the China news bureau of The Wall Street Journal bribed local officials with gifts in exchange for information.
* Prominent state attorneys general are calling on President Obama to fire the acting director of the Federal Housing Finance Agency and name a new permanent director, arguing that current policies are impeding the economic recovery.
* With shorter stories and scarce coverage of politics and government, local television newscasts in the United States, like local newspapers before them, are suffering from "shrinking pains," according to the Pew Research Center.
THE GLOBE AND MAIL
* Canada's Justice Minister Rob Nicholson says there is "no question" that the series of criminal justice reforms his government has introduced will stand up to constitutional tests, despite allegations that his department's vetting standards are inadequate.
* Police have tracked down and arrested four men they say were responsible for a daring helicopter escape from a Quebec prison. Two men, one with alleged biker-gang affiliations, clung to a hijacked helicopter as it lifted off from a detention center in St-Jerome, Quebec, 60 kilometres northwest of Montreal, on Sunday afternoon, touching off a manhunt by land and air.
Reports in the business section:
* Mall wars have stepped up among major landlords as they try to lure large anchor tenants, reflecting a new era for department stores in Canada.
Cadillac Fairview Corp and Oxford Properties Group are fighting to snare potentially lucrative department-store retailers, including Nordstrom Inc of Seattle, Toronto-based Holt Renfrew & Co and Quebec-based La Maison Simons, which generate above-average industry sales.
* They are flipping burgers or driving trucks, sorting the mail, going back to school or still searching for work. And while the job market looks bleak, with many positions offering low pay on a casual or temporary basis, just 20 of the 465 unionized workers who lost their jobs a year ago - when Caterpillar Inc shuttered Electro-Motive Diesel, a London, Ontario, locomotive plant - have relocated.
* The Alberta government, continuing to press its case for the Keystone XL pipeline, took out an ad in Sunday's New York Times newspaper, tying the controversial project to core American values and to U.S. pride in its military.
* It's been more than two years since mayor Naheed Nenshi became the cuddly creature in charge of Calgary. One of North America's first Muslim mayors, approval ratings place his popularity so high in the public mind that the thought of a serious challenger taking him on in this fall's municipal election seems like a political kamikaze mission.
-- A commentary says remarks made by a new generation of Chinese leaders elected in the annual session of China's parliament, the National People's Congress, ended on Sunday and signal a focus in ruling the country by laws and respect of the people.
CHINA SECURITIES JOURNAL
-- The Bank of China Ltd said its chairman Xiao Gang had resigned to take over another financial leadership role. Earlier, news reports said Xiao, 54, had been appointed head of the China Securities Regulatory Commission (CSRC).
-- The Shanghai Stock Exchange will permit T+0 trading in bond exchange traded funds (ETFs) starting on Monday, paving the way for a resumption of a comprehensive T+0 trading system, in which investors can buy and sell securities on the same day. China suspended the system in 1995 to curb rampant speculation.
SHANGHAI SECURITIES NEWS
-- Under new rules, the CSRC will allow qualified securities brokerages to let staff hold options to boost their performance. It will also allow mutual funds to use third-party over-the-counter platforms to sell their products.
-- Commercial property and office building sales in China's capital, Beijing, surged 320.5 percent in the first 10 days of March, in response to the government's new measures to cool down the real estate sector.
Fly On The Wall 7:00 AM Market Snapshot
Best Buy (BBY) upgraded to Overweight from Neutral at JPMorgan
Community Health (CYH) upgraded to Buy from Hold at Jefferies
Hanover Insurance (THG) upgraded to Outperform from Market Perform at Keefe Bruyette
Health Management (HMA) upgraded to Buy from Hold at Jefferies
Methanex (MEOH) upgraded to Buy from Hold at Jefferies
ON Semiconductor (ONNN) upgraded to Buy from Neutral at Goldman
Office Depot (ODP) upgraded to Buy from Hold at KeyBanc
OfficeMax (OMX) upgraded to Buy from Hold at KeyBanc
Synaptics (SYNA) upgraded to Buy from Hold at Needham
United Technologies (UTX) upgraded to Buy from Neutral at Citigroup
ValueClick (VCLK) upgraded to Buy from Hold at Jefferies
Verizon (VZ) upgraded to Buy from Neutral at Citigroup
Vodafone (VOD) upgraded to Buy from Neutral at Citigroup
Watsco (WSO) upgraded to Buy from Neutral at SunTrust
Actavis (ACT) downgraded to Market Perform from Outperform at Wells Fargo
Adtran (ADTN) downgraded to Neutral from Buy at Mizuho
AmerisourceBergen (ABC) downgraded to Neutral from Buy at UBS
Black Hill (BKH) downgraded to Sector Perform from Outperform at RBC Capital
Carnival (CCL) downgraded to Neutral from Outperform at Exane BNP Paribas
CenterPoint Energy (CNP) downgraded to Underperform from Neutral at Credit Suisse
J.M. Smucker (SJM) downgraded to Sell from Neutral at Goldman
Kimberly Clark (KMB) downgraded to Sell from Neutral at Goldman
Northern Tier (NTI) downgraded to Hold from Buy at Dahlman Rose
Novo Nordisk (NVO) downgraded to Underweight from Neutral at JPMorgan
Progressive (PGR) downgraded to Underweight from Equal Weight at Evercore
Teva (TEVA) downgraded to Market Perform from Outperform at Wells Fargo
Boise Cascade (BCC) initiated with a Hold at Deutsche Bank
Boise Cascade (BCC) initiated with a Neutral at Goldman
Charles River Labs (CRL) initiated with a Neutral at BofA/Merrill
Covance (CVD) initiated with a Buy at BofA/Merrill
Transocean (RIG) board rejected Icahn proposal for dividend, director nominees
Dell (DELL) said Shareholder Forum is seeking all the information made available to Icahn for "improper purposes," rejects demand
Constellation Brands (STZ), Anheuser-Busch InBev (BUD), Grupo Modelo (GPMCF) and Crown Imports said substantial progress in discussions with DOJ
Sharp (SHCAY), Qualcomm (QCOM) deal missed deadline, second capital injection delayed
Ericsson (ERIC), STMicroelectronics (STM) agreed to split up joint venture ST-Ericsson
Boeing (BA) selected GE (GE) as engine partner for 777X studies
Suntech (STP) announced that it didn't make payment on convertible notes due 2013
Phoenix Companies (PNX) filed to delay 10-K, to provide update before April 30
WPP (WPPGY) made strategic investment in SFX Entertainment
Companies that beat consensus earnings expectations last night and today include:
Horizon Pharma (HZNP), Horizon Pharma (HZNP)
Companies that missed consensus earnings expectations include:
Sterling Construction (STRL), Essex Rental (ESSX)
- U.S. regulators are investigating whether high-frequency traders are routinely distorting stock and futures markets by illegally acting as buyer and seller in the same transactions--known as wash trades--sources say. They’re banned by U.S. law because they can feed false information into the market and be used to manipulate prices, the Wall Street Journal reports
- Growing coffee demand in India is prompting international companies such as Lavazza SpA, Nestle (NSRGY) and Starbucks (SBUX) to set up shop in the traditionally tea-drinking subcontinent, offering growth when returns are harder to come by in more developed markets, the Wall Street Journal reports
- The tarnished Libor interest rate benchmark should be replaced with a range of reference rates based on actual market transactions by banks, a global group of central bankers said today, Reuters reports
- S&P sees a high risk that Spain, Italy, Portugal and France won’t be able to carry through necessary reforms as the unemployed become less willing to put up with austerity, says the firm’s Germany head Torsten Hinrichs, Reuters reports
- The euro fell the most in 14 months against the dollar after an unprecedented levy on bank deposits in Cyprus threatened to push Europe back into crisis, Bloomberg reports
- Teen clothing chain Aeropostale (ARO) is offering the biggest sales discount in the country for private-equity firms seeking a deal. The company valued at 0.46 times its revenue in the last year, the cheapest among similar-sized U.S. specialty-apparel retailers, according to Bloomberg data.
BofA (BAC), Wells Fargo (WFC) and holders are biggest winners of Fed review
Dick's Sporting Goods (DKS) will get back on track
Pantry's (PTRY) drop in price could be an opportunity for investors
Globe Specialty Metals (GSM) vulnerable to another drop in share price
Samsung's (SSNLF) S4's hardware is impressive but software erratic
Zoetis (ZTS, PFE) has good outlook but stock looks too expensive
Cabot Oil & Gas (COG), Avis Budget (CAR), Valero (VLO) could be the next Apple (AAPL)
Fiesta Restaurant (FRGI) files to sell 2.5M shares for Jefferies Capital Partners
Fly Leasing (FLY) files to sell 2.19M American depositary shares for holders
RDA Microelectronics (RDA) files to sell 8.25M American depositary shares for holders