Frontrunning: June 12

  • Pimco Sees 60% Chance of Global Recession in Five Years (BBG)
  • Global Tumult Grips Markets (WSJ)
  • NSA Secrecy Prompts a Pushback (WSJ)
  • ANA Scraps 787 Dreamliner Flight as Engine Fails to Start (BBG) - one of these days, though, it shall fly
  • Kuroda’s April-Was-Enough Message Faces Markets Wanting More (BBG)
  • S&P warns top US banks are still ‘too big to fail’ (FT)
  • Democracy for $500 per plate (Reuters)
  • Iran, the United States and 'the cup of poison' (Reuters)
  • Japan grapples with lack of entrepreneurs (FT)
  • Greece First Developed Market Cut to Emerging at MSCI (BBG)
  • Asia's ticking time bonds; time to cut and run? (Reuters)
  • Glencore picks former Morgan Stanley boss John Mack for board (FT)
  • Sony Outduels Microsoft in First PS4-Xbox One Skirmish (BBG)
  • As if there was any doubt: Banks Get Reprieve on New Swaps Rule (WSJ) - because absolutely nobody can stand up on their own two feet yet
  • Dimon pledges to fight ‘whale’ suits (FT)
  • Vodafone in early talks to buy Kabel Deutschland in €7bn deal (FT)

Overnight Media Digest


* The tectonic plates of the world economy are shifting, raising the question of whether markets are experiencing a bumpy return to a new normal or new period of volatility.

* Federal regulators sued discount retailer Dollar General and a U.S. unit of German auto maker BMW, alleging improper use of criminal-background checks in hiring.

* Facebook chief Mark Zuckerberg faced his shareholders for the first time on Tuesday, and many weren't happy.

* The battle between IBM and Amazon over a $600 million contract to set up a cloud-computing system for the Central Intelligence Agency shows the growing importance of intelligence-agency business for tech companies.

* Coty, the beauty-products conglomerate behind Calvin Klein perfume and Lady Gaga fragrance, will price its IPO late Wednesday, marking its long-awaited market debut following delays.

* The SEC fined the Chicago Board Options Exchange, owned by CBOE Holdings Inc, with a $6 million fine over allegations it failed to prevent illegal short-selling activities.

* The Obama administration has increased its economic and diplomatic pressure on Iran's rulers in a bid to shape how the country's presidential election on Friday is viewed inside and outside the country.

* Tracy Britt, 28 years old, has become one of the most influential women within Warren Buffett's Berkshire Hathaway . Britt is one of the executives Buffett is grooming for senior positions after he steps down, say people familiar with the matter and Berkshire analysts.



JPMorgan Chase & Co Chief Executive Jamie Dimon hit back against allegations that the bank's executives misled shareholders last year during its unfolding London Whale derivatives loss.

Google Inc on Tuesday bought mapping app Waze for $1 billion, to safeguard its lead in one of the most crucial aspects of smartphone usage.

Google Inc and Facebook Inc have requested that the U.S. government ease up on regulation preventing Internet companies from disclosing how many national security requests they receive for users' data.

Facebook Inc Chief Executive Mark Zuckerberg faced a barrage of criticism from investors who were disappointed with the social network's slumping stock price at its first annual general meeting on Tuesday.

International Consolidated Airlines Group on Tuesday reached an agreement with trustees to its pension schemes that, it said, would allow British Airways to move to normal dividend payments over time.

Milanese luxury brand Prada SpA reported slow first-quarter profit and sales, hurt by a clampdown on luxury gifts in China and lower European consumer spending.



* The interest rate charged by lenders has been going down for most of the time since the early 1980s, but there are signs that this will not last.

* After weeks of talks, Google Inc completed a deal to buy a Israeli social mapping startup, which uses a combination of GPS tracking and contributions from its users about road conditions to help drivers navigate.

* As the current generation of reactors moves toward retirement, a project in Georgia and one in South Carolina may be the industry's last best hope.

* A Federal District Court judge in Manhattan ruled on Tuesday that Fox Searchlight Pictures had violated federal and New York minimum wage laws by not paying production interns, a case that could upend the long-held practice of the film industry and other businesses that rely heavily on unpaid internships.

* Walgreen Co, the biggest pharmacy operator in the United States, agreed on Tuesday to pay $80 million to resolve federal charges that it failed to properly control the sales of narcotic painkillers at some of its outlets.

* Global stocks fell sharply after the Bank of Japan stood by its monetary policy and an ambitious target to stoke 2 percent inflation in two years.

* At a hearing considering whether measures to contain the European crisis are legal, some witnesses pushed for Germany to leave the currency union.

* The "PBS NewsHour," the signature nightly newscast on public television, is planning its first significant round of layoffs in nearly two decades.

* Discrimination against blacks, Hispanics and Asians looking for housing persists in subtle forms, according to a new national study commissioned by the federal Department of Housing and Urban Development.




* The Canadian Soccer Association has suspended the Quebec Soccer Federation over its decision this month to uphold a ban on turbans and other Sikh religious headgear, a conflict that now risks dragging thousands of children who play organized soccer into the controversy.

* Councillor Jaye Robinson, who was turfed out by Toronto Mayor Rob Ford from his executive this week, wants to get a few things on the record: She was warned there would be "consequences" for speaking to the media about the mayor's personal problems and she has no regrets about what she has done.

Reports in the business section:

* Encana Corp has turned to an outsider to lead it for the first time, hiring former BP Plc executive Doug Suttles, and giving him up to two years to turn around the struggling business.


* If there are answers to be found to the many questions raised after several senior staffers in the officer of Dalton McGuinty were found to have deleted their email accounts amid heightened interest in the discussion surrounding the cancellation of two Toronto-area power plants, those answers are not likely to come from the former premier himself: McGuinty is reportedly set to resign as member of the Ontario provincial parliament for Ottawa South.

* Opposition MPs turned on each other Tuesday after New Democrats upstaged Liberal leader Justin Trudeau by calling for an investigation into taxpayer-funded travel related to paid speaking engagements.


* Royal Bank of Canada, Canada's largest lender, and several units were sued by Rakuten Bank Ltd over claims it marketed and sold unsuitable securities backed by deteriorating mortgage loans that wiped out a $10 million investment.

* Air Canada has found itself at odds with its flight attendants' union over the number of crew members it wants to have aboard some of its flights. Olivia Chow, the federal NDP transport critic, lent her support Tuesday to the Air Canada Component of CUPE, which represents the airline's flight attendants, arguing a reduction in flight attendants would compromise safety aboard its flights.


Fly On The Wall 7:00 Am Market Snapshot



American Electric (AEP) upgraded to Buy from Neutral at SunTrust
American Water (AWK) upgraded to Overweight from Neutral at HSBC
Apollo Global (APO) upgraded to Buy from Neutral at Goldman
Applied Materials (AMAT) upgraded to Buy from Neutral at Citigroup
Boston Beer (SAM) upgraded to Neutral from Sell at Goldman
Bunge (BG) upgraded to Overweight from Neutral at Piper Jaffray
Community Health (CYH) upgraded to Buy from Hold at Deutsche Bank
Glacier Bancorp (GBCI) upgraded to Outperform from Sector Perform at RBC Capital
Health Management (HMA) upgraded to Buy from Hold at Deutsche Bank
Health Management (HMA) upgraded to Fair Value from Sell at CRT Capital
Lennar (LEN) upgraded to Outperform from Market Perform at Keefe Bruyette
Spectra Energy Partners (SEP) upgraded to Equal Weight at Morgan Stanley
Spectra Energy (SE) upgraded to Buy from Hold at Deutsche Bank
Spectra Energy (SE) upgraded to Overweight from Equal Weight at Morgan Stanley


Biogen (BIIB) downgraded to Neutral from Buy at Citigroup
Dean Foods (DF) downgraded to Market Perform from Outperform at Bernstein
KapStone (KS) downgraded to Hold from Buy at Deutsche Bank
Legg Mason (LM) downgraded to Sell from Neutral at Goldman
MPLX (MPLX) downgraded to Neutral from Buy at BofA/Merrill
Ocean Rig UDW (ORIG) downgraded to Neutral from Outperform at Credit Suisse
Prudential (PRU) downgraded to Outperform from Top Pick at RBC Capital
U.S. Bancorp (USB) downgraded to Underweight from Neutral at Atlantic Equities
Wells Fargo (WFC) downgraded to Underweight from Neutral at Atlantic Equities


Astec (ASTE) initiated with a Hold at Stifel
Bob Evans (BOBE) initiated with an Outperform at Oppenheimer
Calumet Specialty Products (CLMT) initiated with an Outperform at Credit Suisse
First Republic Bank (FRC) initiated with an Overweight at Barclays
Manitowoc (MTW) initiated with a Buy at Stifel
Pacific Drilling (PACD) initiated with an Outperform at Credit Suisse
Quintiles (Q) initiated with an Underperform at Sterne Agee
SVB Financial (SIVB) initiated with an Equal Weight at Barclays
Terex (TEX) initiated with a Buy at Stifel
Texas Roadhouse (TXRH) initiated with a Buy at BofA/Merrill


Sprint (S) gave DISH (DISH) a June 18 deadline for ”best and final” offer
Vodafone (VOD) said to approach Kabel Deutschland about possible bid, Bloomberg reports
Walgreens (AG) reached agreement with the DOJ, DEA relating to distribution and dispensing of controlled substances
Liberty Global (LBTYA) announced $3.5B share repurchase program
CTS Corp. (CTS) announced consolidation of facilities, share buy back
Prudential (PRU) board authorized share repurchases of up to $1B


Companies that beat consensus earnings expectations last night and today include:
Ulta Salon (ULTA), Oxford Industries (OXM)

Companies that missed consensus earnings expectations include:
Rand Logistics (RLOG)


  • The tectonic plates of the world economy are shifting, moving the yield on the 10-year Treasury to the highest level in more than a year and shaking financial markets.Now, some constants are being questioned in markets, triggering paroxysms in stocks, bonds, commodities and the currencies of emerging markets, the Wall Street Journal reports
  • Drugstores (CVS, RAD, WAG) are preparing to change how they stock and sell a widely used emergency contraceptive after the Obama administration agreed to allow the pill to be sold over the counter to customers of all ages. Sold primarily under the brand name Plan B (TEVA, ACT, PRGO), the pill is currently stocked behind pharmacy counters, the Wall Street Journal reports
  • If currency turbulence in emerging markets becomes a full-scale investor flight, the Fed may have a new headache in deciding when to slow its dollar printing policy. The link between U.S. monetary policy and currency runs on the other side of the world could be tighter than many assume, Reuters reports
  • Toyota Motor (TM) said it’s unlikely to recapture its peak market share it held four years ago in the U.S. (GM, F), its biggest market, the latest sign the car maker is shifting to improving quality from aggressively expanding sales, Reuters reports
  • Exchange executives (NYX, NDAQ), long shielded from legal scrutiny in the U.S., have been put on notice that may be changing after federal regulators fined CBOE Holdings (CBOE) $6M for unprecedented lapses in supervision, Bloomberg reports
  • Borealis Infrastructure Management and its Kuwaiti-British partners abandoned their $8.3B bid for the U.K. water utility Severn Trent (SVTRY) as the offer deadline expired, Bloomberg reports


Clovis (CLVS) 3.33M share Secondary priced at $72.00
Enbridge Energy (EEP) to file IPO for Midcoast Energy Partners
First Solar (FSLR) files to sell 8.5M shares of common stock
Gigamon (GIMO) 6.75M share IPO priced at $19.00
Newcastle Investment (NCT) to offer 30M shares of common stock
Portland General Electric (POR) 11.1M share Secondary priced at $29.50
Western Asset Mortgage (WMC) files to sell 3.35M shares for holders

Glenview asks Health Management (HMA) to remove poison pill


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