Frontrunning: April 4

  • Helicopter QE will never be reversed (Evans-Pritchard)
  • Bank of Japan Launches Easing Campaign under new leadership (WSJ)
  • Draghi Considers Plan B as Sentiment Dims After Cyprus Fumble (BBG)
  • Spain threatened by resurgent credit crunch (FT)
  • U.S. Dials Back on Korean Show of Force (WSJ)
  • Gillard Urges Aussie Firms to Emulate German Deutschmark Success (BBG)
  • Bank watchdog warns on retail branches (FT)
  • Xi's Russia visit confirms continuity of ties (China Daily)
  • Portuguese Government Survives No-Confidence Vote (WSJ)
  • Mortgage rates set for fall, Bank of England survey shows (Telegraph)
  • Russia’s bank chief warns on economy (FT)
  • Fed member hints at summer slowing of QE3 (FT)

Overnight Media Digest


* Thirty U.S. state attorneys general are investigating alleged interest-rate rigging by banks that set Libor, and the probe isn't slowing despite a U.S. judge's ruling last week in favor of the banks in private lawsuits.

* A U.S. federal watchdog is faulting bank regulators for a flawed review of foreclosure documents, for not ensuring banks were using consistent methods to determine which foreclosure files to scrutinize for possible errors.

* Ex-Goldman Sachs Group Inc trader Matthew Taylor pleaded guilty to a single count of wire fraud for concealing trades which cost Goldman $118.4 million to unwind. He told a U.S. federal judge he made the big bets to boost his reputation and bonus at the bank.

* Under pressure from investors, six of the biggest U.S. drugmakers, including Eli Lilly & Co and Bristol-Myers Squibb Co, are revising their compensation policies to make it easier to recover payouts to an executive who violates ethics rules or otherwise behaves inappropriately.

* Walt Disney Co is shutting down LucasArts, the once-pioneering videogame unit of George Lucas's "Star Wars" empire. Nearly all of the unit's roughly 200 employees were laid off, according to a person close to the San Francisco company.

* Lululemon Athletica Inc said Wednesday that its top product executive will leave the company, just weeks after the apparel maker pulled some of its yoga pants from store shelves for being too see-through.

* An investor group led by professional baseball team St. Louis Cardinals is in advanced talks to acquire the Memphis Redbirds from a nonprofit group that controls the minor league baseball team.



The Bundesbank has launched an investigation into claims that Deutsche Bank misvalued credit derivatives that allowed it to hide up to $12 billion in losses.

RSA has come under scrutiny from shareholders after the insurer paid a high level of fees for non-audit work to the company that vets its accounts.

A report following a review of Barclays' culture said the bank should lower pay levels and be more transparent and candid if it is to restore trust.

International Airlines Group said it would buy 18 of Boeing Co's 787 Dreamliner jets for its British Airways arm in a bid to modernise the British carrier's ageing fleet.

A group of shareholders is suing Royal Bank of Scotland and many of its former top executives for as much as 4 billion pounds.

Rio Tinto is considering selling some Australian coal businesses worth about $4.4 billion as it disposes of assets to boost shareholder returns.

The Irish takeover panel has given Royalty Pharma until May 10 to either make a firm bid for Elan or walk away.



* The International Monetary Fund said on Wednesday that it would contribute 1 billion euros ($1.28 billion), or about 10 percent, of a bailout package for Cyprus but stipulated that the country would need to take tough measures to overhaul its beleaguered economy.

* In a ruling on Tuesday, U.S. Judge Jed Rakoff dismissed claims from Dexia SA, a Belgian-French bank that had sued JPMorgan Chase & Co over losses on $1.6 billion in 65 residential mortgage investments, according to court documents.

* Private consultants and U.S. federal regulators are facing a fresh round of scrutiny in Washington after botching a broad review of foreclosures and failing to thwart financial misdeeds.

* Monsanto Co, the world's largest seed company, raised its full-year profit forecast on Wednesday after reporting better-than-expected earnings in its second quarter, driven by strength in its global corn and herbicide businesses.

* Facebook Inc is expected to introduce a Facebook-centric phone - made by HTC, powered by Google Inc's Android operating system - on Thursday that is intended to help increase its profit overseas.

* Samsung Electronics Co Ltd said it would open 1,400 mini-stores this summer inside Best Buy Co Inc stores across the United States. Each store will include customer support for Samsung products, similar to the Genius Bar at Apple Inc stores.

* Lululemon Athletica Inc, the Canadian yoga wear maker, said on Wednesday that its chief product officer was stepping down, as it updated the production problems it has had with see-through pants.

* Long known as a difficult place to do business, Moscow is making a major effort to encourage banks, insurance companies and law firms that deal with securities to expand there.




* The Alberta government has quietly presented a proposal to sharply increase levies on carbon production and force large oil-industry producers to slash greenhouse gas emissions by as much as 40 per cent on each barrel of production, a long-term plan that has surprised Ottawa and industry executives with its ambition.

* Bruce Heyman, a Chicago-based Goldman Sachs executive and one of Barack Obama's top fundraisers, is in final talks to become the next U.S. ambassador to Canada, according to sources.

Reports in the business section:

* Low interest rates have failed to jump-start the housing market, as sales in major Canadian cities in March fell sharply below where they were last spring. Despite a series of mortgage-rate promotions offering five-year loans at less than 3 percent, sales of existing homes in the Toronto area slumped 17 percent in March from a year earlier, while Vancouver sales sank 18 percent.

* Toronto-Dominion Bank CEO Ed Clark unveiled Bharat Masrani as his successor. The Ugandan-born banker will take over on Nov. 1, 2014, after a transitional stint as chief operating officer.


* Lululemon Athletica Inc says its chief product officer is leaving the retailer, just weeks after it pulled its black Luon pants from store shelves because they were too sheer.


Fly on the Wall 7:00 AM Market Snpashot



Alcatel-Lucent (ALU) upgraded to Buy from Hold at Deutsche Bank
Brinker (EAT) upgraded to Buy from Neutral at Goldman
Brown & Brown (BRO) upgraded to Neutral from Sell at Goldman
CenturyLink (CTL) upgraded to Overweight from Neutral at JPMorgan
Lattice Semiconductor (LSCC) upgraded to Buy from Neutral at Mizuho
Niska Gas (NKA) upgraded to Equal Weight from Underweight at Barclays
Niska Gas (NKA) upgraded to Outperform from Market Perform at Wells Fargo
Panera Bread (PNRA) upgraded to Conviction Buy from Neutral at Goldman
Tahoe Resources (TAHO) upgraded to Outperform from Market Perform at Raymond James
Team Health (TMH) upgraded to Conviction Buy from Neutral at Goldman
Texas Capital (TCBI) upgraded to Overweight from Equal Weight at Barclays
Ulta Salon (ULTA) upgraded to Buy from Hold at Jefferies
Waddell & Reed (WDR) upgraded to Outperform from Sector Perform at RBC Capital


Allegheny Technologies (ATI) downgraded to Hold from Buy at BB&T
Aruba Networks (ARUN) downgraded to Neutral from Buy at UBS
Avista (AVA) downgraded to Neutral from Buy at UBS
Domino's Pizza (DPZ) downgraded to Buy from Conviction Buy at Goldman
Microsoft (MSFT) downgraded to Neutral from Buy at BofA/Merrill
lululemon (LULU) downgraded to Sector Perform from Outperform at RBC Capital


Apple (AAPL) initiated with a Buy at Lazard Capital
Casey's General Stores (CASY) initiated with a Market Perform at Wells Fargo
IPC The Hospitalist Co. (IPCM) initiated with a Neutral at Goldman
MEDNAX (MD) initiated with a Neutral at Goldman
Pantry (PTRY) initiated with an Outperform at Wells Fargo
Sarepta (SRPT) initiated with an Outperform at RW Baird
Susser Holdings (SUSS) initiated with an Outperform at Wells Fargo
WesBanco (WSBC) initiated with a Buy at Janney Capital


Midstates Petroleum (MPO) to acquire oil-weighted properties in Oklahoma, Texas for $620M
Auxilium (AUXL), Pfizer (PFE) entered agreement for marketing, development of Xiapex
Compuware (CPWR) guides Q4 below expectations, expects 75%-80% of Q4 deals pushed ahead to close next fiscal year
Greenbrier (GBX) sees FY13 revenue, adjusted EBITDA, EPS similar to FY12


Companies that beat consensus earnings expectations last night and today include:
Greenbrier (GBX), Intellipharmaceutics (IPCI)

Companies that missed consensus earnings expectations include:
Mitcham Industries (MIND), National American University (NAUH)


  • The Bank of Japan today began an aggressive new easing program in what traders called a surprisingly bold first step by new Gov. Haruhiko Kuroda as he begins his campaign to rid the economy of more than 15 years of deflation, the Wall Street Journal reports
  • Alerted by a private message about a potential coming change in government health-care policy, certain investors earlier this week sparked a frenzy of trading in some of the industry's largest companies. (HUM, UNH, AET). The last-minute action, which drove the shares sharply higher before the close of trading, puts a spotlight on the controversial "political intelligence" industry, the Wall Street Journal reports
  • A limited supply of new U.S. strip malls helped offset weak demand for space in Q1, easing the national vacancy rate to 10.6% from 10.7% the prior quarter, according to Reis Inc. (REIS), Reuters reports
  • Delta Air Lines (DAL) sued the Export-Import Bank of the U.S. over loan guarantees given to support purchases of Boeing’s (BA) widebody planes by certain foreign airlines, according to a district court filing in Washington, DC, Reuters reports
  • Primary dealers that have held a seat at the center of the U.S. government debt market since 1960, are losing influence. Over 20% of the $538B of Treasury notes auctioned this year have been awarded to bidders who bypassed the dealers by using a website to place their orders, according to Treasury Department data, Bloomberg reports
  • Gold extended losses for a third day, nearing a bear market after 12 years of gains, on concern that investors are seeking higher returns in other assets as the global economy recovers, Bloomberg reports


BioTime (BTX) files to sell 11.5M shares of common stock
CapLease (LSE) commences offering of 6.5M shares of common stock
Samson Oil & Gas (SSN) announces 959K share equity placement at 52c


Raging Capital reports 5.6% stake in Sigma Designs (SIGM), urges board changes


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