Frontrunning: April 8
- Russia's Gazprom says Ukraine did not pay for gas on time (Reuters)
- Ukraine Moves to Keep Control in East (BBG)
- Banks Set to Report Lower Earnings as Debt Trading Slumps (BBG)
- More DeGeners and Obama selfies needed: Samsung's lower first-quarter estimate highlights smartphone challenges (Reuters)
- Citi Is Bracing to Miss a Profit Target (WSJ)
- Another slam from GM? Safety group calls for U.S. probe of Chevy Impala air bags (Reuters)
- Japan drugmaker Takeda to fight $6 billion damages imposed by U.S. jury (Reuters)
- EU court rules against requirement to keep data of telecom users (Reuters)
- White House may ban selfies with president after Ortiz-Obama photo promotes Samsung (Syracuse)
- SEC Goldman Lawyer Says Agency Too Timid on Wall Street Misdeeds (BBG)
- Beleaguered Thai PM pleads for justice, fair treatment (Reuters)
Overnight Media Digest
* The U.S. Federal Reserve said on Monday that it would give banks two years of extra time to conform certain debt holdings with the Volcker rule, but stopped short of granting an exception the industry had been seeking. The Fed said banks would have two additional years to make sure their collateralized loan obligations do not fall under the rule's ban on speculative investments. (http://link.reuters.com/tyr38v)
* Citigroup Inc is warning investors it may miss a key profitability target after the U.S. Federal Reserve rejected the bank's capital plan last month, people familiar with the matter say. (http://link.reuters.com/syr38v)
* If regulators approve, AT&T Inc customers in Carbon Hill, Alabama, would eventually have to switch to wireless or high-speed service. New customers would not be allowed to sign up for traditional, landline-based service at all, ushering in one of the biggest technological changes since Alexander Graham Bell's first telephone. (http://link.reuters.com/hyr38v)
* A federal judge on Monday gave a boost to the Federal Trade Commission's push to police corporate cybersecurity, allowing the agency to move forward with a lawsuit alleging that Wyndham Worldwide Corp failed to make reasonable efforts to protect consumer information.
* Mallinckrodt Plc agreed to buy Questcor Pharmaceuticals Inc for about $5.6 billion in cash and stock, in the latest sign of consolidation in the specialty pharmaceuticals business. (http://link.reuters.com/bas38v)
* IMAX Corp plans to sell a 20 percent stake in its Chinese business to two China-focused investor groups in an $80 million deal that the big-movie-screen operator hopes will pave the way for expansion and an eventual public listing. (http://link.reuters.com/nas38v)
A new technique of measuring Britain's economy to be adopted by the Office for National Statistics this autumn is likely to present the United Kingdom as a nation with an increase in the size of the economy and a higher level of public debt.
Property firm Globalworth Real Estate Investments is witnessing a strong increase in investments across central and eastern Europe in countries such as Prague, Hungary and Romania.
Britain is facing objections from member states including Czech Republic, Denmark and Copenhagen on the fine print of a common rulebook on what kind of support a state can provide to a lender in the event of a bailout of a struggling bank.
FTSE-100 company BG Group has said it is shifting its liquefied natural gas trading unit to Singapore from the United Kingdom three weeks after announcing staff lay offs at its headquarters in Reading, UK.
Chancellor George Osborne said the Bank of England will extend support to exporters in an attempt to lower the cost of export finance loans.
* The stock market fell again on Monday, extending a sharp sell-off that began last week. Biotechnology and internet stocks pulled the market lower on Friday, and it was companies that sell consumer discretionary goods and services that drove down the market this week. (http://link.reuters.com/kas38v)
* Comcast Corp's $45 billion deal with Time Warner Cable Inc will come up for its first Senate hearing this Wednesday. U.S. regulators are likely to focus on how the merger will affect the market for high-speed Internet, also known as broadband, and how it will affect cable TV service. (http://link.reuters.com/zyr38v)
* Questcor Pharmaceuticals Inc said it will be bought by Mallinckrodt Pharmaceuticals for about $5.6 billion in cash and stock. Based on the closing price of Mallinckrodt shares last Friday, the deal is worth $86.08 per share, representing a 27 percent premium to Questcor's Friday close. (http://link.reuters.com/mas38v)
* Citigroup Inc will pay $1.13 billion to settle claims by investors who demanded that it buy back billions in residential mortgage-backed securities. The bank said on Monday that it has reached a pact with 18 institutional investors to make a binding offer to the trustees of 68 Citi-sponsored trusts that bundled some $59.4 billion in home loans into securities from 2005 to 2008. The offer - subject to approval by trustees and the court - would release Citi from having to buy back mortgages sold to the trusts. (http://link.reuters.com/cas38v)
* The Laclede Group said it will buy Energen Corp's natural gas utility in Alabama in a deal valued at about $1.6 billion. Laclede is paying $1.28 billion in cash and assuming about $320 million in debt. (http://link.reuters.com/ras38v)
* The Manischewitz Company, whose matzo and gefilte fish are a staple of Seder tables around the world, is expected to announce on Tuesday that it has been sold to Sankaty Advisors, an arm of private equity firm Bain Capital. The deal may help the 126-year-old company expand beyond the kosher aisle. (http://link.reuters.com/jas38v)
* SAC Capital Advisors has changed its name to Point72 Asset Management. The retirement of the SAC name happened quietly over the weekend. SAC's old website is no longer accessible. The new site which went live on Monday afternoon, is fairly minimalistic. (http://link.reuters.com/sas38v)
* Financial journalist Michael Lewis' new book, "Flash Boys: A Wall Street Revolt" has revived a debate on taxing financial transactions. Supporters argue that the tax would reduce risk and volatility in the market and would also raise revenue for public coffers. (http://link.reuters.com/nes38v)
* The World Wrestling Entertainment said on Monday its subscription-only streaming video service is showing strong support among its core audience, but reaction from Wall Street investors was less enthusiastic when the company's stock dropped 14.7 percent on Monday. The company expects to exceed one million subscribers within the next year. (http://link.reuters.com/gas38v)
THE GLOBE AND MAIL
* The Parti Quebecois's hopes of rekindling debate on Quebeck's sovereignty by using wedge politics was strongly rejected by Quebeckers Monday night, with voters giving the Quebec Liberal Party a majority government. The Liberals garnered 41.5 percent of the popular vote and won 70 of 125 ridings. (http://link.reuters.com/wus38v)
* Pauline Marois's tenure as the first female Premier of Quebec was short-lived. After only 18 months in office, her minority government was ousted in no uncertain terms. She even lost her own riding of Charlevoix-Cote-de-Beaupre - and announced she is quitting politics after a seven-year stint as party leader. (http://link.reuters.com/pus38v)
Reports in the business section:
* An Ontario court decision ordering Deloitte & Touche to pay $85-million for negligence in its audit of defunct theatre company Livent Inc could open the door to many new lawsuits against audit firms, especially when the cases are carefully structured to fit similar legal circumstances, legal experts said Monday. (http://link.reuters.com/zus38v)
* The raised fist of Parti Quebecois' billionaire star candidate Pierre Karl Peladeau, awkwardly signifying revolutionary resistance and solidarity with the oppressed, was supposed to be the moment that clinched victory for its leader Pauline Marois. Instead, it marked the moment power began to slip from her grasp, as her party lost in Quebec's provincial elections. (http://link.reuters.com/bat38v)
* The board that polices Canadian MPs' spending is expected to tell the New Democratic Party that, effective immediately, it can no longer use House of Commons funds to pay staff in "satellite" branches of Thomas Mulcair's Office of the Leader of the Opposition. (http://link.reuters.com/xat38v)
* In his first major speech since being named Canada's Finance Minister last month, Joe Oliver vowed Monday that once the budget has been eliminated next year, the government's first order of business will be to lower taxes for "hard-working Canadian families." (http://link.reuters.com/kys38v)
* Sales in Canada's corporate sector are set to grow during the next 12 months - helped by a strengthening U.S. economy and a weaker Canadian dollar - and the outlook for investment growth remains positive, as are hiring plans by businesses, according to the Bank of Canada's survey of the sector, released Monday. (http://link.reuters.com/qys38v)
CHINA SECURITIES JOURNAL
- The China Securities Regulatory Commission (CSRC) has rolled out information disclosure rules for preferred shares.
- A series of growth-stabilizing measures are expected from April to achieve the economic target set for this year, with a further push to infrastructure construction in the middle and western parts of China and a mildly easing monetary policy expected by analysts, sources said.
- China's southwestern province of Yunnan has been permitted to conduct electricity price liberalisation experiments, with the direct trading price, one of the three components of the final electricity price to be reached under the negotiations between consumers and providers, sources said.
- Measures to achieve higher returns for stock investors are likely to be unveiled soon, sources said. About 25 of the 1090 Shanghai- and Shenzhen-listed companies, which have released their 2013 annual reports so far, had declared higher dividend rates than the annualized yield of Yuebao, Alibaba's <IPO-ALIB.N> monetary market fund, according to data pooled recently.
- Experts have urged China to invest more in fixed-wing search aircraft after the search for the disappeared flight MH370 revealed weak capabilities of the transport aircraft China sent to support the search.
- China is planning a new nuclear security law, with the first draft expected to be produced this year, said Sun Qin, a member of the Environmental Protection and Resources Conservation Committee of the National People's Congress.
- The Shanghai exchange is considering to create a new board to host technology IPOs to compete with the Shenzhen exchange's ChiNext board.
- China's Central Commission for Discipline Inspection and Supervision Department opened a reporting channel for Internet users to facilitate the supervision and punishment of CCP members' misbehavior.
MPS RECALL CABLE OVER ROYAL MAIL SALE
Vince Cable has been recalled to the Business Select Committee to answer publicly the National Audit Office's charge that Royal Mail was sold on the cheap.
ONS CHANGES WILL INSTANTLY TURN UK INTO NATION OF SAVERS
The Office for National Statistics is to shake up the way it measures the economy, in a move that will instantly turn the UK into a nation of savers. The new accounting standards, which will take effect from September, follow similar changes in the United States, Canada and Australia.
GEORGE OSBORNE ANNOUNCES EXPORT CREDIT SCHEME
Banks will have access to a Bank of England facility to make it less risky for them to finance exports under a new scheme to boost Britain's trade announced by George Osborne on Monday.
MIKE ASHLEY SURPRISES CITY BY SELLING SPORTS DIRECT SHARES WORTH 200 MLN STG
Sportswear tycoon Mike Ashley turned the tables on the City last night with a surprise sale of shares worth more than 200 million pounds. The move came days after investors threw out a bonus scheme that would have handed Ashley 72 million pounds of free stock.
MISSED DEADLINE PILES THE PRESSURE ON CO-OP BANK
The crisis engulfing the Co-operative movement deepened yesterday when the Co-op Bank failed to meet a second deadline for publishing its accounts.
HOUSE PRICE BOOM SPREADS ACROSS BRITAIN
The "London effect" of rising property prices has spread to two-thirds of the country, prompting fresh concerns about the housing market. It said that prices had risen by up to 6 per cent in some areas.
ASDA PLANS 12,000 NEW JOBS OVER FIVE YEARS
Asda has announced it will create up to 12,000 jobs over five years as part of its latest UK expansion plans. The announcement was made on a visit to the UK by the chief executive of parent company Walmart, Doug McMillon.
ENERGY COMPLAINTS SOAR BY STAGGERING 224 PCT
Complaints about energy companies have trebled in the first quarter of this year, according to the energy sector's ombudsman who is calling for "increased transparency."
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled today include:
JOLTs job openings for February at 10:00 am--consensus 4.02M
ARM Holdings (ARMH) upgraded to Market Perform from Underperform at Bernstein
Allegiant Travel (ALGT) upgraded to Buy from Hold at Deutsche Bank
Eli Lilly (LLY) upgraded to Market Perform from Underperform at BMO Capital
Estee Lauder (EL) upgraded to Outperform from Market Perform at Bernstein
Harman (HAR) upgraded to Strong Buy from Outperform at Raymond James
Hawaiian Electric (HE) upgraded to Outperform from Neutral at Macquarie
Hub Group (HUBG) upgraded to Buy from Hold at BB&T
Mallinckrodt (MNK) upgraded to Outperform from Market Perform at BMO Capital
Nike (NKE) upgraded to Buy from Hold at Stifel
Sprouts Farmers Markets (SFM) upgraded to Buy from Neutral at UBS
US Ecology (ECOL) upgraded to Buy from Hold at KeyBanc
US Ecology (ECOL) upgraded to Outperform from Market Perform at Wells Fargo
WABCO (WBC) upgraded to Conviction Buy from Buy at Goldman
Yelp (YELP) upgraded to Buy from Neutral at SunTrust
American Eagle (AEO) downgraded to Neutral from Buy at Janney Capital
Antero Resources (AR) downgraded to Neutral from Buy at Citigroup
BOK Financial (BOKF) downgraded to Underperform from Market Perform at BMO Capital
Banc of California (BANC) downgraded to Market Perform at Raymond James
Cisco (CSCO) downgraded to Hold from Buy at Wunderlich
Gigamon (GIMO) downgraded to Sector Perform from Outperform at Pacific Crest
Questcor (QCOR) downgraded to Hold from Buy at Jefferies
Spirit Realty (SRC) downgraded to Equal Weight from Overweight at Morgan Stanley
1st United Bancorp (FUBC) initiated with a Neutral at Macquarie
Avista (AVA) initiated with a Fair Value at CRT Capital
Castlight Health (CSLT) initiated with a Neutral at Goldman
Castlight Health (CSLT) initiated with an Outperform at Raymond James
Cempra (CEMP) initiated with an Equalweight at Barclays
Coca-Cola (KO) initiated with a Buy at BTIG
JinkoSolar (JKS) initiated with an Overweight at Barclays
Lumenis (LMNS) initiated with a Buy at Goldman
Lumenis (LMNS) initiated with an Outperform at Wells Fargo
National Retail Properties (NNN) initiated with an Overweight at Morgan Stanley
PepsiCo (PEP) initiated with a Buy at BTIG
Realty Income (O) initiated with an Underweight at Morgan Stanley
Teekay (TK) initiated with an Outperform at Raymond James
Twitter (TWTR) initiated with a Buy at Janney Capital
Nokia (NOK) and Microsoft (MSFT) received approval from China for Devices & Services transaction
Citigroup (C) said it would resolve certain private-label securitization repurchase claims for $1.125B
The Federal Reserve announced an extension on some CLOs (BAC, C, GS, JPM, MS, USB, WFC)
IMAX (IMAX) sold a 20% stake in IMAX China to strategic Chinese investors for $80M
James River Coal (JRCC) filed for Chapter 11 bankruptcy
Gigamon (GIMO) cut its Q1 revenue outlook, which the company attributed to one expected large transaction from an existing customer that did not materialize
Tesla (TSLA) announced the launch of leasing for business owners
Companies that beat consensus earnings expectations last night and today include:
Team (TISI), Zep Inc. (ZEP)
Citigroup (C) may miss return-on-tangible-common-equity goal, WSJ reports
Tech firms (AAPL, GOOG), INTC, ADBE) may find no-poaching deals costly, NY Times reports
Apple (AAPL) may release iWatch in Q3, DigiTimes reports
Microsoft (MSFT) ending support for Windows XP today, AP reports
Citigroup (C) says to close one third of Korea branches, Reuters reports
General Motors (GM) to invest $450M in electric cars, WSJ says
FDA extension of MannKind's (MNKD) Afrezza PDUFA not a surprise, Barron's says
Amazon (AMZN) believes Fire TV will fill gap in mid-market games, Re/code reports
Nordic American Tanker (NAT) 12M share Spot Secondary priced at $8.62
Pacira Pharmaceuticals (PCRX) files to sell $100M of common stock
ParkerVision (PRKR) files to sell 2.67M shares for holders
Starwood Property (STWD) files to sell 22M shares of common stock
Voxeljet (VJET) files to sell 4M American Depositary Shares
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