Frontrunning: May 24

  • The deeper agenda behind "Abenomics" (Reuters)
  • BoJ governor Haruhiko Kuroda promises to stabilise bond market (FT)
  • Obama Sees Sunset on Sept. 11 War Powers in Drone Limits (BBG)
  • Lower CPMs for everyone: FTC Begins Probe of Google's Display-Ad Business (WSJ)
  • Apple’s Tax Magic Leaves Irish Bondholders Unmoved (BBG)
  • Asia Goes on a Debt Binge as Much of World Sobers Up (WSJ)
  • All hail Gazpromia: UK gas supply six hours from running out in March (FT)
  • Spain’s banks face €10bn more provisions (FT) ... and then more, and more, and more
  • Truck strike may have caused Washington state bridge collapse, officials says (Reuters)
  • P&G Says A.G. Lafley Rejoins as Chairman, CEO (BBG)
  • Five Key Things About the SAC Insider Case (BBG)


Overnight Media Digest


* In a potential major setback for Apple Inc, a federal judge who will preside over a coming antitrust trial that will determine whether it engaged in a conspiracy to raise prices for e-books said on Thursday that the government is likely able to prove its case against the computer maker.

* Goldman Sachs Group Inc said at its annual meeting that it has adopted 39 initiatives aimed at strengthening its business practices in the wake of the 2008 financial crisis as shareholders voted to approve executive pay and backed all of the firm's directors.

* AT&T Inc has added a new monthly administrative fee of 61 cents to the bills of all of its contract wireless lines as of May 1, a move that could bring in more than a half billion dollars in annual revenue to the telecom giant.

* California's new health insurance exchange, the largest state-operated marketplace emerging under the federal health care overhaul, will offer consumers premiums that vary widely but often avoid the steepest increases experts had predicted.

* Activist investor group Knight Vinke Asset Management LLC, pushing for a breakup of UBS AG, will meet the Swiss bank's Chief Financial Officer Tom Naratil next week, according to a person familiar with the situation.

* New Chief Executive of CBOE Holdings Inc, Edward Tilly, said on Thursday that he plans to take its highly prized volatility franchise global and is open to deal making to bolster the company's leading position in stock options trading.



Data on ENRC may have been stolen after a computer hacking attack and a domestic burglary, the miner said.

Banks in Spain will have to set aside up to 10 billion euros to cover loans that borrowers will find difficult to repay.

Google is facing yet another anti-trust probe with the U.S. Federal Trade Commission having launched an informal inquiry into the company's display advertising business.

EasyJet will buy take-off and landing slots held by Flybe at Gatwick for 20 million pounds.

Britain's domestic security service MI5 is facing questions over what it knew about the men suspected of killing a British soldier in Woolwich on Wednesday.

Britain came close to running out of natural gas in March with only six hours worth of supply left in storage, a senior energy official said.



* As large companies fight for a cut in the official corporate tax rate, small businesses fear they will pay for it.

* In a Senate subcommittee hearing on Apple's avoidance of paying taxes, John McCain and others tried to point out how unfair the current system was to domestic corporations.

* In a sign of Wall Street's resurgent influence in Washington, bank lobbyists are aiding lawmakers in drafting legislation that softens financial regulations.

* Stocks regained ground in New York after global investors were rattled by signs of a slowdown in Chinese manufacturing and a potential easing of central bank support for the economy.

* Four SAC Capital Advisors executives were ordered to testify before a grand jury investigating actions at the hedge fund.

* Apple-1 computers have sold for hundreds of thousands of dollars in recent auctions, a run-up reflecting the Apple's mystique.




* Toronto Mayor Rob Ford's executive committee is preparing to take the extraordinary step of publicly urging the troubled leader to confront allegations of drug use, and is making contingency plans to run the city in his absence.

* Canadian Prime Minister Stephen Harper admitted "perhaps" he should have acted more quickly after revelations that his chief of staff Nigel Wright dipped into his personal wealth to repay senator Mike Duffy's improperly claimed housing expenses.

Reports in the business section:

* The Quebec government announced plans to hold its own hearings on Enbridge Inc's proposed pipeline project to bring western oil to Montreal, a move that could raise roadblocks to Alberta's efforts to access new markets for its growing oil production.

* Mobilicity's bond holders are hedging their bets by giving their blessing to a $380 million acquisition deal by Telus Corp , while postponing a separate vote on a backup plan should the federal government end up killing the controversial deal.

* Flexjet, which caters to flyers sharing in the ownership of a business jet, said sales bounced back strongly in the first quarter, indicating a recovery in demand. The division of Montreal-based Bombardier Inc said it reported new business growth of 83 per cent in the first quarter, compared with the year earlier period. ()


* The Canadian federal government threatened "retaliatory measures" against the United States in a dispute over meat labeling that Ottawa and the World Trade Organization (WTO) consider discriminatory. The U.S. government announced new regulations on "country of origin labeling" that would track beef and hogs from livestock right through the meat processing and distribution systems.

* The personal use of illicit drugs, from heroin to crack cocaine, should be decriminalized as part of a federal provincial strategy to tackle drug abuse, British Columbia-based Canadian Drug Policy Coalition said in a report.


* Ontario Municipal Employees Retirement System (OMERS) Sponsors Corporation, one of Canada's largest pension funds, is facing a $10 billion pension funding deficit and considering a drastic proposal that would reduce benefits paid to retiring workers, or force them to work years longer for the same retirement income.

* Canadian Finance Minister Jim Flaherty said steps he took to tighten mortgage lending rules over the past four years have helped to moderate price increases in the nation's housing market.

* Alberta's bitumen growth prospects could slow on shortages of a much lighter product as companies opt to send crude directly to refineries on the U.S. Gulf Coast and in Asia rather than process the stuff at home.



-- Guangxi Guiguan Electric Power Co Ltd will buy 85 percent stake in LongTan Hydropower Development Co Ltd by offering around 15.15 billion yuan ($2.47 billion) of shares to LongTan's parent companies.


-- Premier Li Keqiang's visit to Pakistan highlights the friendship between the two countries, said an editorial.


-- The reconstruction of Lushan area in Sichuan province, which was hit by a major earthquake on April 20, will be completed in 3 years, according to the Sichuan Development and Reform Commission.


Corporate Finance

* Former News Corp president Peter Chernin and private equity fund Guggenheim Digital Media have placed bids for Hulu, two people with knowledge of the matter told Reuters, triggering a tug-of-war for the online video service.

* Google Inc is considering buying Israeli mobile satellite navigation start-up Waze Inc, which may lead to a bidding war with Facebook Inc, Bloomberg news reported, citing people familiar with the matter.

* Dish Network Corp has added Canada's Scotiabank to the four banks it had already lined up to finance its $25.5 billion bid for Sprint Nextel Corp, according to two people familiar with the matter.

* Independent refiner Tesoro Corp is expected to take control of BP Plc's 240,000 barrel-per-day Los Angeles-area refinery in Carson, California, on June 1 as part of a $2.5-million purchase of the energy giant's southern California assets, according to sources familiar with the deal.

* Belgian grocer Delhaize is looking to sell two of its U.S. businesses as it continues to cut costs in the region, according to two sources familiar with the matter.

* Australian casino company Crown Ltd is selling its entire 10 percent stake in rival Echo Entertainment Group , the operator of Sydney's sole casino, a source with knowledge of the sale said.

* The proposed new chief executive of National Bank of Ras Al Khaimah, one of two banks which earlier this month were named as victims of a massive global bank card fraud, has quit, two sources within the bank said on Thursday.

* Malaysian billionaire Vincent Tan is exploring an initial public offering of UK football team Cardiff City as early as this year, people with knowledge of the matter told Reuters, in a deal that would follow the team's recent promotion to the Premier League.

* Lawyers for SAC Capital Advisors called a meeting with U.S. prosecutors and agents from the Federal Bureau of Investigation in April to argue that there should be no insider trading charges filed against the $15 billion hedge fund or its founder Steven A. Cohen, according to sources familiar with the matter


Fly On The Wall 7:00 AM Market Snapshot



DDR Corp. (DDR) upgraded to Buy from Hold at Jefferies
Gordmans Stores (GMAN) upgraded to Overweight from Neutral at Piper Jaffray
Pandora (P) upgraded to Outperform from Sector Perform at RBC Capital
Procter & Gamble (PG) upgraded to Buy from Neutral at UBS
Sherwin-Williams (SHW) upgraded to Outperform from Neutral at RW Baird
Wendy's (WEN) upgraded to Buy from Neutral at Janney Capital
Whiting Petroleum (WLL) upgraded to Buy from Neutral at SunTrust


Centene (CNC) downgraded to Market Perform from Outperform at Raymond James
Cirrus Logic (CRUS) downgraded to Hold from Buy at Canaccord
Cubist (CBST) downgraded to Neutral from Buy at Janney Capital
Gerdau SA (GGB) downgraded to Neutral from Overweight at JPMorgan
Marvell (MRVL) downgraded to Underperform from Market Perform at JMP Securities
Melco Crown (MPEL) downgraded to Neutral from Outperform at Macquarie
Nordson (NDSN) downgraded to Market Perform from Outperform at BMO Capital
Nordson (NDSN) downgraded to Perform from Outperform at Oppenheimer (CRM) downgraded to Neutral from Outperform at Wedbush


Alnylam (ALNY) initiated with a Buy at Deutsche Bank
Consumer Portfolio (CPSS) initiated with an Equal Weight at Stephens
Credit Acceptance (CACC) initiated with an Overweight at Stephens
Kodiak Oil & Gas (KOG) initiated with a Hold at Deutsche Bank
LKQ Corp. (LKQ) initiated with a Buy at Stifel
Teleflex (TFX) initiated with an Outperform at William Blair


Intuitive Surgical (ISRG) won civil lawsuit that accused it of negligence in training doctors using its surgical robot machines
Google (GOOG) lost bid to block U.S. imports of Microsoft's (MSFT) Xbox, Bloomberg reports
Google considering acquisition of Waze, Bloomberg reports
Crest Financial reiterated opposition to Sprint-Clearwire (S, CLWR) merger
Sears Holdings (SHLD) evaluating strategic alternatives for Protection Agreement unit
GameStop (GME) CEO told CNBC that digital, mobile supplementing decline in console business
A.G. Lafley rejoined Procter & Gamble (PG) as President, CEO
Campbell Soup (CPB) to acquire Plum Organics, terms not disclosed


Companies that beat consensus earnings expectations last night and today include:
Mentor Graphics (MENT), Infoblox (BLOX), Williams-Sonoma (WSM), Shoe Carnival (SCVL), Marvell (MRVL), Aeropostale (ARO), New York & Co. (NWY), Gap (GPS)

Companies that missed consensus earnings expectations include:
America's Car-Mart (CRMT), Sears Holdings (SHLD)

Companies that matched consensus earnings expectations include:
TransAtlantic Petroleum (TAT), Nordson (NDSN), (CRM), Pandora (P), Ross Stores (ROST)


  • Fed Chairman Bernanke told Congress that the central bank could start reducing its $85B-per-month bond-buying program at one of its "next few meetings." But his message has been muddled by a number of other signals sent by the Fed leaving some investors confused, the Wall Street Journal reports
  • Google (GOOG) increasingly appears to be following’s (AMZN) lead. Last year, Amazon rolled out AmazonSupply, an e-commerce site featuring industrial goods, and Google followed suit this January, the Wall Street Journal reports
  • Former News Corp. president Peter Chernin and private equity fund Guggenheim Digital Media placed bids for Hulu ((NWSA, DIS), sources say, triggering a tug-of-war for the online video service. DirecTV (DTV) and Time Warner Cable (TWC) also put in bids, a source added, Reuters reports
  • Apple (AAPL) has operated almost tax-free in Ireland since 1980, welcomed by a government keen to bring jobs to what was then one of Europe's poorest countries, former company executives and Irish officials say, Reuters reports
  • Fannie Mae (FNMA) is taking potential profits away from mortgage lenders as it posts record earnings that are fueling industry-wide concern the government-backed company is regaining its swagger even as lawmakers plot its demise, Bloomberg reports
  • Lenovo Group (LNVGY) said the company’s cash reserves of more than $3B enable it to pursue an acquisition of almost any size to expand in new business areas, including adding assets to bolster its growing business for smartphones and tablets, and hardware such as servers and storage for business computing, Bloomberg reports


Venaxis (APPY) 10M share Secondary priced at $1.25