Frontrunning: March 13

  • China premier warns on economic slowdown as data fans stimulus talk (Reuters)
  • Li says China defaults ‘unavoidable’ (FT)
  • Russia Said to Ready for Iran-Style Sanctions in Worst Case (BBG)
  • Rescue the tapes from the Bank of England’s dustbins  (FT)
  • Obama Warns Putin of Cost to Russia for Annexing Ukraine (BBG)
  • The TVIX is back: Credit Suisse VIX Note That Ran Amok in 2012 Back on Top (BBG)
  • U.S. Risks National Blackout From Small-Scale Attack (WSJ)
  • U.S. Investigators Suspect Missing Airplane Flew On for Hours (WSJ)
  • Malaysia says no evidence missing plane flew hours after losing contact (Reuters)
  • Missed Alarms and 40 Million Stolen Credit Card Numbers: How Target Blew It (BBG)
  • Death Toll in NYC Building Blast Rises to Six; Search Continues (BBG)
  • Big fine imposed on ex-Goldman trader Tourre in SEC case (Reuters)
  • ETFs Get $41 Billion Erasing Stock Withdrawals on Economy (BBG)


Overnight Media Digest


* General Motors Co said it may have known about problems with its ignition switches dating back to 2001 when it was developing but had not yet launched the Saturn Ion.

* U.S. investigators suspect that Malaysia Airlines Flight 370 stayed in the air for about four hours past the time it reached its last confirmed location, according to two people familiar with the details, raising the possibility that the plane could have flown on for hundreds of additional miles under conditions that remain murky.

* The U.S. launched a last-ditch effort Wednesday to avert a potentially costly diplomatic crisis with Moscow ahead of a vote Sunday in Crimea on whether the region should leave Ukraine and return to Russia.

* The Federal Reserve examined a key foreign-exchange benchmark months before global regulators sounded the alarm about potential manipulation, but officials took no public action.

* Game maker King Digital Entertainment Plc is planning to start trading this month on the New York Stock Exchange-valuing itself Wednesday at as much as $7.6 billion after it set a price range for its initial public offering.

* The U.S. could suffer a coast-to-coast blackout if saboteurs knocked out just nine of the country's 55,000 electric-transmission substations on a scorching summer day, according to a previously unreported federal analysis.

* The Federal Trade Commission opened an investigation into Herbalife Ltd, the maker of nutritional supplements that has spent more than a year battling hedge fund manager William Ackman over allegations it is a pyramid scheme.

* Purdue Pharma LP says it plans to submit its extended-release hydrocodone drug to the Food and Drug Administration later this year. The company's tablets are designed to prevent users from crushing them for snorting or injection. Shares of rival Zogenix Inc plunged more than 20 percent after the announcement, which appears to jeopardize sales of the company's just-launched drug Zohydro.

* Energy XXI Ltd agreed to acquire EPL Oil & Gas Inc in a $1.53 billion cash-and-stock deal that will create the largest publicly traded oil-and-gas producer in the shallow waters of the U.S. Gulf of Mexico.

* A former Credit Suisse banker, Andreas Bachmann, pleaded guilty to helping Americans hide money in Switzerland and agreed to cooperate with the U.S. government.



Two-thirds of this year's income tax in Britain will be paid by one in 10 adults as George Osborne leans heavily on Britain's highest earners, fuelling a debate over whether Wednesday's Budget should extend some help to higher-rate taxpayers.

The United States has announced its first "test" sale of oil from its strategic petroleum reserve since Iraq invaded Kuwait in 1990, describing the planned release as intended "to appropriately assess the system's capabilities in the event of a disruption".

British security officials have been given special access by Google to YouTube video site to have content instantly screened if they think it threatens national security.

Multi-level marketing company Herbalife's trading practises will be investigated by the U.S. Federal Trade Commission over claims that it is a "pyramid scheme".

As the search for the missing Malaysia Airlines flight MH370 drags on, aviation experts, frustrated relatives of those aboard and China allege that communications over the search have been slow, information contradictory and co-ordination patchy.



* General Motors said on Wednesday that it had received reports as early as 2001 - three years earlier than previously disclosed - of a safety defect in its cars that the company has now linked to 12 deaths and at least 31 accidents over the past decade.

* A federal judge on Wednesday ordered Fabrice Tourre, the former Goldman Sachs Group Inc trader at the center of a troubled mortgage deal, to pay the Securities and Exchange Commission $825,000 in penalties and other costs. The sum fell just short of the roughly $1 million payout that the agency had requested.

* The U.S. Federal Trade Commission said on Wednesday that it had opened an official inquiry into Herbalife Ltd, the nutritional supplement company that has been the focus of a 15-month crusade by hedge fund billionaire William Ackman.

* King Digital Entertainment Plc, maker of hit mobile phone game "Candy Crush Saga", said on Wednesday that it expected to price its shares from $21 to $24 each in its forthcoming offering, which would value the company at $7.6 billion.

* Citigroup Inc cut the pay of its chairman for Mexico, Manuel Medina-Mora, by about $1.1 million last year from 2012, citing "control issues" at its Banamex USA unit.

* Hedge fund Elliott Management is raising its bet on Juniper Networks Inc after the networking equipment company announced a series of new initiatives.

* Jefferies Group LLC, the investment bank and brokerage firm, agreed on Wednesday to pay $25 million to settle accusations by the Securities and Exchange Commission that it failed to supervise traders who lied to investors about the price of mortgage-backed securities.

* Atomico, the venture capital firm led by Niklas Zennstrom, the co-founder of Skype, is investing in Brazil again, a sign that entrepreneurship continues to grow in Brazil even amid a lagging economy.

* The Financial Conduct Authority of Britain has hired Julia Hoggett, a managing director for debt capital markets products at Bank of America Merrill, as head of investment banking in its supervision division.

* Credit Karma, a credit score service, announced on Wednesday that it raised $85 million in a third round of fund-raising, led by Google Inc through an investment arm that specializes in late-stage technology companies.




* The federal transport safety agency is scrapping a requirement for railways to report on smaller spills involving hazardous materials, raising questions about the quality of the accident data Ottawa collects.

* The Toronto District School Board has pledged to tighten its oversight of provincially funded programs for students outside the classroom, after an audit revealed lax procedures for overseeing spending.

Reports in the business section:

* After building one of Canada's most successful independent whisky distilleries over the past two decades, John Hall has cashed in with the $186-million sale of his Forty Creek Distillery Ltd to Italian beverage giant Gruppo Campari.


* A controversial social services provider that operates Canada's only supervised drug injection centre and runs dozens more projects in Vancouver's poverty-stricken Downtown Eastside appears headed for involuntary receivership and a possible court battle with the British Columbia government, because of concerns over its "spending practices" and financial "irregularities."


* Herbalife Ltd said on Wednesday that the U.S. Federal Trade Commission had opened an inquiry into its operations. Billionaire investor William Ackman has for months called on regulators to investigate Herbalife's distribution model, which he calls a "pyramid scheme."

* AltaGas Ltd could step in to help salvage a proposed natural gas-export terminal planned for Canada's West Coast as the project's Texas-based owners seek to rescue the development from insolvency.




- China will improve the development of agricultural product futures market this year, said Jiang Yang, vice-president of the China Securities Regulatory Commission.


- China Minsheng Banking Corp Ltd will follow China CITIC Bank Corp in launching a virtual credit card with Alibaba Group Holding Ltd for use in online purchases, sources told the newspaper.


- China is drafting a rule saying internet financial and online peer-to-peer lending will be under the supervision of the China Banking Regulatory Commission, several sources told the newspaper.


- A private kindergarten in the western city of Xi'an, home of the famed Terracotta Warriors, is being investigated over allegations it gave children unauthorised prescription medicines. School officials were detained by police.



The Telegraph


The Conservatives should consider scrapping the 40 percent higher rate of income tax as an "iconic" pledge to help win voters, a Number 10 policy adviser has said.


Opec has upgraded its forecast for world oil demand, raising the prospect of higher petrol prices ahead of next week's Budget.

The Guardian


The Bank of England has called in one of the most respected figures in the legal world, Anthony Grabiner QC, to investigate allegations that some of its staff may have been involved in manipulating the 3 trillion pound-a-day foreign exchange markets for almost 10 years.


Britain spent less as a proportion of national income on research and development than the rest of the European Union in 2012 despite the government's apparent innovation push to boost growth.

The Times


Investors who control hundreds of millions of pounds of Barclays shares are poised to vote to oust Sir John Sunderland, head of the board's remuneration committee.


Global commodity prices were shaken in recent days after China's first corporate bond default, with the red metal suffering the brunt of the selling spree. The scale of the sell-off reveals the depth of concerns over China's shaky credit markets, analysts said.

The Independent


UK executives at the games studio behind Candy Crush Saga are set to make millions more than initially thought from the company's stock market listing, after the developer was valued at up to $7.56 billion (4.55 billion pound) on Wednesday.


G4S has agreed to pay nearly 110 million pound back to the taxpayer following a scandal in which it charged for the monitoring of non-existent electronic tags, including some which had been assigned to dead offenders.


Fly On The Wall 7:00 AM Market Snapshot


Domestic economic reports scheduled for today include:
Jobless claims for week of Mar. 8 at 8:30--consensus 330K
Retail sales for February at 8:30--consensus up 0.2%
Import price index for February at 8:30--consensus up 0.5%
Business inventories for January at 10:00--consensus up 0.4%



ATK (ATK) upgraded to Equal Weight from Underweight at Barclays
Activision Blizzard (ATVI) upgraded to Buy from Neutral at BofA/Merrill
Alon USA Energy (ALJ) upgraded to Outperform from Neutral at Macquarie
Cabela's (CAB) upgraded to Outperform from Market Perform at William Blair
Dresser-Rand (DRC) upgraded to Outperform from Market Perform at William Blair
Qihoo 360 (QIHU) upgraded to Outperform from Neutral at Credit Suisse
Starz (STRZA) upgraded to Equal Weight from Underweight at Evercore


Consolidated Edison (ED) downgraded to Equal Weight from Overweight at Barclays
EPL Oil & Gas (EPL) downgraded to Hold from Buy at Stifel
EPL Oil & Gas (EPL) downgraded to Market Perform from Outperform at BMO Capital
Electronic Arts (EA) downgraded to Neutral from Buy at BofA/Merrill
Express (EXPR) downgraded to Market Perform from Outperform at FBR Capital
Midstates Petroleum (MPO) downgraded to Sector Perform from Outperform at RBC Capital
PVH Corp. (PVH) downgraded to Equal Weight from Overweight at Morgan Stanley
PVH Corp. (PVH) downgraded to Market Perform from Outperform at Wells Fargo
Steelcase (SCS) downgraded to Neutral from Buy at Longbow


Approach Resources (AREX) initiated with a Buy at Mizuho
Beneficial Mutual (BNCL) initiated with a Buy at Compass Point
Clifton Savings (CSBK) initiated with a Buy at Compass Point
Concur (CNQR) initiated with a Neutral at B. Riley
Cornerstone OnDemand (CSOD) initiated with a Buy at B. Riley
Diamondback Energy (FANG) initiated with a Buy at Mizuho
Investors Bancorp (ISBC) initiated with a Buy at Compass Point
Jive Software (JIVE) initiated with a Buy at B. Riley
Kearny Financial (KRNY) initiated with a Buy at Compass Point
Knowles (KN) initiated with an Outperform at JMP Securities
Laredo Petroleum (LPI) initiated with a Buy at Mizuho
Perfect World (PWRD) initiated with an Outperform at Credit Suisse
Ultimate Software (ULTI) initiated with a Buy at B. Riley
Workday (WDAY) initiated with a Neutral at B. Riley
YY Inc. (YY) initiated with an Outperform at Credit Suisse


Liberty Global (LBTYA) joined Time Warner Cable (TWC), Comcast (CMCSA) in RDK joint venture
FDA advisory committee unanimously recommended Roche's (RHHBY) cobas HPV test
Addus Homecare (ADUS) said it sees material weaknesses in internal reporting controls and that its Q1 revenues will be negatively impacted by severe winter weather
Herbalife said "surprised" by FTC investigation, CNBC says
Williams-Sonoma (WSM) raised its quarterly dividend to 33c per share from 31c per share
Krispy Kreme (KKD) raised its share repurchase authorization to $80M from $50M
JetBlue (JBLU) to sell LiveTV subsidiary to Thales Group for $400M


Companies that beat consensus earnings expectations last night and today include:
PhotoMedex (PHMD), Kronos Worldwide (KRO), magicJack (CALL), CTPartners (CTP), Williams-Sonoma (WSM), Callon Petroleum (CPE), Depomed (DEPO), Addus HomeCare (ADUS)

Companies that missed consensus earnings expectations include:
Methode Electronics (MEI), Emerge Energy Services (EMES), Hawaiian Telcom (HCOM), Natural Gas Services (NGS), UCP, Inc. (UCP), Banc of California (BANC), Senomyx (SNMX), Vail Resorts (MTN), Miller Energy (MILL), Jones Energy (JONE), KCAP Financial (KCAP), Anthera Pharmaceuticals (ANTH), Scientific Games (SGMS), Ultrapetrol (ULTR), Home Inns (HMIN), Arc Logistics (ARCX), Supernus (SUPN), Keryx (KERX), Artesian Resources (ARTNA), Emerald Oil (EOX), Providence Service (PRSC), Krispy Kreme (KKD), Majesco (COOL), eMagin (EMAN), Orexigen (OREX), Vail Resorts (MTN)


General Motors (GM) knew of faulty ignition switches as early as 2001, WSJ says
Wells Fargo (WFC) alleged to have process for faking foreclosure docs, NY Post says
Zell facing questions over CommonWealth (CWH) fight, FT reports
eBay (EBAY) CEO meets with investors as Icahn feud escalates, Bloomberg says
Deutsche Telekom (DTEGY) expects T-Mobile (TMUS) to struggle in spectrum auctions, WSJ says
Teva's (TEVA) shares could rise 30%, Barron's reports
Citigroup (C) mulls clawbacks, pay cuts over Banamex fraud, Bloomberg reports


Elbit Imaging (EMITF) files to sell 204.42M ordinary shares for holders
Fortress (FIG) files to sell 28.3M shares
Galmed (GLMD) Pharmaceuticals 2.83M share IPO priced at $13.50
InterMune (ITMN) files to sell 7.5M shares of common stock
Post Holdings (POST) 5M share Secondary priced at $55.00
Quintiles (Q) 15M share Secondary priced at $52.00
Regado Biosciences (RGDO) files to sell 4M shares of common stock for holders
Stock Building Supply (STCK) 5.6M share Secondary priced at $19.50
William Lyon Homes (WLH) files to sell 15.73M shares for holders