• U.S. Plans to Hit Putin Inner Circle With New Sanctions (BBG)
• Russian Billions Scattered Abroad Show Trail to Putin Circle (BBG)
• GE’s Alstom Bid Gains Steam as Hollande Said Not Opposed (BBG)
• Russia-West tensions pressure stocks, buoy oil prices (Reuters)
• Toyota Said to Plan to Move U.S. Sales Office to Texas (BBG)
• Egyptian court seeks death sentence for Brotherhood leader, 682 supporters (Reuters)
• Greece warned of 14.9 billion euro financing gap (FT)
• Comcast to shed 3.9 million subscribers to ease cable deal (Reuters)
• Big U.S. Banks Make Swaps a Foreign Affair (WSJ)
• Doctors Get Millions From Medicare After Losing Their Licenses (BBG)
• Europe Lacks Founding Father as Russia Sows Divisions (BBG)

Overnight Media Digest

WSJ

* Pfizer Inc plans to pursue a bid for AstraZeneca Plc, eyeing a tie-up that would create a roughly $300 billion pharmaceutical giant and fuel an already booming year for merger-and-acquisition activity, particularly in health care. (http://r.reuters.com/qez78v)

* Siemens AG barged in on Alstom's plans to sell its energy assets to General Electric Co, proposing a counter offer that would forge a global behemoth while keeping a symbol of French industry rooted in Europe. (http://r.reuters.com/rez78v)

* Alibaba Group Holding Ltd's <IPO-ALIB.N> Taobao is one of the world's largest shopping sites, with 7 million sellers offering 800 million items. But ahead of Alibaba's high-profile IPO in the United States, critics say it needs to address the problem of rampant counterfeit goods. (http://r.reuters.com/sez78v)

* Hedge-fund company Och-Ziff Capital Management Group helped finance controversial African oil and mining deals, a trail of corporate documents shows, and now faces scrutiny from U.S. authorities. Och-Ziff disclosed in a March filing that the Securities and Exchange Commission and Justice Department are investigating investments by some of its funds "in a number of companies in Africa" under the Foreign Corrupt Practices Act and related laws. (http://r.reuters.com/wez78v)

* As regulators tighten rules on the U.S. swaps market, large American banks are maneuvering to take some of the business overseas. Banks including Bank of America Corp, Citigroup Inc, Goldman Sachs Group Inc, JPMorgan Chase and Morgan Stanley are changing the terms of some swap agreements made by their offshore units so they don't get caught by U.S. regulations, according to people with knowledge of the situation. (http://r.reuters.com/zez78v)

* In Ben van Beurden's first four months as chief executive of Royal Dutch Shell Plc, the oil company has issued its first profit warning in a decade, halted major projects in Louisiana and Alaska, and moved to sell unprofitable U.S. shale properties. Shell reports earnings on Wednesday, and investors expect to gain clarity on how the 31-year Shell veteran plans to boost profit when costs are high and oil and gas are harder than ever to find. (http://r.reuters.com/cuz78v)

* As states stretching from Massachusetts to Maine thaw out from bitter cold, questions linger about why New England hasn't benefited from the energy boom in the nearby Marcellus Shale. The short answer is not enough pipelines. And the reason is an impasse between pipeline operators and power plants over how to pay for new capacity. (http://r.reuters.com/zyz78v)

* A newly discovered security hole in Microsoft Corp's Internet Explorer - the default Web browser for many users - could be particularly troubling for those still running Windows XP. Microsoft on Sunday warned about a flaw affecting versions 6 through 11 of its flagship browser. The coding flaw would allow hackers to have the same level of access on a network computer as the official user, Microsoft said, which is a best-case scenario for intruders. (http://r.reuters.com/fuz78v)

* A federal judge is slated to review this week how ready the city of Detroit is to hold a vote for more than 100,000 creditors considering a debt-cutting plan in the nation's largest municipal bankruptcy. A U.S. Bankruptcy Judge is scheduled to hold a hearing Monday to consider final approval of the plan's disclosure statement, a detailed explanation of Detroit's troubled financial past leading to an estimated $18 billion in long-term obligations. (http://r.reuters.com/huz78v)

FT

U.S. pharmaceutical giant Pfizer Inc could make a public declaration of its interest in Britain's second-biggest drugmaker AstraZeneca Plc as early as this week, according to sources.

French President Francois Hollande gathered ministers on Sunday to discuss General Electric's bid for French rival Alstom's energy business, with a separate proposal from Germany's Siemens on the table.

Prosecutors from the U.S. Department of Justice have gone to London to interview individuals as part of their probe into traders' alleged rigging of foreign exchange rates, three sources said.

Premier Oil has spurned a secret approach from Ophir Energy aimed at creating an enlarged oil exploration and production company with a market capitalisation of over 3 billion pounds.

Kazakhstan's $50 billion Kashagan oil project is likely to be delayed by two more years while 200 kilometers of pipeline is replaced, according to the country's minister for economy and budget planning.

NYT

* Charter Communications Inc is set to announce a roughly $22 billion deal with Comcast Corp on Monday that would bolster its subscriber base, people briefed on the matter said on Sunday. The three-part plan, which is scheduled to be announced along with Charter's first-quarter earnings, would allow the cable company to expand from its current largely regional presence to become the country's second-largest cable operator. (http://r.reuters.com/wuz78v)

* Pfizer Inc is close to publicly unveiling its interest in acquiring AstraZeneca Plc of Britain, a person briefed on the matter said on Sunday, in what would be one of the biggest in an already swelling series of deal efforts among drug makers. (http://r.reuters.com/xuz78v)

* A Wall Street executive who helped Goldman Sachs Group Inc make more than a billion dollars betting against mortgages now wants to buy up troubled home loans. Donald Mullen, who was the architect of Goldman's trade against the housing market just before the financial crisis, is seeking to raise as much as $1 billion for a new fund. (http://r.reuters.com/zuz78v)

* The French government on Sunday sought to put the brakes on General Electric's bid for Alstom SA, one of the largest industrial companies in France, warning that national interest was in play and that the state would have a say in the outcome. (http://r.reuters.com/cyz78v)

* The deep recession wiped out primarily high-wage and middle-wage jobs. Yet the strongest employment growth during the sluggish recovery has been in low-wage work, at places like strip malls and fast-food restaurants. In essence, the poor economy has replaced good jobs with bad ones. That is the conclusion of a new report from the National Employment Law Project, a research and advocacy group, analyzing employment trends four years into the recovery. (http://r.reuters.com/myz78v)

Canada

THE GLOBE AND MAIL

* Restaurants in Canada are bracing for significant new limits on their ability to hire temporary foreign workers, but are hoping to avoid a permanent ban. Employment Minister Jason Kenney promised Sunday that the federal government would unveil more changes to the controversial program within weeks. (http://r.reuters.com/xuc88v)

* About half of Ontario's school principals have asked parents to keep their child at home because they could not accommodate their special education needs, says a new report that sheds light on how budget constraints have affected students with learning disabilities. (http://r.reuters.com/fyc88v)

Reports in the business section:

* Bombardier Inc seems to have settled into a smoother flight path these days. There have been no additional disclosures of major setbacks on the high-stakes C Series new-jet program. The Learjet 85 finally had its first flight recently after a number of development stalls and glitches. (http://r.reuters.com/myc88v)

NATIONAL POST

* Canadians at risk of joining foreign terrorist groups in Syria and elsewhere are now being tracked under a program led by the Royal Canadian Mounted Police, a senior counter-terrorism officer has revealed in an interview. (http://r.reuters.com/xyc88v)

* The Canadian government is poised to introduce legislation in the coming weeks that will overhaul the country's prostitution laws - possibly targeting the pimps and johns as criminals while leaving the prostitutes themselves free from criminal prosecution. (http://r.reuters.com/bad88v)

FINANCIAL POST

* Winter storms flattened much of the economic data in North America and may have clouded the early outlook for growth this year. But a clearer picture could be developing - one that reveals a stronger underlying performance in Canada and the United States. (http://r.reuters.com/fad88v)

Hong Kong

SOUTH CHINA MORNING POST

-- A former mayor in Shanxi, Yan Guoping, who was sacked for failing to curtail illegal mining operations in his city, has turned out to be a key figure in helping China Resources to make inroads in the coal-rich province. (link.reuters.com/wyx78v)

-- More than 40 retired senior government officials serving as independent directors at China's top listed firms find themselves under the spotlight after a mainland flagship newspaper questioned whether they had carried out their responsibilities to protect small investors. (link.reuters.com/baz78v)

-- Brokers believe Hong Kong Exchanges and Clearing will face an uphill battle to promote its four commodity products to be introduced later this year mainly because investors are used to trading these products overseas. (link.reuters.com/daz78v)

THE STANDARD

-- The MTR has come under fire for not telling passengers quickly enough about a 35-minute suspension of East Rail services in Hong Kong on Sunday, with lawmakers calling on the government to fine the corporation heavily. (link.reuters.com/jaz78v)

-- Locals have given Hong Kong an early glimpse of the proposed May Day stink planned by mainlanders by mock pooing in the streets and at Harbour City in Hong Kong's Tsim Sha Tsui. (link.reuters.com/naz78v)

-- Most social workers are opposed to the screening of candidates in the 2017 chief executive election, a survey shows. The Hong Kong Social Workers' General Union surveyed about 500 members between April 3-19. (link.reuters.com/raz78v)

HONG KONG ECONOMIC JOURNAL

-- Hong Kong's Mandatory Provident Fund has registered a 0.65 percent return in April, against a 0.67 percent fall in March. It slid 0.36 percent for the first four months of 2014, according to data from financial research group Morningstar.

HONG KONG ECONOMIC TIMES

-- Fashion retailer La Chapelle, which trying to position itself as China's Zara, is set to raise $300 million in an initial public offering in May, according to market sources.

MING PAO DAILY NEWS

-- Property prices in Hong Kong's primary market have fallen by 20-30 percent from their peak, according to government sources. Developers are set to continue selling flats at low prices as potential buyers expect a further slide in prices, industry observers said.

Britain

The Telegraph

BSKYB PLANS MAJOR OVERHAUL OF SET-TOP BOX TO MEET APPLE THREAT

BSkyB is preparing a major overhaul of its set-top box technology to address the threat to its subscription business from internet-based television services from American giants such as Amazon, Apple and Google . (http://link.reuters.com/syx78v)

MORRISONS 'HEADING FOR AN ICEBERG', SAYS FORMER DIRECTOR

A former director at Wm Morrisons who served under Ken Morrison has warned the grocery retailer is a "supertanker heading towards an iceberg" and called for management to step aside. (http://link.reuters.com/jyx78v)

ENERGY COMPANIES 'TO REAP 2 BLN STG WINDFALL' FROM GREEN LEVIES DEAL

Britain's biggest energy suppliers could pocket a 2 billion pound ($3.36 billion) windfall over the next three years after the government miscalculated a deal to cut green levies, new research claims. (http://link.reuters.com/mux78v)

The Guardian

GE FACES RIVAL BID FOR ALSTOM FROM SIEMENS

Siemens entered the battle for French engineering group Alstom on Sunday, after the French government encouraged a European counterbid following a $13 billion offer last week by the U.S. company General Electric. (http://link.reuters.com/tyx78v)

CBI SCOTLAND CHIEF ANNOUNCES RETIREMENT AMID INDEPENDENCE ROW

The director of CBI Scotland, Iain McMillan, has announced he is retiring after the independence referendum in the wake of the organisation's disastrous registration as a no campaigner. (http://link.reuters.com/vyx78v)

The Times

RBS MAKES ALLOWANCES ON ROSS MCEWAN'S PAY

Royal Bank of Scotland has guaranteed that the minimum pay of its new boss will be 50 percent higher than that of his predecessor, Stephen Hester, who left the taxpayer-backed bank last year after a series of bruising rows over his bonus arrangements. (http://link.reuters.com/kyx78v)

ROYAL MAIL IS UNDER MPS' MICROSCOPE

The cream of the City of London is to be hauled across town this week to the Palace of Westminster in an unprecedented three days of parliamentary inquiry into last autumn's privatisation of the Royal Mail Plc. (http://link.reuters.com/kux78v)

CLEARACCOUNT FACES INQUIRY FOR SEEKING PINS AND PASSWORDS

Britain's privacy watchdog is to investigate a short-term credit provider that requires potential customers to hand over their PIN and online banking passwords, after an investigation by The Times. (http://link.reuters.com/myx78v)

Fly On The Wall 7:00 AM Market Snapshot

ANALYST RESEARCH

Upgrades

AstraZeneca (AZN) upgraded to Hold from Sell at Societe Generale
Autodesk (ADSK) upgraded to Outperform from Sector Perform at Pacific Crest
Deckers Outdoor (DECK) upgraded to Neutral from Underperform at Credit Suisse
Empresas ICA (ICA) upgraded to Buy from Neutral at BofA/Merrill
Hornbeck Offshore (HOS) upgraded to Buy from Hold at Wunderlich
LCNB Corp. (LCNB) upgraded to Outperform from Market Perform at FBR Capital
Macatawa Bank (MCBC) upgraded to Market Perform from Underperform at Keefe Bruyette
Masco (MAS) upgraded to Buy from Neutral at Citigroup
Meritage Homes (MTH) upgraded to Neutral from Sell at UBS
Newmont Mining (NEM) upgraded to Sector Performer from Underperformer at CIBC
TD Ameritrade (AMTD) upgraded to Outperform from Market Perform at Bernstein

Downgrades

Air Products (APD) downgraded to Underweight from Neutral at Atlantic Equities
BCE (BCE) downgraded to Sector Perform from Outperform at RBC Capital
CenturyLink (CTL) downgraded to Market Perform from Outperform at BMO Capital
Clean Harbors (CLH) downgraded to Outperform from Strong Buy at Raymond James
Diageo (DEO) downgraded to Neutral from Outperform at Credit Suisse
FLIR Systems (FLIR) downgraded to Fair Value from Buy at CRT Capital
Knightsbridge Tankers (VLCCF) downgraded to Equal Weight at Morgan Stanley
Mattress Firm (MFRM) downgraded to Hold from Buy at KeyBanc
Panera Bread (PNRA) downgraded to Underperform from Neutral at Longbow
Sociedad Quimica (SQM) downgraded to Underweight from Neutral at HSBC
USG (USG) downgraded to Equalweight from Overweight at Barclays
Wesco Aircraft (WAIR) downgraded to Neutral from Overweight at JPMorgan

Initiations

Corium (CORI) initiated with a Buy at Jefferies
Corium (CORI) initiated with an Outperform at Leerink
Rubicon Project (RUBI) initiated with a Neutral at Goldman
Rubicon Project (RUBI) initiated with an Overweight at Morgan Stanley
Tarena (TEDU) initiated with a Buy at Goldman
Tarena (TEDU) initiated with an Outperform at Oppenheimer
United Insurance (UIHC) initiated with an Outperform at Wells Fargo

COMPANY NEWS

Pfizer (PFE) confirmed a $76.62 per share offer for AstraZeneca  (AZN)
AstraZeneca (AZN) said Pfizer's (PFE) offer 'significantly udnervalued' prospects
Comcast (CMCSA) said it will divest 3.9M video customers to Charter (CHTR) following the completion of the merger with Time Warner Cable (TWC)
Meda rejected Mylan's (MYL) revised proposal, said lacks shareholder support
HealthSouth (HLS) received additional subpoenas for seven hospitals from an office of the U.S. Department of Health and Human Services, Office of the Inspector General
Hartford Financial (HIG) said it would sell its Japanese annuity subsidiary for $895M to ORIX Life Insurance Corporation
BG Group (BRGYY) CEO Chris Finlayson resigned for 'personal reasons'
Youku Tudou (YOKU) announced a $1.22B investment led by Alibaba Group

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
TGC Industries (TGE), Carter's (CRI), Boardwalk Pipeline (BWP), New Oriental Education (EDU)

Companies that missed consensus earnings expectations include:
Haemonetics (HAE), Loews (L), Charter (CHTR), Sohu.com (SOHU), Changyou.com (CYOU)

NEWSPAPERS/WEBSITES

Siemens (SI) looks to compete with GE on Alstom offer, Bloomberg says
Starbucks's (SBUX) coffee purchases have slowed as coffee bean prices soar, WSJ says
Omnicom (OMC), Publicis (PUBGY) working out differences to complete deal, Reuters reports
Mining executive said to make offer for BHP (BHP) coal unit, Sunday Times reports
Merck (MRK) nears deal to sell consumer healthcare unit, Reuters says
Citigroup (C) and DOJ plan to begin mortgage settlement talks, WSJ says
Bayer (BAYRY) exploring sale of $10B plastics unit, Bloomberg reports
Whirlpool (WHR) 'worth another spin' despite mixed results, Barron's says
Pfizer (PFE) could rise 25%, Barron's says
LinkedIn (LNKD) shares look overvalued, Barron's reports
Zoetis (ZTS) 'worth a look,' Barron's reports
Apple (AAPL) shares could continue to climb, Barron's says
Sarepta (SRPT) still has more upside, Barron's says
Saneamento Basico (SBS) could be at risk of violating debt agreements, Barron's reports

SYNDICATE

GasLog Partners files 8.4M common unit IPO at $19-$21 each

Follow ZeroHedge in Real-Time on FinancialJuice

It’s illegal but who gives a damn. As if we abided by the law these days. People annex countries when they want to so why worry about a little bit of bribery? Why worry about bestowing favoritism on somebody, patronage to those in the places that decide? It’s no longer just the Papal nephews that get a look in from the nepotism being practiced around the world today. Now, it’s the children of high-flying officials in China that are getting the best seats in US companies. Really, let’s agree, they’re all doing it. Today, we’re just admitting that it’s happening, that’s the only difference. There’ll be a few that stand up and cry for freedom and democracy but most will just wave a few papers in the air and breath out hot bunk so that it makes it look as if they are really trying to clear it up.

The Securities and Exchange Commission as well as the Justice Department in the US have been enquiring about the dealings of certain companies that are now hiring children of high-level Chinese officials. Jobs for the boys? Not, quite; but, most certainly jobs for the kids of the boys. We all know it’s a corrupt world. We all know that it’s who you know rather than what you know that will get you to the top. It won’t necessarily keep you there unless you are the son or daughter of somebody that is so high up that they could do whatever they wanted.

Just last week the mobile chip manufacturer Qualsomm Inc. announced that it was facing civil action over bribery of officials of state-owned companies and agencies. A spokesperson stated that they were filing a rebuttal since they believed that they were not in violation of the Foreign Corrupt Practices Act. If found to have carried out illegal practices and bribery of officials the company will face fines for having used preferential hiring, the giving of gifts and providing other benefits amounting to a total value of $250,000. Hardly anything to write home about and probably the tip of the iceberg, but nonetheless corrupt. It doesn’t mean because it’s not a lot, that we shouldn’t put an end to preferential hiring. It’s fine if you are the child of the rich and famous or the government official; tough if you aren’t.

Action taken against Qualcomm might also lead to giving up profits made during that time. China is a major target for growth of the US company and their revenue increased by 4% year-on-year in the second quarter to$6.37 billion. Net income was also up by 5% year-on-year to $1.96 billion.

There were complaints last year regarding the company from industry groups to the Chinese government (allegedly because Qualcomm were using their market position, charging higher fees for patent licenses). The Chinese authorities carried out two surprise raids and took documents away. Isn’t that always the way? While you’re small and insignificant, nobody could give a damn who and how you bribe. By the time you get bigger and have a lion’s share of the market, the bribery has become so much part and parcel of the road you took to get to that top-spot, that you can’t stop doing it. You’re addicted and so it carries on. The competition is ready to pounce and take a chunk by any which way they can. So, complaints are lodged against you. Fines could reach between 1 and 10% of the company’s revenue for last year.

The Justice Department and the SEC believe that Qualcomm may have taken advantage of its market position and bribed officials to maintain that lion’s share and keep revenues. If they (and others that are being investigated) are shown to have employed children of officials or giving preferential treatment to people in return for turning a blind eye to certain practices, then they will be in violation of the Foreign Corrupt Practices Act. Apparently, it has been illegal to bribe a foreign government official since the law was enacted in the1970s. But, as Qualcomm defense lawyers suggest proving that corruption took place on both the company’s part and also on the side of the government official will be hard to do.

They could always bribe the US government officials with a few benefits in kind or preferential treatment, couldn’t they? Everybody has their price!

Originally posted: US Companies: Bribery Probe

Day Trading Data Sheets Futures and Forex

• EU regulators unveil details of bank stress tests (FT)
• Just use NSAfari: U.S., UK advise avoiding Internet Explorer until bug fixed (Reuters)
• China’s Income Inequality Surpasses U.S., Posing Risk for Xi  (BBG)
• US races to refuel infrastructure fund as revenue dries up (FT)
• New Era Dawns at Nokia as Company Appoints CEO, Plans $1.4 Billion Special Dividend, Share-Repurchase Program (WSJ)
• Obama reassures allies, but doubts over 'pivot' to Asia persist (Reuters)
• Dissent at SEC over bank waivers (FT)
• U.S. Banks to Help Authorities with Tax Evasion Probe (WSJ)
• U.S., Europe Impose New Sanctions on Russia (WSJ)
• Why the U.S. Is Targeting the Business Empire of a Putin Ally (BBG)
• Euro-Area April Economic Confidence Unexpectedly Declines (BBG)
• Bitcoin traders settle class actions over failed Mt. Gox exchange (Reuters)
• China’s Provinces Fail to Meet Lower 2014 Growth Goals (BBG)

Overnight Media Digest

WSJ

* The U.S. and Europe imposed sanctions on a slate of new Russian government officials and business entities in an effort to pressure President Vladimir Putin and his Ukrainian allies to cease their military activity in eastern Ukraine. (http://r.reuters.com/dek88v)

* Nokia on Tuesday named mobile-network veteran Rajeev Suri as its next chief executive and said it would distribute an approximately 1 billion euro ($1.4 billion) special dividend and initiate a share-repurchase program in an effort to return to investment grade. The financial moves come as a result the sale of the company's handset unit to Microsoft Corp. (http://r.reuters.com/bek88v)

* Pfizer Inc's nearly $100 billion offer to buy British rival AstraZeneca Plc, if accepted, would allow the pharmaceutical giant to move its official headquarters overseas, saving the company that started 165 years ago on a Brooklyn, New York, street corner billions in taxes over the next decade. (http://r.reuters.com/hek88v)

* An apparent communications blunder inside Bank of America Corp forced the lender to shelve a plan to buy back shares and boost its dividend for the first time since 2008, another setback for Chief Executive Brian Moynihan's efforts to escape the long shadow of the financial crisis. (http://r.reuters.com/rek88v)

* Energy Future Holdings Corp, the Texas utility at the center of the biggest private-equity buyout ever, was preparing to file for Chapter 11 bankruptcy protection as soon as Tuesday morning, after reaching a restructuring deal with creditors. The utility, formerly TXU Corp, was racing to forge a restructuring deal and file for bankruptcy before a grace period on skipped debt payments expired later this week and put the company in default. (http://r.reuters.com/tek88v)

* The weather phenomenon known as El Niño is poised to return, a development that threatens to drive up prices for food and other staples. El Niño has a reputation for triggering sharp run-ups for prices in markets as diverse as nickel, coffee and soybeans, and commodities investors, traders and analysts are bracing for impact. (http://r.reuters.com/zek88v)

* Toyota Motor Corp will receive $40 million from Texas to consolidate several far-flung units in a new headquarters in the state as the company looks to cut costs and combine its North American sales, manufacturing and financial locations. (http://r.reuters.com/wek88v)

* Lawyers for creditors involved in two proposed class-action lawsuits against Mt. Gox have reached an agreement to support a group of U.S. investors' bid to revive the bankrupt bitcoin exchange, an agreement that would give the creditors a 16.5 percent stake in the prospective future company. (http://r.reuters.com/duk88v)

* Lawmakers pressing Securities and Exchange Commission Chairman Mary Jo White to address worries about rapid-fire trading aren't likely to hear detailed plans for immediate action when she testifies Tuesday on Capitol Hill. (http://r.reuters.com/huk88v)

FT

government in the hopes of winning it over to their rival bids for engineering group Alstom, each arguing that its offer best served the national interest.

Three U.S.-based former Barclays traders will be charged by Britain's Serious Fraud Office as part of its probe into the alleged manipulation of the Libor interbank rate.

The U.S. department of homeland security has told individuals and companies to avoid using Internet Explorer, after a flaw allowing cyber criminals to impersonate known websites and steal user data was found in the popular web browser.

U.S. Securities and Exchange Commission commissioner Kara Stein has accused the agency of having "strayed from its mission" by allowing two banks that pleaded guilty to interest-rate rigging to access capital markets without regulatory scrutiny.

Britain's Financial Conduct Authority has slapped fund manager Invesco Perpetual with a 18.6 million pound ($31.26 million) for breaching investment limits and introducing leverage into funds - including those run by Neil Woodford - without proper disclosure.

NYT

* The Federal Reserve is tiptoeing away from its economic stimulus campaign, and so far the broader economy has barely noticed. The Fed's policy-making committee, which meets on Tuesday and Wednesday, is widely expected to announce another $10 billion cut in its monthly bond purchases, to $45 billion, en route to ending the purchases this autumn. (http://r.reuters.com/vak88v)

* Pfizer Inc proposed on Monday a $99 billion acquisition of its British rival AstraZeneca Plc that would allow it to reincorporate in Britain. Doing so would allow Pfizer to escape the United States corporate tax rate and tap into a mountain of cash trapped overseas, saving it billions of dollars each year and making the company more competitive with other global drug makers. (http://r.reuters.com/wak88v)

* Covington & Burling LLP, the firm where Eric Holder practiced law before becoming attorney general, will announce on Tuesday that Mythili Raman is the latest former senior Justice Department official to join its ranks. Raman, who will be a partner in Covington's white-collar crime and litigation practices, led the Justice Department's criminal division until last month. (http://r.reuters.com/zak88v)

* Bank of America Corp disclosed on Monday that it had made a significant error in the way it calculates a crucial measure of its financial health, suffering another blow to its effort to shake its troubled history. The mistake, which had gone undetected for several years, led the bank to report recently that it had $4 billion more capital than it actually had. After Bank of America reported its error to the Federal Reserve, the regulator required the bank to suspend a share buyback and a planned increase in its quarterly dividend. (http://r.reuters.com/fek88v)

* A new government report suggests that errors made by banks and their agents during foreclosures might have been significantly higher than was previously believed when regulators halted a national review of the banks' mortgage servicing operations. (http://r.reuters.com/jek88v)

* Yahoo Inc Chief Executive Marissa Mayer announced on Monday evening that Yahoo is commissioning two original TV-length comedy series that will be shown exclusively on its websites and mobile apps. (http://r.reuters.com/xek88v)

* Toyota Motor Corp said on Monday that it would move thousands of employees from California and other locations to new North American headquarters in Texas as part of a broad effort to cut costs and streamline operations. (http://r.reuters.com/buk88v)

* As part of a routine effort to identify acquisition targets, the Walt Disney Co last year zeroed in on BuzzFeed, the fast-growing digital media company, but Disney's interest quickly dissipated when BuzzFeed valued itself at nearly $1 billion, according to a person with direct knowledge of the talks. (http://r.reuters.com/fuk88v)

* The Obama administration has begun a wide-ranging search for companies to run the online federal health insurance exchange, seeking new talent to prevent a repeat of problems that immobilized the website last fall. (http://r.reuters.com/nuk88v)

Canada

THE GLOBE AND MAIL

* The Harper government has hired two agencies with relatively little experience in elections monitoring to organize hundreds of Canadian observers for next month's Ukrainian presidential vote. The government has hired the Forum of Federations and CUSO International to replace its longtime Ukraine election partner, the non-governmental organization Canadem. (link.reuters.com/jan88v)

* Ottawa is relenting to external pressure and now promising to speed up the release of a "public report" on the fighter jets pegged to replace Canada's fleet of CF-18s. The document, which has been put together for widespread release, lists the risks and benefits of the four fighter jets that were involved in an "options analysis" overseen by the Canadian Forces. (link.reuters.com/guq42v)

Reports in the business section:

* A spat between Barrick Gold Corp and Newmont Mining Corp erupted into a public war of words, with the companies accusing each other of ruining their $13-billion (U.S.) merger. Barrick said its American rival reneged on their deal and tried to change key provisions, including the location of the head office in Toronto. Newmont disagreed with Barrick's version and faulted the Canadian company's incoming chairman John Thornton for not being constructive. (link.reuters.com/xym88v)

* Canadian Imperial Bank of Commerce's coming leadership shuffle spotlights the need for boards of directors to devote more resources to the crucial task of succession planning, governance experts say. (link.reuters.com/zym88v)

NATIONAL POST

 
* After some tough years of spending restraints, Canada's economy is soon expected to return to normal levels of growth and possibly get back to budget surpluses ahead of schedule. (link.reuters.com/gan88v)

FINANCIAL POST

* Quebecor Inc announced the second surprise change of its leader in little more than a year Monday, leaving the distinct impression of an organization in flux. The Montreal-based telecom and media company cited health reasons for Robert Dépatie's resignation as president and chief executive less than a year after he took over from Pierre Karl Péladeau. (link.reuters.com/guq42v)

* Premier Kathleen Wynne is promising to create a $2.5-billion fund aimed at keeping businesses in Ontario. Details are scant, but officials say companies would be able to apply for government grants. (link.reuters.com/guq42v)

China

CHINA SECURITIES JOURNAL

- The pace of China Securities Regulatory Commission (CSRC) in resuming IPO applications will not overly speed up despite the commission's recent spate of "pre-disclosure" of companies waiting to be listed, with sources expecting four to five companies to be granted per week in the near term. As of April 28, up to 144 companies have submitted the draft version of prospectuses, the CSRC information disclosure shows.

- Members of the China Iron and Steel Association (CISA) have lost 2.329 billion yuan ($372.5 million) in the first quarter of 2014, with 45.45 percent of the association members losing money because of low demand, high inventory stock and declining price.

SECURITIES TIMES

- A total of 2453 A-share listed companies have released their 2013 annual reports so far, with the sum of their net profit reaching 2,240 billion yuan, a 15 percent rise year-on-year.

- In spite of high rates, the number of China's new issuance of quasi-municipal bonds in 2014 has reached 215 so far this year, raising 248.31 billion yuan, a 36.28 percent increase from the same time of last year.

CHINA DAILY

- Chinese stocks saw a sharp drop on Monday after the securities regulator said it will resume reviewing IPO applications following an 18-month moratorium. The Shanghai Composite Index lost 1.6 percent before closing at 2003.49, the Shenzhen Component Index dropped 1.14 percent to 7240.46.

SHANGHAI DAILY

- China's president Xi Jinping visited armed policeman, local residents' homes and a primary school after arriving in the restive Xinjiang autonomous region on Sunday, encouraging local officials to promote harmony among all ethnic groups.

PEOPLE'S DAILY

- Higher quality as well as wider coverage of road constructing in China's rural areas must be achieved to fulfil the goal of modern agriculture, an editorial said, commenting on president Xi Jinping's series of conduct highlighting the significance in rural transportation infrastructure.

Britain

The Telegraph

BANKS TO BE TESTED ON PROPERTY MARKET CRASH

The Bank of England is to test Britain's major banks on their ability to weather a housing market crash that could wipe more than a third off home prices. (http://link.reuters.com/zaj88v)

CITY WATCHDOG SAYS WON'T WASTE RESOURCES ON ROYAL MAIL PROBE

Martin Wheatley, the boss of the Financial Conduct Authority, has told Members of Parliament he saw no reason to investigate the flotation of Royal Mail or the bankers involved pouring water on claims that the historic privatisation was mismanaged. (http://link.reuters.com/gah88v)

SERCO SET TO LAUNCH RESCUE RIGHTS ISSUE

Serco's shares are expected to fall heavily on Tuesday after the embattled outsourcing firm warned that it is looking at launching a rescue rights issue to bolster its finances. (http://link.reuters.com/xaj88v)

ASSET SELL-DOWN LOOMS AS BG OUSTS CHIEF EXECUTIVE

A sell-down of BG Group's assets or even a break-up bid have moved a step closer after the ousting of Chief Executive Chris Finlayson just 16 months into the job. (http://link.reuters.com/jeh88v)

BP 'COMMITTED TO ROSNEFT' AS RUSSIAN ENERGY GIANT'S CHIEF IGOR SECHIN IS PLACED ON U.S. SANCTIONS LIST

BP has said it remains "committed" to Rosneft , after the U.S. placed sanctions on Igor Sechin, the president of the Russian energy giant, in which BP has a 20 percent stake. (http://link.reuters.com/cej88v)

FITNESS FIRST FLEXES ITS MUSCLES IN SOUTHEAST ASIA

Recovering gym chain Fitness First is investing $140 million to get Southeast Asia into shape and is eyeing a further 50 clubs in the region. (http://link.reuters.com/tah88v)

The Guardian

BRITAIN FILES FIRST CRIMINAL CHARGES AGAINST U.S.-BASED LIBOR TRADERS

Britain filed its first criminal charges against U.S.-based Libor traders on Monday, as the UK arm of a complex global investigation into alleged benchmark interest-rate rigging stretches across the Atlantic. (http://link.reuters.com/dej88v)

PFIZER ASTRAZENECA TAKEOVER PROMPTS JOB WARNING FROM VINCE CABLE

Battle lines are being drawn over what would be the biggest foreign takeover of a British company after pharmaceutical company AstraZeneca rejected a 60 billion pound ($100.85 billion) approach from U.S. rival Pfizer, prompting a warning on jobs from UK Business Secretary Vince Cable but receiving a warmer welcome from investors. (http://link.reuters.com/feh88v)

RBS PUT AT 'COMPETITIVE DISADVANTAGE' BY BONUS BLOCKING PLANS

Standard Life, one of London's biggest fund managers, has warned that the British government's decision to block Royal Bank of Scotland's bonus plans would put the bank at a competitive disadvantage. (http://link.reuters.com/heh88v)

HEATHROW CHIEF WARNS STRONG PROFITS WILL NOT BE SUSTAINED IN YEAR AHEAD

Heathrow recorded strong profits and record passenger satisfaction scores over a mild winter but warned it will feel the squeeze in the year ahead. (http://link.reuters.com/fej88v)

The Times

BASKIN-ROBBINS SCOOPS UP CINEWORLD DEAL

Dunkin' Brands, the group that owns Baskin-Robbins ice cream shops, has scored a victory over one of its biggest rivals after securing a franchise deal to replace Ben & Jerry's at 45 Cineworld cinemas across Britain. (http://link.reuters.com/kyg88v)

The Independent

UK ADVERTISING MARKET BUOYED BY MOBILE BOOM

A boom in smartphone and mobile advertising has spurred growth in the UK advertising market as industry forecasters reckon ad revenues should soar 5.5 percent this year and 6.5 percent next year to reach a record 20 billion pounds. (http://link.reuters.com/gej88v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
S&P Case-Shiller 20-city home price index for February at 9:00--consensus up 0.8% m/m, up 13.0% y/y
Consumer confidence index for April at 10:00--consensus 83.2

ANALYST RESEARCH

Upgrades

Barrick Gold (ABX) upgraded to Neutral from Underweight at HSBC
Boardwalk Pipeline (BWP) upgraded to Equal Weight from Underweight at Morgan Stanley
Boardwalk Pipeline (BWP) upgraded to Market Perform at Raymond James
Boardwalk Pipeline (BWP) upgraded to Outperform from Neutral at Credit Suisse
Chegg (CHGG) upgraded to Buy from Neutral at BofA/Merrill
Choice Hotels (CHH) upgraded to Equalweight from Underweight at Barclays
Clarcor (CLC) upgraded to Buy from Hold at BB&T
DSW (DSW) upgraded to Buy from Neutral at Sterne Agee
El Paso Electric (EE) upgraded to Buy from Hold at Jefferies
GP Strategies (GPX) upgraded to Neutral from Sell at B. Riley
HP (HPQ) upgraded to Outperform from Sector Perform at Pacific Crest
Ingram Micro (IM) upgraded to Strong Buy from Outperform at Raymond James
Intuitive Surgical (ISRG) upgraded to Neutral from Underperform at Sterne Agee
Lakeland Bancorp (LBAI) upgraded to Outperform from Market Perform at Keefe Bruyette
Tech Data (TECD) upgraded to Outperform from Market Perform at Raymond James
WSFS Financial (WSFS) upgraded to Outperform from Market Perform at Keefe Bruyette

Downgrades

ABB (ABB) downgraded to Hold from Buy at Societe Generale
Airgas (ARG) downgraded to Neutral from Overweight at Atlantic Equities
Coca-Cola Enterprises (CCE) downgraded to Reduce from Neutral at Nomura
OncoGenex (OGXI) downgraded to Sector Perform from Outperform at RBC Capital
Stage Stores (SSI) downgraded to Neutral from Buy at Northcoast
Tyson Foods (TSN) downgraded to Market Perform from Outperform at BMO Capital

Initiations

AudioCodes (AUDC) initiated with an Outperform at William Blair
Coca-Cola (KO) initiated with a Buy at Nomura
Five9 (FIVN) initiated with a Buy at BofA/Merrill
Five9 (FIVN) initiated with an Outperform at Pacific Crest
Five9 (FIVN) initiated with an Overweight at Barclays
Five9 (FIVN) initiated with an Overweight at JPMorgan
Gentex (GNTX) initiated with a Sector Perform at Pacific Crest
GrubHub (GRUB) initiated with a Buy at Citigroup
GrubHub (GRUB) initiated with an Equal Weight at Morgan Stanley
GrubHub (GRUB) initiated with an Outperform at BMO Capital
Harman (HAR) initiated with an Outperform at Pacific Crest
Opower (OPWR) initiated with a Buy at Goldman
Opower (OPWR) initiated with a Neutral at RW Baird
Opower (OPWR) initiated with an Equal Weight at Morgan Stanley
Opower (OPWR) initiated with an Outperform at Pacific Crest
Royal Caribbean (RCL) initiated with a Buy at Berenberg
Sonus Networks (SONS) initiated with an Outperform at William Blair
TPG Specialty Lending (TSLX) initiated with a Market Perform at JMP Securities
Vince Holding (VNCE) initiated with an Overweight at Piper Jaffray

COMPANY NEWS

Nokia (NOK) appointed Rajeev Suri as CEO, effective May 1
Herbalife (HLF) announced that it would suspend its quarterly dividend and use its cash instead to repurchase stock, and said it plans to repurchase $581M worth of stock in Q2
Yahoo (YHOO) announced first two original comedies in lineup of long-form shows
Yahoo (YHOO), Live Nation (LYV) announced a deal to stream live concerts
Honeywell (HON) announced an agreement in principle with AT&T (T) for AT&T's planned in-flight connectivity services
Novavax (NVAX) reported positive results from a Phase 2 trial of its RSV-F protein nanoparticle vaccine candidate
Heartland Advisors said it plans to enter discussions with Lincoln Educational's (LINC) management regarding potential corporate governance and budget changes

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Spirit Airlines (SAVE), Magellan Health (MGLN), Littelfuse (LFUS), Wolverine World Wide (WWW), World Acceptance (WRLD), Norwegian Cruise Line (NCLH), Pioneer Energy (PES), Huntsman (HUN), United Therapeutics (UTHR), HomeStreet (HMST), BP (BP), Ensco (ESV), Arlington Asset Investment (AI), Ballard Power (BLDP), Hartford Financial (HIG), Wabash (WNC), Cleco (CNL), PartnerRe (PRE), Herbalife (HLF), Kaman (KAMN), Berkshire Hills Bancorp (BHLB), Advent Software (ADVS), Hartford Financial (HIG), Ducommun (DCO), Compass Minerals (CMP), Ameriprise (AMP), NetSuite (N), Intevac (IVAC), CoreLogic (CLGX), OFG Bancorp  (OFG), Luminex (LMNX), Amkor Technology (AMKR), Buffalo Wild Wings (BWLD), STAAR Surgical (STAA), Plum Creek Timber (PCL), Knowles (KN), Ruth's Hospitality (RUTH)

Companies that missed consensus earnings expectations include:
CIT Group (CIT), Portland General Electric (POR), Stock Building Supply (STCK), Chart Industries (GTLS), Provident Financial (PROV), Headwaters (HW), Volaris (VLRS), PRGX Global (PRGX), Bridge Bancorp (BDGE), RockTenn (RKT), Silicon Motion (SIMO), Seaspan (SSW), Owens & Minor (OMI), Range Resources (RRC), Ultra Clean (UCTT), Container Store (TCS), Rudolph Technologies (RTEC), Meru Networks (MERU), Heartland Financial (HTLF), Questcor (QCOR), MainSource Financial (MSFG), Helen of Troy (HELE), J & J Snack Foods (JJSF)

Companies that matched consensus earnings expectations include:
1-800-Flowers.com (FLWS), Check Point (CHKP), Del Frisco's (DFRG), Sensata (ST), Silicon Laboratories (SLAB), German American Bancorp (GABC), STMicroelectronics (STM), NBT Bancorp (NBTB), Flotek (FTK), Denny's (DENN)

NEWSPAPERS/WEBSITES

Disney (DIS) sought to acquire BuzzFeed, Fortune says
Reckitt Benckiser confirms discussions to buy Merck (MRK) unit, WSJ says
Siemens' (SI) Alstom bid likely to occur today (GE), Reuters reports
HP (HPQ) to launch Android-dedicated laptop (GOOG), BGR says
Netflix (NFLX) signs traffic deal with Verizon (VZ), The Verge reports
Sanofi (SNY) CEO says focusing on smaller, 'bolt-on' deals, WSJ reports
Craig Ferguson to leave CBS' (CBS) "Late Late Show," Variety reports

SYNDICATE

Burlington Stores (BURL) files to sell 12M common shares for holders
El Paso Pipeline (EPB) files to sell 6.8M shares for limited partners
Forum Energy (FET) files to sell 10M shares for holders
Media General (MEG) files to sell 9M shares for holders
RAIT Financial (RAS) files 10.1M shares for holders of warrants
TOP Ships (TOPS) files to sell $30M in stock and preferred stock purchase rights
Universal Truckload (UACL) files to sell 1.9M shares, including 1.88M for holders

It is somewhat ironic, actually make that criminal, that two days after new SEC head Mary Jo White (whose conflict of interest list is so vast courtesy of her prior position as defending every Wall Street from their criminal acts she now has to recuse herself from virtually every enforcement action) solemnly promised Congress under oath that the "markets are not rigged", the SEC comes out swinging and slaps the wrist of the NYSE with an intolerable $4.5 million fine for allowing market rigging "for a period of time from 2008 to 2012."

From the SEC complaint:

The Securities and Exchange Commission today announced an enforcement action against the New York Stock Exchange and two affiliated exchanges for their failure to comply with the responsibilities of self-regulatory organizations (SROs) to conduct their business operations in accordance with Commission-approved exchange rules and the federal securities laws.  Also charged was the NYSE exchanges’ affiliated routing broker Archipelago Securities.

The details:

“The order highlights instances where the exchanges conducted business without a rule in place due to weak or inadequate policies and procedures,” said Antonia Chion, an associate director in the SEC’s Division of Enforcement.  “In other instances, the exchanges did not operate in compliance with their effective rules.  Both failures reflect a troubling lack of compliance with the requirements and obligations imposed on securities exchanges.”

The violations detailed in the SEC’s order occurred during periods of time from 2008 to 2012.  The SEC’s order finds that the NYSE exchanges violated Section 19(b) and 19(g) of the Securities Exchange Act of 1934 through misconduct that included the following:

• NYSE, NYSE Arca, and NYSE MKT (formerly NYSE Amex) used an error account maintained at Archipelago Securities to assume and trade out of securities positions without a rule in effect that permitted such trading and in a manner inconsistent with their rules for the routing broker, which limited Archipelago Securities’ activity primarily to outbound and inbound routing of orders on behalf of those exchanges.
• NYSE provided co-location services to customers on disparate contractual terms without an exchange rule in effect that permitted and governed the provision of such services on a fair and equitable basis.
• NYSE operated a block trading facility (New York Block Exchange) that for a period of time did not function in accordance with the rules submitted by NYSE and approved by the SEC.
• NYSE distributed an automated feed of closing order imbalance information to its floor brokers at an earlier time than was specified in NYSE’s rules.
• NYSE Arca failed to execute Mid-Point Passive Liquidity Orders (MPLOs) in locked markets (where the bid and ask prices are the same) contrary to its exchange rule in effect at the time.

In addition, the SEC’s order finds that NYSE Arca accepted MPLOs in sub-penny amounts for National Market System stocks trading at over $1.00 per share, in violation of Rule 612(a) of Regulation NMS.

 

The SEC’s order further finds that Archipelago Securities failed to establish and maintain policies reasonably designed to prevent the misuse of material, nonpublic information in connection with error account trading.  Archipelago Securities also violated and failed to give the SEC timely notice of its violation of the net capital rule – a critical federal securities law provision intended to ensure that brokers and dealers remain solvent and can meet their financial obligations.  

Or in other words, the SEC is claiming that for 5 years the NYSE was aiding and abetting the very same rigged market that the SEC swears does not exist.

It. Just. Does. Not. Compute.

• Ukraine attacks rebel city, helicopter shot down (Reuters)
• Euro Unemployment Holds Near Record Amid Factory Gains (BBG)
• Yellen’s Fed Resigned to Diminished Growth Expectations (BBG)
• Junket Figure's Disappearance Shakes Macau's Gambling Industry (WSJ)
• China tried to undermine economic report showing its ascendancy (WSJ)
• Liquidity Trap Hitting AAA Bonds Has ATP CEO Sounding Alarm (BBG)
• AstraZeneca Snubs Pfizer Approach That U.K. Won’t Block (BBG)
• Missing Jet Recordings May Have Been 'Edited' (NBC)
• RBS turns corner as first-quarter profit trebles (Reuters)
• Japan household spending hits four-decade high, wages key to outlook (RTRS) while Real Incomes Drop 3.3% in March, 6th straight decline
• First Million-Dollar Drug Near After Prices Double on Dozens of Treatments (BBG)
• How Canada’s Flirtation with a China Oil Market Soured (BBG)
• Retirement Investors Flock Back to Stocks (WSJ)
• SEC probing hedge funds' bets on Herbalife (Reuters)
• White House study backs data-gathering (FT)

Overnight Media Digest

WSJ

* German Chancellor Angela Merkel will be carrying a clear message from Germany's business lobby when she meets President Barack Obama at the White House to discuss the Ukraine crisis: No more sanctions on Russia. (r.reuters.com/qaj98v)

* Pfizer Inc and AstraZeneca have resumed talks about a trans-Atlantic merger of the two drug giants, after Pfizer sweetened the terms of an earlier takeover offer for its British rival. (r.reuters.com/jaj98v)

* Retirement investors are putting more money into stocks than they have since markets were slammed by the financial crisis six years ago. Meanwhile, large investors such as pension funds, banks and insurance companies are showing less appetite for risk. Demand for shares of newly public companies has weakened, and utilities, considered safe when economic growth isn't robust, are the best-performing group this year. (r.reuters.com/vej98v)

* As Apple Inc and Samsung Electronics Co squabble in court over who copied whose phone features, the companies' grip over the smartphone industry is slipping. The two companies account for nearly all smartphone hardware profits. But they are losing market share to Chinese rivals with lower-priced phones, particularly in developing nations. (r.reuters.com/hej98v)

* Mark Fields is set to take over as chief executive of Ford Motor Co on July 1, and he'll face very different set of challenges than those the current boss, Alan Mulally, has tackled over the last eight years. (r.reuters.com/xej98v)

* The New York Stock Exchange agreed to settle allegations it broke rules designed to protect investors, the second such pact in less than two years as the top U.S. securities regulator tries to ratchet up the policing of stock markets. The Big Board, along with affiliated exchanges and a broker, agreed to pay $4.5 million to settle civil charges by the Securities and Exchange Commission that they "repeatedly" broke their own rules or failed to submit rules governing certain activities to the regulator. (r.reuters.com/jej98v)

* J. Crew is developing a new store format aimed at budget-conscious shoppers underscoring the difficulty apparel retailers have had in boosting sales without help from discounts. The new format is called J. Crew Mercantile and will feature merchandise and prices closer to what shoppers would find at J. Crew Factory, the retailer's outlet stores, than what is available in its full-line stores. (r.reuters.com/rej98v)

* Exxon Mobil Corp is pushing ahead with its plans to drill in Russia's Arctic seas - its biggest opportunity to discover untapped deposits of oil and gas - even though deteriorating relations between Moscow and Washington have increased the risks. (r.reuters.com/tej98v)

FT

U.S. drugmaker Pfizer Inc is planning to sweeten its 60 billion pound ($101.37 billion) takeover bid for AstraZeneca Plc hoping to increase pressure on its UK rival to enter talks to create the world's biggest pharmaceuticals company.

The U.S. government has said business leaders who attend the St. Petersburg International Economic Forum in May are sending "an inappropriate message, given Russia's behaviour" in Ukraine.

The two big U.S. credit card companies, Visa and MasterCard, have both warned about the impact of proposed legislation in Russia - a response to U.S. sanctions - that will increase the control of the Russian authorities over its payment systems.

Rolls-Royce Chief Executive John Rishton said he was "reasonably optimistic" about the sale of the company's energy business to Siemens going through, in a deal expected to raise at least 900 million pounds.

Britain's financial watchdog, the Financial Conduct Authority, has banned a former co-worker of UBS rogue trader Kweku Adoboli from working in the financial services industry.

NYT

* Seattle Mayor Ed Murray presented on Thursday what he described as an imperfect but workable plan to increase the city's minimum wage to $15 an hour, more than twice the federal minimum wage and one of the highest anywhere in the nation, through a series of complex and phased-in stages. (http://r.reuters.com/qej98v)

* The White House, hoping to move the national debate over privacy beyond the National Security Agency's surveillance activities to the practices of companies like Google and Facebook, released a long-anticipated report on Thursday that recommends developing government limits on how private companies make use of the torrent of information they gather from their customers online. (http://r.reuters.com/sej98v)

* Ares Management LP, a private equity and debt investing firm, is expected to have its debut on the New York Stock Exchange on Friday, becoming the seventh major private equity firm to tap the public markets. The initial public offering was priced conservatively Thursday evening, raising $345.7 million for Ares and a large shareholder, the Abu Dhabi Investment Authority. The shares priced at $19 each, below an expected range of $21 to $23, according to a person briefed on the matter. (http://r.reuters.com/zej98v)

* Merck & Co Inc, the big health care company, is close to a deal to sell its consumer unit to Bayer AG for about $14 billion, a person briefed on the matter said on Thursday. (http://r.reuters.com/buj98v)

* Three federal agencies and one billionaire hedge fund manager have placed Herbalife Ltd under the microscope, scrutinizing whether the diet-supplements company is a pyramid scheme. But Herbalife is not the only one under investigation. Some federal authorities are pursuing other inquiries that might expand the regulatory gaze from Herbalife to the traders who traffic in the company's stock. (http://r.reuters.com/cuj98v)

* The auction site eBay Inc has settled a federal antitrust case that accused it of having a secret deal with Intuit Inc not to try to hire each other's employees. (http://r.reuters.com/duj98v)

Canada

THE GLOBE AND MAIL

* Ontario's Liberal government is ramping up the province's deficit with a big-spending budget designed to either forestall an election or pay off at the polls in the event of a snap vote. (http://r.reuters.com/hak98v)

* Toronto Mayor Rob Ford, on a leave to seek professional treatment for his addiction issues, is facing a growing chorus of calls to resign from business leaders, political rivals and his council colleagues. (http://r.reuters.com/jak98v)

Reports in the business section:

* SNC-Lavalin Group Inc is selling its Alberta electricity transmission company AltaLink for C$3.2 billion to Warren Buffett's Berkshire Hathaway Inc, as it moves away from infrastructure investments and puts its resources into engineering and construction. (http://r.reuters.com/wak98v)

NATIONAL POST

* The Liberal minority government of Ontario has delivered a budget packed with new spending and tax hikes for high-income earners while allowing this year's deficit to balloon to C$12 billion, C$2 billion higher than predicted. (http://r.reuters.com/cek98v)

* Liberal Party of Canada Leader Justin Trudeau's credibility has again come under fire from a member of his own party, with new allegations that he is stacking the deck to help star candidates win local nomination battles. (http://r.reuters.com/fek98v)

FINANCIAL POST

* Canadian auto sales rose to record levels in April with Ford Motor Co narrowly outselling its rival Chrysler Canada Inc last month. Overall auto sales increased 4 percent year over year in Canada last month to 178,703 units, up 2 percent from the previous record set for April in 2008, according to figures collected by DesRosiers Automotive Consultants. (http://r.reuters.com/gek98v)

* Canadian engineering giant SNC-Lavalin Group Inc is selling its entire stake in Alberta electricity transmission company Altalink for about C$3.2 billion to Warren Buffett's Berkshire Hathaway Inc in a deal priced far beyond what the market had been expecting. (http://r.reuters.com/hek98v)

Britain

The Telegraph

PFIZER MULLS HIGHER BID FOR ASTRAZENECA

Pfizer Inc is mulling a bid in excess of 63 billion pounds ($106.44 billion) for its smaller British rival AstraZeneca Plc, according to reports. (http://link.reuters.com/ceh98v)

SCOTTISH 'YES' VOTE COULD IMPROVE UK CREDIT, SAYS MOODY'S

Britain could end up with a better credit rating if Scotland votes for independence, with a "yes" providing the catalyst for an upgrade of the remaining UK's debt, according to Moody's. (http://link.reuters.com/beh98v)

'DANGEROUS' TO IGNORE HOUSE PRICE BOOM, WARNS BOE DEPUTY

Surging house prices pose the single biggest threat to UK financial stability, the deputy governor of the Bank of England has warned. (http://link.reuters.com/deh98v)

The Guardian

ELECTORAL COMMISSION VOIDS CBI LISTING AS NO CAMPAIGNER IN SCOTLAND VOTE

The Electoral Commission has nullified the Confederation of British Industry's controversial registration as a no campaigner in the Scottish independence referendum, after ruling that the application was made by the wrong CBI official. (http://link.reuters.com/hah98v)

FAT FACE AND PIZZAEXPRESS UP FOR AUCTION AS FIRMS TEST BUYERS' APPETITES

Fat Face and PizzaExpress are the latest consumer brands to go under the hammer as private equity firms look to cash in on rising consumer confidence and buoyant financial markets. (http://link.reuters.com/feh98v)

The Times

ROLLS CONFIDENT OF RETURN TO GROWTH

Rolls-Royce insisted yesterday that it would not be knocked off course despite a surging pound and a 30 million pound charge to fix a product defect. (http://link.reuters.com/heh98v)

HENDERSON INVESTORS IN REVOLT OVER CHIEF'S PAY

This year's bout of shareholder revolts over pay appeared to escalate yesterday after Henderson Group was given a bruising in the wake of a 4.5 million pound annual payout for Andrew Formica, its chief executive. (http://link.reuters.com/jeh98v)

The Independent

POUND LEAPS AFTER SURGE IN MANUFACTURING OUTPUT

The latest stunning evidence of a UK manufacturing revival sent the pound surging to a five-year high yesterday as the City upped its bets on early interest rate rises. (http://link.reuters.com/meh98v)

HERITAGE OIL FOUNDER SELLS TO QATARI SHEIKH IN 1 BLN STG DEAL

The former prime minister of Qatar is buying Heritage Oil in a deal that values the explorer founded by the former mercenary Tony Buckingham at nearly 1 billion pounds. (http://link.reuters.com/peh98v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Change in nonfarm payrolls for April at 8:30--consensus 215K
Unemployment rate for April at 8:30--consensus 6.6%
New York ISM for April at 9:45--consensus 54.0
Factory orders for March at 10:00--consensus up 1.4%

ANALYST RESEARCH

Upgrades

AmTrust Financial (AFSI) upgraded to Buy from Neutral at Compass Point
Aruba Networks (ARUN) upgraded to Outperform from Perform at Oppenheimer
Avanir (AVNR) upgraded to Buy from Neutral at Mizuho
Beazer Homes (BZH) upgraded to Buy from Neutral at Compass Point
Constant Contact (CTCT) upgraded to Outperform from Neutral at RW Baird
Dynegy (DYN) upgraded to Strong Buy from Buy at ISI Group
EP Energy (EPE) upgraded to Buy from Neutral at Mizuho
Endo (ENDP) upgraded to Overweight from Equal Weight at Morgan Stanley
Evercore Partners (EVR) upgraded to Buy from Neutral at UBS
General Dynamics (GD) upgraded to Neutral from Sell at Goldman
InvenSense (INVN) upgraded to Buy from Hold at Needham
Kennametal (KMT) upgraded to Outperform from Market Perform at Wells Fargo
LinkedIn (LNKD) upgraded to Buy from Neutral at UBS
Masco (MAS) upgraded to Neutral from Sell at Goldman
Masco (MAS) upgraded to Strong Buy from Market Perform at Raymond James
Maxwell (MXWL) upgraded to Buy from Neutral at Roth Capital
Mercer (MERC) upgraded to Outperform from Market Perform at Raymond James
Mohawk (MHK) upgraded to Outperform from Market Perform at Raymond James
Novartis (NVS) upgraded to Buy from Hold at Jefferies
OpenTable (OPEN) upgraded to Buy from Neutral at BofA/Merrill
Oracle (ORCL) upgraded to Buy from Hold at Societe Generale
Piedmont Office Realty (PDM) upgraded to Hold from Sell at Stifel
Texas Instruments (TXN) upgraded to Neutral from Reduce at Nomura
United Microelectronics (UMC) upgraded to Neutral from Underperform at BofA/Merrill
Wynn Resorts (WYNN) upgraded to Buy from Neutral at Sterne Agee

Downgrades

AXIS Capital (AXS) downgraded to Underperform from Market Perform at BMO Capital
Avon Products (AVP) downgraded to Neutral from Buy at BTIG
BNP Paribas (BNPQY) downgraded to Neutral from Outperform at Credit Suisse
Broadcom (BRCM) downgraded to Neutral from Buy at Nomura
Cabot Oil & Gas (COG) downgraded to Market Perform from Outperform at Bernstein
DCT Industrial (DCT) downgraded to Neutral from Buy at ISI Group
DirecTV (DTV) downgraded to Neutral from Buy at Citigroup
Oclaro (OCLR) downgraded to Neutral from Buy at B. Riley
PSEG (PEG) downgraded to Sector Perform from Outperform at RBC Capital
Procera Networks (PKT) downgraded to Sector Perform from Outperform at Pacific Crest
United Microelectronics (UMC) downgraded to Neutral from Buy at UBS
Vocera (VCRA) downgraded to Neutral from Overweight at JPMorgan
Wisconsin Energy (WEC) downgraded to Neutral from Buy at ISI Group

Initiations

GAIN Capital (GCAP) initiated with an Outperform at Keefe Bruyette
Gastar Exploration (GST) initiated with a Buy at Wunderlich
Gran Tierra (GTE) initiated with a Neutral at Goldman
Navient (NAVI) initiated with an Equalweight at Barclays
Navient (NAVI) initiated with an Outperform at Keefe Bruyette

COMPANY NEWS

Pfizer (PFE) confirmed delivery of increased offer of $84.47 per share to AstraZeneca (AZN)
AstraZeneca (AZN) rejected proposal from Pfizer (PFE) as 'substantially' undervalued
LinkedIn (LNKD) guided to FY14 revenues that were lower than analysts' current forecasts. The company said it has no plans for a significant increase in China investment
Berry Plastics (BERY) CEO said business will improve in coming quarters
Verizon (VZ) said in a regulatory filing that it believes it would be "perverse and unjust" for the FCC to adopt rules that would "subsidize" companies like T-Mobile (TMUS) and Sprint (S) by allowing them to bid on airwaves set aside for smaller firms
InterContinental Hotels (IHG) announced a $750M special dividend
Royal Bank of Scotland (RBS) said on track to achieve capital targets

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

Newell Rubbermaid (NWL), Hill-Rom (HRC), Alliant Energy (LNT), Dresser-Rand (DRC), Alon USA Energy (ALJ), Alon USA Partners (ALDW), XL Group (XL), MasTec (MTZ), Territorial Bancorp (TBNK), Black Hills (BKH), OpenTable (OPEN), Scansource (SCSC), Sequenom (SQNM), Northeast Utilities (NU), QLogic (QLGC), eHealth (EHTH), Chegg (CHGG), HCI Group (HCI), Bottomline Technologies (EPAY), Autobytel (ABTL), TeleCommunication Systems (TSYS), Mitek Systems (MITK), BioMarin (BMRN), Seattle Genetics (SGEN), Westport (WPRT), Ellie Mae (ELLI), Impax (IPXL), American Vanguard (AVD), Universal Electronics (UEIC), Audience (ADNC), Nutrisystem (NTRI), Tempur Sealy (TPX), Constant Contact (CTCT), Southwestern Energy (SWN), Akamai (AKAM), ON Semiconductor (ONNN), GigOptix (GIG), BJ's Restaurants (BJRI), PMC-Sierra (PMCS), MICROS (MCRS), InterMune (ITMN), Federated National (FNHC), Web.com (WWWW), Maxwell (MXWL), DigitalGlobe (DGI), Addus HomeCare (ADUS), SBA Communications (SBAC), Outerwall (OUTR), Outerwall (OUTR), Vertex (VRTX), Skullcandy (SKUL), Omnicell (OMCL), Western Union (WU), A10 Networks (ATEN), Wynn Resorts (WYNN), LinkedIn (LNKD), FleetCor (FLT), Affymetrix (AFFX), Expedia (EXPE)

Companies that missed consensus earnings expectations include:

Northwest Natural Gas (NWN), Exelis (XLS), Berry Plastics (BERY), Cheniere Energy (LNG), Integrys Energy (TEG), Eldorado Gold (EGO), Oil States (OIS), Frank's International (FI), Sierra Wireless (SWIR), Golden Minerals (AUMN), Southside Bancshares (SBSI), Multi-Fineline (MFLX), Bill Barrett (BBG), Manitowoc (MTW), Idenix (IDIX), Computer Programs (CPSI), LRR Energy (LRE), Medley Capital (MCC), Exelixis (EXEL), XPO Logistics (XPO), InvenSense (INVN), Insight Enterprises (NSIT), KEYW (KEYW), Entropic (ENTR), Kodiak Oil & Gas (KOG), Fluor (FLR), Actuate (BIRT), Oncothyreon (ONTY), Standard Pacific (SPF), ServiceSource (SREV), Rubicon (RBCN), RadiSys (RSYS), Procera Networks (PKT), DaVita (DVA), Bally Technologies (BYI), Cornerstone OnDemand (CSOD), DexCom (DXCM), FBL Financial (FFG), FBL Financial (FFG), Einstein Noah (BAGL)

Companies that matched consensus earnings expectations include:
Cheniere Energy Partners (CQH), Immersion (IMMR), Select Medical (SEM), Geron (GERN), SciQuest (SQI), Natural Grocers (NGVC), The Inventure Group (SNAK), First NBC Bank (NBCB), Callidus Software (CALD), Cerus (CERS)

NEWSPAPERS/WEBSITES

U.S. probing Herbalife (HLF) traders, NY Times says
DirecTV (DTV) likely open to a sale, WSJ reports (T)
Regulators against Sprint (S)-T-Mobile (TMUS) deal, sources say, NY Post reports
General Motors (GM) recalls over 50,000 Cadillac SRX SUVs, Detroit Free Press reports
Under Armour (UA) suits part of U.S. speedskating issues in Sochi, WSJ says
New York AG eyeing exchanges in high frequency probe (ICE, NDAQ), Reuters reports

SYNDICATE

Aldexa (ALDX) 1.5M share IPO priced at $8.00
Ares Capital (ARES) 11.4M share IPO priced at $19.00
Chimerix (CMRX) files $200M mixed securities shelf
EQT Midstream Partners (EQM) 10.75M share Secondary priced at $75.75
HD Supply (HDS) 30M share Secondary priced at $26.00
Immunomedics (IMMU) $30M share Spot Secondary; price range $3.35-$3.45
Investors Bancorp (ISBC) 219.581M stock offering priced at $10.00
Media General (MEG) 4.21M share Secondary priced at $15.50
Papa Murphy's (FRSH) 5.833M share IPO priced at $11.00
Tetraphase (TTPH) files $125M mixed securities shelf

• Fed’s Fisher Says Economy Strengthening as Payrolls Rise (BBG)
• Russia Knows Europe Sanctions Ineffective With Tax Havens (BBG)
• EU Cuts Euro-Area Growth Outlook as Inflation Seen Slower (BBG)
• U.S. Firms With Irish Addresses Get Tax Breaks Derided as ‘Blarney’ (BBG)
• Portugal exits bailout without safety net of credit line (Euronews)
• Puzzled Malaysian Air Searchers Ponder What to Try Now (BBG)
• Barclays, Credit Suisse Battle Banker Exodus, Legal Woes (BBG)
• Germany says euro level not an issue for politicians (Reuters)
• Alibaba-Sized Hole Blown in Nasdaq 100 Amid New Stock (BBG)
• Obamacare to save large corporations hundreds of billions (The Hill)
• Specter of SARS weighs on CDC as MERS virus lands in U.S. (BBG)
• Nine badly hurt in U.S. circus 'hair hang' accident (Reuters)
• Australia Promises Shared Burden Amid Doubts on Debt Levy (BBG)
• Swiss Seek ‘Fair’ U.S. Treatment of Banks, Meet With DOJ (BBG)

Overnight Media Digest

WSJ

* U.S.-based companies this year have proposed or agreed to $637.95 billion worth of mergers or acquisitions - either as the buyer or the target. The rise in merger-and-acquisition activity comes as investors increasingly shun riskier, high-growth areas of the market, especially newly minted stocks. (http://r.reuters.com/ceq98v)

* As Alibaba prepares to submit its first major filings as early as this week in what could be one of the largest initial public offerings in U.S. history, Jack Ma - now executive chairman - still looms large in the company's dealings. Even though he is no longer CEO, Ma remains the face of Alibaba. (http://r.reuters.com/deq98v)

* Crackdowns and new rules on banks are creating a hot employment market in one corner of Wall Street: risk and compliance. Due to stepped-up regulatory oversight and some high-profile lapses, banks are boosting hiring of workers who evaluate risks and make sure their firms comply with laws and regulations. JP Morgan Chase & Co has been the most aggressive, with plans to add more than 13,000 people to its staff tasked with bolstering controls. (http://r.reuters.com/duq98v)

* Apple Inc won a $119 million jury verdict against Samsung Electronics Co for infringing on three of its patents. But it didn't achieve a key goal: inflicting pain on its Korean rival. The late Friday verdict also did little to derail the momentum of Google Inc's Android operating system, which has eclipsed Apple's, first with high-end iPhone alternatives from Samsung and now with low-cost smartphones from Chinese manufacturers. (http://r.reuters.com/huq98v)

* Warren Buffett is widely celebrated for his plain-spoken, straight-shooting manner, but the chairman of Berkshire Hathaway Inc showed on Saturday before thousands of shareholders that he sometimes values degrees of nuance. Shareholders and analysts peppered Buffett and Charles Munger, Berkshire's vice chairman, with questions about where Berkshire's weaknesses lie, and whether Buffett's eldest son, Howard Buffett, is the right man to be Berkshire's future non-executive chairman. (http://r.reuters.com/jeq98v)

* Symantec Corp invented commercial antivirus software to protect computers from hackers a quarter century ago. Now the company says such tactics are doomed to failure. Antivirus "is dead," says Brian Dye, Symantec's senior vice president for information security. "We don't think of antivirus as a moneymaker in any way." (http://r.reuters.com/heq98v)

* Banks are again doling out money to hedge funds and other investors to finance purchases of complex debt securities, returning to a practice that helped fuel the debt boom ahead of the financial crisis. RBC Capital Markets, Société Générale and Wells Fargo & Co are among the banks offering to let investors borrow money, also known as providing leverage, to buy collateralized loan obligations, say investors and bankers. (http://r.reuters.com/zeq98v)

NYT

* Even after a year post Tumblr's acquisition by Yahoo! Inc , the biggest issue bothering Tumblr's Chief Executive David Karp is: how to generate significant revenue growth from the blogging service. But rather than slap banner ads and risk a mutiny from users, the company is working with advertisers to encourage them to create their own Tumblr pages and come up with creative material - also known as native advertising - that fans can interact with. (http://r.reuters.com/teq98v)

* HBO's popular TV series Game of Thrones has generated a lot of buzz among its coveted demographic of younger, wealthier viewers. But with no televised advertisements during the show, companies are trying to reach viewers through their smartphones, tablets and laptops with social media posts. (http://r.reuters.com/veq98v)

* John Heilemann and Mark Halperin, political journalists known for their books on the past two presidential campaigns, will join Bloomberg in the coming days to start a new site that will focus on American politics and policy. (http://r.reuters.com/xeq98v)

* Created 25 years ago to provide movie listings on phone, Moviefone is set to re-launch as a free app and a website on Monday. Moviefone makes money mostly by selling advertising, which is shared by AOL Inc and Whalerock. AOL said that Moviefone has about 10 million users. (http://r.reuters.com/cuq98v)

* Hedge fund Greenlight Capital has requested the Securities and Exchange Commission for confidential treatment of its buying strategy on Micron Technology Inc. The firm said disclosure of its buying strategy on Micron would cause "substantial" financial harm to its investors because the hedge fund intended to keep accumulating shares for at least another week. (http://r.reuters.com/guq98v)

* Portugal announced its exit from a three-year bailout program that has forced deep spending cuts and set off mass protests. Prime Minister Pedro Passos Coelho said that Portugal had built up sufficient financial reserves to end the program on schedule, without requesting any additional line of credit from its European counterparts. (http://r.reuters.com/juq98v)

* Ukraine has been pushing hard to start reverse-flow deliveries of gas from Europe via Slovakia to Ukraine, thus blunting repeated Russian threats to turn off the gas tap. An agreement signed last week between Slovak and Ukrainian pipeline operators opened the way for modest reverse-flow deliveries of gas from Europe, where prices are much lower than those demanded by Gazprom for its direct sales to Ukraine. (http://r.reuters.com/kuq98v)

Canada

THE GLOBE AND MAIL

* The Prime Minister's Office is rejecting a call from Canada's legal community to clarify its statement about the Supreme Court. The unprecedented dispute comes as the country's top court prepares to hear challenges to laws that were passed by the Conservative government. (http://r.reuters.com/gur98v)

* National Defence has done an about-face and revoked an offer that would have allowed a soldier with post-traumatic stress disorder the right to an extended release from the military. Kristian Wolowidnyk's story made headlines across the country in November when he tried to take his own life after the army put him on the fast track for dismissal. (http://r.reuters.com/kur98v)

Reports in the business section:

* The British Columbia government and Malaysia's state-owned Petronas Gas have reached a deal designed to provide lift-off to a liquefied natural gas project. Both sides agreed on Monday to assign officials to prepare terms of reference by June 30 and then have a project development agreement in place by Nov. 30. (http://r.reuters.com/rur98v)

NATIONAL POST

* A new federal bill that will allow Internet and cellphone providers to hand over personal data without a warrant has privacy advocates concerned about how many officials will have access to that information. The officers obtaining that data can be anything from tax agents to sheriffs, reeves, justices of the peace, Canadian Security Intelligence Service agents, and even mayors. (http://r.reuters.com/per98v)

* International Relief Fund for the Afflicted and Needy, an Ontario-based Muslim relief group branded a terrorist organization by the federal government, has decided to appeal the decision. A non-profit group that works mostly in Muslim regions, IRFAN-Canada had been under scrutiny by Canada Revenue Agency auditors for a decade. (http://r.reuters.com/ter98v)

FINANCIAL POST

* While a surprisingly big surge in the U.S. employment in April reflects growing confidence in the country's recovery, the outlook for Canada's job market - and the economy as a whole - is still far from certain. Statistics Canada on Friday will likely report between 16,000 to 20,000 positions were created in April - with the jobless rate staying at 6.9 percent. (http://r.reuters.com/fur98v)

China

SHANGHAI SECURITIES NEWS

- Combined first-quarter profit of 2,534 listed companies was up 8.08 percent from the same quarter last year, data compiled by the newspaper showed. The figure was down from 10.7 percent in the first quarter of last year. Meanwhile, revenue was down 13.44 percent in the first three months of the year compared with the same period last year.

- The China Insurance Regulatory Commission has published draft rules that would classify insurers' assets into five categories based on risk levels.

- China's eastern province of Jiangsu is discussing whether the current business model of market making in precious metals should be banned.

SECURITIES TIMES

- Total assets of China's fund industry exceeded 6 trillion yuan ($958.57 billion) in the first quarter.

CHINA DAILY

- Anti-narcotics officers uncovered 1,491 transnational drug smuggling cases last year, an increase of 14.5 percent from the previous year, with most suspects caught in the southern provinces of Guangdong and Yunnan, the police ministry said.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Markit services PMI for April at 9:45--consensus 54.5
ISM non-manufacturing index for April at 10:00--consensus 54.2

ANALYST RESEARCH

Upgrades

ARIAD (ARIA) upgraded to Buy from Hold at Jefferies
Apollo Investment (AINV) upgraded to Overweight from Equalweight at Barclays
BB&T (BBT) upgraded to Outperform from Neutral at Credit Suisse
Bill Barrett (BBG) upgraded to Buy from Hold at Stifel
Chipotle (CMG) upgraded to Outperform from Market Perform at Raymond James
Covance (CVD) upgraded to Overweight from Neutral at Piper Jaffray
Cracker Barrel (CBRL) upgraded to Market Perform from Underperform at Raymond James
Hi-Crush Partners (HCLP) upgraded to Outperform from Sector Perform at RBC Capital
Informatica (INFA) upgraded to Neutral from Underperform at BofA/Merrill
L-3 Communications (LLL) upgraded to Overweight from Neutral at JPMorgan
Lennox (LII) upgraded to Overweight from Neutral at JPMorgan
Och-Ziff Capital (OZM) upgraded to Outperform from Market Perform at Keefe Bruyette
PerkinElmer (PKI) upgraded to Buy from Neutral at Janney Capital
Salesforce.com (CRM) upgraded to Buy from Hold at Deutsche Bank
Santander Consumer (SC) upgraded to Buy from Neutral at BofA/Merrill
Swift Energy (SFY) upgraded to Hold from Buy at Canaccord
Virtus Investment Partners (VRTS) upgraded to Outperform at Raymond James
Watts Water (WTS) upgraded to Buy from Neutral at Sterne Agee

Downgrades

ACI Worldwide (ACIW) downgraded to Underperform from Market Perform at Raymond James
GAP Airports (PAC) downgraded to Underweight from Neutral at JPMorgan
Helmerich & Payne (HP) downgraded to Sell from Neutral at Guggenheim
Host Hotels (HST) downgraded to Neutral from Buy at SunTrust
Hyatt Hotels (H) downgraded to Neutral from Buy at MKM Partners
Kodiak Oil & Gas (KOG) downgraded to Neutral from Buy at SunTrust
Nabors Industries (NBR) downgraded to Sell from Neutral at Guggenheim
OMA Airports (OMAB) downgraded to Neutral from Overweight at JPMorgan
Oaktree Capital (OAK) downgraded to Market Perform from Outperform at Keefe Bruyette
Redwood Trust (RWT) downgraded to Market Perform from Outperform at JMP Securities
Southern Company (SO) downgraded to Sell from Neutral at UBS
WESCO (WCC) downgraded to Neutral from Overweight at JPMorgan

Initiations

Adamas Pharmaceuticals (ADMS) initiated with a Buy at Needham
Adamas Pharmaceuticals (ADMS) initiated with an Outperform at Credit Suisse
Adamas Pharmaceuticals (ADMS) initiated with an Overweight at Piper Jaffray
FireEye (FEYE) initiated with a Hold at Deutsche Bank
King Digital (KING) initiated with a Buy at BofA/Merrill
King Digital (KING) initiated with a Buy at Deutsche Bank
King Digital (KING) initiated with a Neutral at Piper Jaffray
King Digital (KING) initiated with an Outperform at BMO Capital
King Digital (KING) initiated with an Outperform at Pacific Crest
King Digital (KING) initiated with an Outperform at RBC Capital
King Digital (KING) initiated with an Overweight at Barclays
King Digital (KING) initiated with an Overweight at JPMorgan
La Quinta (LQ) initiated with a Buy at Stifel
La Quinta (LQ) initiated with a Neutral at BofA/Merrill
La Quinta (LQ) initiated with a Neutral at Goldman
La Quinta (LQ) initiated with a Neutral at JPMorgan
La Quinta (LQ) initiated with an Outperform at Credit Suisse
La Quinta (LQ) initiated with an Outperform at JMP Securities
La Quinta (LQ) initiated with an Outperform at Wells Fargo
La Quinta (LQ) initiated with an Overweight at Evercore
La Quinta (LQ) initiated with an Overweight at Morgan Stanley
pSivida (PSDV) initiated with a Buy at MLV & Co.

COMPANY NEWS
Citigroup (C) disclosed that prosecutors probing Mexico subsidiary
BE Aerospace (BEAV) said exploring strategic alternatives to enhance shareholder value
PayPal (EBAY) said director of global strategy Rakesh Agrawal no longer with company
GM (GM) recalled certain 2014 SUVs for faulty fuel gauge
FedEx (FDX) announced pricing changes for FedEx Freight and FedEx Ground. FedEx Freight will increase its published fuel surcharge indices by 3 percentage points, effective June 2. FedEx Ground will apply dimensional weight pricing to all shipments, effective January 1, 2015
JPMorgan (JPM) forecast Q2 markets revenue down 20% from prior year

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Westlake Chemical (WLK), Emerge Energy (EMES), Exar (EXAR)

Companies that missed consensus earnings expectations include:
Auxilium (AUXL), Tesco (TESO), FreightCar America (RAIL), ArthroCare (ARTC), Volcano (VOLC)

Companies that matched consensus earnings expectations include:
Natural Gas Services (NGS)

NEWSPAPERS/WEBSITES
Barclays' (BCS) head of M&A expected to quit bank, FT reports
Apple (AAPL) not expected to unveil iWatch, new Apple TV at WWDC, Re/code reports
Siemens (SI) close to selling logistics and airports solutions unit, Bloomberg says
Coca-Cola (KO) removes controversial ingredient from Powerade, AP reports
Microsoft (MSFT) Asia-Pacific head sees large potential for Asia expansion, WSJ says
Court denies Loeb's efforts to remove Sotheby's (BID) poison pill, Reuters reports
Comcast (CMCSA) nearing deal to stream Electronic Arts (EA) games to TVs, Reuters says
Sony (SNE) and Samsung (SSNLF) launching in-store shops at Best Buy (BBY) stores, LA Times reports
Hertz (HTZ) spin-off could drive shares 25% higher, Barron's says
Murphy Oil (MUR) looks undervalued, Barron's reports
Twitter (TWTR) still looks over-priced, Barron's says
Harsco (HSC) could rise 20%, Barron's says
SunEdison's (SUNE) YieldCo plan could bring scrutiny over taxes, Barron's reports
Wynn Resorts (WYNN) shares could rise 25%, Barron's reports

SYNDICATE
Iridium (IRDM) to sell 7.7M shares at $6.50 to certain Baron's funds
LeMaitre (LMAT) files to sell 1.8M shares of common stock for holders
Mid-Con Energy (MCEP) files to sell 3.19M common units

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

In the midst of the financial crisis, our “leaders” had a choice. They could’ve done what most Americans wanted, which was allow failing firms to fail and permit the chips to fall where they may. In contrast, our “leaders” settled on trillion dollar bailouts with zero strings attached for the criminals who destroyed the nation’s economy. At that point, the American people would’ve been at least somewhat satisfied if the rule of law was applied to the banksters, and those who deserved to go to jail were locked up. As we all know by now, the Justice Department decided to create a special “Too Big To Jail” untouchable class, and nobody was held accountable for anything. Once again, our “leadership” could’ve look at the situation honestly and responded appropriately. Rather, they doubled down on corruption and criminality and now nobody trusts anything. We don’t trust the Presidency, the Congress, the intelligence agencies, the banks, the financial system, the courts, the Federal Reserve, or any institutions at all. We certainly don’t trust Democrats and Republicans. In fact, millennials in particular have given up all trust in everything. They don’t even trust Jay-z anymore, which I suppose is what happens when you prance around with Warren Buffett and flash illuminati signs 24/7. This is how society breaks down.

Moving along, with confidence in “the system” already in the gutter by summer 2013, Edward Snowden released a bombshell of information on illegal government spying. It confirmed what so many of us had been saying for years, but had been dismissed pejoratively by the mainstream as “conspiracy theorists.” Once again, our “leaders” had a choice. Take the difficult steps and offer real reform, or merely pretend nothing really happened and defend the practices at all costs. Once again, they chose the latter. Just as no bankers were jailed for the financial crisis, no intelligence operatives were jailed for illegal spying. In fact, nothing at all has happened to James Clapper for perjuring himself in front of Congress.

 Once again, rather than reforming the system, the status quo is doubling down. I have recently highlighted several such efforts with regard to the internet, which can be read below:

Say Goodbye to “Net Neutrality” – New FCC Proposal Will Permit Discrimination of Web Content

Obama Administration Launches Plan to Make an “Internet ID” a Reality

It now appears the status quo is moving to destroy any last semblance of privacy with regard to your personal brokerage accounts. Yep, in the name of “stopping fraud” and the practices of unscrupulous brokers, the Financial Industry Regulatory Authority (FINRA) wants to launch a program called Cards, or the Comprehensive Automated Risk Data System. This electronic system sounds a lot like the so-called metadata the NSA is collecting on everyone’s internet usage. This “robocop” would collect a weekly “record of activity at all of the more than 4,100 brokerage firms nationwide.”

For your own good of course. Oh, and yeah, to stop terrorists or something…

From the Wall Street Journal:

In December, the Financial Industry Regulatory Authority, which oversees how investments are sold, proposed what it calls Cards, an electronic system that would regularly collect data on balances and transactions in brokerage accounts.

 

If adopted, Cards would revolutionize how regulators do their jobs and could make it harder for unscrupulous brokers to bilk customers.

Give me a fucking break. The last thing the establishment cares about is stopping fraud. Fraud is the number one driver of American GDP at the moment. It is institutionalized, protected and endorsed. This is about nothing more than destroying your financial privacy.

Under Cards (which stands for Comprehensive Automated Risk Data System), Finra would collect—probably weekly—a record of activity at all of the more than 4,100 brokerage firms nationwide.

 

Finra would scour the data continuously, looking for any hints that a firm or a broker might be taking advantage of a client: excessive trading or commissions, switching from one mutual fund to another, overcharging for bond trades, overconcentrating in risky or illiquid securities, and so on.

The nanny brokerage state. Was this Michael Bloomberg’s idea or what? Better make sure there isn’t too much salt or sugary drinks in your portfolio.

Social Security numbers and other personal details won’t be included in Cards, so Finra won’t be able to identify which investor an account belongs to or to match any investor’s holdings across firms. Nor will the data give anyone access to cash or securities.

It’s just metadata, nothing to see here serfs!

That, Mr. Ketchum argues, would enable the regulator to stop at least some misdeeds before too much damage is done. And the sense that a regulatory RoboCop is watching their every move could deter some brokers from doing anything wrong in the first place.

 

“The good that will come from the dramatically increased ability to reduce fraud will way overwhelm that extraordinarily remote risk,” Mr. Joachim adds.

 

Mr. Ketchum says he hopes that Cards will go to the Securities and Exchange Commission for final approval by next year, after further refinements and input from brokerage firms and the public.

The battle is on and the system is doubling down. What are you going to do about it?

Full article here.

• EU Court: Google Must Remove Certain Links on Request (WSJ)...  people have right to be forgotten on Internet (Reuters)
• Harsh weather: German Investor Confidence Drops for Fifth Straight Month (BBG)
• More harsh weather: China Slowdown Deepens (BBG)
• Harsh weather as far as the eye can see: China’s New Credit Declines (BBG)
• "Alien" artist, surrealist H.R. Giger dies aged 74 (Reuters)
• Pfizer urges AstraZeneca to talk as UK lawmakers slam offer (Reuters)
• Property sector slowdown adds to China fears (FT)
• Russia says EU sanctions will hurt Ukraine peace efforts (Reuters)
• U.S. Considers Relaxing Crude Oil Export Restrictions (WSJ)
• Yellen Wage Signals Showing Slack May Be Missing Cost Speedup (BBG)
• Investors bet on BoE acting to ease property market and raise rates (FT)
• Lehman Trade a Gift That Keeps Giving for Paulson to King Street (BBG)
• Attorney General Holder Tightens the Squeeze on Banks (WSJ)
• The Secret Brazil Happy Meal McDonald’s Keeps Under Wraps (BBG)
• All-Madrid Soccer Final Soured by $2,000 Hotels in Portugal (BBG)

Overnight Media Digest

WSJ

* AT&T Inc is close to sealing a takeover of DirecTV that could value the satellite-television provider at about $50 billion. The two sides are discussing a deal that would involve a mix of cash and AT&T stock. An agreement could be reached in two weeks if not sooner, people familiar with the matter said. (http://r.reuters.com/dyg39v)

* Pfizer Inc laid out a case for its proposed $106 billion takeover of AstraZeneca PLC in documents sent on Monday to two U.K. parliamentary committees. For the first time, Pfizer said that its five-year commitments to the U.K. - made 10 days ago as part of an unsolicited takeover bid of $84.26 a share - were legally binding. AstraZeneca rejected the offer, saying the proposal substantially undervalued the company. (http://r.reuters.com/hyg39v)

* Hillshire Brands Co agreed to buy Pinnacle Foods Inc for $4.3 billion in a bet that mixing hot dogs and frozen cakes with pickles, syrup and salad dressing will add up to a more appetizing business. The deal, announced on Monday, would create a company with about $6.6 billion in annual revenue and a broad array of brands including Hillshire's namesake lunch meats, Jimmy Dean sausages and Ball Park hot dogs. (http://r.reuters.com/jyg39v)

* Several major advertisers, including MasterCard Inc , Mondelez International and Verizon Wireless in the past year have moved a portion of the money they previously spent on television to online outlets, conscious that viewers are more frequently watching video online. And with online outlets in recent weeks unveiling plans to ramp up their programming, more shifts are likely, say media buyers. (http://r.reuters.com/nyg39v)

* London Stock Exchange Group PLC has emerged as a contender for Russell Investments, the stock-index and asset-management business that is on the auction block. The U.K. stock-exchange operator is among a small group of late-stage bidders for Russell, which Northwestern Mutual Life Insurance Co officially put on the auction block early this year. (http://r.reuters.com/ryg39v)

* Citizens Financial Group Inc filed for an initial public offering with the Securities and Exchange Commission on Monday. In the filing, Citizens said the number of shares to be offered and the price range for the proposed deal haven't yet been determined. However, it plans to raise up to $100 million in the offering. (http://r.reuters.com/wyg39v)

* Federal prosecutors asked a judge for a stiff sentence of more than five years in prison for Michael Steinberg, a former senior employee of SAC Capital Advisors LP convicted of insider trading last year. Steinberg, who is free on bail, is scheduled to be sentenced Friday in federal court in Manhattan. (http://r.reuters.com/zyg39v)

* Becker Drapkin Management LP, an activist investor that targets smaller companies, has taken a 7.2 percent stake in XO Group Inc, according to a regulatory filing on Monday. The investment fund supports XO Group's recently named Chief Executive Michael Steib but is raising questions about the continued operational role of co-founder and Chairman David Liu and losses piling up under Liu's watch in China. (http://r.reuters.com/cah39v)

FT

The United States and its leading European allies are mulling wider sanctions on the Russian economy along with a ban on the export of high-tech energy equipment, if Moscow is seen disrupting Ukraine's presidential elections on May 25.

British law makers will demand "cast iron" guarantees from U.S. drug maker Pfizer on jobs and investment for up to 10 years if it buys AstraZeneca.

Citizens Financial Group Inc, the U.S. unit of Britain's Royal Bank of Scotland, filed with U.S. regulators for an initial public offering of common stock that would raise about $100 million.

AT&T Inc is in active talks to buy satellite TV provider DirecTV and may finalise a deal in the next few weeks that could be worth close to $50 billion, according to people familiar with the matter.

The head of KPMG in the Netherlands resigned on Monday, the accounting firm said, less than a month after authorities launched a criminal investigation into alleged tax fraud at a venture it set up to build a new Dutch headquarters.

NYT

* With TransCanada's Keystone XL pipeline snarled in a regulatory and legal struggle south of the border, Canadian oil companies are proposing many new and expanded pipelines that would connect the oil sands fields with new markets in China and across the world. The planned projects that would snake east and west as well as south, could break the virtual United States monopoly market for Canadian oil exports. (http://r.reuters.com/qyg39v)

* A string of departures from the Fed's seven-member board over the last year has left the central bank on the verge of operating with just three governors for the first time in its 100-year history. Three nominees are awaiting Senate confirmation, but so are scores of nominees to other offices. (http://r.reuters.com/syg39v)

* AT&T is in talks to buy DirecTV for at least $50 billion, and the two sides are actively working toward an announcement. If completed, the deal would give AT&T, the country's second-largest wireless carrier, control of the country's largest satellite television provider, further reshaping the rapidly changing telecommunications and television industries. (http://r.reuters.com/vyg39v)

* Rejecting an unusual $50 billion unsolicited bid, Allergan , the maker of Botox, said its best days were ahead of it and signaled it would consider making acquisitions of its own as it worked to stay independent. Allergan said the offer by Valeant Pharmaceuticals and William Ackman "substantially undervalues Allergan and is not in the best interests of the company and its stockholders." (http://r.reuters.com/xyg39v)

* Pfizer Inc pledged on Monday to keep jobs in Britain if it succeeds in taking over British drug maker AstraZeneca Plc, and it questioned whether AstraZeneca can stand on its own much longer. Pfizer's chief executive is expected to appear before a parliamentary committee in London on Tuesday as the American pharmaceutical giant tries to convince British lawmakers that a Pfizer-AstraZeneca combination is viable. (http://r.reuters.com/bah39v)

* Toyota said on Monday that it would allow a battery-supply deal with Tesla Motors to expire this year and would focus instead on building cars running on hydrogen fuel cells, a next-generation technology that rivals Tesla's all-electric systems. (http://r.reuters.com/gah39v)

* Since the financial crisis, the annual meetings of Wall Street banks have become focal points for shareholder anger about foreclosures, taxpayer bailouts and income inequality. While gadflies and social activists have flocked to shareholder meetings across corporate America for decades, banks' annual meetings can be quite contentious. (http://r.reuters.com/hah39v)

Canada

THE GLOBE AND MAIL

* Railway company Montreal, Maine & Atlantic Railway Ltd and three of its employees will be charged with criminal negligence in connection with a train accident on July 6 last year, according to the Quebec prosecutor's office. The devastating accident occurred after a train hauling volatile crude oil broke free from its brakes and ran down a hill into the small town of Lac-Mégantic, causing a massive explosion and killing 47 people. (http://r.reuters.com/pyj39v)

* Rob Ford and his brother Councillor Doug Ford's role in helping a client of their family firm gain access to top city executives has renewed calls for investigative action against them. Toronto's integrity commissioner suspended investigations this month after Rob Ford announced he was going to rehab. (http://r.reuters.com/ryj39v)

Reports in the business section:

* AutoCanada Inc, which is playing a leading role in consolidation of Canada's automobile dealerships, is poised to shake up the Calgary market with its purchase of Hyatt Automotive Group. (http://r.reuters.com/wyj39v)

NATIONAL POST

* The political fortunes of the Parti Québécois are getting worse and worse, with support now at a historic low. One month after its crushing electoral defeat to the Liberals, a new poll shows that, had an election been held on May 7-8, support for the party would have been a mere 19 percent. (http://r.reuters.com/xak39v)

FINANCIAL POST

* The housing boom has not only resulted in record real estate prices, it has spawned an unprecedented number of real estate agents. Toronto had 35,000 real estate agents in December 2012 which has grown to 39,000 this year. Much of it is an influx of speculative careers from would-be real estate agents who see a quick buck to be made - up to 5 percent of the house price - that comes with it. (http://r.reuters.com/jak39v)

* Canada's aboriginals have threatened to go to court if Prime Minister Stephen Harper approves the Alberta-to-West Coast oil pipeline next month, and if he does, to sabotage the project if proponent Enbridge Inc dares to build it. (http://r.reuters.com/pak39v)

Britain

The Telegraph

SCOTLAND FACES RISK OF CAPITAL FLIGHT, WARNS DEUTSCHE

An independent Scotland faces the risk of "capital flight" if it cannot strike a deal to keep the pound, Europe's largest investment bank, Deutsche Bank, has warned. (http://link.reuters.com/heg39v)

VINCE CABLE URGED TO PROTECT ASTRAZENECA

Members of the Business Select Committee will on Tuesday demand that Vince Cable tightens Britain's takeover rules to protect AstraZeneca from a possible 63 billion pound hostile bid from Pfizer. (http://link.reuters.com/jeg39v)

The Guardian

PFIZER SAYS UK JOBS PLEDGE LEGALLY BINDING

Pfizer has said it will keep its promises about retaining high-skill jobs and manufacturing in Britain as the U.S. firm's boss prepares to face questions from MPs on the proposed takeover of AstraZeneca. (http://link.reuters.com/keg39v)

ANNUAL RETAIL SALES GROWTH SLOWS, DESPITE BOOST FROM EASTER PERIOD

Retailers enjoyed an Easter boost in sales last month but it was not enough to prevent the worst underlying performance for more than a year. The British Retail Consortium's monthly report suggested sales were up 4.2 percent on a like-for-like basis in April on a year earlier as bank holiday shoppers bought furniture and snapped up clothing to suit the warmer weather. (http://link.reuters.com/meg39v)

The Times

BSKYB FACES HOSTILE RECEPTION TO PAY-TV TALKS WITH SKY ITALIA AND DEUTSCHLAND

BSkyB, Britain's largest pay-TV company, is in talks to buy Sky Deutschland and Sky Italia, in deal estimated at 10 billion euro. (http://link.reuters.com/seg39v)

BUSINESS LEADERS ECHO PUBLIC DISTRUST OF PFIZER'S 63 BLN STG BID

The public overwhelmingly opposes Pfizer's takeover of AstraZeneca, according to polls, showing the scale of the challenge faced by the U.S. drugs company in overcoming doubts about its 63 billion pound offer. (http://link.reuters.com/peg39v)

Sky News

CITY STAR WOODFORD TO MEET PFIZER BOSS READ

London-based prominent fund manager Neil Woodford will meet the boss of Pfizer this week for talks about the U.S. pharmaceuticals giant's proposed 63 billion pound takeover of AstraZeneca. (http://link.reuters.com/reg39v)

CARLYLE TESTS APPETITE FOR 1 BLN STG DENTAL CHAIN

Integrated Dental Holdings, UK's largest privately owned dental chain, will either be put up for sale or floated on the stock market by private equity firm Carlyle Group LP. (http://link.reuters.com/qeg39v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Retail sales for April at 8:30--consensus up 0.4% from prior month
Import price index for April at 8:30--consensus up 0.3% from prior month
Business Inventories for March at 10:00--consensus up 0.4%

ANALYST RESEARCH

Upgrades

Bridgepoint Education (BPI) upgraded to Hold from Sell at Deutsche Bank
Danone (DANOY) upgraded to Equal Weight from Underweight at Morgan Stanley
Hub Group (HUBG) upgraded to Buy from Hold at KeyBanc
KKR (KKR) upgraded to Overweight from Equal Weight at Evercore
Masco (MAS) upgraded to Buy from Hold at Jefferies
QIAGEN (QGEN) upgraded to Neutral from Underweight at HSBC
Time Warner (TWX) upgraded to Outperform from Market Perform at Bernstein

Downgrades

BE Aerospace (BEAV) downgraded to Neutral from Overweight at JPMorgan
Baker Hughes (BHI) downgraded to Market Perform from Outperform at Bernstein
Carmike Cinemas (CKEC) downgraded to Hold from Buy at Topeka
Concho Resources (CXO) downgraded to Hold from Buy at Wunderlich
Douglas Emmett (DEI) downgraded to Market Perform from Outperform at Wells Fargo
Electrolux downgraded to Neutral from Buy at Longbow
Endeavour (END) downgraded to Neutral from Buy at SunTrust
Hillshire Brands (HSH) downgraded to Neutral from Overweight at JPMorgan
Nabors Industries (NBR) downgraded to Market Perform from Outperform at Bernstein
Pinnacle Foods (PF) downgraded to Hold from Buy at Stifel
Safeguard Scientifics (SFE) downgraded to Equal Weight from Overweight at First Analysis
Whirlpool (WHR) downgraded to Neutral from Buy at Longbow

Initiations

City Office REIT (CIO) initiated with a Buy at Janney Capital
Global Cash Access (GCA) initiated with a Hold at Stifel
Grainger (GWW) initiated with an Overweight at Morgan Stanley
HD Supply (HDS) initiated with an Equal Weight at Morgan Stanley
WESCO (WCC) initiated with an Equal Weight at Morgan Stanley
Watsco (WSO) initiated with an Equal Weight at Morgan Stanley

COMPANY NEWS

Pfizer (PFE) said possible offer for AstraZeneca (AZN) represents compelling holder value
Elizabeth Arden (RDEN) reported a significant miss on Q3 results and said it has engaged Goldman Sachs (GS) to explore potential strategic alternatives. The company also implemented a broad restructuring and cost savings progam, targeting annual savings of $40M-$50M upon full implementation of the program
CEMEX (CX) said CEO Lorenzo Zambrano passed away
Halozyme Therapeutics (HALO) reported Q1 results that narrowly missed expectations and announced that the Data Monitoring Committee now supported enrollment in the company's PEGPH20 study
Vantiv (VNTV) agreed to acquire Mercury Payment Systems from Silver Lake for $1.65B
magicJack (CALL) reported quarterly revenues below analyst estimates and said it activated 196,000 subscribers during Q1

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Cubic (CUB), Installed Building Products (IBP), Ophthotech (OPHT), Encana (ECA), Synergy Pharmaceuticals (SGYP), Sunshine Heart (SSH), Elbit Systems (ESLT), Wix.com (WIX), DFC Global (DLLR), Supernus (SUPN), Thompson Creek (TC), Atlantic Power (AT), Endeavour Silver (EXK), CorEnergy (CORR), American Apparel (APP), InnerWorkings (INWK), LipoScience (LPDX), Esperion Therapeutics (ESPR), Convergys (CVG), magicJack (CALL), Aerie Pharmaceuticals (AERI), Everyday Health (EVDY), Engility Holdings (EGL), McKesson (MCK), Premier (PINC), Trovagene (TROV), Rackspace (RAX)

Companies that missed consensus earnings expectations include:
CST Brands (CST), Surgical Care Affiliates (SCAI), Resolute Energy (REN), Consolidated Water (CWCO), Arc Logistics (ARCX), Odyssey Marine (OMEX), Health Insurance Innovations (HIIQ), Fuel Tech (FTEK), Elizabeth Arden (RDEN), Capitala Finance (CPTA), TG Therapeutics (TGTX), Cardiome (CRME), American Midstream Partners (AMID), Apricus Biosciences (APRI), Halozyme (HALO), ADMA Biologics (ADMA), Unilife (UNIS), Fontegra Financial (FRF), Omeros (OMER), Puma Biotechnology (PBYI), Parametric Sound (HEAR), Lifeway Foods (LWAY), Virtusa (VRTU), Penn Virginia (PVA), Hannon Armstrong (HASI), Kindred Biosciences (KIN), DealerTrack (TRAK), Orion Energy (OESX), Rockwell Medical (RMTI), Cara Therapeutics (CARA), Onconova (ONTX), Portola Pharmaceuticals (PTLA), Acorn Energy (ACFN), 2U (TWOU), Arena Pharmaceuticals (ARNA), PDL BioPharma (PDLI), Continental Building (CBPX)

Companies that matched consensus earnings expectations include:
Babcock & Wilcox (BWC), Cytori Therapeutics (CYTX), Towerstream (TWER), Spark Networks (LOV), Osiris (OSIR)

NEWSPAPERS/WEBSITES

AT&T (T) in talks to buy DirecTV (DTV) for approximately $100 per share, Bloomberg says 
Credit Suisse (CS) tax evasion settlement might exceed $2B, Reuters says
DOJ, AG Holder may reach multibillion-dollar settlements with banks (CS, BAC), WSJ reports
Sony (SNE) may ditch OLED TVs for 4K LCD sets, Nikkei reports
EA (EA) executives, including COO, recently sold almost $5M in stock, Re/code reports
Google (GOOG) must remove certain links if requested, EU court says, WSJ reports
Facebook (FB) said to be looking to open China sales office, Bloomberg reports
Pfizer (PFE) says too early to discuss U.S. AstraZeneca (AZN) impact, Bloomberg says

SYNDICATE

Antero Resources (AR) files to sell 10M shares for holder
Concho Resources (CXO) 6.5M share Secondary priced at $129.00
Daqo New Energy (DQ) files to sell 2M American Depositary Shares
ExamWorks (EXAM) files to sell 3.1M shares of common stock
GTx (GTXI) files to sell $150M of common stock, warrants
Gramercy Property Trust (GPT) files to sell 34M shares of common stock
MDC Partners (MDCA) files to sell 3.5M class A suborinate voting shares for CEO
Northstar Realty (NRF) 30M share Spot Secondary; price range $15.40-$15.60
ONEOK Partners (OKS) files to sell 11M common units for limited partners
SVB Financial (SIVB) files to sell 3.9M shares of common stock

• Bank of England sees 'no housing bubble' (Independent)
• ‘If the euro falls, Europe falls’ (FT)
• India's pro-business Modi storms to historic election win (Reuters)
• Global Growth Worries Climb (WSJ)
• Bitcoin Foundation hit by resignations over new director (Reuters)
• Blackstone Goes All In After the Flop (WSJ)
• SAC's Steinberg loses bid for insider trading acquittal (Reuters)
• Beats Satan: Republicans Paint Reid as Bogeyman in 2014 Senate Races (BBG)
• Tech Firms, Small Startups Object to Paying for Internet 'Fast Lanes' (WSJ) - but they just provide liquidity
• U.S. Warns Russia of Sanctions as Ukraine Troops Advance (BBG)
• Major U.S. hedge funds sold 'momentum' Internet names in first-quarter (Reuters)
• Cameron offers Scotland more powers (FT)
• Pinterest Is Valued at $5 Billion (WSJ)
• Uber Said to Be in Funding Talks for More Than $10B Value  (BBG)

Overnight media Digest

WSJ

* Five years after the financial crisis ended, soft growth in Europe, a stop-and-start U.S. recovery and waning momentum in China have policy makers groping for what to do next. (http://r.reuters.com/byf49v)

* In a move that has sharply divided technology giants over how to keep the Internet open, the FCC voted Thursday to advance rules that would let broadband providers charge companies for preferential handling of web traffic. (http://r.reuters.com/zef49v)

* Billionaire investors Warren Buffett, Daniel Loeb and John Paulson made a connection on Verizon Communications, as their firms separately picked up stakes in the telecommunications firm amid a wave of deal-making in the sector. (http://r.reuters.com/duf49v)

* Pinterest said it raised a $200 million investment that values it at $5 billion, making it one of the most valuable venture-capital backed startups in the world. (http://r.reuters.com/guf49v)

* General Motors recalled another 2.7 million vehicles to fix a variety of defects, and said it will take a $200 million charge against second-quarter earnings to cover the repair costs. (http://r.reuters.com/huf49v)

* Credit Suisse has tentatively agreed to pay almost $2.5 billion to the Justice Department and banking regulators and is expected to plead guilty to criminal charges to settle a probe into how the firm allegedly helped Americans evade taxes. The deal, which would mark an escalation in the U.S. crackdown on financial firms, could be announced early next week. (http://r.reuters.com/juf49v)

* Credit raters are split over a new type of bond-and proud of it. In a recent, and rare, bout of partisanship, ratings firms are taking sides on whether a new type of bond represents a safe bet or a slightly risky one. The discord, the firms say, shows that the industry is responding to critics who have said that raters in the past have too often spoken in unison and lacked a diversity of opinions. (http://r.reuters.com/puf49v)

* Blackstone Group, the world's largest private-equity firm on Thursday agreed to pay $1.7 billion in cash to Deutsche Bank AG for the Cosmopolitan of Las Vegas, a 3,000-room hotel and casino on the Strip that ran into big financial trouble during the downturn. (http://r.reuters.com/ruf49v)

FT

A No vote in September's referendum would open the way for the transfer of more powers to Edinburgh, British Prime Minister David Cameron said as he stepped up his campaign against Scottish independence during a visit to Glasgow.

France's socialist government announced a decree requiring prior state approval for most foreign bids as part of a battle with General Electric over its $13.5 billion deal to buy Alstom's energy business, provoking a sharp clash with the UK over how to deal with controversial foreign corporate acquisitions.

Uber Technologies Inc, which arranges car rides on demand, is in talks to secure a new round of financing from private equity investors that may value the company at more than $10 billion.

Official data released on Thursday cast doubt on claims that the inequality gap is widening after it was revealed that the proportion of wealth owned by the top 10 per cent of UK households has barely changed compared with the years before the recession, and still stands at 44 per cent.

Investors snapped up top tier government bonds as they beat a retreat from stocks on Thursday, after poor eurozone data increased pressure on the European Central Bank to take aggressive action to bolster the region.

NYT

* Two indicators of economic health that the Federal Reserve has identified as keys to a stronger recovery - modestly higher inflation and a more robust job market - finally seem to be moving in the right direction, according to new data released by the government on Thursday. Economists said a rise in the Consumer Price Index in April suggest a broader economic firming is underway after a weak, weather-plagued start to 2014. (http://r.reuters.com/waf49v)

* Federal judge Steven Rhodes, who is handling Detroit's bankruptcy, indicated on Thursday that the current timetable for finishing the case might be unrealistic given the many disputes outstanding. He made the observation in a hearing after saying he had heard that the state had promised to give Detroit some money - but only if the city could get him to approve its bankruptcy exit plan by the end of September. (http://r.reuters.com/xaf49v)

* PepsiCo Inc will unveil a range of new self-serve equipment for dispensing drinks in places like restaurants, movie theaters and college dining halls on Saturday at the National Restaurant Association Show. (http://r.reuters.com/bef49v)

* A day after The New York Times Company announced that it had dismissed Jill Abramson, The Times's first female executive editor, it found itself mired in controversy, having to reassure employees and rebut reports that her removal was related to her complaints about receiving less pay than her male predecessors. (http://r.reuters.com/def49v)

* Investors in Chipotle Mexican Grill voted overwhelmingly against the company's executive compensation plans, sending a strong rebuke to a company that had awarded more than $300 million to its co-chief executives in recent years. Though the vote is non-binding, Chipotle said it was taking investor sentiment into consideration. (http://r.reuters.com/gef49v)

* General Motors Co on Thursday announced a recall for 2.7 million vehicles, bringing the number of vehicles recalled this year by G.M. in the United States to nearly 11.2 million and 12.8 million worldwide. (http://r.reuters.com/hef49v)

* A Senate panel approved legislation on Thursday to wind down Fannie Mae and Freddie Mac and reshape the mortgage finance system. However, sparse support among Democrats means the measure is unlikely to become law. (http://r.reuters.com/nef49v)

Canada

THE GLOBE AND MAIL

* The Conservative government is putting employers on notice that could force them to pay more for temporary foreign workers, a move that would likely make the program too costly for low-wage sectors like restaurants that have been accused of abusing it. (http://r.reuters.com/nyg49v)

* Canada broke with the United States and did not impose sanctions on two key allies of Russian President Vladimir Putin because the pair had Canadian business interests. The revelation puts into question the Canadian government's tough line on Russia over the crisis in Ukraine. (http://r.reuters.com/pyg49v)

Reports in the business section:

* Two major investors - Prem Watsa's Fairfax Financial Holdings Ltd and U.S. activist fund manager Dan Loeb - have trimmed their holdings in BlackBerry Ltd. Regulatory filings with the U.S. Securities and Exchange Commission showed that Watsa has sold 5.2 million shares, while Loeb's Third Point LLC shed the 10 million shares it purchased last year. (http://r.reuters.com/tyg49v)

NATIONAL POST

* An 11-year-old girl's potentially fatal decision to treat her cancer with indigenous medicine instead of chemotherapy may be entirely legal, say analysts, despite the recent intervention of Ontario child services. (http://r.reuters.com/fah49v)

FINANCIAL POST

* A new report from the Conference Board puts Canada's three oil rich provinces on top of the world in terms of economic performance. The think-tank's annual economic report card comparing 16 of the world's richest countries puts Canada in fifth place overall, one spot better than last year and behind Australia, Ireland, the United States and Norway. (http://r.reuters.com/gah49v)

* Less than two years after Robert Friedland took Ivanhoe Mines Ltd public, he is already looking at ways to break it up. The Vancouver-based company revealed on Thursday it is studying a number of "potentially significant corporate and project-level options." Those include splitting the company's projects into separate publicly-traded entities, asset sales, joint ventures, and alternative stock exchange listings. (http://r.reuters.com/qah49v)

Hong Kong

SOUTH CHINA MORNING POST

-- Wynn, one of the world's biggest casino operators, issued an angry rebuke last night after a United States trade union boss accused it of allowing organised crime-linked junket operators to do business at its Macau property. (link.reuters.com/tud49v)

-- The first batch of Hong Kong's 30-tonne stockpile of seized ivory was reduced to ashes on Thursday, a symbolic move aimed at boosting the fight against the illicit trade. (link.reuters.com/vud49v)

-- Electronic component manufacturer Johnson Electric reported a record profit for the financial year to the end of March after sales in all major markets rose, but the firm is forecasting a decline in gross profit margin for the coming year due to aggressive investment in new plant and rising labour costs on the mainland. (link.reuters.com/wud49v)

THE STANDARD

-- Power Assets is opposed to the Hong Kong government's plans to import a third of the city's energy needs from the mainland. The sole power provider to Hong Kong Island said the move would be costly and a step backward for local power reliability and the environment. (link.reuters.com/xud49v)

-- Local cleaning services provider Baguio Green has been oversubscribed by more than 400 times in the retail tranche, freezing HK$4.8 billion ($619.21 million), market sources said. (link.reuters.com/zud49v)

-- Global exporter Li & Fung expects this year's business performance to be unimpressive due to poor weather in the United States. (link.reuters.com/byd49v)

HONG KONG ECONOMIC JOURNAL

-- Chinese property developer Sunac China Holdings Ltd said it was in talks with Greentown China's vice chairman Shou Bainian to buy up to 30 percent interest in his company, with market experts estimating the deal to be worth at least HK$5 billion ($645.01 million).

MING PAO DAILY NEWS

-- The retail portion of the initial public offering of mainland railway equipment manufacturer China CNR Corp Ltd is seen under-subscribed while its international portion has been three times subscribed, according to market sources.

Britain

The Telegraph

CARPHONE WAREHOUSE AND DIXONS AGREE 3.8 BLN POUND MERGER

Almost 400 million pounds was wiped off the value of Dixons Retail and Carphone Warehouse on Thursday as the proposed merger between the companies was given a rough reception by the City. (http://link.reuters.com/zed49v)

SCOTTISH INDEPENDENCE VOTE CREATING 'UNCERTAINTY' - LLOYDS

Lloyds Banking Group has warned that the consequences of Scottish independence are largely unknown, saying the bank has no plan for what would happen if the Scottish people vote to secede. (http://link.reuters.com/bud49v)

The Guardian

ASTRAZENECA AT RISK FROM PFIZER TAX AVOIDANCE PLANS, SAYS COMPANY CHIEF

Pascal Soriot, the chief executive of AstraZeneca, has stepped up his attack on the business model of Pfizer , the US drugs company stalking the UK business, and warned that the British drugs group could be damaged by Pfizer's tax avoidance plans. (http://link.reuters.com/cud49v)

EUROZONE SETBACK AFTER 'DISMAL' GROWTH FIGURES DENT TALK OF RECOVERY

The eurozone's fragile economic recovery suffered a setback in the first quarter after slower-than-expected growth as GDP data showed France and Italy flatlining and Netherlands suffering shock contraction. (http://link.reuters.com/dud49v)

The Times

MIDDLE MANAGERS SWEPT AWAY BY ASDA'S FOCUS ON CLICK AND COLLECT

Asda is to axe 4,100 jobs in middle management and hire e-commerce specialists as it expands further into online retailing. (http://link.reuters.com/fud49v)

The Independent

BANK OF ENGLAND SEES 'NO HOUSING BUBBLE'

Bank of England policymaker Ben Broadbent moved to play down fears of a housing bubble, insisting there were no signs of a dangerous boom in credit. (http://link.reuters.com/gud49v)

GOOGLE CHIEF ERIC SCHMIDT SAYS 'RIGHT TO BE FORGOTTEN' RULING HAS GOT THE BALANCE 'WRONG'

Google's Executive Chairman, Eric Schmidt, has come out against the recent 'right to be forgotten' ruling as reports claim the company is already receiving request to remove search results. (http://link.reuters.com/hud49v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Housing starts for April at 8:30--consensus up 3.6% to 980K rate
Housing permits for April at 8:30--consensus up 1.3% to 1.01M rate
U. of Michigan consumer sentiment for May at 9:55--consensus 84.5

ANALYST RESEARCH

Upgrades

AngloGold (AU) upgraded to Neutral from Sell at UBS
Bank of the Ozarks (OZRK) upgraded to Strong Buy from Outperform at Raymond James
Capella Education (CPLA) upgraded to Outperform from Market Perform at BMO Capital
Home Bancshares (HOMB) upgraded to Outperform from Market Perform at Keefe Bruyette
Insulet (PODD) upgraded to Outperform from Market Perform at Barrington
Kansas City Southern (KSU) upgraded to Buy from Neutral at BofA/Merrill
L-3 Communications (LLL) upgraded to Outperform from Neutral at Credit Suisse
National Bank of Greece (NBG) upgraded to Overweight from Neutral at JPMorgan
Protective Life (PL) upgraded to Buy from Underperform at BofA/Merrill
Prudential (PRU) upgraded to Buy from Hold at Deutsche Bank
RWE AG (RWEOY) upgraded to Buy from Neutral at Goldman
Stonegate Mortgage (SGM) upgraded to Outperform from Market Perform at Keefe Bruyette
Super Micro Computer (SMCI) upgraded to Buy from Hold at Stifel
tw telecom (TWTC) upgraded to Buy from Neutral at Citigroup
Twitter (TWTR) upgraded to Hold from Sell at Wunderlich
ViaSat (VSAT) upgraded to Outperform from Market Perform at Wells Fargo

Downgrades

Assurant (AIZ) downgraded to Underperform from Neutral at BofA/Merrill
Mechel (MTL) downgraded to Neutral from Buy at Citigroup
Nationstar (NSM) downgraded to Hold from Buy at Jefferies
Torchmark (TMK) downgraded to Neutral from Buy at BofA/Merrill
Walter Investment (WAC) downgraded to Hold from Buy at Jefferies

Initiations

AXIS Capital (AXS) initiated with an Outperform at JMP Securities
Affiliated Managers (AMG) initiated with a Buy at Deutsche Bank
Alkermes (ALKS) assumed with a Buy at Jefferies
BlackRock (BLK) initiated with a Buy at Deutsche Bank
City Office REIT (CIO) initiated with a Buy at Wunderlich
Franklin Resources (BEN) initiated with a Hold at Deutsche Bank
Invesco (IVZ) initiated with a Hold at Deutsche Bank
T. Rowe Price (TROW) initiated with a Buy at Deutsche Bank
TheStreet (TST) initiated with a Buy at B. Riley
Whiting Petroleum (WLL) assumed with a Buy at Brean Capital

COMPANY NEWS

Rackspace (RAX) hired Morgan Stanley (MS) after approach by 'multiple parties'
Nokia (NOK), NSN upgraded to BB by S&P
J.C. Penney (JCP) reported better than expected Q1 results and said it expects to be cash flow neutral this year
Berkshire Hathaway (BRK.A) disclosed an 11M share stake in Verizon (VZ)
Navidea Biopharmaceuticals (NAVB) reported that CEO Mark Pykett is stepping down
WWE (WWE) reached a multi-year deal with NBCUniversal Cable Entertainment (CMCSA)
Overland Storage (OVRL), which missed analyst's Q3 expectations, entered into merger agreement with Sphere 3D (SPIHF)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:

MAG Silver (MVG), SMART Technologies (SMT), Dillard's (DDS), Nordstrom (JWN), J.C. Penney (JCP), Autodesk (ADSK)

Companies that missed consensus earnings expectations include:

Park Electrochemical (PKE), China Mobile Games (CMGE), Canadian Solar (CSIQ), Gas Natural (EGAS), EveryWare Global (EVRY), Qunar (QUNR), Amedica (AMDA), Paycom Software (PAYC), Uroplasty (UPI), Cosi (COSI), Mirati Therapeutics (MRTX)

Companies that matched consensus earnings expectations include:

Alexco Resource (AXU), Applied Materials (AMAT)

NEWSPAPERS/WEBSITES

Technology giants (VZ, T, CMCSA, TWC, NFLX, AMZN, GOOG, FB, YHOO) publicly oppose FCC's proposed Internet rules, WSJ says
Sony (SNE) console sales exceed Microsoft (MSFT) for fourth straight month, Bloomberg says
Sony (SNE) asks top bosses to give back bonuses, NY Post reports
General Electric (GE) looking to save Alstom deal, WSJ reports
Wal-Mart (WMT) looks overvalued, Barron's says
Lead electrical engineer for Google Glass (GOOG) to leave company, TechCrunch reports

SYNDICATE

Banc of California (BANC) 5.15M share Secondary priced at $9.78
Excel Trust (EXL) files to sell 1.15M shares of common stock for holders
Jumei International (JMEI) 11.1M share IPO priced at $22.00
TrueCar (TRUE) 7.775M share IPO priced at $9.00

It seems crime pays... or "committing crimes, writing about them, having them adapated into a screenplay, and made into an oscar-winning movie" pays. Jordan Belfort, the "Wolf of Wall Street", as Bloomberg reports, expects to make more money this year than he "ever made in his best year as a broker." Having spent 22 months in jail in the 1990s, Belfort comments that 'my goal is to make north of a $100 million so I am paying back everyone this year," and adds some remarkably irresponsbible philosophy given the markets today and the world in which we are told we live in... "Greed is not good. Ambition is good, passion is good." How do we BTFD if we are not greedy?

As Bloomberg reports, Jordan Belfort, whose memoir “The Wolf of Wall Street” was turned into a film by Martin Scorsese, expects to earn more than he made as a stockbroker this year, allowing him to repay the victims of his financial fraud.

“I’ll make this year more than I ever made in my best year as a broker,” Belfort told a conference in Dubai today. “My goal is to make north of a $100 million so I am paying back everyone this year.”

 

Belfort, a motivational speaker, will use his earnings from a 45-city speaking tour in the U.S. to repay about $50 million to investors. That was his share of the fine, he said.

 

U.S. stockbroker Belfort spent 22 months in jail for money laundering and securities fraud in the 1990s after his Long Island-based Stratton Oakmont Inc. defrauded investors out of more than $200 million. That story was retold last year in a blockbuster film starring Leonardo DiCaprio.

 

“After six months of putting all the profit from the U.S. tour into an escrow account, it will go directly back to investors,” Belfort said. “Once everyone is paid back, believe me I will feel a lot better.”

 

The Securities and Exchange Commission shut down his firm in 1998 and in 2003, Belfort was convicted and sentenced to four years in jail. He now works as a motivational speaker to repay $110.4 million to a victim-compensation fund, which the government said must receive half of his income.

 

“I got greedy,” Belfort said today. “Greed is not good. Ambition is good, passion is good. Passion prospers. My goal is to give more than I get, that’s a sustainable form of success.”

Perhaps he should take the $100 million and put it all in a diversified portfolio of social media stocks? or all on black? Just don't "blow" it...

• Vietnam, China trade accusations after Vietnamese fishing boat sinks (Reuters)
• SEC Set to Spur Exchange Trading (WSJ)
• Bank of Japan quietly eyes stimulus exit (Reuters)
• Japan Risks Low Growth Even as Easing Spurs Inflation (BBG)
• Hello Japan: Bond Market Message to Fed: Your 4% Rate Outlook Is Too High (BBG)
• Malaysia, UK firm release satellite data on missing MH370 flight (Reuters)
• Fighting rages in eastern Ukraine city, dozens dead (Reuters)
• Bad Credit No Problem as Balance-Sheet Bombs Rally 94%  (BBG)
• Draghi’s Asset-Backed Drive Rouses Academic Skeptics (BBG)
• For-Profit Colleges Face Test From State, Federal Officials (WSJ)
• Boutique bank Sterne Agee imploding (AL)
• Euroskeptic election surge gives EU a headache (Reuters)
• Alarm Raised by Plan to Ease Credit Norms on U.S. Parent Loans (BBG)
• How AstraZeneca escaped Pfizer's clutches this time (Reuters)
• As His Foundation Has Grown, Gates Has Slowed His Donations (NYT)

Overnight Media Digest

WSJ

* Top U.S. securities regulators are embracing a plan designed to shift more stock trading onto exchanges and away from private trading venues operated by banks and other firms, according to people familiar with the discussions. The move, which could deliver a blow to bank trading operations, is expected to be part of a coming Securities and Exchange Commission pilot program aimed at boosting trading in the stocks of smaller companies. (http://r.reuters.com/qef69v)

* Pfizer Inc dropped its pursuit of British rival AstraZeneca Plc, leaving both drug makers to overcome aging pipelines and market pressures alone. Pfizer had been chasing AstraZeneca since November in an effort to create the world's biggest pharmaceutical company. (http://r.reuters.com/xef69v)

* Wal-Mart Stores Inc needs a more independent board in order to improve directors' handling of a protracted foreign-bribery probe and executive pay, a prominent proxy adviser said. Institutional Shareholder Services Inc, which advises big shareholders like mutual funds how to vote on corporate ballots, is concerned the company has not disclosed which, if any, of its executives might be found culpable in an investigation into alleged bribery overseas. (http://r.reuters.com/zef69v)

* Intuit Inc has agreed to buy bill-payment service Check Inc. for $360 million, according to two people familiar with the situation. The deal was signed on Friday and the two companies plan to announce it Tuesday, one of the people said. (http://r.reuters.com/buf69v)

* Federal and state officials are conducting probes into for-profit colleges over concerns that schools are marketing career-training programs that lack proper accreditation for students in certain fields, according to government agencies and regulatory filings. (http://r.reuters.com/duf69v)

FT

ECB president Mario Draghi warned that credit constraints were adding to disinflationary pressures in stressed countries, and said weak lending risks were derailing the eurozone's fledgling recovery.

Drugmaker Pfizer officially dropped its bid for UK pharmaceutical giant AstraZeneca on Monday, marking a rare failure for the U.S. company that has made a series of large acquisitions until now.

Rosneft and BP Plc signed an agreement to jointly explore for hard-to-recover oil in Russia, the first major deal for the state-run Russian oil company since the West imposed sanctions over Ukraine in March.

Swedish telecoms equipment maker Ericsson warned that lack of public sector expenditure in next generation networks was resulting in lessening returns on the development the company made in Europe, which is at the risk of falling behind other regions.

Four of Europe's 10 biggest car manufacturers including General Motors, BMW, Fiat and Hyundai would miss carbon dioxide emission reductions targets, and could face penalty according to an report by think-tank Transport & Environment.

NYT

* On the final day for Pfizer Inc to decide whether to abandon the plan, it said it did not intend to make an offer for AstraZeneca Plc. Last week, the British company rejected what Pfizer had called its final offer. The cash-and-stock bid, which valued AstraZeneca at about $119 billion, would have created the world's largest drug company. (http://r.reuters.com/vaf69v)

* In a sign of the growing potential under the federal health care law, several insurers that have been sitting on the sidelines say they will sell policies on the new exchanges in the coming year, and others plan to expand their offerings to more states. (http://r.reuters.com/waf69v)

* Martin Lipton, the superlawyer, has advised hundreds of boards of directors in the midst of crises. Now, however, Lipton is grappling with a board governance crisis of his own. As chairman of New York University's board of trustees, Lipton has been dealing with revelations that the university's much-heralded new campus in Abu Dhabi might have been the product, in part, of rights abuses of foreign laborers. (http://r.reuters.com/xaf69v)

* Bill Gates, who as the richest American has become one of the foremost advocates of philanthropy, has reduced the pace of his own giving to the Bill & Melinda Gates Foundation over the last decade. After starting the foundation with gifts of $356 million from 1994 to 1997, Gates, the co-founder of Microsoft Corp, vastly expanded it into the nation's largest with a burst of gifts totaling $24.6 billion over the next four years. Since then, however, he has dialed back this giving. (http://r.reuters.com/cef69v)

* A law that allows the government to read email and cloud-stored data over six months old without a search warrant is under attack from technology companies, trade associations and lobbying groups, which are pressing Congress to tighten privacy protections. Federal investigators have used the law to view content hosted by third-party providers for civil and criminal lawsuits, in some cases without giving notice to the individual being investigated. (http://r.reuters.com/kef69v)

Canada

THE GLOBE AND MAIL

* Canadian Prime Minister Stephen Harper is under mounting pressure to make the Supreme Court appointment process more transparent and less ideological, after revelations that four of the government's six candidates were from a court that was ultimately ruled ineligible. (http://r.reuters.com/weg69v)

* Toronto Mayor Rob Ford is on the sidelines, but the city's controversial leader remains a strong presence among the candidates who want to replace him, with contenders jockeying for position as the best choice to continue his agenda or move away from it. (http://r.reuters.com/dug69v)

Reports in the business section:

* Rogers Communications Inc's Chief Executive Guy Laurence believes a new cellular carrier would not have the ability to invest in Canada's capital-intensive wireless market and succeed. (http://r.reuters.com/fug69v)

NATIONAL POST

* The Muslim Brotherhood has established a "significant presence" in Canada, says a study released Tuesday that asks whether the government should follow the lead of the United Kingdom and launch an investigation into the group. (http://r.reuters.com/kug69v)

* Fawzi Ayoub was a hijacker, international terrorist operative and senior member of Hezbollah. He was also a naturalized Canadian citizen, but on Monday Lebanese media reported he was dead, killed in an ambush by Syrian rebels. (http://r.reuters.com/mug69v)

FINANCIAL POST

* Canada's construction industry faces a major shakeup in the wake of the proposed merger of cement makers Holcim Ltd and Lafarge SA as the country's competition watchdog eyes forced asset sales that could attract significant interest from bidders. (http://r.reuters.com/qug69v)

* Wal-Mart Stores Inc has confirmed it laid off hundreds of employees across Canada earlier this month in a move to rework its management structure. The retailer said it eliminated 750 jobs, which it says represented less than one per cent of staff, after testing a new management structure in select stores. (http://r.reuters.com/sug69v)

China

CHINA SECURITIES JOURNAL

- The insurance industry's total assets have exceeded 9 trillion yuan ($1.44 trillion) so far, sources close to the China Insurance Regulatory Commission (CIRC) said. Risk management will be a priority for the regulator for the year.

- Investigations of insider trading in the fund management industry should be formalised despite possible shocks to publicly offered funds, the newspaper said in an editorial.

- Moody's Investor Service downgraded its outlook on China's property development sector to "negative" from "stable" amid growing pessimism about the industry among foreign investors.

SHANGHAI SECURITIES NEWS

- The preferred share issuance plan by Shanghai Pudong Development Bank Co Ltd has won shareholders' approval. The fundraising is aimed at supporting its transformation into a large bank and achieving a more balanced structure involving its wholesale, retail and capital businesses.

SECURITIES TIMES

- China's central government published its plans and targets for energy saving for this year and the next. Energy-saving services will be regulated under the "negative list", which explicitly sets business boundaries and opens the gates for a wider range of unlisted companies.

21ST CENTURY BUSINESS HERALD

- New loans of China's "big four" state-owned banks have only reached 130 billion yuan as of May 25, sources said.

CHINA DAILY

- The U.S. Justice Department indicted five individuals of the People' Liberation Army, saying they had hacked into the computers of U.S. companies for the benefit of Chinese state-owned enterprises (SOEs). The act is seen as Washington's attempt to draw a fine line between spying to benefit particular companies, which it regards as illegitimate, and spying to benefit the economy, which it seems to regard as legitimate.

PEOPLE'S DAILY

- As of the first quarter of 2014, 53 SOEs have invested in 685 projects in Xinjiang, with the actual investment amount reaching 590.4 billion yuan.

Britain

The Telegraph

PFIZER BOSS IAN READ HITS BACK OVER ASTRAZENECA

(http://link.reuters.com/hud69v)

Ian Read told the Telegraph that the rules capping drug prices are discouraging investment in Britain, and are "inconsistent" with the government's apparent desire to attract research and development.

LLOYDS POISED TO LAUNCH TSB FLOAT

(http://link.reuters.com/jud69v)

Lloyds Banking Group is poised to fire the starting gun on the highly anticipated stock market flotation of TSB <IPO-TBS.L>, which will try to win the support of retail investors by giving them bonus shares.

The Guardian

VINCE CABLE VOWS GOVERNMENT WILL TACKLE ZERO-HOURS CONTRACT ABUSES

(http://link.reuters.com/kud69v)

The business secretary, Vince Cable, has said the government will tackle abuses of zero-hours contracts once a fuller picture of the number of employers using the controversial labour-hiring system becomes available.

COLES AND WOOLWORTHS URGE DEREGULATION OF RETAIL TRADING HOURS

(http://link.reuters.com/mud69v)

The supermarket giants Coles and Woolworths have called on the federal government to lead the states towards a deregulation of retail trading hours, citing bizarre rules that dictate when a shop can or cannot trade.

The Times

ASTRA PINS HOPES ON TRIALS AFTER PFIZER EXIT

(http://link.reuters.com/pud69v) Pfizer's official declaration that it had withdrawn its offer will shift the spotlight on to Pascal Soriot, the chief executive of AstraZeneca, to justify his reasons for blocking a deal as he is set to attend the unveiling of the trial results of two lung cancer treatments at the American Society of Clinical Oncology this weekend.

TSB SWEETENS THE PILL OF NO DIVIDENDS WITH FREE SHARES

Lloyds Banking Group will promise one free TSB <IPO-TBS.L> share for every 20 bought and held for a year by retail investors as it formally sets out the intention to float announcement.

Sky News

PFIZER WALKS AWAY FROM 69 BLN STG ASTRAZENECA DEAL

(http://link.reuters.com/rud69v)

U.S. firm Pfizer has confirmed it will not make another offer for British pharmaceuticals group AstraZeneca as a deadline expired for it to lodge a formal bid.

BLACKSTONE IN JOINT BID FOR FRIENDS' TAX ARM

(http://link.reuters.com/sud69v)

The private equity giant Blackstone has joined forces with a US-based specialist insurer to table a bid for the tax planning arm of Friends Life, the FTSE-100 financial services group.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Durable goods orders for April at 8:30--consensus down 0.8% for the month
S&P Case-Shiller 20-city composite index for March at 9:00--consensus up 0.7%
FHFA house price index for March at 9:00--consensus up 0.5%
Consumer confidence for May at 10:00--consensus 83.0

ANALYST RESEARCH

Upgrades

AMC Entertainment (AMC) upgraded to Buy from Neutral at B. Riley
Brooks Automation (BRKS) upgraded to Buy from Neutral at B. Riley
Cepheid (CPHD) upgraded to Buy from Hold at Needham
Cinemark (CNK) upgraded to Buy from Neutral at B. Riley
Cisco (CSCO) upgraded to Buy from Hold at Deutsche Bank
Credit Suisse (CS) upgraded to Buy from Hold at Deutsche Bank
Guidewire (GWRE) upgraded to Neutral from Sell at Citigroup
Henkel (HENKY) upgraded to Neutral from Underperform at Credit Suisse
Legacy Reserves (LGCY) upgraded to Neutral from Underweight at JPMorgan
NRG Energy (NRG) upgraded to Conviction Buy from Buy at Goldman
Office Depot (ODP) upgraded to Buy from Neutral at Goldman
Palo Alto (PANW) upgraded to Buy from Neutral at Nomura
Sherritt (SHERF) upgraded to Outperformer from Sector Performer at CIBC
Splunk (SPLK) upgraded to Outperform from Market Perform at Northland
Youku Tudou (YOKU) upgraded to Neutral from Underweight at HSBC

Downgrades

AstraZeneca (AZN) downgraded to Sell from Hold at Societe Generale
Hudbay Minerals (HBM) downgraded to Sector Performer from Outperformer at CIBC
NTELOS (NTLS) downgraded to Hold from Buy at Jefferies
NextEra Energy (NEE) downgraded to Buy from Conviction Buy at Goldman
Oiltanking Partners (OILT) downgraded to Hold from Buy at MLV & Co.
ResMed (RMD) downgraded to Underperform from Market Perform at Northland
Staples (SPLS) downgraded to Sell from Neutral at Goldman

Initiations

Aegerion (AEGR) initiated with a Sell at Goldman
Ares Management (ARES) initiated with a Neutral at Goldman
Ares Management (ARES) initiated with an Outperform at Keefe Bruyette
Ares Management (ARES) initiated with an Overweight at JPMorgan
Burger King (BKW) initiated with an Equal Weight at Morgan Stanley
Gramercy Property Trust (GPT) initiated with a Buy at BofA/Merrill
Oiltanking Partners (OILT) initiated with a Market Perform at Wells Fargo
Papa Murphy's (FRSH) initiated with a Buy at Jefferies
Papa Murphy's (FRSH) initiated with an Outperform at RW Baird
Papa Murphy's (FRSH) initiated with an Outperform at William Blair
Quotient (QTNT) initiated with a Buy at UBS
Sabre (SABR) initiated with a Buy at BofA/Merrill
Sabre (SABR) initiated with a Buy at Deutsche Bank
Sabre (SABR) initiated with a Buy at Goldman
Sabre (SABR) initiated with a Buy at Jefferies
Sabre (SABR) initiated with an Overweight at Morgan Stanley

COMPANY NEWS

Amgen (AMGN) announces FDA approval of Vectibix in combination with FOLFOX
Gentiva Health (GTIV) adopts shareholders rights plan
Pfizer (PFE) confirms it won't bid for AstraZeneca (AZN) after rejection of proposal
BioCryst (BCRX) announces positive results from OPuS-1, a trial of BCX4161
China Automotive (CAAS) announces special dividend of 18c per share
Stoneridge (SRI) to sell wiring business to Motherson Sumi Systems for $65.7M
Willis Group (WSH) acquires 75% controlling stake in Max Matthiessen for $205M

NEWSPAPERS/WEBSITES

Apple (AAPL) asks court to ban nine Samsung products, Re/code says
Bank of America (BAC) found $4B error after Fed wording change, WSJ reports
Barnes & Noble shares could double, Barron's says
Canada looks into GM (GM) crashes amid faulty switch complaints, Reuters says
Credit Swiss (CS) tax case sparks probe of 13 other banks, Bloomberg says
Google (GOOG) considering buying connected camera maker, The Information says
Intuit (INTU) to acquire Check Inc. for $360M, WSJ reports
Sears (SHLD) could drop over 50%, Barron's says
Tyson Foods (TSN) looks appealing, Barron's says
U.S. regulators back plan to shift trading onto exchanges, WSJ reports

• Yellen Concerned by Housing Slowdown She Has Scant Power to Cure (BBG)
• Because snow in Q1? Citigroup’s CFO Says Trading Revenue Could Slide 25% (BBG)
• Banks Raise Caution Flag on Trading (WSJ)
• The answer is yes: Hilsenrath asks if BOJ’s Kuroda Awakening to His Limits? (WSJ)
• Google Develops Prototype Cars for Fully Autonomous Driving (WSJ)
• Amazon Expects Lengthy Hachette Dispute (WSJ)
• Ukraine Faces Hurdles in Restoring Its Farming Legacy (NYT)
• Tencent $1 Billion Game Shows Global Hunt for Mobile Hits (BBG)
• GE offer for Alstom has improved, French official says (Reuters)
• More than 50 rebels killed as new Ukraine leader unleashes assault (Reuters)
• To Make a Killing on Wall Street, Start Meditating (BBG)

Overnight Media Digest

WSJ

* Google Inc's co-founder Sergey Brin said it has developed prototype cars for fully autonomous driving. In a promotional video, Google showed off one of the prototypes, a two-seater vehicle that resembles a gondola on wheels. It has no steering wheel, accelerator pedal or brake pedal. Instead, the car relies on its own sensors and software to do the work. (http://r.reuters.com/nan69v)

* General Electric Co is willing to partner with French government in a possible alliance, Chief Executive Jeffrey Immelt told French lawmakers Tuesday as he tried to win their support for the company's $17 billion bid for Alstom SA's power equipment business. (http://r.reuters.com/san69v)

*Pilgrim's Pride Corp swooped in with a $5.5 billion offer for Hillshire Brands Co, maker of Jimmy Dean sausage and Ball Park hot dogs, a surprise bid that could upend Hillshire's plan to expand its supermarket sway by buying Pinnacle Foods Inc. (http://r.reuters.com/van69v)

* After a turbulent few months marked by a management shake-up, lackluster performance and client withdrawals, Pacific Investment Management Co is turning to a familiar face to help soothe nervous investors. The money manager, based in Newport Beach, California, said it had rehired Paul McCulley, a former senior executive. (http://r.reuters.com/wan69v)

* Amazon.com Inc said Tuesday it does not expect a quick resolution of a contract dispute with Hachette Book Group that has led to Amazon restricting the sale of some Hachette titles. (http://r.reuters.com/xan69v)

* Congress should require data brokers to tell consumers more about how they collect and use information and give consumers greater control over their personal data, the Federal Trade Commission said on Tuesday. (http://r.reuters.com/zan69v)

FT

Google could face specially created "cyber courts" as Berlin looks at a range of mechanisms to settle disputes concerning individuals seeking to protect their privacy and search engines.

Spanish government failed to protect citizens from recent housing crash because of which many are left with heavy debts, according to a report by Human Rights Watch, an international non-governmental organization.

Britain's fraud office has launched a formal criminal investigation into GlaxoSmithKline, posing a new challenge to the drugmaker, which already faces claims of bribery in China and four other countries.

Siemens said it was preparing to make an official bid for for Alstom SA, and defeat rival offer by General Electric, in its bid to create two European leaders in power generation and rail.

M&G, the investment unit of Prudential Plc, and ING Investment Management rank among the insurers leading a push in real estate investment as both the companies pump millions into the property market.

NYT

* Restoring Ukraine's farming legacy will be crucial to the success of the country's newly elected president, Petro Poroshenko, as such efforts would go a long way toward fixing Ukraine's economy and reducing its dependence on Russia. (http://r.reuters.com/fym69v)

* The Federal Trade Commission on Tuesday called on Congress to protect consumers against the unchecked collection and sharing of their digital data by providing people with tools to view, suppress and fix their information. (http://r.reuters.com/hym69v)

* Google Inc has begun building a fleet of 100 experimental electric-powered vehicles that will dispense with all the standard controls found in modern automobiles. (http://r.reuters.com/kym69v)

* After Mohamed El-Erian's surprising departure in March, Pimco has now brought back a prominent former executive, Paul McCulley, to help the asset management firm reassure skeptical investors and bolster its intellectual credentials. (http://r.reuters.com/rym69v)

* Since 2000, the Securities and Exchange Commission has sought to ensure equal access to that commodity through a rule known as Regulation FD. The rule generally requires that if a company disclosed material information to one person, it must do so to all. Yet even with that requirement and with the flood of information that is out there, some investors still appear to be getting premier access. (http://r.reuters.com/tym69v)

* The World Bank, a famously bureaucratic institution, is undergoing its first restructuring in nearly two decades. The overhaul is intended to keep it relevant at a time when even the poorest countries can easily tap the global capital markets. (http://r.reuters.com/gen69v)

* A task force convened by the Obama administration issued the most detailed study yet of blight in Detroit on Tuesday and recommended that the city spend at least $850 million to quickly tear down about 40,000 dilapidated buildings. (http://r.reuters.com/hen69v)

Canada

THE GLOBE AND MAIL

* A candidate in the Alberta Progressive Conservative leadership race is promising to change land-use rules that have angered some rural voters. Jim Prentice told the Medicine Hat News that he would rewrite the Land Stewardship Act if he becomes premier and would be more careful about private property rights. (http://r.reuters.com/dep69v)

* Skin cancer, one of the most preventable forms of the disease, is also one of the fastest-rising in Canada, according to a new report from the Canadian Cancer Society that notes the death rate for all cancers combined continues to fall for most age groups. (http://r.reuters.com/cep69v)

Reports in the business section:

* Royal Bank of Canada, the country's largest mortgage lender, is offering real estate agents C$1,000 for referring five first-time home buyers, as competition among banks for first-time buyers has heated up. (http://r.reuters.com/fep69v)

NATIONAL POST

* Toronto Liberal Member of Parliament John McKay was secretly recorded criticizing party leader Justin Trudeau over his edict that prospective MPs must follow the party's pro-choice position on abortion. (http://r.reuters.com/qep69v)

* Councillor Doug Ford indicated on Tuesday that his brother, Toronto Mayor Rob Ford, intends to stay in the mayoral race when he returns from addiction treatment. (http://r.reuters.com/zep69v)

FINANCIAL POST

* It is becoming increasingly difficult for families to own a home in Canada and affordability is expected to get worse going forward, according to the Royal Bank of Canada. (http://r.reuters.com/kup69v)

* Canada's biggest financial institutions have agreed to voluntarily reduce service costs for those that need to save the most following discussions with a federal government eager to push its "consumers-first agenda". (http://r.reuters.com/pup69v)

China

CHINA SECURITIES JOURNAL

- Zhou Xiaochuan, governor of the People's Bank of China (PBOC), said the economy was in an "unusually intricate" situation and local branch offices needed to implement a prudent monetary policy to ensure economic stability and strengthen financial regulation.

- Song Liping, general manager of Shenzhen Stock Exchange, said the exchange would continue to promote and extend China's ChiNext board.

21st CENTURY BUSINESS HERALD

- Miao Jianming, president of China Life Insurance (Group) Co, said the company was going to get licences to start payment, securities and financial services, paving the way for the firm to become a full-fledged financial services company.

SHANGHAI SECURITIES NEWS

- Data from the China Insurance Regulatory Commission showed investments by insurers into stocks and equity funds reached 822 billion yuan ($131.6 billion) in the first four months of this year, accounting for just 10 percent of their total investment portfolio, which is a one-year low.

CHINA DAILY

- The government will release a detailed list of administrative fees for micro-sized and small enterprises as it seeks to alleviate the financial burden of a group of companies that are a source of economic dynamism, an official said on Tuesday.

SHANGHAI DAILY

- Shanghai plans to establish 8-10 smart parks with top-class technologies such as cloud computing and Big Data by 2015 as it looks to lead the sector nationwide, the city's information technology regulator said.

PEOPLE'S DAILY

- Stabilising and developing Xinjiang is the primary goal, the newspaper said in a commentary.

Britain

The Telegraph

BARCLAYS: INDEPENDENT SCOTLAND LIKELY TO GET NEW CURRENCY

(http://link.reuters.com/sam69v)

An independent Scotland would be twice as likely to adopt its own currency as continue using the pound, according to an analysis produced yesterday by Barclays for its investors.

M&S'S SWANNELL HIRED TO OVERSEE GOVERNMENT ASSET SALES

(http://link.reuters.com/tam69v)

Robert Swannell, the chairman of Marks & Spencer and City veteran, has been hired to help the Government speed up the sale of billions of pounds of state assets.

The Guardian

MORRISONS ASKS SUPPLIERS TO PAY FOR PRODUCTS TO MEET REGULATIONS

(http://link.reuters.com/vam69v)

Morrison Supermarkets Plc is asking suppliers to cover the cost of ensuring products meet regulations in the latest of a series of payment demands as the supermarket faces falling profits.

UK CINEMA CHAINS BAN ADS ON SCOTTISH INDEPENDENCE REFERENDUM

(http://link.reuters.com/ram69v)

The UK's major cinema chains have banned all adverts on the Scottish independence referendum after customers inundated them with complaints.

The Times

RIO TINTO CUTS MONGOLIAN MINING JOBS

(http://link.reuters.com/zam69v)

Rio Tinto is planning to cut about 300 jobs from its troubled project in Mongolia, further testing its turbulent relationship with the government.

TSB PARKS ITS TANK ON THE BIG BANKS' LAWN

(http://link.reuters.com/cem69v)

The chief executive of TSB Banking Group <IPO-TBS.L> declared that his company would do more to change the face of high street banking in Britain than any other challenger bank as he set out ambitious expansion plans in the wake of its 1.5 billion pound flotation next month.

Sky News

NATIONWIDE BIG WINNER FROM SEVEN-DAY SWITCH

(http://link.reuters.com/dem69v)

Britain's biggest building society Nationwide will emerge on Wednesday as one of the principal winners from a new system designed to encourage customer mobility when it discloses that it opened more than 420,000 current accounts last year.

MORTGAGE APPROVALS DECLINE FOR THIRD MONTH

(http://link.reuters.com/fem69v)

High street banks have reduced the number of mortgage approvals for the third month in a row, despite their total value reaching a six-year high. The British Bankers' Association said 12.2 billion pounds in loans were activated in April.

Fly On The Wakk 7:00 AM Market Snapshot

ECONOMIC REPORTS
No major domestic economic reports are scheduled today.

ANALYST RESEARCH

Upgrades

Auxilium (AUXL) upgraded to Buy from Neutral at MKM Partners
DreamWorks Animation (DWA) upgraded to Hold from Sell at Topeka
FormFactor (FORM) upgraded to Buy from Neutral at B. Riley
The Pantry (PTRY) upgraded to Outperform from Neutral at Macquarie
Twitter (TWTR) upgraded to Buy from Neutral at Nomura
Vince Holding (VNCE) upgraded to Buy from Hold at KeyBanc
Williams-Sonoma (WSM) upgraded to Overweight from Neutral at Piper Jaffray

Downgrades

Dollar General (DG) downgraded to Hold from Buy at Deutsche Bank
Live Nation (LYV) downgraded to Neutral from Buy at Sterne Agee
Lowe's (LOW) downgraded to Sell from Hold at Canaccord
Nautilus (NLS) downgraded to Neutral from Buy at B. Riley
Vodafone (VOD) downgraded to Hold from Buy at Berenberg

Initiations
Coca-Cola Enterprises (CCE) initiated with a Neutral at ISI Group
Delek US (DK) initiated with a Buy at BofA/Merrill
Nimble Storage (NMBL) initiated with a Neutral at Macquarie
Veeva (VEEV) initiated with an Overweight at JPMorgan
Waste Management (WM) initiated with an Outperform at Imperial Capital

COMPANY NEWS

Valeant (VRX) raises proposal for Allergan by $10.00 per share to $58.30 per share; adds new CVR related to DARPin sales which would provide up to approximately $25.00 per share of additional value
Valeant (VRX) to sell filler, toxin assets to Nestle (NSRGY) for $1.4B in cash
LoJack (LOJN) CFO Donald Peck to leave the company; Casey Delaney named Acting CFO
PetroLogistics (PDH) agrees to be acquired by Flint Hills for $14.00 per unit 
Sanofi (SNY), Eli Lilly announce licensing agreement for Cialis OTC
Workday (WDAY) sees Q2 revenue $173M-$178M, consensus $171.5M
Qihoo 360 (QIHU) sees Q2 revenue $300M-$305M, consensus $270.18M
MiMedx (MDXG) raises lower end of Q2 revenue view to $22.5M-$23.5M from $21.5M-$23.5M
FormFactor (FORM) raises Q2 revenue guidance to $65M-$69M from $62M-$66M
Wet Seal (WTSL) sees Q2 adjusted EPS (9c)-(12c), consensus (4c)

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Toll Brothers (TOL), Seadrill (SDRL), Qihoo 360 (QIHU), Workday (WDAY)

Companies that missed consensus earnings expectations include:
America's Car-Mart (CRMT)

Companies that matched consensus earnings expectations include:
Wet Seal (WTSL)

NEWSPAPERS/WEBSITES

Apple (AAPL) expected to announce purchase of Beats for $3B this week, NY Post says
Broadcom (BRCM) extends market share to 49% in worldwide STB market, DigiTimes says
Facebook (FB) asks for EU review of WhatsApp deal, WSJ reports
GE (GE) sweetens bid for Alstom with job pledge, Reuters says
Google (GOOG) unveils self-driving car without steering wheel, Re/code reports
Microsoft (MSFT) CEO says not selling search to Yahoo, Re/code reports
Pfizer (PFE) looks like a buy after dropping bid for AstraZeneca, Barron's says
Xerox (XRX) beats out HP for $500M NY Medicaid contract, Bloomberg says

SYNDICATE

3D Systems (DDD) announces offering of 5.95M shares of common stock
ARAMARK (ARMK) launches 20M share common stock offering for holders
BioCryst (BCRX) files to sell $100M in common stock
Brookdale (BKD) announces secondary offering by affiliates of Fortress Investment
Cache (CACH) commences public offering of $14M of common stock
Health Care REIT (HCN) files to sell 1.8M shares of common stock
Installed Building (IBP) files to sell 8.1M shares of common stock for holders
Rexnord (RXN) launches 15M share common stock offering for holders
Strategic Hotels (BEE) commences 34M share common stock offering

• Ukraine Rebels Outfox Army to Dent Poroshenko Troop Goal (BBG)
• Russia Withdraws Most of Forces From Ukraine Border: U.S. (BBG)
• Super-Size Me! China’s ’Mini’ Stimulus Starts Expanding (BBG)
• Option B: The blueprint for Thailand's coup (Reuters)
• Big investors replace banks in $4.2tn repo market (FT)
• Draghi Shields Catalan Independence Bid From Market (BBG)
• U.S. companies seek cyber experts for top jobs, board seats (Reuters)
• Parsley CEO Emerges as One of Youngest U.S. Billionaires (BBG)
• SpaceX unveils sleek spaceship to fly U.S. astronauts (Reuters)
• U.K. House Prices Rise as Consumer Optimism Improves (BBG)
• Aging Swiss Face Pension Funding Dilemma on Immigration (BBG)
• Siemens to Remove 11,600 Positions as Company Cuts Costs (BBG)

Overnight Media Digest

WSJ

* Tyson Foods Inc unleashed a $6.1 billion bid for Hillshire Brands Co, the maker of Jimmy Dean sausage and Ball Park hot dogs, setting up a heavyweight battle with Brazilian rival JBS SA for one of the juiciest remaining assets in the meat industry. (http://r.reuters.com/vyc79v)

* Former Microsoft Corp chief Steve Ballmer is first in line to buy the L.A. Clippers with a $2 billion bid for the team, according to people familiar with the process, an offer that would triple the record for an NBA franchise. (http://r.reuters.com/xyc79v)

* KPMG LLP is going long on the market for hedge-fund services. The New York accounting firm on Thursday agreed to buy Rothstein Kass, a New Jersey firm that caters to hedge funds and other alternative investment firms. Buying Rothstein Kass would make KPMG the largest auditor of hedge funds based on client numbers. (http://r.reuters.com/bad79v)

* Ford Motor Co on Thursday added to the year's massive surge in auto-safety recalls, calling back 1.38 million vehicles in North America for repairs, some of which it previously had ruled out requiring a change. (http://r.reuters.com/fad79v)

* Twitter Inc's senior vice president of engineering, Christopher Fry, is stepping down effective Thursday. Fry will keep an advisory role at Twitter, the company said in a filing with the Securities and Exchange Commission. No reason was given for the move. (http://r.reuters.com/gad79v)

* The U.S. has added about 650,000 factory jobs since their numbers rebounded after the recession, putting manufacturing workers at 12.1 million and reversing a long decline in such jobs. But uneven growth has created regional disparities in the nation's overall economic recovery. (http://r.reuters.com/had79v)

FT

Google bowed to European Court of Justice's decision on the "right to be forgotten", and said the ruling risked damaging the next generation of internet start-ups and empowered repressive governments looking to restrict online communication.

Britain's Office for National Statistics report said that sales of illegal drugs and sexual services add around 10 billion pounds ($16.7 billion) to Britain's economic activity each year, making up just under 1 percent of total economic output.

Mediobanca has appointed former Barclays Capital executive Francesco Canzonieri as the Italian investment bank looks to reposition itself in Europe.

John Mack, a former chief executive and chairman of Morgan Stanley, has decided to leave the board of Russia's top oil producer, Rosneft, the Kremlin-controlled company said on Thursday.

The Italian government said it planned to seek 1.2 billion euros ($1.63 billion) in damages from two of the world's biggest drug companies - Novartis AG and Roche Holdings - following a ruling by the country's antitrust authority that their policies had been detrimental to Italy's national health service.

NYT

* As one of the most moribund housing markets in Europe, Spain has become a magnet for global bargain hunters. Real estate prices are down as much as 50 percent from their peak during a housing bubble, and investors from Asia to the United States and Britain are flocking to Spain to try to catch the uptick. (http://r.reuters.com/zuc79v)

* A recent court ruling in Europe has accelerated requests that Internet search companies expunge individuals' data. Once a contested item is online, however, the genie will not easily go back in the bottle. (http://r.reuters.com/cyc79v)

* Two health care advocacy groups filed a complaint against CoventryOne, Cigna Corp, Humana Inc and Preferred Medical Plan for what they said was discrimination against people with H.I.V. or AIDS by requiring them to pay high out-of-pocket costs for drugs to treat H.I.V., including generic medications, in Florida.(http://r.reuters.com/dyc79v)

* The United States economy contracted at an annual rate of 1 percent earlier this year, the first quarterly decline in three years. (http://r.reuters.com/kyc79v)

* Kevin Reilly is stepping down as head of entertainment programming at Fox network after three consecutive years of steep declines in ratings for "American Idol", a show crucial to the network's profits. (http://r.reuters.com/jyc79v)

* Some colleges are offering a real-world experience of philanthropy by requiring students to investigate nonprofit organizations and give them a portion of grant money. (http://r.reuters.com/myc79v)

Canada

THE GLOBE AND MAIL

* Canadian Prime Minister Stephen Harper told The Globe and Mail in an interview that family planning is an essential part of Canada's efforts to improve maternal and child health, but abortion remains too divisive to be included in that package. (http://r.reuters.com/pef79v)

* Alberta's Education Minister Jeff Johnson is looking to address "shortcomings" in the teacher disciplinary process after he overturned suspensions by the union and instead banned four teachers - including two in cases involving sexual misconduct - from ever working in the classroom again. (http://r.reuters.com/sef79v)

Reports in the business section:

* The Joslyn oil sands mine has been shelved indefinitely, a result of rising industry costs that made the C$11 billion project financially untenable. French energy powerhouse Total SA , along with its partners in the Joslyn north oil sands project, unanimously decided to put the project on hold because of rising cost pressures across the entire energy industry, said Andre Goffart, the head of Total's Canadian division. (http://r.reuters.com/zef79v)

NATIONAL POST

* The C$3.5 billion in new funding for child and maternal health promised by Canadian Prime Minister Stephen Harper Thursday will pay for several life-saving measures, including vaccines, training midwives, vitamin A supplements - and birth certificates. (http://r.reuters.com/duf79v)

* The Speaker of the House of Commons Andrew Scheer says neither he nor his office was consulted about whether the New Democratic Party could use taxpayer funds to pay staff to work in "satellite" offices outside Ottawa. (http://r.reuters.com/juf79v)

FINANCIAL POST

* Decision day is approaching for one of the most important moves of Canadian Prime Minister Stephen Harper's political career - whether to approve the Northern Gateway pipeline - and there is no easy way forward. (http://r.reuters.com/quf79v)

* Despite years of public outrage over lavish executive compensation and regulatory measures to curb it, the pace of CEO pay continues to skyrocket to record highs, especially in the United States. In Canada, CEO pay is an equally a divisive issue although on paper the numbers seem less eye-popping. (http://r.reuters.com/suf79v)

China

CHINA SECURITIES JOURNAL

- State Grid Corp of China, the country's largest power distributor, said it would allow non-state capital for the construction of power distribution network and charging infrastructure for electric cars, the third state-owned monopoly in the energy sector to introduce private capital following PetroChina Co Ltd and China Petroleum & Chemical Corp.

SECURITIES TIMES

- The General Armament Department of the People's Liberation Army said it supports the participation of private companies in research, production and maintenance of the army's armament. It will provide preferential policies for private companies such as simplifying the censorship process and establishing online purchase platforms, sources told the paper.

- The Shanghai Stock Exchange has submitted a plan for launching non-ferrous metal futures options to the regulator and trading could start as early as this year, its Vice-President, Ye Chun, said at the Shanghai Derivatives Market Forum on Thursday.

PEOPLE'S DAILY

- Party cadre in Xinjiang should focus their work on creating a strong identity of the motherland and Chinese culture to maintain long-term social stability in the province, the paper which acts as a party mouthpiece, said in an editorial.

Britain

The Telegraph

DRUGS AND PROSTITUTION ADD 10 BLN STG A YEAR TO UK ECONOMY

(http://link.reuters.com/jac79v)

Prostitution and illegal drugs are contributing around 10 billion pounds a year to the British economy, according to data by the Office for National Statistics.

RUDDERLESS CENTRICA NEEDS TO CHANGE TACK, LEADING ANALYST WARNS

(http://link.reuters.com/kac79v)

A "rudderless" Centrica should overhaul its strategy and stop trying to be "a poor man's BG Group", a leading analyst warned on Thursday after the energy giant confirmed that British Gas boss Chris Weston had resigned.

The Guardian

BANK OF ENGLAND DIRECTOR DEFENDS QE AND LOW INTEREST RATES

(http://link.reuters.com/mac79v)

Britain would be a significantly poorer country without deep cuts in interest rates and the Bank of England's emergency injection of 375 billion pounds into the economy through its controversial quantitative easing programme, Andrew Haldane, Bank of England's executive director for financial stability, has said.

FOOTBALL WORLD CUP TEAM WORKS ON KEEPING BRITAIN'S KETTLES BOILING

(http://link.reuters.com/nac79v)

Managers at the National Grid are trying to assess what extra power might be needed to cope with a surge in electricity demand as kettles are brewed and lights turned on during England's opening and late-night game against Italy.

The Times

BUSINESS LENDING SLUMPS DESPITE PRESSURE BY BANK

(http://link.reuters.com/pac79v)

Corporate lending by Britain's biggest banks collapsed this year, dealing a crushing blow to policymakers' recent efforts to improve the supply of credit for businesses. Loans made through the Bank of England's Funding for Lending Scheme fell by £2.7 billion in the three months to April.

TUNGSTEN FINALLY SEALS 30-MLN-STG BANK TAKEOVER

(http://link.reuters.com/qac79v)

Edi Truell, the founder and chief executive of Tungsten Corp , announced he had at last succeeded in buying First International Bank of Israel, more than seven months after announcing plans for the deal.

Sky News

EX-RBS CHIEF HOURICAN EYES LONDON BANK FLOAT

(http://link.reuters.com/rac79v)

A London share listing for Bank of Cyprus is one of a range of options that will be considered by John Hourican, the former boss of Royal Bank of Scotland's investment banking arm, who took over as its chief executive last October.

TESCO SIGNS DEAL FOR CHINA JOINT VENTURE

(http://link.reuters.com/sac79v)

Britain's biggest supermarket chain Tesco Plc has signed a partnership deal to form China's biggest food retailer. The joint venture will see Tesco combine its 131 outlets with China Resources Enterprise's Vanguard business that already has 2,986 stores

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Personal income for April at 8:30--consensus up 0.3% for the month
Personal spending for April at 8:30--consensus up 0.2% for the month
Chicago PMI for May at 9:45--consensus 61.0
University of Michigan consumer confidence for May at 9:55--consensus 82.5

ANALYST RESEARCH

Upgrades

AmSurg (AMSG) upgraded to Strong Buy from Market Perform at Raymond James
Avery Dennison (AVY) upgraded to Overweight from Neutral at JPMorgan
Bank of Nova Scotia (BNS) upgraded to Outperformer from Sector Performer at CIBC
Exelon (EXC) upgraded to Hold from Underperform at Jefferies
LifePoint Hospitals (LPNT) upgraded to Buy from Neutral at Mizuho
Mattress Firm (MFRM) upgraded to Buy from Neutral at Longbow
Telephone and Data (TDS) upgraded to Equal Weight from Underweight at Morgan Stanley

Downgrades

Alaska Air (ALK) downgraded to Hold from Buy at Stifel
Gruma (GMK) downgraded to Hold from Buy at Deutsche Bank
Infoblox (BLOX) downgraded to Hold from Buy at Deutsche Bank
Infoblox (BLOX) downgraded to Market Perform from Outperform at William Blair
Infoblox (BLOX) downgraded to Neutral from Buy at Goldman
Infoblox (BLOX) downgraded to Sector Perform from Outperform at Pacific Crest
OmniVision (OVTI) downgraded to Underperform from Market Perform at Raymond James
ReneSola (SOL) downgraded to Neutral from Buy at Roth Capital
Royal Bank of Canada (RY) downgraded to Sector Performer from Outperformer at CIBC

Initiations

Array BioPharma (ARRY) initiated with a Buy at Cantor
AtriCure (ATRC) initiated with a Buy at Stifel
BB&T (BBT) initiated with a Neutral at Sterne Agee
Comerica (CMA) initiated with a Buy at Sterne Agee
Eaton Vance (EV) initiated with an Equal Weight at Evercore
Fifth Third Bancorp (FITB) initiated with a Buy at Sterne Agee
KEYW (KEYW) initiated with a Buy at Drexel Hamilton
KeyCorp (KEY) initiated with a Neutral at Sterne Agee
M&T Bank (MTB) initiated with a Neutral at Sterne Agee
Matrix Service (MTRX) initiated with a Buy at Stifel
PNC Financial (PNC) initiated with a Buy at Sterne Agee
Preferred Apartment (APTS) initiated with a Buy at MLV & Co.
SunTrust (STI) initiated with a Buy at Sterne Agee
U.S. Bancorp (USB) initiated with a Neutral at Sterne Agee
ViaSat (VSAT) initiated with a Hold at Drexel Hamilton
Waddell & Reed (WDR) initiated with an Equal Weight at Evercore
Zions Bancorp (ZION) initiated with a Neutral at Sterne Agee

COMPANY NEWS

Microsoft (MSFT) and salesforce.com (CRM) announced a strategic partnership to create new solutions that connect salesforce.com's customer relationship management apps and platform to Microsoft Office and Windows so customers can be more productive
Mosaic (MOS) said CEO Prokopanko to take anticipated medical leave, named CFO Stranghoener as interim CEO
OmniVision (OVTI) reported better than expected Q4 resulst and guided Q1 above expectations
Infoblox (BLOX) guided below analyst estimates for Q4 and announcedthat CEO Robert Thomas will step down
Retrophin (RTRX) announced a U.S. license agreement with Mission Pharmacal for Thiola and raised its FY14, FY15 revenue views
Express (EXPR) said it will close 50 stores over the next 36 months

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Big Lots (BIG), OmniVision (OVTI), Avago (AVGO), Nimble Storage (NMBL), Guess (GES), Infoblox (BLOX), Lionsgate (LGF), Splunk (SPLK), Veeva (VEEV), Pacific Sunwear (PSUN)

Companies that missed consensus earnings expectations include:
QAD Inc reports Q1 EPS (1c), Annie's (BNNY), Exa Corp. (EXA), Esterline (ESL), Express (EXPR)

Companies that matched consensus earnings expectations include:
Bona Film (BONA), Violin Memory (VMEM)

NEWSPAPERS/WEBSITES

Microsoft (MSFT) could launch smartwatch as early as this summer, Forbes reports
Amazon Prime (AMZN) to launch music streaming service, Buzzfeed reports
DOJ seeks to fine BNP Paribas (BNPQY) over $10B for sanctions violations, WSJ says
Wells Fargo (WFC) settles securities lending suit by paying $62.5M, Reuters reports
Google (GOOG) to bow to EU's privacy ruling, FT reports
Boeing (BA) expects defense sales to stay flat for next five years, WSJ reports
Netflix (NFLX) says 'few people' using Facebook (FB) auto-sharing feature, Re/code reports
Zoetis (ZTS) could climb 25%, Barron's says

SYNDICATE

ARAMARK (ARMK) 20M share Secondary priced at $25.50
Caesarstone (CSTE) 5.5M share Secondary priced at $45.50
Cancer Genetics (CGIX) files $100M mixed securities shelf
Crossroads Systems (CRDS) files to sell 2.98M shares of common stock for holders
Glori Energy (GLRI) files to sell 27.24M shares of common stock for holders
Glu Mobile (GLUU) files to sell common stock
Hyatt Hotels (H) files to sell 15.14M shares of Class A common stock for holders
RSP Permian (RSPP) files to sell 8M shares of common stock for holders

Did you hear the one about the Vegas gambler, the Pro golfer, and the Wall Street insider? Straight off the pages of some Hollywood script, the Wall Street Journal reports that Federal investigators are pursuing a major insider-trading probe involving finance, gambling and sports, examining the trading of investor Carl Icahn, golfer Phil Mickelson and Las Vegas bettor William "Billy" Walters. All three men have denied any investigations or "no comment"-ed about "well timed" stock trades in Clorox in 2011 - around the time Icahn made a $10.2bn bid for the company. Mr. Walters and Mr. Mickelson, 43, play golf together; and rather comedically, Mr. Icahn said he didn't know who Mr. Mickelson was...?

Via The Wall Street Journal,

The Federal Bureau of Investigation and the Securities and Exchange Commission are examining whether Mr. Mickelson and Mr. Walters traded illicitly on nonpublic information from Mr. Icahn about his investments in public companies, people briefed on the probe said.

 

Investigators are examining whether over the past three years Mr. Icahn tipped Mr. Walters—famous in Las Vegas for his sports-betting acumen—about potentially market-moving investments by Mr. Icahn's company.

 

The FBI and SEC are examining whether Mr. Walters on at least one occasion passed a tip on to Mr. Mickelson, these people said, and are studying the two men's trading patterns.

The denials were quick to come...

"We do not know of any investigation,"Mr. Icahn said on Friday. "We are always very careful to observe all legal requirements in all of our activities." The suggestion that he was involved in improper trading, he said, was "inflammatory and speculative."

 

...

 

"Phil is not the target of any investigation. Period," said a lawyer for Mr. Mickelson,

 

...

 

When asked to comment about the investigation, Mr. Walters, reached by phone on Friday, said, "I don't have any comment about anything," and then hung up.

They kinda sorta know each other... kinda...

Mr. Icahn met Mr. Walters, 67, through a mutual acquaintance when Mr. Icahn's company owned the Stratosphere Hotel in Las Vegas. Mr. Icahn bought the Stratosphere in 1998 and sold it along with several other properties for $1.2 billion in 2008.

 

The two struck up a friendship. Mr. Icahn was once an avid poker player and enjoys betting on football games. The two have spoken about stocks.

 

Mr. Walters and Mr. Mickelson, 43, play golf together, said people familiar with their relationship. Sometimes Mr. Walters has suggested stocks for Mr. Mickelson to consider buying, one of the people said.

 

Mr. Mickelson, who has one of the most loyal followings of top professional golfers, has won the prestigious Masters three times.

 

Mr. Icahn said he didn't know who Mr. Mickelson was.

It seems the trades in question are focused on Clorox in 2011... (and also Dean Foods)

The government investigation began three years ago after Mr. Icahn accumulated a 9.1% stake in Clorox in February 2011, said the people briefed on the probe. On July 15, 2011, he made a $10.2 billion offer for Clorox that caused the stock to jump.

 

Well-timed trading around the time of his bid caught the attention of investigators, who began digging into the suspicious trading in Clorox stock, the people familiar with the probe said.

 

 

...

 

The investigators expanded their probe to look at trading patterns by Mr. Walters and Mr. Mickelson relating to Dean Foods Co. , said the people briefed on the probe. The FBI, following its approach to Mr. Mickelson on Thursday, expressed an interest in his trading in Dean Foods, a person familiar with the situation said.

We are sure somewhere Bill Ackman is laughing his ass off...

Cue CNBC defense... and Icahn's twitter feed seems awkwardly quiet on the matter

• At least 74 dead in crashes similar to those GM linked to faulty switches (Reuters)
• Obama Calls for $1 Billion Europe Security Fund; Will Increase U.S. Military Presence in Eastern Europe (WSJ)
• Euro Inflation Slowing More Than Forecast Pressures ECB (BBG)
• China accelerates as euro zone stumbles (Reuters)
• Russia says Ukraine situation worsening, submits U.N. resolution (Reuters)
• Secondary Sales Squeeze Investors (WSJ)
• Barclays Said to Start Cutting Jobs in Investment Banking Unit (Bloomberg)
• Backlash Grows on Release of Sgt. Bowe Bergdahl in Taliban Prisoner Swap (WSJ)
• For fallen soldiers' families, Bergdahl release stirs resentment (Reuters)
• PIMCO's Gross stares at record outflow (Reuters)
• China Builds Sulawesi Smelters as Ore Ban Cuts Jobs (BBG)
• Toilet Shortage Fuels India Rape as Women Are Prey (BBG)
• Bank of America Says Mistake Inflated Reported Size of Dark Pool (BBG)
• Six shot at Chicago laundry facility (Reuters)
• Norway Oil Riches at Stake as Political Brinkmanship Rules (BBG)
• Ex-Bankers Upgrade the Good Life as Violin Pools Beckon (BBG)

Overnight Media Digest

WSJ

* The Phoenix VA Health Care System, at the heart of the crisis at the Department of Veterans Affairs, is among a number of VA hospitals that show significantly higher rates of mortality and dangerous infections than the agency's top-tier hospitals, internal records show. (http://r.reuters.com/xus79v)

* Two years after three major book publishers settled a major civil antitrust lawsuit with the federal government, the Justice Department has gone back to the publishers asking about any recent pricing discussions they may have had with others in the industry, say people familiar with the situation. (http://r.reuters.com/mes79v)

* New federal caps on carbon emissions unveiled by the Environmental Protection Agency on Monday would force sweeping changes in the U.S. electric system but wouldn't deliver the knockout blow to coal that mining companies and some power producers had feared. The proposed regulations give both states and utilities credit for reductions they already have made, including moving from coal to more natural gas and deploying renewable energy. (http://r.reuters.com/cus79v)

* Pilgrim's Pride Corp raised its offer for Hillshire Brands Co by more than $1 billion, according to people familiar with the matter. The new offer from Pilgrim's, a unit of Brazilian meat giant JBS SA, values the Chicago-based meats and desserts company at $55 a share, or more than $6.7 billion. (http://r.reuters.com/mur79v)

* United States Steel Corp said it would temporarily close plants in Texas and Pennsylvania and blamed illegally-priced imports, raising the volume on trade disputes with China and South Korea. The steel-maker's decision to close its plants will affect 260 workers. (http://r.reuters.com/fus79v)

* A dozen companies including Google Inc, J. Crew Group Inc, and Deere & Co acknowledged they or their suppliers may have obtained metals from mines in a region known to use mining to fund armed militias, according to filings with the Securities and Exchange Commission. (http://r.reuters.com/jus79v)

* The Pentagon on Monday awarded Lockheed Martin Corp a $915 million contract for the first phase of its Space Fence, a radar system that would track more of the fast-growing field of debris in space that threatens satellites and manned spacecraft. (http://r.reuters.com/pus79v)

* Live Nation Entertainment Inc's Ticketmaster agreed to a tentative settlement in a 2003 class action lawsuit that, if approved, would offer to issue roughly $400 million in credit to 50 million ticket buyers. (http://r.reuters.com/rus79v)

* Activist investor William Ackman and Valeant Pharmaceuticals International Inc shifted their strategy yet again as they looked to pressure Allergan Inc on Monday to succumb to a $52.7 billion takeover. Ackman will now seek a more definitive vote to throw out a majority of Allergan's board. (http://r.reuters.com/zus79v)

* The U.S. Supreme Court on Monday declined to make it easier to hold companies liable for encouraging others to commit patent infringement. The ruling, which came in patent litigation between Internet services companies Akamai Technologies Inc and Limelight Networks Inc restored prior legal rules that were loosened when a U.S. appeals court sided with Akamai in 2012. (http://r.reuters.com/cys79v)

* Patients with the skin cancer melanoma, who received drugs from Bristol-Myers Squibb Co and Merck & Co Inc , have survived longer than other cancer patients. Doctors say the outcomes were impressive because until recently, most patients with advanced melanoma could be expected to live for less than a year. (http://r.reuters.com/fys79v)

* The Federal Reserve is hiring Thomas Sullivan, who served as Connecticut Insurance Commissioner during the financial crisis, to lead its oversight of big insurance firms. Sullivan will lead oversight of some of the nation's largest insurers and represent the Fed in global discussions about rules for the industry. (http://r.reuters.com/gys79v)

FT

U.S. private equity firm KKR & Co LP has shuttered its $510 million equities hedge fund a mere three years after roping in a group of former Goldman Sachs proprietary traders to run it.

European private equity firms Montagu and Astorg are to buy back French diagnostics company Sebia four years after selling it to private equity group Cinven, highlighting a scarcity of buyout opportunities in Europe.

British interdealer broker Tullett Prebon is in advanced talks to appoint a successor to Chief Executive Terry Smith. Former Nomura and Lehman Brothers executive John Phizackerley is the leading contender, two sources said.

Bank of America Merrill Lynch has poached UK banking industry veteran Tim Waddell from rival UBS to be its new vice-chairman of global corporate and investment banking for Europe, the Middle East and Africa.

Global security company G4S is under further pressure after a British government-funded watchdog agreed to investigate its activities in Israel and the occupied Palestinian territories.

NYT

* Enormous amounts of capital investment - up to $2.5 trillion a year - will be needed to supply the world's energy needs through 2035, according to a report released Monday by the International Energy Agency, the intergovernmental organization based in Paris. And even that amount of investment would not eliminate many of the issues the industry faces. (http://r.reuters.com/ves79v)

* Facing the prospect of a guilty plea in the United States, the giant French bank BNP Paribas SA, which is suspected of doing business with Sudan and other countries blacklisted by the United States, has enlisted the support of a powerful ally: its own government, including top regulators and even the French president. (http://r.reuters.com/ces79v)

* From the moment it was announced, the $53 billion joint bid for Allergan, the maker of Botox, made by Valeant Pharmaceuticals and the hedge fund manager William Ackman, was highly unconventional. In the last week, the joint bid has evolved from an already unusual deal into one of the most confounding takeover attempts in recent memory. (http://r.reuters.com/ses79v)

* Pilgrim's Pride has raised its takeover bid for Hillshire Brands to $55 a share, people briefed on the matter said, turning up the heat in a battle over the maker of Jimmy Dean Sausages and Ball Park hot dogs. (http://r.reuters.com/kes79v)

* The Subway restaurant chain is taking a foot-long approach to original online video programming, sponsoring a second web series and considering a renewal for its first entry into the growing field. Subway is to announce on Tuesday that it will sponsor an original scripted web comedy series called "Summer With Cimorelli," featuring six singing sisters whose pop music has become popular through YouTube. (http://r.reuters.com/wes79v)

* Authorities in China have made Google Inc's services largely inaccessible in recent days, a move most likely related to the government's broad efforts to stifle discussion of the 25th anniversary of the crackdown on pro-democracy demonstrators in Tiananmen Square on June 3 and 4, 1989. In addition to Google's search engines being blocked, the company's products, including Gmail, Calendar and Translate, have been affected. (http://r.reuters.com/sus79v)

* The Seattle city council went where no big-city lawmakers have gone before on Monday, raising the local minimum wage to $15 an hour, more than double the federal minimum, and pushing Seattle to the forefront of urban efforts to address income inequality.(http://r.reuters.com/nus79v)

Canada

THE GLOBE AND MAIL

* The union representing Ontario's provincial police has released two ads targeting Progressive Conservative Leader Tim Hudak, a first in its 60-year history. The 15-second TV ads feature a voice-over saying Hudak will tear up the union's contracts, which would lead to "labor strife and extensive litigation." (http://r.reuters.com/wyt79v)

* Canadian Prime Minister Stephen Harper will leave for Europe this week to discuss the fate of Ukraine. However, he will be dogged by questions over why Ottawa has failed to finalize a multibillion-dollar free-trade agreement Canada and the European Union announced more than seven months ago. (http://r.reuters.com/bav79v)

Reports in the business section:

* Sotheby's International Realty Canada is planning to double its presence in Calgary, a testament to the growing number of luxury properties that are selling in the city. Sotheby's opened its first office in Calgary less than two years ago, with about 20 real estate agents. It now wants to grow its team to close to 60 people. (http://r.reuters.com/cav79v)

NATIONAL POST

* Cities across Canada have launched an effort to preserve door-to-door mail delivery, even as the first cuts loom this fall. Canada Post announced last December that it would phase out door-to-door delivery, bringing in annual savings of $500 million. Since then, over 70 municipalities have joined together in opposing the measure. (http://r.reuters.com/vav79v)

* Canadian Prime Minister Stephen Harper ignored the federal government selection committee's nominee Lisa Campbell and chose Daniel Therrien as the next privacy commissioner. National Democratic Party leader Tom Mulcair has sent a letter to the government warning that Therrien will face conflicts since he helped establish controversial information-sharing arrangements with the United States that the previous privacy commissioner criticized. (http://r.reuters.com/bev79v)

FINANCIAL POST

* Canada and Mexico are working together to boost oil and gas production. A high-level delegation from Mexico was in Calgary on Monday to invite Canadian companies to take advantage of its sweeping energy reforms. (http://r.reuters.com/gev79v)

* Sentry Investments Inc has launched a proxy fight to overhaul Timmins Gold Corp's board, a relatively unique situation that experts believe could become more common in the future. Sentry said it is calling for change after Vancouver-based Timmins ignored shareholder requests to allow potential acquirers to conduct due diligence. (http://r.reuters.com/pev79v)

China

SHANGHAI SECURITIES

- The government's decision last Friday to lower the reserve requirement for more banks to shore up China's economic growth does not mean it was easing monetary policy, economists say.

- China's economy growth will not rebound sharply even though it posted over the weekend that its official Purchasing Managers' Index rose to 50.8 in May from April's 50.4, better than the market had expected, analysts say.

CHINA SECURITIES JOURNAL

- The Shanghai Stock Exchange adjusted the components of its main blue-chip stock index, the SSE180, to include 18 new firms, such as the newly listed Shaanxi Coal Industry Co Ltd .

- With another 20 firms publishing their draft share issue prospectuses on the China Securities Regulatory Commission website over the weekend, the total number of companies that have published such prospectuses as part of their initial public offering process has reached 430.

CHINA DAILY

- The persistent existence and rampancy of cult activities in China reveals failures in education and administration, an editorial by this official newspaper said after the murder of a woman at a fastfood restaurant in China last week sparked a national outcry as it was revealed she was beaten to death for refusing to give her telephone number to members of a banned religious group.

SECURITIES TIMES

- China Vanke Co Ltd said a Shenzhen-based financial firm representing 1,320 of Vanke's employees has bought Vanke shares worth a combined 723 million yuan ($116 million) over the past three trading days.

PEOPLE'S DAILY

- Asia must guard against Cold War-like solutions that result in division, and those countries hoping to use military alliances to strike balance should abandon Cold War thinking, a commentary by this ruling Communist Party of China's newspaper said after China, Japan and the United States exchanged harsh words at an Asian Security meeting in Singapore over the weekend.

Britain

* Enormous amounts of capital investment - up to $2.5 trillion a year - will be needed to supply the world's energy needs through 2035, according to a report released Monday by the International Energy Agency, the intergovernmental organization based in Paris. And even that amount of investment would not eliminate many of the issues the industry faces. (http://r.reuters.com/ves79v)

* Facing the prospect of a guilty plea in the United States, the giant French bank BNP Paribas SA, which is suspected of doing business with Sudan and other countries blacklisted by the United States, has enlisted the support of a powerful ally: its own government, including top regulators and even the French president. (http://r.reuters.com/ces79v)

* From the moment it was announced, the $53 billion joint bid for Allergan, the maker of Botox, made by Valeant Pharmaceuticals and the hedge fund manager William Ackman, was highly unconventional. In the last week, the joint bid has evolved from an already unusual deal into one of the most confounding takeover attempts in recent memory. (http://r.reuters.com/ses79v)

* Pilgrim's Pride has raised its takeover bid for Hillshire Brands to $55 a share, people briefed on the matter said, turning up the heat in a battle over the maker of Jimmy Dean Sausages and Ball Park hot dogs. (http://r.reuters.com/kes79v)

* The Subway restaurant chain is taking a foot-long approach to original online video programming, sponsoring a second web series and considering a renewal for its first entry into the growing field. Subway is to announce on Tuesday that it will sponsor an original scripted web comedy series called "Summer With Cimorelli," featuring six singing sisters whose pop music has become popular through YouTube. (http://r.reuters.com/wes79v)

* Authorities in China have made Google Inc's services largely inaccessible in recent days, a move most likely related to the government's broad efforts to stifle discussion of the 25th anniversary of the crackdown on pro-democracy demonstrators in Tiananmen Square on June 3 and 4, 1989. In addition to Google's search engines being blocked, the company's products, including Gmail, Calendar and Translate, have been affected. (http://r.reuters.com/sus79v)

* The Seattle city council went where no big-city lawmakers have gone before on Monday, raising the local minimum wage to $15 an hour, more than double the federal minimum, and pushing Seattle to the forefront of urban efforts to address income inequality.(http://r.reuters.com/nus79v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Factory orders for April at 10:00--consensus up 0.5%

ANALYST RESEARCH

Upgrades

BRF S.A. (BRFS) upgraded to Buy from Neutral at Goldman
China Mobile (CHL) upgraded to Buy from Neutral at Nomura
Devon Energy (DVN) upgraded to Outperform from Market Perform at Wells Fargo
East West Bancorp (EWBC) upgraded to Overweight from Equalweight at Barclays
LIN Media (LIN) upgraded to Overweight from Equal Weight at Evercore
Synovus (SNV) upgraded to Outperform from Market Perform at Keefe Bruyette

Downgrades

Allergan (AGN) downgraded to Neutral from Outperform at Credit Suisse
Broadcom (BRCM) downgraded to Hold from Buy at Stifel
Centene (CNC) downgraded to Sell from Neutral at Citigroup
Clovis (CLVS) downgraded to Neutral from Buy at Citigroup
Danone (DANOY) downgraded to Sell from Neutral at Goldman
Heineken (HEINY) downgraded to Sell from Neutral at Goldman
TPG Specialty Lending (TSLX) downgraded to Market Perform at Wells Fargo

Initiations

Alcentra Capital (ABDC) initiated with a Market Perform at Keefe Bruyette
Alcentra Capital (ABDC) initiated with a Neutral at RW Baird
Alcentra Capital (ABDC) initiated with an Outperform at Oppenheimer
Applied Materials (AMAT) initiated with a Buy at Jefferies
Devon Energy (DVN) initiated with an Accumulate at KLR Group
Emerge Energy (EMES) initiated with a Buy at Wunderlich
Kroger (KR) initiated with an Outperform at Oppenheimer
Lam Research (LRCX) initiated with a Buy at Jefferies
Lazard (LAZ) initiated with an Outperform at Bernstein
MeadWestvaco (MWV) initiated with a Buy at KeyBanc
Medley Capital (MCC) initiated with a Buy at MLV & Co.
Multimedia Games (MGAM) initiated with a Buy at Stifel
ONE Gas (OGS) initiated with an Underperform at BofA/Merrill
PBF Logistics (PBFX) initiated with a Buy at Citigroup
PBF Logistics (PBFX) initiated with a Buy at UBS
PBF Logistics (PBFX) initiated with an Outperform at Credit Suisse
PBF Logistics (PBFX) initiated with an Overweight at Barclays
RAIT Financial (RAS) initiated with a Buy at MLV & Co.
SuperValu (SVU) initiated with an Outperform at Oppenheimer

COMPANY NEWS

Pilgrim's Pride (PPC) confirmed revised proposal to acquire Hillshire (HSH) at $55 per share
Hillshire Brands (HSH) board authorized discussions with Pilgrim's Pride (PPC), Tyson Foods (TSN), says does not have right to terminate Pinnacle Foods (PF) merger on the basis of either of these proposals
IBM (IBM) disclosed conclusion of SEC investigation regarding cloud revenue, says SEC does not intend to recommend any enforcement action against company
Lockheed Martin (LMT) was awarded a $914.7M Space Fence contract
NPS Pharmaceuticals (NPSP) disclosed in a filing that it has not had any communication with Shire (SHPG) concerning a purported acquisition offer

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Guidewire (GWRE)

Companies that missed consensus earnings expectations include:
Quiksilver (ZQK)

Companies that matched consensus earnings expectations include:
Krispy Kreme (KKD)

NEWSPAPERS/WEBSITES

Analysis says 74 deaths like those GM (GM) linked to switches, Reuters reports
Goldman (GS) planning to increase the size of its commercial bank and wealth management division, FT reports
Barclays (BCS) said to begin reducing 100 jobs in Asia-Pacific, Bloomberg reports
Humana (HUM) claims Medtronic (MDT) conspired with physicians, WSJ reports
France to stand by BNP (BNPQY) against possible U.S. fine, Reuters says
Marathon Oil (MRO) could jump 20% after unloading Norway assets, Barron's says

SYNDICATE
1347 Property Insurance (PIH) files to sell 2.5M shares of common stock
Berry Plastics (BERY) files to sell 10M shares of common stock for holders
CoStar Group (CSGP) files to sell 2M shares of common stock
CommScope (COMM) files to sell 15M shares of common stock for holders
Nielsen (NLSN) files to sell 20M shares of common stock for holders
Oxygen Biotherapeutics (OXBT) files to sell 5.29M shares for holders
Profire Energy (PFIE) files to sell $17.42M of common stock
Wesco Aircraft (WAIR) files to sell 6M shares of common stock for Carlyle

• U.S. sets new import duties on Chinese solar products (Reuters)
• U.S.-China Solar-Products Dispute Heats Up (WSJ)
• China Mulls Offshore Yuan Gold Trade in Free Trade Zone (BBG)
• Insider-Trading Probe Could Snarl a Deal for Icahn (WSJ)
• KCG Holdings Suspects Its Trading Code Was Stolen (WSJ)
• ‘Period. Full Stop’ Is the New ‘At the End of the Day’ (BBG)
• Draghi not so goof for bonds: Investors Flag Risk of ECB Disappointing After Europe Bond Rally (BBG)
• But great for stocks: Equity Traders See Draghi Turning Throttle Up on Rally (BBG)
• ISS, Other Proxy Advisers Pressed to Disclose Conflicts (WSJ)
• State Colleges Revolt as Years of Cuts Divide U.S. Campuses (BBG)
• Singapore Joins China With Dangerous Debt Level, GMT Says (BBG)

Overnight Media Digest

WSJ

* The U.S. Securities and Exchange Commission is readying new guidelines for firms that advise shareholders on corporate ballots, amid complaints by corporations that such advisers have too much influence. The SEC guidance is expected to press proxy advisers to better disclose potential conflicts of interest and may also seek to reduce investor reliance on their advice when voting in company elections. (http://r.reuters.com/neb89v)

* European regulators, anxious about potentially massive U.S. penalties against BNP Paribas SA and other continental banks, are scrambling to determine whether they could pose a threat to the financial health of major lenders, according to regulatory and industry officials. (http://r.reuters.com/sab89v)

* The Manhattan district attorney's office is investigating whether a former technology executive stole computer code from a high-profile trading firm and used it to benefit a rival, according to people briefed on the probe. Code-theft cases have proliferated as global banks and sophisticated trading firms seek to protect the technology that drives their operations. (http://r.reuters.com/tab89v)

* Dai-ichi Life Insurance Co said on Wednesday it will acquire Alabama-based Protective Life Corp for $70 per share in cash, valuing the company at about $5.7 billion. The deal is the largest purchase of a foreign company by a Japanese life insurer. (http://r.reuters.com/vab89v)

* The European Central Bank is ready to act against very low inflation after months of delay, amid mounting evidence that weak prices are undermining the euro zone's recovery from its debt crisis. Tuesday's report showing inflation in the 18-country region softened to 0.5 percent last month - a four-year low - underscored the challenge facing the ECB as it prepares for a policy-setting meeting Thursday. (http://r.reuters.com/xab89v)

* Chinese search company Baidu Inc is selling a benchmark-sized U.S. dollar-denominated bond, according to a term sheet seen by The Wall Street Journal on Wednesday. Baidu could raise about $1 billion with the bond sale, according to a person familiar with the matter, but the exact size will depend on market demand. (http://r.reuters.com/mab89v)

* Moody's lowered its baseline credit and local currency ratings for Citigroup Inc's Mexican banking unit Banamex on Tuesday. The ratings agency also warned that Banamex's stand-alone bank financial-strength rating could be next as the institution slogs through investigations into bad loans it extended to Mexican oil-services provider Oceanografia. (http://r.reuters.com/beb89v)

* Standard & Poor's Ratings Services lost a bid to combine more than a dozen state lawsuits filed in the aftermath of the financial crisis, with a U.S. federal judge ruling that the cases be dealt with separately in the state courts. (http://r.reuters.com/ceb89v)

* A federal insider-trading investigation could complicate a potentially large deal being negotiated by activist investor Carl Icahn, according to a person familiar with the matter. It is unclear which company is involved in the negotiations or whether the veteran financier would be forced to jettison the deal. (http://r.reuters.com/geb89v)

FT

France's socialist government warned on Tuesday of potential consequences for transatlantic trade talks if the U.S. pushed ahead with $10 billion-plus sanctions for BNP Paribas, France's biggest bank.

Billionaire Carl Icahn bought about $50 million of common stock in mortgage financiers Fannie Mae and Freddie Mac on the same day in March that Senators Tim Johnson and Mike Crapo announced reforms to replace the companies with a new model of government support for the U.S. housing market.

Mexican national oil company Pemex has sold most of its holding in Spain's Repsol. The sale of shares for about 2.2 billion euros ($3 billion) was revealed in a regulatory filing by Repsol.

State-backed Royal Bank of Scotland became the second British lender to cap large mortgage loans, echoing Lloyds Banking Group's move last month amid rising concerns that the London property market is overheating.

Canaccord Genuity Group, the Canadian investment bank, quadrupled its profits to $25.9 million in the three months to March 31, driven by a rise in advisory and equity capital markets business in the UK and United States.

NYT

* As the financial sanctions that the United States imposes on foreign governments have become vastly more sophisticated, the Obama administration has deployed them more and more often. (http://r.reuters.com/wab89v)

* Officials at General Motors said an internal report on faulty ignition switches tied to 13 deaths would exonerate the company's chief executive. (http://r.reuters.com/hyz79v)

* Economists fear that an outbreak of ultralow inflation across the 18-nation euro zone is doing more harm than good to the bloc's economic recovery. (http://r.reuters.com/zab89v)

* BNP Paribas SA, under investigation for doing business with Sudan and other countries that the United States has blacklisted, is hashing out the final details of a criminal guilty plea for its parent company. BNP showed prosecutors a memo, drafted around 2004 by an outside law firm, that essentially authorized the bank to process certain transactions for Sudan, as long as BNP's employees in New York were not involved in the arrangement. (http://r.reuters.com/deb89v)

* The Commerce Department on Tuesday imposed steep duties on importers of Chinese solar panels made from certain components, asserting that the manufacturers had benefited from unfair subsidies. The duties will range from 18.56 to 35.21 percent, the department said. (http://r.reuters.com/feb89v)

* Automakers announced robust sales in the United States in May as several reported double-digit growth over last year - including General Motors, which continued to post strong results despite a widening recall crisis. (http://r.reuters.com/heb89v)

* As more middle-class Indians are able to afford costlier products, they drive the demand for organic, fair-trade and artisanal items. (http://r.reuters.com/keb89v)

Canada

THE GLOBE AND MAIL

* Prime Minister Stephen Harper has chosen Clément Gascon, a widely respected, conservative-minded judge from the Quebec Court of Appeal, for a seat on the Supreme Court of Canada. The Prime Minister's Office said it had promised to fill the position as quickly as possible and did not want to delay it. The appointment is effective next Monday. The job has been vacant since Morris Fish of Quebec retired at the end of August. (http://r.reuters.com/jec89v)

* Pipeline company Plains Midstream Canada has been fined $1.3 million after pleading guilty to two spills that sent a total of nearly five million litres of oil into Alberta rivers and wetlands. (http://r.reuters.com/ruc89v)

Reports in the business section:

* A massive catch of lobster in parts of Nova Scotia has stuffed the holding tanks of dealers, causing them to halt purchases and idle the fishermen who are worried about plunging prices for Canada's most valuable seafood export. (http://r.reuters.com/tec89v)

NATIONAL POST

* Ahmed Sayed Abassi, a former Quebec graduate who was arrested in New York last year following an investigation into an alleged Al-Qaeda plot to derail a Toronto-bound passenger train, pleaded guilty to two counts of immigration fraud on Tuesday. (http://r.reuters.com/juc89v)

* Bruce Montague, a northwestern Ontario gunsmith who protested against Canada's firearms licensing regime by letting his own permit slip, has lost his challenge of Canada's criminal forfeiture laws. The Ontario Court of Appeal has ruled against Montague's challenge of the Criminal Code's automatic forfeiture provisions, under which a judge had ordered most of his "arsenal" - 200 items including dynamite, submachine guns, sawn off shotguns etc - should become the property of Ontario. (http://r.reuters.com/fuc89v)

FINANCIAL POST

* A majority of British Columbians want Prime Minister Stephen Harper to reject or delay Enbridge Inc's Northern Gateway pipeline amid concern the project could lead to oil spills, a Bloomberg-Nanos poll shows. (http://r.reuters.com/muc89v)

* The Real Estate Board of Greater Vancouver said there were 3,286 sales last month in Greater Vancouver across the Multiple Listing Service, up from 2,882 sales recorded in May 2013. Sales jumped 7.7 percent from 3,050 in April, 2014. (http://r.reuters.com/puc89v)

China

SECURITIES TIMES

- Land sales revenue for May in 10 major Chinese cities totalled 57.8 billion yuan ($9.24 billion), down 24.6 percent from a year earlier, the first decline in 20 months, according to a report by E-house China R&D Institute.

- Chen Geng, the president of Guotai Junan Securities Co Ltd, has resigned, insiders said on Tuesday. Chen Geng, who has held the position for 10 years, is leaving as the company prepares for an initial public offering.

CHINA DAILY

- The state-run newspaper said in an editorial that Japanese Prime Minister Shinzo Abe's call for a larger role by Japan in regional security is against the nature of the Self-Defense Forces as defined by the country's constitution.

Abe is not only trying to violate the pacifist constitution of Japan, he is also attempting to expand his unconstitutional moves to the Asia-Pacific, the editorial added.

PEOPLE'S DAILY

- Chinese President Xi Jinping told a conference on Tuesday that engineering and technology are strategic options by the human race to cope with global challenges and China should also rely on innovation to drive growth.

Britain

The Telegraph

ROYAL BANK OF SCOTLAND CAPS RISKY MORTGAGES

Royal Bank of Scotland has become the second bank in the space of two weeks to limit risky mortgage lending amid fears of unsustainable house price inflation. (http://link.reuters.com/qez79v)

UK DEALMAKING DROPS TO LOWEST LEVEL ON RECORD

Takeover activity between British companies fell to its lowest level on record during the first quarter of the year, according to official figures. (http://link.reuters.com/rez79v)

UK HOUSE PRICES SURPASS PRE-CRISIS LEVELS TO HIT NEW HIGH

UK house prices have jumped over the past year to a record high of 186,512 pounds ($312,200), rising above its pre-financial crisis peak, Nationwide figures show. (http://link.reuters.com/pez79v)

The Guardian

ONE MILLION FEWER CUSTOMER VISITS A WEEK AT TESCO

Tesco appears to have lost more than 1 million customer visits a week, worth 25 million pounds in sales, with its market share showing the biggest decline for at least 20 years. In the 12 weeks to 25 May, Tesco's sales fell 3.1 percent from a year earlier and Morrisons' sales dipped 3.9 percent, according to figures compiled by Kantar Worldpanel. (http://link.reuters.com/tez79v)

VODAFONE TO SHUT SILICON VALLEY TECH INCUBATOR AND BOOST LONDON HUB

Vodafone is to close its research facility in Silicon Valley and expand its London team as the telecommunications company seeks to tap into UK engineering skills. (http://link.reuters.com/buz79v)

The Times

LLOYDS WALKS AWAY FROM FINANCE DEAL WITH ROSNEFT

The fall-out from the rising tension between the west and Russia over its actions in Crimea and eastern Ukraine struck at the heart of the City last night after Lloyds Banking Group withdrew from a trade finance deal with Rosneft worth up to $2 billion. (http://link.reuters.com/baz79v)

MICHAEL BROWN QUITS FOXTONS JUST NINE MONTHS AFTER FLOAT

The chief executive of Foxtons has stepped down unexpectedly less than nine months after bringing the estate agent to the stock market. Michael Brown is to leave Foxtons for personal reasons after 12 years, the company said yesterday. He had taken compassionate leave in April. (http://link.reuters.com/ryx79v)

The Independent

MARKIT IPO PRICING VALUES TRADING DATA COMPANY AT UP TO $4.4 BLN

London-based trading data company Markit, which competes with Thomson Reuters and Bloomberg, said late on Tuesday it expects its Nasdaq initial public offering to price between $23 and $25 a share, raising up to $1.1 billion and valuing the whole of the company at up to $4.4 billion. (http://link.reuters.com/fuz79v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
ADP employment change report for May at 8:15--consensus 210K
Nonfarm productivity for Q1 at 8:30--consensus (3.0%)
U.S. trade deficit for April at 8:30--consensus ($40.8B)
Markit services PMI for May at 9:45--consensus 58.2
ISM non-manufacturing PMI at 10:00--consensus 55.5

ANALYST RESEARCH

Upgrades

Canadian Pacific (CP) upgraded to Outperform from Market Perform at BMO Capital
Credit Suisse (CS) upgraded to Conviction Buy from Neutral at Goldman
Deutsche Bank (DB) upgraded to Neutral from Sell at Goldman
Newell Rubbermaid (NWL) upgraded to Overweight from Equal Weight at Morgan Stanley
Rexnord (RXN) upgraded to Overweight from Equalweight at Barclays
Under Armour (UA) upgraded to Buy from Hold at Jefferies
XL Group (XL) upgraded to Overweight from Equal Weight at Morgan Stanley

Downgrades

Barclays (BCS) downgraded to Neutral from Overweight at HSBC
Coach (COH) downgraded to Neutral from Buy at Sterne Agee
Garrison Capital (GARS) downgraded to Neutral from Outperform at RW Baird
Monroe Capital (MRCC) downgraded to Neutral from Outperform at RW Baird
Sasol (SSL) downgraded to Sell from Neutral at Goldman
Stellus Capital (SCM) downgraded to Neutral from Outperform at RW Baird
TIBCO (TIBX) downgraded to Hold from Buy at Stifel
TIBCO (TIBX) downgraded to Market Perform from Outperform at JMP Securities
TIBCO (TIBX) downgraded to Neutral from Buy at Mizuho

Initiations

AVG Technologies (AVG) initiated with an In-Line at Imperial Capital
Air Methods (AIRM) initiated with a Buy at KeyBanc
Exact Sciences (EXAS) initiated with a Buy at Goldman
GTT Communications (GTT) initiated with an Outperform at Pacific Crest
NOW Inc. (DNOW) initiated with a Positive at Susquehanna
PBF Logistics (PBFX) initiated with a Market Perform at Wells Fargo

COMPANY NEWS

Protective Life (PL) said it will be acquired by Dai-ichi Life for $70.00 per share in cash, or a total transaction value of approximately $5.7B
AT&T (T) said it is confident that regulators will approve DirecTV (DTV) deal. The company sees over $1.6B in cost synergies from the DirecTV deal
Northrop Grumman (NOC) was awarded $9.9B government contract for B-2 modernization and sustainment
Ascena Retail (ASNA) reported Q3 earnings that beat estimates and backed its FY14 EPS view
Ambarella (AMBA) reported Q1 results above analyst estimates
Tibco Software (TIBX) reported weaker than expected Q2 guidance

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Jiayuan.com (DATE), Mitcham Industries (MIND), Ambarella (AMBA), Ascena Retail (ASNA)

Companies that missed consensus earnings expectations include:
FuelCell (FCEL), ABM Industries (ABM), ePlus (PLUS), Mattress Firm (MFRM)

NEWSPAPERS/WEBSITES

General Motors (GM) CEO expected to be cleared of wrongdoing, NY Times says
Lenovo (LNVGY) to complete IBM (IBM) server business acquisition by November, DigiTimes reports
Goldman Sachs (GS) CEO says 'can never imagine leaving' position, NY Post reports
Merck (MRK), Sanofi (SNY), GSK (GSK) look to unload older drugs, WSJ says
Amazon (AMZN) delays launch of Cloud Player, FreeTime for Fire TV, GigaOM reports
Samsung (SSNLF) says Tizen TV coming "soon," WSJ reports
Official says Hollande told Obama BNP (BNPQY) fine “disproportionate,” Reuters reports

SYNDICATE

Allison Transmission (ALSN) files to sell 35M shares for holders
Boston Properties (BXP) establishes $600M 'at the market' stock offering program
Laclede (LG) files to sell 9M shares of common stock, $125M in equity units
Palo Alto (PANW) files to sell 1.56M shares for holders

Committees, investigations, concerns... but no actions. The SEC's Mary White spoke about market micro-structure this morning but mereley asked a lot of questions - as opposed to answered any. Two things she did mention of note: increased transpraceny for dark pools and internalizers; and forcing more high-frequency traders (and prop shops) to register as broker-dealers (and thus come under closer regulatory scrutiny). However, by the time any of this becomes 'law', we suspect the lobbyists will have created loopholes the size of Draghi's ego for HFTs to walk through. As WSJ reports, the SEC's enforcement division is investigating whether some high-speed traders are using order types - commands exchanges provide that determine how traders' buy and sell orders will be handled - in ways that can give them an advantage over less-savvy investors. We apologize for not seeing this 'investigation' as a positive but we've been here before with every other regulator... vested interests remain strong.

As WSJ reports,

Securities and Exchange Commission Chairman Mary Jo White unveiled a sweeping set of initiatives Thursday to address mounting concerns about the impact of computer-driven trading on the stock market, including proposals that would extend oversight of high-frequency traders and dark pools.

The SEC Looks to Enhance Market Structure:

 

Finalize proposed Regulation SCI to put in place stricter requirements for the technology used by exchanges, alternative trading systems and others.

 

Develop a new rule for additional safeguards when liquidity is most vulnerable and the risk of price disruption caused by aggressive short-term trading strategies is highest.

 

Improve firms' management of the risks associated with the use of algorithms and the SEC's oversight of their use.

 

Examine whether the SEC's own rules, including elements of Regulation NMS, have contributed to excessive fragmentation across all types of trading venues.

 

Examine whether to further mitigate or eliminate potential sources of conflicts between brokers and customers.

 

Finalize terms for a pilot program to allow wider tick sizes for the stocks of smaller companies.

The proposed measures will help the market "operate openly, fairly and efficiently to benefit investors and promote capital formation," Ms. White said.

The new rules, if approved and implemented by the SEC, could force significant changes upon high-frequency traders, who now account for more than half of all stock-market volume, according to analysts.

 

Among the most significant proposals unveiled by Ms. White Thursday is a rule that would require high-frequency traders to register with regulators as broker dealers, pulling them further under regulatory scrutiny. High-frequency traders have largely avoided direct oversight since they are typically private outfits that trade on behalf of their owners.

 

Ms. White also directed SEC staff to develop a new anti-disruptive trading rule to prevent rapid-fire traders from engaging in short-term strategies that can aggravate market volatility.

 

The proposals will be developed by the SEC's staff in the coming months and will require a vote by the full commission, meaning it could be months—if not years—before they're fully implemented.

 

Many of the proposals are likely to trigger pushback from some high-speed firms and other market players. Defenders of high-speed trading say the firms help regular investors since the traders stand ready to buy and sell under most market conditions.

The ideas are good, but have been around forever - and we just don;t believe change will come any time soon. But there is this...

The SEC will also direct exchanges to conduct a comprehensive review of order types and to make rule changes to clarify how they interact, Ms. White said.

 

The SEC's enforcement division is investigating whether some high-speed traders are using order types—commands exchanges provide that determine how traders' buy and sell orders will be handled—in ways that can give them an advantage over less-savvy investors.

We just hope they employ independent consultants that are not HFT traders (or exchange employees) to do the analysis

Isn’t it fitting that the original story was Ali Baba and the Forty Thieves? But, this time round the modern day version of the Chinese story with Alibaba and the Initial Public Offering that has been programmed for in or around August 2014 will be the biggest IPO this year and will bring in the staggering sum of $40 billion for its employees.

The co-founders of the Chinese company Jack Ma and Joe Tsai are aiming for the launch that should take place in true Chinese tradition on the 8th of the 8th. What better could you do in a country where the number 8means ‘fortune’? Only problem might be is that it’s a Friday and Friday launches tend not to go down too well in trading history.

Alibaba filed for a launch in May and the date has yet to be confirmed officially. They will not be allowed to do so until the interviews and meetings with the Securities and Exchange Commission have finalized. Then, the company will be full-steam ahead to pitch investors with what looks like a boon for business and the coffers of the already dollar-rich billionaires that founded the company. Jack Ma, for example, is China’s 8th richest person and has a net worth of $10 billion.

Ma, Tsai and a close-knit group of company executives (28 people in total) own 14% of Alibaba.

But, it’s not only Ma and Tsai that will be raking it in once the launch happens. The past and current employees of the company hold just over a quarter of the shares of the company (26.7%) in stock options and other awards that were provided as incentives back 15 years ago in 1999.

Apparently, the company has gone as far as to start counselling of its employees to help them deal with the share of the tens of billions of dollars that could be brought in with the IPO when they will be allowed to sell of their shares. Although their shares may be locked up for months before they can cash in.

According to some sources, employees have been looking at how to spend that money on investments in property in the USA, starting business ventures in China and of course buying up the trappings of the consumer world and overt social status such as cars and artwork. But, because the IPO will be going ahead in New York, the majority of the money is suspected to be kept outside of China.

There was already a sell-down of shares in 2011, with employees selling about $2 billion in shares then. Apparently, according to sources at Alibaba, it was better to prepare the employees for immense wealth, little by little, rather than throwing millions at each of them. Ma sold off $162 million in shares then and his co-founder $108 million.

It’s the Japanese telecom company SoftBank that owns the largest stake in the company (34.4%) and the US company Yahoo that has 22.6%.

Alibaba has already acknowledged that it will have its work cut out keeping those employees on after the IPO if they decide to cash in and take advantage. The company stated: “It may be difficult for us to continue to retain and motivate these employees, and this wealth could affect their decisions about whether or not they remain with us”.

So, with the IPO of Alibaba looming fast it’s going to be ‘Open Sesame’ for the employees that will be raking it in in the biggest launch on a stock exchange this year. There’s no denying that the treasure that Alibaba is sitting on will certainly be worth fighting over.

Alibaba is an online company which enables shoppers to buy and vendors to sell as well as make on-line payments. IT’s Amazon, Paypal and eBay all rolled into one on a Chinese scale. It’s two retailers, Taobao and Tmall offering non-brand products and branded goods respectively, make up more than 50% of all parcel deliveries in the People’s Republic of China today. Combined transaction value reached $163 billion in 2012. There are 24, 000 workers employed by Alibaba and 36.7 million registered users today. In the last quarter of2013, Alibaba posted an increase in revenue equivalent to 66% (reaching $3.06 billion. Net income for the same period stood at $1.36 billion.

Originally posted: Alibaba and the $40 billion

Day Trading Data Sheets Futures and Forex

• Canada Aims to Sell Its Oil Beyond U.S (WSJ)
• ECB Unanimity May Prove Fleeting (WSJ)
• Chinese military spending exceeds $145 billion, drones advanced: U.S. (Reuters)
• France to sell 10 warships to Russia next? BNP Executive Firings Sought by Top New York Bank Regulator Amid Probe (BBG)
• Vodafone says governments have direct access to eavesdrop in some countries (Reuters)
• Home Price Gains of 20% Vanish as Hottest Markets Cool (BBG)
• G-7 Heads Warn Moscow Before Facing Putin (WSJ)
• Barclays Fine Spurs U.K. Scrutiny of Derivatives Conflict (BBG)
• "Or Costs" - Obama Says Putin Running Out of Time Over Ukraine (BBG)
• Banca Monte Paschi Falls After Offering New Stock at 35.5% Discount (BBG)
• Venezuela Sacrifices Drinking Water to Pay Bondholders (BBG)
• Texas man fourth in U.S. to die from rare brain disease (Reuters)
• Japan Child Porn Ban Brings Nation in Line With Industrial Peers (BBG)
• Chinese Military Shows New Capabilities, Pentagon Says (BBG)
• Welcome to Baku, the Fiercely Modern, Millennia-Old, Capitalist-Socialist, Filthy-Rich Capital of Azerbaijan (BBG)

Overnight Media Digest

WSJ

* Bank of America is in talks to pay at least $12 billion to settle probes by the Justice Department and a number of states into the bank's alleged handling of shoddy mortgages. (r.reuters.com/rap89v)

* General Motors Co CEO Mary Barra vowed to upend the corporate culture responsible for what she denounced as a "pattern of incompetence and neglect" in the auto maker's failure to recall cars equipped with a defective ignition switch. (r.reuters.com/buq89v)

* Oil-sands and other Canadian crude-oil producers, who have long exported mainly to the United States, would like to diversify their markets but are stymied by poor access to ocean ports. (r.reuters.com/cuq89v)

* SEC Chair Mary Jo White unveiled a sweeping set of initiatives to address mounting concerns about the impact of computer-driven trading on the stock market. (r.reuters.com/fuq89v)

* Credit unions are loosening lending standards and piling into longer-term assets, exposing the firms to potentially significant losses if interest rates rise and worrying regulators. (r.reuters.com/huq89v)

* Shareholders at four companies - Valero Energy Corp , Gannett Co, Boston Properties Inc and Dean Foods Co, have voted in recent weeks to prevent executives from cashing in on certain stock bonuses if their companies are sold, the latest sign that investors are pushing back on the generous pay packages in the event of a merger or sale. (r.reuters.com/juq89v)

FT

BNP Paribas, France's biggest bank, is exploring a management shake-up and considering the departure of its chief operating officer as it struggles to reach a settlement with U.S. banking regulators over alleged sanctions violations, according to sources.

Deutsche Bank has warned that the ongoing investigations by global regulators into whether foreign exchange rates were manipulated could have a "material" impact on the Frankfurt-based lender.

A new U.S. government inquiry has concluded that BP's 2010 oil spill in the Gulf of Mexico was in part caused by the failure of a vital piece of safety equipment that the company did not own.

Sir Ken Morrison launched an outspoken assault against the management of Morrisons, the supermarket chain that he once chaired and that his father founded, saying its chief executive was talking "bullshit".

G4S, the world's biggest security firm, said it would end all its Israeli prison contracts within the next three years after its annual general meeting on Thursday was severely disrupted by angry human rights protesters.

NYT

* A report released on Thursday after an internal investigation of General Motors set off the dismissal of 15 G.M. employees, including a vice president for regulatory affairs and a senior lawyer responsible for product liability cases, and forced broad changes in how the company handles vehicle safety. (r.reuters.com/heq89v)

* Banks typically make money on the cash they park at a central bank. Now the European Central Bank wants them to pay for the privilege. The move, a so-called negative interest rate, is part of a wide-ranging set of measures aimed at combating the crippling combination of slow growth and super low inflation. The bank president, Mario Draghi, also signaled that he may employ the same powerful, albeit controversial, bond-buying program that was used to restart growth in the United States. (r.reuters.com/keq89v)

* Mark Spitznagel, the founder of the $6 billion hedge fund Universa Investments, on Thursday brought 20 billy goats to graze among abandoned homes and general detritus in Brightmoor, one of Detroit's most blighted neighborhoods. But his goat experiment - called the Idyll Farms Detroit project - appears to have a bigger objective. Spitznagel has a vested interest in seeing Detroit make a comeback. He has personally invested millions of dollars in commercial real estate, something he says has no bearing on the Brightmoor project. (r.reuters.com/neq89v)

* The Securities and Exchange Commission Chairwoman, Mary Jo White, unveiled on Thursday a sweeping package of recommendations for new rules and other changes aimed at strengthening the structure of the market and improving disclosures for investors. (r.reuters.com/peq89v)

* Investment banks typically hold tens of billions of dollars of Treasury bonds on their balance sheets, enormous positions that can create trading profits if the prices of the bonds rise. But this year, the banks slashed those holdings, so much so that they actually had a negative position in government bonds in March, according to data from the Federal Reserve Bank of New York. (r.reuters.com/qeq89v)

* Federal safety regulators warned on Thursday that another disastrous offshore oil well blowout could happen despite regulatory improvements in the four years since a BP well explosion in the Gulf of Mexico killed 11 workers and dumped millions of gallons of oil into the sea. (r.reuters.com/req89v)

* Verizon fired back at Netflix on Thursday with a cease-and-desist letter sent to Netflix's top lawyer, David Hyman. Randal Milch, Verizon's general counsel, demanded that Netflix's error message blaming Verizon's network for slowing the streaming of Netflix's programming be taken down. The accusation "is self-serving, deceptive, inaccurate and an unfair business practice," Milch said. (r.reuters.com/veq89v)

* On Thursday, the OpenSSL Foundation issued a warning to users that a decade-old bug that makes it possible for an attacker to conduct a so-called man-in-the-middle attack on traffic encrypted with OpenSSL. The advisory warns users that someone could use the bug to intercept an encrypted connection, decrypt it, and read the traffic. (r.reuters.com/xeq89v)

Canada

THE GLOBE AND MAIL

* Police in New Brunswick confirmed early on Friday that shooting suspect Justin Bourque had been arrested. Bourque, 24, wanted in connection with the shooting deaths of three Royal Canada Mounted Police officers, was taken into custody shortly after midnight. (http://r.reuters.com/hyr89v)

* In a historic vote in the National Assembly, Quebec has become the first province in Canada to legalize doctor-assisted death as part of comprehensive end-of-life legislation. (http://r.reuters.com/xur89v)

Reports in the business section:

* Environmentalists have launched a campaign against Oakville, Ontario-based Tim Hortons Inc, which says the company's deep-fried treats are also bad for orangutans, tigers and the rain forests. Environmentalists want the company to stop making its doughnuts with cooking oil bought from suppliers in Indonesia, Malaysia and Papua New Guinea that destroy the habitats of endangered animals, to plant palm trees. (http://r.reuters.com/kyr89v)

NATIONAL POST

* The Ontario Provincial Police's anti-rackets investigation into an alleged cover-up in Dalton McGuinty's office intensified on Thursday, with detectives serving a court order at Queen's Park for key records, and confirming they have interviewed the former premier about the gas plants scandal. (http://r.reuters.com/nyr89v)

* Progressive Conservative Leader Tim Hudak suggested on Thursday that the Liberals may have made a deal with the Ontario Provincial Police Association in exchange for support during the election. Union president Jim Christie has said that advertisements his association took out against the Progressive Conservative party were not an endorsement of the Liberals or of the New Democratic Party - they just don't want Hudak as premier. (http://r.reuters.com/syr89v)

FINANCIAL POST

* Lévis, Quebec-based Exceldor is taking over Streetsville, Ontario's P&H Foods, as parent company Parrish & Heimbecker Ltd concentrates on its core businesses including grain merchandising and milling. Terms of the transaction were not disclosed. (http://r.reuters.com/wyr89v)

* Suncor Energy Inc, Canada's largest oil sands company, is recycling tailings water from surface mining at its oil sands plant to feed its nearby in-situ operations in northern Alberta. The question is whether the rest of the industry will follow suit. (http://r.reuters.com/zyr89v)

China

CHINA SECURITIES JOURNAL

- China's regulator said in an exposure draft that it would vigorously promote innovative development in Chinese fund companies by setting up an open and flexible management system.

SHANGHAI SECURITIES NEWS

- The National Development and Reform Commission has held a meeting with power firms and will hold another one with industry experts next week, indicating that China is going to further advance electric reforms.

CHINA BUSINESS NEWS

- China's May Consumer Price Index (CPI) could rebound to 2.5 percent, the newspaper said in its research report, quoting 20 economists.

CHINA DAILY

- China must take an open-minded and pragmatic approach when revising its immigration policy with an eye to retaining foreign talent, the newspaper said in a commentary.

Britain

The Telegraph

SAFETY DEVICE ON BP GULF OF MEXICO RIG WASN'T TESTED PROPERLY

A U.S. board's investigation into BP's Gulf of Mexico oil spill has concluded that a last-ditch safety device on the underwater well had multiple failures, was not tested properly and still poses a risk for many rigs drilling today. (link.reuters.com/nep89v)

 
ELEVEN THROWN OUT OF G4S AGM AFTER PALESTINE PROTEST

Protesters angry at G4S's business interests in Israel and Palestine have disrupted the security company's annual meeting. Guards removed 11 human rights activists from the AGM, which was being held in a conference room at the Excel Centre, London, on Thursday. (link.reuters.com/kep89v)

NEW LEGAL ACTION IN THALIDOMIDE SCANDAL

A new legal action has been launched against the manufacturers of thalidomide, the morning sickness drug which caused harrowing birth defects, on behalf of eight British sufferers claiming they have never received full compensation. (link.reuters.com/pep89v)

ZOOPLA SETS IPO PRICE RANGE AS FLOTATION FLURRY CONTINUES

Online property site Zoopla (IPO-ZPGL.L) is the latest company to test the strength of London's flotation market after it unveiled the price range for its upcoming listing. (link.reuters.com/rep89v)

The Guardian

MORRISONS' FORMER CHAIRMAN ACCUSES MANAGEMENT OF RUINING SUPERMARKET

The former chairman of Morrisons has launched an extraordinary public tirade against the supermarket's leadership, describing the chief executive's strategy as "bullshit" and warning that the business founded by his father had been ruined. (link.reuters.com/tep89v)

ASOS SHARES PLUMMET AFTER PROFITS WARNING

When it first launched under the name As Seen on Screen, ASOS was an online retail ingenue whose title referred to clothing first glimpsed on Hollywood stars, models and celebrities, then rapidly reproduced for trend-hunting consumers.

But on Thursday the stock market turned its lens on the leading light of British e-commerce and sent its shares plummeting by 31 percent as a shock profit warning wiped 1.2 billion pounds ($2.01 billion) off its value. (link.reuters.com/vep89v)

SERIOUS FRAUD OFFICE LOOKING INTO CURRENCY MARKET MANIPULATION CLAIMS

Britain's Serious Fraud Office is examining information related to a global investigation into the possible manipulation of currency markets, although it has yet to open a criminal investigation. (link.reuters.com/wep89v)

The Times

THAMES WATER ORDERED TO PAY 86 MLN STG IN PENALTIES FOR FLOODS MISREPORTING

Thames Water is to stump up a reparations package of 86 million pounds to customers after admitting to misspending money to shore up its sewer system and misleading the regulator. (link.reuters.com/zep89v)

INMARSAT TO END EXECUTIVES' QUIET TIME WITH PLANS FOR IN-FLIGHT BROADBAND

British satellite operator Inmarsat has announced plans to connect European airline passengers to the Internet, allowing the same sort of telecommunications connectivity, in-flight 4G coverage and broadband speeds that many residents on the ground in large parts of Scotland are still crying out for. (link.reuters.com/bup89v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Change in non-farm payrolls for May at 8:30--consensus up 213K
Unemployment rate for May at 8:30--consensus 6.4%
Consumer credit for April at 15:00--consensus $15B

ANALYST RESEARCH

Upgrades

Angie's List (ANGI) upgraded to Buy from Neutral at BofA/Merrill
CONSOL (CNX) upgraded to Buy from Neutral at Goldman
Herman Miller (MLHR) upgraded to Buy from Neutral at Longbow
Humana (HUM) upgraded to Buy from Hold at Stifel
JAKKS Pacific (JAKK) upgraded to Buy from Hold at Needham
Joy Global (JOY) upgraded to Buy from Neutral at BofA/Merrill
Lennox (LII) upgraded to Buy from Hold at KeyBanc
Spirit AeroSystems (SPR) upgraded to Outperform from Market Perform at Cowen
Watts Water (WTS) upgraded to Buy from Hold at KeyBanc

Downgrades

Apache (APA) downgraded to Market Perform from Outperform at Wells Fargo
Approach Resources (AREX) downgraded to Market Perform from Outperform at Wells Fargo
Athlon Energy (ATHL) downgraded to Market Perform from Outperform at Wells Fargo
Chunghwa Telecom (CHT) downgraded to Underweight from Neutral at JPMorgan
Frontier Communications (FTR) downgraded to Hold from Buy at Jefferies
Nexstar (NXST) downgraded to Equal Weight from Overweight at Evercore
Peabody (BTU) downgraded to Neutral from Buy at Goldman
Rally Software (RALY) downgraded to Hold from Buy at Deutsche Bank
Rally Software (RALY) downgraded to Market Perform from Outperform at William Blair
SM Energy (SM) downgraded to Market Perform from Outperform at Wells Fargo
Swift Energy (SFY) downgraded to Market Perform from Outperform at Wells Fargo
Team Health (TMH) downgraded to Hold from Buy at Deutsche Bank

Initiations

CECO Environmental (CECE) initiated with an Outperform at William Blair
Cheetah Mobile (CMCM) initiated with an Overweight at JPMorgan
Republic Services (RSG) initiated with an Outperform at Imperial Capital
Rouse Properties (RSE) initiated with an Outperform at RBC Capital
Sabra Health Care (SBRA) initiated with an Equalweight at Barclays
Sabre (SABR) initiated with an Outperform at Imperial Capital
Theravance Biopharma (TBPH) initiated with a Buy at BofA/Merrill

COMPANY NEWS

AIG (AIG) authorized additional $2B share repurchase plan
eMarketer said Google's (GOOG) share of U.S. mobile search-ad dollars is declining
Men's Wearhouse (MW) sees completion of Jos. A. Bank (JOSB) merger in next few weeks
Comtech (CMTL) reported Q3 earnings and raised FY14 EPS and revenue guidance
Panera Bread (PNRA) announced a new $600M share repurchase plan to replace the company's existing plan
SeaChange (SEAC) reported disappointing Q1 earnings, Q2 guidance and FY14 guidance

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Men's Wearhouse (MW), Rally Software (RALY), Comtech (CMTL), Vail Resorts (MTN), VeriFone (PAY), Cooper Companies (COO), Zoe's Kitchen (ZOES)

Companies that missed consensus earnings expectations include:
Analogic (ALOG), Thor Industries (THO), SeaChange (SEAC), Diamond Foods (DMND)

NEWSPAPERS/WEBSITES

Bank of America (BAC) in talks to pay at least $12B to settle probes, WSJ reports
Lawsky seeks ouster of BNP Paribas (BNPQY) COO, others, Bloomberg says
Barclays (BCS) fine sparks U.K. probe of derivatives dispute, Bloomberg says
Changes may make approval of Sprint (S), T-Mobile (TMUS) tie-up more likely, NY Times reports
Any Sprint (S), T-Mobile (TMUS) deal likely to face regulatory hurdles on two fronts, WSJ reports
Canada to recommend buying 65 Lockheed Martin (LMT) F-35 jets, Reuters reports
Beastie Boys win $1.7M in copyright case with Monster Beverage (MNST), NBC News says

SYNDICATE

Arista Networks (ANET) 5.25M share IPO priced at $43.00
Cheniere Energy (LNG) 1.2M share Block Trade priced at $66.15
CoStar Group (CSGP) 3M share Secondary priced at $160.00
Hudson Technologies (HDSN) files to sell common stock
IGI Laboratories (IG) files to sell $35M of common stock
Laclede (LG) 9M share Secondary priced at $46.25
Marrone Bio (MBII) 4.5M share Secondary priced at $9.50
Novavax (NVAX) 25M share Secondary priced at $4.00
Palo Alto (PANW) files to sell 1.54M shares of common stock for holder
Radius Health (RDUS) 6.5M share IPO priced at $8.00
Star Scientific (STSI) files to sell 26.47M shares for holders
United Insurance (UIHC) files to sell 2.7M shares for holders

For many months we have discussed the massive outperformance that buying the "most shorted" stocks has created. The 'alpha' generated fro buying the weakest balance sheet companies in preference of the stronger has enabled the dash-for-trash strategy (just as we saw yesterday when Tepper unleashed hell) to be the new meme. And so it is, like anything that is popular, ETFTrends reports that ETFis - a turnkey ETF provider - has filed with the SEC to launch an actively managed short squeeze fund.

Buying the most-shorted has been the best strategy since QE3 was unleashed.

As we showed yesterday.

And so why not create an actively managed short squeeze ETF...(as ETFTrends reports)

ETFis, a turnkey exchange traded fund provider, is working on a so-called short squeeze fund to help investors capitalize on a heavily shorted market that is beginning to turn around.

According to a recent Securities and Exchange Commission filing, the actively managed Short Squeeze Fund (SQZZ) will seek to outperform the Russell 2000 index and earn current income.

...

The ETF’s managers will select U.S. stocks and American Depository Receipts that they believe may be subject to a “short squeeze” and lend portfolio securities that they believe may be subject to a short squeeze.

Basically, the fund managers will pick out securities that have a higher potential for capital appreciation, which could result in a short squeeze.

A short position is a sale on a borrowed security. The investor needs to eventually return the borrowed stock by purchasing it back from the open market. If the price falls, the investor buys it back for less than he or she sold it for and pockets the profit.

 

A short squeeze occurs when investors with heavy short positions are forced to cover, or buy back, their shorts in the event of positive reports that result in a share appreciation – short sellers are essentially being squeezed out of their short positions, typically at a loss. Consequently, the additional buying momentum from short sellers covering their options contracts help bolster share prices even further.

 

Investors can identify securities at risk of a short squeeze by monitoring short interest -the total number of shares sold short as a percentage of total shares outstanding – and the short-interest ratio – the total number of shares sold short divided by average daily volume.

 

For the fund’s secondary income objective, SQZZ can lend out securities from the fund’s underlying portfolio to short sellers and other market participants for a fee.

and as we noted recently, here are the "most shorted" stocks currently.

If it's really that easy a top must be close. At least until the next central bank liquification intervention... all to benefit the savers of course.