Frontrunning: May 15

  • More than 20 dead, doctor says, as anti-China riots spread in Vietnam (Reuters)
  • Russia's Gazprom plans Singapore stock exchange listing (Reuters)
  • Inside Europe’s Plan Z (FT)
  • Ukraine slides deeper toward war as Russia warns to vote (BBG)
  • Fast-Food Protests Spread Overseas (NYT)
  • Meanwhile, Cremonini Emerges as Billionaire Making Burgers in Italy (BBG)
  • BOJ Beat, Officials Could Upgrade Outlook for Capex (WSJ)
  • Euro-Zone Economy Shows Weaker-Than -Expected Expansion (WSJ)
  • Yahoo to YouTube Ads Spreading Viruses Rile Lawmakers (BBG)
  • New York Times Ousts Jill Abramson as Executive Editor, Names Dean Baquet (BBG)
  • NYT Publisher Said to Always Have Clashed With Abramson (BBG)
  • Google gets take-down requests after European court ruling - source (Reuters)
  • Endo to Pay Executive’s $60 Million Tax Bill in Move (BBG)
  • EU East-West Defense Divide Makes Putin Bold (BBG)
  • Job market debate rages at Fed, likely keeping rates on hold (Reuters)


Overnight Media Digest


* Global bond rates dropped to their lowest levels of the year Wednesday, as central bankers signaled their determination to jolt the world's largest economies out of their malaise. Investors piled into U.S., German and British government bonds, used to price everything from mortgages to car loans, driving down their yields. (

* Citigroup Inc Chief Executive Michael Corbat said in a memo Wednesday that the bank had fired 11 employees in its Banamex unit in connection with the loan losses from Mexico's Oceanografia SA de CV that the bank has blamed on fraud. (

* AT&T Inc's internal merger team is active again with talks to buy satellite-television provider DirecTV in a deal that could be valued at nearly $50 billion, people familiar with the matter said. AT&T has hired investment bank Lazard Ltd for advice on the deal, the people said. (

* French Prime Minister Manuel Valls has signed a decree giving him extended authority to block foreign takeovers of companies deemed strategic, a move that could strengthen the government's hand in the battle for Alstom SA's energy assets, sought by General Electric Co. (

* In a significant move to streamline its process for dealing with counterfeits, Alibaba Group Holding Ltd <IPO-ALIB.N> this month began automatically removing from its biggest shopping site products that some brands have flagged as fake. (

* Richard Perry's Perry Capital increased its stake in Herbalife Ltd, the nutritional supplements maker that hedge-fund manager William Ackman of Pershing Square Capital Management has been campaigning against since December 2012. (

* AerCap Holdings N.V. on Wednesday established itself as the world's second-largest jet leasing company by assets, completing its $7.6 billion purchase of the aircraft leasing unit of American International Group Inc. (



The British Bankers' Association has warned that the Bank of England's proposals to impose the world's toughest rules for clawing back bonuses from bankers could be unenforceable in the UK and would be illegal in some countries.

Western banks are imposing tougher lending restrictions on Russian companies as sanctions against the country start to bite.

Citigroup has fired 11 staff, including four managing directors, in Mexico after a two-month internal investigation at its Mexican subsidiary, Banamex, into an alleged $400 million fraud that forced the U.S. bank to cut its 2013 earnings.

Bank of England Governor Mark Carney played down expectations of an imminent rise in interest rates even as new figures show the British economy is producing new jobs at the fastest rate on record.

GlaxoSmithKline was accused by Chinese authorities of earning billions of renminbi in "illegal revenues" through a programme of "massive and systemic bribery" as more pressure was mounted on the pharmaceuticals group following a 10-month long corruption investigation.



* Even though fast-food workers have staged several one-day strikes in the last 18 months, the protests have not swayed McDonald's or other major restaurant chains to raise their employees' pay. So on Thursday, the fast-food workers' movement wants to broaden its reach as it pushes for a $15-an-hour wage that restaurant companies say is unrealistic. The movement leaders say support protests will take place in 80 cities in more than 30 countries, from Dublin to Venice to Casablanca to Seoul to Panama City. (

* The New York Times dismissed Jill Abramson as executive editor on Wednesday, replacing her with Dean Baquet, the managing editor, in an abrupt change of leadership. Arthur Sulzberger, the publisher of the paper and the chairman of The New York Times Co, told a stunned newsroom that he had made the decision because of "an issue with management in the newsroom." (

* Citigroup Inc has fired 11 employees, including four high-ranking executives in Mexico, in connection with a $400 million fraud involving a large Banamex client. The bank fired many because they had not taken steps to detect the fraud or had ignored warning signs about the client. (

* The ruling by Europe's highest court that Google can be forced to remove links from certain searches will be carried out by data privacy regulators at 28 different agencies across the European Union. However, since the court gave the agencies little guidance in applying the ruling, people in different European countries could receive different treatment. (

* Macy's Inc reported a sluggish first quarter on Wednesday, dampening hopes for more positive spring spending news after an exceptionally frigid, difficult winter. It said profit rose a modest 3 percent in the quarter but that sales dropped 1.7 percent from the year before. (

* The Retail Industry Leaders Association, along with several top retailers, like Gap and Walgreen, on Wednesday opened an intelligence-sharing center focused on the prevention of cybercrimes against retailers. According to the retail group, the center will allow retailers to share information about data breaches and potential threats. (

* Valero Energy Partners reported a 28 percent drop in first-quarter net income on Wednesday, as a rough winter curbed demand for the petroleum products that flow through its pipelines. The San Antonio company, spun out of the Valero Energy Corp last year, reported net income of $10.5 million, or 18 cents per unit, in its first full quarter as a publicly traded company. (




* The Conservative government is preparing to keep Canadian warplanes on a NATO mission in Romania for another three months and possibly until late 2014. The government has declined to give Canadians a timeline for its new military commitment to NATO's reassurance mission in Europe. (

* A report by the City of Vancouver says Kinder Morgan's Trans Mountain pipeline pitch falls short on details. Among the gaps, it says Vancouver Coastal Health cannot fully assess Kinder Morgan's claims that there are minimal health risks because the company has not provided assessment reports. (

Reports in the business section:

* Edmonton-born Greg Abel, who serves as one of Warren Buffett's chief lieutenants, is making a big bet on the economic potential of Alberta, amid speculation that he might one day succeed the famed investor at the helm of Berkshire Hathaway Inc . (


* New Democratic Party leader Tom Mulcair is set to appear before a House of Commons committee on Thursday to answer allegations that the New Democrats misused taxpayer funds to set up partisan satellite offices in Quebec. (

* Alberta Wildrose leader Danielle Smith accused Jim Prentice on Wednesday of trying to eliminate her party as a threat before he even enters the race to become premier. Smith says a member of Prentice's inner circle has approached someone on her team pitching a merger if Prentice wins the Progressive Conservative leadership contest. (


* Sears Canada's demise seems inevitable after news emerged that its biggest shareholder may pull its stake out of the ailing department store chain. But with no single retailer seen as an obvious suitor to acquire the entire operation, it is likely that Sears Canada will continue to operate, even if Sears Holdings Corp sells its 51 percent ownership in the business. (

* Builders of Toronto condominiums get as little respect these days as the embattled mayor, according to one of the city's largest high-rise developers. Toronto, whose mayor entered a rehabilitation center after admitting smoking crack cocaine, is in the midst of a building boom. (




- The Shanghai Stock Exchange will conduct test trading on Saturday for stock options linked to individual shares, sources told the paper. Test trading is the last step before the official roll-out of such products, the sources said.

- Several provinces and cities are making plans to implement "One Road, One Strip", a long-term economic and political strategy that aims to promote economic ties and regional integration between countries along the traditional Silk Road, sources familiar with matter said.


- The State Council, China's cabinet, said the government would implement a range of policies to support "production-oriented" service industries, including research and development, industrial design, commercial services, sales and marketing, and after-sales service.


- China Reinsurance Group Corp has started preparing for its initial public offering (IPO) and is expected to list as early as next year, multiple sources told the paper. Given the current long waiting list for IPOs in the mainland stock market, the company may consider listing in Hong Kong, another person close to the matter said.


- Beijing will impose a new levy on the discharge of certain organic compounds, aiming to increase environmental awareness in the city's industrial enterprises, municipal officials said. The money collected from the levy will be used to improve the city's air quality, they added.


- Members of the Communist Party should insist on their political beliefs and have the courage to criticize wrong thoughts, the paper which acts as the party's mouthpiece said in an editorial.



The Telegraph


Interest rates will remain on hold this year, the Bank of England has signalled, but households must be prepared for a gradual increase in borrowing costs amid a backdrop of "robust" growth and rapidly falling unemployment. (


Pfizer's top scientist Mikael Dolsten on Wednesday embarked on a whistlestop tour of Britain's leading scientific figures to garner support for an AstraZeneca deal. (

The Guardian


Britain's jobs boom accelerated in the first three months of the year as unemployment reached a five-year low, fuelled by a surge in self-employed workers. (


AstraZeneca boss Pascal Soriot has undermined the drug maker's campaign to stay independent, by admitting that an increased takeover bid from U.S. rival Pfizer could outweigh concerns over the needs of cancer patients. (

The Times


Two of Britain's best known companies, bus, coach and train operator National Express and broadcaster ITV PLC , were hit by substantial shareholder revolts over executive pay. (


Compass Group Plc, the world's biggest contract catering company, is to hand back 1 billion pound to shareholders in a special dividend payout. (

The Independent


Chinese police have charged the British former head of GlaxoSmithKline with bribery and fraud in connection with a long-standing scheme to boost drug sales in China. (


Patisserie Valerie <IPO-PATV.L> listed at the bottom of its price range - although shares then rose nearly 9 percent- prompting fears that investor enthusiasm for new listings is wearing off. (



Fly On The Wall 7:00 AM Market Snapshot


Domestic economic reports scheduled today include:
Empire State manufacturing survey for May at 8:30--consensus 5.0
Consumer Price Index for April at 8:30--consensus up 0.3% for the month
Jobless claims for week of May 10 at 8:30--consensus 317K
Industrial production for April at 9:15--consensus up 0.4% for the month
Philadelphia Fed survey for May at 10:00--consensus 14.3



Acxiom (ACXM) upgraded to Market Perform from Underperform at BMO Capital
EarthLink (ELNK) upgraded to Outperform from Perform at Oppenheimer
Heartland Payment (HPY) upgraded to Outperform from Neutral at RW Baird
Kinder Morgan (KMI) upgraded to Conviction Buy from Buy at Goldman
L-3 Communications (LLL) upgraded to Buy from Neutral at BofA/Merrill
Miller Energy (MILL) assumed with a Buy from Hold at Brean Capital
Nimble Storage (NMBL) upgraded to Buy from Neutral at Goldman
Parkway Properties (PKY) upgraded to Buy from Hold at Stifel
Pernix Therapeutics (PTX) upgraded to Strong Buy from Buy at Needham
Range Resources (RRC) upgraded to Conviction Buy from Neutral at Goldman
Steel Dynamics (STLD) upgraded to Outperform from Market Perform at Cowen
Tandem Diabetes (TNDM) upgraded to Buy from Hold at Deutsche Bank (pre-open)
Twitter (TWTR) upgraded to Neutral from Underweight at Atlantic Equities
Zimmer (ZMH) upgraded to Buy from Neutral at SunTrust


American Capital Mortgage (MTGE) downgraded to Market Perform at JMP Securities
Anglo American (AAUKY) downgraded to Neutral from Outperform at Credit Suisse
BE Aerospace (BEAV) downgraded to Neutral from Buy at UBS
Bristol-Myers (BMY) downgraded to Market Perform from Outperform at BMO Capital
Columbia Property (CXP) downgraded to Equal Weight from Overweight at Morgan Stanley
Huntington Ingalls (HII) downgraded to Neutral from Buy at BofA/Merrill
ITC Holdings (ITC) downgraded to Neutral from Overweight at JPMorgan
LATAM Airlines (LFL) downgraded to Market Perform from Outperform at Raymond James
PhotoMedex (PHMD) downgraded to Hold from Buy at Ascendiant
Southwestern Energy (SWN) downgraded to Neutral from Conviction Buy at Goldman
Urban Outfitters (URBN) downgraded to Market Perform from Outperform at FBR Capital
VOXX International (VOXX) downgraded to Neutral from Buy at B. Riley
Vodafone (VOD) downgraded to Neutral from Buy at Goldman


ACADIA (ACAD) initiated with an Overweight at JPMorgan
Cherokee (CHKE) initiated with a Buy at B. Riley
Magellan Petroleum (MPET) initiated with a Buy at B. Riley
Rackspace (RAX) assumed with an Overweight at JPMorgan


Kindred Healthcare (KND) proposed to acquire Gentiva Health (GTIV) for $14.00 per share
Cisco (CSCO) reported better-than-expected Q3 results and forecast Q4 revenue down 1%-3% on adjusted EPS of 51c-53c; Cisco forecast "several more quarters" before growth in overall switching
JPMorgan (JPM) reported April net credit losses 3.05% vs. 3.07% last month
Capital One (COF) reported April net charge-off rate 3.98% vs. 4.18% last month
Incyte (INCY) posted an abstract regarding a Phase 2 study of its pancreatic cancer drug at ASCO
Jack in the Box (JACK) initiated a quarterly dividend of 20c per share and forecast Q3 SSS up 2%-3%  after reporting Q2 earnings that beat expectations


Companies that beat consensus earnings expectations last night and today include:

Fifth Street Senior (FSFR), Prestige Brands (PBH), Teekay (TK), TowerJazz (TSEM), Dangdang (DANG), WuXi PharmaTech (WX), CafePress (PRSS), Cvent (CVT), Radiant Logistics (RLGT), Acxiom (ACXM), Opower (OPWR), Vipshop (VIPS), Gevo (GEVO), Xencor (XNCR), Cisco (CSCO), Reed's (REED)

Companies that missed consensus earnings expectations include:

Arctic Cat (ACAT), Luxoft (LXFT), (NTES), eLong (LONG), Ultrapetrol (ULTR), DragonWave (DRWI), VOXX International (VOXX), ExOne (XONE), Applied Genetic (AGTC), CM Finance (CMFN), Cypress Energy (CELP), Eagle Materials (EXP), TriVascular (TRIV), Jack in the Box (JACK), Agilent (A), Metabolix (MBLX), SeaWorld (SEAS), StemCells (STEM)


AT&T (T) works with Lazard (LAZ) amid DirecTV (DTV) takeover negotiations, Reuters reports
Murphy Oil (MUR) looking to sell Malaysia oil and gas assets, WSJ reports
Departure of New York Times (NYT) editor 'not a mutual decision,' FT reports
European court rules Google (GOOG) to grant take-down requests, Reuters says
Teva (TEVA) loses bid to block approval of generic Copaxone, Bloomberg reports
Trian says PepsiCo (PEP) CEO Nooyi made 'major mistake,' Fortune reports
Macy's (M) looks cheap, Barron's says


ANI Pharmaceuticals (ANIP) files to sell 3.5M shares for holders
Daqo New Energy (DQ) 2M share Secondary priced at $29.00
Delek US (DK) 9.2M share Secondary priced at $30.00
LDR Holding (LDRH) 3.97M share Secondary priced at $24.50
Select Income REIT (SIR) 9M share Spot Secondary priced at $29.00
Sorrento Therapeutics (SRNE) 4.765M share Spot Secondary priced at $5.25
The Dixie Group (DXYN) 2.5M share Secondary priced at $10.65
US Rare Earths (UREE) files to sell $23M in common stock
Zendesk (ZEN) 11.11M share IPO priced at $9.00


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