Today's Headlines

Bloomberg:

- The cost of protecting corporate bonds from default fell to the lowest since the collapse of Lehman Brothers Holdings Inc. on speculation banks will resume lending after withstanding Federal Reserve stress tests. Credit-default swaps on the benchmark CDX North America Investment-Grade Index dropped 8.5 basis points to 135.5, the lowest since Aug. 18, according to Phoenix Partners Group prices at 8:15 a.m. in New York. The Markit iTraxx Europe index of 125 companies with investment-grade ratings fell 12 basis points to 118.5, the lowest since Oct. 1 and below the closing level the day Lehman filed for bankruptcy protection, JPMorgan Chase & Co. prices show. Contracts on Morgan Stanley fell 20 to 265, Citigroup Inc. was 85 lower at 375 and General Electric Co.’s finance arm dropped 100 basis points to 450, Phoenix prices show. Bank of America Corp. declined 21 basis points to 207, JPMorgan fell 7 to 125 and Goldman Sachs Group Inc. slid 15 to 187, according to CMA DataVision. The thaw in credit markets drove the rate at which banks lend to each other to record lows, with the London interbank offered rate for three-month loans in dollars dropping to 0.96 percent. Libor reached an all-time high of 5.73 percent Sept. 7. The Libor-OIS spread, which increases as banks become more reluctant to lend, was at 75 basis points, the lowest level since Aug. 4. The difference between what banks and the Treasury pay to borrow for three months, the so-called TED spread, narrowed to 77 basis points, the least since May 28 last year. It widened to 464 basis points on Oct. 10. Credit-default swaps on the Markit iTraxx Financial index of 25 European banks and insurers declined 16 basis points to 120 and the subordinated index dropped 37 to 208. Both are the lowest since February.

- Chinese steel prices aren’t likely to rally until automakers and builders use up more of their inventories, said John Kovacs, an analyst at London-based metals consultant CRU Ltd. Inventories in Shanghai soared to their highest in at least 2 ½ years in March. Prices in China, the world’s largest user of the metal, for hot rolled coil declined 42% in the past year to $482 a metric ton, according to Metal Bulletin. “Prices won’t rise until the current inventory levels come down,” Kovacs said. “Inventory levels are still fairly high in all major cities in China.”

- Crude oil traded at the highest price in almost six months and copper rose to a three-week peak on speculation that the banking crisis is ending and demand for raw materials will rebound.

- European Central Bank President Jean- Claude Trichet said the ECB unanimously agreed on a 60 billion- euro ($80.5 billion) plan to buy bonds as officials step up their response to the worst recession since World War II. “The Governing Council has decided in principle that the eurosystem will purchase euro-denominated covered bonds issued in the euro area,” Trichet told reporters in Frankfurt. He said the bank’s main interest rate, which it cut by a quarter point to a record low of 1 percent today, is appropriate and that the ECB will extend its unlimited auctions of funds to banks.

- Kohl’s Corp., BJ’s Wholesale Club Inc. and other U.S. retailers said first-quarter preliminary earnings exceeded their forecasts after April sales signaled shoppers are returning to stores. Wal-Mart Stores Inc., the world’s largest retailer, said sales at U.S. stores open at least a year rose 5 percent. The company had forecast as much as 3 percent growth for the quarter. Sales at clothing chain Aeropostale Inc. climbed 20 percent, more than twice the average analyst estimate in a survey by Retail Metrics Inc. Gap Inc. also beat projections. Retail Metrics said comparable-store sales rose 1.5 percent in April, only the second gain since September.

- Three Chicago billionaires who helped fund President Barack Obama’s election campaign are fighting legislation he backs that would make it easier for unions to organize hotels they own. Penny Pritzker, Obama’s campaign finance chairwoman and a director of Global Hyatt Corp., has told the president she is opposed to the measure, known as card check, said a person familiar with the situation. Neil Bluhm, a partner in Walton Street Capital LLC, also opposes the bill, the person said. Lester Crown, chairman of Henry Crown & Co., criticized the proposal in an interview. For the city’s business leaders who nurtured Obama’s White House bid, card check is a gut check on support for their hometown president. Labor, which spent $100 million on Democratic campaigns last year, made it a top priority to enact a bill giving workers bargaining rights based on signing cards instead of winning a secret-ballot election. Voting privately is “an American prerogative and shouldn’t be overturned,” said Crown, 83, whose family holdings include the Ojai Valley Inn & Spa in Ojai, California, and the Little Nell hotel in Aspen, Colorado. “The recommended legislation is absolutely the wrong thing to do.”

- General Electric Co.(GE) plans to spend $6 billion by 2015 on health-care products, financing and partnerships designed to make more efficient, lower-cost treatment available worldwide. Dubbed “Healthymagination,” the effort spans units including water, media and health care, the world’s biggest maker of medical-imaging equipment said. GE will double research on targeted medical products to $3 billion, lend $2 billion via its finance unit, partly to developing regions, and earmark $1 billion for partnerships, information and services.

- Treasury 30-year bonds fell the most in about four months as investors demanded higher-than-forecast yields at today’s auction of $14 billion of the securities with the U.S. slated to sell a record amount of debt this year. “This is a problem,” said Chris Ahrens, head interest- rate strategist at UBS Securities LLC in Stamford, Connecticut, one of 16 primary dealers required to bid in Treasury auctions. “The market required a fairly significant discount to buy the bonds.”

Wall Street Journal:

- In a turnaround for the industry, two groups representing hedge funds said Thursday at a House Financial Services Subcommittee hearing that they support mandatory registration for investment advisers, including those to private capital.

- President Barack Obama delivered Congress the details of his $3.6 trillion budget Thursday, eliminating or cutting back 121 programs but swamping the $17 billion in savings with new efforts, from a college-completion fund to a new affordable-housing trust fund to 50,000 more cops on the beat. At a time when state and local governments are slashing services remorselessly, the Obama budget for 2010 shows little real sign of belt-tightening.

- The Cranes in Spain Point Mainly to a Strain. Symbols of Spanish Prosperity Now Serve as Giant Reminders of Economic Gloom; Downturn Ends a Building Frenzy.

NY Times:

- Four years after paying $2 billion to extricate itself from a partnership with Fiat, General Motors is seeking a stake in the Italian automaker in exchange for its Latin American and European operations.

- President Obama was noticeably silent last month when the Iowa Supreme Court overturned the state’s ban on same-sex marriage. But now Mr. Obama — who has said he opposes same-sex marriage as a Christian but describes himself as a “fierce advocate of equality” for gay men and lesbians — is under pressure to engage on a variety of gay issues that are coming to the fore amid a dizzying pace of social, political, legal and legislative change.

NY Post:

- The Chinese are about to embark on a shopping trip of epic proportions. Hoping to take advantage of cheap prices on struggling American businesses, a group of 400 executives from state-owned and private Chinese companies will be visiting the US next month on the hunt for distressed assets. China's Ministry of Commerce is behind the tour, and is planning visits to New York, Washington, Chicago and Salt Lake City.

Washington Times:

- President Obama's choice for the government's No. 2 housing job is embroiled in the largest fine in U.S. history for "blatant violations" of open records laws after the Washington State Supreme Court chastised his office for withholding documents detailing taxpayer costs for a new professional football stadium in Seattle. The documents that Ronald Sims' office was found to have kept from the public when he served as King County executive included information about cheaper alternatives to the $430 million Seattle Seahawks stadium, which was built in 2002, according to a Washington Times review of the court records.

THR.com:

- Watching adult-oriented TV shows and movies might prompt kids to start having sex at an earlier age, according to a new study released by Children's Hospital Boston. It suggests that early onset of sexual activity among teens might relate to the amount of adult content they watched as children.

Forbes:

- Want to find one reason why the markets have risen so steeply over the past few months? One overlooked cause is that pensions and endowments are rebalancing their holdings in order to get back in-line with their original asset allocation models. Meaning that mangers have been buying stocks at a feverish pace because they had become so devalued--and these same managers are lightening their alternative holdings in things like hedge funds.

FINalternatives:

- Three of the five hedge fund strategies published by Dow Jones Hedge Fund Indexes posted losses in April. Merger arbitrage moved out of the top spot on a year-to-date basis falling 29 basis points for the month, lowering its 2009 return to 2.34%. Equity long/short fell nearly half a percent and is -1.01% for the year and equity market neutral rounded out the benchmarks with a loss of 85 basis points, increasing its YTD loss to -2.72%.

Reuters:
- Egypt's Suez Canal revenues dropped 22.7 percent to $346.9 million in April, compared to $448.9 million in the same month last year, but were up from $327.9 million in March, a Suez Canal Authority official said on Thursday. Economists have been watching Suez Canal revenues closely to see any effects from piracy off the Somali coast and the recession in major economies, which is expected to reduce the volume of trade between Asia and Europe.

- General Motors Corp(GM) said it burned through $10.2 billion in the first quarter as it relied on a federal bailout to ride out a sharp decline in global sales that overwhelmed its cost-cutting efforts. Revenue dropped by almost half to $22.4 billion as the company cut production by about 900,000 vehicles and worked to run down costly inventories in the United States and Europe. The results showed the extreme pressure on GM with just four weeks remaining for the embattled automaker to win deals to slash debt and operating costs with its major union and bondholders to avoid bankruptcy.

- The U.S. government on Thursday prepared to draw a line separating weak banks from strong ones in an attempt to put the worst of the financial crisis behind it. The results of "stress tests" of the 19 largest U.S. banks -- due at 5 p.m. EDT (2100 GMT) -- are the culmination of a months-long exercise aimed at reviving the financial system and are expected to show about half the banks need more capital.

The Economic Times:

- Cement prices could fall by up to 10% in the coming months, pushed lower by new supply and slower construction activity during the monsoon season, industry officials said.

Market News International:
- Chinese banks made about $90 billion in new loans in April. It would be the lowest monthly increase in loans since November, the news agency said.