Frontrunning: June 4
- Whale of a Trade Revealed at Biggest U.S. Bank With Best Control (BBG)
- ECB backs away from use of ‘big bazooka’ to boost credit (FT)
- Turkish unions join fierce protests in which two have died (Reuters)
- Europe Floods Wreak Havoc (WSJ)
- Beheadings by Syrian Rebels Add to Atrocities, UN Says (BBG)
- RBA Sees Further Rate-Cut Scope as Aussie Remains High (BBG)
- China’s ‘great power’ call to the US could stir friction (FT)
- J.C. Penney Continuing Ron Johnson’s Vision on the Cheap (BBG)
- Japan Wages Gain in Boost for Abe's Drive to Reflate Economy (BBG)
- Brussels bank resolution blueprint sets up clash with Germany (FT)
- French minister hits at Amazon ‘dumping’ (FT)
- EM assets lose favour on fears of slowing Fed QE (FT)
Overnight Media Digest
* U.S. factories in May posted their worst month since the end of the recession, as weakness overseas overwhelmed a still-shaky manufacturing recovery at home.
* The White House is set to announce a set of executive actions aimed at reining in certain patent-holding firms, known as "patent trolls" to their detractors, amid concerns that the firms are abusing the patent system.
* Zynga said it plans to lay off about 18 percent of its staff and close certain office locations as the embattled social games maker seeks to cut costs.
* Onetime activist investor Paul Kazarian is trying to jump back into the boldface world of deal making with an offer to buy Greek bonds, but it isn't clear that he is the heavyweight he once was.
* U.S. regulators took a long-awaited step to address market vulnerabilities, proposing that a first round of large, nonbank financial companies, including AIG, face tougher government oversight.
* Apple was the conduit for five major publishers that sought to drive up the price of electronic books, as the technology company entered the market in 2010, a Justice Department lawyer told a federal court.
A mining union official was shot dead near Lonmin's Marikana platinum mine and 1,000 striking Glencore Xstrata workers were dismissed, sparking fears of renewed violence in the troubled South African mining belt.
Apple Inc on Monday defended itself against U.S. government accusations that it conspired with book publishers to raise the price of e-books, removing market competition and costing consumers hundreds of millions of dollars.
Private equity firm Carlyle Group has offered to buy the remaining 40 percent of Dutch investment manager AlpInvest Partners NV, a move that would grant Carlyle greater control of a large investor in many of its rivals' funds.
As Zynga Inc's social games continue to struggle, the owner of Farmville and DrawFree announced plans to cut over 500 jobs, or 18 percent of its global headcount.
Package delivery company FedEx Corp said on Monday that it would immediately retire 10 aircraft and hasten the withdrawal of a further 76, as it responds to slow economic growth.
Chinese shoe exporter Huajian -- which makes ladies shows for brands including Guess, Clarkes and Tommy Hilfiger -- is eyeing a multimillion-dollar Ethiopian factory expansion that could mean preferential trade tariffs and lower labour costs.
* Homes in struggling markets are being snapped up by big investment companies, shutting out regular buyers and creating concerns about soaring prices. (http://link.reuters.com/gez58t)
* The suggestion that some auction participants could be favored in an airwaves spectrum auction has spawned a dispute involving corporate lobbyists, academics and members of Congress on both sides of the debate. (http://link.reuters.com/nez58t)
* The early success of a new class of cancer drugs, revealed in test results released here over the last several days, has raised hope among the world's top cancer specialists that they may be on the verge of an important milestone in the fight against the disease. (http://link.reuters.com/mez58t)
* Connecticut on Monday became the first state to pass a bill that would require food manufacturers to label products that contain genetically modified ingredients - but only after other conditions are met. (http://link.reuters.com/rez58t)
* As social media sites pursue advertising in a bid for new revenue, they are finding that they must simultaneously create a safe space for the advertisers they attract. (http://link.reuters.com/sez58t)
THE GLOBE AND MAIL
* Amid the ongoing Senate expense scandal,
Prime Minister Stephen Harper's government has largely shot down a move
by one of its own back-benchers to publicly reveal the salaries and
expenses of many top federal bureaucrats.
* The Quebec Soccer
Federation says if Sikh kids want to play soccer while wearing a turban
there's an easy solution: they can play in their own yard. The
federation held a teleconference on Monday to explain its weekend
decision to uphold a ban on turbans that is unique in the country.
Provincial civil servants have drawn up a list of new fees and levies
to help raise money for Queen's Park, including bringing back photo
radar, making prison inmates pay rent during their incarceration and
adding a 75-cent surcharge to monthly phone bills.
Reports in the business section:
After sparking a dramatic overhaul at Canadian Pacific Railway Ltd,
activist investor Bill Ackman is taking some of his money off the table.
Ackman's Pershing Square Capital Management LP said on Monday it plans
to sell up to 7 million shares in the railway on the open market.
Auto sales surged in Canada last month to a level not seen since before
the recession amid other signs that the recovery of the domestic
economy is growing more robust.
* Industry Minister Christian
Paradis will double down on the federal government's goal of ensuring
sustainable competition in the $19-billion wireless industry when he
announces a high-stakes decision on spectrum-licence transfers on
* Canada's telecom regulator on
Monday told Canadians they essentially can no longer sign three-year
contracts for mobile wireless services and devices. The contracts,
fabulously popular among phone users, allow wireless consumers to buy
expensive new iPhones, BlackBerrys and Galaxies by spreading the cost
over a long period, like leasing a car.
* As Western Potash Corp
was putting the finishing touches on a Chinese financing last week, the
company was also in contact with regulators regarding the trading of
its stock. Management at Vancouver-based Western Potash became alarmed
as the stock shot to 73 Canadian cents over a few days from 56 Canadian
cents, with trading volumes that were more than double normal levels.
SHANGHAI SECURITIES NEWS
- The Securities Association of China will launch a new quotation and transaction system for unlisted, over-the-counter financial products as early as June.
- The Shenzhen Stock Exchange has issued new regulations for the issuance of private-placement bonds by small and medium-sized enterprises. The bonds will use listed stock as collateral against repayment of the bonds.
- China Securities Regulatory Commission is going to revise the requirements for what information securities companies must include in their annual reports.
- House prices in May increased 0.81 percent compared with April, the twelfth consecutive month-on-month rise, according to closely-watched unofficial data from the China Index Academy.
- President Xi Jinping's visit to Latin America has promoted a cooperative and mutually beneficial relationship between the two sides, the paper said in an editorial.
Fly On The Wall 7:00 AM Market Snapshot
Home Properties (HME) upgraded to Neutral from Sell at UBS
Societe Generale (SCGLY) upgraded to Buy from Neutral at Goldman
Walter Investment (WAC) upgraded to Outperform from Market Perform at Wells Fargo
Canadian Pacific (CP) downgraded to Underperform from Sector Perform at RBC Capital
Colonial Properties (CLP) downgraded to Neutral from Buy at UBS
First Defiance (FDEF) downgraded to Market Perform from Outperform at Keefe Bruyette
PVH Corp. (PVH) downgraded to Outperform from Top Pick at RBC Capital
Ulta Salon (ULTA) downgraded to Neutral from Buy at Goldman
EPAM Systems (EPAM) initiated with a Buy at UBS
Emerge Energy Services (EMES) initiated with a Buy at Citigroup
Harvest Capital Credit (HCAP) initiated with a Buy at Janney Capital
Integra LifeSciences (IART) initiated with a Market Perform at Wells Fargo
Intersil (ISIL) initiated with an Overweight at Piper Jaffray
LSI Corp. (LSI) initiated with a Buy at Longbow
MoSys (MOSY) initiated with a Buy at Roth Capital
Monolithic Power (MPWR) initiated with an Outperform at Wells Fargo
RPM (RPM) initiated with a Neutral at RW Baird
SeaWorld (SEAS) initiated with an Outperform at Wells Fargo
Valspar (VAL) initiated with a Neutral at RW Baird
AIG (AIG) said government council determined it’s “systematically important”
Prudential (PRU) received notice of proposed “covered company” designation
Apple (AAPL) said to unveil music streaming service next week, Bloomberg reports
Clearwire (CLWR) said special committee continuing review of DISH (DISH) offer
Scor (SCRYY) to acquire Generali U.S. Holdings
Forest City (FCE.A, FCE.B), QIC to form JV for portfolio of eight regional retail malls
FedEx (FDX) accelerating aircraft retirements
Barrick Gold (ABX) said production at Pascua-Lama to be delayed past previous target
Arch Coal (ACI) increased profile in China to meet demand
Companies that beat consensus earnings expectations last night and today include:
ABM Industries (ABM), G-III Apparel (GIII)
Companies that missed consensus earnings expectations include:
SAIC (SAI), Verint Systems (VRNT)
- Strong demand for pickup trucks and sport-utility vehicles boosted U.S. sales in May for major automakers (F, GM, NSANY, TM), but the auto industry rebound that has helped buoy the U.S. economy since early last year is showing signs of leveling off, the Wall Street Journal reports
- In the midst of North America's energy boom (CHK, HESS, RIG, OXY, MUR, APA), several long-serving CEOs and board chairmen have been booted in recent months, pushed out by activist shareholders demanding restraint and oversight. Others appear to be running scared, making shareholder-friendly gestures, including higher dividends and lower executive pay, the Wall Street Journal reports
- Japan's government is set to urge the nation's public pension funds - a pool of over $2T - to increase their investment in equities and overseas assets as part of a growth strategy being readied by Prime Minister Shinzo Abe, sources say, Reuters reports
- Two companies linked to Chinese state-backed groups- Chinalco Mining Corp. International or Hong Kong-listed MMG group- are weighing rival bids for Glencore Xstrata’s (GLNCY) roughly $5B worth of copper mines in Peru, sources say, Reuters reports
- Stocks gained in Europe and Asia after a Federal Reserve official said the bank is committed to record stimulus. The dollar strengthened, commodities fell and Turkish shares rebounded from the biggest drop in a decade, Bloomberg reports
- Airline executives (DLAKY) are set to spend more on orders for the latest wide-body planes from Airbus SAS (EADSY) and Boeing (BA) as consolidation and cost cuts give them more reason for optimism for a rebound in earnings this year, Bloomberg reports
Accelerate Diagnostics (AXDX) files rights offering to stockholders
BioTime (BTX) to raise $9M in registered direct offering
Carlyle Group (CG) files 11.06M common unit secondary for CalPERS
Himax Technologies (HIMX) files to sell 25.4M American Depositary Shares for holders
Plug Power (PLUG) files to sell 12.18M shares of common stock
Tile Shop (TTS) files to sell 4.25M shares of common stock
U.S. Silica (SLCA) files to sell 10M shares of common stock for holders