THE DAY AHEAD REUTERS NEWS North American Edition For Wednesday, June 18, 2014

Stocks ended higher as the Federal Reserve kicked off a two-day policy meeting, though gains were capped by con-cerns surrounding Iraq. Better-than-expected inflation data supported the dollar and weighed on Treasuries. Crude fell and gold dipped.

TODAY’S MARKET RECAP COMING UP

The Federal Reserve is widely expected to push forward with a

further reduction in its monthly bond-buying, putting the main focus of investors on the fresh quarterly economic and interest rate projections the central bank will re-lease. They could show officials see faster pro-gress toward the Fed's goals of full employment and 2 percent inflation than they saw in March, the last time official forecasts were pub-lished. But perhaps of most interest will be the matrix of dots that represent individual policymakers views on when they will hike rates and how high they will go. Fed Chair Janet Yellen will hold a quarterly press conference, and any comments about slack in the economy or the likely path of rate hikes will be closely parsed by investors.

General Motors CEO Mary Barra heads back to Capitol Hill to

face lawmakers irritated by her lack of answers during her previous appearance about the deadly ignition switch flaw in millions of cars. Barra will appear alongside Anton Valukas, the GM-hired investi-gator who delivered a report earlier this month that cleared top ex-ecutives in the scandal and instead pinned blame on lower engi-neers and lawyers. Barra is expected to face tough questions about whether the automaker is truly being transparent and holding peo-ple accountable for the flaw, which is linked to at least 13 deaths.

Parcel delivery company FedEx is likely to have benefited from a

rise in shipments, which are being boosted by a surge in online retail sales. FedEx's investment in its Ex-press service is also ex-pected to add to earnings this year. Investors will be looking for any hit from higher fuel costs and one less operating day in the quarter. FedEx's comments on how it expects the rest of the year to play out will also be keenly watched.

Amazon.com’s founder and CEO, Jeff Bezos, is expected to re-

veal a new product in Seattle. The company has not confirmed what will be revealed, but analysts widely expect it to be a phone. The company has been working on the device for many years and it includes 3D features visible to the eye without special glasses, according to two people familiar with the phone. Analysts expect Amazon will set itself apart from competitors by offering a cheaper model with a creative data plan. Prime is likely to be incorporated in some way in keeping with Amazon’s push to boost the value of the membership program.

Linux operating system vendor Red Hat’s quarterly results will

likely be in line with analysts' estimates, according to StarMine. Analysts expect the company to report a fall in first-quarter billings due to the impact of strong billings growth in the fourth quarter.

KEY ECONOMICS EVENTS ET REUTERS POLL PRIOR SOURCE

Mortgage Market Index 0700 -- 387.1 Mortgage Bankers Association

Current account for Q1 0830 -96.9 bln -81.1 bln

STOCKS Close Change % Chng Yr-high Yr-low

DJIA 16809.20 28.19 0.17 16970.20 14551.27

Nasdaq 4337.23 16.13 0.37 4371.71 3294.95

S&P 500 1942.04 4.26 0.22 1955.55 1560.33

Toronto 15055.89 15.46 0.10 15075.70 11759.04

Russell 1162.04 3.63 0.31 1169.60 1043.17

FTSE 6766.77 12.13 0.18 6894.88 6416.72

Eurofirst 1387.75 3.80 0.27 1398.65 1263.36

Nikkei 14975.97 42.68 0.29 16164.01 13885.11

Hang Seng 23203.59 -97.08 -0.42 23469.33 21137.61

TREASURIES Yield Price

10-year 2.6550 -16 /32

2-year 0.4837 -1 /32

5-year 1.7531 -8 /32

30-year 3.4447 -29 /32

FOREX Last % Chng

Euro/Dollar 1.3542 -0.23

Dollar/Yen 102.12 0.28

Sterling/Dollar 1.6959 -0.14

Dollar/CAD 1.0863 0.19

COMMODITIES $ Price $ change % change

Front Month Crude /barrel 106.15 -0.75 -0.70

Spot gold (NY/oz) 1269.95 -1.34 -0.11

Copper U.S. (front month/lb) 0.0306 0.0001 0.34

Reuters/Jefferies CRB Index 309.75 -0.80 -0.26

BIG MOVERS $ Price $ change % change

Yingli Green Energy 3.95 0.43 12.22

AVEO Pharmaceuticals 1.56 0.16 11.43

Acorda Therapeutics 32.12 -3.16 -8.96

United Therapeutics 86.30 -4.15 -4.59

For The Day Ahead - Canada, click here

For U.S. - Top News, click here

For World Cup Details, click here

2

COMING UP (continued)

THE DAY AHEAD For June 18, 2014

Contract electronics maker Jabil Circuit’s third-quarter results

are expected to be slightly above estimates, according to Star-Mine, helped by higher sales of mobile phones and video game consoles in the quarter. The company, which had issued a conservative outlook in December due to the winding down of its business with BlackBerry, expects to return its core oper-ating income within its diversified manufacturing services busi-ness to "more normalized levels" in fiscal year 2015.

Thermal coal producer Foresight Energy Partners is ex-

pected to raise up to $367.5 million from its initial public offer-ing of 17.5 million common units, representing limited partner interests. Foresight is expected to be valued at about $1.36 billion at the high end of its estimated price range of $19-$21 per unit.

Statistics Canada is scheduled to report wholesale trade data

for April. Analysts surveyed by Reuters expect a 0.6 percent increase, after a 0.4 percent decline in March.

Brazil’s 12-month inflation rate is expected to stay near the 6.5 percent central bank target ceiling. Stubbornly elevated inflation is a headache for President Dilma Rousseff, who will seek re-election in October. It has also undermined business and consumer confidence, curbing investments and family consumption over the past few months.

The Bank of England publishes the minutes from its June meeting, which will be closely watched for signs of further divi-sion among policymakers on the outlook for interest rates.

MARKET MONITOR

Click on the chart for full-size image Stocks rose on Tuesday, with the S&P 500 ending near its re-cord after three days of gains, as investors shrugged off the tur-moil in Iraq and focused on data pointing to higher inflation, which helped lift bank shares. Investors have been monitoring the situation in Iraq, worried that it could lead to sharply higher oil prices for an extended period. The spike in the CPI figures helped to drive the S&P financial stocks index up 0.94 percent to 305.41. E*Trade Financial rose 7.74 percent and shares of Charles Schwab advanced 5.51 percent. Yingli Green Energy shares soared 12.22 percent after the Chinese solar panel maker reported a quarterly net loss that was nearly halved, citing cost controls and a small rise in panel prices. The Dow rose 0.17 percent, the S&P 500 gained 0.22 percent and the Nasdaq Composite added 0.37 percent. Treasuries fell after consumer prices recorded their largest in-crease in more than a year, which may give the Federal Reserve more confidence in adopting a hawkish tone at it meets this week. Benchmark 10-year notes fell 16/32 to yield 2.66 per-cent. Thirty-year bonds dropped 29/32 to yield 3.44 percent. The dollar rose as news of a stronger-than-expected pickup in inflation supported the view the Federal Reserve might raise interest rates sooner than some traders had thought. The green-back gained 0.29 percent against the yen at 102.13 yen, while the euro weakened 0.23 percent against the dollar at $1.3542. The euro edged up 0.07 percent against the yen, at 138.30 yen. The dollar index gained 0.19 percent to 80.62.

Crude weakened as fears over oil supply disruptions from Iraq offset the possibility of increased supply due to a thawing of rela-tions between Iran and the West. Crude was pressured by a combination of high supply levels and lower refinery runs, said Carl Larry, chief executive of consultancy Oil Outlooks in Hous-ton. Oil fell 0.70 percent to $106.15 a barrel. Gold fell, retreating from three-week highs as a stronger dollar and possible thawing of tensions between the Middle East and West quelled investors' appetite for safe-haven assets. Spot gold was down 0.11 percent at $1,269.86. Gold futures for July delivery fell 0.38 percent to $1,270.10 an ounce.

3

TOP NEWS

Click on the chart for full-size image U.S. consumer prices show inflation ticking up Consumer prices recorded their largest increase in more than a year in May as costs for a range of goods and services rose, likely easing the Federal Reserve's concerns that inflation was running too low. The Labor Department said its Consumer Price Index increased 0.4 percent last month. In the 12 months through May, consumer prices increased 2.1 percent. Core CPI rose 0.3 percent. In the 12 months through May, the core CPI increased 2.0 percent. Groundbreaking for homes fell 6.5 per-cent to a seasonally adjusted annual pace of 1 million units, the Commerce Department said. Permits to build homes declined 6.4 percent to a 991,000-unit pace in May. For a related graphic on housing starts and building permits, click here BP to sign $20 billion LNG supply deal with China's CNOOC BP will sign a deal worth around $20 billion to supply China National Offshore Oil Corporation with liquefied natural gas, Chief Executive Bob Dudley said at a conference in Moscow. "It is a 20-year supply agreement on LNG. It is a fair price for them and a fair price for us. It is a good bridge between the UK and China in terms of trade," Dudley said. BP will likely source much of the LNG from its U.S. export plant at Freeport, Texas, where it owns 4.4 million tonnes per year of export capacity, having started negotiations with CNOOC earlier this year. The deal, expected to boost China's LNG intake by at least 1.5 million tonnes per year cements China's role as a key buyer of U.S. gas, industry sources said. "After missing out on a deal to sell LNG to Taiwan last year, BP has now found a Chinese buyer for its Freeport volumes, which in pricing terms will have elements of U.S. as well as oil pricing," an industry source said. Oracle may buy Micros Systems for more than $5 billion - Bloomberg Oracle is in talks to buy Micros Systems, which makes soft-ware for retailers and hotel chains, for more than $5 billion, Bloomberg reported citing people familiar with the matter. While the companies are in exclusive talks, they could still fail to reach an agreement, the report said. FBR Capital Markets analyst Daniel Ives said Oracle's rivals could offer a higher bid to drive up the price. "We believe the most likely candidates would be SAP or IBM, which offers WebSphere, its own enterprise class e-commerce platform," FBR Capital Markets analyst Daniel Ives said. Four-decade-old Oracle's strategy is to integrate software with its own high-end, expensive hardware for greater efficiency. The deal, if confirmed, would be Oracle's largest acquisition since it bought Sun Microsystems for $5.6 billion in 2009. France tells GE and Siemens: Alstom proposals still not good The French government raised the stakes in the battle for engi-neering group Alstom, telling rival suitors General Electric and Siemens to come up with better offers. President Francois Hol-lande's government has given itself the power to veto a deal on the grounds it does not want Alstom, an innovator and big em-ployer, to sell the bulk of its business to a foreign firm without the state having a say. "The talks between the state and the differ-ent companies are going to continue this week," a source in Hollande's office said after the meeting with Siemens Chief Ex-ecutive Joe Kaeser and Mitsubishi Heavy Industries CEO Shunichi Miyanaga. "The offers must be improved," the source said. Kaeser, outlining the Siemens-MHI offer to reporters across town in Paris, said he saw no reason to discuss improv-ing a proposal which was already the better one on the table.

Facebook challenges TV for brand dollars with smarter campaigns Lacking the millions of dollars it costs to broadcast a Super Bowl ad, Britain's Newcastle Brown Ale gate-crashed the biggest advertising event in the United States by creating an archetypal big budget campaign that it never intended to run on television. The Heineken-owned brand's beer commercials, which poked fun at the marketing tactics of rivals advertising in the American football championship game, ran on Facebook and Google's YouTube instead. The average cost of a 30-second spot in the Super Bowl was around $4 million. Newcastle said its campaign cost "a fraction" of a Super Bowl ad, without specifying a num-ber. It a message Facebook has taken to marketers at the Cannes Lions international advertising festival this week. Face-book launched a smartphone app, dubbed Slingshot, that will allow consumers to exchange disappearing photos and videos without requiring Facebook accounts. Shell to sell most of stake in Australia's Woodside for $5.7 billion Royal Dutch Shell launched a long-anticipated sale of most of its stake in Australia's Woodside Petroleum, looking to reap about $5.7 billion as it moves to focus on developing its own gas assets in Australia. The share disposal brings the Anglo-Dutch oil major closer to its goal of shedding $15 billion of assets as part of a drive to cut spending and streamline operations follow-ing a profit warning in late 2013. The selldown, which reduces Shell's holding to 4.5 percent from 23.1 percent, removes uncer-tainty that has weighed on Woodside's share price since Shell sold a third of its stake in 2010 and flagged it was not a long-term holder. As part of the deal, Woodside will buy back and cancel half the shares that Shell is selling, which Australia's top petroleum producer said would effectively boost its earnings per share by 6 percent. Apple settles e-book antitrust case with US states, others Apple reached an out-of-court settlement with U.S. states and other complainants in an e-book price-fixing class action lawsuit on Monday, effectively avoiding a trial in which the iPad maker faced more than $800 million in claims. U.S. District Judge in Manhattan Denise Cote ordered the parties to submit a filing to seek approval of their settlement within 30 days. The publish-ers - Hachette Book Group, HarperCollins Publishers, Penguin Group, Macmillan and Simon & Schuster, previously agreed to pay more than $166 million to settle related antitrust charges.

THE DAY AHEAD For June 18, 2014

4

TOP NEWS (continued)

Jefferies profit rises on investment banking revenue Investment bank Jefferies Group, owned by Leucadia Na-tional, reported a 55 percent rise in quarterly profit on improved investment banking revenue. Jefferies' investment banking reve-nue grew 19.5 percent to $331.5 million in the second quarter. Revenue from fixed income sources dropped 5 percent to $217.7 million. Net earnings attributable to the company's share-holders rose to $61.3 million from $39.5 million a year earlier. GM to start compensating ignition switch victims -CEO Barra General Motors expects to begin processing victims' claims related to faulty ignition switches by Aug. 1, CEO Mary Barra will tell the U.S. Congress. In prepared testimony to be delivered to the House of Representatives Energy and Commerce Com-mittee, Barra also will say that Kenneth Feinberg, who is over-seeing the creation of a compensation fund, will have "full au-thority to establish eligibility criteria for victims and determine compensation levels." Barra testified to the panel in early April and was unable to answer many of the lawmakers' questions. She promised to come back after the company's internal investi-gation was completed. Anton Valukas, who headed GM's inter-nal investigation, will also appear before the House panel. UPS to charge by size for U.S. ground packages United Parcel Service said it would start charging by size of packages for all ground services in the United States as it looks to offset rising fuel costs. The new pricing will add to shipping costs for online retailers such as Amazon.com and eBay as they

will have to pay more to ship items that are bulky, but not neces-sarily heavy, such as diapers and large soft toys. UPS's new pricing, which will be implemented from Dec. 29, will also include packages to Canada, the company said. UPS said the change in pricing would reduce overall package sizes and the use of ex-cess packaging materials, leading to lower fuel use, vehicle emissions and transportation costs.

PIC OF THE DAY

A member of the Thunderbolt Craziness band wearing a metal suit bal-ances a soccer ball on his head as electricity is discharged from Tesla coils during a performance to celebrate the 2014 Brazil World Cup, in Changle, China.

Company Name Action

Expedia Susquehanna raised rating to positive from neutral and target price to $90 from $79, sees upward revisions, execution, and faster growth driving outperformance.

Morgan Stanley Barclays raised target price to $35 from $33 as it expects the company's retooled business to allow for a higher ROE/multiple over time.

SanDisk Jefferies revised price target to $118 from $95 citing the company's acquisition of Fusion-IO.

Travelers Companies BMO cut rating to market perform from outperform, said the stock is almost fully valued at current levels and raised the target price to $98 from $96 based on valuation changes after lower catastrophe losses in the second quarter.

TW Telecom RBC raised target price to $41 from $32 after the company said it would be acquired by Level 3.

ANALYSTS’ RECOMMENDATIONS

THE DAY AHEAD For June 18, 2014

5

THE DAY AHEAD - CANADA For June 18, 2014

COMING UP MARKET MONITOR

Statistics Canada is scheduled to report wholesale trade data

for April. Analysts surveyed by Reuters expect a 0.6 percent increase, after a 0.4 percent decline in March.

Canada's main stock index rose on Tuesday as strength in the financial sector helped offset worries about the volatile situation in Iraq and nervousness about the outcome of a Federal Re-serve policy meeting. Investors have been speculating whether the Fed will accelerate the pace of withdrawal from its stimulus program and when the U.S. central bank might increase interest rates. The Toronto Stock Exchange's S&P/TSX composite index was up 0.10 percent at 15,055.89. Financials climbed, with Royal Bank of Canada adding 0.08 percent and Toronto Dominion Bank advancing 0.48 percent. Shares of energy pro-ducers dropped, reflecting weakness in the price of U.S. crude oil. Suncor Energy lost 0.92 percent and Canadian Natural Resources slipped 0.73 percent. The dollar was up 0.19 percent to C$1.0863.

TOP NEWS

Valeant goes hostile, to launch Allergan exchange offer this week Valeant Pharmaceuticals said it will launch an exchange offer for Allergan this week, allowing it to eventually take the unsolic-ited bid directly to shareholders. Botox-maker Allergan has re-jected Valeant’s offer of cash and shares, but Valeant CEO Mike Pearson said he sees no reason to adjust the bid a third time. Allergan's biggest shareholder, Pershing Square Capital Man-agement, intends to mail proxy materials as early as this month to seek a special meeting later this year to change most of Aller-gan’s board, Valeant said. Valeant Chief Financial Officer How-ard Schiller said the company is confident enough Allergan shareholders will support calling the meeting, noting that more than half of Allergan's shares have traded since word of Valeant's initial offer leaked on April 21. Hedge funds and arbi-trageurs who are interested in a deal now own a large percent-age of Allergan, Schiller said.

First Quantum to acquire Lumina for about $420 million First Quantum Minerals said it has agreed to acquire Lumina Copper for about C$456 million, in a bid to win control of Lumina's Taca Taca copper project in Argentina. The cash-and-stock deal values Lumina at about C$9.71 a share, a premium of nearly 25 percent to the mining company's closing price on the TSX Venture Exchange on Monday. The Taca Taca asset, lo-cated about 120 kilometers east of the world's largest copper mine Escondida in Chile, has an indicated mineral resource esti-mate of about 21.15 billion pounds of copper.

BIG MOVERS Price C$ % Change

Romarco Minerals 0.97 0.05 5.43

Centerra Gold 5.25 0.17 3.35

Westport Innovations 18.03 0.43 2.44

Pacific Rubiales 22.25 -1.55 -6.51

Migao Corp 1.38 -0.04 -2.82

6

7

ANALYSIS AND INSIGHT

REUTERS SUMMIT Morgan Stanley's Fleming eyes fee-based account growth By Svea Herbst-Bayliss and Lauren Tara LaCapra Morgan Stanley Wealth Management, which is poised to be-come the largest brokerage in the United States by assets, sees fee-based accounts making up 40 percent of all the money it invests for clients, its top executive said. Gregory Fleming, who runs the bank's brokerage arm as presi-dent of Morgan Stanley Wealth Management, said at the Reuters Global Wealth Management Summit so-called advisory assets are growing at a healthy pace and that they could make up as much as 40 percent of overall assets in the future. The number, which has not been made public before, under-scores both the bank's growth in wealth management plus a shift into fee-based accounts from accounts where clients pay for every transaction. "If we continue to experience growth as we have seen, then we could see advisory assets swell to $900 billion or $1 trillion over time," Fleming said, adding that with overall wealth management assets to top $2 trillion in the near future and set to keep rising, advisory assets could be 40 percent. In the first quarter, Morgan Stanley's fee-based accounts repre-sented 37 percent of assets under management, up from 35 percent in the first quarter of 2013. Fleming emphasized that 40 percent was their forecast, but the level could end up being higher over time. He said the split be-tween fee-based accounts and transaction-based accounts will depend on what markets do and what clients want, and that he was not expressing a preference for one over the other. "A lot of our advisors do both," he said, adding that the bank will provide services to dovetail with the client's needs. At the end of the first quarter total client assets stood at $1.94 trillion with fee-based assets having grown 17 percent to $724 billion. During the quarter Fleming said the bank saw $19 billion in inflows into fee-based accounts. The numbers put Morgan Stanley very close to overtaking Merrill Lynch, which oversees $1.95 trillion in client assets. Passing the rival could be an especially sweet moment for Flem-ing who had been president at Merrill Lynch but left in 2009 after the bank was acquired by Bank of America Corp. He joined Mor-gan Stanley in 2010. Morgan Stanley already employs more financial advisers, count-ing 16,400 compared with Merrill Lynch which had 13,700. But Merrill Lynch's wealth management group already earns 41.7 percent of revenue from fee-based accounts. In the interview Fleming said Morgan Stanley's financial advisers are now significantly happier than they were two years ago when the company last conducted its employee survey. He said far fewer financial advisers are leaving for other firms and that im-proved technology helped boost morale. "You can now send pictures of the front and back of a check on your iPhone," he said, allowing clients to deposit checks by phone. For other news from the Reuters Global Wealth Management Summit, click here

US banks seen falling short of new debt funding rule By Douwe Miedema Wells Fargo, State Street and JPMorgan Chase & Co are below or almost at minimum capital thresholds expected to be in-cluded in a rule still being hammered out by U.S. regulators that's meant to mitigate taxpayer losses in another financial cri-sis, according to a Reuters analysis. U.S. banks are already required to hold equity equal to about 10 percent of their balance sheet to serve as a shock absorber to cover the risk of a sharp drop in the value of loans, investments and other assets on their books. Banks expect U.S. regulators to require them to hold another 10 percent in bonds with maturities of more than a year and other instruments, as part of the forth-coming rule. Wells Fargo's loss-absorbing capital stood at 17 percent at the end of last year, State Street's was 18.2 percent and JPMorgan stood at 19.1 percent, according to a Reuters analysis of eight banks, based on regulatory filings and methodology recently presented by Citigroup. "These are figures which have been circulating," said Bernard De Longevialle, a credit analyst at Standard & Poor's. "The mar-ket tends to view these three (banks) as those who would poten-tially be the most stretched." Analysts and officials at banks are basing their estimates for the benchmarks partially on discussions with regulators and on wider market assumptions for what would be a reasonable level. The Federal Reserve has typically taken a tougher stance than its counterparts in the European Union. The Fed and the Federal Deposit Insurance Corporation (FDIC), who are jointly working on the rule, declined to com-ment. Regulators want creditors - and not just shareholders - to take a hit if a bank lands in trouble, to prevent a repeat of the panic that spread when Lehman Brothers collapsed in 2008. The equity requirements that U.S. banks already conform to are in line with recommendations made in the global Basel III ac-cord. The Fed has said it is planning similar requirements for long-term debt instruments that investors buy knowing they might lose all or part of their money. This would double the loss-absorbing capacity of a bank's capital to about 20 percent. Regulators from across the world are also working on such plans, but they still disagree about the details of a common ap-proach they want to present when the G20 largest countries of the world meet at a summit in Brisbane, Australia, in November. DOUBLE THE BUFFERS The European Union wants banks' loss-absorbing capital to stand at about 18 percent of the balance sheet, and analysts believe that the Fed will come up with a similar number, some-where between 18 percent and 25 percent. JPMorgan declined to comment. State Street said it had "an ongoing dialogue with industry participants and regulators over a wide variety of issues", and that it remained one of the most well-capitalized banks in the United States. Wells Fargo pointed to a May investor day, during which its Treasurer Paul Ackerman said he expected the bank's long-term debt "to grow a little bit" to fill any gap. Since the beginning

THE DAY AHEAD For June 18, 2014

8

ANALYSIS AND INSIGHT (continued)

of last year, Wells Fargo has issued more than $11 billion in debt with maturities greater than 10 years. Bank of New York Mellon stood at 23.4 percent, Citigroup at 22.8 percent and Bank of America at 23.2 percent. All num-bers are based on regulatory filings as of Dec. 31, 2013. The rule is intended to make sure that governments can wind down a failing bank that is considered to pose too much risk to the financial system to go through ordinary bankruptcy, while not burdening the taxpayer. In the U.S., for example, the FDIC has explained how it would go about the exercise, but the plan won't work without the extra buffers. "Banks are more or less asked to keep a capital base ... of 9 to 10 percent of risk-weighted assets, and it's just a simple rule of thumb to say you would have ... debt that would allow to double this amount," De Longevialle said. FitchRatings in a recent presentation also assumed a total loss-absorbing capacity of 20 percent. MORE RULES Banks may not have too much trouble in raising more long-term debt depending on the exact details of the Fed's requirement, analysts said, particularly if there is a long transition period. Questions about the levels and about what instruments would count towards the total add to banks' anticipation about a long list of new rules that haven’t been fully implemented, or that regulators are still writing. The Fed alone is working on four more rules: to raise more capi-tal for systemically important banks, to require banks to invest in

assets they can easily sell, to balance the maturities of assets and liabilities, and to make the short-term funding market less susceptible to panics. One of the reasons that Wells Fargo is behind some of the other banks is that it has traditionally relied on client deposits for fund-ing, and simply did not need to borrow money from other banks or from investors. While clients can quickly withdraw deposits, they are still consid-ered "sticky" – meaning banks don't anticipate that depositors will withdraw their funds all at once-- and the Fed may take that into account by granting banks such as Wells Fargo more lee-way when setting its long-term debt requirement. "We would not be surprised if there are some differentiations between the banks based on their business models. But that's an assumption, that's not an information," De Longevialle said. Morgan Stanley and Goldman Sachs have far fewer deposits to fund their business, and they are also the two banks that far exceed the 25 percent thought to be the upper boundary for loss-absorbing capital level. A senior Fed staffer working on the rule said at a conference last week he would prefer consensus among the world's regulators grouped together in the G20's Financial Stability Board before the Fed put out its own rule. Banks in Europe often have a different legal structure than those in the United States, which group all their operating subsidiaries under one holding company, and this may make it hard to agree on a common approach soon.

THE DAY AHEAD For June 18, 2014

Yellen, future tightening in spotlight as U.S. Fed meets The U.S. Federal Reserve is widely expected to chop another $10 billion from its monthly bond purchases at a meeting on Tuesday and Wednesday but make few, if any, other concrete policy moves. To read more, click here

FACTBOX

9

The Day Ahead - North American Edition is compiled by Shashwat Sharma, Sourav Bose, Nandi Kaul and Ayesha Sruti Ahmed in Bangalore; Franklin Paul and Meredith Mazzilli in New York. For questions or comments about this report, email us at: TheDay.Ahead@thomsonreuters.com Visit the Thomson Reuters Equities Community Site at: http://customers.reuters.com/community/equities/ For more information about our products: http://thomsonreuters.com/products_services Or send us a sales enquiry at: http://thomsonreuters.com/products_services/financial/contactus/ or call us on North America: +1 800 758 5555

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KEY RESULTS vs. THOMSON REUTERS I/B/E/S ESTIMATES

Company Name Quarter EPS Estimates Year Ago Rev Estimates (mln)

FedEx Q4 $2.36 $2.13 $11,659

Jabil Circuit Q3 $-0.09 $0.56 $3,599

Red Hat Q1 $0.33 $0.32 $414

** Includes companies on S&P 500 index. Estimates may be updated or revised.

THE DAY AHEAD For June 18, 2014