Frontrunning: May 15
- Once a beacon, Obama under fire over civil liberties (Reuters)
- Eurozone in longest recession since birth of currency bloc (FT)
- EU Oil Manipulation Probe Shines Light on Platts Pricing Window (BBG)
- BMWs Cheaper Than Hyundais in Korea as Tariffs Crumble (BBG)
- Stock Boom Isn't a Bubble, Says BOJ's Kuroda (WSJ)
- Struggling France strives to shake off economic gloom (FT)
- JPMorgan investors take heat off Dimon (FT)
- Private-Equity Firms Build Instead of Buy (WSJ)
- Bloomberg Saga Highlights Clash Between Two Worlds (WSJ)
- Bank documents portray Cyprus as Russia's favorite haven (Reuters)
- HSBC Signals 14,000 Jobs Cuts in $3 Billion Savings Plan (BBG)
- Argentines Hold More Than $50 Billion in U.S. Currency (BBG)
- For Japan lenders, Abenomics' pain comes first, gain later (Reuters) ...or never
- Russia expels U.S. diplomat in spy scandal (Reuters)
Overnight Media Digest
* Hedge fund billionaire Daniel Loeb's campaign to pressure Sony Corp into spinning off its entertainment arm is the latest tremor to ripple through Japan's electronics industry, already reeling from unprecedented losses stemming from its lost standing in the technology world.
* Some of the hedge funds that made fortunes in the housing-market crash are now betting on the recovery of Fannie Mae and Freddie Mac, the government-controlled mortgage giants.
Paulson & Co and Perry Capital LLC are among a handful of hedge fund firms that have bought preferred shares in Fannie and Freddie, which collapsed in value in 2008 after the companies were taken over by the federal government.
* Standard & Poor's Ratings Services president Douglas Peterson said that a proposal to upend the credit rating firms' business model could create new conflicts of interest and disrupt financial markets.
* Google Inc is set to launch a paid subscription music streaming service akin to that of Spotify AB as soon as this week, according to people familiar with the matter.
* Some restaurant operators are scaling back expansion plans because of uncertainty about the expense of insuring employees under the new federal health-care law.
The concerns are especially acute among smaller operators who are more likely to be on the cusp of the Affordable Care Act's requirements for increased coverage of workers. The doubt is adding to anxiety over other rising costs for items like ingredients at a time when diners are cutting back on eating out.
* Securities and Exchange Commission (SEC) Chairman Mary Jo White is eyeing a Charles Schwab Corp executive for a top post overseeing trading firms and stock exchanges, according to a person familiar with the talks.
* Walt Disney Co's ABC is thinking outside the four-cornered, single-screen box.
On Tuesday it became the first major broadcast network to let viewers live-stream programming onto iPhones and iPads. It will do so for local stations in New York and Philadelphia and plans to release the new app in more markets this summer.
European Commission officials on Tuesday carried out raids on oil majors
Royal Dutch Shell Plc, BP Plc and Statoil in an investigation into the
pricing of oil.
Taiwanese electronics maker Hon Hai Precision
Industry , the main manufacturing partner for Apple Inc , is facing
growing competition as the iPhone and iPad maker shifts more orders to
local rival Pegatron Corp.
Billionaire hedge fund manager Daniel
Loeb has taken a $1.1 billion stake in Sony Corp and called on the
Japanese electronics group to sell off part of its film and music
Hundreds of warehouse workers at Amazon.com's German
operations went on strike on Tuesday in a dispute with the global
Internet retailer over pay and benefits.
The budget deficit at
the world's largest economy is shrinking more quickly than expected as
the U.S. government collects higher revenue from businesses, individuals
and the two mortgage companies it rescued during the financial crisis.
Bank of Scotland Group, which faced one of the worst IT failures in
British banking history last June, would spend an additional 450 million
pounds ($686.56 million) to fix its ailing IT systems, Chairman Philip
Hampton told shareholders at its annual meeting.
* Real estate upstarts like Fundrise are allowing people to invest in their neighborhoods in a way that has traditionally been the exclusive domain of wealthy investors and private equity firms.
* The European Commission is looking into whether BP, Shell and Platts may have "colluded" in an effort to manipulate the prices of oil products.
* Hedge fund manager Daniel Loeb's demands of Sony could test Japan's commitment to economic change.
* Jamie Dimon, the chief of JPMorgan Chase, is seeking advice from Lloyd Blankfein of Goldman Sachs as he wrestles with the fallout from a big trading loss. Not long ago, he was the one offering guidance.
* The Congressional Budget Office said the 2013 fiscal deficit would fall to about $642 billion, or 4 percent of G.D.P., about $200 billion less than it estimated just three months ago.
* Long thought of as a company that serves Wall Street firms, Bloomberg, through a relatively unheralded expansion, is quietly becoming more like them.
* According to the Justice Department, Apple took a leadership role in a price-fixing conspiracy in the market for e-books.
* A new generation in the mainly Muslim suburbs that ring Paris is finding business success by relying on personal initiative rather than government programs.
* Google's Chief Executive Larry Page said he has paralyzed vocal cords, a rare health problem that causes a hoarse voice and constricted breathing. The company said a year ago that he had a voice problem.
THE GLOBE AND MAIL
* British Columbians voted overwhelmingly to send the Liberal Party back to power on Tuesday in one of the most dramatic political comebacks in recent Canadian history. The election was a stunning turnaround for Premier Christy Clark, although she was struggling Tuesday to hold her own seat in Vancouver-Point Grey.
* Canada will take the helm on Wednesday at a ministerial summit of the circumpolar, eight-nation Arctic Council, where Health Minister Leona Aglukkaq faces a clamour from southern nations seeking a greater role in the race to extract the Arctic's vast oil and mineral riches. China, India, Japan, South Korea and Singapore all want observer status at the council as climate change exposes Arctic resources and opens new, shorter shipping lanes.
Reports in the business section:
* Ron Mock has completed his rise from the ashes of collapsed hedge fund firm Phoenix Research and Trading Corp, putting a controversial failure behind him to become the new chief executive of the Ontario Teachers' Pension Plan.
Mock, 60, was named on Tuesday as the successor to Teachers Chief Executive Jim Leech, who is retiring at the end of the year. Mock is currently Teachers' senior vice-president of fixed income and hedge funds, heading the largest of the pension plan's six major asset management groups.
* Canada's Conservative government said on Tuesday it would boycott a United Nations disarmament conference chaired by Iran - currently targeted by sanctions over its rogue nuclear arms program - on the grounds that it makes a "mockery" of the effort against arms proliferation. It is the latest sign of a new boldness in Canada's stance against the Islamic Republic.
* Canada's oil sands and U.S. tight oil plays will contribute more than one third of new supplies to global markets between now and 2018, the International Energy Agency says. Production from northern Alberta's bitumen reserves, the world's No. 3 deposit, North Dakota's Bakken play and the Eagle Ford shale in Texas will provide 40 percent of new supplies in the next five years as global output surges by 8.4 million barrels a day, the Paris-based agency said Tuesday.
* Internet video provider Netflix is facing an onslaught of competing streaming services launched by Canadian media giants such as Bell, Videotron and Astral as they clamour to cash in on the increasingly popular platform. But Reed Hastings, chief executive of Los Gatos, California-based Netflix, is nonchalant about the market his company pioneered becoming increasingly crowded.
CHINA SECURITIES JOURNAL
-- China Securities Regulatory Commission is considering a reform of the system of issuing new shares, which may include centralised listings and packaging issues of new shares, according to unidentified industry insiders.
-- The rising value of the yuan has made it difficult for exporters in the Pearl River Delta region to make a profit, even though they have seen orders increase, an industrial survey said.
-- The Kunming city government's openness and flexibility in the conflict over a proposed PX plant that has drawn large-scale public protests has been laudable so far. Government offices in similar situations should replace confrontation with dialogue and respect to build trust.
* Actavis Inc received and rejected a takeover offer from Mylan Inc last week that valued the generic drugmaker at more than $15 billion, a person familiar with the situation told Reuters on Tuesday.
* State-owned China Galaxy Securities Co Ltd priced its initial public offering at the lower end of the indicative price range, raising $1.1 billion, a source with direct knowledge of the matter said on Wednesday.
* State-rescued German bank Hypo Real Estate Holding AG is preparing to sell its public finance specialist Depfa, with Citigroup Inc appointed to organise the sale, two people familiar with the situation said on Tuesday.
* The parent of Dongfeng Motor Group Co, China's second-largest automaker, will take an over-40 percent stake in Fujian Motor Industry Group, a local newspaper said on Wednesday, the latest consolidation in the country's fragmented auto market.
* Shares in German lender Commerzbank AG, which are currently held by Germany's bank rescue fund Soffin, are being placed at a price range between 6.60-7.00 euros ($8.57-$9.08) a piece, two people familiar with the transaction said on Tuesday.
Fly On The Wall 7:00 AM Market Snapshot
Aeropostale (ARO) upgraded to Outperform from Market Perform at BMO Capital
Gap (GPS) upgraded to Buy from Neutral at Citigroup
PS Business Parks (PSB) upgraded to Market Perform from Underperform at BMO Capital
Redwood Trust (RWT) upgraded to Outperform from Market Perform at FBR Capital
Regal-Beloit (RBC) upgraded to Outperform from Neutral at Credit Suisse
Unilever (UN) upgraded to Buy from Reduce at Nomura
BlackBerry (BBRY) downgraded to Market Perform from Outperform at Bernstein
Brunswick (BC) downgraded to Market Perform from Strong Buy at Raymond James
Charles Schwab (SCHW) downgraded to Underweight from Equal Weight at Barclays
Clorox (CLX) downgraded to Neutral from Outperform at Credit Suisse
Domino's Pizza (DPZ) downgraded to Hold from Buy at Miller Tabak
E-Trade (ETFC) downgraded to Underweight from Equal Weight at Barclays
Golar LNG (GLNG) downgraded to Sell from Neutral at Goldman
ITT Educational (ESI) downgraded to Equal Weight from Overweight at First Analysis
Janus Capital (JNS) downgraded to Underweight from Overweight at Barclays
NYSE Euronext (NYX) downgraded to Equal Weight from Overweight at Barclays
Regency Energy Partners (RGP) downgraded to Market Perform at Wells Fargo
Renren (RENN) downgraded to Perform from Outperform at Oppenheimer
Smithfield Foods (SFD) downgraded to Hold from Buy at BB&T
TD Ameritrade (AMTD) downgraded to Equal Weight from Overweight at Barclays
Waddell & Reed (WDR) downgraded to Underweight from Overweight at Barclays
Wyndham (WYN) downgraded to Neutral from Buy at Janney Capital
Ciena (CIEN) initiated with an Overweight at Evercore
Halozyme (HALO) initiated with an Overweight at Piper Jaffray
LinkedIn (LNKD) initiated with a Neutral at RW Baird
PDL BioPharma (PDLI) initiated with a Neutral at Piper Jaffray
UIL Holdings (UIL) initiated with an Outperform at Wells Fargo
Universal Truckload (UACL) initiated with a Buy at KeyBanc
Citi Brazil (C) announced sale of Credicard to Banco Itaú Unibanco
Wal-Mart (WMT) to raise inspection standards, transparency on Bangladesh factories
Said won't sign Bangladesh factory proposal, said its plan will produce quicker results
Agilent (A) raised stock repurchase program to $1B
Announced restructuring, to reduce employees by about 450
Moody's lowered Merck's (MRK) guaranteed debt to A1 from Aa3; outlook stable
Tidewater (TDW) to acquire Troms Offshore Supply for $395M
Wabtec (WAB) announced 2-for-1 stock split, raised dividend 60%
TD Ameritrade (AMTD) senior unsecured ratings upgraded by Moody's
Companies that beat consensus earnings expectations last night and today include:
VimpelCom (VIP), VOXX International (VOXX), Netlist (NLST), Agilent (A)
Companies that missed consensus earnings expectations include:
GasLog (GLOG), ExOne (XONE), Alexza Pharmaceuticals (ALXA), Athersys (ATHX), Regulus Therapeutics (RGLS), Digital Cinema (DCIN)
- In recent years, some buyout firms (BX, APO, KKR, CG) are finding it difficult to survive on buyouts alone. They’re increasingly moving beyond the buyout playbook in search of other, sometimes unfamiliar sources of profit. The large firms that have gone public want to show their shareholders steady earnings quarter after quarter—hard to obtain with buyouts, where the timing of a payoff is unpredictable, the Wall Street Journal reports
- After a miserable past few years, Japan's once-powerful electronics manufacturers (SNE, SHCAY), already reeling from unprecedented losses stemming from its lost standing in the technology world, are grappling with outside investors and fed-up creditors looking to break the cozy and insular bonds that were once a hallmark of the country's corporate sector, the Wall Street Journal reports
- Debt may be everywhere but there's a scarcity of bonds. Not only is "quantitative easing" by the world's major central banks sucking benchmark bonds out of the system, new regulations to strengthen banks and derivatives markets that effectively ring-fence bond holdings at commercial banks has raised concerns about a lack of bonds to lubricate the system, Reuters reports
- Boeing (BA) resumed deliveries of its 787 Dreamliner jet, ending a nearly four month period in which it was unable to provide new planes to customers because of safety concerns about the battery system, Reuters reports
- The Dollar Index climbed to the highest level in more than nine months as improving U.S. growth spurred speculation policy makers may curb stimulus, Bloomberg reports
- A monumental Barnett Newman canvas sold for a record $43.8M at a $294M Sotheby’s (BID) auction, as contemporary art prices rose with stocks, and as the speculation returns to the market, Bloomberg reports
ACADIA (ACAD) files to sell common stock
Apollo Investment (AINV) announces offering of 18M shares of common stock
CVR Refining (CVRR) 12M share Secondary priced at $30.75
Diamondback Energy (FANG) announces offering of 4M shares of common stock
Oaktree Capital (OAK) files automatic mixed securities shelf
Restoration Hardware (RH) 8.674M share Secondary priced at $50.00
Rockwell Medical (RMTI) files to sell common stock
Standard Pacific (SPF) files to sell 20M shares for MP CA Home