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Frontrunning: April 20

Tyler Durden's picture




 
  • Current account surplus recycling goes global: BRICS demand bigger IMF role before giving it cash (Reuters)
  • Obama oil margin plan could increase price swings (Reuters)
  • Britons Abandoning Pensions Amid ‘Outdated’ Rules (Bloomberg)
  • Hedge-Fund Assets Rise to Record Level (WSJ)
  • Way to restore confidence: SEC considers case against Egan-Jones (FT)
  • Qatari wealth fund adds 5% Tiffany stake  (FT)
  • "Do we file bankruptcy and how?" Dewey Pitches Plan for Rescue (WSJ)
  • French president slips further behind Socialist challenger Hollande (ANI)
  • Nine U.S. Banks Said to be Examined on Overdraft Fees (Bloomberg)
  • Capital Rotation: Investors fret on emerging markets and look to U.S. (Reuters)
  • Verizon's Answer to iPhone: Windows (WSJ)

Overnight Media Digest

WSJ

* President Obama's efforts to project himself as a protector of the middle class have strengthened him for the general election, while Mitt Romney has gained traction with his argument that he can improve the economy.

* Dewey & LeBoeuf is considering a novel rescue plan that would put the law firm into bankruptcy protection but might be its best hope at preserving value at a prestigious firm that this year has been hemorrhaging talent.

* Rising layoffs, falling home sales and slowing manufacturing activity are sparking fears that the economic recovery is headed for a springtime stall for the third year in a row.

* An unprofitable business-technology start-up with a funny name turned in the best stock debut this year. Splunk closed up 109 percent, the latest proof that the tech-stock appetite extends beyond hot names like Facebook.

* Verizon, fed up with the high costs of offering the iPhone, plans to push smartphones powered by Microsoft's Windows software, as a counterweight to the popular Apple device.

* The SEC voted to take an enforcement action against Egan-Jones Ratings, alleging the credit-rating firm's regulatory filings included inaccuracies.

* Ford Motor Co said it would build its fifth car factory in eastern China as part of a plan to double its production capacity and sales outlets in the country by 2015 -- a $5 billion bet overall on a market where the U.S. auto maker faces significant challenges.

* The hedge-fund industry is bigger than ever before, after a market rally helped lift assets under management to a record. Total hedge-fund assets surged to $2.13 trillion at the end of the first quarter, beating the previous high of $2.04 trillion, set in the middle of last year, according to Hedge Fund Research Inc. Higher returns, rather than the flow of new money from investors, accounted for a large portion of the industry's growth.

FT

BRUSSELS APPROVES $2.2 BILLION SONY-EMI DEAL

A Sony-led consortium won European Union clearance on Thursday for its $2.2 billion purchase of EMI's music publishing business, giving unexpectedly early antitrust approval to one half of a deal to split the independent British music group.

MOSCOW TO BRING SPILL CHARGES AGAINST TNK-BP

Moscow has ordered that charges be brought against TNK-BP , BP's Russian oil venture, over damages caused by oil spills in Siberia.

SEC CONSIDERS CASE AGAINST EGAN-JONES

Egan-Jones and the credit rating agency's founder may face civil charges for allegedly filing misleading information in its 2008 application to rate asset-backed securities and sovereign debt, according to people familiar with the matter.

QATARI WEALTH FUND ADDS 5 PERCENT TIFFANY'S STAKE

Qatar's sovereign wealth fund has made its first big investment in a U.S. public company by acquiring a 5.2 percent stake in Tiffany, the jewellery retailer known for its diamond rings and blue, ribboned boxes.

UK REGULATORS URGE TAKEOVER TRANSPARENCY

Companies and bankers have been encouraged by UK regulators to share takeover plans more freely with investors in the wake of G4S's 5.2 billion pound ($8.35 billion) failed bid for Danish cleaning company ISS.

GOLDMAN SACHS TO SELL PETERSHILL FUND

Goldman Sachs is in late-stage negotiations over the sale of its Petershill fund, a high-profile investment vehicle which owns stakes in some of the world's most successful hedge fund managers.

CONCORDIA SALVAGE AWARD EXPECTED

The contract for one of the most challenging and costly salvage operations ever mounted is expected to be awarded this weekend as Italian officials and insurance companies select the winner of a tender to recover the Costa Concordia cruise liner, which sank off Tuscany in January.

BARCLAYS INVESTORS FORCE BONUS RULES

Shareholders in Barclays have forced the British bank to accept tougher bonus conditions and promise higher dividends, highlighting how the balance of power between investors and managers is shifting at some of the biggest global banks.

MPS SEEK SAY IN CHOICE OF BANK GOVERNOR

British finance minister George Osborne has been warned not to ignore the will of parliament in appointing a new Bank of England governor, as debate intensified at Westminster over whether a foreign candidate - possibly Mark Carney of Canada's central bank - should be considered for the post.

NYT

* Global finance leaders are meeting in Washington to discuss oil prices, unemployment and other issues putting a cloud over the economy.

* Europeans may discover this week that the debt crisis is not only threatening the euro zone economy and the integrity of the common currency, but also diminishing Europe's influence in world affairs.

* A credit rating downgrade could hurt Morgan Stanley's huge derivatives business, forcing the group to come up with billions of extra dollars.

* India cannot get enough fuel to run power plants, and the problem has contributed significantly to a second year of slowing economic growth in the country.

* Sales of Windows to consumers declined, but big businesses picked up the slack, Microsoft announced, with its earnings beating estimates by analysts expecting a drop.

* Nokia, struggling to reinvent its smartphone business around Microsoft's Windows Phone software, said Thursday that it might have to cut prices of its cheaper Lumia models to keep its new phones competitive in some markets.

* Federal prosecutors in California are investigating whether a Goldman Sachs executive leaked confidential information about two publicly traded companies to Raj Rajaratnam, the convicted former hedge fund manager.

Canada

THE GLOBE AND MAIL

 

- The NDP have swept to a decisive victory in both British Columbia by-elections - including a landslide win in an area where the party has not won since provincial elections began more than a century ago. r.reuters.com/hej77s

- Three recent deaths at the hands of Toronto police have prompted the force to launch a wide-ranging review of how they deal with the mentally ill. r.reuters.com/jej77s

Reports in the business section:

- The Canada Pension Plan Investment Board is paying $1.14 billion for stakes in five major Chilean toll roads, as the fund seeks to boost its exposure to both infrastructure and emerging markets. r.reuters.com/nej77s

- Iamgold Corp's chief executive Steve Letwin laid out plans to nearly double the company's production by 2017 from the current 850,000 ounces, with most of that to come from acquisitions, including one in coming months that will likely be worth between $400 million and $500 million.

NATIONAL POST

- Foods and drinks boosted with high levels of certain vitamins and minerals are going to have to be reformulated to stay on store shelves as Health Canada moves to close a loophole that has permitted fortified snacks and beverages to be sold as natural health products. r.reuters.com/xej77s

Reports in the business section:

 - Canadian convenience store giant Alimentation Couche-Tard Inc is eyeing Germany for its next big move after it takes time to digest its $2.8 billion proposed takeover of Norwegian service station operator Statoil Fuel and Retail ASA . r.reuters.com/buj77s

 

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Fri, 04/20/2012 - 07:41 | 2360590 EconSammie
EconSammie's picture

Today has also seen yet more weak economic data from Spain confirming that her recession may be heading for an economic depression.

Services turnover index

 

The interannual rate of turnover for the Market services sector stands at -1.9% in February, eight tenths lower than that registered in January

 

However if we take the trouble to look further down the report

 

After eliminating the calendar effect, that is, the difference between the number of working days in a given month in different years, the interannual variation of the General Index of Services sector turnover stood at –4.4 in February, more than two points below that registered the previous month.

 

So the report from thr largest part of the economy is yet again grim if we allow for the extra day. And frankly even if we ignored the extra day’s effect output was lower than a year ago. If we look at the underlying index it is at 85.1 compared to a base of 2005=100.

 

Also if we recall Spain’s severe unemployment problem there is little solace and more worries to be found in this.

 

Employment in the Services sector experienced an interannual decrease of –2.2% in February Industrial Turnover.

 

http://www.mindfulmoney.co.uk/...

 

Whilst politicians make plans and dither Spain is sinking into the same morass that engulfed Greece

Fri, 04/20/2012 - 07:42 | 2360591 Jumbotron
Jumbotron's picture

Read this...

Verizon, fed up with the high costs of offering the iPhone, plans to push smartphones powered by Microsoft's Windows software, as a counterweight to the popular Apple device.

Then this.....

Sales of Windows to consumers declined, but big businesses picked up the slack, Microsoft announced, with its earnings beating estimates by analysts expecting a drop.

Then this....

Nokia, struggling to reinvent its smartphone business around Microsoft's Windows Phone software, said Thursday that it might have to cut prices of its cheaper Lumia models to keep its new phones competitive in some markets.

Time to short Verizon.



Fri, 04/20/2012 - 07:41 | 2360592 lizzy36
lizzy36's picture

SO happy frontrunning is back today.

Thank you tyler.

Fri, 04/20/2012 - 07:42 | 2360594 wang (not verified)
wang's picture

This is an excellent discussion on US housing from yesterday AM on BBG radio including the coming wave of foreclosures and further price declines

 

RBC’s Wettenhall Says U.S. Home Prices Will Decline

 

http://media.bloomberg.com/bb/avfile/v.JRa5LsOvFg.mp3

Fri, 04/20/2012 - 07:44 | 2360598 lizzy36
lizzy36's picture

Btw, shouldn't it be "Global Financial Leaders Meeting in Washington For a Giant Circle Jerk" and how to bend over the citizens of their states and countries.

Fri, 04/20/2012 - 07:46 | 2360602 r00t61
r00t61's picture

That's probably redundant; "Leaders Meeting" is more than descriptive enough.

Fri, 04/20/2012 - 07:51 | 2360603 lolmao500
lolmao500's picture

In the war area...

- #DPRK: Precious "data & precious experience gained this time...a reliable guarantee for greater success in the days ahead."

- #DPRK vowing no matter what US, Japan "reactionaries" & #ROK Pres. Lee "group of rats" think it'll launch space sats "one after another."

- #ROK media now abuzz with Kyodo report from a "South Korean gov't source" saying 2nd rocket still at new #DPRK launch site.

- US says China may have assisted with North Korean missile programme

http://www.guardian.co.uk/world/2012/apr/20/us-accuse-china-north-korea-...

- U.S. worried about N. Korea's mobile missile capability

http://english.yonhapnews.co.kr/news/2012/04/20/13/0200000000AEN20120420...

- Mr Barak says all options are on the table, including a strike on Iran before the next round of scheduled talks. Although he agrees that an attack could ignite a bigger war with Iran, Mr Barak says it is important to deal with Iran before it goes nuclear.

http://www.sbs.com.au/news/article/1644061/Will-Israel-launch-an-attack-...

- Florida officials prepare for backlash if Zimmerman released on bail

http://www.nypost.com/p/news/national/zimmerman_family_parents_testify_n...

- Iran 'halts oil sales to France and Britain'

http://www.bbc.co.uk/news/world-middle-east-17089953

Fri, 04/20/2012 - 08:08 | 2360619 Boilermaker
Boilermaker's picture

Frontrunning:  Federal Reserve ramrodding futures again for a gap open.

<The End>

Fri, 04/20/2012 - 08:14 | 2360623 LouisDega
LouisDega's picture

This just in..  The School bus picked up the kids,  The garbage men picked up the garbage, The birds are a chirping  and the Futures are up. 

Fri, 04/20/2012 - 08:15 | 2360625 jplotinus
jplotinus's picture

ZHers

I grasp that criticism of capitalism is not well tolerated in these parts. So, let this serve not as criticism but rather as a request for accuracy of understanding. I refer here to a front running Bloomberg piece:

Title:
"The U.K.’s “outdated” regulations on pensions are driving Britons away from using them to save for retirement, the Institute of Directors said.

Link:
http://mobile.bloomberg.com/news/2012-04-19/britons-abandoning-pensions-...

Excerpt:

"While annual investment in pensions fell 11 percent to 22.9 billion pounds ($37 billion) between 2007 and 2009, contributions to tax-exempt Individual Savings Accounts had increased to almost 54 billion pounds by April 2011, Malcolm Small, senior adviser at the London-based business lobby, said in a report today.
The report includes a call to increase the state retirement age to 68 by 2032 instead of 2046 and to 70 in 2044...."

I gather the underlying meaning is that in the UK defined benefit pensions are becoming as rare as they are In the US. That is to say in non-euphemistic terms, PENSIONS ARE BEING LOST AND/OR REDUCED.

The language of the article suggests what is happening is a good thing!

If on the one hand it is not cool to criticize capitalism, it should be incumbent upon capitalistic press to refrain from lauding pension cuts as a good thing, on the other.

Just sayin....

Sheesh, bitchez

Fri, 04/20/2012 - 08:36 | 2360656 Catullus
Catullus's picture

Are they being "lost" or is there a general realization that the promises made can't be kept?

Like when Enron collapsed. People claimed that they "lost" money on their shares.  But the books were a farse. So their shares should never have gone up the way they did.  Is it a loss when you never realize the gain?

The good part is the are enough Britons who are realizing that the promises made to them are bunk and are taking steps to not relying on them for their retirement.

Fri, 04/20/2012 - 08:55 | 2360718 i-dog
i-dog's picture

Under "capitalism", a pension would EITHER be the returns on an investment ("I want back what I put in...plus interest!") OR a defined benefit under an actuarily assessed insurance policy (where the premiums would reflect age on entry, general health, lifestyle choices and expected duration of premium payments).

Under the present socialist system, there is just a giant slush fund upon which the central planners de jour decide on a whim how much must currently be paid in by those [few] contributing and how much will, or won't, be paid out to those [many] collecting. Soon, there will be nothing left to pay out....

Fri, 04/20/2012 - 08:16 | 2360626 John Law Lives
John Law Lives's picture

"WSJ

* President Obama's efforts to project himself as a protector of the middle class have strengthened him for the general election,..."

 

Oh, really?  Thanks for the laugh, WSJ!  I suppose the 46+ million citizens on SNAP and the millions of people (those who still have a job) who have seen their wages remain stagnant (when adjusted for inflation) think Obumble is a real champion and protector...

100% FUBAR.

Fri, 04/20/2012 - 09:18 | 2360790 Marc_W
Marc_W's picture

Who are these "middle class" persons anyway?  I've never met anyone that didn't consider themselves "middle class" as they were growing up.

 

This ranges from people who grew up in million dollar homes in gated communities to people who grew up in rental properties.  The myth of the American middle class is just that - a myth.  You're either rich, or you're not.  Everyone else is different flavors of "not rich."

 

And with the generationally stagnant wages, unemployment, etc., we're headed for a Brazil style slum class lorded over by an ultra wealthy celebrity class before you know it.  We're about 30% of the way there now.

Fri, 04/20/2012 - 09:51 | 2360899 John Law Lives
John Law Lives's picture

"we're headed for a Brazil style slum class lorded over by an ultra wealthy celebrity class before you know it."

It sure seems to be heading that way.

 

Fri, 04/20/2012 - 08:18 | 2360634 Boston
Boston's picture

Hedge-Fund Assets Rise to Record Level

 

Here's one NYC hedge fund whose assets will soon be falling....to zero......Bernie Madoff style:

http://online.wsj.com/article/SB10001424052702303513404577354351667651304.html?KEYWORDS=alphonse+fletcher

Fri, 04/20/2012 - 08:26 | 2360636 Element
Element's picture

Just curious as to why every 'leader' in the phree world is so keen to toss $400 billion in Taxpayer pledges into the IMF's begging hat?

 

http://www.reuters.com/article/2012/04/20/us-imf-idUSBRE83I19X20120420

 

I mean, there's got to be a really good rationale for tossing in, or tossing away, 60% of TARP like this, once more ... right?

 

I wonder if any of our globalist collective's fearless spend-a-holic Leadsters knows what that might be?

 

But I note that they all look pretty happy and keen to be doing it, on our behalf  ...  and good on them!

 

I'm sure they know what they're doing

Fri, 04/20/2012 - 09:21 | 2360795 jplotinus
jplotinus's picture

The one clear outcome of the pensions issue appears to be this:

Capitalism cannot pay defined benefit pensions to retiring workers.

Based upon that rather clear outcome, it is proper to assert we need a better economic premise if pensions are to be reclaimed as a social norm. IMHO, capitalism has proven itself inadequate to provide pensions. And, I am unwilling to look the other way and say "oh well" about that; much less blame people for wanting too much.

It is this latter factor of blaming people for wanting pensions that best illustrates capitalism's wanton hubris when acknowledgment of capitalism's systemic inadequacy in connection with pensions is, in fact, the correct answer.

That capitalism cannot provide adequate pensions is a fault of capitalism, worthy of ditching that system, replacing it with one that can provide secure, livable, retirement income, i.e., a defined benefit pension.

That capitalism cannot do that does not mean the idea of wanting pensions must be forgotten or consigned to the memory hole.

Fri, 04/20/2012 - 10:24 | 2361044 Catullus
Catullus's picture

So Because the pension system is a failure, we shouldnt give up on it because people still want them. And so instead of allowing people the freedom to deploy their capital (sometimes called property) the way they see fit, we should continue making promises that can't be met simply because of the "worthy" cause of guaranteeing something to someone.
To claim capitalism caused pensions to fail is to say given the choice, people didn't direct their money into them. In the end, people decided they werent worthy of their capital.

Of course, if it's not capitalism's fault, you only have left to blame the people who established them, the people who managed them, and the people who believed the pack of lies sold to them. You're right, I'd continue to blame capitalism, because the alternate explanation is so damning

Fri, 04/20/2012 - 12:49 | 2361508 jplotinus
jplotinus's picture

The bottom line:

Capitalism cannot provide defined benefit pensions.

The conclusion to be drawn from the bottom line:

Dump capitalism

Sat, 04/21/2012 - 05:30 | 2363348 Element
Element's picture

I'm sorry Mr Johnson, we had to use your retirement and SS to bail out a failed bank.

What? ... "did it help"? ... well, no, as I already said, these banks had already failed Mr Johnson.

No Sir, I'm sorry if you've misunderstood the situation, there are no refunds for YOUR losses, Mr Johnson.

As you can see, it's a very complex situation for most people to grasp.

What do you mean you're not happy with the arrangements, Mr Johnson?

We let you live, didn't we?  So count your many blessings little man.

And also I don't appreciate your tone of voice Mr Johnson ... so don't push your luck.

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