ZeroHedge – Frontrunning – 17 April 2014

  • ZeroHedgePutin Doesn’t Rule Out Sending Troops (WSJ)
  • Japan Cuts Economic View on Tax Rise (WSJ)
  • No “harsh weather” in Chipotle restaurants where comp store sales rose 13.4% (PR)
  • No sanctions for you: EU sanctions push on Russia falters amid big business lobbying (FT)
  • Consumer Spending on Health Care Jumps as Obamacare Takes Hold (BBG)
  • China Seen Cracking on Property Controls (BBG)
  • Google, IBM results raise questions about other tech-sector companies (Reuters)
  • California city evacuation lifted after military ordnance found (Reuters)
  • For Obama, Standoff With Moscow Jumbles Plans at Home and Abroad (WSJ)
  • Weibo cuts IPO size amid selloff in technology stocks (Reuters)
  • High-Frequency Fightback Starts in Foreign Exchange (BBG)
  • Post Holdings to buy Michael Foods for $2.45 billion (Reuters)

Overnight Media Digest

WSJ

* Banks are boosting their lending to businesses, providing fuel for companies to increase spending on workers and equipment as the economy improves. The rise is being driven both by banks, which are loosening their lending standards, and companies, which are seeking more money, bank executives said. (http://r.reuters.com/xyz58v)

* A U.S. safety regulator released new documents on Wednesday showing General Motors Co ordered a more robust ignition switch before the release of a new Cadillac, stemming from complaints the engine could turn off while driving when the ignition was bumped. (http://r.reuters.com/cab68v)

* The Federal Reserve’s New York office indicated to Citigroup Inc that the bank would have more time to fix certain “stress test” planning problems before Fed officials in Washington last month gave it a failing grade, said people close to the company. (http://r.reuters.com/tyz58v)

* Home Depot Inc is putting a lid on new-store openings and focusing its expansion efforts on e-commerce, which presents some logistical challenges for a retailer that sells a lot of bulky materials. (http://r.reuters.com/fab68v)

* Amazon.com Inc said it will begin collecting sales tax in Florida starting next month, affecting as many as 20 million people in the nation’s fourth-largest state by population. The 6 percent sales tax comes as a result of Amazon’s plans to build two new warehouses in the Sunshine State, in Ruskin and Lakeland, which ring Tampa and are near to Orlando. (http://r.reuters.com/gab68v)

* Sony Corp said Wednesday it will sell its entire stake in Square Enix Holdings Co, or 8.2 percent of the video game maker’s issued shares, for 15.3 billion yen ($149.60 million).

FT

Europe’s resolve to impose tough sanctions on Russia is under intense pressure as companies warn governments that any retaliation from the Kremlin could cost them dearly.

Federal Reserve Chair Janet Yellen has said that even a recovering U.S. economy may not pull inflation back up towards the Fed’s 2 percent target, suggesting that the central bank’s easy monetary policy might last longer than currently expected.

Sean Fitzpatrick, former chairman of the collapsed Anglo Irish Bank and the banker blamed for the collapse of Ireland’s financial system, has been cleared of making fraudulent loans after one of the longest and most complex corporate trials in the country’s history.

Jean-Claude Juncker, front-runner to become the next European Commission president this year, has indicated that the EU should rethink its competition rules for the telecoms sector, potentially clearing the passage for companies to consolidate and boost profitability.

Two of the world’s highest-profile container shipping lines, Germany’s Hapag-Lloyd and Chile’s CSAV, announced on Wednesday that they will join forces to create the world’s fourth-largest container-shipping company.

Veteran entrepreneurs Nick Leslau and Sir Tom Hunter are set to return to the stock market with a flotation of property assets worth 1.5 billion pounds.

NYT

* One of the unsettled questions from the financial crisis is whether the big banks have paid enough to cover the mortgage abuses they committed before the market collapsed. A settlement announced Wednesday that involves Bank of America Corp indicates that, in some cases, the banks could have been made to pay more than they have. (http://r.reuters.com/qab68v)

* Weibo Corp, the microblogging service formed by the Sina Corp, priced its initial public offering at $17 per American Depositary share on Wednesday, at the bottom of its expected range. At that level, the social network operator will have raised $285 million, and would be valued at $3.6 billion. (http://r.reuters.com/sab68v)

* General Mills Inc, the maker of cereals like Cheerios and Chex as well as brands like Bisquick and Betty Crocker, has quietly added language to its website to alert consumers that they give up their right to sue the company if they download coupons, “join” it in online communities like Facebook, enter a company-sponsored sweepstakes or contest or interact with it in a variety of other ways. (http://r.reuters.com/tab68v)

* In a speech in New York, Janet Yellen, the Federal Reserve chairwoman, said the labor market still needed a lift from monetary policy, despite an improving economy. (http://r.reuters.com/wab68v)

* Internet users are migrating to mobile devices, but ads on phones and tablets still do not have the familiarity and appeal they do on bigger computers. And they are not as profitable for Google. Google Inc’s ad volume jumped 26 percent in the quarter, which sounds good but is less than expected, while the amount advertisers pay dropped 9 percent. (http://r.reuters.com/beb68v)

Canada

THE GLOBE AND MAIL

* Pauline Marois held her final cabinet meeting as Premier of Quebec on Wednesday and is about to leave political life again, this time for good. It was the first time Marois spoke publicly since the Parti Quebecois’ devastating April 7 election defeat. (http://r.reuters.com/pub68v)

* The man facing five murder charges in Calgary’s worst mass killing was held at a forensic psychiatric facility on Wednesday to determine whether he was fit to navigate the legal system, although his lawyer said he was lucid and able to communicate. (http://r.reuters.com/qub68v)

Reports in the business section:

* As much of last year’s record crop sits unsold, financially stretched Western Canadian grain farmers are scrambling to secure funding for the coming planting season. (http://r.reuters.com/wub68v)

NATIONAL POST

* The Liberals Party of Canada plans to name two ombudsmen to keep the peace in upcoming nomination battles for the 2015 election, as all three main parties struggle to balance their promises of open party contests with their desire to maintain some control. (http://r.reuters.com/zub68v)

* The blackout that plunged Toronto’s entire west end into darkness Tuesday night appears to have been caused by little more than a power line installation error. On Wednesday, officials with Hydro One were reporting that a Toronto Hydro line was installed too close to one of its own high-voltage transmission lines. As a result, electricity was able to arc between the two cables and cause a short circuit that brought down huge sections of the Toronto grid. (http://r.reuters.com/gyb68v)

FINANCIAL POST

* Osisko Mining Corp’s Chief Executive Sean Roosen has come out lashing at Canada’s takeover process. “You’ve got a regulatory regime here that is set for predatory behaviour”, Roosen said in an interview Wednesday. (http://r.reuters.com/jyb68v)

* Bank of Canada governor Stephen Poloz says he has not ruled out a future cut to interest rates despite his belief that the global and Canadian recoveries are picking up steam and that disinflationary pressures appear to be waning. (http://r.reuters.com/kyb68v)

China

– Listed companies’ shareholders that are selling more than 1 percent of released restricted shares in one month will no longer be regarded as abnormal trading activity, according to a new regulation issued by Shanghai Stock Exchange on Tuesday.

SHANGHAI SECURITIES NEWS

– China Securities Regulatory Commission said on its official microblog that it has not started appraisals for IPO issuance, squashing rumours that the commission will restart IPO approvals early as next week.

– Taiwan securities regulators are looking to ease restrictions on mainland Chinese investment in Taiwanese listed firms. It plans to allow mainland investors to hold up to 50 percent stake in Taiwanese firms, sources familiar with the matter told the paper.

– China will grant a tax exemption to several business in culture industry including film making and cable TV broadcasting, a move aimed at supporting the development of the country’s nascent culture sector.

ChINA DAILY

– China starts releasing a monthly nonferrous metals price index on Wednesday, as China hopes to increase its influence in global commodity price formation.

– About 60 percent of Chinese companies plan to move their research centres and production bases overseas in five years, roughly doubling from the current percentage of companies having these functions abroad, according an expert survey on Wednesday.

SHANGHAI DAILY

– Firms of modern logistics, information, technology and culture industry operating in Qianhai economic zone, a pilot test ground for economic reform in southern Chinese city Shenzhen, will receive a 15 percent corporate tax benefit, according to a document released by Shenzhen tax authorities on Wednesday.

– China will build Asia’s biggest business jet exhibition centre in the western province of Shanxi, according to the report of the annual Asian Business Aviation Conference and Exhibition on Wednesday. The centre will display business jets from global manufactures and provide test flights service.

Britain

The Times

HEATHROW FLIGHT PRICES SET TO SOAR WITHOUT NEW RUNWAY

The average cost of a return flight could rise by as much as 320 pounds by 2030 if a third runway is not built at Heathrow airport.

METSO’S REFUSAL PUTS USUAL SUSPECTS IN LINE TO STEAL WEIR’S THUNDER

Weir Group will have to come back with substantially better terms for its putative 9 billion pound merger with Metso of Finland or potentially see its target fall to an American counter-attack.

The Telegraph

MORE THAN $22 BLN WIPED OFF GOOGLE

MORE than $22 billion was wiped off the value of Google last night, amid fears that it is struggling to make as much money from mobile users as those on traditional desktops.

CLARKE INSISTS HE WILL NOT GIVE UP REINS AT TESCO

The beleaguered chief executive of Tesco, Philip Clarke, has insisted he will not resign and said he should be judged by the quality of the retailer’s revamped stores, despite profits falling for the second year in a row.

The Guardian

WAGES BEAT INFLATION AS UNEMPLOYMENT FALLS BELOW 7 PCT Pay rose by 1.7 percent, ahead of the March inflation rate of 1.6 percent, while there was a quarterly fall of 77,000 in the number of people out of work.

The Food Standards Agency has called for a fresh round of tests on lamb takeaways, after the consumer watchdog Which? found that nearly half bought from restaurants in London and Birmingham were adulterated with cheaper meats.

http://www.zerohedge.com / link to original article

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Jobless claims for week of April 12 at 8:30–consensus 312K
Philly Fed manufacturing survey for April at 10:00–consensus 10.0

ANALYST RESEARCH

Upgrades

Alcoa (AA) upgraded to Sector Perform from Underperform at RBC Capital
Bank of America (BAC) upgraded to Outperform from Perform at Oppenheimer
Boardwalk Pipeline (BWP) upgraded to Overweight from Underweight at JPMorgan
BofI Holding (BOFI) upgraded to Buy from Neutral at Sterne Agee
Edison International (EIX) upgraded to Buy from Hold at Jefferies
Equifax (EFX) upgraded to Buy from Hold at Deutsche Bank
Gogo (GOGO) upgraded to Overweight from Neutral at JPMorgan
Hancock Holding (HBHC) upgraded to Outperform from Market Perform at Raymond James
National Bank of Greece (NBG) upgraded to Neutral from Underweight at JPMorgan
Netflix (NFLX) upgraded to Outperform from Sector Perform at Pacific Crest
Rally Software (RALY) upgraded to Overweight from Neutral at Piper Jaffray
SolarCity (SCTY) upgraded to Outperform from Neutral at RW Baird

Downgrades

Enterprise Products (EPD) downgraded to Hold from Buy at Jefferies
Huntington Bancshares (HBAN) downgraded to Outperform at Raymond James
Meredith (MDP) downgraded to Neutral from Buy at Citigroup
Ryder (R) downgraded to Hold from Buy at Stifel
Seadrill (SDRL) downgraded to Neutral from Buy at BofA/Merrill
Southern Company (SO) downgraded to Sector Perform from Outperform at RBC Capital
Targa Resources Partners (NGLS) downgraded to Hold from Buy at Jefferies

Initiations

Golub Capital (GBDC) initiated with an Outperform at Raymond James
Hanmi Financial (HAFC) initiated with an Outperform at Raymond James
Norwegian Cruise Line (NCLH) initiated with a Buy at Longbow
Plum Creek Timber (PCL) initiated with an Outperform at RBC Capital
RF Micro Devices (RFMD) initiated with a Market Perform at BMO Capital
SanDisk (SNDK) assumed with an Overweight at Piper Jaffray
Skyworks (SWKS) initiated with a Market Perform at BMO Capital
TriQuint (TQNT) initiated with a Market Perform at BMO Capital

COMPANY NEWS

Post Holdings (POST) to acquire Michael Foods for $2.45B
Sony (SNE) said PlayStation 4 sales surpass 7M units worldwide
SanDisk (SNDK) reported Q1 earnings and revenue that beat expectations and guided to Q2 revenues that were in-line with expectations
Discover (DFS) announced $3.2B share repurchase, increased dividend to 24c per share
IBM (IBM) said FY14 revenue growth to be impacted by hardware business challenges
La-Z-Boy (LZB) said it will restructure casegoods business, will take charge of $13M-$15M
Google (GOOG) reported Q1 average cost-per-click down 9%

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
KeyCorp (KEY), Baker Hughes (BHI), BlackRock (BLK), General Electric (GE), First Cash Financial (FCFS), UnitedHealth (UNH), El Paso Pipeline (EPB), Steel Dynamics (STLD), East West Bancorp (EWBC), Albemarle (ALB), Crown Holdings (CCK), Hancock Holding (HBHC), Noble Corp. (NE), Cohen & Steers (CNS), Astoria Financial (AF), HNI Corporation (HNI), United Rentals (URI), Allison Transmission (ALSN), Electronics for Imaging (EFII), Capital One (COF), American Express (AXP), SanDisk (SNDK), Kansas City Southern (KSU), RLI Corp. (RLI), Danaher (DHR), Platinum Underwriters (PTP)

Companies that missed consensus earnings expectations include:
Fifth Third Bancorp (FITB), Orbital Sciences (ORB), Mattel (MAT), BB&T (BBT), Triangle Petroleum (TPLM), Kinder Morgan Energy (KMP), Kinder Morgan (KMI), People’s United (PBCT), Badger Meter (BMI), Universal Forest (UFPI), Google (GOOG), B&G Foods (BGS), NeuStar (NSR)

Companies that matched consensus earnings expectations include:
DuPont (DD), Pacific Continental (PCBK), Cathay General (CATY), BankMutual (BKMU), Guaranty Bancorp (GBNK), IBM (IBM), Plexus (PLXS)

NEWSPAPERS/WEBSITES

Big banks (MS, GS, USB, C, WFC, JPM, BAC) boosting their business lending, WSJ reports
Platform Specialty Products (PAH) to buy Chemtura’s (CHMT) agrochemicals unit, WSJ says
Bank of America (BAC) to pay $950M to settle mortgage allegations, NY Times says
General Motors (GM) redesigned Cadillac ignition switch in 2006, Detroit News says
Citigroup (C) may have received mixed signals from Federal Reserve, WSJ reports
Yahoo (YHOO) seeks default search status for Apple (AAPL) products, Re/code says
Edwards (EW) says not looking for complete ban of Medtronic (MDT) valve, Bloomberg says
AT&T (T) could sit out on major U.S. spectrum auction, Reuters reports

SYNDICATE

Athlon Energy (ATHL) 12.875M share Secondary priced at $40.00
Sabre (SABR) 39.2M share IPO priced at $16.00
Senior Housing (SNH) files to sell 12M shares of common stock
Sportsman’s Warehouse (SPWH) 12.5M share IPO priced at $9.50
Vital Therapies (VTL) 4.5M share IPO priced at $12.00
Weibo (WB) 16.8M share IPO priced at $17.00

www.zerohedge.com / link to original article

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