Frontrunning: March 13

  • More black smoke over Vatican: No decision on pope in second day (NBC)
  • PBOC Chief Says China Should Be on ‘High Alert’ on Inflation (BBG) - just as predicted last fall
  • Italian Billionaire Says Bankers Must Follow Lawmakers Out Door (BBG)
  • California Seizes Guns as Owners Lose Right to Keep Arms (BBG)
  • U.S. Tax Cheats Picked Off After Adviser Mails It In (BBG)
  • In 2012, Samsung spent $401 million advertising its phones in the U.S. to Apple's $333 million (WSJ)
  • Coca-Cola probed over mapping in China (FT) - accused of ‘illegally collecting classified information’
  • Italy's Bond Sale Meets Tepid Demand (WSJ)
  • U.S. Steps Up Alarm Over Cyberattacks (WSJ)
  • Mugabe takes on Zimbabwe's Generation X (Reuters)
  • Mars Rover Finds Conditions Once May Have Supported Life (BBG)
  • Oil demand hit by China refinery outages (FT)
  • Big Sugar Is Set for a Sweet Bailout (WSJ) DOA to buy 400,000 tons of sugar to stave off a wave of defaults by sugar processors
  • Spectre of stagflation haunts UK (FT)
  • As Republicans seek identity, conclave highlights divisions (Reuters)
  • JGBs mostly rise on expectations of BOJ easing measures (Reuters)

Overnight Media Digest


* The U.S. Department of Agriculture is considering buying 400,000 tons of sugar to stave off a wave of defaults by sugar processors that borrowed $862 million under a government price-support program.

* Top spies in the United States told senators that the country is vulnerable to attacks and destruction of computer networks, both from government-sponsored assaults as well as from hackers and terrorists.

* The Federal Aviation Administration gave initial approval to Boeing Co's proposed package of fixes for the batteries on its 787 Dreamliner, a major boost for the aerospace giant's efforts to end a nearly two-month-long grounding of its flagship jetliner.

* President Obama's nominee to lead the Securities and Exchange Commission, Mary Jo White, in a Senate hearing on Tuesday, fended off pointed questions from lawmakers about whether her time spent defending Wall Street banks would impinge on her ability to police Wall Street.

* Short-form ads on Twitter and Facebook have the same basic requirement as any old-fashioned ad: They can't mislead consumers, federal regulators said Tuesday.

* In the latest effort by private equity firms to broaden their customer base, Carlyle Group LP is letting some people invest in its buyout funds with as little as $50,000.

* In 2012, Samsung Electronics Co Ltd spent $401 million advertising its phones in the United States to Apple Inc's $333 million. Its ad blitz has helped Samsung open a huge lead in the global smartphone race.

* Connecticut Attorney General George Jepsen confirmed Google Inc agreed to pay $7 million to settle with 38 U.S. states over its Street View cars collecting data from unsecured Wi-Fi networks.

* Hostess Brands Inc said it would seek court approval to sell its Twinkies and other cake brands to Apollo Global Management LLC and Metropoulos & Co after no rival bidders challenged their $410 million offer.

* The oil industry is increasing spending on research that it hopes will make it cheaper and easier to coax more crude and natural gas from shale formations and deep-sea oil fields, extending and accelerating the U.S. energy boom.

* Starr International Co, run by a former chief executive of American International Group Inc, is pressing ahead with allegations against the U.S. government on AIG's behalf despite the insurer's decision to stay out of the legal dispute.



Investors expect inflation in the UK to rise to its highest level since before the financial crisis even as dismal manufacturing data fans speculation that the Bank of England may be more aggressive in jump-starting the economy. Boeing Co got approval on Tuesday from U.S. aviation regulators to start test flights of its redesigned battery for its troubled 787 Dreamliner, putting it a step closer to resume normal service of the aircraft.

Canada's First Quantum Minerals moved closer to seizing control of fellow miner Inmet after revising the terms of its hostile C$5.1 billion ($4.97 billion) takeover that will create one of the world's largest copper producers.

Workers downed tools at Anglo American's Kleinkopje coal mine in South Africa as labour unrest in the mining industry spreads.

Germany has piped the United Kingdom as the most sought-after destination for European property investors, a trend that underlines easing fears of a Eurozone break-up.

British Land, the UK's second largest landlord by market capitalisation, has asked investors for 500 million pounds to fund acquisitions in and around London.

UK's top watchdog has slammed banks for failing to show how risky investments are suited to their customers and for not living up to the levels of service customers one should expect.

Concerns over a conflict of interest has thrown the Serious Fraud Office's investigation into British software firm Autonomy into confusion after the agency admitted that it might be using an Autonomy product.



* In agreeing to settle a case brought by 38 U.S. states over the Street View mapping project, Google Inc for the first time is required to aggressively police its own workers on privacy issues.

* Boeing Co achieved a major milestone on Tuesday as the Federal Aviation Administration approved its plan to test fixes for the battery problems that have grounded its 787 jets since mid-January.

* Japan said on Tuesday that it had extracted gas from offshore deposits of methane hydrate - sometimes called "flammable ice" - a breakthrough that officials and experts said could be a step toward tapping a promising but still little-understood energy source.

* Mary Jo White moved closer to becoming a top Wall Street regulator on Tuesday as she sailed through a Congressional confirmation hearing. But even her supporters on Capitol Hill pointed to significant challenges awaiting the next leader of the Securities and Exchange Commission.

* Hostess Brands Inc picked a partnership of two investment firms, Apollo Global Management LLC and Metropoulos & Co, as the new owner of its snack cake business.

* Google Inc is expanding its office space and hiring engineers in the Seattle area to compete with rivals in the lucrative cloud computing business.

* The American International Group Inc's former chief executive, Maurice Greenberg, is moving ahead with a lawsuit against the federal government over its $182 billion rescue of the insurer - even without the backing of the company itself.

* The Serious Fraud Office of Britain cautioned that it first needed to make sure that its use of an Autonomy product did not pose a conflict of interest for an investigation into Autonomy's sale to Hewlett-Packard Co.

* The U.S. government is buying enough of a new smallpox medicine to treat 2 million people in the event of a bioterrorism attack. But some experts are saying the government is buying too much of the drug at too high a price.




* Anglophone municipal leaders predict chaos and the end of linguistic peace in Quebec if the Parti Québécois government proceeds with a provision in its language bill to withdraw the bilingual status of certain municipalities.

* The British Columbia government has withdrawn controversial sections of a new bill that opponents claim would have privatized the Canadian province's forests after an outcry over a lack of public consultation in the process.

* A 20-year-old Toronto man charged with stabbing a stranger on a subway train last month was back in court on Tuesday on fresh charges, also involving apparently random attacks.

Reports in the business section:

* Ottawa has granted Air Canada more time to meet its pension funding obligations, but with tough conditions that include the airline's executives taking a hit to the wallet.

* Oxford Properties Group is on the hunt in Europe as it looks to add C$7 billion ($6.8 billion) to the real estate portfolio it manages by 2015, part of a massive expansion that would boost its size by nearly a third.

* First Quantum Minerals Ltd has gained control of Inmet Mining Corp after a drawn-out hostile bid, charting a course to the major leagues of copper mining as it takes on the massive Cobre Panama project.


* Ontario Labor Minister Yasir Naqvi says he didn't endorse a controversial book on Islam that says it's okay for men to physically punish their wives. Naqvi acknowledged that he wrote a letter of support for the book two years ago, but says he didn't read it.

* The Canadian National Exhibition Association is demanding MGM Resorts International and Cadillac Fairview Corp Ltd stop using its iconic images to promote pitch for a casino resort at Exhibition Place.


* A private equity firm is looking for the court's intervention to stop a recent move by cash-strapped wireless startup Mobilicity to raise new debt financing. Toronto-based Catalyst Capital Group Inc filed an application on Feb. 25 asking the Ontario Superior Court of Justice to set aside a financing agreement Mobilicity entered into on Feb. 6.

* Sears Canada Inc has named a member of its board of directors, EJ Bird, as interim chief financial officer. The department store retailer, grappling with sliding sales and market share for several years, has been on the hunt for a new chief financial officer since the sudden departure of Sharon Driscoll in December.

* The heads of Canada's leading business lobby groups are urging the federal government to get on with negotiating a free trade deal with Europe. The groups issued a letter to assure Trade Minister Ed Fast that they will stand behind the deal, once it is negotiated, and help sell it to workers and communities across Canada.




--Pan Xuexian, head of the securities regulator of Liaoning province, where the Dalian Commodity Exchange is based, urged the launch of iron ore futures as soon as possible to strengthen China's pricing power in buying the raw material.


--The Shanghai Futures Exchange will aim to launch night trade for its futures contracts this year. The exchange is studying the move and has not submitted an application for regulatory approval yet, said Yang Maijun, a senior exchange official.


--The number of dead pigs found in the Huangpu River of Shanghai had risen to 5,916 by 3 pm on Tuesday, and was expected to increase further.

--The eastern Hangzhou local government is currently investigating a mysterious "coal rain" that hit the city on Tuesday, leaving tiny pieces of a black substance covering the roads and trees near a forest park.


--China will develop an integrated mapping system to cover ground, underground, sea, air and outer space by 2020, said a senior official from the national surveying and mapping authority.


--Data from the China National Environmental Monitoring Centre showed that air quality in the country's 74 cities met the PM 2.5 air pollution standards for only half of February.


Fly On The Wall 7:00 AM Market Snapshot



Affiliated Managers (AMG) upgraded to Buy from Neutral at Goldman
Boeing (BA) upgraded to Hold from Underweight at BB&T
Coach (COH) upgraded to Buy from Neutral at Citigroup
Diamond Foods (DMND) upgraded to Hold from Underperform at Jefferies
Discover (DFS) upgraded to Outperform from Market Perform at FBR Capital
Fortress (FIG) upgraded to Buy from Neutral at Goldman
Genesco (GCO) upgraded to Overweight from Neutral at Piper Jaffray
Oracle (ORCL) upgraded to Buy from Hold at Canaccord
Republic Services (RSG) upgraded to Buy from Hold at BB&T
Walgreen (WAG) upgraded to Buy from Neutral at UBS


Calamos (CLMS) downgraded to Sell from Neutral at Goldman
Cash America (CSH) downgraded to Neutral from Buy at Sterne Agee
EQT Midstream Partners (EQM) downgraded to Neutral from Outperform at Credit Suisse
El Paso Pipeline (EPB) downgraded to Neutral from Outperform at Credit Suisse
First Cash Financial (FCFS) downgraded to Neutral from Buy at Sterne Agee
GSI Group (GSIG) downgraded to Neutral from Buy at Roth Capital
Grainger (GWW) downgraded to Hold from Buy at BB&T
Invesco (IVZ) downgraded to Neutral from Buy at Goldman
Oaktree Capital (OAK) downgraded to Neutral from Buy at Goldman
Tesoro Logistics (TLLP) downgraded to Neutral from Outperform at Credit Suisse
Velti (VELT) downgraded to Market Perform from Outperform at Raymond James
Velti (VELT) downgraded to Sector Perform from Outperform at RBC Capital


Acadia Healthcare (ACHC) initiated with a Buy at Cantor
Dril-Quip (DRQ) initiated with a Buy at Lazard Capital
Francesca's (FRAN) initiated with a Buy at Lazard Capital
HomeAway (AWAY) initiated with a Buy at Janney Capital
Integrated Silicon (ISSI) initiated with a Buy at Benchmark Co.
OraSure (OSUR) initiated with a Buy at Longbow
Stericycle (SRCL) initiated with a Buy at Goldman
TG Therapeutics (TGTX) initiated with a Buy at Roth Capital
Verastem (VSTM) initiated with a Buy at Roth Capital
Zoetis (ZTS) initiated with a Buy at Deutsche Bank
Zoetis (ZTS) initiated with a Buy at Jefferies
Zoetis (ZTS) initiated with a Neutral at Goldman
Zoetis (ZTS) initiated with an Overweight at Piper Jaffray
eLong (LONG) initiated with a Buy at Janney Capital


FAA approved Boeing (BA) 787 Dreamliner certification plan for redesigned battery system
Approved limited test flights for two Boeing aircraft
Boeing (BA) said financiers should embrace shifts as aircraft financing rises
Hewlett-Packard (HPQ) disclosed in Form 10-Q that it’s not currently planning to divest any major business units
Discover (DFS) plans to offer home-equity loans
Chevron (CVX) CEO Watson told CNBC keeping cash on hand for gyrations of commodity prices
National Consumers League urged FTC to investigate allegations against Herbalife (HLF)


Companies that beat consensus earnings expectations last night and today include:
Geron (GERN), XOMA (XOMA), Kennedy Wilson (KW), Majesco (COOL), GenMark (GNMK)

Companies that missed consensus earnings expectations include:
Kronos Worldwide (KRO), Dole Food (DOLE), Synergetics (SURG), ACADIA (ACAD), Summer Infant (SUMR)

Companies that matched consensus earnings expectations include:
Odyssey Marine (OMEX), Craft Brew (BREW), Global Cash Access (GCA), Evolving Systems (EVOL)


  • The oil industry (SLB, HAL, BHI) is increasing spending on research that it hopes will make it cheaper and easier to coax more crude and natural gas from shale formations and deep-sea oil fields, extending and accelerating the U.S. energy boom, the Wall Street Journal reports
  • Audi, the car maker owned by Volkswagen (VLKAY) is now running neck-and-neck with BMW for the crown of the world's top selling luxury automaker, helped by surging U.S. sales, the Wall Street Journal reports
  • Chesapeake Energy Corp. (CHK) faces a showdown with investors and a bond trustee over its plan to redeem $1.3B of notes early. In a court filing, investors who own about $250M of the notes contended that the plan would shortchange them, saying the notes are worth more and that the move would violate Chesapeake's contractual obligations. Bank of New York Mellon (BK) also filed court papers against the plan, Reuters reports
  • National Financial Partners (NFP), the wealth management company, is exploring a potential sale, sources say, Reuters reports
  • China’s new leaders may further loosen interest rate controls this year. Twelve of 16 analysts expect China to relax or remove the cap on deposit rates or the floor on lending rates, according to a Bloomberg News survey conducted ahead of Xi Jinping’s appointment as president tomorrow, Bloomberg reports
  • KKR & Co. (KKR) is preparing to market its first fund dedicated to real estate investments with an initial $500M committed to the pool, sources say, Bloomberg reports


Annie's (BNNY) 3.5M share Secondary priced at $40.00
Box Ships (TEU) files to sell $25M shares of common stock
Comstock Mining (LODE) announces plan to sell 5M shares of common stock
Eagle Rock Energy (EROC) announces plans to sell 8M common units
Emeritus (ESC) 7.97M share Secondary priced at $27.00
Fabrinet (FN) announces plans to sell 3.8M shares of common stock for holders
HeartWare International (HTWR) 1.5M share Spot Secondary priced at $86.45
IMRIS (IMRS) files to sell common stock
Kennedy Wilson (KW) files to sell 9M shares of common stock
Ramco-Gershenson (RPT) 7M share Spot Secondary priced at $15.55
Silver Spring Network (SSNI) 4.75M share IPO priced at $17.00
Sun Communities (SUI) 5M share Secondary priced at $45.25
WageWorks (WAGE) 5.631M share Secondary priced at $24.00
Xplore Technologies (XPLR) files to sell $50M of common stock
Yandex (YNDX) 24.253M share Secondary priced at $22.75


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