Frontrunning: May 13
- Hilsenrath: A Top Contender at the Fed Faces Test Over Easy Money (WSJ)
- Yen drops further as G7 avoids criticizing Japan (Reuters)
- Markets missed Flaherty’s clues on next Bank of Canada chief (G&M)
- Republicans turn screws over Tea Party tax probes (FT)
- Dual-track Libor replacement lined up (FT)
- Risks to China recovery seen as factory output underwhelms (Reuters)
- Barack Obama’s goal of universal healthcare could be set back significantly by Texas Governor Rick Perry (FT)
- Gold Bears Pull $20.8 Billion as BlackRock Says Buy (BBG)
- Mexico sets shelters as volcano shakes, spews ash (AP)
- Europe Eases Corporate Tax Dodge as Worker Burdens Rise (BBG)
- IPOs Set to Raise Most Cash Since Crisis (WSJ)
- Melting Ice Opens Fight Over Sea Routes for Arctic Debate (BBG)
- Top hedge funds bet on Greek banks (FT)
- Icahn Asks Investors to Make Big Bet on a Debt-Laden Dell (BBG)
Overnight Media Digest
* U.S. companies are on track to raise the most money through initial public offerings since before the financial crisis, driven by the same thirst for risk among investors that has pushed the stock market to new highs.
Already this year, 64 U.S.-listed public offerings have raised $16.8 billion, according to Dealogic. In the same period in 2012, the biggest year in dollars since the financial crisis, 73 companies raised a total of $13.1 billion. Last week alone brought 11 U.S.-listed IPOs, making it the busiest week for such deals since December 2007.
* Bangladesh's government, facing pressure to improve standards in the garment industry following a deadly factory building collapse last month, announced plans to increase wages in the sector.
* Lawmakers and federal bank regulators are stepping up scrutiny of a consulting firm that twice bungled payments to consumers in a foreclosure abuse settlement.
Executives with Rust Consulting Inc, hired to distribute $3.6 billion to 4.2 million homeowners, are scheduled to meet this week with staffers from the office of Rep. Elijah Cummings (D., Md.), the top Democrat on the House Oversight Committee.
* The next chief of the Federal Reserve will decide when to reverse the easy-money policies of Ben Bernanke, a judgment that could strangle the economic recovery if made too early or trigger runaway inflation if made too late.
The task could fall to Fed vice-chairwoman Janet Yellen, a meticulous and demanding Yale-trained economist, who issued prescient, early warnings about the housing bust.
* Chrysler Group LLC is recalling 469,000 Jeep SUVs world wide because they can shift into neutral without warning on startup.
The recall affects 2005 to 2010 Grand Cherokees and 2006 to 2010 Commanders.
* After four years of crises, foreign and domestic, that threatened to plunge the U.S. economy back into recession, the road ahead at last looks comparatively free of roadblocks. But progress remains slow, and there is little reason to expect meaningful acceleration in coming months.
* Discount airline Virgin America said it continued to rack up losses in the past two quarters, but a deal to restructure its balance sheet and raise fresh capital should help put it on course for profit later this year and bring it closer to an initial public offering, according to Chief Executive David Cush.
Despite being aware in 2011 of the privacy issue concerning its major clients, Bloomberg failed to take action until Goldman Sach Group Inc's complaint that reporters kept track of its partners using private terminal data.
Win Bischoff is stepping down as chairman of British state-backed Lloyds Banking Group Plc after overseeing major restructuring and a return to profitability at the bank.
A dual-track system, including survey-based lending rates along with transaction-linked indexes, is likely to replace scandal-hit London interbank lending rate Libor as soon as next year.
British insurer Aviva Plc could buy thousands of homes in London and the southeast of England to use as rented properties in a deal with social housing provider A2Dominion.
Expecting huge potential returns, some of the world's leading hedge funds are investing heavily in the Greek banking sector, even as the country continues to struggle with deep public spending cuts.
British insurer Esure Group Plc has been accused of failing to specify, during its recent London Stock market launch, the role of one of its directors in lender HBOS before its collapse.
* So far, Chinese companies have concentrated on selling parts and opening offices, but some see the day when Chinese cars will be sold in the United States.
* Broadcast networks are preparing to unveil new fall lineups for an audience that is shrinking rapidly, lured away by new rivals on all sides.
* Barbara Walters, network television's first anchorwoman, plans to announce Monday she'll leave the business where she broke barriers and rules for more than 50 years.
* Lee Raymond, JPMorgan Chase's outspoken lead director, will be a major factor in its shareholder vote on Jamie Dimon's role at the bank.
* Fostering innovation has become a mantra among corporate leaders and government officials in Taiwan because its huge consumer electronics industry has run into serious trouble.
* This week ABC will quietly revolutionize its app for iPhones and iPads with a button called "live." Users around New York and Philadelphia will be able to live-stream all the programming from ABC's local stations there, the first time that any major broadcaster has turned on such a technology.
* Increasingly, the authorities say, criminals are using expensive artworks - bought and sold in secret and with little regulation - to hide ill-gotten profits.
THE GLOBE AND MAIL
* When Canadian astronaut Chris Hadfield sets foot on Earth on Monday for the first time in 146 days after his mission on the International Space Station, he will be stepping into a future fraught with uncertainty for the program he represents as well as for the $100-billion facility he leaves behind.
* The Royal Canadian Mounted Police (RCMP) is looking into Senate expense claims and critics have more ammunition in their calls for abolition after three members of the Red Chamber were found to have improperly received tens of thousands of dollars in living expenses.
Reports in the business section:
* A combination of growing oil sands production and congested pipelines is creating new opportunities for midstream companies that have cavern or tank capacity to spare. The waiting game for proposed pipeline projects such as Keystone XL or the Trans Mountain expansion, along with a new focus on rail transport, has resulted in growth of storage industry.
* Rona Inc says the pieces are coming together in a top-to-bottom renovation of the home-improvement retailer. Observers will be watching closely for signs of progress when the company unveils first-quarter results and holds its annual meeting Tuesday.
* The death of a former grand chief of the Innu Nation, Joseph Riche, while hunting in Labrador has renewed calls to improve Canada's search-and-rescue protocols, a provincial politician said on Saturday.
* Air Canada chief executive, Calin Rovinescu, called on his top executives on Friday to launch aggressive cost-cutting measures aimed at trimming $50 million of expenses from the company's operations by the end of the second quarter as competition mounts on the country's largest carrier.
CHINA SECURITIES JOURNAL
-- U.S. billionaire Warren Buffett told China's state broadcaster in an interview that he would not sell his stake in Chinese car firm BYD Company and that he would not purchase gold.
SHANGHAI SECURITIES NEWS
-- The daily volatility of yuan exchange rate is expanding constantly in May, repeatedly reaching the 1 percent daily fluctuation limit. There is a high possibility that the daily fluctuation limit of yuan against the U.S. dollar will be broadened from 1 to 2 percent, said some experts.
-- Cooperation between China and European countries has been increasing and has surpassed the pure business relations. The two sides need to further strengthen two-way investment and develop cooperation in urbanisation, new energy, advanced technology and cultural industry.
* Japanese telecom company SoftBank Corp, which owns 33 percent of Alibaba Group Holding Ltd, has told banks that their financing of Dish Network Corp's $25.5 billion rival offer for Sprint Nextel Corp could hurt their chances of landing a role in a highly anticipated public offering of the Chinese e-commerce giant, two sources familiar with the situation said.
* Win Bischoff is stepping down as chairman of British state-backed Lloyds Banking Group Plc, the Financial Times reported on Sunday, citing sources familiar with the plan, set to be announced ahead of Thursday's annual shareholder meeting.
* Swiss Life Holding AG and Valiant Holding AG are discussing a distribution partnership, which may include the insurer taking a stake in the bank, Swiss newspaper Sonntag reported on Sunday, citing sources familiar with the matter.
* A dual-track system, including survey-based lending rates along with transaction-linked indices, is likely to replace scandal-hit London interbank lending rate Libor as soon as next year, the Financial Times reported on its website on Sunday.
* Switzerland's finance minister supports exchanging bank client data with foreign tax authorities under certain conditions, which the Swiss government will begin debating in June, according to a newspaper interview.
* The resumption of initial public offerings in China, expected this month or next, will likely be delayed until July in part due to concerns over the strength of the economy, the official China Securities Journal reported on Monday.
* Britain's Royal Mail Group Ltd could fall into foreign hands if trade unions continue to fight plans to launch an initial public offering of shares on the London Stock Exchange, the Observer newspaper reported.
* One of the credit card processing companies whose security was breached in a $45 million global cyber heist was India's ElectraCard Services, according to two people familiar with the situation.
* German diversified healthcare group Fresenius SE & Co KGaA has identified potential takeover targets costing up to 300 million euros ($389.16 million), Chief Executive Ulf Schneider told German weekly paper Euro am Sonntag.
* Private equity firm Blackstone Group LP is in talks with India's largest insurer, Life Insurance Corporation, to buy out its 14 percent stake in Stock Holding Corporation of India Ltd, the Economic Times reported, citing a senior official of the insurer.
* German printing machines maker Heidelberger Druckmaschinen is in talks about a possible partnership with rival KBA Koenig & Bauer Group, the Frankfurter Allgemeine Zeitung paper reported on Sunday.
Fly On The Wall 7:00 AM Market Snapshot
AIG (AIG) upgraded to Overweight from Equal Weight at Barclays
Apollo Global (APO) upgraded to Outperform from Market Perform at Keefe Bruyette
Cadence Design (CDNS) upgraded to Outperform from Sector Perform at RBC Capital
Corning (GLW) upgraded to Overweight from Equal Weight at Barclays
DuPont Fabros (DFT) upgraded to Buy from Hold at Jefferies
Express Scripts (ESRX) upgraded to Buy from Hold at Jefferies
Franklin Resources (BEN) upgraded to Buy from Neutral at Citigroup
Franklin Resources (BEN) upgraded to Buy from Neutral at UBS
Hartford Financial (HIG) upgraded to Overweight from Equal Weight at Barclays
LyondellBasell (LYB) upgraded to Buy from Neutral at Citigroup
Orbotech (ORBK) upgraded to Overweight from Equal Weight at Barclays
Pharmacyclics (PCYC) upgraded to Outperform from Sector Perform at RBC Capital
Sequenom (SQNM) upgraded to Neutral from Underperform at Credit Suisse
T-Mobile USA (TMUS) upgraded to Buy from Neutral at UBS
Warner Chilcott (WCRX) upgraded to Buy from Fair Value at CRT Capital
Washington REIT (WRE) upgraded to Outperform from Neutral at RW Baird
AllianceBernstein (AB) downgraded to Market Perform from Outperform at Keefe Bruyette
Allot Communications (ALLT) downgraded to Equal Weight from Overweight at Barclays
AutoZone (AZO) downgraded to Hold from Buy at Deutsche Bank
C.H. Robinson (CHRW) downgraded to Neutral from Buy at UBS
Carlyle Group (CG) downgraded to Neutral from Buy at UBS
Celanese (CE) downgraded to Neutral from Buy at Citigroup
Ctrip.com (CTRP) downgraded to Neutral from Buy at Goldman
EV Energy (EVEP) downgraded to Hold from Buy at Wunderlich
EZchip (EZCH) downgraded to Equal Weight from Overweight at Barclays
Highwoods (HIW) downgraded to Sector Perform from Outperform at RBC Capital
Invesco (IVZ) downgraded to Neutral from Buy at UBS
Mellanox (MLNX) downgraded to Equal Weight from Overweight at Barclays
Southwest Gas (SWX) downgraded to Hold from Buy at Brean Capital
Fairway Group (FWM) initiated with a Buy at BB&T
Fairway Group (FWM) initiated with a Buy at Guggenheim
Fairway Group (FWM) initiated with an Outperform at Credit Suisse
Hannon Armstrong Sustainable (HASI) initiated with an Outperform at RW Baird
Theravance (THRX), Elan (ELN, GSK) entered into $1B royalty participation agreement
Samsung (SSNLF) announced plans to launch 5G by 2020
S&P raised Gap (GPS) ratings to 'BBB-' from 'BB+'
Hess's (HES) five independent nominees waived rights to payments in compensation plan
Companies that beat consensus earnings expectations last night and today include:
Sky-mobi (MOBI), Consolidated Water (CWCO)
Companies that missed consensus earnings expectations include:
CTI Industries (CTIB), Chimerix (CMRX), Silver Wheaton (SLW), Inovio (INO)
Companies that matched consensus earnings expectations include:
- U.S. companies are on track to raise the most money through IPOs since before the financial crisis, driven by the same thirst for risk among investors that has pushed the stock market to new highs. Already this year, 64 U.S.-listed public offerings have raised $16.8B, according to Dealogic, the Wall Street Journal reports
- Cisco Systems (CSCO) shares fell this time last year after executives warned their biggest corporate customers were ordering less equipment. If history repeats itself this week, the networking giant will join a dreary but growing club (IBM, JNPR), the Wall Street Journal reports
- Japan's Nikkei share average surged to a new 5 1/2-year high today as the weakening yen further bolstered exporters, while brokerage shares attracted buyers who see growing volume bringing in much more fee income, Reuters reports
- China's factory output growth was surprisingly muted in April, darkening the outlook for the Chinese economic recovery and feeding expectations that the government may take policy action to support activity. Annual industrial output grew 9.3%, up from 8.9% in March but still missing market expectations for a 9.5%, Reuters reports
- Wall Street’s major bond dealers are beginning to forecast that the Treasury Department will lower the size of its debt auctions in coming months for the first time in three years as government revenue soars, Bloomberg reports
- The largest overseas bet on Indian consumers is spurring speculation that companies from Nestle (NSRGY) to Colgate-Palmolive (CL) will pursue more deals in a nation where household income is forecast to triple this decade, Bloomberg reports
Carl Icahn's newest offer could be better deal for Dell (DELL) holders
Western Union (WU) shares could jump to $19 in the next 12 months
Fannie Mae, Freddie Mac (FNMA, FMCC) could be in trouble
BlackBerry (BBRY) shares could jump to low $20s-$30 this year
Uni-Pixel (UNXL) has rallied but investors should be cautious
Orient-Express (OEH) EBITDA could rise 35% to $140M in the next few years
Teekay Offshore Partners (TOO) files to sell 2.06M common units for holders
Triple-S Management (GTS) announces 5.4M Class B share secondary
Velti (VELT) files to sell 6.02M ordinary shares for holders