Frontrunning: March 15

  • JPMorgan Report Piles Pressure on Dimon in Too-Big Debate (BBG)
  • Employers Blast Fees From New Health Law (WSJ)
  • Obama unveils US energy blueprint (FT)
  • Obama to Push Advanced-Vehicle Research (WSJ) - here come Solar-powered cars?
  • BRICs Abandoned by Locals as Fund Outflows Reach 1996 High (BBG)
  • Obama won't trip over Netanyahu's Iran "red line" (Reuters)
  • Samsung puts firepower behind Galaxy (FT)
  • Boeing sees 787 airborne in weeks with fortified battery (Reuters)
  • Greece Counts on Gas, Gambling to Revive Asset Sales Tied to Aid (BBG)
  • Goldman’s O’Neill Says S&P 500 Beyond 1,600 Needs Growth (BBG)
  • China’s new president in corruption battle (FT)
  • Post-Chavez Venezuela as Chilly for Companies From P&G to Coke (BBG)


Overnight Media Digest


* The Federal Reserve dealt a blow to JPMorgan Chase & Co and Goldman Sachs Group Inc, citing weaknesses in their "stress test" capital planning that could hamper their funneling more dividends and share buybacks to investors.

* Boeing Co, offering a spirited defense of its grounded 787 Dreamliner, spelled out details of proposed battery fixes and predicted the jets could be back in commercial service in a matter of weeks.

* Facing growing evidence that some of America's top-selling diabetes medicines could lead to pancreatic disease, federal regulators on Thursday opened an unusual review of drugs from Merck & Co, Bristol-Myers Squibb Co and other pharmaceutical makers.

* Employers are bracing for a little-noticed fee in the federal healthcare law that will charge them $63 for each person they insure next year, one of the clearest cost increases companies face when the law takes full effect.

* CenterPoint Energy Inc, OGE Energy Corp and ArcLight Capital Partners LLC are combining their pipeline and related assets into a partnership, a move that would give them a fresh source of capital as they seek to take advantage of booming demand for shipping oil and natural gas.

* Some financial advisers said they would stop using Fidelity Investments' trading platform to buy certain exchange-traded funds because of high fees that kick in when investors sell.

* A federal jury found Chinese vitamin-C suppliers Hebei Welcome Pharmaceutical and affiliated companies liable for fixing prices on vitamin C for several years.

* Billionaire Phil Anschutz's decision on Thursday to pull sports conglomerate Anschutz Entertainment Group off the auction block marked a rare whiff for an industry that has gotten used to record sales over the past year.

* Facebook Inc is working on incorporating the hashtag, one of Twitter's most iconic markers, into its service by using the symbol as a way to group conversations, said people familiar with the matter.



A senate panel has slammed JPMorgan Chase & Co, accusing the company of lying to investigators and misleading investors about its 6 billion trading loss.

The Federal Reserve has ordered Goldman Sachs and JPMorgan Chase to improve their capital adequacy even as the Fed approves their plans to return capital to shareholders.

Chancellor George Osborne sent his chief economic adviser to the United States last month to sound out opinion formers on options for a new era of growth-promoting monetary activism.

Bank of England Governor Mervyn King's said he did not expect a further fall in sterling and that markets judged that the currency was at an appropriate level.

Schroders Plc said its head of UK equities, Richard Buxton, would leave the company after a career spanning more than a decade with the investment management company. The co-heads of Carlyle's European real estate funds are leaving the company, a move that has angered investors in one of its three property funds weighed down by huge losses.

An investigation by the Irish government has revealed that a meat plant in the country uncovered several cases of contamination of its beef supplies with horsemeat in June last year but kept it secret until February 2013 - three weeks after the scandal erupted. China Mobile, the world's largest telecom carrier by subscribers, will boost its capital expenditure by half to $30.6 billion as it gears up for the launch of fourth-generation mobile services.



* The Federal Reserve on Thursday said Goldman Sachs Group Inc and JPMorgan Chase & Co would need to resubmit their proposals to pay out billions of dollars to shareholders, citing weaknesses in their capital plans.

* JPMorgan Chase & Co, the nation's biggest bank, ignored internal controls and manipulated documents as it racked up trading losses last year, while its influential chief executive, Jamie Dimon, briefly withheld some information from regulators, a new Senate report says.

* Instead of bowing to a rising anti-austerity tide, European leaders who gathered for an economic summit meeting on Thursday seemed determined to stay the course, insisting that only budget cuts and other measures to restore financial stability could return the continent to economic growth and create jobs.

* Increasing the stakes in the smartphone battle Samsung Electronics Co Ltd showed off the Galaxy S IV, the latest version of its flagship device.

* The investment company owned by the billionaire Philip Anschutz has decided to call off efforts to sell the Anschutz Entertainment Group, a sports and live entertainment juggernaut that owns stakes in the Los Angeles Lakers and the Los Angeles Kings.

* Haruhiko Kuroda was approved on Friday to become the next Bank of Japan governor, one of the most thankless jobs in a country plagued for decades with economic problems. He is tasked with bringing about a regime change at the bank, something he himself has previously called for.

* Royal Dutch Shell Plc must provide a detailed plan addressing numerous safety and operational issues that plagued its efforts to extract oil beneath the Arctic Ocean last year if it wants to resume drilling off the coast of Alaska, the Interior Department said on Thursday.




* More than 2-1/2 years after a Canadian pipeline rupture spilled heavy oil into a Michigan river, the U.S. Environmental Protection Agency is ordering Calgary-based Enbridge Inc to perform additional dredging to remove submerged oil.

* Nancy Pelosi, one of Washington's most powerful Democrats, has signaled that she is skeptical about the benefits of the controversial Keystone XL pipeline that would send heavy crude from Alberta's oil sands across the United States to refineries on the Gulf Coast.

* Ontario Lottery and Gaming Corp is promising a special deal to Toronto that would give the city a generous slice of gambling revenues from a downtown casino. Toronto would receive fees for hosting a casino that are more than double those offered to other municipalities.

Reports in the business section:

* BlackBerry is bringing more functionality to the security services it already offers for Apple Inc's iOS devices and smartphones running Google Inc's Android software as the BlackBerry maker battles to retain its lead in the increasingly competitive mobile device management space.

* Pierre Karl Péladeau surprised the media industry and even some Quebecor Inc directors by stepping down as chief executive and handing the company to his most trusted lieutenant, Robert Dépatie.

* The fate of Suncor Energy Inc's Voyageur upgrader will be made public within days, but with rapidly expanding North American oil supplies challenging the viability of major oil sands projects, the prospects for the C$11.6 billion ($11.3 billion) upgrader are looking increasingly grim.


* Peter Penashue, the federal intergovernmental affairs minister, resigned on Thursday from cabinet and as the member of Parliament for Labrador over irregularities with campaign funding.

* After a near-disaster at Toronto Pearson International Airport on Monday, the Transportation Safety Board has dispatched an investigator to find out how an unmanned work van was allowed to drive into the path of an incoming flight from Edmonton.


* A new report says Canada has moved up its economic ranking to sixth out of 16 countries - but it's mostly due to the weakness of other countries. The Conference Board of Canada says the country has retained its "B" grade and improved its ranking from 11th since its last report card in pre-recession 2008, adding that part of the reason the surge is because some European countries going through tough times.

* Interactive Ontario is the latest industry group to urge the Ontario Securities Commission to approve proposed exemptions for raising capital in the province via crowdfunding. The OSC released a consultation paper at the end of last year, calling for interested stakeholders to comment on proposed regulatory changes that would allow small businesses and startups to solicit small contributions from a large number of investors in exchange for securities.


Fly on the Wall 7:00 Am Market Snapshot



ARM Holdings (ARMH) upgraded to Buy from Hold at Jefferies
Best Buy (BBY) upgraded to Outperform from Sector Perform at RBC Capital
Capstone Turbine (CPST) upgraded to Buy from Neutral at Roth Capital
Emerald Oil (EOX) upgraded to Buy from Neutral at SunTrust
Freeport McMoRan (FCX) upgraded to Buy from Neutral at Goldman
Infosys (INFY) upgraded to Buy from Hold at Jefferies
Ironwood (IRWD) upgraded to Outperform from Neutral at Credit Suisse
NASDAQ (NDAQ) upgraded to Outperform from Market Perform at Wells Fargo
Obagi Medical (OMPI) upgraded to Buy from Hold at Cantor


BBCN Bank (BBCN) downgraded to Market Perform from Outperform at Keefe Bruyette
Charles Schwab (SCHW) downgraded to Sell from Neutral at Compass Point
East West (EWBC) downgraded to Market Perform from Outperform at Keefe Bruyette
J.B. Hunt (JBHT) downgraded to Market Perform from Outperform at Bernstein
Kennametal (KMT) downgraded to Neutral from Buy at Longbow
Progressive (PGR) downgraded to Underperform from Market Perform at Keefe Bruyette
Royal Dutch Shell (RDS.A) downgraded to Underweight from Neutral at JPMorgan
Sierra Bancorp (BSRR) downgraded to Market Perform from Outperform at Keefe Bruyette
Transocean (RIG) downgraded to Hold from Buy at Jefferies
Ulta Salon (ULTA) downgraded to Perform from Outperform at Oppenheimer


Cubist (CBST) initiated with a Neutral at Credit Suisse
Maiden Holdings (MHLD) initiated with a Buy at Compass Point
Nexstar (NXST) initiated with a Buy at UBS
Response Genetics (RGDX) initiated with a Buy at Roth Capital
SunCoke Energy (SXCP) initiated with a Neutral at Citigroup
The Medicines Co. (MDCO) initiated with an Outperform at Credit Suisse
Tower Group (TWGP) initiated with a Buy at Compass Point

CenterPoint Energy (CNP), OGE Energy (OGE), Arclight Capital to combine assets of nearly $11B
DirecTV (DTV) pulled out of bidding for Vivendi's (VIVHY) GTV unit; Vivendi halts GVT sales process, Bloomberg reports
Fed accepted capital plans for 14 banks (AXP, BAC, BK, COF, FITB, KEY, MS, PNC, RF, STT, STI, USB, WFC, C) without conditions
Fed required Goldman Sachs (GS), JPMorgan (JPM) to submit new capital plan by end of Q3
Goldman Sachs (GS) said Fed did not object to capital actions
BB&T (BBT) capital plan rejected as Fed cites qualitative concerns
Zions Bancorp (ZION) said Fed objects to certain proposed actions, to resubmit plan
Morgan Stanley (MS) received Fed approval to buy remaining Smith Barney stake
Senate committee report to be released today said JPMorgan (JPM) hid “Whale” losses, disregarded risk
FDA investigating reports of possible risks from type 2 diabetes drugs (BMY, NVO, MRK, LLY)
American Express (AXP) plans to raise dividend 15%, buy back $4B common shares in 2013
Facebook (FB) to acquire the team behind Hot Studio
Aetna (AET) formed strategic alliance with Starr International in Hong Kong


Companies that beat consensus earnings expectations last night and today include:
Bonanza Creek (BCEI), Anacor Pharmaceuticals (ANAC), Aeropostale (ARO), Zumiez (ZUMZ), Ulta Salon (ULTA)

Companies that missed consensus earnings expectations include:
Lone Pine Resources (LPR), Edgen Group (EDG), Molycorp (MCP), Raptor Pharmaceuticals (RPTP), Krispy Kreme (KKD), STEC (STEC)


Boeing (BA) offered a strong defense of its grounded 787 Dreamliner, spelled out details of proposed battery fixes and predicted the jets could be back in commercial service in a matter of weeks, the Wall Street Journal reports
Dallas Fed President Richard Fisher will address this year's Conservative Political Action Conference, an unusually political venue for a U.S. central banker, pushing his proposal to break up the biggest U.S. banks as the best way to avoid government bailouts of such firms, the Wall Street Journal reports
IBM (IBM) and EMC Corp. (EMC) are among firms in talks to buy privately held database web hosting company SoftLayer Technologies Inc, in a deal that could be over $2B, sources say, Reuters reports
Silver Lake Partners, the technology-focused private equity firm backing a $24.4B bid to take Dell (DELL) private, is close to raising $10B for its latest fund, exceeding its initial fundraising target on strong investor demand and confidence in the firm, sources say, Reuters reports
Microsoft (MSFT) has sold about 1.5M Surface devices, sources say, a slow beginning in its bid to crack the tablet market to make up for slumping PC demand, Bloomberg reports
Chinese car maker BYD Co., partially owned by Berkshire Hathaway (BRK.A), plans to sell new shares equivalent to as much as 20% of its Hong Kong-traded stock, sources say, Bloomberg reports


Cardica (CRDC) announces common stock offering
Carlyle Group (CG) files to sell 5M shares of common stock
Delek US (DK) 9M share Secondary priced at $39.50
Kennedy-Wilson (KW) 9M share Secondary priced at $15.70
Trulia (TRLA) 6.211M share Secondary priced at $29.75


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