Frontrunning: June 17
- Obama prepares for chilly talks with Putin over Syria (Reuters)
- G8 opens amid dispute on Syria arms (FT)
- Economists Blame Fed for Higher Bond Yields (WSJ) - wait... what? Isn't the "stronger economy" to blame?
- What a novel concept - In the Czech Republic, a spying scandal has forced the PM to resign (BBG)
- Rigged-Benchmark Probes Proliferate From Singapore to UK (BBG)
- Economists Wary as Fed's Next Forecast Looms (Hilsenleak)
- Banks Balk at New Rules for Small Loans (WSJ)
- Sporadic clashes in Turkey as Erdogan asserts authority (Reuters)
- India Holds Rates as Rupee Drop Risks Fueling Inflation (BBG)
- Smithfield Pressed to Carve Itself Up (WSJ)
- Bank Profits Seen Buffeted by Rates Rising Without Growth (BBG)
- Bank of England says foreign banks made UK’s credit crunch worse (FT)
- Apple got up to 5,000 data requests in six months (Reuters)
- Airbus on Track to Double Profit Margin by 2015 (WSJ)
- West to Press Iran on Nukes (WSJ)
- Suntory Shows Caution on IPO Price (WSJ)
Overnight Media Digest
* The United States and Europe plan to push for nuclear talks with Iran following the surprise victory of centrist Hassan Rohani in presidential elections.
* Airbus is on track to more than double its profit margin by 2015 through greater efficiency and restructured management, said Chief Executive Fabrice Bregier.
* Large banks are pushing back against regulators' plans to toughen rules on short-term, high-interest consumer loans.
* Starboard Value LP, a large activist investor in Smithfield Foods Inc, is pressuring the company to explore a break-up rather than go ahead with a planned $4.7 billion takeover by Chinese meat producer Shuanghui.
* Home-improvement retailer Lowe's Cos Inc agreed to buy Orchard Supply Hardware Stores for $205 million, potentially throwing a lifeline to the struggling West Coast hardware-and-garden chain.
* Co-op Bank is expected to unveil plans this week to fill a capital hole, estimated at 1.25 billion pounds ($1.96 billion), by imposing losses on bondholders and selling loan portfolios, a person familiar with the plans said.
* General Electric Co is expanding its ability to produce ceramic-based parts for its jet-engine business, betting that the risks of using a novel material are outweighed by the expected fuel savings.
* Liberty Media Corp Chief Executive Greg Maffei recently met with Time Warner Cable Inc Chief Executive Glenn Britt to discuss the benefits of mergers in the cable sector, said a person familiar with the situation, the latest sign that Liberty is interested in sparking consolidation in the industry.
* Congress is gearing up to tackle an issue that Washington has mostly ignored for nearly five years: What to do with Fannie Mae and Freddie Mac, the bailed-out but now-profitable mortgage companies.
The United Kingdom's biggest shareholders such as Schroders , pension funds and charities are looking at setting up a joint investor forum to check boardroom excesses and in turn improve performance and returns of companies.
The car market in western Europe will not begin to grow until at least 2019, according to a report to be released by AlixPartners on Monday, raising fears of further plant closures. The total capital raised on Brazil's stock exchange during the first half of 2013 is set to cross $10.6 billion this week when the country's largest cement producer, Votorantim Cimentos lists on Wednesday.
Private equity owners of Germany's Grohe, Europe's biggest bathroom fittings maker, have appointed bankers to evaluate strategic options including an initial public offering or sale, that could value the company at 4 billion euros, including debt.
Co-operative Bank is close to agreeing a rescue package with the Bank of England that will plug a capital shortfall of up to 1.5 billion pounds ($2.35 billion) without state help. EADS, Finmeccanica and Dassault - three of Europe's biggest defence companies - have called up governments to set up a European drone programme to compete with U.S. and Israeli companies that dominate the sector.
* A record seven million students will graduate from universities and colleges across China in the coming weeks, but their job prospects appear bleak - the latest sign of a troubled Chinese economy.
* Only months before Americans start buying coverage through new state insurance exchanges, it is becoming clear that choices will vary sharply depending on where people live.
* A long-running economic policy debate over austerity versus stimulus was expected to be muted at the Group of Eight summit as participants concentrated on addressing the escalating civil war in Syria.
* After posting a loss in the first quarter, Martha Stewart Living Omnimedia redesigned its print and digital offerings in hopes of returning to profitability.
* Boeing Co's full-court press to address the risk of battery fire on its flagship 787 Dreamliner jet this year has not slowed progress on the company's other planes in development, including a revamped version of its popular 777 wide-body, Raymond Conner, chief executive of Boeing's civil aircraft division, said on Sunday.
THE GLOBE AND MAIL
* New Mexican President Enrique Pena Nieto wants ties with Canada to be a priority in the country's foreign policy, rather than the on-again, off-again interest of two countries distracted by relations with the United States, Mexico's ambassador says.
* Canadian Prime Minister Stephen Harper is lashing out at Russian President Vladimir Putin over his support for "thugs" in Syria, a public sign of the divisions that have broken out between Russia and the other G8 members over the future of the Middle East country torn by civil war.
Reports in the business section:
* The proposed Northern Gateway pipeline project has spurred a fierce national debate about whether heavy oil spilled in sea water floats or sinks, how much disaster insurance pipeline projects should carry and the economic rewards of shipping oil sands bitumen across the ocean to foreign markets.
* The growing debt burdens of Ontario and Quebec look alarmingly large compared to most other regional and local governments around the world. But a report to be released Monday by Moody's Investors Service argues that the two provinces' unique fiscal and economic characteristics mean they can carry heavy debt loads while still enjoying relatively high credit ratings.
* Montreal's pharmaceutical industry has been hit hard by lab closings and layoffs, but the Canadian CEO of French drug giant Sanofi sees a possible cure.
* Justin Trudeau, the leader of the Liberal Party of Canada, is promising to compensate all groups that paid him hefty speaking fees to participate in fundraising events since he became an MP.
* The International Monetary Fund sees the Federal Reserve maintaining large monthly bond purchases until at least the end of this year and urged the central bank to carefully manage its exit plan to avoid disrupting financial markets.
* Yoga wear giant Lululemon Athletica Inc is on the hunt for a new chief executive whose credentials include holding a "headstand for at least 10 minutes", fluency in Sanskrit and the ability to do "wheatgrass and tequila shots" on Fridays.
CHINA SECURITIES JOURNAL
- A report published by the Institute of Economic Research of Renmin University forecast that the GDP growth rate this year will reach 8.1 percent, while the consumer price index would rise 2.3 percent.
- China will put forward new electricity price subsidies on the solar industry as soon as end-June, sources said.
SHANGHAI SECURITIES NEWS
- The People's Bank of China will promote cross-border yuan settlement to facilitate trade and investment for personal businesses, said an official with the PBOC's Monetary Policy Committee.
- Fujian should seize the opportunity of national support in the economic zone and promote economic and trade exchanges and cooperation across the Taiwan Straits, said Yu Zhengsheng, the head of Chinese People's Political Consultative Conference, during a visit to the province.
- The Chinese embassy in France strongly condemned an attack on six Chinese students in the Bordeaux region which France's Interior Ministry described as an "act of xenophobia".
Fly On The Wall 7:00 AM Market Snapshot
CIT Group (CIT) upgraded to Buy from Hold at Drexel Hamilton
CYS Investments (CYS) upgraded to Buy from Hold at Wunderlich
Century Aluminum (CENX) upgraded to Equal Weight from Underweight at Morgan Stanley
CubeSmart (CUBE) upgraded to Strong Buy from Outperform at Raymond James
Extra Space Storage (EXR) upgraded to Strong Buy from Outperform at Raymond James
Fidelity Southern (LION) upgraded to Outperform from Market Perform at Keefe Bruyette
Heartland Payment (HPY) upgraded to Overweight from Neutral at Piper Jaffray
Philips (PHG) upgraded to Buy from Hold at Deutsche Bank
ProLogis (PLD) upgraded to Outperform from Market Perform at Wells Fargo
Public Storage (PSA) upgraded to Outperform from Market Perform at Raymond James
Ryman Hospitality (RHP) upgraded to Overweight from Neutral at JPMorgan
Spectra Energy Partners (SEP) upgraded to Outperform at Raymond James
TIBCO (TIBX) upgraded to Outperform from Market Perform at Wells Fargo
Transmontaigne Partners (TLP) upgraded to Buy from Neutral at BofA/Merrill
American Capital Agency (AGNC) downgraded to Equal Weight from Overweight at Barclays
CYS Investments (CYS) downgraded to Equal Weight from Overweight at Barclays
Encore Capital (ECPG) downgraded to Neutral from Overweight at Piper Jaffray
Health Management (HMA) downgraded to Neutral from Buy at Mizuho
Infinera (INFN) downgraded to Hold from Buy at Jefferies
JAVELIN Mortgage (JMI) downgraded to Underweight from Equal Weight at Barclays
MICROS (MCRS) downgraded to Neutral from Buy at Compass Point
Novo Nordisk (NVO) downgraded to Neutral from Buy at BofA/Merrill
Time Warner Cable (TWC) downgraded to Market Perform at Raymond James
Blackstone Mortgage Trust (BXMT) initiated with an Overweight at JPMorgan
ChannelAdvisor (ECOM) initiated with a Buy at Goldman
IHS Inc. (IHS) initiated with a Hold at Deutsche Bank
Synergy Pharmaceuticals (SGYP) initiated with a Buy at Citigroup
T-Mobile (TMUS) initiated with a Neutral at RW Baird
Teradata (TDC) initiated with an Underperform at Cowen
Tesla (TSLA) initiated with an Overweight at Global Equities
U.S. Silica (SLCA) initiated with an Outperform at Wells Fargo
Ubiquiti Networks (UBNT) initiated with an Outperform at BMO Capital
Weyerhaeuser (WY) to acquire Longview Timber (BAM) for $2.65B, intends to increase dividend
Weyerhaeuser (WY) to explore strategic alternatives for WRECO business
Brookfield (BAM) to sell Longview Fibre Paper and Packaging to KapStone (KS) for $1.03B
Boeing (BA), Qatar Airways announced agreement worth up to $2.8B for nine 777-300ERs
Lowe's (LOW) entered $205M purchase agreement with Orchard Supply Hardware (OSH)
ING (ING) to sell Mexican mortgage business to Banco Santander (SAN)
Elan (ELN) announced Royalty Pharma bid lapses in accordance with terms
Royalty Pharma expressed disappointment in letter to Elan (ELN) board
Transition Therapeutics (TTHI) announced exercise of TT-401 rights by Eli Lilly (LLY)
Netflix (NFLX) to premiere DreamWorks Animation (DWA) brand slate of new original TV series
- Activist investment fund Starboard Value LP, a major Smithfield Foods (SFD) investor, is pressuring the company to explore a breakup rather than follow through with its planned takeover by a Chinese meat producer, according to a letter reviewed by the Wall Street Journal
- Large banks are pushing back against regulators' plans to toughen rules on short-term, high-interest consumer loans. Wells Fargo (WFC), the largest bank to offer "deposit-advance loans," told regulators that it will discontinue the loans if plans for tougher rules are completed, the Wall Street Journal reports
- Apple (AAPL) received over the last six months between 4,000 and 5,000 requests for customer data from U.S. law enforcement authorities relating to criminal investigations and national security matters, Reuters reports
- Telefonica (TEF) said it had not received any indication of interest from AT&T (T), following an El Mundo newspaper report that the government had stopped a $93B offer from the U.S. company, Reuters reports
- Brazil’s Vale (VALE) said further local currency depreciation could counter cost rises and a slowdown in Chinese iron-ore demand as it seeks to regain market share from Rio Tinto (RIO) and BHP Billiton (BHP), Bloomberg reports
- Rising bond yields are typically indicators of stronger economic growth and higher profits for banks (JPM, BAC). That might not be the case this time, as a 30-year bull market in U.S. government debt shows signs of coming to an end. Higher long-term interest rates can discourage mortgage lending and cause losses in the securities portfolios of banks, Bloomberg reports
Eastman Chemical (EMN) could rise over 35%
BB&T (BBT) looks ready to regain favor with investors
AMD (AMD) could double from entry into 'microserver' market
Amgen (AMGN) still looks attractive
Big Lots (BIG) shares look cheap
Linn (LINE) deal with Berry (BRY) in jeopardy (LNCO)
Iron Mountain (IRM) could drop towards the teens
DCP Midstream (DPM) files to sell $300M of common units
Intercept (ICPT) files to sell 1.73M shares of common stock
OPKO Health (OPK) files to sell 24.76M shares of common stock for holders
PVR Partners (PVR) files to sell $150M of common units
SL Green Realty (SLG) files to sell 68,973 shares of common stock
Weyerhaeuser (WY) files to sell 28M shares of common stock
WhiteWave Foods (WWAV) files to sell 29.91M shares of Class A common for holders
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