Today's Headlines

Bloomberg:

• Greek Two-Year Note Yields Jump Over 11% Amid Talks, Rating Cut. Greek bonds plunged, driving two- year yields above 11 percent, after the European Union said the nation’s 2009 budget deficit was larger than previously stated and Moody’s Investors Service cut its credit rating one step. The cost of insuring against default soared, rising above Ukraine and putting it closer to Argentina and Venezuela. Ten- year bonds slid for an eighth day, sending the yield to more than 9 percent. The EU’s statistics office said today that Greece’s deficit was 13.6 percent of gross domestic product last year. Greek officials are holding a second day of talks today with the European Commission and International Monetary Fund. Moody’s lowered the rating to A3 from A2. “The market recognizes that Greece can’t get out of this on its own and it’s a question of whether it’s the bondholders that get a haircut or the other euro-area states that pay the bill, or a combination of the two,” said Paul Lambert, head of the global macro team at Polar Capital Holdings Plc in London. Greek two-year note yields advanced 265 basis points to 10.83 percent as of 4:04 p.m. in London, after earlier climbing close to 11.5 percent. The 4.3 percent security due March 2012 tumbled 4.1, or 41 euros per 1,000-euro face amount, to 88.30. The 10-year yield climbed 84 basis points to 9.01 percent. Prime Minister George Papandreou’s government has failed to convince investors Greece can push through austerity measures to shore up the country’s finances. The budget deficit may rise to 14 percent as “off-market swaps” cloud estimates, Luxembourg- based Eurostat said today. The EU limit is 3 percent of GDP. Credit-default swaps insuring Greek government debt for five years rose 158 basis points to a record 644, according to CMA DataVision prices. Swaps on Venezuela climbed 10 basis points to 823, according to calculations based so-called up- front prices quoted for higher-risk countries. Argentina debt swaps were 13.9 percent upfront, or 862 basis points. The bonds of other so-called peripheral euro-region nations fell, with the yield premium that investors demand to hold Portuguese 10-year government debt instead of benchmark German bunds climbing 21 basis points to 190 basis points, the most since Bloomberg records began. The spread between Irish and German bonds widened 20 basis points to 172 basis points, while the Spanish-German spread grew 12 basis points to 91 basis points.
• Euro-Area Deficit Widens to More Than Double Limit. The euro area’s budget deficit widened to more than double the European Union’s 3 percent limit in 2009, led by Greece and Ireland. The total budget gap for the 16-nation euro region widened to 6.3 percent of gross domestic product last year, the biggest since the introduction of the euro in 1999, from 2 percent in 2008, the EU’s Luxembourg-based statistics office said today. At 14.3 percent of GDP, Ireland had the largest shortfall, while Greece’s deficit was 13.6 percent. European governments may struggle to narrow their budget gaps after spending billions on stimulus measures. The International Monetary Fund on April 20 called rising state debt the biggest threat to the global economy.
• Sony to Stream Major League Baseball on PlayStation 3.
• CBS, Turner Sign $10.8 Billion NCAA Basketball Deal. CBS Corp. and Time Warner Inc.’s Turner Broadcasting agreed to a $10.8 billion, 14-year contract for broadcast, Internet and wireless rights on an expanded men’s college basketball championship tournament.

Wall Street Journal:

• SEC Probes Fund Industry's Use of Derivatives. The U.S. Securities & Exchange Commission is conducting a sweep of examinations to investigate how the mutual fund industry uses derivative financial products, the head of SEC’s Office of Compliance Inspections and Examinations said Tuesday. The goal of the investigation is to help regulators “understand the nature of derivatives in the mutual fund sector” and “make sure that mutual funds aren’t taking on unnecessary risks that people don’t understand,” said Carlo di Florio, who took the helm of OCIE in January, told Dow Jones Newswires in an interview. The probe is part of a broader effort by the SEC to understand how complex financial products impact the markets and investors.
• Did John Paulson Undermine Goldman's(GS) 'Big Boy' Defense? Paulson offered a slightly different take on how sophisticated CDO investors were. Responding to one investor’s confusion about how the CDO market worked, Paulson assured her: “If you find this confusing you should. Most people do. Even the people who participated in this market didn’t understand it either.”

Business Insider:

• ENDGAME: Obama Delivers Really Conciliatory Speech to Wall Street, Moderate Bill Now a Done Deal.
• Oh Please, The GM Bailout Was A Failure, And No The Taxpayer Hasn't Made Money.
• The Complete Guide to the Banks and Countries That Will Get Slammed When Greece Collapses.
  

Boston Globe:

• Galvin Also Scrutinizing Goldman(GS). Massachusetts Secretary of State William F. Galvin is conducting a separate investigation of Goldman Sachs & Co. that he said has similarities to the federal government’s case against the Wall Street titan: potential conflicts of interest and a corporate culture of favoring certain clients. His office has been investigating the practice at Goldman of “huddles,’’ or meetings in which the company’s traders and securities analysts discuss investments and market trends, and then, allegedly, share insights from these meetings with hedge funds and other large clients. Galvin said the practice gives certain clients valuable information ahead of others. “It’s a recurring theme. It’s conflicts of interest,’’ Galvin said in an interview yesterday. “It is illustrative of the culture. Even if you take the official explanation being offered by Goldman, there’s a culture that preferred customers get special treatment.’’

Big Government:

• IndyMac Attack: At the end of 2007, hedge fund billionaire John Paulson invested $15 million in the leftist non-profit, Center for Responsible Lending, their largest single donation ever. Around the same time, Paulson and his employees contributed over $100,000 to the Democratic Senatorial Campaign Committee, headed, at the time, by Sen. Chuck Schumer. Roughly six months later, CRL and Sen. Schumer both launched a highly public attack on the California-based mortgage lender, Indymac. The lender failed, wiping out the investment of thousands of people. Roughly six months after that, John Paulson, in partnership with George Soros, bought up the remnants of Indymac for pennies on the dollar.

Rasmussen Reports:

• Just 32% Confident Policymakers Know What They're Doing About The Economy.

Politico:

• Lindsay Graham: Immigration Push Could 'Destroy' Climate Talks. A top Senate negotiator on climate change believes that a sudden turn by Senate Democrats to immigration could “destroy” any hope of a major climate and energy bill this year. “This comes out of left field,” said Sen. Lindsey Graham (R-S.C.), after hearing that Democratic leaders may now push immigration reform ahead of a climate bill. “I’m working as earnestly as I can to craft climate and energy independence, clean air and jobs, and now we’re being told that we’re going to immigration. We haven’t done anything to prepare the body of the country for immigration.”

Reuters:

• BofA's Krawcheck Says New Broker Rules "Inevitable". The latest call for brokers to accept pending regulatory reform comes from a surprising source - one of the industry's top executives. Bank of America Corp (BAC.N) wealth management chief Sallie Krawcheck said on Thursday that financial advisers should not oppose a looming regulatory overhaul of the U.S. securities industry but instead embrace coming change, saying it is good for customers.

Rooz:

• Iran is boosting gasoline imports to counter sanctions urged by the U.S. and its allies that aim to discourage the country from pursuing a nuclear program. The Persian Gulf country imported more than $4.5 billion worth of gasoline in the Iranian year that ended on March 20th, citing customs statistics from last week. That represents a 67% gain in value and a 2.5-fold increase in volume, compared with the previous year.