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Frontrunning: May 16

Tyler Durden's picture




 
  • Bank of England sees 'no housing bubble' (Independent)
  • ‘If the euro falls, Europe falls’ (FT)
  • India's pro-business Modi storms to historic election win (Reuters)
  • Global Growth Worries Climb (WSJ)
  • Bitcoin Foundation hit by resignations over new director (Reuters)
  • Blackstone Goes All In After the Flop (WSJ)
  • SAC's Steinberg loses bid for insider trading acquittal (Reuters)
  • Beats Satan: Republicans Paint Reid as Bogeyman in 2014 Senate Races (BBG)
  • Tech Firms, Small Startups Object to Paying for Internet 'Fast Lanes' (WSJ) - but they just provide liquidity
  • U.S. Warns Russia of Sanctions as Ukraine Troops Advance (BBG)
  • Major U.S. hedge funds sold 'momentum' Internet names in first-quarter (Reuters)
  • Cameron offers Scotland more powers (FT)
  • Pinterest Is Valued at $5 Billion (WSJ)
  • Uber Said to Be in Funding Talks for More Than $10B Value  (BBG)

 

Overnight media Digest

WSJ

* Five years after the financial crisis ended, soft growth in Europe, a stop-and-start U.S. recovery and waning momentum in China have policy makers groping for what to do next. (http://r.reuters.com/byf49v)

* In a move that has sharply divided technology giants over how to keep the Internet open, the FCC voted Thursday to advance rules that would let broadband providers charge companies for preferential handling of web traffic. (http://r.reuters.com/zef49v)

* Billionaire investors Warren Buffett, Daniel Loeb and John Paulson made a connection on Verizon Communications, as their firms separately picked up stakes in the telecommunications firm amid a wave of deal-making in the sector. (http://r.reuters.com/duf49v)

* Pinterest said it raised a $200 million investment that values it at $5 billion, making it one of the most valuable venture-capital backed startups in the world. (http://r.reuters.com/guf49v)

* General Motors recalled another 2.7 million vehicles to fix a variety of defects, and said it will take a $200 million charge against second-quarter earnings to cover the repair costs. (http://r.reuters.com/huf49v)

* Credit Suisse has tentatively agreed to pay almost $2.5 billion to the Justice Department and banking regulators and is expected to plead guilty to criminal charges to settle a probe into how the firm allegedly helped Americans evade taxes. The deal, which would mark an escalation in the U.S. crackdown on financial firms, could be announced early next week. (http://r.reuters.com/juf49v)

* Credit raters are split over a new type of bond-and proud of it. In a recent, and rare, bout of partisanship, ratings firms are taking sides on whether a new type of bond represents a safe bet or a slightly risky one. The discord, the firms say, shows that the industry is responding to critics who have said that raters in the past have too often spoken in unison and lacked a diversity of opinions. (http://r.reuters.com/puf49v)

* Blackstone Group, the world's largest private-equity firm on Thursday agreed to pay $1.7 billion in cash to Deutsche Bank AG for the Cosmopolitan of Las Vegas, a 3,000-room hotel and casino on the Strip that ran into big financial trouble during the downturn. (http://r.reuters.com/ruf49v)

 

FT

A No vote in September's referendum would open the way for the transfer of more powers to Edinburgh, British Prime Minister David Cameron said as he stepped up his campaign against Scottish independence during a visit to Glasgow.

France's socialist government announced a decree requiring prior state approval for most foreign bids as part of a battle with General Electric over its $13.5 billion deal to buy Alstom's energy business, provoking a sharp clash with the UK over how to deal with controversial foreign corporate acquisitions.

Uber Technologies Inc, which arranges car rides on demand, is in talks to secure a new round of financing from private equity investors that may value the company at more than $10 billion.

Official data released on Thursday cast doubt on claims that the inequality gap is widening after it was revealed that the proportion of wealth owned by the top 10 per cent of UK households has barely changed compared with the years before the recession, and still stands at 44 per cent.

Investors snapped up top tier government bonds as they beat a retreat from stocks on Thursday, after poor eurozone data increased pressure on the European Central Bank to take aggressive action to bolster the region.

 

NYT

* Two indicators of economic health that the Federal Reserve has identified as keys to a stronger recovery - modestly higher inflation and a more robust job market - finally seem to be moving in the right direction, according to new data released by the government on Thursday. Economists said a rise in the Consumer Price Index in April suggest a broader economic firming is underway after a weak, weather-plagued start to 2014. (http://r.reuters.com/waf49v)

* Federal judge Steven Rhodes, who is handling Detroit's bankruptcy, indicated on Thursday that the current timetable for finishing the case might be unrealistic given the many disputes outstanding. He made the observation in a hearing after saying he had heard that the state had promised to give Detroit some money - but only if the city could get him to approve its bankruptcy exit plan by the end of September. (http://r.reuters.com/xaf49v)

* PepsiCo Inc will unveil a range of new self-serve equipment for dispensing drinks in places like restaurants, movie theaters and college dining halls on Saturday at the National Restaurant Association Show. (http://r.reuters.com/bef49v)

* A day after The New York Times Company announced that it had dismissed Jill Abramson, The Times's first female executive editor, it found itself mired in controversy, having to reassure employees and rebut reports that her removal was related to her complaints about receiving less pay than her male predecessors. (http://r.reuters.com/def49v)

* Investors in Chipotle Mexican Grill voted overwhelmingly against the company's executive compensation plans, sending a strong rebuke to a company that had awarded more than $300 million to its co-chief executives in recent years. Though the vote is non-binding, Chipotle said it was taking investor sentiment into consideration. (http://r.reuters.com/gef49v)

* General Motors Co on Thursday announced a recall for 2.7 million vehicles, bringing the number of vehicles recalled this year by G.M. in the United States to nearly 11.2 million and 12.8 million worldwide. (http://r.reuters.com/hef49v)

* A Senate panel approved legislation on Thursday to wind down Fannie Mae and Freddie Mac and reshape the mortgage finance system. However, sparse support among Democrats means the measure is unlikely to become law. (http://r.reuters.com/nef49v)

 

Canada

THE GLOBE AND MAIL

* The Conservative government is putting employers on notice that could force them to pay more for temporary foreign workers, a move that would likely make the program too costly for low-wage sectors like restaurants that have been accused of abusing it. (http://r.reuters.com/nyg49v)

* Canada broke with the United States and did not impose sanctions on two key allies of Russian President Vladimir Putin because the pair had Canadian business interests. The revelation puts into question the Canadian government's tough line on Russia over the crisis in Ukraine. (http://r.reuters.com/pyg49v)

Reports in the business section:

* Two major investors - Prem Watsa's Fairfax Financial Holdings Ltd and U.S. activist fund manager Dan Loeb - have trimmed their holdings in BlackBerry Ltd. Regulatory filings with the U.S. Securities and Exchange Commission showed that Watsa has sold 5.2 million shares, while Loeb's Third Point LLC shed the 10 million shares it purchased last year. (http://r.reuters.com/tyg49v)

NATIONAL POST

* An 11-year-old girl's potentially fatal decision to treat her cancer with indigenous medicine instead of chemotherapy may be entirely legal, say analysts, despite the recent intervention of Ontario child services. (http://r.reuters.com/fah49v)

FINANCIAL POST

* A new report from the Conference Board puts Canada's three oil rich provinces on top of the world in terms of economic performance. The think-tank's annual economic report card comparing 16 of the world's richest countries puts Canada in fifth place overall, one spot better than last year and behind Australia, Ireland, the United States and Norway. (http://r.reuters.com/gah49v)

* Less than two years after Robert Friedland took Ivanhoe Mines Ltd public, he is already looking at ways to break it up. The Vancouver-based company revealed on Thursday it is studying a number of "potentially significant corporate and project-level options." Those include splitting the company's projects into separate publicly-traded entities, asset sales, joint ventures, and alternative stock exchange listings. (http://r.reuters.com/qah49v)

 

Hong Kong

SOUTH CHINA MORNING POST

-- Wynn, one of the world's biggest casino operators, issued an angry rebuke last night after a United States trade union boss accused it of allowing organised crime-linked junket operators to do business at its Macau property. (link.reuters.com/tud49v)

-- The first batch of Hong Kong's 30-tonne stockpile of seized ivory was reduced to ashes on Thursday, a symbolic move aimed at boosting the fight against the illicit trade. (link.reuters.com/vud49v)

-- Electronic component manufacturer Johnson Electric reported a record profit for the financial year to the end of March after sales in all major markets rose, but the firm is forecasting a decline in gross profit margin for the coming year due to aggressive investment in new plant and rising labour costs on the mainland. (link.reuters.com/wud49v)

THE STANDARD

-- Power Assets is opposed to the Hong Kong government's plans to import a third of the city's energy needs from the mainland. The sole power provider to Hong Kong Island said the move would be costly and a step backward for local power reliability and the environment. (link.reuters.com/xud49v)

-- Local cleaning services provider Baguio Green has been oversubscribed by more than 400 times in the retail tranche, freezing HK$4.8 billion ($619.21 million), market sources said. (link.reuters.com/zud49v)

-- Global exporter Li & Fung expects this year's business performance to be unimpressive due to poor weather in the United States. (link.reuters.com/byd49v)

HONG KONG ECONOMIC JOURNAL

-- Chinese property developer Sunac China Holdings Ltd said it was in talks with Greentown China's vice chairman Shou Bainian to buy up to 30 percent interest in his company, with market experts estimating the deal to be worth at least HK$5 billion ($645.01 million).

MING PAO DAILY NEWS

-- The retail portion of the initial public offering of mainland railway equipment manufacturer China CNR Corp Ltd is seen under-subscribed while its international portion has been three times subscribed, according to market sources.

 

Britain

The Telegraph

CARPHONE WAREHOUSE AND DIXONS AGREE 3.8 BLN POUND MERGER

Almost 400 million pounds was wiped off the value of Dixons Retail and Carphone Warehouse on Thursday as the proposed merger between the companies was given a rough reception by the City. (http://link.reuters.com/zed49v)

SCOTTISH INDEPENDENCE VOTE CREATING 'UNCERTAINTY' - LLOYDS

Lloyds Banking Group has warned that the consequences of Scottish independence are largely unknown, saying the bank has no plan for what would happen if the Scottish people vote to secede. (http://link.reuters.com/bud49v)

The Guardian

ASTRAZENECA AT RISK FROM PFIZER TAX AVOIDANCE PLANS, SAYS COMPANY CHIEF

Pascal Soriot, the chief executive of AstraZeneca, has stepped up his attack on the business model of Pfizer , the US drugs company stalking the UK business, and warned that the British drugs group could be damaged by Pfizer's tax avoidance plans. (http://link.reuters.com/cud49v)

EUROZONE SETBACK AFTER 'DISMAL' GROWTH FIGURES DENT TALK OF RECOVERY

The eurozone's fragile economic recovery suffered a setback in the first quarter after slower-than-expected growth as GDP data showed France and Italy flatlining and Netherlands suffering shock contraction. (http://link.reuters.com/dud49v)

The Times

MIDDLE MANAGERS SWEPT AWAY BY ASDA'S FOCUS ON CLICK AND COLLECT

Asda is to axe 4,100 jobs in middle management and hire e-commerce specialists as it expands further into online retailing. (http://link.reuters.com/fud49v)

The Independent

BANK OF ENGLAND SEES 'NO HOUSING BUBBLE'

Bank of England policymaker Ben Broadbent moved to play down fears of a housing bubble, insisting there were no signs of a dangerous boom in credit. (http://link.reuters.com/gud49v)

GOOGLE CHIEF ERIC SCHMIDT SAYS 'RIGHT TO BE FORGOTTEN' RULING HAS GOT THE BALANCE 'WRONG'

Google's Executive Chairman, Eric Schmidt, has come out against the recent 'right to be forgotten' ruling as reports claim the company is already receiving request to remove search results. (http://link.reuters.com/hud49v)

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Housing starts for April at 8:30--consensus up 3.6% to 980K rate
Housing permits for April at 8:30--consensus up 1.3% to 1.01M rate
U. of Michigan consumer sentiment for May at 9:55--consensus 84.5

ANALYST RESEARCH

Upgrades

AngloGold (AU) upgraded to Neutral from Sell at UBS
Bank of the Ozarks (OZRK) upgraded to Strong Buy from Outperform at Raymond James
Capella Education (CPLA) upgraded to Outperform from Market Perform at BMO Capital
Home Bancshares (HOMB) upgraded to Outperform from Market Perform at Keefe Bruyette
Insulet (PODD) upgraded to Outperform from Market Perform at Barrington
Kansas City Southern (KSU) upgraded to Buy from Neutral at BofA/Merrill
L-3 Communications (LLL) upgraded to Outperform from Neutral at Credit Suisse
National Bank of Greece (NBG) upgraded to Overweight from Neutral at JPMorgan
Protective Life (PL) upgraded to Buy from Underperform at BofA/Merrill
Prudential (PRU) upgraded to Buy from Hold at Deutsche Bank
RWE AG (RWEOY) upgraded to Buy from Neutral at Goldman
Stonegate Mortgage (SGM) upgraded to Outperform from Market Perform at Keefe Bruyette
Super Micro Computer (SMCI) upgraded to Buy from Hold at Stifel
tw telecom (TWTC) upgraded to Buy from Neutral at Citigroup
Twitter (TWTR) upgraded to Hold from Sell at Wunderlich
ViaSat (VSAT) upgraded to Outperform from Market Perform at Wells Fargo

Downgrades

Assurant (AIZ) downgraded to Underperform from Neutral at BofA/Merrill
Mechel (MTL) downgraded to Neutral from Buy at Citigroup
Nationstar (NSM) downgraded to Hold from Buy at Jefferies
Torchmark (TMK) downgraded to Neutral from Buy at BofA/Merrill
Walter Investment (WAC) downgraded to Hold from Buy at Jefferies

Initiations

AXIS Capital (AXS) initiated with an Outperform at JMP Securities
Affiliated Managers (AMG) initiated with a Buy at Deutsche Bank
Alkermes (ALKS) assumed with a Buy at Jefferies
BlackRock (BLK) initiated with a Buy at Deutsche Bank
City Office REIT (CIO) initiated with a Buy at Wunderlich
Franklin Resources (BEN) initiated with a Hold at Deutsche Bank
Invesco (IVZ) initiated with a Hold at Deutsche Bank
T. Rowe Price (TROW) initiated with a Buy at Deutsche Bank
TheStreet (TST) initiated with a Buy at B. Riley
Whiting Petroleum (WLL) assumed with a Buy at Brean Capital

COMPANY NEWS

Rackspace (RAX) hired Morgan Stanley (MS) after approach by 'multiple parties'
Nokia (NOK), NSN upgraded to BB by S&P
J.C. Penney (JCP) reported better than expected Q1 results and said it expects to be cash flow neutral this year
Berkshire Hathaway (BRK.A) disclosed an 11M share stake in Verizon (VZ)
Navidea Biopharmaceuticals (NAVB) reported that CEO Mark Pykett is stepping down
WWE (WWE) reached a multi-year deal with NBCUniversal Cable Entertainment (CMCSA)
Overland Storage (OVRL), which missed analyst's Q3 expectations, entered into merger agreement with Sphere 3D (SPIHF)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

MAG Silver (MVG), SMART Technologies (SMT), Dillard's (DDS), Nordstrom (JWN), J.C. Penney (JCP), Autodesk (ADSK)

Companies that missed consensus earnings expectations include:

Park Electrochemical (PKE), China Mobile Games (CMGE), Canadian Solar (CSIQ), Gas Natural (EGAS), EveryWare Global (EVRY), Qunar (QUNR), Amedica (AMDA), Paycom Software (PAYC), Uroplasty (UPI), Cosi (COSI), Mirati Therapeutics (MRTX)

Companies that matched consensus earnings expectations include:

Alexco Resource (AXU), Applied Materials (AMAT)

NEWSPAPERS/WEBSITES

Technology giants (VZ, T, CMCSA, TWC, NFLX, AMZN, GOOG, FB, YHOO) publicly oppose FCC's proposed Internet rules, WSJ says
Sony (SNE) console sales exceed Microsoft (MSFT) for fourth straight month, Bloomberg says
Sony (SNE) asks top bosses to give back bonuses, NY Post reports
General Electric (GE) looking to save Alstom deal, WSJ reports
Wal-Mart (WMT) looks overvalued, Barron's says
Lead electrical engineer for Google Glass (GOOG) to leave company, TechCrunch reports

SYNDICATE

Banc of California (BANC) 5.15M share Secondary priced at $9.78
Excel Trust (EXL) files to sell 1.15M shares of common stock for holders
Jumei International (JMEI) 11.1M share IPO priced at $22.00
TrueCar (TRUE) 7.775M share IPO priced at $9.00

 

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Fri, 05/16/2014 - 07:48 | 4765771 Sudden Debt
Sudden Debt's picture
  • ‘If the euro falls, Europe falls’ (FT)

let's try it anyway... make my day...

I'm not protesting it... hell... nobody's protesting when I have a bad day so why would I?

in all...

when a monkey drives by riding a bicycle... and you're watching it from the sideline..

and you have no idea where the fuck he came from...

you're having a great day!

that's what grandpa used to say AND HE'S RIGHT!!

Fri, 05/16/2014 - 08:06 | 4765808 XAU XAG
XAU XAG's picture

 

Bank of England sees 'no housing bubble' 

 

Should have gone to specsavers!

 

http://www.thedrum.com/news/2013/10/25/specsavers-continues-should-ve-go...

Fri, 05/16/2014 - 08:18 | 4765834 XAU XAG
XAU XAG's picture

Asda is to axe 4,100 jobs in middle management and hire e-commerce specialists as it expands further into online retailing. (http://link.reuters.com/fud49v)

 

Bet they will not be hiring 4,100 e-commerce specialists!

 

Especialy not from the UK ........India maybe

Fri, 05/16/2014 - 08:23 | 4765849 overmedicatedun...
overmedicatedundersexed's picture

JCP had great qtr....still lost big $$ but not as much as predicted...closed the JCP in my hometown - sure sign of recovery, NO?

Fri, 05/16/2014 - 08:30 | 4765875 XAU XAG
XAU XAG's picture

Sure sighn of recovery

 

is all around .................you just cannot see it

 

cause it's round the corner out of sight..............you turn the corner and it's still not there ................is it round the next corner?

 

or the next

 

or the next

 

etc

Fri, 05/16/2014 - 08:00 | 4765796 Grouchy Marx
Grouchy Marx's picture

If the euro falls, Europe falls.

...I thought Europe fell with the advent of the Euro. It just took a little time. 

Fri, 05/16/2014 - 08:04 | 4765803 I am a Man I am...
I am a Man I am Forty's picture

Yeah, and why would you set up something that could take down an entire continent?  The Euro=>dumb idea to begin with  

Fri, 05/16/2014 - 08:02 | 4765800 RyeWhiskey
RyeWhiskey's picture

Pinterest at 5B. Fuber at 10B. No bubbles? No fraud valuations??
No useless dotcom 2.0 crap???
I see. Go on... Forward tovarish!! Cali oligarch red party right behind you!
BTFF! Buy the f.. Fraud!

Fri, 05/16/2014 - 09:14 | 4766055 ZoSo
ZoSo's picture

please don't tell me you guys missed this :)

http://www.ft.com/cms/s/0/6c71b3cc-dccb-11e3-b73c-00144feabdc0.html#axzz...

 

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