Frontrunning: June 20
- Bonds Tumble With Stocks as Gold Drops in Rout on Fed (BBG)
- Bernanke Sees Beginning of End for Fed’s Record Easing (BBG)
- Gold Tumbles to 2 1/2 Year-Low After Fed as Silver Plummets (BBG)
- PBoC dashes hopes of China liquidity boost (FT)
- U.S. Icons Now Made of Chinese Steel (WSJ)
- Emerging Markets Crack as $3.9 Trillion Funds Unwind (BBG)
- Everyone joins the fun: India sets up elaborate system to tap phone calls, e-mail (Reuters)
- China Manufacturing Shrinks Faster in Threat to Europe (BBG)
- More on how Syria's Al-qaeda, and now US, supported "rebels", aka Qatar mercenaries, operate (Reuters)
- Echoes of Mao in China cash crunch (FT) - how dare a central bank not pander to every bank demand?
- Coronavirus Mystifies Scientists Seeing SARS-Like Spread (BBG)
Overnight Media Digest
* U.S. Federal Reserve Chairman Ben Bernanke said the Fed could start winding down its $85 billion-a-month bond-buying program later this year, setting up a high-stakes test to see if the economy and markets can begin to stand on their own.
* The UK is considering splitting the Royal Bank of Scotland into two banks: one housing the lender's healthy assets and the other, its pile of troubled loans and securities, a move that underscores policy makers' frustration.
* Economic sanctions against Iran have made it hard for Iranians to do business abroad. But Iranian businessmen are flocking to Georgia, a U.S. ally in the Caucasus region, to pursue profits.
* Microsoft Corp was recently in advanced discussions with Nokia about a purchase of its device business, in a marriage that could have reshaped the mobile-phone industry.
* Four large U.S. banks have failed to comply with key elements of a landmark $25 billion mortgage settlement, an independent monitor said Wednesday. Bank of America Corp , JP Morgan Chase, Citigroup Inc and Wells Fargo each failed to meet at least one of 29 standards for providing timely and accurate relief to homeowners at risk of foreclosure, said Joseph Smith, the independent monitor responsible for overseeing the settlement.
* Goldman Sachs lost out on an advisory role in one of the most significant deals this year - the sale of Smithfield Foods to China's Shuanghui International Holdings - because of its investment in the Chinese company, according to people familiar with the matter.
* A hearing this week on whether to substantially reduce former Enron CEO Jeffrey Skilling's 24-year prison sentence comes amid a growing debate about the rules for punishing white-collar criminals.
* Microsoft said on Wednesday it will loosen some unpopular new policies it had earlier announced for its upcoming Xbox One videogame console. The software company said it would no longer require its Xbox to connect to the Internet each day, nor would it restrict how its videogame discs are traded, resold or rented.
* Clothing chain Men's Wearhouse terminated its founder and public face, George Zimmer, from his position as executive chairman. Zimmer said he was being silenced after expressing concerns about the comapny's direction.
* Alcatel Lucent SA plans to rework its balance sheet and significantly tighten its focus to a handful of core businesses, in an effort to return the telecommunications-equipment maker to profitability, the company said.
* Nike Inc is encouraging developers to build apps for its FuelBand digital bracelet by giving them aggregate data from customers. Nike's data-sharing venture is part of a larger shift at the sportswear giant to think more like a technology company.
* Smaller-jet makers Embraer and Bombardier have drawn attention with contrasting order books at the Paris Air Show, with Bombardier yet to snare any orders for its coming CSeries jets.
UK's chancellor of the exchequer George Osborne proposed transferring Royal Bank of Scotland's weak assets into a "bad bank" as part of the government's plan to reduce state involvement in the British banking sector.
Britain's financial regulator, the Prudential Regulation Authority, will on Thursday say capital holes at Royal Bank of Scotland, Lloyds Banking Group and Barclays account for more than 90 percent of a 25 billion-pound ($39 billion) shortfall it has identified at the country's top eight banks, according to people familiar with the exercise.
Ben Bernanke Federal Reserve Chairman said the U.S. economy is expanding strongly enough for the central bank to begin slowing the pace of its bond-buying stimulus later this year.
The Financial Conduct Authority is vetting senior appointments at hedge funds and extending its scrutiny to the activities of U.S. funds operating in the United Kingdom as part of its increasing scrutiny of the hedge fund industry
BT Group Chief Executive Ian Livingston, the person credited with turning around the British telecom company, said on Wednesday he was stepping down to replace Lord Green as trade minister.
Italian fashion designers Domenico Dolce and Stefano Gabbana were handed a suspended prison sentence of a year and eight months and fined 500,000 euros on Wednesday by a court in Milan for evading hundreds of millions of euros from the Italian tax authorities.
* The possibility of a bankruptcy filing by the city of Detroit has raised concerns about the fate of 62 classic cars managed by the city's historical society.
* The U.S. Federal Reserve, increasingly confident in the durability of economic growth, expects to start pulling back later this year from its efforts to stimulate the economy, the Fed Chairman, Ben Bernanke, said on Wednesday.
* Europe's top antitrust enforcer continued a crackdown on drug company efforts to keep low-cost generic versions of their medicines off the market, a campaign that is taking place on both sides of the Atlantic.
* George Zimmer, the founder of Men's Wearhouse Inc and a frequent presence in its commercials, was fired on the day of its shareholders' meeting. A disagreement between Mr. Zimmer and the board appeared to be the reason for the sudden dismissal, though it was not immediately clear what that disagreement was.
* The Philippines has the fastest-growing economy in East Asia. But unemployment is still rising and the number of people in poverty has barely changed in six years.
* Riverstone Holdings, a leading private equity firm focused on energy and power, announced on Wednesday that it had raised its largest-ever fund, a $7.7 billion vehicle that exceeds its $6 billion target.
* The British government is preparing to sell part of its holding in the Lloyds Banking Group and is weighing a breakup of the Royal Bank of Scotland, the chancellor of the Exchequer said.
* Sony Corp's Chief Executive Kazuo Hirai told shareholders on Thursday that movies and music were an indispensable part of the company, rejecting a renewed push by the American activist investor Daniel Loeb.
THE GLOBE AND MAIL
* The watchdog agency that sounded the alarm on Canada's metadata surveillance program has also raised red flags about how that intelligence is exchanged with the Canadian Security Intelligence Service.
* A decision in the United States to recognize obesity as a disease has prompted soul-searching within Canada's medical establishment on whether to follow suit.
Reports in the business section:
* Imperial Oil Ltd will close its 95-year-old Dartmouth, Nova Scotia, oil refinery and eliminate most of the 400 high-paying jobs it provides in the Halifax area - victims of too much refining capacity in the Atlantic basin and the high cost of imported crude.
* Alberta Premier Alison Redford delivered an ardent pitch for expanded development of her province's oil sands, calling it critical to the long-term growth and security of the United States and Canada.
* A newly declassified memo that was sent to Prime Minister Stephen Harper during the height of the Afghanistan mission downplayed statistics showing Canadian troops were suffering significantly higher casualty rates than their allies.
* Canada's navy brass is lowering the hammer on veterans who are wearing their uniforms to ceremonial and other public functions, demanding that they receive permission in writing before doing so.
* The Quebec government has set an informal two-week deadline to resolve the province's construction sector strike as reports surface of union brigades pressing non-unionized workers to put down their tools.
* Bombardier Inc booked an order on Wednesday for its regional jets and turboprops from African carrier, Arik Air. The Lagos, Nigeria-based carrier ordered three of the manufacturer's CRJ1000s and four Q400 turboprops, valued at C$297 million ($291.48 million) based on list price.
CHINA SECURITIES JOURNAL
- China Securities Regulatory Commission will introduce new policies to simplify administrative approvals for mergers and acquisitions, unnamed sources said.
- Despite signs of economic slowdown, policymakers should focus on long-term structural reforms rather than short-term stimulus measures, a front-page comment piece said.
- Singapore government-owned developer CapitaLand China has paid 1.9 billion yuan for a 70 percent stake in Shanghai Guang Chuan Property Co Ltd, enabling CapitaLand to develop a mixed-use project on a plot of land on Hanzhong Road in Shanghai.
- Shanghai issued new regulations easing requirements for non-locals to apply for residency permits, making it the first Chinese metropolis to give nearly equal urban status to non-locals.
- At least five countries are negotiating with China to buy its domestically-developed Wing Loong drone, Ma Zhiping, general manager of China National Aero-Technology Import and Export Corp, said at the 50th International Paris Air Show.
- China is trying to attract public attention to the issue of food safety in order to demonstrate the government's determination to resolve this problem, rebuild public confidence in food safety, and get more people involved in solving the problem, the newspaper said in a commentary.
Alcatel-Lucent (ALU) upgraded to Buy from Underperform at BofA/Merrill
Alcatel-Lucent (ALU) upgraded to Neutral from Sell at UBS
Ann Inc. (ANN) upgraded to Outperform from Perform at Oppenheimer
Hewlett-Packard (HPQ) upgraded to Outperform from Market Perform at Wells Fargo
Wal-Mart (WMT) upgraded to Outperform from Market Perform at Raymond James
Weyerhaeuser (WY) upgraded to Outperform from Market Perform at BMO Capital
Aeropostale (ARO) downgraded to Perform from Outperform at Oppenheimer
Alcatel-Lucent (ALU) downgraded to Underperform from Neutral at Exane BNP Paribas
American Eagle (AEO) downgraded to Perform from Outperform at Oppenheimer
Disney (DIS) downgraded to Neutral from Conviction Buy at Goldman
FedEx (FDX) downgraded to Neutral from Overweight at JPMorgan
Newmont Mining (NEM) downgraded to Neutral from Outperform at Cowen
UNS Energy (UNS) downgraded to Hold from Buy at Jefferies
Ascena Retail (ASNA) initiated with an Outperform at Oppenheimer
BRF Brasil Foods (BRFS) initiated with a Buy at Goldman
Children's Place (PLCE) initiated with an Outperform at Oppenheimer
Coty (COTY) initiated with a Hold at Stifel
Ecopetrol (EC) initiated with a Neutral at Goldman
First BanCorp (FBP) initiated with a Buy at Guggenheim
First Midwest (FMBI) initiated with a Neutral at Guggenheim
Gramercy Property Trust (GPT) initiated with an Outperform at JMP Securities
L Brands (LTD) initiated with an Underperform at Oppenheimer
Owens Corning (OC) initiated with an Outperform at Wedbush
Popular (BPOP) initiated with a Buy at Guggenheim
Quanex (NX) initiated with an Outperform at Wedbush
USG (USG) initiated with a Neutral at Wedbush
IHS Inc. (IHS) to acquire PFC Energy
Ebix (EBIX), Goldman Sachs (GS) affiliate terminated merger agreement
Ericsson (ERIC) to develop LTE network for Russian mobile operator MTS
Men's Wearhouse (MW) founder fired over strategy clash with CEO, Bloomberg reports
Orchard Supply Hardware (OSH) filed to delay 10-Q
Wright Medical (WMGI) sold OrthoRecon business to MicroPort Medical for $290M
Stratasys (SSYS) to acquire MakerBot
Companies that beat consensus earnings expectations last night and today include:
IHS Inc. (IHS), Cinedigm Digital (CIDM), Red Hat (RHT), Micron (MU), Jabil Circuit (JBL), Finisar (FNSR)
Companies that missed consensus earnings expectations include:
Companies that matched consensus earnings expectations include:
Pier 1 Imports (PIR), Steelcase (SCS)
- Four large U.S. banks have failed to comply with key elements of a landmark $25B mortgage settlement, said Joseph A. Smith Jr., the independent monitor responsible for overseeing the settlement. Bank of America (BAC), JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) each failed to meet at least one of 29 standards for providing timely and accurate relief to homeowners at risk of foreclosure, the Wall Street Journal reports
- Natural gas is set to emerge as a significant new transportation fuel over the next five years, raising the prospect of a challenge to oil's dominance in the sector, the International Energy Agency said today, the Wall Street Journal reports
- Sony Corp. (SNE) shareholders pressed its CEO for a response to hedge fund Third Point's proposal for a partial spinoff of its profitable entertainment arm, but Kazuo Hirai pleaded for patience as management reviews the plan, Reuters reports
- Britain is ready to begin selling its shares in Lloyds Banking Group (LYG) and will examine whether to break up Royal Bank of Scotland (RBS), according to Finance Minister George Osborne, who added that the re-privatization of RBS remains a long way off, Reuters reports
- Ford (F) CEO Alan Mulally called Japan a currency manipulator that’s giving local exporters an unfair edge as the weaker yen threatens to undermine U.S. automakers’ profits, Bloomberg reports
- Facebook (FB) plans to unveil video-sharing tools, bringing its Instagram into closer competition with Twitter, sources say, Bloomberg reports
Ashford Hospitality (AHT) files to sell 11M shares of common stock
Fulton Financial (FULT) files mixed securities shelf
General Growth (GGP) files to sell 444.6M shares of common stock for holders
Home Loan Servicing (HLSS) files to sell 12.5M shares of common stock
Memorial Production (MEMP) files to sell 12.42M common unit for limited partners
PTC Therapeutics (PTCT) 8.372M share IPO priced at $15.00
Progenics (PGNX) files to sell common stock
Repros Therapeutics (RPRX) 3.75M share Secondary priced at $19.00
Truett-Hurst (THST) 2.7M share IPO priced at $6.00
Vitesse (VTSS) Semiconductor 16.3M share Spot Secondary priced at $2.15