Frontrunning: May 18
- Inside J.P. Morgan's Blunder (WSJ) - Where we learn that Jamie Dimon did not inform his regulator, the Fed, where he is a board member of the massive JPM loss even as he was fully aware of the possible unlimited downside
- Euro Attempted Recovery Countered By Asian Sovereigns (MNI)
- Santander, BBVA Among Spanish Banks Downgraded by Moody’s (Bloomberg)
- Spain hires Goldman Sachs to value Bankia (Reuters)
- Defiant Message From Greece (WSJ)
- G-8 Leaders to Discuss Oil Market as Iran Embargo Nears (Bloomberg)
- China to exclude foreign firms in shale gas tender (Reuters)
- Fed Board Nominees Powell, Stein Win Senate Confirmation (Bloomberg)
- Defiant Message From Greece (WSJ)
- Fitch Cuts Greece as Leaders Spar Over Euro Membership (Bloomberg)
- Madrid Hails Moves by Regions to Cut Spending (WSJ)
- Japan Raises Economic Assessment for First Time in Nine Months (Bloomberg)
- Japan, S. Korea Worried About Currency Moves as Stocks Slide (Bloomberg)
Overnight Media Digest
* Alexis Tsipras, head of Greece's radical left party, said in an interview with the Journal that there is little chance Europe will cut off funding to the country and if it does, Greece will repudiate its debts.
* BATS's board is debating whether to list the company on a rival exchange once it revisits plans for an IPO, a step that would further undermine its bid to challenge the Big Board and Nasdaq.
* Facebook priced its initial public offering at $38 a share, a move that values the Internet company at more than $100 billion. It tried floating higher numbers to investors but was rebuffed.
* Hewlett-Packard plans to cut its workforce by 25,000 to 30,000 employees, a record number for the venerable tech giant as it grapples with declining revenue and profits.
* Several top corporate and Wall Street executives, including Goldman Sachs CEO Lloyd Blankfein, could be potential witnesses at the insider-trading trial of Rajat Gupta.
* In an action unrelated to U.S. sanctions against Tehran, Bank of Tokyo-Mitsubishi UFJ said it has frozen financial transactions with Iran's government and central bank, as ordered by a U.S. federal court.
* The Senate confirmed Obama's two nominees to the Federal Reserve Board, filling the seven-member panel for the first time since April 2006.
IRAN HELPS SYRIA DEFY OIL EMBARGO
An oil tanker belonging to Iran's state-owned shipping line has been switching flags and using multiple companies to transport crude from Syria to Iran, illustrating how Tehran is helping to sidestep international efforts to choke the finances of Bashar al-Assad, Syrian president.
SPAIN MOVES TO CALM BANK FEARS
The Spanish government called for investor calm on Thursday as shares in Bankia, the country's second-largest bank, tumbled by nearly 30 percent and Moody's prepared a sweeping downgrade of the country's lenders.
FACEBOOK PRICES SHARES AT $38 EACH
Facebook priced its shares at $38 each in an initial public offering raising $16 billion that values the world's largest social networking group at $104 billion, vaulting the eight-year-old company into the ranks of top 25 public companies in the U.S.
GRAFF TO HAVE $3 TO $4 BILLION VALUE AT IPO
Graff Diamonds, known for selling multimillion-pound jewels to the super-rich, will be valued between $3 billion and $4 billion when it lists in Hong Kong, according to people familiar with the process.
LME'S SUITORS' BID PASS 1 BILLION POUND
The three remaining contenders to acquire the London Metal Exchange have all valued it at more than 1 billion pounds ($1.58 billion) and promised to preserve its open outcry trading pit, setting the scene for a close-run contest as they attempt to snatch control of the historic bourse.
JP MORGAN UNIT HAS BILLIONS OF RISKY BONDS
The unit at the centre of JP Morgan Chase's $2 billion trading loss has built up positions totalling more than $100 billion in asset-backed securities and structured products - the complex, risky bonds at the centre of the financial crisis in 2008.
* President Obama and four African leaders will introduce the group of companies, the Alliance for Food and Nutrition Security, on Friday at a forum on food security and agriculture.
* The United States Commerce Department concluded that Chinese producers had "dumped" their products on the American market.
* The one money matter that most Internet millionaires talk about openly is what start-ups they are investing in next. Expect many more such investments from Facebook executives. Indeed, that might be where the biggest chunk of their new wealth will go.
* A multibillion-dollar trading loss at JPMorgan may remind some of the disaster at the Long Term Capital Management hedge fund in 1998.
THE GLOBE AND MAIL
- Canada's National Energy Board expects the average cost of regular gasoline to be between $1.20 and $1.35 per litre this summer, mirroring last summer's range.
Reports in the business section:
- Several Canadian fund managers are queuing up for a slice of Facebook Inc's initial public offering, ignoring critics who suggest the stock could be an expensive bust. CI Investment Inc's Boston-based Cambridge Advisers unit has placed an order for a million shares of the social media giant.
- The Quebec government is aiming for the pocketbook to help stamp out the turbulent student crisis that is rocking the province.
- If G20 nations ignore reforms agreed upon last fall in Cannes, the world economy will be 8 percent, or $6-trillion, poorer by 2015, the Bank of Canada says.
- Investors are now on pace to reduce their gold holdings for a third straight month, marking the longest bullion selloff since 2004.
European Economic Summary:
- Portugal Producer Prices 0.6% m/m 3.6% y/y. Previous 0.2% m/m 3.5% y/y. Revised 0.4% m/m 3.7% y/y.
- Italy Industrial Orders 3.5% s.a. m/m -14.3% n.s.a. y/y – higher than expected. Consensus 1.0% s.a. m/m. Previous -2.5% s.a. m/m -13.2% n.s.a. y/y. Revised -2.6% s.a. m/m.
- Italy Industrial Sales 0.0% s.a. m/m -3.1% n.s.a. y/y. Previous 2.3% s.a. m/m -1.5% n.s.a. y/y.
- Germany Producer Prices 0.2% m/m 2.4% y/y – lower than expected. Consensus 0.3% m/m 2.5% y/y. Previous 0.6% m/m 3.3% y/y.
- Russia Money Supply Narrow Def. RUB 6.93T. Previous 6.88T.
- Hungary Avg Gross Wages 2.7% y/y – lower than expected. Consensus 6.5% y/y. Previous 6.9% y/y. Revised 6.8% y/y.
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