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
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