Frontrunning: April 10
- J.P. Morgan's Dimon Describes Year of Pain (WSJ)
- SAC Faces a Final Reckoning for 14 Years of Insider Scam (BBG)
- New Standards for $693 Trillion Swaps Market Increase Risk of Blowup (BBG)
- China says no major stimulus planned; March trade weak (Reuters)
- As we said in 2012 would happen: Record Europe Dividends Keep $3 Trillion From Factories (BBG)
- Blame it on the algo: Deutsche Bank Said to Find Improper Communication in FX Case (BBG)
- Coke Sticks to Its Strategy While Soda Sales Slide (WSJ)
- Ukraine’s Rust Belt Faces Ruin as Putin Threatens Imports (BBG)
- RBC Joins Goldman in Suing Clients After Singapore Crash (BBG)
- Abe Rewrites Rules to Rouse Japan With Governance Revamp (BBG)
- U.S. House panel to look at aluminum prices, warehousing (Reuters)
- Brooklyn Apartment Rents Jump to a Record as Leases Surge (BBG)
- Spain Borrowing at German Yields? It’s Possible, Thanks to U.S. (BBG)
- The princeling of private equity (Reuters)
- Europe’s steelmakers remain under pressure despite rising demand (FT)
Overnight Media Digest
* For 13 years running, Americans have been drinking less Coke. Now Diet Coke sales are falling off a cliff. Globally, sales growth of soda is slowing amid concerns about sugar intake and obesity. The trends are industry wide, but it is especially bad news for Coca-Cola Co, a company that derives almost 75 percent of its global sales volume from carbonated soft drinks. (http://r.reuters.com/vaj48v)
* AT&T said on Thursday it is in advanced talks to bring speeds of up to one gigabit per second to six North Carolina cities, or about 10 times the current fastest options. (http://r.reuters.com/mej48v)
* J.P. Morgan Chase & Co Chairman and Chief Executive James Dimon acknowledged that a series of legal headaches in 2013 evolved into "the most painful, difficult and nerve-wracking experience I have ever dealt with professionally." (http://r.reuters.com/pej48v)
* Auto lender Ally Financial Inc's initial public offering priced at the low end of its expected range, raising some $2.38 billion for the U.S. Treasury Department. The deal marks the largest U.S.-listed IPO of the year and sharply reduces the U.S. government's stake in the former General Motors financing arm. (http://r.reuters.com/rej48v)
* Hewlett-Packard Co agreed to pay $108 million to resolve bribery investigations spanning three countries, in a case involving bags of cash, jewelry and tours of the Grand Canyon. U.S. authorities on Wednesday gave a detailed view of corruption at HP, which pleaded guilty to violating the Foreign Corrupt Practices Act and agreed to the facts laid out by the government. (http://r.reuters.com/tej48v)
* Greece plans to sell a new bond, and demand appeared strong among investors ready to look beyond the country's debt crisis. The country's desire to issue the bond, its first longer-term debt sale since its international bailout in 2010, was well known. But details of the planned offering and indications of healthy investor appetite spurred a rally Wednesday in Greece's existing securities. (http://r.reuters.com/wej48v)
* Bank of America Corp agreed to pay at least $772 million to settle allegations it misled customers when marketing credit-card products promising to protect consumers against identity theft and job loss. The pact announced Wednesday is the fifth, and largest, settlement to date in a probe of banks' sales of credit-card add-on products. (http://r.reuters.com/xej48v)
* For U.S. energy companies, it has been a simple and profitable strategy: spin off a piece of the business and secure a special tax treatment. Now, the IRS is wondering if some firms are pushing the popular tactic too far. It is conducting an internal review and taking a temporary break from giving guidance to companies looking to form or expand master limited partnerships. (http://r.reuters.com/duj48v)
* Mars Inc agreed to buy Iams and other pet-food brands from Procter & Gamble Co for $2.9 billion, solidifying its position as the world's biggest pet-food company and effectively ridding P&G of a business that no longer fits with its goals. (http://r.reuters.com/guj48v)
* Popular websites and millions of Internet users scrambled to update software and change passwords Wednesday, after a security bug in crucial encryption code was disclosed sooner than researchers had planned. Facebook Inc and Yahoo Inc's blogging site Tumblr advised users to change their passwords because of the so-called Heartbleed bug while Canada's tax agency shut its filing website as a precaution, weeks before its April 30 filing deadline. (http://r.reuters.com/kuj48v)
Russia's biggest steel company Evraz Plc warned that the crisis in Ukraine could hurt its business in 2014, as it reported a deepening in losses for last year.
The World Steel Association expects a pick up in manufacturing in Europe after six years of recession, and has forecast a 3.1 percent pickup in European steel demand. But European steel companies, plagued by high energy costs, remain wary.
A new regulatory study by The Pensions Regulator shows that employers could be charged 10 times more than competitors for running final-salary pension schemes.
In one of the biggest corporate criminal cases in Ireland, a jury cleared former Anglo Irish Bank Chairman Sean Fitzpatrick of charges associated with loans to family members of the region's business tycoon Sean Quinn.
Co-op Group's senior board member Lord Paul Myners, who has been facing criticism over a proposed restructuring of the group's board, has quit just a week before the group is scheduled to post its results.
* Bank of America Corp has been ordered to pay about $772 million in refunds to customers and fines to federal regulators to settle allegations that the bank used deceptive marketing and billing practices involving credit card products. (http://r.reuters.com/quj48v)
* Bruce Karpati, a former Securities and Exchange Commission official, is joining the private equity firm Kohlberg Kravis Roberts & Company as its chief compliance officer, a person briefed on the matter said on Wednesday. (http://r.reuters.com/fuj48v)
* Top U.S. investment banks have recently instituted a change in their corporate culture telling their most junior employees to take a few days off a month or on the weekends. The banks are responding to fears across the industry that finance is losing its appeal for bright, ambitious college graduates. (http://r.reuters.com/sej48v)
* Members of the Senate Judiciary Committee expressed concern on Wednesday that the proposed $45 billion merger of Comcast Corp and Time Warner Cable Inc would raise the prices consumers pay for cable television and high-speed Internet service while leaving them with fewer choices for video programming. (http://r.reuters.com/vej48v)
* The Treasury Department on Wednesday sold a 20 percent stake in the once-embattled lender Ally Financial Inc via its initial public offering. The stock sale will raise about $2.4 billion for the government. (http://r.reuters.com/cuj48v)
* A bond insurer halted the bankruptcy proceedings for Detroit by offering to buy four treasures in the city's art museum. The non-binding proposals range as high as $2 billion, including a loan for that amount from a specialized firm that would use the art collection as collateral. Other parties have proposed buying the art collection, or parts of it. (http://r.reuters.com/huj48v)
* Walmart Stores Inc plans to announce on Thursday that it is backing Wild Oats organic products, offering the label at prices that will undercut brand-name organic competitors by at least 25 percent. The move by Walmart is likely to send shock waves through the organic market, in which an increasing number of food companies and retailers are seeking a toehold. (http://r.reuters.com/juj48v)
* Toyota Motor Corp on Wednesday announced a recall of nearly 6.4 million vehicles worldwide for problems with air bags that may not deploy or seats that could move in a crash. The recall, which includes nearly 1.8 million vehicles in the United States, brings Toyota's recall tally for 2014 to almost 2.9 million vehicles in the U.S. (http://r.reuters.com/muj48v)
* When the Federal Reserve changed the guidelines for its stimulus campaign last month, it did not change its commitment to supporting the economy, according to an account of the decision that the Fed published on Wednesday. Janet Yellen, the Fed's new chairwoman, convened a secret meeting in early March to discuss the shift, the Fed disclosed on Wednesday. (http://r.reuters.com/nuj48v)
* American mutual fund investors with significant exposure to bonds issued by indebted companies in fast-growing economies may be at risk, the International Monetary Fund warned in a report published on Wednesday. Bonds issued by big companies in emerging economies have seen explosive growth in recent years after central banks around the globe started making extraordinarily large purchases of government and corporate bonds. (http://r.reuters.com/puj48v)
THE GLOBE AND MAIL
* A major cybersecurity flaw called "Heartbleed" that exposes encrypted information to hackers has forced the Canada Revenue Agency to shut down its filing system and push back the deadline for online returns. The flaw has got major websites around the world to release software updates to patch a hole that leaves users' personal information vulnerable. (http://r.reuters.com/cek48v)
* Canada's embassy in Beijing has spent about $175,000 in the past two years to buy crates of high-end filters for its staff. Embassy officials are also looking at compensation for workers whose stays in China stand to permanently damage their health. (http://r.reuters.com/hek48v)
Reports in the business section:
* BlackBerry Ltd's Chief Executive John Chen said the company might consider exiting its handset business if it remained unprofitable. Chen, who took over the struggling company in November, said BlackBerry was also looking to invest in regulated industries such as healthcare, and financial and legal services, all of which require highly secure communications. (http://r.reuters.com/mek48v)
* Conservative Party of Canada's efforts to push the Fair Elections Act has run into controversy. The secrecy surrounding the act, the failure to consult in advance of its drafting, the curtailment of debate after, the supreme indifference to legitimate criticism - all under the chilling oversight of the Minister for Democratic Reform, Pierre Poilievre, would be enough to make anyone nervous. (http://r.reuters.com/sek48v)
* The Canadian Broadcasting Corporation may cut about 600 jobs as it grapples with a financial shortfall of $130 million to $150 million, according to a lobby group that watches the national broadcaster closely. (http://r.reuters.com/zek48v)
* "Heartbleed", a cybersecurity flaw that got major websites around the world to release software patches, went undetected for two years, according to one of the organizations that helped identify it. The bug leaves behind no trace when it is exploited and it may take years before the extent of this security breach is fully known. (http://r.reuters.com/kuk48v)
* Activist investor George Armoyan has called for the removal of Sherritt International Corp Chief Executive David Pathe. Armoyan said some Sherritt insiders, including former directors, have indicated to him that there is a vacuum of leadership at the company. (http://r.reuters.com/quk48v)
- State-owned enterprises, especially those owned by the central government, are likely to play an important role in launching large-scale investment projects aimed at stabilising economic growth this year, the paper reported, citing an unnamed source closed to the State-owned Assets Supervisory and Administration Commission.
SHANGHAI SECURITIES NEWS
- China's first private equity-style fund focused on futures investment started fundraising on Tuesday. The private equity product called "Donghang Finance Number One Seeds Asset Management Plan", which is operated by CES Finance, plans to raise 50 million yuan ($8.1 million).
21ST CENTURY BUSINESS HERALD
- China's securities regulator will not restart equity initial public offerings in April because the agency is still in the process of drafting several new regulations, sources closed to the matter told the paper.
- China's major online peer-to-peer lending platform Ppdai raised around $50 million its second round of private fundraising, sources said.
CHINA BUSINESS NEWS
- Executives at privately-owned companies complained forcefully about unequal treatment relative to state-owned firms at a roundtable discussion at the Boao Forum for Asia in Hainan, the paper reported in a front-page article.
- Beijing may impose strict traffic controls and suspend operations of polluting companies to reduce smog during the Asia-Pacific Cooperation Forum scheduled for later this year, said Zhuang Zhidong, deputy head of the Beijing Environmental Protection Bureau.
- Party cadres should be highly attentive to the ongoing "Mass Line" education campaign, an internal propaganda effort aimed at maintaining the common people's support for the party, said the paper, which acts as a mouthpiece for the ruling Communist Party.
TOP ECONOMISTS WARN GERMANY THAT EMU CRISIS AS DANGEROUS AS EVER
The eurozone debt crisis is deepening and threatens to re-erupt on a larger scale when the liquidity cycle turns, a leading panel of economists warned in a clash of views with German officials in Berlin.
NEXT CHIEF LORD WOLFSON DONATES £4M BONUS TO STAFF
Lord Wolfson, the chief executive of Next Plc, has waived his £4m bonus for the second consecutive year and awarded it to the clothing retailer's staff.
LORD MYNERS QUITS CO-OPERATIVE GROUP
Lord Paul Myners tendered his resignation in the face of mounting opposition to his plan to reform the way the country's biggest mutual Co-operative Group is run.
IMF WARNS EUROPE'S BANKING SYSTEM POSES THREAT TO GLOBAL FINANCIAL STABILITY
The eurozone's creaking banking system poses a serious threat to global financial stability, according to the International Monetary Fund, which warned European leaders to accelerate plans to support weak banks and create a banking union.
ANNUITY SALES TAKE A HIT FROM OSBORNE'S PENSIONS REFORM
Just Retirement, a specialist annuity provider, reported that the shock Budget measure "has had a material effect on individually underwritten annuity volumes", and warned that it would not meet the sales growth target of 7 per cent for its full year that had been flagged in February.
BRUSSELS DIVIDEND DEAL GIVES RBS PUSH IN RIGHT DIRECTION
Royal Bank of Scotland inched closer to corporate normality yesterday after agreeing a deal with Brussels that paves the way for it to resume paying ordinary dividends and gives it more breathing space to complete a key disposal.
CAR INSURANCE 'DROPS TO A FOUR-YEAR LOW'
Car insurance premiums are at a four-year low after a record 19 percent drop in the cost last year, according to Confused.com's car insurance price index.
IMF WARNS INVESTORS OVER 'ROCK-BOTTOM RATES'
Investors are becoming dangerously reliant on rock-bottom interest rates, with many becoming so indebted they will face serious problems when borrowing costs rise, the International Monetary Fund (IMF) has warned.
Fly On The Wall 7:00 AM Market Snapshot
Domestic economic reports scheduled today include:
Jobless claims for week of April 5 at 8:30--consensus 318K
Import price index for March at 8:30--consensus up 0.2% from prior month
Treasury budget for March at 14:00--consensus deficit $36.0B
Akamai (AKAM) upgraded to Buy from Neutral at B. Riley
Alkermes (ALKS) upgraded to Buy from Neutral at Mizuho
AmerisourceBergen (ABC) upgraded to Buy from Neutral at ISI Group
BT Group (BT) upgraded to Neutral from Sell at UBS
DexCom (DXCM) upgraded to Buy from Neutral at Sterne Agee
Nike (NKE) upgraded to Outperform from Neutral at Macquarie
Palo Alto (PANW) upgraded to Outperform from Market Perform at JMP Securities
Premier (PINC) upgraded to Buy from Neutral at ISI Group
Prospect Capital (PSEC) upgraded to Buy from Neutral at Guggenheim
Twitter (TWTR) upgraded to Hold from Sell at Cantor
WESCO (WCC) upgraded to Buy from Neutral at UBS
Wright Medical (WMGI) upgraded to Outperform from Neutral at RW Baird
Yamana Gold (AUY) upgraded to Neutral from Underweight at HSBC
Bed Bath & Beyond (BBBY) downgraded to Neutral from Buy at BofA/Merrill
CF Industries (CF) downgraded to Equalweight from Overweight at Barclays
Cabot Oil & Gas (COG) downgraded to Hold from Buy at Stifel
Imperva (IMPV) downgraded to Perform from Outperform at Oppenheimer
Molson Coors (TAP) downgraded to Neutral from Buy at Nomura
Apple (AAPL) initiated with a Buy at Deutsche Bank
Crocs (CROX) initiated with a Buy at Buckingham
Deckers Outdoor (DECK) initiated with a Buy at Buckingham
EMC (EMC) initiated with a Buy at Deutsche Bank
HP (HPQ) initiated with a Buy at Deutsche Bank
IBM (IBM) initiated with a Hold at Deutsche Bank
NeoPhotonics (NPTN) coverage resumed with a Market Perform at Raymond James
NetApp (NTAP) initiated with a Hold at Deutsche Bank
Nutrisystem (NTRI) initiated with a Buy at B. Riley
Questar (STR) initiated with an Underperform at BofA/Merrill
S&T Bancorp (STBA) initiated with an Outperform at Raymond James
STB Systems Inc (STBI) initiated with an Outperform at Raymond James
Skechers (SKX) initiated with an Underperform at Buckingham
Steven Madden (SHOO) initiated with a Buy at Buckingham
UGI Corporation (UGI) initiated with a Buy at BofA/Merrill
Web.com (WWWW) initiated with a Neutral at Buckingham
IDC said worldwide PC shipments totaled 73.4M units in Q1, down 4.4% y/y (MSFT, HPQ, LNVGY)
Gartner said worldwide PC shipments in Q1 fell 1.7% (MSFT, HPQ, LNVGY)
Costco reported March total company SSS up 5%
Imperva (IMPV) cut its Q1 profit and sales outlook, citing delays in receiving certain anticipated orders as a result of an extended sales cycle. Cybersecurity peers Fortinet
AngioDynamics (ANGO) gave a Q4 earnings outlook that beat estimates while guiding revenues for the upcoming quarter in-line with expectations
Pier 1 Imports (PIR) board authorized a new $200M stock repurchase program
Chevron (CVX) said Q1 earnings expected to be lower than Q4
Companies that beat consensus earnings expectations last night and today include:
iGATE (IGTE), AngioDynamics (ANGO), PriceSmart (PSMT), Joe's Jeans (JOEZ)
Companies that missed consensus earnings expectations include:
Sigma Designs (SIGM), Apogee Enterprises (APOG), NeoPhotonics (NPTN)
Companies that matched consensus earnings expectations include:
Pier 1 Imports (PIR), Bed Bath & Beyond (BBBY)
JPMorgan (JPM) CEO says 2013 was a year of 'pain,' WSJ reports
BlackBerry (BBRY) CEO says would consider sale of handset unit, Reuters reports
Apple (AAPL) departure of interface head Greg Christie, FT reports
Apple (AAPL) weighing 'dramatic' overhaul of iTunes store, Billboard says
General Motors (GM) requests NASA review in recalled vehicles, Detroit News says
Yahoo (YHOO) hires Bobbi Brown to be editor-in-chief of beauty site, Re/code reports
Facebook (FB) removing messaging from main app, TechCrunch says
Competition, overexpansion hurting Whole Foods (WFM) competitors (FWM, SFM, TFM), WSJ reports
Adamas Pharmaceuticals (ADMS) 3M share IPO priced at $16.00
Agios Pharmaceuticals (AGIO) files to sell $75M in common stock
Ally Financial (ALLY) 95M share IPO priced at $25.00
Aviv REIT (AVIV) 8M share Secondary priced at $24.10
Box Ships (TEU) files to sell common stocks and warrants
Hi-Crush Partners (HCLP) 4.25M share Secondary priced at $41.29
New Mountain Finance (NMFC) files to sell 3.5M shares of common stock
Stereotaxis (STXS) terminates $15M at-the-market equity offering with Cantor
Sysorex Global (SYRX) 3.333M share IPO priced at $6.00
TransAlta (TAC) announces $125M common stock offering
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