Presenting the US car market this cold, stormy, sunny, dry, and rainless winter according to "The Haves... and The Have-Nots..."

The Haves...

• *FERRARI POSTS RECORD SALES IN U.S. AND U.K. IN 2013
• *MASERATI GLOBAL SALES MORE THAN DOUBLE IN JAN
• *PORSCHE REPORTS RECORD FEB. SALES (UP 15%)
• *MERCEDES REPORS HIGHEST JAN SALES IN HISTORY
• *LAMBORGHINI SEES 2014 HURACAN DELIVERIES EXCEEDING 1,800

And The Have-Nots...

• *FORD FEB U.S. LIGHT-VEHICLE SALES FALL 6.1%
• *GM FEBRUARY U.S. SALES FALL 1%
• *TOYOTA U.S. FEB SALES DOWN 4.3%
• *VOLKSWAGEN OF AMERICA FEB. VEHICLE SALES DOWN 13.8%
• *HONDA FEB. U.S. VEHICLE SALES FELL 7%

It appears the 1% don't feel the cold (or wet) weather?\

What is supremely clear from this data is - if you want to sell cars, raise prices...

• No need to use military force in Ukraine for now: Putin (Reuters)
• Russia Orders Drill Troops Back to Bases (WSJ)
• Ukraine premier agrees to reforms for aid package (FT)
• Japan Base Wages Rise for First Time in Nearly Two Years (WSJ)
• Only the algos are trading: Citigroup Joins JPMorgan in Seeing Trading-Revenue Drop  (BBG)
• Vietnam sends blogger to prison for critical posts (AP)
• At White House, Israel's Netanyahu pushes back against Obama diplomacy (Reuters)
• Obama to offer new tax breaks for workers in election year budget pitch (Reuters)
• China Banks Show Too-Connected-to-Fail Link to Shadow Loans (BBG)
• Ex-BOK Deputy Lee Named to Head South Korea Central Bank (BBG)
• Beijing's GDP Goal Under New Scrutiny (WSJ)
• No mortgage origination problem in the UK: Mortgage approvals climb to six year high (Telegraph)

Overnight Media Digest

WSJ

* As Russia's military secured the Crimean peninsula, its currency hit a record low and its stock market plunged in the face of U.S. and European warnings of sanctions over the incursion into Ukraine.

* North Dakota's oil producers are choosing the greater flexibility of railroads to move crude to thirsty markets in the east and west, stranding two pipeline projects before they could begin.

* After months of ill-fated deals, the bankrupt city of Detroit has settled with two large banks for about 30 cents on the dollar in the city's only agreement so far with major creditors, according to court filings Monday.

* Standard Chartered PLC is nearing deals to sell roughly a half-dozen units in Europe, Asia and the Middle East, as part of an effort to combat an emerging-markets slowdown and worries about the bank's financial health, according to people familiar with the deals.

* Citigroup Inc said on Monday it received subpoenas from the Federal Deposit Insurance Corp and U.S. prosecutors, three days after the bank disclosed it had found allegedly fraudulent billings at its Mexico unit that cost it up to $400 million.

* Winter storms chilled U.S. auto demand in February as overall sales were flat on big gains at Fiat Chrysler Automobiles and Nissan Motor Co .

Single-digit percentage declines at General Motors Co , Ford Motor Co, Toyota Motor Corp and several others kept sales at 1.19 million cars and light trucks last month, off slightly from a year earlier, said researcher Autodata Corp.

* PNC Financial Services Group Inc has received a subpoena from the U.S. Department of Justice concerning its relationships with merchants for payment-processing services, the Pittsburgh-based bank disclosed in a regulatory filing Monday.

* Roche Holding AG will have more flexibility to pursue acquisitions in the coming year as the Swiss drug maker pays off the bulk of debt from its $47 billion buyout of Genentech.

* Dish Network Corp has agreed to curtail the use of a controversial ad-skipping feature on its latest digital video recorders for ABC shows, as part of a new long-term programming deal with ABC owner Walt Disney Co, the companies confirmed late Monday.

* The U.S. Supreme Court on Monday agreed to decide whether workers should be paid for time spent going through theft-deterrence screenings at the end of their shifts, taking up a case brought by Amazon.com Inc warehouse employees.

* A federal appeals court rejected BP Plc's effort to stop Gulf Coast businesses from collecting payouts from the Deepwater Horizon settlement fund, even when they can't directly trace their losses to the 2010 oil spill.

FT

Fears of a war in Ukraine wiped a tenth off the value of Moscow's stock exchange, sent the rouble tumbling to an all-time low and pushed up the price of commodities as the west scrambled to counter Russia's creeping invasion of Crimea.

Diplomats have been scrambling to lower tensions and offer Russian President Vladimir Putin a face-saving way out of the Ukraine crisis in order to avert war.

The British Prime Minister's office denied it was putting the interests of businesses based in London ahead of attempts to defuse the Ukraine crisis.

U.S. tobacco company RJ Reynolds is exploring a bid for rival Lorillard Inc, people familiar with the situation said.

Citigroup has issued a warning about revenue declines at its consumer banking, trading and investment banking businesses in the first quarter.

Ukraine is set to receive more than $2 billion in international aid after its acting prime minister promised to meet all economic reform demands needed to secure the aid package.

NYT

* The Obama administration suspended military ties to Russia, including exercises, port visits and planning meetings, just a day after calling off trade talks.

* Banamex USA, a banking affiliate of Citigroup Inc that handles transactions across the Mexican border, has become entangled in an investigation into compliance with rules on the monitoring of financial transfers.

* American refiners are refurbishing old plants or planning new ones to take advantage of new supplies of domestic crude.

* A federal appeals panel ruled that BP must pay gulf companies for damages without requiring proof of harm by the Deepwater Horizon spill.

* California voters imposed more generous living conditions for egg layers. But the Legislature's decision that imported eggs must to be produced under the same standards has drawn a lawsuit.

* The Federal Communications Commission leveled fines totaling $1.9 million on Monday on three of the nation's biggest media companies - Comcast Corp, Viacom Inc and Walt Disney Co - for "willfully and repeatedly" violating federal law by carrying a commercial.

* Maury Rosenberg says he lost his business after being forced into involuntary bankruptcy by a unit of U.S. Bancorp . A court later ruled the bankruptcy illegal, but by then the business was gone.

* Two of Carlyle's three founders plan to sell 7.5 million common units of Carlyle Group, according to a filing on Monday. Carlyle itself is selling 4.5 million common units. The offering of 12 million shares would raise about $435 million.

Canada

THE GLOBE AND MAIL

* The number of obese Canadians has tripled since the mid-1980s, a phenomenon driven by a sharp rise in the number of extremely overweight adults whose health complications are expected to place a heavy burden on the health-care system.

* Lawyers working for Kinder Morgan Inc have sent a letter to the National Energy Board proposing the narrowest interpretation of who can participate in a review of the company's proposed twinning of the Trans Mountain pipeline.

Reports in the business section:

* A year after being admonished for cutting mortgage rates too aggressively, banks are demonstrating a new, self-imposed restraint.

* Canada's dairy industry faces a grim future of stagnant sales, dwindling farms and lost opportunity if the country remains a bystander to a global boom in milk products trade, the Conference Board of Canada argues in a new study.

NATIONAL POST

* The libel trial of the controversial Sun News TV host Ezra Levant began in a Toronto courtroom with blunt questions and cautiously indignant answers from the alleged victim.

FINANCIAL POST

* Pacific Investment Management Co forecasts Canadian home prices falling as much as 20 percent in the next five years, removing the boost from household spending that contributed to faster-than-expected growth last quarter.

* Prime Minister Stephen Harper sharply criticized Taseko Mines Ltd and its controversial New Prosperity project on Monday, stating that an environmental report on the British Columbia project was "damning."

China

CHINA SECURITIES JOURNAL

- The southwestern inland municipality of Chongqing said detailed plans for its proposed free trade zone would be hopefully unveiled to the public after the opening of the annual session of the National People's Congress.

SECURITIES TIMES

- Easing liquidity conditions have pulled yields of money market investment funds lower than 5 percent since last week, with analysts predicting that money market funds marketed online may no longer be able continue offering high yields.

CHINA BUSINESS NEWS

- The PBOC said it was supportive of the development of the online financial service sector, responding to the appeals to strengthen regulation of online finance from traditional brick-and-mortar financial service providers.

- Li Yizhong, former head of Ministry of Industry and Information, called for reform of monopolistic industries by introducing more competition to selected parts of identified sectors.

CHINA DAILY

- Zimbabwe will allow China's yuan to be used as legal tender in the country.

- China National Offshore Oil Corp (CNOOC), the country's largest offshore oil and gas developer, has become the first Chinese firm licensed to look for oil in the Arctic, in partnership with Iceland's Eykon Energy and Petoro Iceland AS.

SHANGHAI DAILY

- Li Zhongyang, the deputy director of the Shanghai Health Promotion Committee said the city government was planning to introduce a ban on smoking in all public places within five years.

- Several types of headphones and earphones manufactured by Panasonic, Philips and some local firms failed quality checks after being found to pose risk to people's hearing, said Shanghai Quality and Technical Supervision.

- Shares of China Galaxy Securities Co Ltd, the country's sixth-biggest brokerage by revenue, dipped in Hong Kong on Monday, after it announced its plans to list in Shanghai.

Britain

The Telegraph

BP LOSES APPEAL OVER $9.2BN GULF OF MEXICO PAYOUTS

BP has lost its battle to clamp down on "absurd" payouts to alleged victims of the 2010 Gulf of Mexico oil spill, after an appeals court said it must restart payments from its $9.2 billion compensation fund.

MORTGAGE APPROVALS CLIMB TO SIX-YEAR HIGH

Mortgage approvals rose to their highest level in more than six years in January, amid growing confidence in the housing market and record low borrowing costs.

The Guardian

ROLLS-ROYCE FACES FRESH BRIBERY ALLEGATIONS IN INDIA

Rolls-Royce has been plunged into fresh crisis after India became the latest country to launch a formal investigation into allegations of bribery and corruption at the British defence and engineering firm.

UKRAINE CRISIS SENDS RUSSIAN STOCK MARKET TUMBLING

The Moscow stock market suffered one of its biggest one-day falls in recent years and the rouble tumbled sharply in a first nervous reaction to the Kremlin's gambit in Crimea.

The Times

CRIMEA CRISIS SENDS GLOBAL INVESTORS FLEEING FOR SAFETY

Turmoil gripped world markets on Monday as investors reacted to the armed stand-off between Russia and Ukraine in Crimea, with the FTSE 100 suffering its worst day in two months as more than 25 billion pounds was wiped off the value of its biggest companies.

'MINDER' IAN TYLER STEPS IN TO KEEP WATCH ON G4S

The Cabinet Office will announce on Tuesday that Ian Tyler, the former chief executive of Balfour Beatty, has been appointed as a £500-a-day Crown Representative - or "minder" - to G4S, the troubled outsourcer.

The Independent

BUSINESS LENDING FALLS AGAIN IN FRESH BLOW FOR BANK OF ENGLAND

Bank of England Governor Mark Carney faced a fresh setback on Monday as another drop in loans to businesses overshadowed the latest figures from Threadneedle Street's flagship scheme to kick-start credit.

SERCO BEEFS UP BOARD IN WAKE OF TAGGING SCANDAL

Scandal-hit Serco continues to strengthen its board with the appointment of three heavyweight non-executives days after it poached Rupert Soames from Aggreko as its new chief executive.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS
Domestic economic reports scheduled for today include:
New York ISM for February at 9:45 am--prior reading 64.4

ANALYST RESEARCH

Upgrades

Abercrombie & Fitch (ANF) upgraded to Outperform from Neutral at Credit Suisse
GrafTech (GTI) upgraded to Buy from Hold at Jefferies
Hilton (HLT) upgraded to Buy from Neutral at Goldman
Magna (MGA) upgraded to Neutral from Sell at Goldman
Magna (MGA) upgraded to Neutral from Underweight at JPMorgan
PulteGroup (PHM) upgraded to Buy from Hold at KeyBanc
SunEdison (SUNE) upgraded to Overweight from Equal Weight at Morgan Stanley
WNS Holdings (WNS) upgraded to Outperform from Neutral at RW Baird

Downgrades

AngloGold (AU) downgraded to Sell from Neutral at UBS
Cliffs Natural (CLF) downgraded to Underperform from Market Perform at Wells Fargo
Dendreon (DNDN) downgraded to Market Perform from Outperform at Bernstein
Fresenius Medical (FMS) downgraded to Underweight from Neutral at HSBC
Intuitive Surgical (ISRG) downgraded to Hold from Buy at Cantor
Lennar (LEN) downgraded to Hold from Buy at KeyBanc
Madison Square Garden (MSG) downgraded to Hold from Buy at Needham
Solazyme (SZYM) downgraded to Neutral from Buy at Goldman
Starwood Hotels (HOT) downgraded to Neutral from Buy at Goldman
Time Warner Cable (TWC) downgraded to Neutral from Outperform at Macquarie
Watts Water (WTS) downgraded to Market Perform from Outperform at Cowen

Initiations

Argos Therapeutics (ARGS) initiated with an Outperform at JMP Securities
Argos Therapeutics (ARGS) initiated with an Overweight at Piper Jaffray
Avon Products (AVP) initiated with a Sell at UBS
Church & Dwight (CHD) initiated with a Buy at UBS
Clorox (CLX) initiated with a Sell at UBS
Coca-Cola Enterprises (CCE) initiated with a Neutral at UBS
Coca-Cola (KO) initiated with a Neutral at UBS
Colgate-Palmolive (CL) initiated with a Buy at UBS
Dr Pepper Snapple (DPS) initiated with a Neutral at UBS
Energizer (ENR) initiated with a Sell at UBS
Estee Lauder (EL) initiated with a Buy at UBS
GT Advanced (GTAT) initiated with a Buy at Goldman
Infinity Pharmaceuticals (INFI) initiated with an Underperform at Wedbush
Ladder Capital (LADR) initiated with an Outperform at Keefe Bruyette
Monster Beverage (MNST) initiated with a Buy at UBS
Procter & Gamble (PG) initiated with a Neutral at UBS
Santander Consumer USA (SC) initiated with a Buy at Citigroup
Santander Consumer USA (SC) initiated with a Buy at Deutsche Bank
Santander Consumer USA (SC) initiated with a Buy at UBS
Santander Consumer USA (SC) initiated with a Neutral at Goldman
Santander Consumer USA (SC) initiated with a Sector Perform at RBC Capital
Santander Consumer USA (SC) initiated with an Outperform at BMO Capital
Santander Consumer USA (SC) initiated with an Outperform at Credit Suisse
Santander Consumer USA (SC) initiated with an Outperform at Wells Fargo
Tenneco (TEN) initiated with a Buy at UBS

COMPANY NEWS

Disney (DIS), DISH Network (DISH) signed a long-term distribution agreement
Sony (SNE) says PlayStation 4 has sold over 6M units as of March 2
S&P revised J.C. Penney (JCP) outlook to stable from negative
McDermott (MDR) withdrew prior guidance, suspended future guidance
Enbridge (ENB), Enbridge Energy (EEP) to undertake $7B mainline replacement program
Alexion (ALXN) said NICE acknowledged Soliris as effective treatment for aHUS
Synta Pharmaceuticals (SNTA) said CEO Safi R. Bahcall, Ph.D., resigned; A newly formed executive committee will serve as the principal executive body for the company until a new CEO is named

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
DXP Enterprises (DXPE), NuVasive (NUVA), Ambac Financial (AMBC), Molycorp (MCP), Black Diamond (BDE), MBIA (MBI), Ascena Retail (ASNA), URS Corporation (URS), Guidewire Software (GWRE), Synageva (GEVA), Amicus Therapeutics (FOLD), Vipshop (VIPS)

Companies that missed consensus earnings expectations include:
AuRico Gold (AUQ), AcelRx (ACRX), McDermott (MDR), PDL BioPharma (PDLI)

Companies that matched consensus earnings expectations include:
TherapeuticsMD (TXMD)

NEWSPAPERS/WEBSITES

Buffett's (BRK.A) succession plans remain vague, Reuters reports
Archer Daniels (ADM), Bunge (BG) said operations haven't been affected by Ukraine turmoil, WSJ reports
BP (BP) considers options after Gulf court setback, Reuters reports
Broadcasters (DISH, TWC, CMCSA, FOXA, DIS) backed by Justice Department in Aereo fight, Re/code reports
Sprint (S) sued by U.S. officials for overbilling $21M for wiretap services, AP reports
Roche (RHHBY) cash position provides acquisition flexibility, WSJ reports
JPMorgan (JPM) to pay $400M to settle Syncora lawsuits, Reuters reports
DISH (DISH) to curtail ad-skipping for ABC shows (DIS), WSJ reports
Loral Space (LORL) hires Perella to advise on sale, Reuters reports  

SYNDICATE

ACADIA (ACAD) files to sell $150M in common stock
Ardmore Shipping (ASC) files to sell 6M shares of common stock
Artisan Partners (APAM) files to sell 7M shares of Class A common stock
Atlas Resource Partners (ARP) files to sell 5.5M common units
BioLineRx (BLRX) files to sell American Depositary Shares
Carlyle Group (CG) files to sell 12M common units
GTx (GTXI) raises $21.3M in a private placement
Mandalay Digital (MNDL) files to sell common stock
MannKind (MNKD) enters $50M at-the-market agreements
OvaScience (OVAS) files to sell common stock
Regulus Therapeutics (RGLS) files $100M mixed shelf, 7.9M shares for holders
Stock Building Supply (STCK) files to sell 6.6M shares of common stock

• Putin rebuffs Obama as Ukraine crisis escalates (Reuters)
• Behind the $100 Billion Commodity Empire That Few Know (BBG)
• Initial Public Offerings Hit Pace Not Seen in Years (WSJ)
• Russian Parliament Will Back Crimea Split From Ukraine (WSJ)
• Nakamoto Named as Bitcoin Father Denies Involvement, Flees Press (BBG)
• Chaori Can’t Make Payment in China’s First Onshore Default (BBG)
• Zombies Spreading Shows Chaori Default Just Start (BBG)
• Pimco's Gross declares El-Erian is 'trying to undermine me' (Reuters)
• U.S. Fighters Circle Baltics as Putin Fans Fear of Russia (BBG)
• College Grads Taking Low-Wage Jobs Displace Less Educated (BBG)
• Malaysia's Anwar convicted of sodomy, political future in doubt (Reuters)
• Biggest Wealth Fund Urged to Explain Formula One Investment (BBG)
• Regulator Deletes Red Flags From Brokers' Records, Says Study (WSJ)

Overnight Media Digest

WSJ

* Crimea's Moscow-backed government voted to secede from Ukraine and join Russia and accelerated a snap referendum to ratify the move, a dramatic escalation of tension that pushed the West closer to imposing sanctions if Russian troops don't withdraw.

* As Crimea's legislators voted for secession on Thursday, residents expressed a mixture of shock and satisfaction about the prospect of splitting from Ukraine and joining Russia.

* With the U.S. Supreme Court poised to rule on race-conscious college-admissions policies, University of California officials say they still struggle to meet diversity goals for their university system 18 years after state voters banned affirmative action

* The Financial Industry Regulatory Authority "routinely" strips out some possible red flags on brokers from its database in the information it makes available to investors, according to a study released Thursday by an organization of lawyers who represent investors in claims against brokers.

* When the leaders running law firm Dewey & LeBoeuf LLP realized in the depths of the financial crisis that they were about to violate the terms of their bank loan, prosecutors allege they took the easy way out and cooked the books.

* Canadian regulators on Thursday approved a plan by Enbridge Inc to reverse the flow of a major pipeline and ship more oil to refineries in the East, a move designed to ease bottlenecks that have depressed prices of crude from Western Canada.

* Abercrombie & Fitch Co is preparing to reposition its surfer-themed Hollister chain as a fast-fashion brand, hoping to better compete with rivals such as H&M and Forever 21 Inc. that have eaten into sales to teens.

* Hundreds of workers at an International Business Machines Corp plant struck for a fourth day as the company prepares to transfer the computer-server factory to Lenovo Group Ltd.

* One of the country's biggest retailers sounded a worrying call for the future of brick and mortar: Staples Inc is not only closing a big swath of its North American stores, but it also wants those that remain to be half the size.

* General Electric Co raised $3 billion in a sale of new debt Thursday, stocking its coffers while rates are low.

* Cerberus Capital Management LP agreed to buy Safeway Inc in a deal the companies valued at more than $9 billion that would be the private-equity firm's latest acquisition of a big U.S. grocery chain.

* A top Food and Drug Administration official on Thursday rejected the cosmetic industry's latest proposal for a regulatory overhaul aimed at improving the safety of beauty and personal-care products.

FT

Britain might have to go through another year of austerity due to a 20 billion pound black hole in public finances, according to economic models used by the Office for Budget Responsibility.

Russia was at receiving end of the western powers over its intervention in Ukraine, with the United States issuing visa bans on Russian officials and EU signing an integration agreement with Kiev.

A consortium led by private equity firm Cerebus Capital Management will acquire Safeway Inc in a deal worth $9 billion, and merge it with Albertsons supermarket chain.

Two years after the collapse of Dewey & LeBoeuf, the U.S. authority has charged its former management with "a massive effort to cook the books".

Shares of Reynolds American Inc and Lorillard Inc jumped this week on talks of a potential deal between the U.S. cigarette makers.

NYT

* Former executives at Dewey & LeBoeuf were accused of manipulating the firm's books to keep it afloat during the financial crisis.

* An article about a man in Southern California named Satoshi Nakamoto has prompted many enthusiasts to question whether the right person had been identified as the creator of the virtual currency Bitcoin.

* With the music industry turning digital, music companies can now understand their customers' listening habits in greater depth than ever before.

* John Lefevre, the man behind the @GSElevator Twitter account, has lost his book deal after his true identity came to light.

* Some employers are offering as many as 25 health care plans to employees from a variety of insurers, including Blue Cross and UnitedHealthcare, to lower their costs for the benefit. ()

* Gene McQuade, the chief executive of Citibank, the entity that holds 70 percent of the company's assets and runs its international businesses, is leaving, as is Cece Stewart, who runs Citigroup's consumer and commercial banking operations in the United States. ()

Canada

THE GLOBE AND MAIL

* Enbridge Inc has won approval to reverse the flow of oil in its Line 9 pipeline between Southern Ontario and Quebec, a contentious project aimed at giving Quebec refiners access to more affordable Western Canadian and North Dakota oil.

* The union representing 41,000 teachers in British Columbia has voted overwhelmingly in favour of job action, although its president says there will be no immediate school closures or disruptions to students, and members are committed to a negotiated settlement.

Reports in the business section:

* As grocers slash prices to win bargain-hungry customers, makers of food and consumer goods are pushing back against heavy discounting of their products. In the intensified competition, grocers have demanded price cuts from their suppliers. Now vendors are retaliating by setting minimum advertised prices in a bid to stop retailers from using their merchandise as loss leaders.

* Canada is on the verge of clinching a free-trade deal with South Korea after more than half a decade of on-and-off negotiations, and an announcement is expected early next week.

NATIONAL POST

* British Columbians will soon be able to buy wine and beer at the same grocery store where they pick up their eggs and bread.

* Toronto moved one step closer to having a ranked ballot vote in municipal elections, an initiative that is getting support from across the political spectrum.

FINANCIAL POST

* John Chen has surprised skeptics and pleased investors, but the BlackBerry chief says his next aim is to get the devices business growing and to expand its BBM messaging service.

* Target Corp made a splash with colourful billboards, ads and flyers in Canada. But in this country of heavy Internet usage, it's website doesn't show much of what it sells.

China

CHINA SECURITIES JOURNAL

- The two-way movements of China's yuan against the dollar are favourable for further financial reforms, including the liberalisation of deposit rates and the introduction of foreign exchange derivative products, a commentary by the newspaper said.

SHANGHAI SECURITIES NEWS

- China (Shanghai) Pilot Free Trade Zone plans to shorten its negative list for foreign investment in 2014, Shanghai's Party Secretary, Han Zheng, said in a sub-session of China's on-going annual parliamentary meeting in Beijing.

CHINA BUSINESS NEWS

- China's central bank has finished drafting regulations governing the country's first deposit insurance mechanisms, which are expected to be promulgated soon.

PEOPLE'S DAILY

- The Chinese government should keep economic reforms a top priority and step up enforcement of pronounced reform polices, the mouthpiece of the ruling Communist Party of China said in an editorial.

Britain

The Telegraph

UKRAINIAN TENSIONS COULD HAVE SERIOUS IMPLICATIONS FOR EUROPE - DRAGHI

Tensions in Ukraine could pose a "very serious" threat to the rest of Europe, Mario Draghi has warned. The president of the European Central Bank (ECB) said the impact of the Ukrainian crisis on the energy market, while minimal in the short term, could escalate.

UK HOUSE PRICE GROWTH 'APPROACHING MADNESS'

The speed UK property prices are rising at is "approaching madness", analysts have warned, after data showed house prices jumped 2.4 percent in February, the biggest monthly increase in five years.

The Guardian

LOSS-MAKING RBS TO GIVE MILLIONS IN SHARES TO EXECUTIVES

Royal Bank of Scotland is poised to release millions of pounds worth of shares to its top executive team through bonus schemes put in place by the loss-making bank over the last three years.

LLOYDS BANKING GROUP TO PAY EXTRA 1BN POUND TO BUY BACK BONDS

The bailed-out Lloyds Banking Group is to take an unexpected 1 billion pound accounting charge as the result of a complex scheme to buy back financial instruments it issued during the banking crisis.

The Times

BNP TRADER SUSPENDED AS FOREX SCANDAL ESCALATES

A senior currency trader who served on the Bank of England's foreign exchange committee has been suspended by his bank BNP Paribas, dealing a further blow to London's position as the world's leading centre for forex trading.

BP CHIEF GIVEN HUGE PAY RISE AS REWARD FOR PLAYING IT SAFE

BP more than tripled its chief executive's pay to $8.7 million last year after it hit new performance targets put in place after the Gulf of Mexico disaster in 2010.

Sky News

CURTAIN TO FALL ON BARCLAYS' 120-YEAR AUDIT

Barclays is to end its 120-year audit relationship with PricewaterhouseCoopers (PwC) and appoint one of its main rivals in the latest shake-up at the embattled bank.

SHELL BOSS REJECTS SCOTTISH INDEPENDENCE

The chief executive of Royal Dutch Shell has said he wants Scotland to remain part of the UK. At the company's annual reception in London, Ben van Beurden said he valued the "continuity and stability" of the UK.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Nonfarm payrolls for February at 8:30--consensus 150K
Unemployment rate for February at 8:30--consensus 6.6%
International trade balance for January at 8:30--consensus -$39.0B
Consumer credit for January at 15:00--consensus $14.0B

ANALYST RESEARCH

Upgrades

Copa Holdings (CPA) upgraded to Buy from Neutral at UBS
Cross Country Healthcare (CCRN) upgraded to Buy from Hold at Cantor
Cross Country Healthcare (CCRN) upgraded to Buy from Neutral at Citigroup
GT Advanced (GTAT) upgraded to Outperform from Neutral at Credit Suisse
Omnicare (OCR) upgraded to Buy from Neutral at UBS
Polycom (PLCM) upgraded to Buy from Neutral at Citigroup
Quality Systems (QSII) upgraded to Market Perform from Underperform at FBR Capital
Safeway (SWY) upgraded to Neutral from Sell at UBS
Skullcandy (SKUL) upgraded to Outperform from Market Perform at Northland Securities
Teva (TEVA) upgraded to Overweight from Equal Weight at Barclays
The Buckle (BKE) upgraded to Neutral from Sell at Janney Capital
The Fresh Market (TFM) upgraded to Buy from Neutral at UBS

Downgrades

Alpha Natural (ANR) downgraded to Sell from Neutral at Goldman
American Capital Mortgage (MTGE) downgraded to Hold from Buy at Deutsche Bank
CYS Investments (CYS) downgraded to Hold from Buy at Deutsche Bank
Houghton Mifflin (HMHC) downgraded to Hold from Buy at Stifel
Houghton Mifflin (HMHC) downgraded to Neutral from Buy at Goldman
Humana (HUM) downgraded to Hold from Buy at Jefferies
Kindred Biosciences (KIN) downgraded to Neutral from Buy at Roth Capital
New York Mortgage (NYMT) downgraded to Hold from Buy at Deutsche Bank
Numerex (NMRX) downgraded to Hold from Buy at Canaccord
Pinnacle Financial (PNFP) downgraded to Hold from Buy at Wunderlich
Safeway (SWY) downgraded to Hold from Buy at BB&T
Star Bulk Carriers (SBLK) downgraded to Equal Weight from Overweight at Morgan Stanley
TCP Capital (TCPC) downgraded to Hold from Buy at Deutsche Bank
Violin Memory (VMEM) downgraded to Underperform from Buy at BofA/Merrill

Initiations

Bridge Capital Holdings (BBNK) initiated with a Buy at DA Davidson
Conatus Pharmaceuticals (CNAT) initiated with a Buy at Roth Capital
E2open (EOPN) initiated with a Buy at B. Riley
Jazz Pharmaceuticals (JAZZ) reinstated with an Overweight at Barclays
Ladder Capital (LADR) initiated with a Buy at Deutsche Bank
Regency Energy Partners (RGP) initiated with a Hold at Deutsche Bank
Rouse Properties (RSE) initiated with a Neutral at BofA/Merrill
Salesforce.com (CRM) initiated with a Neutral at B. Riley
ServiceNow (NOW) initiated with a Neutral at B. Riley
Tallgrass Energy (TEP) initiated with an Outperform at Wells Fargo
Thomson Reuters (TRI) initiated with a Hold at Deutsche Bank

COMPANY NEWS

Albertsons to buy Safeway (SWY) for $40 per share
Kimco Realty (KIM) to own 9.94% of combined Safeway-Albertsons
Gap (GPS) reported February SSS down 7%
Ford (F) to move production of F-650, F-750 medium-duty trucks to Ohio from Mexico
American Apparel (APP) gave a FY14 revenue outlook that came in below estimates, and said February preliminary SSS were down 5%
Cooper Companies (COO) said foreign currency continues to have negative effect
Big Lots (BIG) said wind down of Canadian operations remains on schedule, sees Q1 “slightly positive” to “slightly negative”
FreeWheel confirmed that it has been acquired by Comcast (CMCSA)
Casablanca Capital nominated six for election to Cliff’s Natural (CLF) board

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Achillion (ACHN), Information Services (III), Qihoo 360 (QIHU), Comtech (CMTL), Ambarella (AMBA), Alamo Group (ALG), Korn/Ferry (KFY), Numerex (NMRX), Emergent BioSolutions (EBS), Jamba (JMBA), Cooper Companies (COO), U.S. Auto Parts (PRTS)

Companies that missed consensus earnings expectations include:
Timmins Gold (TGD), Denison Mines (DNN), BPZ Resources (BPZ), The Fresh Market (TFM), Baxano Surgical (BAXS), Analogic (ALOG), Novatel Wireless (NVTL), H&R Block (HRB), Thor Industries (THO), Synergetics (SURG), Quantum (QTWW), Quiksilver (ZQK)

Companies that matched consensus earnings expectations include:
Craft Brew (BREW), Manitex (MNTX), Violin Memory (VMEM), Finisar (FNSR)

NEWSPAPERS/WEBSITES

Facebook (FB) faces privacy advocates who want WhatsApp deal stopped, Reuters reports
Atlanta Fed's Lockhart: Keep reducing policy accommodation, Reuters reports
AT&T (T) CEO: Comcast (CMCSA), Time Warner Cable (TWC) a 'redefining' industry deal, WSJ reports
Oil industry (CVX) facing rising production costs, WSJ reports
Cigarette manufacturers (RAI, LO,TYBY, BTI) surge on deal discussions, FT reports
Twitter (TWTR) paid IBM (IBM) $36M for 900 patents to end dispute, Bloomberg reports
U.S. clients of Credit Suisse (CS) face uncertainty over probe, Bloomberg reports
Time Warner's (TWX) Warner Bros. plans to lead an investment of $18M in Machinima, WSJ reports

SYNDICATE

Alimera Sciences (ALIM) files to sell 6.25M shares of common stock
Applied Optoelectronics (AAOI) files to sell 2.7M shares of common stock
Aquinox (AQXP) 3.7M share IPO priced at $11.00
Artisan Partners (APAM) 8.07M share Secondary priced at $62.00
CDW Corporation (CDW) files to sell 10M shares of common stock for holders
Coupons.com (COUP) 10.5M share IPO priced at $16.00
FireEye (FEYE) 14M share Secondary priced at $82.00
Flamel Technologies (FLML) files to sell common stock
Recro Pharma (REPH) 3.75M share IPO priced at $8.00
Windstream (WIN) files to sell 4.32M shares of common stock for holders

Submitted by James Stafford via OilPrice.com,

How much faith can we put in our ability to decipher all the numbers out there telling us the US is closing in on its cornering of the global oil market? There’s another side to the story of the relentless US shale boom, one that says that some of the numbers are misunderstood, while others are simply preposterous. The truth of the matter is that the industry has to make such a big deal out of shale because it’s all that’s left. There are some good things happening behind the fairy tale numbers, though—it’s just a matter of deciphering them from a sober perspective.   

In a second exclusive interview with James Stafford of Oilprice.com, energy expert Arthur Berman discusses:

• Why US gas supply growth rests solely on Marcellus
• When Bakken and Eagle Ford will peak
• The eyebrow-raising predictions for the Permian Basin
• Why outrageous claims should have oil lawyers running for cover
• Why everyone’s making such a big deal about shale
• The only way to make the shale gas boom sustainable
• Why some analysts need their math examined
• Why it’s not just about how much gas we produce
• Why investors are starting to ask questions
• Why new industries, not technologies will make the next boom
• Why we’ll never hit the oil and gas ‘wall’
• Why companies could use a little supply-and-demand discipline
• Why ‘fire ice’ makes sense (in Japan)
• Why the US crude export debate will be ‘silly’

Arthur is a geological consultant with thirty-four years of experience in petroleum exploration and production. He is currently consulting for several E&P companies and capital groups in the energy sector. He frequently gives keynote addresses for investment conferences and is interviewed about energy topics on television, radio, and national print and web publications including CNBC, CNN, Platt’s Energy Week, BNN, Bloomberg, Platt’s, Financial Times, and New York Times. You can find out more about Arthur by visiting his website: http://petroleumtruthreport.blogspot.com

Oilprice.com: Almost on a daily basis we have figures thrown at us to demonstrate how the shale boom is only getting started. Mostly recently, there are statements to the effect that Texas shale formations will produce up to one-third of the global oil supply over the next 10 years. Is there another story behind these figures?

Arthur Berman:First, we have to distinguish between shale gas and liquids plays. On the gas side, all shale gas plays except the Marcellus are in decline or flat. The growth of US supply rests solely on the Marcellus and it is unlikely that its growth can continue at present rates. On the oil side, the Bakken has a considerable commercial area that is perhaps only one-third developed so we see Bakken production continuing for several years before peaking. The Eagle Ford also has significant commercial area but is showing signs that production may be flattening. Nevertheless, we see 5 or so more years of continuing Eagle Ford production activity before peaking. The EIA has is about right for the liquids plays--slower increases until later in the decade, and then decline.

The idea that Texas shales will produce one-third of global oil supply is preposterous. The Eagle Ford and the Bakken comprise 80% of all the US liquids growth. The Permian basin has notable oil reserves left but mostly from very small accumulations and low-rate wells. EOG CEO Bill Thomas said the same thing about 10 days ago on EOG's earnings call. There have been some truly outrageous claims made by some executives about the Permian basin in recent months that I suspect have their general counsels looking for a defibrillator.

Recently, the CEO of a major oil company told The Houston Chronicle that the shale revolution is only in the "first inning of a nine-inning game”. I guess he must have lost track of the score while waiting in line for hot dogs because production growth in U.S. shale gas plays excluding the Marcellus is approaching zero; growth in the Bakken and Eagle Ford has fallen from 33% in mid-2011 to 7% in late 2013.

Oil companies have to make a big deal about shale plays because that is all that is left in the world. Let's face it: these are truly awful reservoir rocks and that is why we waited until all more attractive opportunities were exhausted before developing them. It is completely unreasonable to expect better performance from bad reservoirs than from better reservoirs.

The majors have shown that they cannot replace reserves. They talk about return on capital employed (ROCE) these days instead of reserve replacement and production growth because there is nothing to talk about there. Shale plays are part of the ROCE story--shale wells can be drilled and brought on production fairly quickly and this masks or smoothes out the non-productive capital languishing in big projects around the world like Kashagan and Gorgon, which are going sideways whilst eating up billions of dollars.

None of this is meant to be negative. I'm all for shale plays but let's be honest about things, after all!  Production from shale is not a revolution; it’s a retirement party.

OP: Is the shale “boom” sustainable?

Arthur Berman:The shale gas boom is not sustainable except at higher gas prices in the US. There is lots of gas--just not that much that is commercial at current prices. Analysts that say there are trillions of cubic feet of commercial gas at $4 need their cost assumptions audited. If they are not counting overhead (G&A) and many operating costs, then of course things look good. If Walmart were evaluated solely on the difference between wholesale and retail prices, they would look fantastic. But they need stores, employees, gas and electricity, advertising and distribution. So do gas producers. I don't know where these guys get their reserves either, but that needs to be audited as well.

There was a report recently that said large areas of the Barnett Shale are commercial at $4 gas prices and that the play will continue to produce lots of gas for decades. Some people get so intrigued with how much gas has been produced and could be in the future, that they don't seem to understand that this is a business. A business must be commercial to be successful over the long term, although many public companies in the US seem to challenge that concept.

Investors have tolerated a lot of cheerleading about shale gas over the years, but I don't think this is going to last. Investors are starting to ask questions, such as: Where are the earnings and the free cash flow. Shale companies are spending a lot more than they are earning, and that has not changed. They are claiming all sorts of efficiency gains on the drilling side that has distracted inquiring investors for awhile. I was looking through some investor presentations from 2007 and 2008 and the same companies were making the same efficiency claims then as they are now. The problem is that these impressive gains never show up in the balance sheets, so I guess they must not be very important after all.

The reason that the shale gas boom is not sustainable at current prices is that shale gas is not the whole story. Conventional gas accounts for almost 60% of US gas and it is declining at about 20% per year and no one is drilling more wells in these plays. The unconventional gas plays decline at more than 30% each year. Taken together, the US needs to replace 19 billion cubic feet per day each year to maintain production at flat levels. That's almost four Barnett shale plays at full production each year! So you can see how hard it will be to sustain gas production. Then there are all the efforts to use it up faster--natural gas vehicles, exports to Mexico, LNG exports, closing coal and nuclear plants--so it only gets harder.

This winter, things have begun to unravel. Comparative gas storage inventories are near their 2003 low. Sure, weather is the main factor but that's always the case. The simple truth is that supply has not been able to adequately meet winter demand this year, period. Say what you will about why but it's a fact that is inconsistent with the fairy tales we continue to hear about cheap, abundant gas forever.

I sat across the table from industry experts just a year ago or so who were adamant that natural gas prices would never get above $4 again. Prices have been above $4 for almost three months. Maybe "never" has a different meaning for those people that doesn't include when they are wrong.

OP: Do you foresee any new technology on the shelf in the next 10-20 years that would shape another boom, whether it be fossil fuels or renewables?

Arthur Berman: I get asked about new technology that could make things different all the time. I'm a technology enthusiast but I see the big breakthroughs in new industries, not old extractive businesses like oil and gas. Technology has made many things possible in my lifetime including shale and deep-water production, but it hasn't made these things cheaper.

That's my whole point about shale plays--they're expensive and need high oil and gas prices to work. We've got the high prices for oil and the oil plays are fine; we don't have high prices for the gas plays and they aren't working. There are some areas of the Marcellus that actually work at $4 gas price and that's great, but it really takes $6 gas prices before things open up even there.

OP: In Europe, where do you see the most potential for shale gas exploitation, with Ukraine engulfed in political chaos, companies withdrawing from Poland, and a flurry of shale activity in the UK?

Arthur Berman: Shale plays will eventually spread to Europe but it will take a longer time than it did in North America. The biggest reason is the lack of private mineral ownership in most of Europe so there is no incentive for local people to get on board. In fact, there are only the negative factors of industrial development for them to look forward to with no pay check. It's also a lot more expensive to drill and produce gas in Europe.

There are a few promising shale plays on the international horizon:  the Bazherov in Russia, the Vaca Muerte in Argentina and the Duvernay in Canada look best to me because they are liquid-prone and in countries where acceptable fiscal terms and necessary infrastructure are feasible.  At the same time, we have learned that not all plays work even though they look good on paper, and that the potentially commercial areas are always quite small compared to the total resource.  Also, we know that these plays do not last forever and that once the drilling treadmill starts, it never ends.  Because of high decline rates, new wells must constantly be drilled to maintain production.  Shale plays will last years, not decades.

Recent developments in Poland demonstrate some of the problems with international shale plays.  Everyone got excited a few years ago because resource estimates were enormous.  Later, these estimates were cut but many companies moved forward and wells have been drilled.  Most international companies have abandoned the project including ExxonMobil, ENI, Marathon and Talisman.  Some players exited because they don’t think that the geology is right but the government has created many regulatory obstacles that have caused a lack of confidence in the fiscal environment in Poland.

The UK could really use the gas from the Bowland Shale and, while it's not a huge play, there is enough there to make a difference. I expect there will be plenty of opposition because people in the UK are very sensitive about the environment and there is just no way to hide the fact that shale development has a big footprint despite pad drilling and industry efforts to make it less invasive.

Let me say a few things about resource estimates while we are on the subject.  The public and politicians do not understand the difference between resources and reserves.  The only think that they have in common is that they both begin with “res.”  Reserves are a tiny subset of resources that can be produced commercially.  Both are always wrong but resource estimates can be hugely misleading because they are guesses and have nothing to do with economics.  

Someone recently sent me a new report by the CSIS that said U.S. shale gas resource estimates are too conservative and are much larger than previously believed.  I wrote him back that I think that resource estimates for U.S. shale gas plays are irrelevant because now we have robust production data to work with.  Most of those enormous resources are in plays that we already know are not going to be economic.  Resource estimates have become part of the shale gas cheerleading squad’s standard tricks to drum up enthusiasm for plays that clearly don’t work except at higher gas prices.  It’s really unfortunate when supposedly objective policy organizations and research groups get in on the hype in order to attract funding for their work.

OP: The ban on most US crude exports in place since the Arab oil embargo of 1973 is now being challenged by lobbyists, with media opining that this could be the biggest energy debate of the year in the US. How do you foresee this debate shaping up by the end of this year?

Arthur Berman: The debate over oil and gas exports will be silly.

I do not favor regulation of either oil or gas exports from the US. On the other hand, I think that a little discipline by the E&P companies might be in order so they don't have to beg the American people to bail them out of the over-production mess that they have created knowingly for themselves. Any business that over-produces whatever it makes has to live with lower prices. Why should oil and gas producers get a pass from the free-market laws of supply and demand?

I expect that by the time all the construction is completed to allow gas export, the domestic price will be high enough not to bother. It amazes me that the geniuses behind gas export assume that the business conditions that resulted in a price benefit overseas will remain static until they finish building export facilities, and that the competition will simply stand by when the awesome Americans bring gas to their markets. Just last week, Ken Medlock described how some schemes to send gas to Asia may find that there will be a lot of price competition in the future because a lot of gas has been discovered elsewhere in the world.

The US acts like we are some kind of natural gas superstar because of shale gas. Has anyone looked at how the US stacks up next to Russia, Iran and Qatar for natural gas reserves?

Whatever outcome results from the debate over petroleum exports, it will result in higher prices for American consumers. There are experts who argue that it won't increase prices much and that the economic benefits will outweigh higher costs. That may be but I doubt that anyone knows for sure. Everyone agrees that oil and gas will cost more if we allow exports.

OP: Is the US indeed close to hitting the “crude wall”—the point at which production could slow due to infrastructure and regulatory restraints?

Arthur Berman: No matter how much or little regulation there is, people will always argue that it is still either too much or too little. We have one of the most unfriendly administrations toward oil and gas ever and yet production has boomed. I already said that I oppose most regulation so you know where I stand. That said, once a bureaucracy is started, it seldom gets smaller or weaker. I don't see any walls out there, just uncomfortable price increases because of unnecessary regulations.

We use and need too much oil and gas to hit a wall. I see most of the focus on health care regulation for now. If there is no success at modifying the most objectionable parts of the Affordable Care Act, I don't suppose there is much hope for fewer oil and gas regulations. The petroleum business isn't exactly the darling of the people.

OP: What is the realistic future of methane hydrates, or “fire ice”, particularly with regard to Japanese efforts at extraction?

Arthur Berman: Japan is desperate for energy especially since they cut back their nuclear program so maybe hydrates make some sense at least as a science project for them. Their pilot is in thousands of feet of water about 30 miles offshore so it's going to be very expensive no matter how successful it is.

OP: Globally, where should we look for the next potential “shale boom” from a geological perspective as well as a commercial viability perspective?

Arthur Berman: Not all shale is equal or appropriate for oil and gas development. Once we remove all the shale that is not at or somewhat above peak oil generation today, most of it goes away. Some shale plays that meet these and other criteria didn't work so we have a lot to learn. But shale development is both inevitable and necessary. It will take a longer time than many believe outside of North America.

OP: We’ve spoken about Japan’s nuclear energy crossroads before, and now we see that issue climaxing, with the country’s nuclear future taking center-stage in an election period. Do you still believe it is too early for Japan to pull the plug on nuclear energy entirely?

Arthur Berman: Japan and Germany have made certain decisions about nuclear energy that I find remarkable but I don't live there and, obviously, don't think like them.

More generally, environmental enthusiasts simply don't see the obstacles to short-term conversion of a fossil fuel economy to one based on renewable energy. I don't see that there is a rational basis for dialogue in this arena. I'm all in favor of renewable energy but I don't see going from a few percent of our primary energy consumption to even 20% in less than a few decades no matter how much we may want to.

OP: What have we learned over the past year about Japan’s alternatives to nuclear energy?

Arthur Berman: We have learned that it takes a lot of coal to replace nuclear energy when countries like Japan and Germany made bold decisions to close nuclear capacity. We also learned that energy got very expensive in a hurry. I say that we learned. I mean that the past year confirmed what many of us anticipated.

OP: Back in the US, we have closely followed the blowback from the Environmental Protection Agency’s (EPA) proposed new carbon emissions standards for power plants, which would make it impossible for new coal-fired plants to be built without the implementation of carbon capture and sequestration technology, or “clean-coal” tech. Is this a feasible strategy in your opinion?

Arthur Berman: I'm not an expert on clean coal technology either but I am confident that almost anything is possible if cost doesn't matter. This is as true about carbon capture from coal as it is about shale gas production. Energy is an incredibly complex topic and decisions are being made by bureaucrats and politicians with little background in energy or the energy business. I don't see any possibility of a good outcome under these circumstances.

OP: Is CCS far enough along to serve as a sound basis for a national climate change policy?

Arthur Berman: Climate-change activism is a train that has left the station. If you’ve missed it, too bad. If you're on board, good luck.

The good news is that the US does not have an energy policy and is equally unlikely to get a climate change policy for all of the same reasons. I fear putting climate change policy in the hands of bureaucrats and politicians more than I fear climate change (which I fear).

See our previous interview with Arthur Berman.

Submitted by Lance Roberts of STA Wealth Management,

• China worries chill markets, copper slumps (Reuters)
• Peak dot com dot two idiocy: Candy Crush Saga maker King seeks $7.56 bln valuation from IPO (BBG)
• Obama Meeting With Yatsenyuk Raises Stakes in Ukraine (BBG)
• Federal prosecutors open criminal probe of GM recall (Reuters)
• Missing Malaysian Jetliner Confuses World That’s Online 24/7 (BBG)
• Pimco Cuts Government Debt on Outlook for Fed Buying (BBG)
• Mortgage Giants Face Endgame (WSJ)
• Russia Calls U.S. Aid to Ukraine Illegal Amid Standoff (BBG)
• U.S. judge freezes assets of Mt. Gox bitcoin exchange boss (Reuters)
• Ousted Libyan PM flees country after tanker escapes rebel-held port (Reuters)
• Senate-CIA Dispute Erupts Into a Public Brawl (WSJ)
• Wilbur Ross Suspends Diamond S Shipping IPO on Low Price  (BBG)
• Toddler found with heroin at New Jersey daycare center (Reuters)
• Singapore Broker Exodus Seen Quickening (BBG)

Overnight Media Digest

WSJ

* President Obama notched the lowest approval ratings of his presidency in the latest Wall Street Journal/NBC News poll, amid wide pessimism about the economy and deep frustration with Washington.

* Nearly six years after the government rescued Fannie Mae and Freddie Mac, top members in the Senate and the White House agreed on a framework to wind down the mortgage giants and overhaul the nation's $10 trillion mortgage market.

* A senior Malaysia air force official rejected media reports that military radar had picked up signals from the jet over the Strait of Malacca, hundreds of miles from its intended course.
 
* Comcast Corp's proposed takeover of Time Warner Cable Inc has sparked media-industry fears that the combined giant would have too much influence over everything from cable industry pricing to broadband-related services.

* General Motors Co's shares tumbled as the automaker faced new investigations on multiple fronts into why it took nearly a decade to recall cars with defects tied to 12 deaths.

* China's top central banker put the country on course to free up interest rates on bank deposits within two years, an unprecedented move that would force the nation's lenders to compete for customers by offering the best terms.

* Some property owners in Pennsylvania, a state caught up in a natural-gas drilling boom, are accusing Chesapeake Energy Corp of shortchanging them on royalty payments for pumping oil and gas from their land.

* Jos. A. Bank Clothiers Inc agreed to be bought by Men's Wearhouse Inc for roughly $1.8 billion, in an agreement that ends a colorful takeover battle between the rival suit retailers.

* Tesla Motors Inc will stop selling its luxury electric cars in New Jersey on April 1, after the state said Tuesday it would not license the company to sell vehicles directly to consumers, bypassing franchised dealers.

* Walt Disney Co is in talks to acquire popular online-video producer Maker Studios for about $500 million, said people with knowledge of the discussions, a deal that could give the entertainment giant better access to a young teen audience whose tastes are shifting to Web-based video.

* SoftBank Corp CEO Masayoshi Son characterized U.S. wireless service as dismal while reaffirming that his company wants a bigger part of the market.

* Amazon.com Inc is hoping to offer an on-demand music-streaming service to customers of its Amazon Prime program, but it may limit how much a person can listen to any given song, according to people familiar with the matter.

FT

Labour party leader Ed Miliband says he will not hold an in-out referendum on Britain's membership of the European Union in 2017 if his party comes to power and will focus on its economic agenda.

The British government has spent 63 million pounds buying up 106 homes blighted by the proposed HS2 high speed rail link between London and Birmingham.

Bank of England Governor Mark Carney said he would overhaul the central bank's dealings with the City and would create a new deputy governor post to oversee markets and banking.

Shares of Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corp (Freddie Mac) plunged on Tuesday after Senate leaders released a bipartisan plan to unwind the U.S. mortgage finance companies, but did not appear to provide an outlet for investors to share in their profits.

Entertainment company Walt Disney is close to acquiring online video producer Maker Studios in a deal worth $500 million which could rise to as much as $900 million if certain financial conditions are met, according to people familiar with the situation.

NYT

* The Justice Department has begun a criminal investigation into General Motors' decade-long failure to address deadly safety problems before announcing a huge vehicle recall last month, according to people briefed on the matter.

* Private equity firm Blackstone announced on Tuesday that it had agreed to buy a majority stake in Accuvant, a 12-year-old company that offers cyber security software and consulting services to companies and governments.

* The Bitcoin Foundation announced on Tuesday that it had hired Jim Harper, director of information policy studies at the libertarian research group the Cato Institute, as global policy counsel.

* Faced with strong demand from hedge funds and wealthy individuals, Puerto Rico sold 17 percent more debt on Tuesday than it had originally planned, a sign that the commonwealth still has ample access to the capital markets. Puerto Rico sold $3.5 billion of debt at an 8.72 percent yield.

* Anne Sweeney, the president of Walt Disney Co's Disney-ABC Television Group, said on Tuesday that she would step down as president of the company to become a TV director.

* Hedge fund manager William Ackman accused Herbalife , which sells vitamins, shakes and other supplements, of "operating illegally" in China. Ackman, the billionaire founder of Pershing Square Capital Management, called the company's accounting of its Chinese business "highly misleading."

* Greek Yogurt maker Chobani is in talks with six potential investors for a deal that could value it at $5 billion, a person with direct knowledge of the discussions said Tuesday. The company is looking to finalize an investment in the first half of the year, with an eye toward expanding internationally.

* U.S. President Barack Obama this week will seek to force American businesses to pay more overtime to millions of workers, the latest move by his administration to confront corporations that have had soaring profits even as wages have stagnated.

Canada

THE GLOBE AND MAIL

* Olivia Chow, former councillor and wife of the late New Democrat leader Jack Layton, will jump into the Toronto mayoral race on Thursday. She will be the first serious left-wing candidate to challenge scandal-plagued Mayor Rob Ford.

* With two confirmed cases of measles in British Columbia's Fraser Valley and about 100 other suspected cases, provincial health officials are gearing up for another outbreak of the easily transmitted, highly contagious virus.

Reports in the business section:

* Ontario is calling for the creation of a new group to monitor how the South Korea trade deal affects the province's auto sector, amid concern that the pact will cause production cuts and job losses at Canadian factories.

NATIONAL POST

* The head of the U.S. Senate Intelligence Committee accused the CIA on Tuesday of criminal activity in improperly searching a computer network set up for lawmakers investigating allegations that the agency used torture in terror investigations during the Bush administration.

* Ukraine's fugitive president Viktor Yanukovych called his country's new government a "band of ultra-nationalists" as he accused the "neo-fascists" of fomenting a civil war, and criticized the West for supporting it.

FINANCIAL POST

* Apple Inc has brought its iPhone trade-in program to retail stores in Canada, allowing users to sell older handsets back to the tech giant in exchange for credit toward a new model.

* Canada's main exchange TMX Group said on Tuesday that it wanted to focus on building and expanding business opportunities in the Asia-Pacific region for the Toronto Stock Exchange, TSX Venture Exchange and Montreal Exchange. The company plans to expand its international footprint with an office in Singapore later this year.

China

CHINA SECURITIES JOURNAL

- CITIC Bank will partner with Alibaba Group Holding Ltd and Tencent Holdings Ltd to launch a "virtual" credit card for use in online purchases.

- The city of Nanjing in east China's Jiangsu province has launched new measures to control land and real estate prices, including a mechanism to adjust rules on a quarterly basis in line with price trends.

CHINA BUSINESS NEWS

- Huang Guangyu, founder and former chairman of GOME Electrical Appliances Holding Ltd, who is now in prison, and his wife have reached an agreement with the Hong Kong Securities and Futures Commission to pay HK$420 million ($54 million) in compensation to the company.

SHANGHAI SECURITIES NEWS

- Many companies have suspended applications for initial public offerings, as they are waiting for possible changes to IPO rules, especially for China's small-cap ChiNext board.

SECURITIES TIMES

- Annual growth in net profits in China's food industry dropped 11.6 percentage points to 13.6 percent in 2013 due to an slowdown in economic growth and increase in raw material costs, data from the National Development and Reform Commission showed.

21ST CENTURY BUSINESS HERALD

The Shanghai Stock Exchange has submitted a plan to the China Securities Regulatory Commission (CSRC) to allow options trading on individual stocks, Gui Minjie, chairman of the exchange, told the paper. The plan is now awaiting CSRC approval.

PEOPLE'S DAILY

- China should ensure the judicial system's ability to enforce justice in order to safeguard social fairness and improve protection for the people, a commentary in the paper said.

Britain

The Telegraph

INTEREST RATES COULD RISE SIX-FOLD IN THREE YEARS

Interest rates will rise six-fold by 2017 as Britain's economy becomes one of the fastest growing in the developed world, the Bank of England governor said on Tuesday.

CO-OP OVERHAULS GOVERNANCE AFTER CHIEF QUITS

An overhaul of the Co-operative Group's controversial governance is set to be put to the vote after a dramatic 48-hours that culminated in the abrupt resignation of Chief Executive Officer Euan Sutherland.
 
The Guardian

SPORTS DIRECT URGES SHAREHOLDERS TO APPROVE 65 MLN STG BONUS FOR MIKE ASHLEY

Sports Direct has called a special shareholders' meeting to approve a plan to pay its founder a share bonus worth about 65 million pounds.

OECD PREDICTS UK RECOVERY WILL BE STRONGEST IN G7 OVER FIRST HALF OF 2014

Britain's recovery will be the strongest among G7 economies over the first half of 2014, according to the latest predictions from the Organisation for Economic Co-operation and Development (OECD).

The Times

WATCHDOG CRACKS DOWN ON USED-CAR INSURANCE

Add-on insurance bought by more than a million car buyers has been branded poor value by regulators, who unveiled a crackdown on Tuesday on the new and used car salesmen who push it.

The Independent

TESCO LOSES MARKET SHARE AS SHOPPERS GO BARGAIN HUNTING

Tesco's high-street dominance continues to be eroded, with the latest data showing that the retailer's market share has slipped to a 10-year low as shoppers desert it for discounters Aldi and Lidl.

UK MANUFACTURING BEATS ESTIMATES AS IT NEARS THREE-YEAR HIGH

Britain's manufacturers reported their strongest annual growth for nearly three years, official figures showed.

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled for today include:
Treasury budget for February at 14:00--consensus deficit $218B

ANALYST RESEARCH

Upgrades

AngioDynamics (ANGO) upgraded to Outperform from Market Perform at Raymond James
Brandywine Realty (BDN) upgraded to Equal Weight from Underweight at Barclays
Calix (CALX) upgraded to Neutral from Sell at Goldman
Euronet (EEFT) upgraded to Outperform from Market Perform at Avondale
General Growth (GGP) upgraded to Overweight from Equal Weight at Barclays
Hercules Technology (HTGC) upgraded to Outperform at Keefe Bruyette
Infinera (INFN) upgraded to Buy from Neutral at Goldman
MRC Global (MRC) upgraded to Buy from Neutral at Longbow
McKesson (MCK) upgraded to Conviction Buy from Buy at Goldman
PharMerica (PMC) upgraded to Outperform from Neutral at Credit Suisse
Rite Aid (RAD) upgraded to Buy from Neutral at Goldman
Summit Midstream (SMLP) upgraded to Outperform from Neutral at RW Baird
VeriFone (PAY) upgraded to Hold from Sell at Deutsche Bank

Downgrades

AIG (AIG) downgraded to Hold from Buy at Deutsche Bank
AmREIT (AMRE) downgraded to Hold from Buy at Jefferies
American Eagle (AEO) downgraded to Underweight from Equal Weight at Morgan Stanley
AmerisourceBergen (ABC) downgraded to Neutral from Buy at Goldman
Church & Dwight (CHD) downgraded to Neutral from Outperform at Credit Suisse
Clean Harbors (CLH) downgraded to Outperform from Top Pick at RBC Capital
DiamondRock (DRH) downgraded to Underperform from Neutral at BofA/Merrill
Forest Labs (FRX) downgraded to Neutral from Overweight at Piper Jaffray
Horizon Technology (HRZN) downgraded to Underperform at Keefe Bruyette
Liberty Ventures (LVNTA) downgraded to Neutral from Buy at Citigroup
Motorola Solutions (MSI) downgraded to Sell from Neutral at Goldman
Northwest Biotherapeutics (NWBO) downgraded to Perform from Outperform at Oppenheimer
PulteGroup (PHM) downgraded to Neutral from Outperform at Credit Suisse
Synta Pharmaceuticals (SNTA) downgraded to Sell from Hold at Stifel
Synta Pharmaceuticals (SNTA) downgraded to Underperform from Market Perform at BMO Capital
Toll Brothers (TOL) downgraded to Neutral from Outperform at Credit Suisse
Urban Outfitters (URBN) downgraded to Equal Weight from Overweight at Barclays
William Lyon Homes (WLH) downgraded to Neutral from Outperform at Credit Suisse

Initiations

Cypress Energy (CELP) initiated with a Buy at Janney Capital
ICG Group (ICGE) initiated with an Overweight at Evercore
Intersil (ISIL) assumed with an Overweight at Piper Jaffray
InvenSense (INVN) assumed with an Overweight at Piper Jaffray
Silicon Laboratories (SLAB) assumed with an Overweight at Piper Jaffray

COMPANY NEWS

Energy XXI (EXXI) agreed to acquire all of EPL's (EPL) shares for $2.3B
IATA cut its global airline profit forecast for 2014 to $18.7B
OXiGENE (OXGN) reported positive top-line results from a Phase 2 trial of its Avastin with or without Zybrestat in patients with recurrent ovarian cancer
Magnachip Semiconductor (MX) said it will restate prior results, withdrew prior Q4 guidance and naming Jonathan Kim as its Chief Accounting Officer. The company also said it concluded that one or more material weaknesses exist in the company's internal controls over financial reporting
Seadrill Partners (SDLP) said it will acquire the entities that own and operate an ultra-deepwater drillship, the West Auriga, from Seadrill (SDRL)
VimpelCom (VIP) said it is being investigated by SEC, Dutch authorities regarding Uzbekistan operations
Boeing (BA), SpiceJet announced order for 42 737 MAX 8s

EARNINGS
Companies that beat consensus earnings expectations last night and today include:
QIWI (QIWI), Midstates Petroleum (MPO), Furiex (FURX), Men's Wearhouse (MW), NewLink Genetics (NLNK), Fox Factory (FOXF), GenMark (GNMK), GSI Group (GSIG), Diamond Foods (DMND), Inter Parfums (IPAR), OncoGenex (OGXI), Summer Infant (SUMR), VeriFone (PAY)

Companies that missed consensus earnings expectations include:
Abraxas Petroleum (AXAS), Dresser-Rand (DRC), Horizon Technology (HRZN), Enzo Biochem (ENZ), Compass Diversified (CODI), Evolving Systems (EVOL), Caesar's (CZR)

Companies that matched consensus earnings expectations include:
Chelsea Therapeutics (CHTP), Kratos Defense (KTOS)

NEWSPAPERS/WEBSITES

Lawyers in the U.S. Attorney’s office in Southern District of NY leading DOJ investigation into GM (GM) recall, Bloomberg reports
Vornado (VNO) weighs spin-off, merger for suburban centers, WSJ says
Banamex fraud exposes challenges for Citigroup (C) in Mexico, NY Times reports
Disney/ABC (DIS) television chief Anne Sweeney exiting in 2015, LA Times says
Sandberg (FB) won't become Disney's (DIS) new CEO, source says, Business Insider reports
Amazon (AMZN) working to offer Prime streaming music service, WSJ says
Barclays (BCS) faces shareholder backlash regarding upped bonuses, Reuters says
Tesla (TSLA) stores in New Jersey may close after vote, Bloomberg says

SYNDICATE

Achaogen (AKAO) 6M share IPO priced at $12.00
CommScope (COMM) files to sell 17.5M shares of stock for holders
Noranda Aluminum (NOR) files to sell 10M shares for Apollo funds
Pointer Telocation (PNTR) files to sell 994,357 ordinary shares for holders
Seadrill Partners (SDLP) files to sell 10.4M common units
Summit Midstream (SMLP) 9M share Secondary priced at $38.75
TG Therapeutics (TGTX) 2.7M share Spot Secondary priced at $6.71

Goldman Sachs is bearish on TSLA with a $200 price target (currently trading at $236) but... provides bulls with all the hope they need to justify stock prices rising to at least $478. Laying out 5 scenarios on the company's path to 2025, the analyst shies from his base-case and downside-risk perspective to reflect on the possibility that TSLA is truly disruptive. Depending on whether Elon Musk is Steve Jobs (iPhone projections), Henry Ford (Model T projections), or a Maytag Repairman (Consumer Durable projections), TSLA's upside is enormous as all of our three “disruptive outcomes” imply meaningful upside to the current share price. Of course, the probability assocoated with each of these scenarios is why Goldman's overall target is 15% below current prices - but that won't stop the dreamers.

Adding rigor to the upside analysis
We quantify the option value of Tesla shares through a deep dive into the lessons learned from past disruptive technologies as well as the opportunity from stationary storage. Our new 6-month price target rises to $200.

Automotive business worth $180
If Tesla’s auto business were to be truly disruptive (to the whole auto industry, not just luxury vehicles), then there would be considerable upside.

Keying off the history of the iPhone, (adjusting for the replacement cycle) would imply 3.1mn units by 2025 and a PV of $442 per share.

The Model-T trajectory implies 3.3mn units and $478 per share;

and the volume implied by a basket of transformative durable goods (laundry appliances/dishwashers/refrigerators) gets us 1.8mn units and $329 per share.

However, this is offset by our base case (broadly unchanged from our previous forecast) and a downside case where Tesla’s present value is lower and hence we arrive at probability weighted share price of $180 for the auto business alone.

Full Goldman Sachs research note below:

Tsla Goldman

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Rather than deal forthrightly with the reality that unrealistic promises made to their employees cannot be honored, local government has pursued a strategy of legalizing looting.

The gradual erosion of civil liberties, legal rights and government ethics are connected: our rights don't just vanish into thin air, they are expropriated by government: Federal, state and local. Though much is written about the loss of civil liberties at the Federal level, many of the most blatantly illegal power grabs are occurring in local government.

This expropriation is under the radar of the average citizen because the process slowly chips away the fundamentals of legality and justice: bit by bit, due process and the rights of the individual have been eroded by state and local governments until the fundamental Constitutional protections simply cease to exist.

When local government looting is legalized, the entire system is illegal. Here are three recent examples of blatantly illegal looting by local governments.

First up: privatizing the collection of traffic fines and probation to create a modernized debtor's prison. We turn to The Nation for the story:

The Town That Turned Poverty Into a Prison Sentence Most states shut down their debtors’ prisons more than 100 years ago; in 2005, Harpersville, Alabama, opened one back up.
 

What happened to Ford in the small town of Harpersville was tangled and unconstitutional-- but hardly unique. Similar tales have been playing out in more than 1,000 courts across the country, from Georgia to Idaho. In the face of strained budgets and cuts to public services, state and local governments have been stepping up their efforts to ensure that the criminal justice system pays for itself. They have increased fines and court costs, intensified law enforcement efforts, and passed so-called “pay-to-stay” laws that charge offenders daily jail fees. They have also begun contracting with “offender-funded” probation companies like JCS, which offer a particularly attractive solution—collection, at no cost to the court.

Harpersville’s experiment with private probation began nearly ten years ago. In Alabama, people know Harpersville best as a speed trap, the stretch of country highway where the speed limit changes six times in roughly as many miles. Indeed, traffic is by far the biggest business in the town of 1,600, where there is little more than Big Man’s BBQ, the Sudden Impact Collision Center and a dollar store.

In 2005, the court’s revenue was nearly three times the amount that the town received from a sales tax, Harpersville’s second-largest source of income. Fines had become key to Harpersville’s development, but it proved difficult to chase down those who did not pay. So, that year, Harpersville decided to follow in the footsteps of other Alabama cities and hire JCS to help collect.

It was a system of extraction and coercion so flagrant that Alabama Circuit Court Judge Hub Harrington likened it to a modern-day “debtors’ prison.”

Her fines for the three charges added up to $2,922, court papers show. Ward sentenced her--and others who said they couldn’t pay their full fines that day-- to probation. Once a means of allowing convicted offenders to stay out of jail on the condition of good behavior, probation had now become a court-sanctioned tool for debt collection.
Burdette reported to the JCS office in nearby Childersburg, where she paid her probation officer $100. Of that, $45 went toward her fine, $10 toward a one-time “start-up fee,” and the last $45 went to JCS as a monthly fee for service.

Next up: illegal search and seizure under the pretext of traffic violations. As if "driving while black" isn't bad enough, now "driving with cash" is pretext enough to be stripped of your rights and your property stolen by local government:

Lawsuits over cash seizures settled in Nevada

Tan Nguyen of Newport, Calif., and Michael Lee of Denver said in lawsuits filed in U.S. District Court in Reno they were stopped last year on U.S. Interstate 80 near Winnemucca about 165 miles east of Reno under the pretext of speeding. They said they were subjected to illegal searches and told they wouldn't be released with their vehicles unless they forfeited their cash.

The lawsuits claimed the cash seizures were part of a pattern of stopping drivers for speeding as a pretext for drug busts in violation of the Constitution.

Nguyen was given a written warning for speeding but wasn't cited. As a condition of release, he signed a "property for safekeeping receipt," which indicated the money was abandoned or seized and not returnable. But the lawsuit says he did so only because Dove threatened to seize his vehicle unless he "got in his car and drove off and forgot this ever happened."

"He wasn't charged with anything. He had no drugs in his car. The pretext for stopping him was he was doing 78 in a 75," John Ohlson told KRNV-TV. "It's like Jesse James or Black Bart," he told AP in an interview last week.

The district attorney's statement said both men were stopped legally and that "every asset that was seized pursuant to those stops was lawfully seized."

Exhibit # 3: guilty until proven innocent: State of California seizes cash from "suspected" tax evaders with no evidence, no court action, no recourse. I have documented in detail how the jackboot of the State of California has pressed on the necks of thousands of law-abiding citizens whose only crime was moving out of California.

The State of California presumes anyone moving out of the state who still has a source of income in California--for example, a few dollars of interest earned on a bank account--owes California income tax on all their presumed income, even if they have filed income tax returns in another state.

If this isn't the acme of illegal seizure and denial of basic rights, i.e. presumed innocent until proven guilty, then what is?

Here is one reader's account of how this legal looting works: I wrote about this inWelcome to the United States of Orwell: Law-Abiding Taxpayers Are Treated as Criminals While the Real Criminals Go Free (March 27, 2012).

I received a letter last year that we owed the state of California's Franchise Tax Board $90,000 for taxes in the year 2008.We replied to the Franchise Tax board in a similar manner as RT stating that:

-- Did not reside in California in 2008
-- Did not file a State income tax return in California in 2008
-- Did not have any outstanding tax issues with California in 2008
-- Did no business in California in 2008
-- Owned no property in California in 2008

The CA Franchise Tax board responded by putting a lien on us in the state - fortunately, our banks and assets have no business in CA or I am certain our accounts would have been robbed as well.

After a great deal of uncertainty and angst, I found an accountant in CA who advised us that we needed to file a complete CA tax return for 2008 even though we did not owe any tax. We filed the return and received a response that we owed the state $625 to cover the State's collection fees. We paid the fee and within two weeks received a "refund" check for the $625.

On reflection, we felt as if we had been "held up" by some powerful gangsters and if it had not been for an honest tax accountant we would have suffered much financial damage.

In other words, honest taxpayers are reduced to begging the predatory state of California to return their own money. Meanwhile, the bagmen for the local government thieves, Wells Fargo and Bank of America, among others, get to keep the $100 fee they charged the taxpayer for stealing their money. If this isn't Orwellian, then what do you call it? "Legal"? If this is legal, legality has lost all meaning.

For more on the blatantly illegal seizures of cash from people who aren't even residents of California and who filed income tax returns in another state, please read:

Welcome to the Predatory State of California--Even If You Don't Live There (March 20, 2012)

The Predatory State of California, Part 2 (March 21, 2012)

Just as pernicious as outright looting is the growing dependence of local government on fines and related rip-offs. Correspondent Joel M. recently submitted this article which features New York City officials whining that the recent snow storm deprived them of sorely needed revenues from parking fines.
Costs Have Piled Up Along With the Snow of a Difficult Winter (NYT.com)

"If the winter was costly for individuals, it was even more so for municipalities. The snow triggered repeated suspensions of New York City’s alternate-side-of-the-street parking rules, delighting car owners but costing the city an average of $270,000 a day in potential fines, officials said. That added up to $4.3 million during a three-week stretch in February alone, money that would have gone to help pay for city services, including the fire and police forces, city officials said."

Everyone who believes local government is "here to fill potholes and help disadvantaged people" needs to wake up and ask what kind of government we have when due process has been replaced with "legal" looting. Is local government focused on serving citizens or on funding public employee pensions and healthcare benefits?

The erosion of ethics of those in government service is as pernicious as the rise of legal looting. Let's be honest, shall we? Those in local government tasked with collecting all these forms of legal looting are "just doing my job," but how many protest the process? How many public employee unions are outraged by the legal looting that fills the coffers of their pension funds?

For context, government employees constitute about 15% of the employed workforce in the U.S.: 22 million out of 142 million. Unlike the other 85%, their employer can legalize looting on their behalf.

Local government spending has soared for decades.

So has local government debt.

Promises were made to local government employees by craven, bought-and-paid-for politicos that cannot possibly be honored in a stagnating economy with widening wealth inequality. But rather than deal forthrightly with that reality, local government has pursued a strategy of legalizing looting.

From the point of view of the hapless tax donkeys and debt-serfs being looted, this strategy boils down to a stark threat: Pay Our Pensions Or We'll Throw You in Jail.

Here's the deal: government is supposed to serve the people, not the insiders. Please read the above news stories; can anyone claim that legalized looting is OK because the "ends" (public services) justify the "means" (legalized looting)? How many public employees care about where the money that funds their paycheck, pension and healthcare benefits comes from?

Maybe public employees should start caring about where the money is coming from, because taxation approved by elected officials or direct voter approval is one thing, and legalized looting is another. If you don't care that your pay/pension/benefits may be partly funded by legalized looting, perhaps you should start caring.

Remember that we (the general public) can't pull you over and "legally" steal your cash, nor can we order Wells Fargo to go into your bank account and "legally" steal your money without court review, evidence of wrongdoing or recourse. We can't award private collection agencies the powers reserved for representative government and rig the probation system into a cash cow that benefits us.

Please don't trot out the "good German" excuse: I only take orders. You're the ones who are pulling the levers of the legalized looting machine; us tax donkeys and debt-serfs are on the receiving end. Given that special interests own the state legislatures, the tax donkeys and debt-serfs have only three choices: opt out, move out or stop paying, and fill your modern debtors' prisons to the brim.

Let's examine what happened from the beginning.  An extreme right wing group, with US and NATO support (according to released internal transcripts), overthrew the legitimate Ukrainian government (illegally) via violent coup.  The fact that this group had western support is not important really, but should be noted.  So according to 'international law' - this 'country' is NOT Ukraine.  Ukraine cease to exist when this happened.  The new 'government' - not popularly elected, seized control by force.  If anything we could call this country (still yet to be defined) the "New Ukraine" - of course if the current 'government' suggested this it would diminish their power; it serves them to mislead the world (those who are uninformed) that this is in fact the Ukraine, the same country that existed before.  Once the legal process breaks down, there's no going back.  

Now, the smoking gun:

Why is this important?

When Russia went into Crimea, they claimed that they were protecting Russian citizens (who are the overwhelming majority there), which at the time sounded as an excuse for 'annexation' of Crimea (although Crimea was always part of Russia and mostly Russians are living there).  Is it possible that Russian intelligence received such real threats to Russians in Crimea?  Also to note the vehement anti-Russian stance of Western Ukrainians, at least those in power.  

RT commentators saying this recording is right out of "Dr. Strangelove" - only problem, Ukraine doesn't have nuclear weapons.  Is she referring to her western friends?  If they hate Russians so much, why not leave Crimea to them?

Where US interest lies

The US has few economic or political ties to Ukraine, other than the NATO agenda to expand further into Europe and Eurasia (Grand Chessboard).  But the US has very strong economic ties with Russia.  Russia is a huge consumer of USD, invests in the US, and has provided transportation and other logistic services to US forces in Afghanistan.  Not to mention US corporations now doing business in Russia:

U.S. companies have also made sizable wagers in Russia. In 2010, PepsiCo agreed to buy Russian dairy and juice manufacturer Wimm-Bill-Dann Foods for over $5 billion, or about 16 times earnings before interest, taxes, depreciation and amoritization. The deal was seen as a way to boost the company's revenue growth, which had slowed as PepsiCo's mainstay U.S. market matured.

..

Today, Russia accounts for about 7 percent of PepsiCo's total revenue. PepsiCo declined to comment.

Ford has two plants in Russia, as does General Motors. Meanwhile,Renault/Nissan and Hyundai also have large operations in Russia.

Russians have also been gobbling up US real estate at an increasing pace, even financing new developments:

Russian Deputy Economy Minister Andrei Klepach recently said that he expects Russians to invest $80 billion outside of Russia over the next few months, up from the $65 billion that he predicted originally.

Until now, investment in the U.S. only accounted for a small fraction of that number. But that may be changing. Mermelstein expects Russian real estate investment in the U.S., both commercial and residential, to double from its current share of 5 percent of Russian investment abroad to 10 percent in 2012.

Not to mention other sectors, such as the Steel industry: 

Russian steelmaker OAO Severstal yesterday said it is buying a Western Pennsylvania coal company for $1.3 billion in cash, adding to the surge of Russian money into the United States.

Russia holds $136 Billion of US Government Debt.  Ukraine on the other hand, holds so little they are categorized under 'other' (according to data from the US Treasury).

What happened to 'the customer is always right?'

Russia is certainly not the largest customer of the US.  But they are a significant one.  And with US companies in Russia, trade has been two way.

Part of the motivation of dismantling the Soviet Union was to create a capitalist 'open market' system, that the US could do business with Russia.  They have done that.  Their economy has grown, and they've learned from the American system, adopting many US-led economic practices.  They have even replicated the 'open markets' model creating a commodity and derivatives exchange:

In February 2011 JSC “Saint-Petersburg exchange” and JSC “RTS Stock Exchange” carried out a joint project on organization of trading of commodities futures. In this project organizer of trading is JSC “Saint-Petersburg exchange”, clearing organization is CJSC “CC RTS”, settlement organization is “Settlement Chamber RTS”. Trading is carried out on the basis of trade system and risk-management system of FORTS derivatives market. It ensures the principle of single money position in all markets for the participants of trading.

Russia is depicted in the media as a wasteland.  Moscow has built a downtown filled with skyscrapers comparable to many international business districts.  A growing middle and upper class in Russia puts in on par if not more advanced than Western economies:

Stable gross domestic product growth, declining inflation and a record-low unemployment rate are pointing to positive consumer purchasing power in Russia. The Russian middle class, which stands at 104 million strong, is fueling that power. This segment of the population is projected to rise 16 percent between now and 2020, at which point it will represent 86 percent of the population and amount to $1.3 trillion in spending—up 40 percent from 2010, based on a global study of the emerging middle class and related databases by Dr. Homi Kharas of the Brookings Institution.

“There is an equal share of money at the top and in the middle,” said Dr. Venkatesh Bala, chief economist, The Cambridge Group, a part of Nielsen. “Russia’s middle class today has the same share of income as the upper class and has remained an untapped opportunity by many international corporations.”

While the top 20 percent of income earners in Russia represent 47 percent of the country’s total income, the middle 60 percent accounts for 48 percent, according to federal statistics from the Bank of Russia (2012). The bottom 20 percent comprise the remaining five percent of income.

Ukraine on the other hand, has done none of this.  Many of the media depictions of Russia are more applicable to Ukraine.  

Finally, since this issue has become polarized, just to compare the 2 choices.  Is it better to support a coup government that seized power by force, with few economic and political ties (Ukraine); or Russia, a legitimate country, world power, with many economic ties, who has proven in the past 10 years that it has accepted the suggested economic reforms?

Supposedly as traders we look at economic data and make economic decisions.  Following the 'sanctions' logic to the end, we have much more to lose by supporting 'Ukraine' than Russia.  Taking what they have learned from the West, it would not be difficult for Russia to internally reorganize their economy, and make new partnerships that have already been in the making for years (such as with China, India, and others).  Russia also sits on vast natural resources, which could be used internally or sold to China.

Irony of fallacious policy

Hundreds of billions of dollars were spent on propoganda, intelligence, and other means, during the Cold War, trying to convince the Russians to go capitalist.  Open their markets.  Finally it suceeded, and they have developed a sophistocated, capitalist market system.  All of those efforts are now in jeopardy. 

Now, for reasons unknown, the West is sending the opposite message.  Through the use of account freezing, trade sanctions, and other economic tactics, the West is doing exactly what the West tried to convince the Russians not to do for decades.  

No matter the outcome, the West (US and Europe) has much more to lose in any scenario.  

Market approach

Traders should only be concerned about the message being sent to the markets.  Markets operate based on a series of rules.  The market opens at a certain time, closes at a certain time.  Contracts are defined in quality and quantity.  Although traders may be emotional and irrational, they cannot operate outside of market rules (for example, if you are not happy with the outcome of a trade, you cannot just delete it from your account).  A violation of market rules opens a pandora's box.  

What's next? Politicians will decide that in order to support the US market (because it's now suffering due to billions flowing out because of sanctions, or assets are frozen) that now to support our efforts overseas, we can only buy (not sell)?  Or that IRAs are converted to tbills to 'save Ukraine'?  Since when did any Westerner care about Ukrainian politics?

..44 percent weren't sure about the name of the former Ukrainian president with close ties to Russia who was recently removed from office. Only 40 percent correctly chose Viktor Yanukovych from the list. Sixteen percent selected an incorrect answer.

 

A relative lack of knowledge, however, doesn't stop some from giving their opinion on various policy questions. The poll found that 24 percent of Americans were willing to express an opinion on whether the nonexistent Ukraine Administrative Adjustment Act should be repealed in light of the conflict. Respondents who gave an answer were divided evenly, with 12 percent backing repeal and 12 percent opposed.

With the economy faltering as it is, a market based approach to the current situation would have given a boost to the economy, instead of putting further negative pressure.  

Looking economically, any trader should agree that if you can lose 100 and gain possibly  another 20 or more through solidifying the relationship (Russia) and lose a few; OR (Ukraine) gain a few, but in the process lose 100, it's a no brainer trade.  That is the economic magnitude difference between Russia and Ukraine, based on above referenced economic data.  

The reason Nixon opened up China, was to further the US economy, not to meddle in Chinese politics.  Even recently, we've overlooked China's domestic problems, such as human rights, the seizing of Tibet, rampant pollution, and other issues not acceptable by Western standards, in the interest of furthering trade.  And over a period of decades, with US cooperation, China has built itself into an industrial powerhouse, and supplies goods in almost every economic sector, and is the US biggest customer.   

Some important facts to note about Russia:

• 40% of EU energy comes from Russia.
• 45% of EU cars are sold to Russia.
• US poverty is 3% higher, than in Russia.
• More billionaires live in Moscow than any other city.
• Russia has no external debt!

Article updates 

objective political analysis

Different explanation, same topic - must read (Sott.net)

• BOE to Sign Agreement With China on Yuan Clearing Next Week (BBG)
• U.S. law firm plans to bring suit against Boeing, Malaysia Airlines (Reuters)
• Citigroup Fraud Stings Mexico Star as Medina-Mora Chased (BBG)
• Fraternity Chief Feared for Son as Hazings Spurred JPMorgan Snub (BBG)
• UBS suspends six more forex traders (FT)
• Goodbye CSCO Q1 EPS: China to strengthen Internet security after U.S. spying report (Reuters)
• Good luck: Spain Banks With $55 Billion of Property Seek Deals (BBG)
• Citic Pacific Said to Plan About $4 Billion Public Offering (BBG)
• Yahoo Japan to buy eAccess from SoftBank for $3.2 billion (Reuters)
• "Whatever it takes" to talk down the Euro: Euro, peripheral bond yields fall on ECB easing debate (Reuters)
• Obama and Pope Francis Meet in Rome (Reuters)
• License Plate Technology at Risk Post-Snowden (BBG)
• Robert Shiller on the art of stock-picking and the complex psychology of investors (WSJ)
• U.S. jobs market dropouts increasingly likely to stay out (Reuters)

Overnight Media Digest

WSJ

* Citigroup Inc failed to get Federal Reserve approval to reward investors with higher dividends and stock buybacks, a surprising blow to Chief Executive Michael Corbat's effort to bolster the bank's reputation following a 2008 government rescue. The Fed rejected capital plans from five large banks and approved 25 as part of its annual "stress tests" measuring a firm's ability to continue lending during a severe economic downturn. (http://link.reuters.com/xeb97v)

* Bank of America Corp and former Chief Executive Kenneth Lewis took big steps to put the financial crisis behind them by paying state and federal agencies to settle lawsuits over the acquisitions of Countrywide Financial Corp and Merrill Lynch & Co. The Charlotte, North Carolina-based lender said it would pay $9.5 billion to settle mortgage claims with Fannie Mae, Freddie Mac and their federal regulator. (http://link.reuters.com/bub97v)

* Brookstone Inc, which sells consumer gadgets ranging from travel electronics to massage chairs, is preparing to file for bankruptcy protection as early as Sunday, with a plan in place to be bought by another specialty retailer Spencer Spirit Holdings Inc, people familiar with the matter said. (http://link.reuters.com/jeb97v)

* Microsoft Corp's new boss on Thursday will have his first shot at outlining a new, less Windows-dependent path for the company. Chief Executive Satya Nadella, at an event in San Francisco, is expected to disclose a new version of Microsoft's popular Office software for the iPad, people familiar with the matter said. (http://link.reuters.com/hub97v)

* An internal investigation into the George Washington Bridge lane closures conducted by lawyers hired by the Christie administration is expected to absolve additional members of Governor Chris Christie's senior staff from being involved in the matter. (http://link.reuters.com/kub97v)

FT

Sources said the International Monetary Fund would announce a rescue package for Ukraine of about $15 billion as early as Thursday, hoping that the initial aid payments could be made by the end of April.

Bank of America agreed on Wednesday to pay $9.5 billion to settle claims it sold U.S. housing regulators faulty mortgage bonds.

The U.S. Federal Reserve rejected the capital plans of five large banks including Citigroup as part of its annual stress test, but cleared Bank of America and Goldman Sachs after they agreed to lower buyback and dividend proposals.

Mexico expects to issue tenders for some deep water oilfields next year as it welcomes private investment at its oil and gas exploration and production sector.

King Digital Entertainment's shares fell more than 15 percent on its New York stock market debut, making the Candy Crush Saga maker the largest new U.S. listing to flop on its opening day in 20 years

NYT

* The Federal Reserve dealt an embarrassing blow to Citigroup Inc on Wednesday when it rejected the company's plans to manage its capital, citing concerns about the "overall reliability of Citigroup's capital planning process." It was the only one among the top five banks that failed to persuade the Fed to bless its plans of increasing dividends and repurchasing stock. (http://r.reuters.com/cub97v)

* Rupert Murdoch appointed his two sons, Lachlan and James to senior positions at his companies News Corp and Twenty-first Century Fox, ensuring that a media conglomerate that has always been run like a small family business would have a Murdoch in charge for years to come.(http://r.reuters.com/mub97v)

* Children of elderly borrowers are learning that their parents' reverse mortgages are now threatening their own inheritances. Under federal rules, survivors are supposed to be offered the option to settle the loan for a percentage of the full amount. Instead, reverse mortgage companies are increasingly threatening to foreclose unless heirs pay the mortgages in full. (http://r.reuters.com/pub97v)

* Bank of America Corp is paying $6.3 billion to settle a lawsuit arising out of troubled mortgage-backed securities it sold to Fannie Mae and Freddie Mac in the run up to the financial crisis. As part of the settlement, Bank of America will also repurchase mortgage securities from Fannie and Freddie that are valued at about $3.2 billion. (http://r.reuters.com/rub97v)

* Candy Crush Saga-developer King Digital Entertainment saw its stock slump as trade opened on Wednesday, and ended the day down 15.6 percent, closing at $19 per share. The sheer drop disappointed investors who scooped up the stock at the initial public offering, as well as those who bought shares Wednesday morning. (http://r.reuters.com/tub97v)

* In the fifth huge recall for automakers this year, Nissan Motor Co Ltd is recalling nearly a million vehicles because the front passenger-side air bag might not deploy in a crash, the company said in a report to regulators published on Wednesday. (http://r.reuters.com/byb97v)

* A growing number of big corporate clients are demanding that their law firms demonstrate that their computer systems are employing top-tier technologies to detect and deter attacks from hackers bent on getting their hands on corporate secrets either for their own use or sale to others. (http://r.reuters.com/vub97v)

* Yet another proposal to overhaul United States' housing finance system will be put before Congress on Thursday. The major distinction of this proposal is that it would make the mortgage lending system more like a public utility, by creating a co-op of lenders that would be the sole issuer of mortgage-backed securities guaranteed by the government. (http://r.reuters.com/wub97v)

* Two Democratic senators on Wednesday criticized Target Corp's management for not stopping a huge data breach of its systems, citing several missed opportunities to thwart the attack and protect customer data. John D. Rockefeller from West Virginia, chairman of the Senate Commerce Committee, and Richard Blumenthal from Connecticut said Target's failure to heed warning signs of incursions by cyber criminals ultimately was the fault of its top executives. (http://r.reuters.com/xub97v)

* Connecticut lawmakers on Wednesday became the first in the country to pass legislation that would increase a state's minimum wage to $10.10 an hour by 2017, the same rate President Obama wants for the federal minimum wage. (http://r.reuters.com/zub97v)

Canada

THE GLOBE AND MAIL

* Canadian Prime
Minister Stephen Harper and his U.S. counterpart Barack Obama are urging
European allies to support sanctions targeting Russia's energy sector,
with both leaders saying North America could help Western Europe end its
dependence on Russian natural gas. (http://link.reuters.com/zac97v)

*
After a day of tense negotiations under threat of a back-to-work order,
British Columbia Premier Christy Clark signed a settlement with union
and non-union truckers to end the strike that has snarled shipping at
the Port Metro Vancouver for almost a month.
(http://link.reuters.com/bec97v)

Reports in the business section:

*
Just one week after Jim Flaherty stepped down as the Canadian finance
minister, Bank of Montreal is shaking up the mortgage market,
aggressively cutting its five-year rate to levels that caused him to
intervene last year. BMO is now offering five-year fixed mortgages at
2.99 percent, slashing its rate from 3.49 percent.
(http://link.reuters.com/kec97v)

NATIONAL POST

*
Toronto Mayor Rob Ford took more than a few punches but remained light
on his feet at the inaugural televised debate in mayoral election that
saw challengers skirt around the police investigation into him and not
once utter the words "crack cocaine." (http://link.reuters.com/tec97v)

*
Quebec Premier Pauline Marois's insistence that her party is a model of
political integrity took a hit on Wednesday as it emerged that Quebec's
anti-corruption police are looking into past Parti Quebecois
fundraising practices. (http://link.reuters.com/zec97v)

FINANCIAL POST

*
Quebec's Liberal Party says the separatist Party Quebecois has gone too
far in its dream of the province as a petroleum promised land and that
no public money should be spent on early-stage oil drilling projects
such as those on Anticosti island. (http://link.reuters.com/zyc97v)

*
BlackBerry Ltd Chief Executive John Chen says he is fighting against
future product leaks by taking "legal action" that he hopes will set an
example. The head of the Waterloo, Ontario-based smartphone company
alleges that a person he did not name stole confidential details about a
future BlackBerry product and leaked them to the public.
(http://link.reuters.com/rec97v)

China

CHINA SECURITIES JOURNAL

- China's pension investment fund reported a net profit of 69.6 billion yuan ($11.21 billion) in 2013, up 6.29 percent from a year earlier, the National Council for Social Security fund said.

- Average daily power output and daily rail transport volume has picked up in March, a sign that the economic activities were gaining pace, said Li Pumin, spokesman of the National Development and Reform Commission.

SHANGHAI SECURITIES NEWS

- China will launch the Baotou Rare Earth Products Exchange on March 28, the first such exchange in the country that aims to provide open prices for rare earth products, it said on its official website.

CHINA DAILY

- The central government will introduce a credit rating system for provinces, cities and counties as it seeks to establish a foundation for a well-regulated municipal debt market, said a source at the Ministry of Finance.

Britain

The Telegraph

RBS CITIZENS FAILS FEDERAL RESERVE STRESS TEST

Royal Bank of Scotland's U.S. business has been barred from raising its dividend by the Federal Reserve after being deemed unable to survive another financial crisis. (link.reuters.com/wuz87v)

PENSION CHANGES MUST NOT CREATE MIS-SELLING RISK, SAYS L&G BOSS

Changes to Britain's pension rules must not be allowed to create an "open-ended liability" for the insurance industry, the boss of Legal & General has warned, as he forecast a 75 percent contraction in the individual annuity market. (link.reuters.com/xuz87v)

CANDY CRUSH MAKER'S SHARES TUMBLE ON DEBUT

Shares in the London-based smartphone games developer King tanked on their first day of trading on Wall Street on Wednesday, as the company failed to overcome fears it could prove to be a flash in the pan. (link.reuters.com/zuz87v)

The Guardian

WONGA LOOKS BEYOND PAYDAY TO TRY OUT LONGER LOANS

The online lender Wonga is testing out new loans repaid over a six-month period, and has dropped a service that allowed consumers to pay for goods from online retailers using credit. (link.reuters.com/haz87v)

LLOYDS SHARE SALE MAKES GOVERNMENT 4.2 BLN STG

The taxpayer's stake in Lloyds Banking Group has been cut to 25 percent, after the government sold shares worth 4.2 billion pounds on Tuesday night. (link.reuters.com/byz87v)

SSE PLEDGES TO HOLD GAS AND ELECTRICITY PRICES UNTIL 2016

SSE, the UK's second-largest energy provider, is to freeze gas and electricity prices for its 5 million customers until 2016, putting pressure on rivals to follow. (link.reuters.com/cyz87v)

The Times

SCOTS BELIEVE OSBORNE IS 'BLUFFING' OVER CURRENCY

George Osborne's high-stakes gamble of ruling out a currency union between an independent Scotland and the rest of the UK appears to have backfired, with more Scots believing that he is "bluffing" than telling the truth, a poll for The Times has found. (link.reuters.com/tuz87v)

The Independent

ROW AS SWISS PICK UK BANKER TO RUN WATCHDOG

Switzerland has named the British banker Mark Branson as the new head of its financial market regulator, it emerged yesterday. (link.reuters.com/dyz87v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:

Fourth quarter GDP growth at 8:30--consensus 2.7%
Jobless claims for week of March 22 at 8:30--consensus 323K
Pending home sales for February at 10:00--consensus up 0.2% for the month

ANALYST RESEARCH

Upgrades

BankUnited (BKU) upgraded to Overweight from Equal Weight at Morgan Stanley
Federated Investors (FII) upgraded to Neutral from Underperform at Sterne Agee
New York Times (NYT) upgraded to Overweight from Equal Weight at Evercore
PVH Corp. (PVH) upgraded to Conviction Buy from Buy at Goldman

Downgrades

BlackBerry (BBRY) downgraded to Sell from Hold at Societe Generale
CECO Environmental (CECE) downgraded to Market Perform at FBR Capital
Citigroup (C) downgraded to Market Perform from Outperform at Bernstein
Citigroup (C) downgraded to Market Perform from Outperform at Keefe Bruyette
Five Star (FVE) downgraded to Market Perform from Outperform at JMP Securities

Initiations

Active Power (ACPW) initiated with a Buy at Roth Capital
Amgen (AMGN) initiated with an Overweight at Morgan Stanley
Associated Banc-Corp (ASBC) initiated with a Neutral at DA Davidson
Biogen (BIIB) initiated with an Overweight at Morgan Stanley
Celgene (CELG) initiated with an Equal Weight at Morgan Stanley
Cemig (CIG) initiated with a Buy at Goldman
Gilead (GILD) initiated with an Equal Weight at Morgan Stanley
ICON plc (ICLR) initiated with an Outperform at Credit Suisse
Independence Realty Trust (irt) initiated with a Buy at Deutsche Bank
Pharmacyclics (PCYC) initiated with an Equal Weight at Morgan Stanley
Regeneron (REGN) initiated with an Equal Weight at Morgan Stanley
RingCentral (RNG) initiated with an Outperform at Macquarie
Roundy's (RNDY) initiated with a Buy at BofA/Merrill
TCF Financial (TCB) initiated with a Neutral at DA Davidson

COMPANY NEWS

Bank of America (BAC) received approval from the Federal Reserve for its 2014 capital plan; the bank will repurchase $4B of its common stock and increase its dividend to 5c from 1c per share
Bank of America (BAC) also announced a more than $9B settlement with the FHFA related to mortgage-backed securities sold to Fannie Mae (FNMA) and Freddie Mac (FMCC) between 2005 and 2007
JPMorgan (JPM) and Morgan Stanley (MS) both received approval from the Federal Reserve for their proposed 2014 capital plans
The Federal Reserve rejected Citigroup's (C) capital plan for 2014, which included a proposed $6.4B share repurchase program and an increase of the bank's dividend to 5c per share. Citi will be allowed to continue with its current capital actions, which include a $1.2B share repurchase program and a 1c per share dividend
Essex Property Trust (ESS) will join the S&P 500, replacing Cliffs Natural (CLF), as of the market close on April 1
Santander (SAN) said it will resubmit capital plan after Fed objects for qualitative reasons
Yahoo Japan (YHOO) to buy eAccess from SoftBank (SFTBF) for Y324B

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Leidos (LDOS), Vince Holding (VNCE), Paychex (PAYX)

Companies that missed consensus earnings expectations include:
Signet Jewelers (SIG), H.B. Fuller (FUL), American Eagle Energy (AMZG), Revance Therapeutics (RVNC), Cancer Genetics (CGIX)

NEWSPAPERS/WEBSITES

Twitter (TWTR) expected to introduce new music strategy this week, WSJ reports
Microsoft (MSFT) expected to announce new version of Office for iPad, WSJ reports
UBS (UBS) has suspended six more forex traders, FT reports
Amazon (AMZN) received clearance to provide more cloud services to Pentagon, FT reports
Intel to support Cloudera and stop its distribution of Hadoop, Venture Beat says
Target (TGT) and Visa (V) say fraud limited following data breach, WSJ reports
Facebook (FB) denies Oculus hardware redesign, Re/code reports

SYNDICATE

500.com  (WBAI) files to sell $360M of American Depositary Shares
Advaxis (ADXS) 4.08M share Spot Secondary priced at $3.00
Applied Genetic Technologies (AGTC) 4.17M share IPO priced at $12.00
Ford (F) files to sell 1.34M shares of common stock for holders
Marchex (MCHX) 5.714M share Secondary priced at $10.50
Old Second Bancorp (OSBC) files to sell 13.5M shares of common stock
PennyMac (PFSI) 5.555M share Secondary priced at $16.50
Realty Income (O) 12M share Spot Secondary priced at $39.96
SciQuest (SQI) 3M share Secondary priced at $26.75
Solazyme (SZYM) 5M share Secondary priced at $11.00
Square 1 Financial (SQBK) 5.78M share IPO priced at $18.00
TriNet (TNET) 15M share IPO priced at $16.00
William Lyon Homes (WLH) 2M share Secondary priced at $27.25

• Crimea Resolution Backed by U.S. Barely Gets UN Majority (BBG)
• Russian Buildup Stokes Worries (WSJ)
• As reported here first: China’s Developers Face Shakeout as Easy Money Ends (BBG)
• U.S. House Poised to Clear Sanctions Called Putin Warning (BBG)
• Bitcoin Prices Plunge on Report PBOC Orders Accounts Shut (BBG)
• Search for lost Malaysian jet shifts significantly after new lead (Reuters)
• Russian fund taps China and Middle East (FT)
• Long battle looms between U.S. college, athletes seeking to unionize (Reuters)
• Official warns EU-US trade deal at risk over investor cases (FT)
• New iPhone likely out in September, Nikkei daily says (AFP)
• Ukraine's Tymoshenko to Run for President (WSJ)
• Deutsche Boerse, Bank of China agree closer cooperation (Reuters)
• Japan to Front-Load Spending in FY14 Budget as Tax-Bump Looms (BBG)
• Fed feels backlash over stress tests (FT)

Overnight Media Digest

WSJ

* Lehman Brothers Holdings Inc said on Thursday it would repay creditors an additional $17.9 billion next week, its fifth distribution since a bankruptcy judge approved its liquidation plan in December 2011. After that money is returned, Lehman's creditors will have been paid more than $80 billion - $15 billion more than the bank's initial estimate of how much would be returned to creditors. (http://link.reuters.com/syj97v)

* PG&E Corp said it expects to face federal criminal charges over the 2010 natural-gas pipeline explosion that killed eight in San Bruno, California. The utility said on Thursday it expects to be charged with violating the federal Pipeline Safety Act, which dates back to 1968. (http://link.reuters.com/tyj97v)

* Some lawmakers and others are calling on the Securities and Exchange Commission to cut the time that large investors can secretly amass shares in a company. Investors who own 5 percent of a stock get 10 days to announce their holdings, according to a 1968 regulatory. (http://link.reuters.com/xyj97v)

* Wal-Mart Stores Inc has sued Visa Inc for more than $5 billion, claiming the card network charged unreasonably high fees when the retailer's customers paid with plastic. (http://link.reuters.com/bak97v)

* Private-equity firm TPG is in advanced discussions to take a roughly 15 percent stake in Chobani Inc, said a person familiar with the matter, as the maker of Greek yogurt seeks to raise capital that could value it at up to $5 billion. (http://link.reuters.com/cak97v)

FT

Russia's state-backed fund has tapped money from sovereign wealth funds in China and the Middle East, hoping to show it can attract foreign capital into the country even if the United States and European investors turn away following the annexation of Crimea.

French oil giant Total is in talks to partner with Russia's Lukoil on its shale oil projects in Russia, as Moscow targets unconventional resources to replace falling production at ageing fields in Siberia.

Satya Nadella, Microsoft's new chief executive, announced the company's long-awaited Office suite on Apple Inc's iPad at his first public appearance, signalling that he is prepared to unbundle Windows to catch up on mobile and the cloud.

Brazilian public prosecutors have asked that courts block the restructuring plan of former billionaire Eike Batista's oil group and force him to inject $1 billion of his own money into the company.

Graeme Shelley, a former broker at Novum Securities received a two-year suspended sentence after pleading guilty to insider-trading charges, admitting to trading 14 stocks using inside information between 2008 and 2010.

NYT

* A day after Citigroup Inc's capital plan failed the Fed's stress test for the second time in three years, bank executives were still struggling to understand the decision and how best to respond. (http://r.reuters.com/dak97v)

* As the United States seeks to strengthen sanctions on Moscow for its occupation of Crimea, energy experts say the powerful Russian oil industry would make a robust target. But any penalties on energy investments, technology transfers and financial transactions would most likely also punish Western oil companies like Exxon Mobil that are investing heavily in Russia. (http://r.reuters.com/gak97v)

* Microsoft Corp on Thursday introduced its long-awaited suite of applications for Apple Inc's iPad tablets. The suite includes Word, PowerPoint and Excel. (http://r.reuters.com/jak97v)

* When CBS Outdoor Americas Inc begins trading on the New York Stock Exchange on Friday, it will represent not only the dawn of a new publicly traded advertising company in a hot market for IPOs, but also the latest step in the evolution of its parent company, CBS Corp. (http://r.reuters.com/mak97v)

* Italian fashion house Versace said it started 2014 on a strong footing thanks to a double-digit rise in sales from its own shops in the first quarter. The luxury brand may seek stock market listing in the future after the recent sale of a 20 percent stake to the private equity group Blackstone. (http://r.reuters.com/pak97v)

* Walmart Stores Inc sued Visa Inc for $5 billion, accusing the credit and debit card network of excessively high card swipe fees, several months after the retailer opted out of a class-action settlement between merchants and Visa and MasterCard. (http://r.reuters.com/rak97v)

* New York State and federal inspectors have completed a second round of safety checks of train tracks and oil tanker cars in an effort to prevent disastrous derailments and spills of volatile crude from North Dakota's Bakken region. The inspection effort, which generally found only minor and easily correctable defects, is part of a proactive safety effort started in January after several severe accidents. (http://r.reuters.com/tak97v)

* PG&E said it would probably face federal criminal charges for its role in a fatal gas pipeline explosion in the San Francisco Bay Area in September 2010. The company said it had been in discussions with federal prosecutors to reach a resolution, but it now expects prosecutors will say that PG&E's past operating practices violated the federal Pipeline Safety Act(http://r.reuters.com/vak97v)

Canada

THE GLOBE AND MAIL

* Former Ontario Premier Dalton McGuinty's former chief of staff has been accused of orchestrating a plan to purge government records after Ontario's controversial cancellation of two gas-fired power plants, according to police documents. (http://link.reuters.com/fyk97v)

* Canada's new Finance Minister Joe Oliver is taking a hands-off approach to the mortgage market, signal ling that unlike his predecessor he does not want to interfere in the rate-setting decisions of the banks. (http://link.reuters.com/jyk97v)

Reports in the business section:

* Lululemon Athletica Inc is paving the way for an accelerated international expansion as its new leader looks to pump up the business and patch up its merchandise and image problems. (http://link.reuters.com/myk97v)

NATIONAL POST

* Confirming his status as the front-runner in the Quebec election, Liberal leader Philippe Couillard came under heavy fire from the three other leaders during the campaign's final televised debate Thursday. (http://link.reuters.com/pyk97v)

* Toronto Mayor Rob Ford was unable to avoid questions about his crack cocaine scandal during the second mayoral election debate, which saw other candidates take jabs at his personal problems, and audience members heckle him when he resorted to familiar slogans. (http://link.reuters.com/ryk97v)

FINANCIAL POST

* Banks in Canada may finally be ready to battle over mortgage rates but the war for customers has been raging for months now. Falling bond yields, which long-term fixed rate loans are priced off of, had already allowed discounters to cut rates well below the 3 percent threshold that makes finance officials in Ottawa nervous. (http://link.reuters.com/syk97v)

* Canada's largest securities regulator, the Ontario Securities Commission, is attempting to rehabilitate its long-standing image as a toothless tiger by adding new potent weapons to its arsenal of powers it hopes will result in successful prosecutions of market miscreants. (http://link.reuters.com/vyk97v)

China

CHINA SECURITIES JOURNAL

- China's securities regulator encouraged companies to list on the National Equities Exchange and Quotations Co, also known as the "New Third Board", or on overseas stock markets. The regulator is currently dealing with a backlog of firms waiting to list on the country's main boards.

SECURITIES TIMES

- The Ministry of Environmental Protection will spend 1,747 billion yuan ($281.18 billion) to curb air pollution, an engineer from the ministry said in an environmental industry conference. The money will be mainly spent on developing clean energy, car pollution controls and stepping up central heating, he added.

CHINA BUSINESS NEWS

- China will establish a national real estate ownership registration system over the next three years, the head of the Ministry of Land and Resources said at a conference. The real estate ownership registration system has been widely expected to pave the way for implementing a property tax in China.

CHINA DAILY

- Lenovo Group says it is aiming to sell 1 million smart TVs in China in 2014.

SHANGHAI DAILY

- Nikon will give Chinese owners of D600 cameras a free replacement after being targeted by state media in a consumer rights probe.

- Eighty percent of Shanghai's college students set to graduate in June have not found jobs, nor enrolled for further study or plan to travel abroad. Job competition remains fierce for college graduates even as the wider industrial workforce shrinks.

Britain

The Telegraph

ENERGY BOSS WARNS OF BLACKOUTS AS COMPETITION PROBE 'STOPS INVESTMENT IN POWER PLANTS'

The boss of Britain's biggest energy company has warned households they face an "increasing risk" of blackouts because of an investigation into whether the industry is ripping off consumers. (http://link.reuters.com/fah97v)

ROLLS-ROYCE AWARDED $1.1 BLN ENGINE DEAL

Rolls-Royce has been awarded a $1.1 billion deal from All Nippon Airways to provide engines for the troubled Boeing 787 Dreamliner aircraft. (http://link.reuters.com/gah97v)

GATWICK AGREES SEVEN-YEAR PRICING DEAL WITH EASYJET

Gatwick has agreed a seven-year pricing deal with its biggest customer, easyJet, after being freed up by the UK's airports regulator to strike agreements directly with airlines. (http://link.reuters.com/hah97v)

PENSIONS CRISIS WARNING IF SCOTLAND VOTES YES

A new directive from the European Commission has confirmed that the private pensions of hard-working Scots will become "much more expensive" unless Scotland remains part of the UK, according to experts. (http://link.reuters.com/vaj97v)

The Guardian

SCOTTISH BANKS WARNED ON INDEPENDENCE

Scotland's financial services and banking industry would face a long and costly period of disruption if there were a 'yes' vote for independence, the sector's Scottish trade body has warned. (http://link.reuters.com/xyh97v)

LONDON CITY AIRPORT RUNWAY CLOSED AFTER PLANE ENGINE 'BLEW UP'

An engine blew up on an airliner seconds before it was due to leave London City airport, a passenger has said. Four people needed treatment for minor injuries after Geneva-bound LX437 with 74 passengers and four crew on board suffered an engine problem, airport authorities added. (http://link.reuters.com/dyh97v)

EC APPROVES TAX BREAKS FOR VIDEO GAMES INDUSTRY

The video game industry has won a seven-year battle to claim government tax breaks. The European Commission has agreed to extend the credits, which are already available to film and theatre productions, allowing games makers to claim back 25 percent of their qualifying production costs. (http://link.reuters.com/cej97v)

The Times

BANK RAISES ALARM OVER NEW HOUSE PRICE BUBBLE

The number of borrowers being offered dangerously large mortgages is at an all-time high, the Bank of England has warned. (http://link.reuters.com/waj97v)

AMERICANS CONSIDER SELLING THAMES SITE

One of London's best development sites, a stretch of the Thames between Tate Modern and Blackfriars Bridge, could be put up for sale by U.S. private equity firm Carlyle Group.(http://link.reuters.com/kaj97v)

MORRISONS BOSS GIVES UP BONUS AS PROFITS CRASH

Morrisons's chief executive has waived his bonus for a second year running and become the latest blue-chip boss to renounce a pay reward after the supermarket chain suffered torrid trading. (http://link.reuters.com/xaj97v)

The Independent

ED MILIBAND PLEDGES TO SUPPORT SMALL BUSINESSES WITH RAFT OF NEW MEASURES

Ed Miliband is to answer critics who claim that Labour is "anti-business" by promising that his party would give new rights to small companies and the self-employed if it wins power. (http://link.reuters.com/bej97v)

INSURERS WARN OVER GOVERNMENT CAP ON PENSION PLAN CHARGES

The planned cap on charges on workplace pensions will drive small schemes out of business and give workers less financial freedom, insurers warned on Thursday. (http://link.reuters.com/zaj97v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Personal income for February at 8:30--consensus up 0.3%
Personal spending for February at 8:30--consensus up 0.3%
Core PCE prices for February at 8:30--consensus up 0.1%
U. of Michigan consumer sentiment index for March  at 9:55--consensus 80.5

ANALYST RESEARCH

Upgrades

Agnico-Eagle (AEM) upgraded to Buy from Hold at Canaccord
Alcoa (AA) upgraded to Neutral from Underperform at Macquarie
Bofi Holding (BOFI) upgraded to Outperform from Market Perform at Raymond James
Cognizant (CTSH) upgraded to Overweight from Equal Weight at Morgan Stanley
El Paso Pipeline (EPB) upgraded to Buy from Neutral at Citigroup
Fidus Investment (FDUS) upgraded to Strong Buy from Outperform at Raymond James
Finisar (FNSR) upgraded to Outperform from Sector Perform at RBC Capital
Home Loan Servicing (HLSS) upgraded to Overweight from Neutral at Piper Jaffray
InvenSense (INVN) upgraded to Buy from Neutral at Roth Capital
Kinross Gold (KGC) upgraded to Neutral from Sell at Goldman
NICE Systems (NICE) upgraded to Buy from Neutral at UBS
Newpark Resources (NR) upgraded to Overweight from Underweight at First Analysis
Niska Gas (NKA) upgraded to Neutral from Sell at Citigroup
PennyMac (PFSI) upgraded to Outperform from Market Perform at Wells Fargo
SolarCity (SCTY) upgraded to Outperform from Market Perform at Raymond James
TC PipeLines (TCP) upgraded to Neutral from Sell at Citigroup
Tallgrass Energy (TEP) upgraded to Buy from Neutral at Citigroup
Veeco (VECO) upgraded to Buy from Outperform at CLSA

Downgrades

Ambac Financial (AMBC) downgraded to Sell from Neutral at MKM Partners
Blackhawk (HAWK) downgraded to Neutral from Overweight at Piper Jaffray
Ciena (CIEN) downgraded to Sector Perform from Outperform at RBC Capital
Citigroup (C) downgraded to Hold from Buy at Societe Generale
Genesis Energy (GEL) downgraded to Neutral from Buy at Citigroup
JDSU (JDSU) downgraded to Sector Perform from Outperform at RBC Capital
Nestle (NSRGY) downgraded to Neutral from Outperform at Credit Suisse
PG&E (PCG) downgraded to Hold from Buy at Deutsche Bank
PG&E (PCG) downgraded to Neutral from Buy at Citigroup
Pinnacle West (PNW) downgraded at BofA/Merrill
Pinnacle West (PNW) downgraded to Neutral from Buy at BofA/Merrill
Rose Rock Midstream (RRMS) downgraded to Neutral from Buy at Citigroup
Ternium (TX) downgraded to Equal Weight from Overweight at Morgan Stanley

Initiations

Atlas Energy (ATLS) initiated with a Buy at Deutsche Bank
Atlas Resource Partners (ARP) initiated with a Hold at Deutsche Bank
Bill Barrett (BBG) initiated with a Neutral at Mizuho
Carrizo Oil & Gas (CRZO) initiated with a Buy at Mizuho
Colfax (CFX) initiated with a Neutral at Longbow
Columbia Property Trust (CXP) initiated with a Market Perform at JMP Securities
EP Energy (EPE) initiated with a Neutral at Mizuho
Integrated Silicon (ISSI) initiated with a Buy at B. Riley
McGraw Hill Financial (MHFI) initiated with a Buy at Janney Capital
Oracle (ORCL) initiated with a Buy at Cantor
Synergy Resources (SYRG) initiated with an Outperform at Imperial Capital
Valeant (VRX) initiated with a Buy at Cantor

COMPANY NEWS

Exact Sciences (EXAS) announced that an FDA advisory panel recommended approval of its Cologuard colorectal cancer screening test
PG&E (PCG) said it expects criminal charges in San Bruno case
Ford (F) announced plans to invest $500M in Ohio engine plant, create 300 jobs to build new F-150
Parametric Sound (PAMT) provided an update following completion of its combination with Turtle Beach and said it expects adjusted EBITDA for FY14 to total $20M-$25M
GCI (GNCMA) said negotiations with Viacom (VIA) stalled
GM's (GM) Opel unit said sales of Opel brand in China to cease in January 2015
Rolls-Royce (RYCEY) selected by ANA (ALNPY) to provide Trent engines worth $1.1B to power 25 Boeing (BA) 787 Dreamliner aircraft

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Continental Building (CBPX), Oxford Industries (OXM), Red Hat (RHT)

Companies that missed consensus earnings expectations include:
AdCare (ADK), RE/MAX Holdings (RMAX), Conatus Pharmaceuticals (CNAT), Cara Therapeutics (CARA), Metabolix (MBLX)

Companies that matched consensus earnings expectations include:
Progress Software (PRGS), Restoration Hardware (RH)

NEWSPAPERS/WEBSITES

Amazon (AMZN) denies report of streaming-media service, Variety says
Wal-Mart (WMT) seeks $5B from Visa (V) over swipe fees, WSJ says
Apple (AAPL) to release new iPhone as early as September, Nikkei says
Total (TOT) in talks with Lukoil (LUKOY) for shale partnership, FT reports
Rumors suggest Jazz (JAZZ) looking to buy ARIAD (ARIA), Daily Mail reports
Toyota (TM) recalling Avalon cars for airbag deployments, Detroit News reports
Microsoft (MSFT) sets internal goal of 25M Windows tablets in 2014, DigiTimes says
Baidu (BIDU) prevails in lawsuit over search results, Reuters reports
Target (TGT) lawsuit reveals liable security firm Trustwave, WSJ reports

SYNDICATE

58.com (WUBA) 6M share Secondary priced at $38.00
CBS Outdoor Americas (CBSO) 20M share IPO priced at $28.00
Caesar's (CZR) files to sell 7M common shares
CommScope (COMM) 17.5M share Secondary priced at $22.00
Endocyte (ECYT) 4.5M share Secondary priced at $21.00
Energous (watt) 4M share IPO priced at $6.00
Everyday Health (EVDY) 7.15M share IPO priced at $14.00
Exterran Partners (EXLP) files to sell 5.4M common units representing limited partners
Mercer (MERC) 7M share Secondary priced at $7.15
MoneyGram (MGI) 8M share Secondary priced at $16.50
Sprouts Farmers Market (SFM) 15M share Secondary priced at $33.75
Voxeljet (VJET) files to sell 4.25M American Depositary Shares

Submitted by Nick Cunningham via OilPrice.com,

Could the U.S. unleash a flood of oil from the strategic petroleum reserve that would drive down prices in order to punish Russia? While the idea has been kicked around over the last few weeks – most recently by George Soros– it has also been dismissed as not a serious option. Some say the impact of an oil sale, if it actually succeeded in lower prices, would be temporary. Saudi Arabia could cut back on production to keep oil prices at their current levels. Others decried the idea as contrary to the objective of the SPR, which has been setup to be used only in cases of emergency.

However, over at Quartz, Steve LeVine wrote an interesting article about the possibility of a coordinated response between the U.S. and Saudi Arabia that could have a much broader impact on oil markets. President Obama is, after all, meeting with the Saudi King on March 28. Ukraine is certainly going to come up in their discussions – his time in Europe was dominated by coordinating a response to Russia, despite the original intention of the trip to discuss nuclear security.

LeVine argues that it is possible that the U.S. could sustain a sale of 500,000 to 750,000 barrels of oil per day from the SPR. If the U.S. coordinated with the Saudis to ensure that they did not cut back production – indeed, they could even step up production from 9.7 million bpd – the greater supplies could slash prices almost immediately. Russia gets about 70% of its export revenue from oil and gas, so even a modest drop would be a significant blow. A former Ford and Carter administration official believes a U.S. SPR release could lower oil prices by $12 per barrel, potentially costing Russia $40 billion in lost revenue.

But by LeVine’s own account, there are few signs that such a move is in the works. Saudi officials, including Prince Turki bin al-Faisal, recently remarked about the global nature of today’s oil market, and the inefficacy of a single nation’s move to impact supply. Moreover, Saudi incentives aren’t exact in line with such a move. As one the world’s largest oil producers, Saudi Arabia would suffer from a drop in oil prices. And the fiscal breakeven price for Saudi Arabia is rather high, considering its budget necessities. Bank of America Merrill Lynch estimates the Saudis need a global oil price of $85 per barrel for its budget to breakeven. That figure has crept higher in recent years, meaning the Saudis are probably not inclined to want oil prices to decline from the $105-$110 range, where they have been for the last few months.

Not only that, but as LeVine notes, the Saudi King is convinced the U.S. is “unreliable,” and relations between the two countries hit a low point after Obama’s back and forth over air strikes on Syria last year. With Saudis increasingly frustrated with the U.S., why would they shoot themselves in the foot just to help out an unreliable partner? Now they could be interested in striking a blow against Iran, which lower oil prices would do. But, that doesn’t seem like enough of an upside.

Back in the U.S., President Obama could get an earful from oil producers if he reaches for the SPR spigot. Attempting to saturate the market with SPR oil could lower prices, but that would be pretty damaging to U.S. drillers. Their Republican allies will also oppose the move, at least they did when Obama used the SPR back in 2011 during the Libyan civil war. Republicans may have more difficulty justifying their opposition this time around, given that they have been the loudest about using American energy as a geopolitical weapon. But they will surely argue that exports are the better answer to Russia than an SPR release.

For now, Obama will probably hold the SPR card in his back pocket. Should Russia resist any further action in Ukraine, nothing will come of it. But, he is almost certainly mulling over the idea in the event that Russia takes broader action in Eastern Europe.

Nikkei 225 (+1.04%) outperformed overnight, buoyed by S&P 500 posting a new all-time high, a dovish BoJ's Tankan inflation survey and reports that the GPIF is to invest in funds specializing in Japanese stocks with high returns. Overall, another quiet session this morning as market participants continued to position for the upcoming ECB meeting, with Bunds under pressure amid further unwind of expectation of more policy easing by the central bank. According to ECB sources, there is no clear consensus at present on policy action, intense debate seen on Thursday after March HICP data, adding that it fears "over-interpretation" by market of QE possibility.

And now on the real news: after turning its back on HFT (and fully endorsing IEX), Goldman again shocked traders overnight when it announced it is selling its infamous Designated Market Maker Unit at the NYSE (the topic of many posts on Zero Hedge in the early days), confirming a major overhaul is currently in place regarding market structure. Because if Goldman has said enough to the current regime, its days are numbered. Guaranteed. And more importantly, as the crackdown on HFT accelerates, first it will be stocks that are impacted and then, finally, it will be FX - the locus of all the real market rigging. Bloomberg reported overnight that firms using the ultra-fast strategies getting scrutiny thanks to Michael Lewis’s book “Flash Boys” account for more than 35% of spot currency volume in October 2013, up from 9% in October 2008, according to consultant Aite Group; it’s the opposite of equities, where their proportion shrank to 50% in 2012 from 66% four years ago, according to Rosenblatt Securities.

Soon regulators will put two and two together, and if Goldman gives the go ahead the HFT scourge will be eliminated not only from stocks but from FX. Then things like the now daily Yen-carry driven overnight levitation will be a thing of the past. For now however, FX-Spoo correlation pair manipulation is all the rage.

Overnight markets are trading with a positive tone led by the strong finish to the S&P 500 yesterday. There was a bit of market volatility after news that a magnitude 8.2 earthquake struck off the coast of Chile overnight at 9pm local time. Already there are reports of 1.5m to 2m waves hitting the Chilean coastline and coastal areas are currently being evacuated. The extent of damage is so far unclear but there have been reports of power outages in a number of Chilean towns. Japan’s meteorological bureau said that a tsunami may reach the coast of Japan over the next 24 hours. COMEX copper futures traded as high as +1.3%, on fears of supply disruptions from Chile, but they have given up most of those gains to trade +0.4% as we type. In Asia, the Nikkei is outperforming the rest of the region after getting a boost from an article in the Nikkei saying that Japan’s Government Pension Investment Fund will be targeting high yield stocks as part of an overhaul of its investment strategy. Indeed, a number of the yield sensitive sectors such as banks (+2.3%) and real estate (+3.8%) have been beneficiaries today. The BoJ said today that latest inflation expectations from Japanese enterprises point to a pickup in prices to 1.7% over three years, and price rises of 1.5% over the next twelve months – though this is somewhat lower than the central bank’s own inflation targets. Elsewhere Chinese stocks are posting modest gains (Shanghai Comp +0.6%) led by property developers with domestic newswires saying that a number of large cities are considering easing property market purchase restrictions.

In other news, early this morning as part of the Hollande's ongoing overhaul of France's cabient resulting from the socialist drubbing in this weekend's municipal elections, Hollande appointed Michel Sapin finance minister Wednesday, a post he filled in the early 1990s, as the administration prepares a new drive against austerity policies in Europe. Mr. Sapin, who celebrates his 62nd birthday next week, inherits an economy that is struggling to pick up from a lengthy period of stagnation and is saddled with record high public debt.

Turning to the day ahead, there’s not a whole lot in the European calendar. Euroarea finance ministers continue their meeting in Athens where there could be further headlines around bank supervision and aid for Ukraine. The US ADP employment report will be released around 1:15 London time. Consensus expectations are for a headline gain of 195k, and we’ll probably see forecasters adjust their Friday payrolls estimates shortly after its release. US factory orders and mortgage applications round off the data docket.

Bulletin headline summary from Bloomberg and RanSquawk

• Treasuries decline, 5Y and 7Y lead, curve spreads flatten; first look at March employment comes today with ADP (est. 195k); trading may be cautious before ECB meeting tomorrow (preview here), payrolls on Friday.
• Russia pressed Ukraine to disarm nationalists it says are oppressing its compatriots there, while NATO looked to bolster European security as the alliance’s Cold-War foe massed troops on Ukraine’s border
• Europe may enter a new period of market volatility, former Bundesbank president Axel Weber said in an interview; European Parliament elections at the end of May could affect the decisiveness of European leaders
• The effort to keep Middle East peace talks alive has pushed the U.S. to consider doing what once was unthinkable: freeing convicted spy Jonathan Pollard
• Talks are foundering as Palestinian President Abbas  vowed to pursue bid for statehood at the U.N.
• A Chinese building materials producer will avert what would have been the second default in the nation’s onshore bond market as its guarantor said it would step in to help, two people familiar with the matter said
• China’s overnight money-market rate climbed for a seventh day, the longest stretch in five months, after the central bank drained cash from the financial system
• Northern Chile was shaken by an 8.2-magnitude earthquake that killed five people and forced the evacuation of coastal areas, prompting President Michelle Bachelet to order military leaders to the region to keep order
• Goldman is looking to sell its NYSE market-making unit to a Dutch investment firm, as computers replace traders who once dominated the business at the corner of Wall and Broad streets
• Sovereign yields higher. Asian stocks gain, with Nikkei +1%, Shanghai +0.6%. European equity markets, U.S. stocks futures gain. WTI crude lower, copper and gold gains

US Event Calendar

• 7:00am: MBA Mortgage Applications, March 28 (prior -3.5%)
• 8:15am: ADP Employment Change, March, est. 195k (prior 139k)
• 9:45am: ISM New York, March (prior 57.0)
• 10:00am: Factory Orders, Feb., est. 1.2% (prior -0.7%) Central Banks
• EU finance ministers, central bankers continue Athens meeting
• 12:30pm: Fed’s Lockhart speaks in Miami
• 4:00pm: Fed’s Bullard meets reporters in St. Louis
• POMO - 11:00am: Fed to purchase $2b-$2.5b notes in 2021-2024 sector

EU & UK Headlines

Despite the uptick in excess liquidity in Euro-area banking system, together with a fall in an overnight EONIA fix, funding markets remained volatile this morning, with shorter-dated EONIA trading higher. Nevertheless, further unwind of expectation of QE by the ECB meant that Bunds traded lower since the open, with concession related flow also weighing on the short-end amid supply from Buba (1% 2019 Bobl auction was subsequently successfully offered).

US Headlines

USTs traded lower during the first half of the EU session, dragged lower by Bunds and also on the prospect of more corporate issuance, with 5y in particular focus ahead of the expected USD 1bln 5y deal launch by Nordic Investment Bank today which is excepted to be swapped to floating format.

Equities

Overall, relatively quiet trading session in Europe this morning as market participants positioned for the upcoming ECB governing council meeting, which as a result meant that peripheral equity indices underperformed. Also of note, companies trading ex-dividend in the UK resulted in the FTSE-100 underperforming relative to core equity indices (ex-dividend related stocks subtracted around 4 index points from the benchmark index).

FX

The release of weaker than expected macroeconomic data from the UK failed to weigh on GBP/USD and instead benefited from market participants positioning for the upcoming ECB meeting, which in turn weighed on EUR/GBP, albeit marginally. As a result, heading into the North American open, EUR/USD and GBP/USD are seen largely flat. Elsewhere, having benefited overnight following the release of the BoJ's Tankan inflation survey, USD/JPY edged off the best levels of the session on touted profit taking related flow.

Commodities

Despite a fall in API inventories, WTI and Brent crude futures traded steady this morning, in minor negative territory, with Brent prices weighed on by further reports of blockade ending within days in Libya. Of note, NATO's top military commander said that the situation with Russia's forces on the Ukrainian border remains incredibly concerning. Going forward, market participants will get to digest the release of the latest ADP Employment Change, Factory Orders and the release of the weekly DoE reports.

US API Crude Oil Inventories (Mar 28) W/W -5800k vs. Prev. 6280k

- Cushing Crude Inventories (Mar 28) W/W -1520k vs. Prev. -1030k
- Gasoline Inventories (Mar 28) W/W 1800k vs. Prev. -2840k
- Distillate Inventories (Mar 28) W/W -1700k vs. Prev. 267k

Elsewhere, copper and iron ore prices saw volatility overnight, after mines in Chile were evacuated after an 8.2 magnitude earthquake, followed by sporadic  tsunami warnings.

* * *

We conclude with the overnight summary by DB's Jim Reid

Markets were fortunate yesterday with the S&P 500 (+0.70%) closing at fresh record highs for the seventh time this year. Elsewhere EM and European equities were up for an eight and sixth day respectively. Markets are regaining some poise after the heightened geo-political tensions last month have eased. We now head for the business end of the week with ADP today, the ECB meeting and ISM non-manufacturing tomorrow and payrolls on Friday. Aside from the easing geopolitical tensions, markets also welcomed a number of encouraging data points both on a macro and micro level yesterday. Those hoping for a bottom in China’s economic picture looked to recent copper price moves, which are now about 5% off the recent lows, as fears of commodity financing unwinds fade. Indeed, Shanghai copper futures are up for the 10th time in the last 13 sessions. Over to the US, data yesterday was also heartening for those calling for a recovery in US activity after the weather induced slump lasting most of Q1. We wrote yesterday about market chatter suggesting that the US automakers would post surprisingly strong March sales numbers. Well they didn’t disappoint, posting overall sales growth of 5.7% well above Reuters consensus expectations for a circa 2% increase. Management commentary from Ford and Toyota suggested that customer traffic in dealer showroom improved in the second half of March as weather had kept consumers away in the earlier part of the month. According to data compiled by Reuters, GM sales rose 4%, Ford 3%, Toyota 5% and Chrysler up 13% from a year ago and all beat expectations by industry research firm Edmunds.com.

In terms of the market reaction, the S&P 500 auto sector (+2.5%) was the clear outperformer yesterday, underpinned by Ford who recorded a 4.6% gain on the day. Others had a more bearish interpretation of the data, saying that incentives rose by an average of 8% to around $2,800 per vehicle as dealers tried to clear excess stock.

While the auto sector shakes off the effects of the weather, the lingering impact of the recent cold snap is still being felt in other parts of the US economy. According to the International Council of Shopping Centers, the US saw its highest percentage over the last four years of consumers reporting that they didn’t shop through any channel over the last week. This coincided with cooler national temperatures last week which were on average 4 degrees Fahrenheit cooler than normal, marking the 4th coldest last week of March in more than 23 years. Nevertheless, ICSC retail store sales last week rose 3.6% week-on-week, compared to a decline of 1.5% prior.

Staying with the US, on the macro side, though the ISM manufacturing headline number came in below estimates (53.7 vs 54.0), it was a 0.5pt improvement on last month’s outcome and many pointed to the encouraging signs in the various subcomponents. Our US economists note that the most forward-looking component, new orders, was up 0.6 to 55.1, its highest reading since December (64.4). Production advanced the most among the subcomponents, up 7.7 points to 55.9, also the highest reading since December (61.7). For the quarter, the ISM averaged 52.7, which is consistent with Q1 real GDP growth around 2% in their view. There was a small pop in equities following the ISM but equities were already on their way to a solid day well before the release of the data.

Overnight markets are trading with a positive tone led by the strong finish to the S&P 500 yesterday. There was a bit of market volatility after news that a magnitude 8.2 earthquake struck off the coast of Chile overnight at 9pm local time. Already there are reports of 1.5m to 2m waves hitting the Chilean coastline and coastal areas are currently being evacuated. The extent of damage is so far unclear but there have been reports of power outages in a number of Chilean towns. Japan’s meteorological bureau said that a tsunami may reach the coast of Japan over the next 24 hours. COMEX copper futures traded as high as +1.3%, on fears of supply disruptions from Chile, but they have given up most of those gains to trade +0.4% as we type. In Asia, the Nikkei (+1.8%) is outperforming the rest of the region after getting a boost from an article in the Nikkei saying that Japan’s Government Pension Investment Fund will be targeting high yield stocks as part of an overhaul of its investment strategy. Indeed, a number of the yield sensitive sectors such as banks (+2.3%) and real estate (+3.8%) have been beneficiaries today. The BoJ said today that latest inflation expectations from Japanese enterprises point to a pickup in prices to 1.7% over three years, and price rises of 1.5% over the next twelve months – though this is somewhat lower than the central bank’s own inflation targets. Elsewhere Chinese stocks are posting modest gains (Shanghai Comp +0.4%) led by property developers with domestic newswires saying that a number of large cities are considering easing property market purchase restrictions.

Returning to yesterday, in addition to the theme of higher equities we saw curve steepening in USTs and a continued bid for yield and duration in credit. The USTs 2s/30s curve added 4bp, led mostly by the long end as the treasury curve partially retraces its post FOMC bearish flattening. The 30year yield increased for the third straight session. The tightening in credit spreads that we saw into quarter end extended into Q2, with the European Crossover index tightening for the sixth straight session while in the US, the CDX IG index closed firmer for the fourth straight day. The strong sentiment allowed EM to have one of its busiest days in term of new issuance with billions in corporate and sovereign deals being priced. On a similar vein, the WSJ noted yesterday that US investment grade market just capped off its the second busiest quarter ever for new issuance in Q1.

Turning to the day ahead, there’s not a whole lot in the European calendar. Euroarea finance ministers continue their meeting in Athens where there could be further headlines around bank supervision and aid for Ukraine. The US ADP employment report will be released around 1:15 London time. Consensus expectations are for a headline gain of 195k, and we’ll probably see forecasters adjust their Friday payrolls estimates shortly after its release. US factory orders
and mortgage applications round off the data docket.

• Russia says expects answers on NATO troops in eastern Europe (Reuters)
• Dealers say GM customer anxiety rising, sales may take hit (Reuters)
• China Unveils Mini-Stimulus Measure (WSJ)
• Londoners Priced Out of Housing Blame Foreigners (BBG)
• New earthquake in Chile prompts tsunami alerts (Reuters)
• Ukrainian Billionaire Charged by U.S. With Bribe Scheme (BBG)
• Chinese Investments in U.S. Commercial Real Estate Surges (BBG)
• Old Math Casts Doubt on Accuracy of Oil Reserve Estimates (BBG)
• US secretly created 'Cuban Twitter' to stir unrest (AP)
• Gazprom’s $910 Billion Gaffe Shows Putin Economy Waning (BBG)
• Same old song:  Apple Bulls Bet New Products Will Bring Stock Revival  (BBG)
• ECB seen as unlikely to act despite deflation fears (FT)

Overnight Media Digest

WSJ

* General Motors Co Chief Executive Mary Barra withstood a second day of withering attacks from lawmakers, with one senator saying the nation's largest auto maker should face criminal liability and another saying she needed to fix its "culture of coverup." (http://link.reuters.com/sys28v)

* Mary Barra learned late about faulty ignition switches. The larger an organization gets, the less likely it is that bad news will travel smoothly up the chain. At big corporations, say organizational experts, doing the right thing is often incompatible with pleasing the boss. (http://r.reuters.com/pys28v)

* Boeing Co said it will try to sell its new aerial refueling tanker to South Korea as its long-running battle with Airbus Group NV expands from commercial jets into specialized military aircraft. (http://link.reuters.com/wys28v)

* Investors are snapping up low-rated securities backed by companies, home mortgages and car loans at a clip rarely seen since the financial crisis, as fund managers and others tire of paltry yields on safer assets. (http://link.reuters.com/tys28v)

* Juniper Networks Inc is slashing its global workforce by 6 percent. The job cuts that will mostly occur immediately and largely affect middle-management roles. Activist shareholders Jana Partners and Elliott Management Corp have pushed for the network-gear company to make large cuts to costs and enact programs to return capital to shareholders. (http://link.reuters.com/bat28v)

* The Internal Revenue Service's plan to tax virtual currencies could crimp their use as an alternative to cash or credit for retail transactions. The IRS, in a ruling last week, said under existing law bitcoin and its brethren are property, not currency. That means anyone who spends bitcoin, even on a $2 cup of coffee, may have to pay taxes based on any "gain" over that bitcoin's original value. (http://link.reuters.com/hat28v)

* Wausau Paper Corp said President and CEO Henry Newell has stepped down and Chairman Thomas Howatt plans to retire as the tissue company faces pressure from activist investors. (http://link.reuters.com/jat28v)

* Frank Perkins Hixon pleaded guilty to insider trading on Wednesday, punctuating the downfall of the former senior deal maker at Evercore Group Llc. Hixon admitted he used confidential information from his job working on mergers and acquisitions at the investment bank in trades that netted himself more than $700,000. (http://r.reuters.com/kat28v)

* Pacific Investment Management Co's mutual funds suffered a 10th straight month of redemptions in March, although Pimco's chief executive said there is no link between the firm's management turmoil and the outflows. Investors pulled $7.3 billion out of Pimco last month, following outflows of $2.5 billion in February and $5.7 billion in January, to lift the first-quarter total to more than $15 billion, according to fund tracker Morningstar Inc. (http://link.reuters.com/pat28v)

* Accounting giant PricewaterhouseCoopers is expected to complete its acquisition of management-consulting firm Booz & Co Thursday and is renaming Booz "Strategy&." The deal, announced last fall, is among the most prominent acquisitions by an accounting firm in years, and it furthers PwC's recent push into the consulting field. (http://link.reuters.com/qat28v)

* Zillow Inc said it would begin providing real-estate listings for a Chinese real-estate portal, giving Chinese investors more access to the U.S. housing market. (http://link.reuters.com/sat28v)

FT

The first quarterly figures show London's house rates rose twice as fast as the rest of UK according to a property survey by Nationwide.

A study by Deloitte shows management shareholding in listings over the last three years was much higher than established listed companies.

A legal opinion by law firm Slaughter and May says that the Financial Conduct Authority could face three potential allegations of market abuse in the wake of a controversy over the leak of market sensitive probe by the regulator that led to a sell-off of insurers' shares.

Danish bank Saxo Bank is set to back social trading, and argue that investors in the UK want to interact with others and share information.

U.S. investment bank Goldman Sachs Group Inc was fined 37 million euros ($50.94 million) by European regulators for running a cartel along with 11 other subsea power cable firms.

NYT

* Just as Citigroup Inc was putting a troubled past of taxpayer bailouts and risky investments behind it, the bank now finds itself in the government's cross hairs again. Federal authorities have opened a criminal investigation into a recent $400 million fraud involving Citigroup's Mexican unit, according to people briefed on the matter. (http://link.reuters.com/rat28v)

* After facing a House subcommittee investigating General Motors Co's ignition-switch recall a day earlier, GM's Chief Executive Mary Barra was bombarded with a more aggressive line of questioning by senators on Wednesday. (http://link.reuters.com/tat28v)

* Amazon.com Inc is a retailer that makes and sells entertainment. On Wednesday, it took a big step toward a future in which shopping and video are tightly linked, perhaps even inseparable. The company began selling a device, Amazon Fire TV, that lets consumers watch Amazon's extensive video library as well as play a wide array of games on their television sets. (http://link.reuters.com/wat28v)

* A prominent executive is leaving JPMorgan Chase & Co as her powerful trading operation has stopped performing up to expectations. The departure of Blythe Masters, the head of JPMorgan's giant commodities unit, comes as the bank completes a sale of crucial parts of that business. (http://link.reuters.com/xat28v)

* Chrysler, a unit of Fiat Chrysler Automobiles, is recalling more than 850,000 sport utility vehicles because of a possible braking problem. The recall covers the 2011 to 2014 Jeep Grand Cherokee and Dodge Durango models, including about 644,000 in the United States. (http://link.reuters.com/bet28v)

Canada

THE GLOBE AND MAIL

* The political future of Toronto-area Conservative MP Eve Adams is uncertain after Prime Minister and Conservative party leader Stephen Harper ordered a party investigation into the power struggle that went behind an Ontario nomination. (http://link.reuters.com/qyt28v)

* Two new cases of measles in Calgary area have taken the total number of infected people to five. The two individuals are from the Western Canada High School in Calgary, which was warned in late January of a measles exposure. (http://link.reuters.com/fuv28v)

Reports in the business section:

* In an effort to block Goldcorp Inc's hostile bid, Osisko Mining Corp cut a complicated deal with Yamana Gold Inc and two Canadian pension funds. Toronto-based Yamana will use cash and its stock to buy a 50 percent interest in Osisko's mining and exploration assets. (http://link.reuters.com/vyt28v)

NATIONAL POST

* Toronto mayor Rob Ford was the sole vote against the city council's motion on naming a city street in honor of Nelson Mandela. The decision surprised many members of the Toronto city council and ensued a huge commotion on social media. When reporters approached Ford on his surprising decision, he stood up in city council to say he voted the wrong way and asked for a re-vote. (http://link.reuters.com/cav28v)

* An Alberta court has ruled against a constitutional challenge that opposes the provincial government's monopoly on health care. Alberta Court of Queen's bench ruled against a claim to obtain private health insurance, saying that an Albertan can't rely on the Supreme Court's 2005 Chaoulli decision because provincial law bans private health insurance. (http://link.reuters.com/jav28v)

FINANCIAL POST

* Imperial Oil Ltd is struggling to work out manufacturing and installation-related defects at its $12.9 billion Kearl oil sands mine nearly one year after production began. (http://link.reuters.com/tav28v)

* Home sales in the Vancouver region picked up in March compared to a year earlier. However, they were still well below the long-term average for the month, according to the city's real estate board. (http://link.reuters.com/xav28v)

China

CHINA SECURITIES JOURNAL

- China will accelerate urbanisation in shanty towns to promote investment and consumption, Premier Li Keqiang said in the weekly State Council meeting. The move also aims to help boost the broader economy.

- Local securities firm Sealand Securities Co announced it will raise under 5 billion yuan ($805.72 million) via private placements. It will also issue corporate bonds for under 2 billion yuan.

SHANGHAI DAILY

- Shanghai will become the second city in the country after Beijing to introduce the China V-emission standards for new vehicles, starting April 30, in a bid to tackle air pollution.

21st CENTURY BUSINESS HERALD

- The National Development and Reform Commission has approved raising of transport fees by private-owned commercial rail operators such as Shenhua Energy. Shenhua will be able to charge a fee of 0.20 yuan per tonne, from 0.15 yuan per tonne, from April 1 for its Inner Mongolia-Shaanxi rail road.

CHINA DAILY

- China lacks a new engine of economic growth and is still in the process of developing news ways to stimulate the economy, said Guo Tianyang, director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics in Beijing, while other analysts said the country's bad debt is expected to increase.

- China may sell debt and is considering other ways to raise funds for combating climate change, an official at the country's top economic planner said on Tuesday.

Britain

The Telegraph

SSE BOSS ATTACKS 'SCAREMONGERING' OVER ENERGY COMPETITION PROBE

(http://link.reuters.com/cas28v)

Energy companies should not "scaremonger" over the impact of a competition probe, the chief executive officer of SSE has said, in a thinly veiled attack on rival Centrica Plc .

BIDS FOR CHANNEL 5 EXPECTED TO BE LESS THAN HALF 700 MLN STG ASKING PRICE

(http://link.reuters.com/fas28v)

The sale of Channel 5 is expected to attract bids of less than half the 700-million pound price tag attached to the broadcaster by its owner Richard Desmond, it can be disclosed.

The Guardian

MONEY SHOP OWNER DOLLAR FINANCIAL TO BE SOLD TO LONE STAR FOR $1.3 BLN

(http://link.reuters.com/has28v)

Dollar Financial, the U.S. short-term lending specialist behind the Money Shop, Britain's largest high-street payday lender, is to be sold to private equity house Lone Star for $1.3 billion.

LORD MYNERS FACES STRUGGLE TO OVERHAUL CO-OPERATIVE GROUP BOARD

(http://link.reuters.com/jas28v)

Lord Myners is facing an uphill struggle in the coming days to persuade members of the loss-making Co-operative Group Ltd to endorse his plans to overhaul its board and replace it with a plc-style structure.

The Times

GOOD NEWS AS ACCENTURE GOES ON HIRING SPREE

(http://link.reuters.com/mas28v)

One of the world's biggest management consultants, Accenture Plc, is to hire 2,000 people in the United Kingdom this year in a move hailed by the prime minister as "more good news for the British economy."

GLENCORE, GERTLER AND CONGO'S LOST MILLIONS

(http://link.reuters.com/nas28v)

Glencore Xstrata helped to pave the way for a cut-price deal that has led to $71 million in mining royalties going to its joint venture partner instead of the world's poorest country.

Sky News

COWDERY NETS 200,000 STG PROFIT AFTER FCA FIASCO

(http://link.reuters.com/pas28v)

The founder of the closed life insurer Resolution has netted a profit of almost 200,000 pound on shares he bought after last week's botched launch of a probe into the sector by the City regulator.

NATIONWIDE - HOME PRICES UP 10 PCT IN LAST YEAR

(http://link.reuters.com/qas28v)

Average house prices have risen by nearly 10 percent in the last year, according to a property survey. Nationwide said year-on-year prices were up 9.5 percent in March, the biggest annual jump since mid-2010

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Jobless claims for week of March 29 at 8:30--consensus 320K
International Trade Balance for February at 8:30--consensus -$38.8B
March ISM non-manufacturing index for March at 10:00--consensus 53.3

ANALYST RESEARCH

Upgrades

Acuity Brands (AYI) upgraded to Buy from Hold at Canaccord
Eli Lilly (LLY) upgraded to Outperform from Market Perform at Cowen
Intel (INTC) upgraded to Overweight from Neutral at Piper Jaffray
Monsanto (MON) upgraded to Overweight from Neutral at JPMorgan
Newfield Exploration (NFX) upgraded to Buy from Neutral at UBS
OpenTable (OPEN) upgraded to Buy from Neutral at Citigroup
Sun Bancorp (SNBC) upgraded to Neutral from Underperform at Sterne Agee
Willis Group (WSH) upgraded to Buy from Neutral at Nomura

Downgrades

BB&T (BBT) downgraded to Outperform from Strong Buy at Raymond James
Broadcom (BRCM) downgraded to Neutral from Overweight at Piper Jaffray
CF Industries (CF) downgraded to Neutral from Buy at Citigroup
CSX (CSX) downgraded to Equalweight from Overweight at Barclays
Cheniere Energy (LNG) downgraded to Neutral from Outperform at Credit Suisse
Citigroup (C) downgraded to Neutral from Buy at Sterne Agee
Deutsche Bank (DB) downgraded to Neutral from Overweight at JPMorgan
G&K Services (GK) downgraded to Neutral from Outperform at RW Baird
Marcus (MCS) downgraded to Neutral from Buy at B. Riley
National Retail Properties (NNN) downgraded to Sell from Neutral at UBS
Norfolk Southern (NSC) downgraded to Neutral from Overweight at Atlantic Equities
Orion Energy (OESX) downgraded to Hold from Buy at Ascendiant
VIVUS (VVUS) downgraded to Underweight from Neutral at Piper Jaffray

Initiations

Altera (ALTR) assumed with an Overweight at Piper Jaffray
Apollo Global (APO)initiated with an Outperform at Bernstein
BP (BP) initiated with a Market Perform at Cowen
Blackstone (BX) initiated with an Outperform at Bernstein
Cavium (CAVM) assumed with a Neutral at Piper Jaffray
Chevron (CVX) initiated with a Market Perform at BMO Capital
Chevron (CVX) initiated with an Outperform at Cowen
China Mobile Games (CMGE) initiated with an Overweight at Barclays
ConAgra (CAG) initiated with an Equal Weight at Morgan Stanley
ConocoPhillips (COP) initiated with a Market Perform at BMO Capital
ConocoPhillips (COP) initiated with a Market Perform at Cowen
Dollar General (DG) initiated with a Hold at Jefferies
Exxon Mobil (XOM) initiated with an Outperform at Cowen
Exxon Mobil (XOM) initiated with an Underperform at BMO Capital
J.M. Smucker (SJM) initiated with an Equal Weight at Morgan Stanley
KKR (KKR) initiated with an Outperform at Bernstein
Occidental Petroleum (OXY) initiated with an Outperform at Cowen
Petrobras (PBR) initiated with a Market Perform at BMO Capital
Royal Dutch Shell (RDS.A) initiated with a Market Perform at Cowen
Royal Dutch Shell (RDS.A) initiated with an Outperform at BMO Capital
Total (TOT) initiated with an Outperform at BMO Capital
Total (TOT) initiated with an Outperform at Cowen

COMPANY NEWS

Yahoo (YHOO) said all traffic between data centers now encrypted
Novartis (NVS) appointed Dirk Koshce as head of Novartis Pharmaceuticals, announced a third-party internal review of IITs, placed a temporary moratorium on all IIT funding in Japan
Credit Suisse (CS) announced charge of CHF 468M for litigation provision
Plug Power (PLUG) acquired ReliOn, which develops hydrogen fuel cell stack technology and fuel cell systems, for $4M
Fusion-io (FIO) announced a collaboration with Oracle (ORCL) on the development of flash-aware interfaces for MySQL
Cypress Semiconductor (CY) announced that CFO Brad Buss will retire later this year and said it sees Q1 revenue exceeding the high end of its previous $169M-$171M range

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Resources Connection (RECN)

Companies that missed consensus earnings expectations include:
Greenbrier (GBX), Texas Industries (TXI), Dominion Diamond (DDC), Mitcham Industries (MIND), National American University (NAUH)

NEWSPAPERS/WEBSITES

Federal authorities open up criminal probe of Citigroup's (C) Mexican unit, NY Times reports
Boeing (BA) to cut as many as 300 Australian contrators, WSJ reports
RBS (RBS) to close 44 branches, Reuters says
Yelp (YELP) receives subpoenas monthly over users, WSJ reports
Sanofi (SNY) on lookout for acquisitions, expects growth in Africa, Reuters says
Google (GOOG) could ship up to 11M Chromebooks worldwide by 2019, DigiTimes says
Yahoo's (YHOO) goal of raising encryption could clash with advertising, WSJ reports
Google's (GOOG) LeBeau hired by Facebook (FB), TechCrunch reports

SYNDICATE

BG Medicine (BGMD) files to sell common stock
Catalyst Pharmaceutical (CPRX) files to sell common stock
Exact Sciences (EXAS) files to sell $125M in common stock
Kindred Biosciences (KIN) 3M share Secondary priced at $18.00
LDR Holding (LDRH) to sell 3.8M shares for holders
Tarena (TEDU) 15.3M share IPO priced at $9.00
Venaxis (APPY) files to sell common stock

Following the March Jobs Report, ConvergEx's Nick Colas got to thinking about the composition of employment growth rather than just the headline number. Is every new job created really the same when it comes to overall economic impact? Consider that the average household income in Maryland is $69,920, versus $39,592 in Mississippi. Or that Mining and Logging jobs pay, on average, $28.77/hour and Retail Trade positions average only $14.22/hour. To expand on this point, Colas came up with three 'Ideal' marginal hires, when considering which jobs bring the most "bang" for the wage/employment "buck". 

They are:

• a construction job for a middle aged male with an 11th grade education in Texas,
• an upgrade to full time status for a single mom who is a teacher in Pennsylvania, and
• new job at a tech company for a recent college grad in Colorado. 

All three offer excellent multipliers for the national economy, highlighting that at this point in the cycle we should be focused on job quality as much as quantity.

Via ConvergEx's Nick Colas,

After +20 years looking at capital markets, I have found that making the complex seem simple is an underappreciated discipline.  It is easy to revel in the complexity of modern high finance, but cutting the Gordion’s knot of excess data with a sharp stroke does make life easier and leads – generally – to better decisions.  It is a double edged sword we’re using, yes, and small mistakes can mean a nasty cut.  Still, even just the process of trying to distill the complex into the understandable is usually worth the effort.

By way of example, consider a large multinational automotive company like Ford or General Motors.  How do you get a handle on whether earnings estimates should rise or fall through a quarter?  Both companies operate in scores of countries, manufacture on multiple continents, have full product ranges from tiny cars to large SUVs, and set pricing through constantly changing dealer and consumer incentive programs.  Your earnings model can run into the thousands of line items if you pull every financial item from the 10-Q in your quest to build the perfect forecasting tool.  I know – I did exactly that for a decade as a brokerage analyst covering the sector.

Or, you can think at the margin – what single high volume product has an outsized impact on incremental earnings?  Consider that large pickup trucks are still very popular in the U.S., with Ford F-Series and Chevrolet Silverado selling a combined 1.2 million units last year. Not surprisingly, therefore, they are the #1 and #2 best-selling vehicles in the country, with #3 (Toyota Camry) and #4 (Honda Accord) selling only 775,000 units combined.  Add to these unit volume numbers the fact that pickups are still very profitable vehicles for any automaker, with contribution margins of $4,000 or more (often a lot more) versus $2,000 or so for passenger cars.  And where is the biggest pickup truck market in America?  Yep.  Texas.

Therefore, when it comes right down to it, the single most important thing to know about a U.S. car company is: “How are pickup truck sales in Texas?”  If they are doing better, it will take a lot of screw ups elsewhere in the system for the company to disappoint on earnings.  And if they are dropping unexpectedly, well, watch out below.

While many of my economist friends may bridle at the comparison, I think we can do a little ‘Pickups in Texas’ style analysis on the U.S. labor market and how job growth translates into overall economic expansion.  Just as the profits from a small car are different from those on a fully loaded Crew Cab, not all jobs are created equal when it comes to their impact on the broader economy.  Consider the following (with several accompanying tables and charts after this text):

Unemployment might be 6.7% nationally, but the spread is wide on a state-by-state level.  North Dakota is the lowest, at 2.6% and Rhode Island anchors the other end of the spectrum at 9.0%.  Even large states can be outliers – California still suffers from an 8.0% unemployment rate.

 

State-by-state wages vary widely as well.  In Maryland, the average household pulls in $69,920 annually. In Mississippi that number is $39,592.  Yes, the cost of living is radically different, but where would you rather see jobs added if all you care about is GDP growth?  It’s not down on the bayou.

 

Wages by profession are also quite different.  Land a gig in a retail store, and the average job pays $14.22/hour.  Get a job in the Information Technology sector and your hourly wage is more than double that, at $28.77.

So where are the “Pickups” in this data, or (in other words) what kinds of jobs will most quickly increase total economic growth?  It’s not just a matter of what and where; you have to consider “Who”.  While it might be tempting to say that one more hedge fund analyst job paying $500,000 in New York City would help the U.S. economy the most, it’s probably not true.  That person is likely married, needs to save a lot for either an apartment or a child’s college education, or perhaps both.  Wealthier people don’t actually make great consumers – they are generally more focused on maintaining and investing their income and savings.

You want someone who will basically spend all the money they get from their new job – that’s the best economic bang for the buck when it comes to marginal employment.  While there are many answers for where these newly employed high-impact workers might be, we offer up three examples here as a way to expand on the core idea:

Single, 23, living in Colorado, with a new job in Information Technology.  Younger workers have had a tough time in the current economic environment, and the unemployment rate for the 20-24 year old cohort is still 11.9%.  That puts many of them at home, living with their parents, even after a four year college degree.

 

In this scenario, a college grad gets a good full time job in IT making the going wage in the sector, roughly $60,000.  They finally move out of their parent’s house and into their own apartment.  That household formation has a large multiplier effect, as they buy everything they need for their new life.  As long as they aren’t flooded with college debt – the national average is just over $15,000 – much of what they make will quickly flow back into the national economy.

 

And why Colorado?  It has a good combination of high household income ($60,180) and average unemployment at 6.1%.  Job growth in a troubled area of the country may not yield as many benefits as healthier parts, with local job cuts offsetting the incremental benefit of the marginal worker.

 

Married, middle aged, construction worker in Texas who did not complete high school.  The last five years have been toughest for workers without a high school degree.  Even now, their unemployment rate is 9.8% and there are over 1 million unemployed in this cohort.  Construction is one career where on-the-job experience trumps formal education, and it pays well: $24.57/hour on average.  Our marginal worker would be married with kids, and therefore likely to spend his new income on necessities and child-rearing.

 

Why Texas and not, say, Florida?  The housing market in the Lone Star State has fully recovered from the Financial Crisis, and our construction worker’s house is now worth more than ever.  In Florida, we would run the risk that he would use his income to catch up on his mortgage payments or credit card bills (run up because he had no equity in his house and no income).

 

Single mom, school teacher, moving from a part time to full time position in Pennsylvania.  There are still over 7 million Americans working part time jobs even though they would like full time employment.  Yes, this is down from the +9 million in this group in 2010, but this pool of workers represents a lot of dry powder for an accelerating U.S. economy.  Pennsylvania’s average income is right in the middle of the national distribution, at $51,245.  Teaching pays well, at $21.60/hour on average.

 

Why did we make her a single mom?  Women who maintain families continue to have a higher unemployment rate than their married peers.  It’s not even close.  Single moms have an unemployment rate of 9.1% versus 4.2% for married women with their spouse present in the household.  If promoted to full time status, there is no doubt our mom would spend all the incremental income on their family.

To sum up, we should focus much more on the kinds of jobs being created than on the raw number of additions.  It’s not just wages that matter, either – a whole range of factors go into the equation.  To harken back to our automotive analogy, we need a “Big pickup” recovery.  All we ever seem to get is a compact car, however.

Cows in the San Francisco area will be sleeping better at night since, for the last few days, gangs of angry internal combustion engine-likers have taken to a new trend - Smart car tipping. NBC Bay Area found four of the targeted Smart cars between Sunday night and Monday morning. "Whoever is doing this just has misdirected anger," noted one upset owner, as another witness joked, they reminded him of little dogs: "They look like they are dachshunds sitting up on their hind legs." The exact motives behind the vandalism are unclear, as a parody Facebook page was set up called "Smart Car Tipping" by a creator who does not "practice, promote or condone Smart Car Tipping,' and another site called the Smart Car tippers, "heroes." At a price starting at $13,000 for the tiny cars, perhaps it is the relative cost-benefits that the vandals are considering.

This is not an entirely new occurrence - here is a 2011 "tipping"

And NBC Bay Area covering the latest rash of Smart Car tipping...

As NBC Bay Area reports,

Someone's been vandalizing compact Smart cars in San Francisco, flipping the tiny vehicles on their front and rear ends in the city's streets

 

...

 

"Whoever is doing this just has misdirected anger," Gallivan said.

 

San Francisco Police Officer Gordon Shyy said the suspects are still at large and will face felony vandalism charges if they are caught. Police do have an eye witness account to work from.

 

Brandon Michael was out having a cigarette about 1 a.m. Monday when he spotted about six to eight people wearing hooded sweatshirts flip over the cars.

 

"They looked like they were up to no good," Michael said. "And sure enough, they huddled around it and lifted it up."

 

And the vandalized cars? Michael said they reminded him of little dogs:"They look like they are dachshunds sitting up on their hind legs."

 

...

 

The exact motives behind the vandalism are unclear. The diminutive cars are smaller and lighter than most vehicles. A Smart car weighs about 1,500 pounds; a Ford Focus S Sedan weighs close to 3,000 pounds, and a Hummer clocks in at 8,600 pounds -- definitely a heft that would pose a flipping challenge.

 

...

 

One website, however, seemed to be cheering on the tipping. TotalFratMove.com called the Smart car tippers "heroes" and described the cars as "teensy little wheeled boxes."

The morning after...

Not so "Smart" cars...

• Top Medicare Doctor Paid $21 Million in 2012, Data Shows (BBG)
• Separatists build barricades in east Ukraine, Kiev warns of force (Reuters)
• Greece launches sale of five-year bond (FT)
• High-Frequency Trader Malyshev Mulls Accepting Outside Investors (BBG)
• U.S. defense chief gets earful as China visit exposes tensions (Reuters)
• GM Workers Who Built Defective Cars Fret About Recall (BBG)
• Kerry, Congress Agree: Superpower Status Not What It Was (BBG)
• Crimeans Homeless in Ukraine Seek Solace in Kiev Asylums (BBG)
• JPMorgan's Dimon says U.S. banks healthy, Europe lagging (Reuters)
• Manipulate Me: The Booming Business in Behavioral Finance (BBG)
• Toyota to recall nearly 6.5 million vehicles for steering, other faults (Reuters)
• In smartphone mass-market, Samsung, Apple have margins on their minds (Reuters)

Overnight Media Digest

WSJ

* The top 1 percent of 825,000 individual medical providers accounted for 14 percent of the $77 billion Medicare costs in 2012, according to an analysis of federal data that lays out details of physicians' billings. (http://link.reuters.com/qyz38v)

* Google Inc is moving boldly to play a larger role in booking hotel rooms - at the risk of offending some of its most important advertisers. Google is adding more photos and reviews to its hotel listings, so they increasingly resemble those of travel search sites such as Priceline Group Inc , Expedia Inc and TripAdvisor Inc. (http://link.reuters.com/ryz38v)

* Goldman Sachs Group Inc executives have broached the subject of closing its so-called dark-pool trading operation, Sigma X - one of the world's largest private stock-trading venues, in conversations with market participants over the past several months, according to people familiar with the matter. (http://link.reuters.com/tyz38v)

* As the government pressure on SAC Capital Advisors LP intensified last year, the hedge-fund firm's billionaire founder, Steven A. Cohen, and his top lieutenants issued a consistent message to senior investment managers: "Put your heads down. Let's make money." (http://link.reuters.com/xyz38v)

* Comcast Corp on Tuesday submitted a lengthy document to federal regulators to justify its $45 billion proposed purchase of Time Warner Cable Inc. But its filing also had the effect of showing the many ways in which the combined entity could use its leverage over both cable lines and programming to pressure competitors. (http://link.reuters.com/zyz38v)

* Federal auto safety regulators blasted General Motors Co for failing to answer questions about its ignition switch recall, levying a $28,000 fine and warning it could seek stiffer penalties through the federal courts. (http://link.reuters.com/fab48v)

FT

The Madrid stock exchange showed signs of market trust recovering with the listing of eDreams Odigeo, the first company to launch an initial public offering since Spain emerged from recession.

British private equity fund CVC Capital Partners is the front-runner in a race to buy Spanish olive oil bottler Deoleo , people close to the sale said late Tuesday.

Miner Ferrexpo Plc, which is one of the most exposed UK-listed companies to Ukraine, said its iron ore production in Ukraine rose by 1.8 percent in the first three months despite the political tension created with Russia's over the annexation of Crimea.

Chancellor Angela Merkel's cabinet approved on Tuesday a reform of Germany's renewable energy law designed to curb a rise in the cost of electricity in Europe's biggest economy driven by the rapid expansion of green power.

Ex-Barclays chief Bob Diamond says it is the beginning of deals in sub-Saharan Africa, and they would continue soon after his Africa-focused shell company Atlas Mara acquired BancABC, a stake in Development Bank of Rwanda.

NYT

* Federal regulators on Tuesday approved to increase the leverage ratio for banks to 5 percent from 3 percent. Leverage ratio measures the amount of capital that a bank holds against its assets. The move could force the eight biggest banks in the United States to round up as much as $68 billion in loss-absorbing capital. (http://link.reuters.com/gyz38v)

* Federal safety regulators fined General Motors Co $28,000 on Tuesday, saying it had not provided information requested for an investigation into a recall of about 2.6 million cars with an ignition switch defect. (http://link.reuters.com/pyz38v)

* Comcast Corp presented regulators on Tuesday with 650 pages of reasons to approve its takeover of Time Warner Cable Inc, saying a merger of the two largest cable television companies would spur rather than inhibit competition. (http://link.reuters.com/myz38v)

* Comcast on Tuesday unveiled plans to increase spending and include new attractions at Universal Studios Hollywood. The new enhancements, part of a $1.6 billion overhaul of the theme park, will remake 70 percent of the California park by 2016. (http://link.reuters.com/vyz38v)

* Average gasoline prices should be lower than current prices, the Energy Department said. A gallon of regular gasoline would cost $3.57 on average nationally, down a penny from last summer, the Energy Information Administration projected on Tuesday. (http://link.reuters.com/nyz38v)

* A software bug called "Heartbleed," which may compromise communication security over the Internet, has prompted several tech giants such as Yahoo Inc, Google Inc, Facebook Inc and Amazon Web Services to release software updates and fix the problem. Researchers say users' personal information like passwords, bank details and social security numbers could be compromised because of the bug. (http://link.reuters.com/huz38v)

* Imax, the Canadian large-screen movie company, said it would sell a fifth of its Chinese subsidiary to China Media Capital and private equity firm FountainVest Partners for $80 million. The Chinese investors in turn plan to help Imax China complete a public offering of shares to finance expansion. (http://link.reuters.com/wyz38v)

* Companies are rushing to sell their shares on the Wall Street, and this week is expected to be the busiest for IPOs in more than seven years. But even as soaring stocks have fueled a surge in IPOs, there are signs that investors are beginning to sour on the fresh arrivals. This week could provide a barometer for just how many new stocks investors will receive enthusiastically. (http://link.reuters.com/bab48v)

* Target Corp announced on Tuesday that it would expand its inventory of "natural, organic and sustainable" goods to meet growing customer demand. The company said it would introduce more than 120 new products over the next several months. (http://link.reuters.com/gab48v)

Canada

THE GLOBE AND MAIL

* Former Canadian Prime Minister Brian Mulroney is calling on Ottawa to show greater leadership in getting Canada's natural resources to world markets, warning the country needs a federal persuader-in-chief to secure support for major projects or risk being outmanoeuvred by foreign rivals. (http://link.reuters.com/dyb48v)

* Philippe Couillard, the newly elected Premier of Quebec said on Tuesday he will use Quebec Liberal Party's majority to revive a right-to-die bill, to draft a limited secular charter, to bring public finances under control and to ramp up infrastructure spending to boost the provincial economy. (http://link.reuters.com/kyb48v)

Reports in the business section:

* Auto makers spent $17.6 billion around the world in 2013 to increase vehicle-making capacity, but not a dime of that money was invested in Canada. It's the third year in the past four that Canada has been shut out of investment in new plants or expansions that lead to increased production, according to an annual study done by the Office of Automotive and Vehicle Research at the University of Windsor. (http://link.reuters.com/nyb48v)

NATIONAL POST

* The Quebec election severely rattled the incumbent Parti Quebecois on Monday, but Liberal premier-elect Philippe Couillard said the most significant shift in the province's politics occurred below the surface. "There was a realignment of the political forces in Quebec," he said. (http://link.reuters.com/pyb48v)

* Toronto Mayor Rob Ford has added two more people on his re-election campaign - Ben Johnson, the disgraced sprinter who is best known for losing his 1988 Olympic gold medal in a doping scandal, and a cast member from the Trailer Park Boys known as the Greasy Caveman. (http://link.reuters.com/ryb48v)

FINANCIAL POST

* Osisko Mining Corp Chief Executive Sean Roosen thinks Goldcorp Inc has internal problems to deal with. And he suspects that will prevent it from making another offer for his company and its giant Canadian Malartic mine in Quebec. Goldcorp launched a $2.8 billion hostile bid for Montreal-based Osisko in January. (http://link.reuters.com/xyb48v)

* Quebec's Liberal premier-elect Philippe Couillard has buried the issue of sovereignty for the next four years. Now the markets will turn their attention to whether he can bring the province's listless economy back to life. The Liberals believe their financial program should boost Quebec's nominal GDP growth to reach the Canadian average of 4.5 percent over the next five years. (http://link.reuters.com/gac48v)

Britain

The Telegraph

SCOTTISH INDEPENDENCE WOULD ADD 9 PCT TO UK DEBT BURDEN, SAYS NIESR

(http://link.reuters.com/xyx38v)

An independent Scotland would "not have the resources" to pay its share of national debt and would leave the rest of the UK shouldering an extra burden of 143 billion pounds, the National Institute of Economic and Social Research (NIESR) has said.

ABI BOSS SAYS HE KNEW OF INSURANCE REVIEW FOR MONTHS

(http://link.reuters.com/zyx38v)

The boss of the Association of British Insurers knew of the City regulator's plans to review the insurance industry as far back as December but said he did not expect the idea to be "market sensitive." Otto Thoresen told the Treasury Select Committee that he had been taken by surprise by the stock market rout two weeks ago.

The Guardian

MIDCOUNTIES BOARD REJECTS LORD MYNERS' REFORMS FOR CO-OPERATIVE GROUP

(http://link.reuters.com/baz38v)

The board of Britain's largest independent co-operative society has voted not to support the reform proposals drawn up by Lord Myners to shake up the scandal-hit Co-operative Group of supermarkets, funeral homes and pharmacies.

ROLLS-ROYCE ENGINEER LOSES TRIBUNAL CASE ON 'WHISTLE-BLOWING DISMISSAL'

(http://link.reuters.com/caz38v)

An employment tribunal has dismissed a claim from a senior Rolls-Royce engineer saying he was sacked for blowing the whistle on allegations of potentially serious problems with the company's jet engines.

The Times

CLIFFORD CHANCE TO INVESTIGATE BRIEFING THAT CAUSED HAVOC FOR INSURERS

(http://link.reuters.com/daz38v)

Clifford Chance will investigate the controversial pre-briefing of a regulatory review into legacy products that sent insurers' share prices into a tailspin 12 days ago.

DIAMOND RAIDS BARCLAYS TO POACH VITALO

(http://link.reuters.com/faz38v)

Bob Diamond has poached Barclays executive John Vitalo to run Atlas Mara, the London-listed shell company that he set up last year to buy banks in Africa.

Sky News

METRO BANK FOUNDER GOES DIGITAL WITH ATOM

(http://link.reuters.com/gaz38v)

The founder of Metro Bank is switching his attention from high street to digital banking with secret plans for the launch of a new national retail and business lender.

TESCO SIDELINES TOP MARKETER AS SHARE SLIDES

(http://link.reuters.com/haz38v)

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
Wholesale inventories for February at 10:00--consensus up 0.6%

ANALYST RESEARCH

Upgrades

AmSurg (AMSG) upgraded to Buy from Hold at Cantor
Bank of Marin (BMRC) upgraded to Outperform from Market Perform at Raymond James
CBOE Holdings (CBOE) upgraded to Buy from Neutral at BofA/Merrill
Carlyle Group (CG) upgraded to Outperform from Perform at Oppenheimer
Cepheid (CPHD) upgraded to Outperform from Market Perform at JMP Securities
FireEye (FEYE) upgraded to Buy from Hold at Topeka
First Interstate (FIBK) upgraded to Overweight from Equalweight at Barclays
Fortune Brands (FBHS) upgraded to Outperform from Neutral at Credit Suisse
Gray Television (GTN) upgraded to Outperform from Market Perform at Wells Fargo
Hibbett Sports (HIBB) upgraded to Overweight from Neutral at Piper Jaffray
LinkedIn (LNKD) upgraded to Buy from Hold at Topeka
Mallinckrodt (MNK) upgraded to Buy from Neutral at UBS
NXP Semiconductors (NXPI) upgraded to Strong Buy from Outperform at Raymond James
Nexstar (NXST) upgraded to Outperform from Market Perform at Wells Fargo
Penn National (PENN) upgraded to Overweight from Equalweight at Barclays
Philip Morris (PM) upgraded to Neutral from Reduce at Nomura
Quanex (NX) upgraded to Buy from Hold at BB&T
SAIC (SAIC) upgraded to Market Perform from Underperform at Wells Fargo
Seadrill (SDRL) upgraded to Hold from Sell at Societe Generale
Sinclair Broadcast (SBGI) upgraded to Outperform from Market Perform at Wells Fargo
Yelp (YELP) upgraded to Buy from Fair Value at CRT Capital

Downgrades

Aeropostale (ARO) downgraded to Underweight from Neutral at Piper Jaffray
Alpha Natural (ANR) downgraded to Sell from Neutral at UBS
Apache (APA) downgraded to Hold from Buy at Deutsche Bank
Arch Coal (ACI) downgraded to Sell from Neutral at UBS
Credit Suisse (CS) downgraded to Underweight from Neutral at JPMorgan
First Niagara (FNFG) downgraded to Underweight from Overweight at Barclays
General Motors (GM) downgraded to Underweight from Equal Weight at Morgan Stanley
Hershey (HSY) downgraded to Sell from Neutral at Goldman
JMP Group (JMP) downgraded to Market Perform from Outperform at Keefe Bruyette
John Wiley (JW.A) downgraded to Hold from Buy at Stifel
NASDAQ (NDAQ) downgraded to Neutral from Buy at BofA/Merrill
Walter Energy (WLT) downgraded to Sell from Neutral at UBS

Initiations

AMRI (AMRI) initiated with an Overweight at Morgan Stanley
Aegion (AEGN) initiated with a Buy at DA Davidson
American Midstream Partners (AMID) initiated with an Overweight at Barclays
Cabela's (CAB) initiated with a Neutral at DA Davidson
Chevron (CVX) initiated with a Buy at Jefferies
Exxon Mobil (XOM) initiated with a Hold at Jefferies
Federal Agricultural Mortgage (AGM) initiated with an Outperform at Keefe Bruyette
Gentiva Health (GTIV) initiated with a Buy at CRT Capital
Intuitive Surgical (ISRG) initiated with an Underperform at Sterne Agee
Lumenis (LMNS) initiated with a Buy at Jefferies
MedAssets (MDAS) initiated with a Neutral at SunTrust
Mondelez (MDLZ) initiated with a Reduce at Nomura
Premier (PINC) initiated with a Buy at SunTrust
The Advisory Board (ABCO) initiated with a Buy at SunTrust

COMPANY NEWS

Toyota (TM) announced a recall of over 6M vehicles worldwide
General Motors (GM) was fined $28,000 by the NHTSA for timeliness of response to inquiry
Alcoa (AA) said year to date productivity gains ahead of schedule
United Airlines (UAL) said March traffic increased 0.7%, capacity increased 2.7% vs. a year ago
Intuitive Surgical (ISRG) gave a Q1 revenue outlook that widely missed expectations and saying it will take a $67M charge in the quarter related to legal settlements
Constant Contact (CTCT) gave a preliminary Q1 revenue outlook that beat estimates and raised FY14 revenue guidance
Senomyx (SNMX) entered into research agreement with PepsiCo (PEP), terms not disclosed

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
Tech Data (TECD), Consumer Portfolio (CPSS), SAIC (SAIC), Alcoa (AA)

Companies that missed consensus earnings expectations include:
Penford (PENX), WD-40 (WDFC)

Companies that matched consensus earnings expectations include:
Healthcare Services (HCSG)

NEWSPAPERS/WEBSITES

Big banks (JPM, C, GS, WFC, MS, BAC, USB) must add capital to comply with new rules, WSJ reports
JPMorgan (JPM) CEO Dimon says U.S. banks 'healthy,' Europe lags, Reuters reports
Intel (INTC) plans 1,500 job cuts in Cosa Rica, WSJ reports
Goldman Sachs (GS) considers shutting down dark pool Sigma X, WSJ reports
New York regulator issues subpoenas to insurers (CB, CNA, NAVG) on Iran, WSJ says
Bank of America (BAC), Allstate (ALL) to end toxic mortgage suit, Reuters reports
Daimler (DDAIF) says 2014 profit growth strategy to pay off, Bloomberg reports
Flexible PCB samples delivered for Apple (AAPL) iWatch validation, DigiTimes says

SYNDICATE

Ashford Hospitality (AHT) files to sell 7M common shares
Aviv REIT (AVIV) files to sell 8M common shares
Hi-Crush Partners (HCLP) files to sell 4.25M common units
La Quinta (LQ) 38.25M share IPO priced at $17.00
New Source Energy (NSLP) files $500M common, preferred unit shelf
Pacira Pharmaceuticals (PCRX) 1.6M share Spot Secondary priced at $64.00
Relypsa (RLYP) files to sell $80M of common stock
iKang Healthcare (KANG) 10.9M share IPO priced at $14.00

Despite her vehement denial of knowing anything about the ignition switch problems at GM (until late December, early January), documents revealed by the Energy and Commerce Department show:

• *GM'S BARRA TOLD OF STEERING PROBLEM IN 2011, DOCUMENTS SHOW
• *DEGIORGIO SAYS COST FOR ALL COBALT MODELS WOULD BE $10 EACH

We are sure the lawyers will be carefully crafting her PR response to this disaster but as Chairman Fred Upton notes, "There is still much left to examine and we will continue to
follow the facts... These initial documents revealed failures within the system."It seems this was the last straw for the hedge funds (GM is the most widely held) as the stock is dumping.

As Forbes noted,

A recurring theme in the investigation into General Motors delayed response to a safety risk associated with faulty ignition switches is why the chief executive, Mary Barra, didn’t know about the problem earlier and do something about it.

 

She was, after all, the head of global product development before she was CEO, and held a series of engineering and staff jobs before that.

 

“You’re a very important person in this company,” Sen. Barbara Boxer, sounding incredulous, told Barra after reading portions of her resume at a hearing this week. “Something is very strange that you don’t know about these things,” said the California Democrat.

And now...Bloomberg reports,

“These initial documents revealed failures within the system,” House Energy and Commerce Committee Cmte Chairman Fred Upton, R-Mi., says in statement.

• “There is still much left to examine and we will continue to follow the facts”
• GM CEO Mary Barra told of steering problem in 2011, according to documents released by cmte
•  NHTSA sought investigation of Cobalts for airbags in 2007
• GM engineer Ray DeGiorgio said it was “impossible” to modify switch

• *GM IN 2005 SAID IT SAW NO ISSUE WITH COBALT AIRBAGS: DOCUMENTS
• *GM IN '07 SAID IT SAW `NO SPECIFIC PROBLEM' WITH COBALT AIRBAGS
• *COBALT AIRBAG WARRANTY RATE MORE THAN 9%; FORD RATE WAS 2%
• *NHTSA SAID IT SAW A PATTERN OF AIRBAG NON-DEPLOYMENTS
• *DEGIORGIO SIGNED OFF ON NEW IGNITION PART IN 2006
• *DEGIORGIO APPROVED NEW GM PART WITHOUT NEW NUMBER: DOCUMENTS

NHTSA...

• *NHTSA INVESTIGATOR SAID GM WAS `SLOW TO ACT' VS OTHER COS.
• *NHTSA INVESTIGATOR SAID IN 2013 GM IS `SLOW TO COMMUNICATE'

Here is the email that shows Barra knew of the problems in 2011...

Rest of documents here...

Submitted by Martin Armstrong via Armstrong Economics,

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The emerging economy is opening up new ways to reconnect workers to their work and the profits from their work.

One of the most striking blind spots in our collective angst over the lack of jobs is our apparent disinterest in the nature of work and how work creates value. This disinterest is reflected in a number of conventional assumptions.

One is the constant shedding of tears over the loss of mind-numbing manufacturing jobs. I doubt a single one of the innumerable pundits decrying the loss of "good manufacturing jobs" spent even one shift in an actual assembly line. There is a reason Henry Ford had to pay the then-astronomical salary of $5 per day to his assembly-line workers: the work was so physically demanding and boring that workers quit after a single shift. The only incentive that would keep people doing such hellish work day in, day out, was a big paycheck.

Henry Ford's $5-a-Day Revolution

After the success of the moving assembly line, Henry Ford had another transformative idea: in January 1914, he startled the world by announcing that Ford Motor Company would pay $5 a day to its workers. The pay increase would also be accompanied by a shorter workday (from nine to eight hours). While this rate didn't automatically apply to every worker, it more than doubled the average autoworker's wage.

While Henry's primary objective was to reduce worker attrition--labor turnover from monotonous assembly line work was high--newspapers from all over the world reported the story as an extraordinary gesture of goodwill.

Another is the confusion over what constitutes the means of production in a knowledge economy. The term means of production has its origins in Marx's analysis of capitalism, but the means of production change along with the processes of creating value.

As a result, Peter Drucker identified the worker's knowledge (human capital) as the means of production in a knowledge economy in his book Post-Capitalist Society.

Many readers have misunderstood Drucker's point; their objections include 1) the software workers use is essentially owned by Microsoft and other corporations; 2) only corporations have the means to use workers' knowledge and 3) means of production is an outdated Marxist term that is being mis-used by Drucker.

These objections miss the point. A skilled knowledge-worker can create $100,000 of value with a $500 PC and $300 of software. What percentage does the software represent of the output ($100,000)? Not even 1%.

As for corporations being the only owners of capital who can deploy workers' knowledge, millions of self-employed people suggest that this blanket statement is not entirely true. Yes, enterprises that deploy billions of dollars in material capital (oil drilling rigs, shipyards, etc.) cannot be replaced by the self-employed, but what percentage of the economy requires billions of dollars in capital to operate? In a service-dominated economy, capital-intensive industries are a shrinking slice of the pie.

Rather than focus on employment, why don't we examine the nature of work? Why don't we ask how work creates value in a knowledge economy that is commoditizing/automating whatever labor can be commoditized/automated? How about asking if work can be re-shaped to become meaningful beyond the paycheck being earned?

Let's review the idea that work that isn't controlled and owned by the workers is inherently alienating.

In Marx’s view, workers were alienated from the product of their work because they did not own the product or control the means of production. Marx argued that the absence of ownership and control was also an absence of agency (control of one’s destiny) and meaning. Workers were estranged from the product of their work, from other workers and from themselves, as the natural order of the product of work belonging to the one who produced it was upended by capitalism.

Marx characterized this separation of work from ownership of the work and its output as social alienation from human nature. Capitalism, in his view, did not just reorder production into enterprises whose sole goal was profit and accumulating more capital; it destroyed the natural connection between the worker, the processes of work and the product of his work.

Marx was thus one of the first to analyze work not just in terms of economic output but in social and psychological terms.

This tradition was carried on by writers such as Eric Hoffer, who saw work as the source of life’s meaning, and Christopher Lasch, who saw the rise of consumerism as the basis of meaning and the rootless cosmopolitanism of the modern economy as the source of a culture of narcissism. For Lasch, the relentless commoditization of life disrupted the natural social relations of family, social reciprocity and the workplace, depriving individuals of these sources of meaning and replacing them with an empty consumerism that worshipped fame and celebrity.

Lasch explained these dynamics in his landmark book The Culture of Narcissism: American Life in an Age of Diminishing Expectations.

The marketplace's commoditization of everyday life--both parents working all day for corporations so they could afford corporate childcare, for example--created two alienating dynamics: a narcissistic personality crippled by a fragile sense of self that sought solace in consumerist identifiers ( wearing the right brands, etc.) and a therapeutic mindset that saw alienation not as the consequence of large-scale, centralized commoditization and financialization but as individual issues to be addressed with self-help and pop psychology.

In Lasch’s view, both of these dynamics ignored the loss of authenticity that resulted from the commoditization not just of production but of every aspect of everyday life. In this sense, Lasch’s social analysis is an extension of Marx’s original insight into the alienating dynamics of commoditized wage-work, in which workers and their work were both interchangeable.

Lasch’s analysis brings us to the source of modern alienation: it’s not just employees who are interchangeable--employers are equally interchangeable. The interchangeability of work, employees, employers, products and services is the key characteristic of commoditization.

What is the takeaway for those seeking a job or career? There are several takeaways.

One is that the sources of value creation are linked to the level of agency (control of one’s work) and ownership of the work: work that is not process-based (i.e. that cannot be commoditized) and that is experientially sensitive to mastery enables a higher level of agency and ownership because the worker owns the means of production--his human and social capital.

The second is that the dramatic lowering of barriers to education and the ownership of tools powered by the Internet has greatly expanded the opportunities to escape an alienating dependence on the state and cartels for employment and on superficial consumerism for meaning.

If we trust networks rather than states or corporations for our security, we automatically gain agency (control of our work and lives) and an authentic sense of self gained from owning our work and the results of our work.

It is important to understand that corporations exist to make a profit and accumulate capital, for if they do not make a profit and accumulate capital they will bleed capital and disappear. To believe that organizations dedicated to making a profit could magically organize society in ways that benefit every participant is nonsense. Corporations organize labor and capital to accumulate capital. It is absurd to expect that such organized self-interest magically optimizes the social order.

This is not to blame all the ills of society on corporations; it is simply to note that corporations are limited by their limited purpose. Their purpose is not to organize a healthy, sustainable economy; it is to organize labor and capital in such a way that the corporation can accumulate capital in a marketplace controlled by supply and demand.

Corporations have profited greatly from the alienation of work and the social order, as narcissistic debt-based consumerism is a highly profitable economic order, even if it is socially dysfunctional, unsustainable and destructive to individual agency and meaning.

The expansion of decentralized, distributed networks, the near-zero cost of knowledge and the declining cost of the means of production (digital memory and processors, software, 3-D fabrication machines, robotics and tools) offer newfound opportunities for workers to reclaim their agency and ownership of their work and output.

Rather than rely on centralized states and corporations to organize labor and capital, collaborative networks can do so without alienating workers from their work and disrupting the sources of meaning.

The emerging economy is opening up new ways to reconnect workers to their work and the profits from their work. These include traditional models such as self-employment and worker-owned cooperatives and new models of collaborative project-based work.

How do we change a dysfunctional, unsustainable and alienating system? By investing in new ways of creating value and alternative models of cooperative work and ownership.

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This essay was excerpted from my new book Get a Job, Build a Real Career and Defy a Bewildering Economy which is on sale through Tuesday evening (Pacific Standard time) at a 20% discount for my regular readers ($7.95 for the Kindle edition, 20% off of the list price of $9.95. The print edition is $20).

You can read the introduction and first section of the book here.