Frontrunning: May 2

  • The number of bond funds that own stocks has surged to its highest point in at least 18 years (WSJ)
  • Clubby London Trading Scene Fostered Libor Rate-Fixing Scandal (WSJ)
  • Cheap money bankrolls Wall Street's bet on housing (Reuters)
  • Bank of Japan reveals concerns over easing policy (FT)
  • iPads and low-end rivals propel higher tablet shipments  (Reuters)
  • China Cyberspies Outwit U.S. Stealing Military Secrets (BBG)
  • Draghi Fuels Bets on Rate Cut With Risk of Limited Impact (BBG)
  • China guides renminbi to fresh high against US dollar (FT)
  • Japan is preparing to start up a massive nuclear-fuel reprocessing plant (WSJ)
  • Apple’s Ive Seen Risking iOS 7 Delay on Software Overhaul (BBG)
  • UBS faces calls for break-up at investor meeting (Reuters)
  • Reinhart-Rogoff Uproar Settles Nothing (BBG)
  • Well duh: Lagarde welcomes Japan’s big stimulus (FT)


Overnight Media Digest


* The U.S. Department of Defense expects in coming weeks to grant two separate security approvals for Samsung's Galaxy smartphones, along with iPhones and iPads running Apple's latest operating system -- moves that would boost the number of U.S. government agencies allowed to use those devices.

* Twelve months ago, Facebook Inc barely had a mobile business. On Wednesday, the social network disclosed how that has changed: Nearly one out of every three dollars it produces now comes from advertising on smartphones and tablets.

* Boeing Co's board of directors gave approval to its commercial airplanes unit to start selling a new version of its long-range 777 jetliner, according to a person familiar with the decision.

* An Ontario court rejected an attempt by Ecuadorean plaintiffs to collect a multi-billion dollar environmental award from Chevron Corp in Canada, giving the oil company a fresh victory in a legal battle that has sprawled far beyond the Amazonian jungles where it began.

* Cablevision Systems Corp is adding Glenn Beck's upstart network TheBlaze TV to its programming lineup later this month, the companies announced, the latest move by the conservative commentator to expand his presence on traditional TV.

* Ford Motor Co said it would add a third shift to its Kansas City, Missouri assembly plant to increase production of F-150 pickup trucks as demand for the vehicles rises.

* Eastman Kodak Co has filed a plan to exit Chapter 11 bankruptcy protection that would hand ownership of the company to its bondholders and unsecured creditors.



Experian Plc founder and Chairman John Peace has announced plans to resign, amid mounting pressure from shareholders who think Peace - also chairman of Burberry Group and Standard Chartered - is shouldering too much responsibility.

Apple will avoid a potential $9 billion tax bill by paying its shareholders using cash from its $17 billion blockbuster bond issue, instead of bringing back cash from abroad.

Investors are fretting over Accor's future after its board said the decision to oust Chief Executive and Chairman Denis Hennequin last week did not stem from any disagreement over the company's strategy.

A Royal Dutch Shell-backed natural gas project in Iraq -- worth $17 billion -- began operations on Wednesday, signalling the country's post-conflict recovery.

Goldman Sachs Group is being criticised for potential profits reaped over a $3 billion bond deal for a Malaysian government fund before this week's national elections.

Billionaire Warren Buffett's Berkshire Hathaway is buying the remaining 20 percent outside stake in the Israel-based International Metalworking Cos for $2 billion.



* The Federal Reserve said Wednesday that its economic stimulus campaign would press forward at the same pace it has maintained since December, putting to rest any suggestion that it was leaning toward doing less.

* This time last year, just before Facebook made its public debut, the social network did not show a single advertisement on its mobile applications. And over time, the cries about its mobile strategy grew louder and louder. Those concerns were silenced on Wednesday, when Facebook's earnings report offered early signs that the company was cracking the mobile revenue code.

* Berkshire Hathaway agreed on Wednesday to buy the 20 percent of the International Metalworking Companies (IMC) that it does not already own, for $2.05 billion, giving it full control of the company.

* General Motors and Mountain Dew withdrew advertisements on Wednesday after receiving criticism that the ads were racially offensive.

* In Greece's first major privatization deal since the country's debt crisis erupted three years ago, the government on Wednesday agreed to sell a controlling stake in the state gambling company OPAP to Emma Delta, a Greek-Czech investment fund, Finance Minister Yannis Stournaras said.

* The American arm of the ING Group, the Dutch financial services firm, priced its initial public offering at $19.50 a share, below its expected range of $21 to $24. Still, the transaction raised about $1.27 billion after slightly increasing the number of shares sold, to 65.2 million. It is the second-biggest market debut in the United States this year.




* Canadian banks and other financial institutions should be required to find out the beneficial owners of corporations or trusts that are transferring money overseas, according to recommendations in a new report on tax evasion by Parliament's finance committee.

* The Parti Québécois, which has come under attack in recent months for cutting social programs, says it will reconsider a commitment to eliminating Quebec's deficit.

Reports in the business section:

* Ottawa and Canadian dairy farmers have bowed to pressure from the fast-food industry and will let thousands of pizza restaurants buy heavily discounted mozzarella cheese.

* Tim Hortons Inc is under pressure from an activist investor that wants the company to pare back its U.S. growth and borrow billions to fund a share buyback.

* An Ontario Superior Court judge has sided with Chevron Corp and tossed out an attempt by lawyers for Amazonian villagers trying to use Canadian courts to collect on a controversial $19 billion judgment leveled against the company in Ecuador over oil pollution.


* B.C.'s police watchdog on Wednesday officially cleared the Prince George RCMP of any criminal wrongdoing for shooting dead Gregory Matters, a 40-year-old Bosnia veteran suffering from post-traumatic stress, in an altercation at his rural home.

* Amid calls from one high ranking government official to develop the Toronto waterfront "faster and harder", the head of the agency in charge of revitalization signaled it wants the power to borrow money in the future.


* Canada's banks rank their prudential regulator, the Office of the Superintendent of Financial Institutions (OSFI), ahead of other regulators domestically and abroad when it comes to the relationship between the watchdog and the financial institutions, according to The Strategic Counsel, an independent research firm.

* The acquittal in January of three former Nortel Networks' executives on fraud charges prompted questions inside the RCMP about the force's ability to tackle future white-collar investigations.




- An overseas unit of Zijin Mining Group Co Ltd has agreed to buy 127 million yuan ($20.60 million) worth of bonds issued by NKWE Platinum Ltd that can be converted into 200 million shares of the South African mining company.


- The overall net profit of listed companies in China grew around 10 percent to 551.4 billion yuan in the first quarter, compared with a decline of 0.4 percent in the same period last year.

- The National Energy Administration is working on developing a power grid and is also taking measures to solve the problems in the wind power and photovoltaic industries.


Corporate Finance

* Panasonic Corp sold some $1 billion worth of stocks in companies such as Toyota Motor Corp as part of a plan to offload assets to bolster its finances, two sources with knowledge of the deals said.

* Cerberus Capital Management LP has completed fundraising for its latest flagship private equity fund, raising $2.61 billion to invest in distressed assets, two sources said, bringing the capital Cerberus has raised from investors in the last two years to over $11 billion.

* IBM and Lenovo Group Ltd have called off negotiations over a multibillion-dollar deal in which the Chinese company would have bought Big Blue's low-end server business, Fortune magazine cited unidentified sources as saying on Wednesday.

* The private equity arm of OMERS, one of Canada's largest pension plans, has hired Barclays Plc and Harris Williams & Co to explore a sale of United States Infrastructure Corporation (USIC), three people familiar with the matter said this week.

* Greece agreed to sell a controlling 33 percent stake in its gambling monopoly OPAP to Greek-Czech investment fund Emma Delta for 652 million euros ($859.6 million), two senior Greek government officials told Reuters on Wednesday.


Fly On The Wall 7:00 AM Market Snapshot



AmTrust Financial (AFSI) upgraded to Buy from Neutral at Compass Point
Arch Coal (ACI) upgraded to Equal Weight from Underweight at Morgan Stanley
CONSOL Energy (CNX) upgraded to Overweight from Equal Weight at Morgan Stanley
CommVault (CVLT) upgraded to Overweight from Neutral at Piper Jaffray
EZCORP (EZPW) upgraded to Outperform from Market Perform at Wells Fargo
Genesee & Wyoming (GWR) upgraded to Strong Buy from Outperform at Raymond James
Invesco (IVZ) upgraded to Buy from Neutral at Sterne Agee
Nabors Industries (NBR) upgraded to Hold from Underperform at Jefferies
Natus Medical (BABY) upgraded to Outperform from Market Perform at Raymond James
PrivateBancorp (PVTB) upgraded to Strong Buy from Outperform at Raymond James
Regal-Beloit (RBC) upgraded to Buy from Hold at KeyBanc
Regeneron (REGN) upgraded to Outperform from Market Perform at JMP Securities
Seagate (STX) upgraded to Buy from Hold at Needham
Superior Energy (SPN) upgraded to Buy from Hold at Jefferies
Tractor Supply (TSCO) upgraded to Buy from Neutral at Janney Capital
U.S. Silica (SLCA) upgraded to Buy from Hold at Jefferies
Viacom (VIAB) upgraded to Buy from Hold at Wunderlich


Active Network (ACTV) downgraded to Sector Perform from Outperform at RBC Capital
Bill Barrett (BBG) downgraded to Hold from Buy at Stifel
California Water Service (CWT) downgraded to Hold from Buy at Brean Capital
Comstock Resources (CRK) downgraded to Hold from Buy at Stifel
DXP Enterprises (DXPE) downgraded to Hold from Buy at BB&T
EXCO Resources (XCO) downgraded to Equal Weight from Overweight at Stephens
Exelon (EXC) downgraded to Hold from Buy at Wunderlich
Forum Energy (FET) downgraded to Hold from Buy at Jefferies
Franklin Resources (BEN) downgraded to Neutral from Buy at Sterne Agee
Genco Shipping (GNK) downgraded to Underperform from Neutral at Credit Suisse
Hyatt Hotels (H) downgraded to Neutral from Outperform at Credit Suisse
Insulet (PODD) downgraded to Market Perform from Outperform at Raymond James
Jack Henry (JKHY) downgraded to Market Perform from Outperform at Wells Fargo
MasterCard (MA) downgraded to Market Perform from Outperform at Raymond James
Micron (MU) downgraded to Underperform from Outperform at CLSA
Questar (STR) downgraded to Market Perform from Outperform at Raymond James
Ritchie Bros. (RBA) downgraded to Underperform from Neutral at BofA/Merrill
SolarCity (SCTY) downgraded to Neutral from Buy at Goldman
Williams Partners (WPZ) downgraded to Neutral from Buy at BofA/Merrill


Archer Daniels (ADM) to acquire GrainCorp for A$12.20 per share or A$3.4B
AB InBev (BUD) commenced tender offer for Grupo Modelo (GPMCY) shares it doesn't currently own
Facebook (FB) said ad growth particularly strong from new small, medium marketers
Fitch affirmed U.S. Steel's (X) IDR at “BB-”, said rating outlook stable
Las Vegas Sands (LVS) “seriously” considering buyback, special dividend
Avis Budget (CAR) expects Zipcar to add $260M to FY13 revenue
Bob Evans (BOBE) to restate Q3 results


Companies that beat consensus earnings expectations last night and today include:
Becton Dickinson (BDX), LeapFrog (LF), Cigna (CI), Tesoro (TSO), Marriott (MAR), Prudential (PRU), Allstate (ALL), Seagate (STX), MetLife (MET), Las Vegas Sands (LVS), CBS (CBS)
Companies that missed consensus earnings expectations include:
Western Refining (WNR), Integra LifeSciences (IART), Calpine (CPN), Charles River Labs (CRL), Archer Daniels (ADM), Yelp (YELP), Caesar's Entertainment (CZR), Facebook (FB)

Companies that matched consensus earnings expectations include:
Dynamics Research (DRCO), Invesco Mortgage (IVR), Tile Shop (TTS), Genpact (G)


  • The number of bond funds that own stocks has jumped to its highest point in at least 18 years, as typically conservative investors take bigger risks to boost returns. The scale of bond funds' shift into stocks is unusual, fund experts said, and could expose investors to unexpected losses, the Wall Street Journal reports
  • Lenovo’s (LNVGY) talks with IBM (IBM) to buy part of the U.S. company's server business have broken down due to differences over price, sources say, the Wall Street Journal reports
  • Dish Network (DISH) Chairman Charlie Ergen escalated the war of words with Japan's SoftBank (SFTBF) over the future of  Sprint Nextel (S), saying Sprint's network needed modernization best performed by English-speaking employees from a U.S. firm, Reuters reports
  • As Glencore (GLNCY) completes its $30B acquisition of Xstrata (XSRAY) today, investors and rivals are asking where the company’s CEO Ivan Glasenberg will look for his next deal. Many are already pointing to vulnerable or undervalued rivals, including Anglo American (AAUKY), Reuters reports
  • Gold’s longest winning streak in at least nine decades is poised to end as diminishing trust in the metal’s ability to preserve value spurred a majority of analysts to predict the first annual retreat since 2000. Bloomberg reports
  • China’s yuan advanced to a 19-year high after the central bank raised the currency’s reference rate by the most in more than six months amid speculation U.S. monetary stimulus will spur faster gains. Volatility surged, Bloomberg reports


ING U.S. (VOYA) 65.2M share IPO priced at $19.50
Idera Pharmaceuticals (IDRA) raises $16.5M in common stock, warrant offering
Nexstar (NXST) files to sell 3.5M shares of common stock for holders
Novadaq (NVDQ) announces sale of $50.3M of common shares at $12.90 per share
Star Bulk Carriers (SBLK) files 14M share rights offering


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