Frontrunning: May 16

  • Facebook's selling shareholders can't wait to get out of company, increase offering by 25% (Bloomberg)
  • Boehner Draws Line in Sand on Debt (WSJ)
  • Romney Attacks Obama Over Recovery Citing U.S. Debt Load (Bloomberg)
  • BHP chairman says commodity markets to cool further (Reuters)
  • Merkel’s First Hollande Meeting Yields Growth Signal for Greece (Bloomberg)
  • Greek President Told Banks Anxious as Deposits Pulled (Bloomberg)
  • EU to push for binding investor pay votes (FT)
  • Martin Wolf: Era of a diminished superpower (FT)
  • China’s Hong Kong Home-Buying Influx Wanes, Midland Says (Bloomberg)
  • U.N. and Iran agree to keep talking on nuclear  (Reuters)
  • US nears deal to reopen Afghan supply route (FT)

Overnight press digest via Reuters:


* Greece's future in Europe's common currency was in doubt after a last-ditch effort to form a new government failed.

* The strategy behind JPMorgan's complicated trades could raise new questions about whether the bank was hedging its risks or making a big bet.

* Relational Investors, an activist shareholder firm, disclosed it has a $600 million stake in PepsiCo, a move that could step up pressure on the beverage and snack giant.

* Discontent is simmering among shareholders, costing some top executives their jobs and turning up the heat on others. The uprising could reverberate across the Atlantic.

* Google is shifting its strategy for its Android mobile operating system in a bid to create a united front with smartphone and tablet makers and to prevent wireless carriers from controlling the devices.

* The U.S. government on Tuesday settled with Cardinal Health Inc over allegations the company distributed large quantities of addictive pain pills in Florida, backing away from a legal showdown over the pharmacy industry's responsibility for what officials call the country's deadliest drug problem.




Amylin Pharmaceuticals, the U.S. maker of diabetes-focused medicines, has attracted a string of potential suitors, including Anglo-Swedish group AstraZeneca, people close to the situation said.


Richard Desmond, the owner of the Express and Daily Star newspapers, is drawing up plans to launch one of London's largest housing schemes as the strength of the capital's housing market continues to lure new investors.


The Justice Department has opened a preliminary investigation into the $2 billion in trading losses suffered by JP Morgan Chase, according to a person familiar with the matter.


Shareholders in Europe's listed companies will be given a binding vote on pay while those who invest in banks will gain powers to set a cap on bonus levels, under plans being drawn up by senior EU officials.


Up to 20 of Europe's top banks will on Wednesday discuss a plan to foil the dominance of the much criticised big three credit agencies at a private meeting of finance directors in Frankfurt.


Lufthansa is keen to play a continuing role in consolidating the airline industry and is interested in buying Portugal's flag carrier with its strong ties to the fast-growing Latin American market.



* Some states are diverting their share of $2.5 billion they were awarded in a mortgage settlement, money intended to help homeowners and mitigate the effects of foreclosures.

* The loss of $10 million in ad dollars does not represent a financial disaster for Facebook, but it is a public relations headache so close to the company's initial stock offering this week.

* Russian investor Alisher Usmanov's investments in Facebook could be worth at least $6 billion when the company goes public.

* When Greece agreed to pay bondholders who rejected a restructuring, most of the money went to a secretive investment fund based in the Cayman Islands.

* The euro zone narrowly avoided recession at the beginning of 2012, after the German economy grew much more than expected.




- Months after handing its doctors a raise, Alberta now says it is looking to overhaul their pay formula, joining Ontario and other provinces in a move that could reshape health-care funding in Canada.

- Get ready to crank up the AC and seek refuge from bursts of wild, windy weather, as one hot summer is being predicted for much of Canada.

Reports in the business section:

- Vancouver's once-overheated housing market has cooled sharply, with the average price falling nearly 10 per cent in April from a year ago to C$735,315, according to figures released Tuesday by the Canadian Real Estate Association.

- After two years of debt crisis with no end in sight in Greece, the Germans are starting to talk openly about a once taboo subject: the possibility their Greek partner may leave the euro zone.


- Mark Peretz, one of the gangsters responsible for spraying a crowded Toronto restaurant with bullets in a bungled mob hit - paralyzing an innocent mother of three - has been re-arrested, just a month after leaving prison for his role in one of the city's most notorious bystander shootings.

- Police are investigating how the elderly victim of a home invasion ended up spending 75 days in jail after he called 911. Marian Andrzejewski was beaten by two thugs after they burst through the door of his 14th-floor public housing unit in October 2010.


- The Ontario Securities Commission has ordered the founder and former chief executive of defunct investment firm First Leaside Wealth Management Inc to stop working with investors in an attempt to raise additional capital for the firm's ailing properties.

- The Desmarais clan, which controls Power Corp, was the target Tuesday of angry demonstrators gathered in Old Montreal outside a hotel where the company's annual general meeting was taking place.


European economic summary:

Euro-zone CPI  0.5% m/m 2.6% y/y – in line with expectations. Consensus 0.5% m/m 2.6% y/y. Previous 1.3% m/m.
Euro-zone Trade Balance 8.6B – higher than expected. Consensus 4.0B. Previous 2.8B. Revised 2.3B.
UK Jobless Claims Change -13.7K – lower than expected. Consensus 5.0K. Previous 36K. Revised -5.4K.
UK ILO Unemployment Rate (3 mths) 8.2% - lower than expected. Consensus 8.4%. Previous 8.3%.
Portugal Unemployment Rate 14.9%. Previous 14.0%.
Italy Trade Balance Total  2064M. Previous -1113M. Revised -1136M.
Turkey Consumer Confidence 91.1. Previous 93.9.
Czech Republic Current Account Monthly 16.83B – higher than expected. Consensus 13.90B. Previous 18.33B.


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