- PBOC Says China Shouldn’t Be ’Blindly Optimistic’ on Inflation (BBG)
- Foreigners Buying Half of London New Homes Prop Up Building (BBG) - first they come for the foreign deposits, then for the real assets...
- Investors Rediscovering Margin Debt (WSJ) - well, yes: it is at record highs
- Japanese investors switch to foreign bonds (FT)
- Japan's Energy Costs Rise as Yen Weakens (WSJ) as reported here three months ago (ZH)
- China issues new rules targeting wealth management fund pools (RTRS)
- Navy $37 Billion Ships Seen Unsuitable Have 2-Year Window (BBG)
- New York may have to drop claims against BofA over Merrill (RTRS)
- FBI Rejects Boston Police Stance in Spat Over Terror Data (BBG)
- Chief of UK's biggest mutually-owned company resigns on fears it could require a bailout (WSJ)
- In eastern Syria oil smugglers benefit from chaos (RTRS)
- Icahn With Southeastern Challenges Silver Lake’s Dell Offer (BBG)
- SEC Is Pressed to Revamp Executive Trading Plans (WSJ)
- JPMorgan sued over credit card debt collecting (FT)
- Netflix, Reed Hastings Survive Missteps to Join Silicon Valley's Elite (BBG)
- Temporary Workers Near U.S. Record Makes Kelly a Winner (BBG)
- Leading Bulgaria parties tied before Sunday vote: poll (Reuters)
Overnight Media Digest
WSJ
* The federal deficit is shrinking faster than expected due to surging tax revenue and bailout paybacks, altering the budget debate.
* During his visit to Russia last year, deceased Boston bombing suspect Tamerlan Tsarnaev was coolly received by the Dagestan region's Islamists, who found him to be brash.
* The Yen's decline signals hopes for a more groundbreaking economic shift: the reversal of nearly two decades of stagnation, weak demand and declining prices.
* A multibillion-dollar settlement of a federal investigation into Johnson & Johnson's sales practices is on hold, as J&J seeks to avoid wording in the agreement that could leave it vulnerable to private lawsuits.
* Futures regulators are close to an agreement that would end a months-long standoff over a central plank of the 2010 Dodd-Frank law and finally bring more transparency to the trading of swaps, the complex financial contracts at the heart of the financial crisis.
FT
A report by Kofi Annan's Africa Progress Panel to be published on Friday criticises mining deals made by Eurasian Natural Resources Corp for "opaque concession trading" costing the Democratic Republic of Congo $750 million.
The Financial Reporting Council, the UK's accounting watchdog, has launched two separate investigations into auditing firm KPMG - one relating to its audit of car dealer Pendragon and the other probing into a KPMG member's shareholding in a client company.
British Prime Minister David Cameron took on critics in his party who demand Britain's immediate exit from the European Union, reassuring international investors that the country's future lay within the EU.
An influential committee of MPs recommended a third or possibly even a fourth runway at London's Heathrow airport on Friday, boosting its controversial efforts to expand.
Chief Executive Stephen Hester is convinced that Royal Bank of Scotland is entering its last phase of repair ahead of reprivatisation, even after its poor first-quarter results last week.
NYT
* The Bank of Japan's efforts to reinvigorate the nation's economy are showing results, at least in the sinking value of the yen.
* Regulators outlined a proposal that could make Internet service on airplanes cheaper, at speeds up to 30 times faster than the service many people have in their homes.
* Mail Online, The Daily Mail's site, has expanded on the news and business sides with offices in New York, and coverage of celebrities in Los Angeles.
* According to Delta Air Lines executives, the carrier's bright and spacious new terminal at Kennedy Airport in New York reflects the industry's new priorities. As financial health improves, airlines are trying to lure passengers with better amenities and service instead of the lowest fares.
* Merck and GlaxoSmithKline will charge less than $5 a dose to expand protection from the virus known as HPV to millions of girls in the poorest countries.
Canada
THE GLOBE AND MAIL
* Conservative backbenchers are pushing to reopen the abortion debate, despite public assurances by Prime Minister Stephen Harper that the issue is settled.
* Nova Scotia's economic and rural development minister Percy Paris resigned from cabinet late Thursday night after he says he lost his composure during an incident at the provincial legislature involving an Opposition member.
Reports in the business section:
* Mark Jaccard, one of Canada's top environmental economists, has a stark warning for the country's oil sands producers: find ways to dramatically cut carbon emissions or risk becoming the buggy-whip producers of the 21st century.
NATIONAL POST
* Juan Ramon Fernandez, described by police in Canada as "a perfect gangster", died the perfect Hollywood gangster death - ambushed by mob rivals, dying in a hail of bullets and his body burned in a field in the picturesque countryside outside Palermo, the historic capital city of Sicily.
* The steel trusses of a new multimillion dollar sawmill formed the backdrop for Liberal Leader Christy Clark as she touted her government's forests strategy during a campaign whistlestop Thursday in Burns Lake, where little more than a year ago an explosion and fire at the previous mill devastated the community.
FINANCIAL POST
* Mobilicity is officially on the block and Telus Corp's chief executive Darren Entwistle would consider buying what he calls a "nice to have" asset, depending on feedback from the government.
China
CHINA SECURITIES JOURNAL
- Net profit at 19 China A-share listed brokerages hit 1.52 billion yuan ($247.92 million) in April, down 22.7 percent from 1.97 billion yuan in March.
- China has raised the minimum limit of registered capital for insurance brokers and insurance agencies to 50 million yuan, China Insurance Regulatory Commission said.
CHINA DAILY
- The Ministry of Commerce is planning to assist manufacturers to identify "specific regions" in key emerging export markets, particularly in India and other BRICS nations, to replace lost business in the eurozone and the United States.
- Total overdue loans for China's top 10 listed banks rose to 486.5 billion yuan ($79.3 billion) by the end of last year, up 29 percent from 2011, according to a report released by PwC.
- Beijing-based iResearch Consulting Group said Chinese shoppers spent 352 billion yuan ($57.4 billion) online in the first quarter of the year, a drop of 17.1 percent compared to the previous quarter. However, annual turnover should still reach 1.85 trillion yuan, the company said.
- Three people were killed and six injured in a landslide on Thursday near a village in Lushan county, Sichuan province. The landslide also blocked the road from Lushan county to Baoxing county in Ya'an city.
PEOPLE'S DAILY
- Chinese President Xi Jinping met visiting Israeli Prime Minister Benjamin Netanyahu on Thursday and pledged to make more efforts towards peace in the Middle East.
Corporate Finance
* Activist investor Carl Icahn and Southeastern Asset Management Inc, two of Dell Inc's largest shareholders, have proposed an alternative to a $24.4 billion buyout deal led by founder Michael Dell, the Wall Street Journal reported.
* U.S. private equity firm Carlyle Group has submitted a bid for Anglo-Australian miner Rio Tinto's 80 percent stake in the Northparkes copper mine in Australia, Dow Jones reported.
* China's $482 billion sovereign wealth fund China Investment Corp is set to appoint a vice mayor of Shanghai as its new chairman, three sources with knowledge of the deal told Reuters.
* Banks have been approached about a potential syndicated loan to back the privatisation of Royal Mail Group, banking sources said on Thursday.
* Royal Dutch Shell and India's Oil and Natural Gas Corp are exploring the possibility of a strategic tie-up to jointly bid for global oil and gas assets, the Economic Times reported.
* Bankers are looking towards the U.S. debt market to raise 900 million euros ($1.18 billion) for a buyout of industrial ceramics firm CeramTec, spurning Europe where risky debt is in shorter supply, bankers said on Thursday.
* French insurer Scor has emerged as the lead bidder for Generali's U.S. life reinsurance business in a deal that could be announced shortly, two people familiar with the matter said.
Fly On The Wall 7:00 AM Market Snapshot
ANALYST RESEARCH
Upgrades
American Water (AWK) upgraded to Buy from Neutral at Citigroup
Arkansas Best (ABFS) upgraded to Buy from Neutral at Citigroup
Boston Scientific (BSX) upgraded to Outperform from Market Perform at Wells Fargo
Edison International (EIX) upgraded to Buy from Neutral at Citigroup
Granite Construction (GVA) upgraded to Neutral from Sell at Goldman
Downgrades
AES Corp. (AES) downgraded to Neutral from Buy at UBS
Atlas Energy (ATLS) downgraded to Neutral from Outperform at RW Baird
Cablevision (CVC) downgraded to Neutral from Buy at Citigroup
Dean Foods (DF) downgraded to Equal Weight from Overweight at Stephens
Dendreon (DNDN) downgraded to Sell from Neutral at Citigroup
Grand Canyon (LOPE) downgraded to Neutral from Outperform at RW Baird
LHC Group (LHCG) downgraded to Hold from Buy at Deutsche Bank
Optimer (OPTR) downgraded to Neutral from Outperform at RW Baird
Pinnacle West (PNW) downgraded to Sell from Neutral at Citigroup
Rent-A-Center (RCII) downgraded to Hold from Buy at Canaccord
Salix (SLXP) downgraded to Neutral from Buy at Janney Capital
Shire (SHPG) downgraded to Neutral from Overweight at JPMorgan
Initiations
3D Systems (DDD) initiated with a Buy at Janney Capital
Actavis (ACT) initiated with an Outperform at BMO Capital
Allergan (AGN) initiated with an Outperform at BMO Capital
Emeritus (ESC) initiated with an Outperform at Wells Fargo
Ensign Group (ENSG) initiated with a Market Perform at Wells Fargo
Forest Labs (FRX) initiated with an Underperform at BMO Capital
J2 Global (JCOM) initiated with an Outperform at Wedbush
Mylan (MYL) initiated with an Underperform at BMO Capital
Splunk (SPLK) initiated with a Market Perform at FBR Capital
Teva (TEVA) initiated with an Outperform at BMO Capital
Workday (WDAY) initiated with an Outperform at Oppenheimer
HOT STOCKS
Icahn reported 4.52% stake in Dell (DELL), sent buyout proposal to board
JPMorgan(JPM) sued by California for "fraudulent, unlawful debt collection practices"
KeyBank (KEY) to acquire Bank of America (BAC) CMBS servicing portfolio, Berkadia CMBS business
AutoNavi (AMAP) announced strategic alliance with Alibaba (ALBCF)
Novartis (NVS) drug Ilaris approved by FDA
Amgen (AMGN), Zhejiang Beta Pharma announced joint venture in China
EARNINGS
Companies that beat consensus earnings expectations last night and today include:
Great Plains Energy (GXP), Nelnet (NNI), Darling (DAR), Molycorp (MCP), NVIDIA (NVDA), Stifel Financial (SF), MBIA (MBI), CareFusion (CFN), priceline.com (PCLN), bebe stores (BEBE)
Companies that missed consensus earnings expectations include:
Sterling Construction (STRL), AutoNavi (AMAP), AuRico Gold (AUQ), Flotek (FTK), Allscripts (MDRX), Sotheby's (BID)
Companies that matched consensus earnings expectations include:
Lexicon Pharmaceuticals (LXRX), Stellus Capital (SCM), Air Lease (AL)
NEWSPAPERS/WEBSITES
- Small investors are borrowing against their portfolios at a rapid rate, reaching levels of debt not seen since the financial crisis. The trend, driven by rising stock values and low interest rates, is sparking a growing debate among market watchers, the Wall Street Journal reports
- Disney’s (DIS) cable sports channel ESPN has had discussions with at least one major U.S. carrier to subsidize wireless connectivity on behalf of its smartphone users, sources say. Under one potential scenario, the company would pay a carrier to guarantee that people viewing ESPN mobile content wouldn't have that usage counted toward their monthly data caps, the Wall Street Journal reports
- China's bond market regulator closed a loophole that allowed banks that sell high-yielding wealth management products to evade regulatory requirements by moving money between the WMP accounts they manage and their own proprietary accounts, sources say, Reuters reports
- Dish Network (DISH) lined up Jefferies Group to help it finance its $25.5B bid for Sprint Nextel (S) as it tries to convince the company its offer is better than Softbank’s (SFTBF), sources say, Bloomberg reports
- Toyota’s (TM) years of fighting the yen is over, at least for now. The weakening yen breached 100 against the dollar in U.S. trading yesterday, opening the way for Japan to emerge from an unprecedented and largely uninterrupted five-year stretch where the currency’s appreciation beyond that level roiled exporters and their ability to sell cars and other products abroad, Bloomberg reports
SYNDICATE
3D Systems (DDD) 7.5M share Secondary priced at $40.00
Apollo Global (APO) 21.1M share Secondary priced at $25.00
Ares Commercial Real Estate (ACRE) files $1.5B mixed securities shelf
BioAmber (BIOA) 8M Unit IPO priced at $11.00
Capital Acquisition (CLACU) 18M Unit IPO priced at $10
Discovery Labs (DSCO) files to sell common stock
First NBC Bank (NBCB) 4.17M share IPO priced at $24.00
Franklin Street (FSP) 15M share Secondary priced at $14.00
Omeros (OMER) announces $16.2M registered direct offering
Preferred Apartment (APTS) files to sell 5.71M shares for holders
Santarus (SNTS) files to sell common stock for Cosmo Technologies
Tornier (TRNX) 7M share Secondary priced at $16.15
U.S. Auto Parts (PRTS) files to sell 5.05M shares of common stock for holders
Venaxis (APPY) files to sell $23M of common stock