Frontrunning: April 10

  • Germany: Europe's... poorest? ECB Survey Puts Southerners on Top in Household Wealth, Germans Near Bottom (WSJ)
  • Obama Proposes $3.77 Trillion Budget to Revive Debt Talks (BBG)
  • China trade data raise accuracy worries (FT) ... but generates so much laughter
  • such as this... China Exports Miss Forecasts as ‘Absurd’ Data Probed (BBG)
  • S. Korea Braces for ‘Very High’ Chance of North Missile Test (BBG)
  • Slovenia, Spain Warned of ‘Excessive’ Economic Imbalances by EU (BBG)
  • G8 foreign ministers meet in London to address Syria, North Korea (Reuters)
  • N. Korea Threats Boost First South Korea Rate Cut Odds Since October (BBG)
  • China Bird Flu Outbreak May Stem From Numerous Sources (BBG)
  • Spain Bailout Less Likely on Lower Funding Costs: Moody’s (BBG)
  • BOE’s Haldane: Simplify Bank Rules to Strengthen Them (WSJ)
  • Australia's Swan Backs Japan-to-U.S. Stimulus as G-20 Meets, Yen Slides (BBG)
  • Japan’s unfinished policy revolution (FT)
  • Fed’s Williams Sees Reduced Fed Bond Buying in Second Half of 2013  (WSJ)


Overnight Media Digest


* German households are among the poorest - on paper, at least - in the euro zone, according to a study by the European Central Bank that adds a new twist to the debate over how far taxpayers in Northern Europe should go to support weaker countries.

* Fitch Ratings Inc lowered one of its key ratings on China's government debt, in one of the most prominent warnings to date over a credit buildup in the world's second-largest economy.

* A former KPMG LLP partner admitted passing on stock tips about clients to a friend who gave him cash and gifts, in a scandal that led the big accounting firm to resign as auditor for two companies, Herbalife Ltd and Skechers USA Inc .

* Yahoo Inc and Apple Inc have been discussing how more Yahoo services can play a prominent role on Apple's iPhone and iPad, people briefed on the matter said.

* European government policy makers are considering rules that would include short-term loans from other banks among the liabilities that could suffer losses when authorities close down failing banks, according to a document seen by The Wall Street Journal.

* Cablevision Systems Corp Chief Executive James Dolan is giving his wife wider responsibilities, including oversight of sales of cable TV, Internet and voice products in addition to product management and marketing.

* The European Union has opened an antitrust investigation into MasterCard Inc following concerns over some of the credit-card company's interbank fees.



James Crosby, the boss of failed lender HBOS, requested to be stripped of his knighthood following a scathing report into the 2008 collapse of the bank he once presided over.

KPMG resigned as auditor to two US companies after accusing a former partner of engaging in insider trading.

Britain's financial watchdog is investigating last year's technology failures at state-backed Royal Bank of Scotland that left 17 million customers without access to their accounts for up to three weeks.

Global ratings agency Fitch cut China's long-term local currency credit rating to A-plus from AA-minus over concerns that the country's rising debt problems will require a government bailout. Austria and Luxembourg are set to ease longstanding bank secrecy rules in a move that will allow other Eurozone member states to access their depositors' account details amid pressure to crack down on tax evasion in Europe.

The European Union has opened an antitrust investigation into MasterCard Inc over concerns that some of the credit-card company's interbank fees are anticompetitive.

Brazil's state-controlled oil company Petrobras is considering possible business ventures with companies controlled by billionaire Eike Batista.



* KPMG resigned as auditor for Herbalife Ltd and Skechers USA Inc and withdrew audit reports after a KPMG employee was found to have given information on clients to a third party.

* President Obama announced three nominations to the National Labor Relations Board on Tuesday to complete a package of five nominees - three Democrats and two Republicans - that the administration hopes Senate Republicans will approve to end the board's unusual limbo.

* Months after brokering a multibillion-dollar settlement with banks over mortgage foreclosure abuses, the Federal Reserve and the Office of the Comptroller of the Currency are set to dole out roughly $1.2 billion in cash relief in the first batch of payments to troubled borrowers.

* James Crosby, a former chief executive of failed British bank HBOS, said on Tuesday that he would ask authorities to remove his knighthood in light of a damning report published last week that blamed him in part for the mortgage lender's 2008 collapse.

* Southeastern Asset management says that proposals from the Blackstone Group and Carl Icahn are superior to the $13.65-a-share offer for Dell Inc from Michael Dell and the private equity firm Silver Lake.

* Theme park operator SeaWorld Entertainment is seeking to raise up to $540 million in its initial public offering. Half of the shares sold will come from its owner, the Blackstone Group .




* Unionized employees of the Liquor Control Board of Ontario (LCBO) have overwhelmingly voted in favor of a strike should contract talks with the retail giant break down. The Ontario Public Service Employees Union, which represents more than 7,000 LCBO staff, says 95 percent of the members voted in favour of a walkout.

* Montreal is lifting its 65-year-old, Prohibition-style ban on street food, providing hope for sidewalk foodies and ending a quirky distinction for a city reputed to be among the gastronomic capitals of the continent.

Reports in the business section:

* An abundant supply of labour is the key ingredient that has allowed Canada to expand its economy over several decades despite disappointing productivity gains, a trio of economists from the U.S. Federal Reserve Board and the International Monetary Fund argue in a report to be published Wednesday in the International Productivity Monitor.

* Agrium Inc has defeated a boardroom challenge from dissident shareholder Jana Partners LLC, with investors choosing to back the company's board slate after an acrimonious months-long campaign that ended in a flurry of accusations of unfair play.


* In its effort to get more people on public transit, Fort McMurray is unleashing an unlikely, yet powerful strategy: It's building the most tricked-out bus shelters Canada has ever seen.

By year's end, residents of the northern Alberta oil sands city will have 300 heated bus shelters to wait in, protected from a certain brand of Canadian winter that can whip winds as cold as 40 below.




- A total of 4.7 million affordable houses are planned for construction this year, according to an official announcement released on Tuesday by Ministry of Housing and Urban-Rural Development.

- New medicine which can fight off bird flu, H7N9, has been authorized by China Food and Drug Administration and is expected to be introduced to the market in the first half on this year.

- Troubled solar panel manufacturer Suntech Power Holdings Co Ltd said on Tuesday they are consulting with several investors, including Buffett-led MidAmerican Energy Holdings Co.


- The Chinese tourism authority said overseas tourist flows declined 1.8 percent in the first quarter due to concerns about environmental issues.

- The city of Guangzhou in southern Guangdong province will allow tourists to visit for 72 hours without a visa, following a similar program in Shanghai.


- The inspection of initial public offerings companies starts today in Shanghai National Accounting Institute and will last till the end of June.


- China's economy growth will hit 8.2 in 2013 and 8.0 percent in 2014, supported by strong fiscal expenditures and consumption.

Fly On The Wall 7:00 AM Market Snapshot



American Eagle (AEO) upgraded to Overweight from Neutral at Piper Jaffray
AmerisourceBergen (ABC) upgraded to Buy from Neutral at Goldman
CYS Investments (CYS) upgraded to Outperform from Market Perform at Keefe Bruyette
Geo Group (GEO) upgraded to Overweight from Equal Weight at Barclays
IBM (IBM) upgraded to Buy from Neutral at UBS
Pacific Sunwear (PSUN) upgraded to Overweight from Neutral at Piper Jaffray
Siemens (SI) upgraded to Neutral from Underperform at Exane BNP Paribas
Starwood Property (STWD) upgraded to Buy from Neutral at BofA/Merrill


Aeropostale (ARO) downgraded to Sell from Neutral at Goldman
Agrium (AGU) downgraded to Neutral from Overweight at Piper Jaffray
Community Health (CYH) downgraded to Hold from Buy at Deutsche Bank
Expeditors (EXPD) downgraded to Buy from Conviction Buy at Goldman
France Telecom (FTE) downgraded to Conviction Sell from Sell at Goldman
Health Management (HMA) downgraded to Hold from Buy at Deutsche Bank
NetApp (NTAP) downgraded to Neutral from Buy at UBS
ONEOK Partners (OKS) downgraded to Sell from Neutral at Goldman
TE Connectivity (TEL) downgraded to Neutral from Buy at BofA/Merrill
Tenet Healthcare (THC) downgraded to Hold from Buy at Deutsche Bank


H&R Block (HRB) initiated with an Outperform at Wedbush
Heartland Financial (HTLF) initiated with a Buy at DA Davidson
Hologic (HOLX) initiated with a Hold at Stifel
Icahn Enterprises (IEP) initiated with a Buy at Jefferies
MarkWest Energy (MWE) initiated with a Neutral at Goldman
Netflix (NFLX) initiated with an Underweight at Evercore
P.A.M. Transportation (PTSI) initiated with a Buy at Wunderlich


Blackstone (BX) solicits partners, tech companies for Dell bid, DJ reports
W.R. Grace (GRA) sees FY13 adjusted EBITDA $665M-$685M
Sanofi (SNY), Pieris broaden existing collaboration, terms not disclosed


Companies that beat consensus earnings expectations last night and today include:
Adtran (ADTN), SeaChange (SEAC), Healthcare Services (HCSG), PriceSmart (PSMT)

Companies that missed consensus earnings expectations include:
W.R. Grace (GRA)


  • Ron Johnson’s departure as CEO of  J.C. Penney (JCP) is a blow to hedge fund manager William Ackman, who set out to change the retailing world by revamping Penney and now is stuck with a large stake in a broken company run by the man he pushed out, the Wall Street Journal reports
  • Nearly a year after walking away from Facebook (FB), GM (GM) said it has returned to advertising on the social network on a trial basis. GM executives are intrigued with Facebook's new audience targeting tools designed to deliver ads to consumers who are more likely to buy, the Wall Street Journal reports
  • Thermo Fisher Scientific (TMO) made a binding offer for Life Technologies (LIFE) as private equity firms raced to finalize a consortium to take the genetic testing equipment maker private, sources say, Reuters reports
  • Toyota Motor (TM) said its Corolla was the world's top selling car of 2012, contradicting rival  Ford (F) which claimed top spot for its Focus model, Reuters reports
  • Home prices are climbing too fast relative to buyer incomes, signaling that property values may fall in some U.S. cities once mortgage rates rise and reduce affordability, according to a study by Zillow Inc. (Z), Bloomberg reports
  • China’s yuan surged to a 19-year high after the central bank set a record reference rate for the currency amid speculation of rising capital inflows. The People’s Bank of China raised the fixing by 0.15%, the biggest increase since February 8, to 6.2548 per dollar, Bloomberg reports


Durata Therapeutics (DRTX) files to sell $50M of common stock
Infinity Pharmaceuticals (INFI) plans to sell 8.5M shares for holders
KNOT Offshore Partners (KNOP) 7.45M share IPO priced at $21.00
Realogy (RLGY) files to sell 35M shares of common stock for holders
Resource Capital (RSO) announces 16.25M share common stock offering
Rexnord (RXN) files to sell 67.9M shares of common stock for holders
Synergy Pharmaceuticals (SGYP) files to sell $90M of common stock
Taylor Morrison (TMHC) 28.57M share IPO priced at $22.00
Tornier (TRNX) files to sell 8M ordinary shares by holders


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