- Mine union threatens to bring South Africa to ‘standstill’ (Reuters)
- Russia Raises Stakes in Syria (WSJ) – as reported here yesterday
- Japan buys into US shale gas boom (FT)
- Bill Gates Retakes World’s Richest Title From Carlos Slim (BBG) – so he can afford a Tesla now?
- China Wages Rose Sharply in 2012 (WSJ)
- Regulators Target Exchanges As They Ready Record Fine (WSJ)
- Citi Takes Some Traders Off Bloomberg Chat Tool (WSJ)
- After Google, Amazon to be grilled on UK tax presence (Reuters)
- Apple CEO Cook to Propose Tax Reform for Offshore Cash (BBG)
- French, German politicians to pressure Google on tax (Reuters)
- Gold Bears Revived as Rout Resumes After Coin Rush (BBG)
- A stretched Samsung chases rival Apple’s suppliers (Reuters)
Overnight Media Digest
* Financial regulators are taking a harder line on exchanges amid concerns over their ability to police the markets they operate, as the SEC prepares to hit one with a record penalty. The deeper scrutiny has prompted some exchange officials to push back against a new regulatory stance that they say leaves them more vulnerable to potential penalties and sanctions.
* A so-so first quarter earnings season hasn’t dented investors’ enthusiasm for stocks. Profit at large U.S. companies modestly exceeded Wall Street analysts’ expectations, while revenue was weak and many companies ratcheted down growth projections. However stock prices have been rising, with the Dow Jones industrial average up 16 percent for the year and 4.2 percent since earnings season began April 8.
* The booming market for commercial-mortgage-backed securities (CMBS) is on the verge of passing a dubious milestone – losses on a class of bonds that have been popular with investors for the big returns they promised.
The securities, dubbed “AJ” have found favor with investors because they combine high payouts, or yield, and greater relative protection against losses than some other high-yielding securities. But now, the potential sale of a troubled Atlantic City luxury mall, named the Pier Shops at Caesars, could saddle investors with the first losses on AJ securities created during the U.S. housing boom. The property is on the block after an earlier sale fell through.
* The ousted chief executive of Tuesday Morning Corp , Kathleen Mason, is suing her former employer, alleging she was discriminated against after developing breast cancer.
* Eight members of Congress on Thursday asked Google Inc Chief Executive Larry Page to give assurances about privacy safeguards for the company’s high-profile Google Glass wearable-computing device.
The demands come as Google holds its annual developer conference in San Francisco, where it is coaching hundreds of developers on how to write programs for the device.
* Foreign-exchange traders at Citigroup Inc will soon move from Bloomberg LP’s chat tool to their own internal system, as part of a push to reduce data costs and migrate more people onto its own proprietary technology, people familiar with the bank’s plans said.
George Osborne’s attempts to cut public spending by 11.5 billion pounds in election year has caused tensions in the cabinet as some ministers failed to provide the list of 10 percent departmental cuts he had ordered and another said he was “asking too much”.
Alternative asset manager Blackstone Group LP, is readying to launch a “super” hedge-fund, which will invite the numerous third-party hedge funds it invests with to submit their best trades in return for a fee.
Newly merged commodities group Glencore Xtrata Plc ousted its chairman on Thursday, replacing him with Tony Howard, the former BP Plc chief executive who was once known as the United States’ most hated man for his role in the Gulf of Mexico oil spill.
Dell Inc, which has been the subject of a takeover war between its founder Michael Dell and activist investor Carl Ichan, reported a 79 percent slide in first-quarter profit on Thursday, well below Wall Street expectations.
Citigroup Inc has stopped its foreign exchange traders from using chat rooms on their Bloomberg terminals but said that the decision was not related to the recent complaints regarding the access of private data by Bloomberg’s journalists.
ANA Holdings Inc, the world’s biggest operator of Boeing Co’s 787 Dreamliner, reported a problem with one of its test flights involving damage to an electrical distribution panel but said that it was not related to the newly modified battery system.
* Fred Eckert was once a star at Goldman Sachs, with a mansion and a collection of vintage cars; but by 2011, he was bankrupt, divorced and had spent two months in a coma. Today, he is planning a return to the arena.
* Google announced seven new apps for its Internet connected glasses, including ones from Facebook, Twitter, Tumblr, CNN, Elle and Evernote.
* Vast databases of patient and doctor information being used by drug makers let them know which medications physicians are prescribing and how they compare to colleagues.
* Two separate groups sent letters to Wal-Mart, Target, Sears and Gap, urging them to sign on to the factory safety plan that over 30 European retailers embraced this week.
* Foxconn Technology has made progress toward better safety conditions, but employees are still working longer than Chinese law allows.
* J C Penney’s former Chief Executive Myron Ullman, who is now its new chief executive, is reinstating old pricing and promotion policies to lure alienated customers back through its doors.
* The Bayonne Medical Center charged Medicare the highest amounts for about a quarter of the most common treatments, a Times analysis of 2011 data shows.
THE GLOBE AND MAIL
* Paul Godfrey has been ousted as chairman of Ontario’s lottery corporation, leaving his vision for a downtown Toronto casino in tatters and plans to overhaul the province’s gambling operations in disarray. The entire board of directors at the Ontario Lottery and Gaming Corp resigned in protest on Thursday evening, with six of them penning a letter to the Finance Minister saying they are shocked by Godfrey’s dismissal.
* Senator Mike Duffy is stepping down from the Conservative caucus, saying the ongoing controversy over his expenses has become a significant distraction to his colleagues and the government. Just days after being praised by the Conservative government for his “leadership” in paying back more than C$90,000 ($88,600) in expenses, Duffy will now sit as an independent as he faces various potential ethics probes.
Reports in the business section:
* Telus Corp’s C$380 million ($374.07 million)agreement to buy faltering carrier Mobilicity presents the federal government with a stark choice – admit failure in its years-long push to create more competition in the wireless business or try to salvage the goal of having at least four players in every regional market.
* It is said that the way to a man’s heart is through his stomach, and Parti Québécois Premier Pauline Marois is hoping the same holds true for a nation. The polls have relegated her party’s dream of independence to the distant future, but that did not stop Marois from making a unilateral declaration of “food sovereignty” on Thursday. Fulfilling a promise from last summer’s election campaign, she announced a government policy aimed at achieving a 50 percent increase in the amount of locally produced food Quebecers eat.
* The fallout from Quebec’s corruption scandals has reached the epicentre of Canada’s Parliament, with the federal Opposition leader revealing on Thursday he once spoke to police about someone trying to pass him a suspicious-looking envelope. NDP Leader Tom Mulcair said he spoke to investigators two years ago about a 1994 meeting with the then mayor of Laval, Quebec, who has since resigned in scandal and been slapped with criminal charges.
* Prime Minister Stephen Harper is seeking to counter opposition to TransCanada Corp’s Keystone XL pipeline, a project crucial for boosting Canada’s economy and Harper’s plans to make the country an energy superpower to rival Saudi Arabia. Harper, at an event on Thursday moderated by former U.S. Treasury Secretary Robert Rubin for the Council on Foreign Relations in New York, said there is a strong case for the U.S. government to approve the pipeline, citing the prospects for job creation and North American energy independence.
CHINA SECURITIES JOURNAL
– New loans by China’s Shanghai Pudong Development Bank Co Ltd are expected to hit 190 billion yuan ($30.90 billion), while bad loans will remain above 0.75 percent in 2013, said Liu Xinyi, vice president of the bank.
– China’s government has allocated 58 billion yuan ($9.43 billion) for public rental housing projects in 2013.
SHANGHAI SECURITIES NEWS
– China will remove or reduce requirements for official approval for 117 “items”, according to a list published by the State Council on Thursday. The official China Daily added that 16 further items are pending decision. The items range from foreigners touring in their own vehicles to companies investing in large oil and gas fields.
– Shanghai authorities are considering reopening some of the city’s live poultry markets next month, after they were shut down in April and thousands of birds culled due to an outbreak of a bird flu virus. The move suggests that fears over the deadly outbreak are waning in China.
– Gold demand in China rose 20 percent in the first quarter of 2013 from a year ago to 294.3 tonnes, according to a report from the World Gold Council.
– Sales of consumer goods in China will grow 13 percent in 2013, slower than previous years, according to a report released on Thursday by a department of China’s Ministry of Commerce. Zhao Ping, deputy director of the department, said the slowdown was linked to private spending rather than public funds becoming the main driver of consumption.
– Thirty-three people have died and 12 are missing after storms battered southern China, the country’s civil affairs and disaster reduction authorities said on Thursday. Official news agency Xinhua also reported late Thursday night that some areas of Guangdong province had suffered the worst flooding in a century with close to 3,000 homes destroyed and 650,000 people affected in the region.
* Dish Network Corp has lined up four banks to finance its $25.5 billion bid for Sprint Nextel Corp, escalating the bidding war against Japanese telecom company SoftBank Corp, according to two people familiar with the matter.
* RP Martin Holdings Ltd, the British interdealer broker that became involved in the Libor fixing investigation when two of its employees were arrested in December, suspended its chief executive and a director on Wednesday, a source familiar with the matter told Reuters.
* The consortium of investors seeking to take over Severn Trent Plc offered just under 20 pounds per share for the British water company, valuing it at around 4.7 billion pounds ($7.16 billion), a source told Reuters on Wednesday.
* The Portuguese government and JPMorgan Chase & Co are attempting to resolve a tussle over potentially costly derivative contracts sold by the U.S. investment bank to state-owned companies, a source familiar with the situation said.
* Swiss drugmaker Roche Holding AG is exploring a sale of its blood glucose meters business, three people familiar with the matter told Reuters on Wednesday, as the industry grapples with increased competition and reimbursement pressure.
* Macquarie Group Ltd -backed Asian Pay Television Trust has priced its Singapore initial public offering at S$0.97 per unit, at the bottom of a narrowed marketing range, people familiar with the matter told Reuters on Thursday, raising $1.14 billion.
* Before Optimer Pharmaceuticals Inc even put itself up for sale earlier this year, Cubist Pharmaceuticals Inc offered to buy the antibiotic maker for $20 per share, or nearly $1 billion, two people familiar with the matter told Reuters on Wednesday.
* Bain Capital LLC has emerged as the last party standing in the race for Yankee Candle Co Inc, three people familiar with the matter said, making it likely that the largest scented candle maker in the United States will stay in private equity hands.
* Singapore’s Changi Airport Group has sold its 8.36 percent stake in Italy’s Generale Mobiliare Interessenze Azionarie SpA at 1.43 euros per share, a source close to the situation said on Wednesday.
* British tour operator Thomas Cook Group Plc will announce plans to raise about 400 million pounds ($609.02 million) through a placing and rights issue on Thursday, according to two travel industry sources.
* Austin Brown, a portfolio manager with a focus on metals at Caxton Associates, has left the London office of the $6 billion U.S. hedge fund, according to a source at the company.
* Publishing company Mecom Group Plc is set to appoint veteran investment banker Rory Macnamara as its chairman as it continues to restructure its business, the Financial Times reported, citing people close to the company
Fly On The Wall 7:00 AM Market Snapshot
Capella Education (CPLA) upgraded to Outperform from Market Perform at William Blair
Ctrip.com (CTRP) upgraded to Neutral from Sell at Citigroup
General Motors (GM) upgraded to Buy from Underperform at CLSA
Ruckus Wireless (RKUS) upgraded to Buy from Neutral at Goldman
Standard Pacific (SPF) upgraded to Buy from Fair Value at CRT Capital
Tetra Technologies (TTI) upgraded to Outperform from Sector Perform at RBC Capital
U.S. Silica (SLCA) upgraded to Outperform from Sector Perform at RBC Capital
Actuant (ATU) downgraded to Neutral from Buy at SunTrust
Aruba Networks (ARUN) downgraded to Equal Weight from Overweight at Morgan Stanley
Aruba Networks (ARUN) downgraded to Market Perform from Outperform at Wells Fargo
Aruba Networks (ARUN) downgraded to Neutral from Buy at Janney Capital
Aruba Networks (ARUN) downgraded to Perform from Outperform at Oppenheimer
CAE (CAE) downgraded to Sector Perform from Outperform at RBC Capital
City Holding (CHCO) downgraded to Market Perform from Outperform at Keefe Bruyette
Deere (DE) downgraded to Sell from Neutral at Goldman
Disney (DIS) downgraded to Neutral from Overweight at Atlantic Equities
HSBC (HBC) downgraded to Neutral from Outperform at Exane BNP Paribas
L Brands (ltd) downgraded to Underperform from Hold at Jefferies
Manning & Napier (MN) downgraded to Underperform from Neutral at BofA/Merrill
MeadWestvaco (MWV) downgraded to Underperform from Sector Perform at RBC Capital
National Grid (NGG) downgraded to Neutral from Outperform at Exane BNP Paribas
Savient (SVNT) downgraded to Market Perform from Outperform at William Blair
Stryker (SYK) downgraded to Reduce from Neutral at SunTrust
TRW Automotive (TRW) downgraded to Hold from Buy at Deutsche Bank
Universal Health (UHS) downgraded to Neutral from Positive at Susquehanna
Williams-Sonoma (WSM) downgraded to Neutral from Buy at BofA/Merrill
Zimmer (ZMH) downgraded to Reduce from Neutral at SunTrust
Ambac Financial (AMBC) initiated with a Buy at BTIG
Cempra (CEMP) initiated with a Buy at Jefferies
Globus Medical (GMED) initiated with a Buy at WallachBeth
Infoblox (BLOX) initiated with a Buy at Needham
McCormick (MKC) initiated with a Neutral at Citigroup
NuVasive (NUVA) initiated with a Buy at WallachBeth
T-Mobile USA (TMUS) initiated with an Equal Weight at Barclays
Northrop Grumman (NOC) announced additional $4B share repurchase authorization
Caterpillar (CAT), Mining Machinery resolved all outstanding issues
Dell (DELL) continues to expect “relatively weak” demand in end-user PC business
ING Groep (ING) to sell part of its direct stake in SulAmerica to International Finance Corp.
Yum! Brands (YUM) Taco Bell CEO sees doubling revenue to $14B in 10 years
Yahoo! (YHOO) granted favorable ruling in Mexico City superior court
Vascular Solutions (VASC) filed patent infringement complaint against Boston Scientific (BSX)
Companies that beat consensus earnings expectations last night and today include:
SINA (SINA), Bona Film (BONA), ViaSat (VSAT), Xueda Education (XUE), Brocade (BRCD), Envestnet (ENV)
Companies that missed consensus earnings expectations include:
Stage Stores (SSI), J.C. Penney (JCP), SMART Technologies (SMT), 21Vianet (VNET), Nordstrom (JWN), Aruba Networks (ARUN), Autodesk (ADSK), Cosi (COSI), Dell (DELL)
- JPMorgan Chase (JPM), in a last-ditch effort to beat back activist investors, sent a letter to shareholders who have yet to vote on the nonbinding proposal ahead of the May 21 annual meeting, urging them to reject a proposal to split the chairman and CEO roles held by James Dimon, the Wall Street Journal reports
- Amazon.com (AMZN) will be called back to the British parliament to clarify how its activities in the U.K. justify its low corporate income tax bill, Reuters reports
- J.C. Penney (JCP) CEO Ullman says that the department store chain is emerging from what he called an abyss but warned he needs time to fix the issues of the retailer, Reuters reports
- Apple (AAPL), which holds $102B in cash and investments outside the U.S., will suggest changes to corporate-tax laws to encourage companies to bring more cash into the country, Bloomberg reports
- Fiat’s (FIATY) deliberations over moving its headquarters to the U.S. after a merger with Chrysler Group LLC. raised concern among Italian unions and politicians about the plans of the country’s biggest manufacturer. CEO Marchionne is considering the move because Fiat’s main sources of revenue and profit are shifting to North America, Bloomberg reports
Marketo (MKTO) 6.059M share IPO priced at $13.00
Stemline (STML) 4.14M share Secondary priced at $14.50
TC PipeLines (TCP) 7.7M share Secondary priced at $43.85
Tableau Software (DATA) 8.2M share IPO priced at $31.00
Tesla (TSLA) 2.7M share Secondary priced at $92.24
Triple-S (GTS) 5.4M share Secondary priced at $18.25
SAC Capital reports 5.0% passive stake in Tessera (TSRA)
Yucaipa wants Morgans Hotel (MHGC) meeting to reflect $7.50 per share offer