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Frontrunning: April 18

Tyler Durden's picture




 
  • Apple reportedly stops placing Mac component orders (DigiTimes)
  • Apple Ordered to Remove Obscene Content From China Store (BBG)
  • Texas Ammonia-Plant Blast Kills as Many as 15 People (Reuters)
  • Boston Probe Said Focused on Person Dropping Bag at Site (BBG)
  • The Chinese cold trade war comes come to roost: US becomes Japan’s top export market (FT)
  • Berlusconi, Bersani back Marini in presidential vote (Ansa)
  • German parliament backs Cyprus bailout (Reuters)
  • China Vows Wider Yuan Movement (WSJ)
  • Morgan Stanley Sees Core Earnings Weaken (WSJ)
  • Gold Miners Lose $169 Billion as Price Slump Adds ETF Pain (BBG)
  • G-20 Draft Affirms Pledge to Avoid Competitive Devaluations (BBG)
  • IMF warns on risks of excessive easing (FT)
  • The battle for the Swiss soul (Reuters)
  • Italy’s centrist parties claim deal on president (FT)
  • SEC to Move Past Financial Crisis Cases Under New Chairman White (BBG)
  • Federal Agents Arrest Mississippi Man Over Ricin Letters (BBG)

 

Overnight Media Digest

WSJ

* China plans to widen the yuan's trading band in the near future, a central-bank official said, suggesting leaders will press ahead with change despite the surprise slowing of the economy.

* A discouraging revenue forecast from an iPhone supplier, chip maker Cirrus Logic Inc, put fresh pressure on Apple Inc shares, which have now slumped 24 percent this year.

* Bank of America Corp shares dropped after first-quarter results fell short of expectations and showed the financial giant was struggling to boost growth in its core lending business.

* A pair of U.S. Federal Reserve officials suggested Wednesday that major financial institutions may need to hold even higher levels of capital, a sign of a growing concern over the efficacy of current regulatory efforts to address the risks posed by large, complex firms.

* Testimony ended on Wednesday in a federal trial in New Orleans to determine civil liability faced by BP Plc and other companies as a result of the fatal 2010 Deepwater Horizon explosion and oil spill in the Gulf of Mexico.

* The two biggest U.S. movie-theater chains, Regal Entertainment Group and AMC Entertainment Holdings Inc, are refusing to sell online tickets for Walt Disney Co's coming film "Iron Man 3" amid a dispute with the studio over how revenue is split.

* International investors in Russian oil company TNK-BP Holding OAO appealed to majority owner NK Rosneft OAO's chief executive to resolve a conflict that has caused the value of their TNK-BP shares to plunge by 50 percent in the past six months, highlighting worries about the rights of minority shareholders in the country.

* After a spate of high-profile ship mishaps, Carnival Corp plans to invest $600 million to $700 million on emergency safety and hospitality systems across its fleet.

* EBay Inc continued its turnaround with double-digit increases in revenue and profit for the first quarter, but sales growth slowed from last year's breakneck pace and the company forecast a weaker-than-expected outlook.

 

FT

Germany's Deutsche Bank AG is capping the 2013 salaries of Co-chief Executives Anshu Jain and Jurgen Fitschen, as it tries to fend off criticism of excessive corporate paychecks.

The European Union is going to speed up its plans to create a single European telecoms market, hoping to implement new regulations before the end of 2013. Bank of America's reported lower-than-expected earnings as revenue at its core divisions fell, stalling the bank's recovery from the bad loans and lawsuits of the financial crisis. Concerns about Apple reporting weak results next week, exacerbated by criticism from the Chinese media and weak results from one of the company's suppliers, sent the iPhone maker's shares to a 12-month low.

Commerzbank is in talks with private equity firm Lone Star and U.S. bank Wells Fargo about the 4-billion-pound ($6.09 billion) sale of Eurohypo, its UK property bank.

ING Groep is expected raise about $1.4 billion when it floats the initial public offering of its U.S. retirement, investment and insurance arms next month.

The International Monetary Fund warned that loose monetary policy could lead to new credit bubbles and another global financial crisis.

France has decided to hold off on imposing this year's new austerity regulations, and has delayed targets for cutting its budget deficit.

In the wake of Tesco's decision to quit the U.S. market - Britain's biggest retailer has taken a 2.4-billion-pound haircut and seen its full-year pretax profit more than halved. The Serious Fraud Office has asked to see documents from a law firm that was investigating corporate governance issues at ENRC , a move that could possibly result in the launch of a formal inquiry against the FTSE-100 miner.

 

NYT

* Banks have been reporting steady growth in earnings since soon after the financial crisis. But the ballooning bottom lines could embolden the lawmakers and regulators who want to introduce additional measures to overhaul the banking system.

* Some checks to troubled homeowners, as a part of a $3.6 billion settlement with the United States' largest banks accused of wrongful evictions and other abuses, bounced after they were issued by the consulting company hired to distribute settlement payments.

* The law firm DLA Piper has settled a fee dispute with one of its clients, resolving a case that highlighted lawyers' emails that discussed overbilling the client, in one instance using the phrase "churn that bill, baby!" to describe their work.

* Four months after the investment firm Cerberus Capital Management LP put the country's largest gun company, Freedom Group Inc, up for sale in the wake of the school shootings in Connecticut, it has found a possible buyer in Cerberus's owner, Stephen Feinberg.

* The Federal Trade Commission announced its first mobile cramming case, accusing a company of taking advantage of consumers by tacking unwarranted charges onto their phone bills.

* The Supreme Court ruled on Wednesday that Nigerian plaintiffs who said foreign oil companies had been complicit in violating their human rights may not sue in American courts. The decision limited the sweep of a 1789 law that had been used to address human rights abuses abroad.

* EBay Inc continues its turnaround, from troubled online auction site to a forward-looking, mobile-oriented ecommerce company as it reported a 19 percent rise in first-quarter net income. But the results, as well as second-quarter forecasts, fell short of Wall Street's expectations, causing the stock to fall 1.6 percent in after-hours trading.

* Greece's economic free-fall is reshaping the lives of families with children, many of whom arrive at school hungry, underfed or even malnourished.

 

Canada

THE GLOBE AND MAIL

* Ontario will add more than 200,000 physiotherapy spots, primarily for senior citizens, as part of the government's strategy to care for the province's aging population.

The move, to be announced Thursday, is designed to ensure all long-term care home residents who need one-on-one attention from a physiotherapist will receive it.

* Canada will ultimately move to adopt a carbon tax despite the outright rejection of such a policy by the Harper government, former Quebec premier Jean Charest said. In a discussion on carbon pricing, Charest joined former Syncrude Canada chief executive Eric Newell in endorsing a clear and simple tax on carbon emissions.

Reports in the business section:

* Ottawa should take another stab at rewriting its foreign investment rules because what it has done so far has created the mistaken impression that Canada doesn't welcome offshore money, a new study concludes.

The confluence of the federal government's rejection of two major takeovers and the introduction of a new test for oil sands investment has magnified the uncertainty among potential investors, according to a report released Thursday by the Institute for Research on Public Policy.

* La Presse is making a C$40 million ($38.90 million) bet on the future of news, hoping that readers and advertisers will embrace a new tablet edition that could one day replace its printed newspaper.

The Montreal-based daily unveils its new digital edition on Thursday, the result of two and a half years of research and development that has seen the 129-year-old newspaper add more than 100 journalists to its newsroom at a time when others across North America are shedding staff.

NATIONAL POST

* In an apparent attempt to show the hypocrisy of the opposition, the Conservatives have released a string of letters from New Democrats and Liberals seeking approval for temporary foreign worker permits on behalf of companies in their ridings.

* Bruno Saccomani, who heads Prime Minister Stephen Harper's personal security detail will be appointed Canada's ambassador to Jordan. The appointment of Royal Canadian Mounted Police Superintendent Saccomani will likely raise eyebrows in the diplomatic community and prompt questions from opposition parties about why the job isn't going to a career diplomat.

FINANCIAL POST

* Porter Airlines' surprise move to start flying jets off Toronto Island has left several industry observers speculating if its primary motivation is actually to solicit a takeover bid from one of its larger rivals, Air Canada, or more likely, WestJet Airlines Ltd.

* In a move to expand its reach with business customers, Rogers Communications Inc said it has purchased a data center subsidiary from Primus Telecommunications Group Inc for C$200 million.

China

SHANGHAI SECURITIES NEWS -- Chinese life insurers are under an immense liquidity pressure as around 230 billion yuan worth of short-term policies sold in 2008 will mature this year.

SHANGHAI DAILY -- Shanghai's municipal legislature is planning a new environmental protection law this year to curb PM2.5 air pollution which will include stricter exhaust discharge standards for vehicles and factories and measures to control dust at construction sites.

-- The growth of China's catering industry slowed to 8.5 percent in the first quarter, a drop of 4.8 percentage points from the rate in the same period last year, statistics showed, reflecting the effects of a nationwide frugality campaign.

 

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

ASML (ASML) upgraded to Buy from Hold at Deutsche Bank
Cabot Oil & Gas (COG) upgraded to Buy from Neutral at BofA/Merrill
Cathay General (CATY) upgraded to Outperform from Market Perform at BMO Capital
FMC Technologies (FTI) upgraded to Outperform from Sector Perform at RBC Capital
Gerdau SA (GGB) upgraded to Buy from Neutral at Citigroup
HollyFrontier (HFC) upgraded to Buy from Neutral at BofA/Merrill
Spectra Energy (SE) upgraded to Overweight from Neutral at Atlantic Equities
UPS (UPS) upgraded to Outperform from Sector Perform at RBC Capital
WNS Holdings (WNS) upgraded to Outperform from Market Perform at William Blair

Downgrades

Alkermes (ALKS) downgraded to Neutral from Buy at Mizuho
Apache (APA) downgraded to Neutral from Overweight at JPMorgan
Apache (APA) downgraded to Perform from Outperform at Oppenheimer
eBay (EBAY) downgraded to Neutral from Outperform at Macquarie
ESCO Technologies (ESE) downgraded to Perform from Outperform at Oppenheimer
East West Bancorp (EWBC) downgraded to Market Perform from Outperform at BMO Capital
Expeditors (EXPD) downgraded to Underperform from Sector Perform at RBC Capital
FedEx (FDX) downgraded to Underperform from Sector Perform at RBC Capital
Huntington Bancshares (HBAN) downgraded to Neutral from Buy at Compass Point

Initiations

ACE Ltd. (ACE) initiated with an Outperform at BMO Capital
AIG (AIG) initiated with an Outperform at BMO Capital
AXIS Capital (AXS) initiated with an Outperform at BMO Capital
Agrium (AGU) initiated with an Overweight at HSBC
Aon Corp. (AON) initiated with an Underperform at BMO Capital
Arch Capital (ACGL) initiated with a Market Perform at BMO Capital
Cepheid (CPHD) initiated with a Neutral at Citigroup
Marsh & McLennan (MMC) initiated with a Market Perform at BMO Capital
Millennial Media (MM) initiated with an Outperform at Northland Securities
Mosaic (MOS) initiated with a Neutral at HSBC
PartnerRe (PRE) initiated with a Market Perform at BMO Capital
PerkinElmer (PKI) initiated with a Neutral at Citigroup
Potash (POT) initiated with an Overweight at HSBC
QIAGEN (QGEN) initiated with a Sell at Citigroup
Qualys (QLYS) initiated with an Outperform at Imperial Capital
Travelers (TRV) initiated with an Outperform at BMO Capital

HOT STOCKS

MetroPCS (PCS) said Institutional Shareholder Services, Glass Lewis recommend merger with T-Mobile (DTEGY)
Roper Industries (ROP) confirmed definitive agreement to acquire Managed Health Care Associates for about $1B
Wendy's (WEN) reached agreement to refinance debt
Google (GOOG) to retire Google Affiliate Network
SanDisk (SNDK) said positioned for continued gains on several fronts throughout 2013
Core Laboratories (CLB) sees FY13 worldwide activity increase of about 5%
ESCO Technologies (ESE) to close factories in Ohio, Germany

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Fifth Third Bancorp (FITB), UnitedHealth (UNH), Autonation (AN), BB&T (BBT), Core Laboratories (CLB), El Paso Pipeline (EPB), Cohen & Steers (CNS), Sallie Mae (SLM), eBay (EBAY), American Express (AXP), SanDisk (SNDK)

Companies that missed consensus earnings expectations include:

WESCO (WCC), Danaher (DHR), Kinder Morgan Energy (KMP), Kinder Morgan (KMI), Greenhill & Co. (GHL), RLI Corp. (RLI), Covanta (CVA)

Companies that matched consensus earnings expectations include:
Steel Dynamics (STLD), CVB Financial (CVBF), Guaranty Bancorp (GBNK), BankMutual (BKMU), Plexus (PLXS)

NEWSPAPERS/WEBSITES

  • Two Fed officials suggested that major financial institutions may need to hold even higher levels of capital, a sign of a growing concern over the efficacy of current regulatory efforts to address the risks posed by large, complex firms, the Wall Street Journal reports
  • China's central bank plans to expand the yuan's trading band in the near future, said People's Bank of China Vice Governor Yi Gang, suggesting that China's leaders will move ahead with change despite the slowing economy, the Wall Street Journal reports
  • Omega Advisors, one of Sprint Nextel’s (S) major shareholders, joined a growing group of investors who say they favor Dish Network’s (DISH) $25.5B bid for the company over SoftBank (SFTBF), Reuters reports
  • U.S. regulators are close to approving the Project Statement of Compliance, a key document  that could start the process of returning Boeing’s (BA) grounded 787 Dreamliner to service within weeks, sources say, Reuters reports
  • SEC Chairman Mary Jo White pledged to run a “bold and unrelenting” enforcement program, but with financial crisis cases mostly done and some of the biggest insider trading cases closed, she will have to chart a course into new areas, Bloomberg reports
  • U.S. Treasury inflation-protected securities are trailing conventional Treasuries this year for the first time in five years as the government prepares to sell debt linked to consumer-price increases, Bloomberg reports

SYNDICATE

Atlas Pipeline Partners (APL) 10.3M share Secondary priced at $34.00
Boston Private Financial (BPFH) announces pricing of 2M depository shares
Hannon Armstrong Sustainable (HASI) 13.333M share IPO priced at $12.50
Intelsat (I) 19.3M share IPO priced at $18.00
MedicNova (MNOV) enters into 6M equity distribution agreement with Macquarie
Taminco (TAM) 15.789M share IPO priced at $15.00
Uni-Pixel (UNXL) files to sell common stock
Uranium Resources (URRE) files to sell 2.15M shares of common stock for holders

 

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Thu, 04/18/2013 - 07:45 | 3465581 WhiteNight123129
WhiteNight123129's picture

The Gold move is 100% Japan related.

Japan has 20 times debt to GDP or war like Debt.

Japan consumes 20 % of budget interest even with very low rates.

FIRST THINGS WE ALL KNOW. BRIEF RECAP.

Japan has now a trade deficit because of Fukushima and because they move some their logistics out of the country to hedge against earthquakes.

More people are now moving out of the workforce then entering so in aggregate they are di-savings, creating problem for demand for JGBs.

So the debt situation is the most serious.

There is a way to avert that, and taking down the Gold price.

Japan wants to inflate away in an orderly way (like Britain post world war II) However the currency had declined by 25% in a short period of time
At the same time the Gold price in Yen was breaching a 30 years all time high.

The backdrop of this breach was a QE announced which is 2 times larger in proportion than the US.
Normally an old all time high breached after 30 years with such a backdrop would mean Gold off the races in Yen.
That would have potentially created a panic since Gold since Gold is purchased in panic.
Gold shapes inflation expectation and the secondary effect could be a disorderly JGBs.
Remember that the JGBs were showing great volatility BEFORE with 2 stops in JGBs market.
So who did the take down?
My answer is Global central banks who have debt problems and need to maintain negative interest rates on their Gov bonds.
Why? If the JGBs go disorderly, it would immediately trigger uneasiness with other sovereign bond markets.
Hence the Gold price in Yen, which could be the fuse for this event had to be squashed.

Who squashed it?

People who can do it. And they should do it in order to avoid a big problem for Japan and the rest of the world.

People from ECB (Draghi), to BoE, the US Fed.

How did they do it?

First a short recommendation by Goldman on Wednesday last week

Next Draghi says Cyprus has to sell its Gold.

However, how reliable is Goldman in warning its clients about an impending bubble?

Absolutely not reliable.

Remember Abigael Cohen in 1999 (Goldman was the biggest IPO promoter of internet bubble)

Fabrice Tourre was structuring crap to be sold to clients (while Goldman was short subprime with AIG)

Goldman made a call for 200 USD oil back in 2008.

So this is why Gold had to be squashed, the JGBs  were stopped because of daily limits while the Gold price in Yen was moving strongly above its 30 years all time high while Japan was announcing massive QE.

We had a 7 sigma move in Gold, even in 1970s you never saw a 7 sigma move, while at the same time the government with the highest risk of disorderly adjustment being halted for excessive move down? How often are the JGBs halted?? And on the same day that Gold has a 7 sigma move down.

http://www.cityam.com/blog/volatility-jgbs-sees-them-halted-again

 

Soros had figured it out that central banks would not let a panic start on the Gold in Yen terms, and he sold his Gold back in September and started to buy puts on the Yen.

Thu, 04/18/2013 - 07:53 | 3465594 NoDebt
NoDebt's picture

I can believe that.

But I just watched a video of a guy in a wing-suit jump out of a helicopter and fly through a cave at 155 MPH so I believe just about anything is possible right now.  Guy calls himself "Batman" but I think his real name is "Japan."

 

Thu, 04/18/2013 - 08:02 | 3465598 JustObserving
JustObserving's picture

A 7 sigma event can happen by chance only at vanishing probabilities - say, once in a million years.  It was a deliberate attack on gold by tthe Central Banksters.

Japan has $3.36 trillion in pension funds and only 0.03% of that is in gold. It turns out to have been a big mistake as the record price for gold in yen shows.

Thu, 04/18/2013 - 07:56 | 3465599 Shevva
Thu, 04/18/2013 - 08:08 | 3465637 css1971
css1971's picture

Lovely. Greek children starving. I hope politicians and bankers are proud of themselves.

 

Thu, 04/18/2013 - 08:16 | 3465672 Bearwagon
Bearwagon's picture

You may rest assured they are.

Thu, 04/18/2013 - 10:22 | 3466228 Papasmurf
Papasmurf's picture

Stealing from the mouths of children is a requirement for banking managment and political career.  Don't worry, this will be sorted out at the pearly gates.

Thu, 04/18/2013 - 08:12 | 3465657 css1971
css1971's picture

Wider CNY band = recession in the US.

Thu, 04/18/2013 - 09:22 | 3465965 Never One Roach
Never One Roach's picture

<< EBay Inc continues its turnaround, from troubled online auction site to a forward-looking, mobile-oriented ecommerce company as it reported a 19 percent rise in first-quarter net income. But the results, as well as second-quarter forecasts, fell short of Wall Street's expectations, causing the stock to fall 1.6 percent in after-hours trading.>>

 

I have three neighbors who have Ebay stores and say they love thier platform but two have closed up shop; not due to anything Ebay is doing, but due to the higher postal rates and serious fraud by oveseas buyers since you (the seller)  cannot protect yourself by getting delivery confirmation for those shipments. The overseas buyer simply says, "I never received it," and Bingo! he gets 100% reimbursed at the expense of the seller (and walks away with the item). They really opended my eyes to what's happening "on the ground"....Main Street in other words.

 

Add to that the deep recession we're in and they both went under. Sad to see it happen.

Thu, 04/18/2013 - 09:55 | 3466141 Shell Game
Shell Game's picture

Ebay has done great harm to their seller base for the reason you outlined, for significantly raising their seller fees (pre- and post-sale), removing the seller's abiltiy to leave negative feedback to troll/criminal customers and by treating sellers as guilty before a very timely exoneration process.  It's been a fun 10+ years as a seller, but I'm done now before they squeeze me for all I work for.

Thu, 04/18/2013 - 10:28 | 3466257 Papasmurf
Papasmurf's picture

I found it was more profitable to give stuff at the curb on Craigslist than to sell on eBay.  Once they demanded access to draw on my bank account, I left for good.  There was a time when honor existed in that market.  No more. 

I had one greivance where I asked for a partial compensation for missing items.  ePay reversed the entire transaction and there was no way I could get them to fix it to make it fair.

I pitty folks who tried to eek out a living here.  There was wonderful potential until the parasite took too much and did too little.

Thu, 04/18/2013 - 09:24 | 3465990 Shell Game
Shell Game's picture

"Apple Ordered to Remove Obscene Content From China Store"

 

Damn, there goes the Fight Club app...

Do NOT follow this link or you will be banned from the site!