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Frontrunning: March 24

  • Germanwings Airbus crashes in France, 148 feared dead (Reuters)
  • Greece promises list of reforms by Monday to unlock cash (Reuters)
  • Merkel Points Tsipras Toward Deal With Greece’s Creditors (BBG)
  • Banks Shift Bond Portfolios -Move to ‘held to maturity’ category aims to guard against rising rates, shield capital  (WSJ)
  • Beijing to Shut All Major Coal Power Plants to Cut Pollution (BBG)
  • As Silence Falls on Chicago Trading Pits, a Working-Class Portal Also Closes (NYT)
  • Oil below $56 as Saudi output near record, China activity slows (Reuters)
  • London Skyscraper Prices Seen Threatened by EU Exit Risk (BBG)
  • This Very Expensive Bull Is Fueling America’s Prime Steak (BBG)
  • Deutsche Bank Said to Weigh Shrinking Securities Unit (BBG)
  • China March flash HSBC PMI contracts to 11-month low, fans policy easing expectations (Reuters)
  • Eurozone composite PMI hits three-year high (FT)

 

Overnight Media DIgest

WSJ

* Banks are shuffling big chunks of their securities portfolios around the balance sheet to shield capital levels from rising interest rates. (http://on.wsj.com/1FxMMB8)

* Total SA is pushing ahead with a $27 billion natural-gas project in the Russian Arctic, but it will seek a big chunk of the financing - as much as $15 billion worth - through Chinese banks in local currency and euros. (http://on.wsj.com/1HrGAYN)

* A U.S. activist fund is raising pressure on Vivendi SA to boost shareholder returns and clarify its strategy ahead of next month's annual meeting, highlighting a growing malaise among minority shareholders over where group Chairman Vincent Bollore is driving the media conglomerate. (http://on.wsj.com/1FSta9D)

* U.S. regulators added three foreign-owned banks, BNP Paribas SA, HSBC Holdings PLC and Royal Bank of Scotland, to the list of big financial firms that haven't shown they can collapse without causing broader economic damage. (http://on.wsj.com/1xe2wqe)

* Ocwen Financial Corp disclosed late Monday after the market closed that it had been threatened with a possible delisting by the New York Stock Exchange for failing to file its 2014 annual financial statement on time, and that it wasn't certain when it would file the required statements. (http://on.wsj.com/18TZVq0)

 

FT

Activist investor P Schoenfeld Asset Management (PSAM) has urged Vivendi SA to spin off its Universal Music Group division to take benefit of investor excitement over future of streaming music. PSAM has valued the music company at close to 9 billion euros ($9.85 billion), including debt.

Royal Bank of Scotland is to raise more than $3 billion by cutting its stake in Citizens Financial Group to less than half, six months after its U.S. subsidiary floated in New York.

Hutchison Whampoa Ltd is expected to finalize a deal to buy Telefonica SA's British mobile unit O2 for 10.5 billion pounds ($15.70 billion) as early as Tuesday morning.

According to European Central Bank projections, one in 10 workers will remain unemployed in the Eurozone even after the full effects of it's bond-buying programme have rippled through the economy.

 

NYT

* Facebook has been quietly holding talks with at least half a dozen media companies, including The New York Times, BuzzFeed, The Times and National Geographic, about hosting their content inside Facebook rather than making users tap a link to go to an external site. (http://nyti.ms/1DRtPsF)

* The Securities and Exchange Commission faces new pressure from Congress to make it harder for lawbreaking companies to hold on to important privileges that help them raise money in the markets. (http://nyti.ms/1Ckq5xH)

* The United States Telecom Association, a trade group that represents some of the largest Internet providers in the U.S. and Alamo Broadband, a small Texas-based broadband provider, on Monday filed lawsuits against the Federal Communication Commission's new rules for broadband Internet service. (http://nyti.ms/1BJRX9z)

* Google Fiber Internet and television service in Kansas City said it would soon begin a trial of local TV ads that will be aimed at a viewer's locality and viewing habits. (http://nyti.ms/1EDOETm)

 

Canada

THE GLOBE AND MAIL

** Federal-provincial relations are being tested on the free trade front once again with the awarding of C$17.3 million ($13.9 million) in damages to two U.S. oil companies, Exxon Mobil Corp and Murphy Oil Corp, over a requirement they spend research money in Newfoundland and Labrador. (http://bit.ly/18UoyCU)

** The Conservative government is proposing to expand Canada's role in the fight against Islamic State militants to Syria and extend the mission by a year to March 2016, sources say. (http://bit.ly/1EE33Pw)

** Thousands of international students were rejected for permanent residence this winter, caught up in changes to Canada's immigration system intended to speed up recruitment of skilled workers but criticized as leading to uncertainty for prospective immigrants and employers. (http://bit.ly/1N3XWyu)

NATIONAL POST

** Nevsun Resources Ltd is describing an attack on its Bisha mine in Eritrea as an "act of vandalism," an account that contrasts starkly with African media reports saying the mine was bombed by Ethiopan fighter jets. (http://bit.ly/1FSRA2A)

** A military intelligence report warns of an "emerging trend" in which terrorist groups use social media to harass the family and friends of Canadian military personnel. (http://bit.ly/1CLEhjQ)

** The British Columbia government has fired the Auditor General for Local Government, after her refusal to participate in a review of her office created an "intolerable situation." (http://bit.ly/1xueLzi) (

 

China

SHANGHAI SECURITIES NEWS

- Former central bank adviser Yu Yongding said a possible outflow of wealth from the richest Chinese is the biggest concern if China opens up the country's capital accounts.

- China's State Council said capital markets should play a major role in driving innovation and helping China's economic restructuring.

21ST CENTURY HERALD

- Government think-tank China Academy of Social Sciences is predicting that the country's gross domestic product growth will fall to 6.85 percent in the first quarter.

CHINA DAILY

- Authorities plan to speed up construction of a high-speed rail link between Winter Olympic bid cities Beijing and Zhangjiakou, with work forecasted to start by June, the municipal railway authority said.

- Internet companies in China are rushing to attract Yahoo Inc's staff after the U.S. Internet giant's announcement that it was shutting its operations in the country.

 

Britain

The Times

POUND PROVES HEAVY BURDEN ON EXPORTERS

Factories have been stung by the strength of the pound and continuing problems in the eurozone, according to an industry survey. Manufacturing orders stagnated unexpectedly in March as new business from abroad collapsed at its fastest rate in more than two years. (http://thetim.es/1EL4Y7t)

BUILDER FACES 1 MILLION POUND COST TO REPLACE SKYSCRAPER BOLTS

Severfield Plc, Britain's largest steelmaker that delivered the steel structures for the Cheesegrater in London has admitted that replacing the skyscraper's faulty bolts will cost at least 1 million pounds ($1.50 million). Severfield said that replacing the bolts is likely to last for the rest of the year. (http://thetim.es/1HtmYTY)

The Guardian

AFZAL AMIN QUITS AS TORY CANDIDATE FOR DUDLEY NORTH AFTER EDL PLOT ALLEGATIONS

Afzal Amin, the Conservative candidate who was recorded allegedly plotting with the English Defence League, has resigned "with immediate effect" to avoid a disciplinary hearing by the party. Tory sources had said that evidence against Amin was so overwhelming that he would be removed as the party candidate in Dudley North in days. (http://bit.ly/1FRyrhC)

DAVID CAMERON: I WOULD NOT SERVE THIRD TERM AS PM

David Cameron unexpectedly ruled out serving a third term in office, causing dismay in Conservative circles as he highlighted three potential successors. Cameron named home secretary Theresa May, chancellor George Osborne and London mayor Boris Johnson as potential Conservative leaders. (http://bit.ly/1ECQwf9)

The Telegraph

ECB HITS OUT AT GREEK 'BLACKMAIL' CLAIMS AS MERKEL HOLDS STEADY IN BAIL-OUT DEMANDS

The European Central Bank hit back at claims it is "blackmailing" Greece over its protracted bail-out, as the impasse between Athens and its international creditors showed no sign of easing. (http://bit.ly/19LGtgp)

FORMER HMRC BOSS: I TOOK JOB AT HSBC TO HELP FIX BANK

A former senior official at HM Revenue and Customs has defended taking a job at HSBC Bank Plc, saying that "leadership at the bank were determined to put things right". Dave Hartnett, HMRC's former head of tax, said he "believed in HSBC chief executive Stuart Gulliver's vision of sorting out the bank and making it one of the best in the world". (http://bit.ly/1BcwAyG)

Sky News

GEORGE OSBORNE SAYS ECONOMY STILL STRUGGLING

The Chancellor has admitted the UK's economic problems are not over and there is "lots more work to do". George Osborne also insisted Britain should be "in Europe, but not run by Europe" as he defended the government's decisions on a range of issues including savers and zero hours contracts. (http://bit.ly/1BobCfs)

PROFITS CRISIS SPARKS NEW TESCO LEGAL BATTLE

The challenge facing Tesco Plc's new leadership team will be underlined on Tuesday with the emergence of another legal claim from shareholders over the retailer's 263 million pound profit misstatement. (http://bit.ly/1G7VRzP)

The Independent

PLASTIC 5-POUND NOTES TO CIRCULATE IN BRITAIN FOR FIRST TIME

Two million 5-pound notes made of polymer plastic are being released by The Clydesdale Bank Plc <IPO-CLBP.L> this month as a safer and more durable alternative to paper banknotes. The limited edition notes are going into the system a year before the Bank of England issues its first set of plastic banknotes for general circulation. (http://ind.pn/1G8MbFc)

VOTE UKIP, SAYS FAR-RIGHT GROUP BRITAIN FIRST

Britain First, the far-right political party responsible for vigilante "invasions" of mosques and a campaign against the "Islamification" of Britain, has told its supporters to help deliver "major Ukip gains" at the general election. Letters and leaflets distributed by Britain First, a group formed by former British National Party members, effectively endorse Nigel Farage's party. (http://ind.pn/1xWEGKy)

 

Fly On The Wall Pre-Market Buzz

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Consumer Price Index for February at 8:30--consensus up 0.2%
FHFA house price index for January at 9:00--consensus up 0.5%
Markit flash manufacturing PMI for March at 9:45--consensus 54.6
New home sales for February at 10:00--consensus down 3.5% to 462K rate
Richmond Fed manufacturing index for March at 10:00--consensus 3

ANALYST RESEARCH

Upgrades

AMN Healthcare (AHS) upgraded to Buy from Neutral at UBS
Analogic (ALOG) upgraded to Buy from Hold at Brean Capital
Cummins (CMI) upgraded to Outperform from Neutral at RW Baird
Estee Lauder (EL) upgraded to Outperform from Market Perform at Wells Fargo
Kimberly-Clark (KMB) upgraded to Outperform from Market Perform at Wells Fargo
Xcel Energy (XEL) upgraded to Overweight from Equal Weight at Barclays

Downgrades

Century Aluminum (CENX) downgraded to Underweight from Equal Weight at Morgan Stanley
Global Power Equipment (GLPW) downgraded to Market Perform at William Blair
MEI Pharma (MEIP) downgraded to Market Perform from Outperform at Wells Fargo
NICE Systems (NICE) downgraded to Market Perform from Outperform at JMP Securities
Progressive (PGR) downgraded to Neutral from Buy at Goldman
Tim Participacoes (TSU) downgraded to Reduce from Overweight at HSBC

Initiations

Atwood Oceanics (ATW) initiated with a Neutral at Susquehanna
Envestnet (ENV) initiated with a Market Perform at BMO Capital
Hartford Financial (HIG) coverage resumed with a Buy at Goldman
Platform Specialty Products (PAH) initiated with an Equal Weight at Barclays
Sirius XM (SIRI) coverage resumed with a Neutral at Goldman
Spirit Realty (SRC) initiated with a Neutral at RW Baird
Verifone (PAY) initiated with an Outperform at BMO Capital

COMPANY NEWS

U.S. regulators said BNP (BNPQY), HSBC (HSBC), RBS (RBS) must rewrite living wills
Amazon's (AMZN) Twitch noted “unauthorized access” to some user account information
Chesapeake (CHK) lowered FY15 CapEx view to $3.5B-$4B from $4B-$4.5B
ABIOMED (ABMD) confirmed FDA approval of Impella 2.5 heart pump
VOXX International (VOXX) said 2015 Jeep will be first to incorporate EyeLock's Iris Identity Authenticator
WellCare (WCG) said Chairman David Gallitano will not stand for re-election

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
McCormick (MKC), HD Supply (HDS), EPIRUS (EPRS), Vericel  (VCEL)

Companies that matched consensus earnings expectations include:
IHS Inc. (IHS)

McCormick (MKC) sees FY15 adjusted EPS $3.44-$3.51, consensus $3.53
HD Supply (HDS) sees Q1 adjusted EPS 25c-31c, consensus 33c, sees FY15 sales up 300 point basis
Engility Holdings (EGL) sees FY15 adjusted EPS $1.70-$2.20, consensus $1.71
IHS Inc. (IHS) cuts FY15 adjusted EPS to $5.77-$5.97 from $6.10-$6.30, consensus $6.18

NEWSPAPERS/WEBSITES

GM (GM) to build next-gen Chevrolet Cruze in Mexico, Reuters reports
Facebook (FB) in talks about hosting content from media companies, NY Times reports
Twitter (TWTR) tests autoplay videos and video ads, Re/code reports
Hutchison Whampoa (HUWHY) to finalize deal to buy O2 (TEF), Financial Times reports
Amazon (AMZN) adds Pandora-like stations to Prime Music app, The Verge reports

SYNDICATE

Brixmor (BRX) 22.5M share Secondary priced at $26.38
Chesapeake Lodging (CHSP) Trust files to sell 3M shares of common stock
Coherus Biosciences (CHRS) files to sell $100M of common stock
Diplomat Pharmacy (DPLO) files to sell 7.4M shares of common stock
Global Partners (GLP) files to sell 1.95M common units for limited partners
Globant (GLOB) files to sell 2.91M shares of common stock for holders
Hercules Technology (HTGC) files to sell 6.6M shares of common stock
Kennedy Wilson (KW) files to sell 7.5M shares of common stock
La Quinta (LQ) files to sell 17.5M shares of stock for Blackstone Group holders
Surgical Care Affiliates (SCAI) files to sell 7M shares of common stock
W&T Offshore (WTI) files $500M mixed securities shelf, 39M shares of common stock
Whiting Petroleum (WLL) announces offering of 35M shares of common stock
ZS Pharma (ZSPH) files to sell 3.3M shares of common stock