Today's Headlines

Bloomberg:

• Intel(INTC), IBM(IBM) Show Return of Corporate Computing Demand. Intel Corp. (INTC) and International Business Machines Corp. (IBM) issued sales and profit forecasts that reflected demand from companies eager to upgrade computer systems left fallow during the recession. IBM, the largest computer-services provider, boosted its full-year profit forecast, while Intel, the top chipmaker, forecast second-quarter sales higher than analysts predicted. VMware Inc. (VMW), EMC Corp. and Juniper Networks Inc. (JNPR), three other business-technology providers, also met or topped analysts’ projections. The quartet of results suggests that after the recession ended in 2009 a rebound in demand may be gathering steam. Companies are outfitting data centers capable of delivering storage, software and other computing tasks over the Internet. The global market for such cloud-related services may more than double to $148.8 billion in 2014 from $58.6 billion in 2009, according to researcher Gartner Inc. in Stamford, Connecticut.
• Greek Bond Yields Rise to Record on Debt Restructuring Concern. Greek bonds tumbled, leading declines by securities from Europe’s most indebted countries, as a German government adviser said the Mediterranean nation will probably have to restructure its debt burden. The slide drove yields on Greece’s two- and 10-year bonds to euro-era records. Portuguese and Irish bonds also fell after Lars Feld, a member of German Chancellor Angela Merkel’s council of economic advisers, said Greek restructuring is probable. Spanish bonds rose after demand increased at an auction of 10- year debt. German 10-year bunds fell for a second day as equities rose, sapping demand for the safest assets. “Talk of Greek restructuring dominates sentiment and is pushing peripherals lower,” said Charles Diebel, head of market strategy at Lloyds Bank Corporate Markets in London. “The bond market continues to push spreads wider, suggesting the reality of the restructuring risk.” Greek two-year yields climbed 134 basis points to 22.06 percent at 3:48 p.m. in London, the highest since at least 1998, when Bloomberg began collecting the data. The 4.6 percent security due 2013 fell 1.45, or 14.5 euros per 1,000-euro ($1,451) face amount, to 73.45. The Greek 10-year yield rose 27 basis points to 14.75 percent, after reaching a euro-era record of 14.80 percent. The extra yield, or spread, over German debt rose to a record 11.44 percentage points. “I fear that Greece can’t get out of this situation without some kind of restructuring,” Feld told Deutschlandfunk radio today. While “that doesn’t have to mean an actual default,” it could include “the buyback of bonds through a European institution,” he said, without elaborating. The cost of insuring Greek sovereign debt jumped 30 basis points to a record 1,271 basis points, according to CMA prices for credit-default swaps. The cost signals a 66 percent chance of default within five years. Portugal’s two-year yield rose to a euro-era record of 10.46 percent, while the nation’s 10-year yield rose 17 basis points to 9.26 percent after reaching a record 9.29 percent. The nation’s borrowing costs increased at an auction of 320 million euros of six-month bills. The securities due in November were issued at an average yield of 5.529 percent, compared with 5.117 percent the last time the securities were sold on April 6. Ireland’s two-year note yields rose 62 basis points to 10.30 percent, the highest since March 24. Ten-year yields gained 26 basis points to 10.06 percent, the first time they have yielded less than the two-year note since March 23, according to closing-price data compiled by Bloomberg. The spread between Spain’s 10-year bonds and similar- maturity German bunds narrowed to 214 basis points after reaching 232 basis points yesterday, the most since March 3. The Portuguese-German spread widened to 592 basis points, the most since Bloomberg began collecting the data in 1998.
• U.S. Existing Home Sales Rise, Fail to Recover Ground Lost. A gain in sales of U.S. previously owned homes in March failed to make up for the ground lost the prior month, a sign that the housing market is taking time to recover. Purchases increased 3.7 percent to a 5.1 million annual rate, exceeding the 5 million median forecast of economists surveyed by Bloomberg News, figures from the National Association of Realtors showed today in Washington. The median price declined from a year earlier, and 40 percent of the sales were distressed properties. Of all purchases, cash transactions accounted for 35 percent, which is probably the highest share on record, Yun said. The realtors group began tracking the monthly figure in August 2008, and the share on a yearly basis before that was around 10 percent, Yun said. Sales rose in three of four regions in March, led by an 8.2 percent gain in the South. The West fell 0.8 percent. The median sales price fell 5.9 percent from March 2010 to $159,600 last month. The number of previously owned homes on the market rose to 3.55 million from February. At the current sales pace, it would take 8.4 months to sell those houses compared with 8.5 at the end of the prior month. Supply in the eight months to nine months range is consistent with stable home prices, the group has said.
• Commodity Assets at Record $412 Billion in March, Barclays Says. Commodity assets under management rose to a record $412 billion in March, led by the biggest ever jump for agriculture products, Barclays Capital said. Investment flows into raw materials for the first quarter totaled $16.8 billion, with $7.1 billion added to agriculture and $6.8 billion to energy, Barclays analyst Roxana Mohammadian Molina said in a report e-mailed today. Precious metals got $300 million, the smallest ever, Barclays said. Pricier food contributed to riots across north Africa and Middle East this year, toppling leaders in Egypt and Tunisia and leading central banks from Brazil to China to raise interest rates. “Oil and food prices are already at levels that are raising inflation fears and by implication, threatening the performance of other assets,” Molina wrote in the report.
• Crude Oil Advances as Increasing Equities Bolsters Optimism On The Economy. The U.S. currency’s drop sent gold to a record and silver to a 31-year high. Oil extended gains after the Energy Department reported an unexpected decline in U.S. crude supplies. “The dollar is getting hammered again and all the commodities are flying,” said Todd Horwitz, chief strategist at Adam Mesh Trading Group in New York. “The falling dollar and inventories as well as the outlook for increasing demand are pushing the oil market higher.” Crude oil for June delivery climbed $2.26, or 2.1 percent, to $110.54 a barrel at 10:56 a.m. on the New York Mercantile Exchange. The May contract expired yesterday at $108.15. Prices are up 32 percent from a year ago.
• Gold Rises Above $1,500 to a Record on Slumping Dollar, Inflation Concern. Gold futures rose to a record for the ninth time this month as a weakening dollar boosted investment demand for the precious metal as an alternative asset. Silver topped $45 an ounce for the first time since 1980. Gold reached $1,506.50 an ounce in New York as the dollar slipped as much as 1 percent against a basket of six major currencies to trade at a 16-month low. Before today, gold rose 32 percent in the past year as the dollar fell 7.4 percent. Earlier this week, Standard & Poor’s revised its long-term outlook for U.S. debt to negative from stable. “For the dollar, the S&P statement was like getting kicked when you’re already down,” said Matt Zeman, a senior market strategist at Kingsview Financial in Chicago. “The dollar is losing its status as the king of the hill, and gold is looking to take its place.” Gold futures for June delivery rose $11.30, or 0.8 percent, to $1,506.40 at 11:47 a.m. on the Comex in New York. The difference between yields on U.S. 10-year notes and Treasury Inflation Protected Securities, a gauge of trader expectations for inflation, today widened to as much as 2.66 percentage points. The spread reached 2.67 percentage points on April 11, the most in three years.
• Cotton Farmers in China Fail to Boost Crop, Top Agency Says; Prices Climb. Cotton plantings in some areas of China, the largest importer, have fallen as record prices failed to spur increased acreage, according to the top economic planning agency, which highlighted a problem in the biggest producing region. Futures reversed losses to gain 1 percent.
• China Orders Halt to Aluminum Projects to Curb 'Huge Waste'. China will immediately suspend approval of new aluminum projects as the world’s biggest producer and consumer of the metal faces overcapacity. Aluminum in London advanced to the highest level since 2008. The country faces a “really pressing” overcapacity and the government will “red light” new projects and cancel local- level preferential policies for the metal, Zhu Hongren, a spokesman for the Ministry of Industry and Information Technology, said at a briefing in Beijing today.
• Banks Lag S&P as Slower Loan Growth Outweighs Higher Dividends. Bank stocks are underperforming the Standard & Poor’s 500 Index, even after Federal Reserve stress tests showed some financial institutions have regained enough strength to boost dividends and buy back their shares. Sluggish loan growth and increased costs from new regulations plague the industry, according to Paul Miller, a former examiner for the Fed Bank of Philadelphia and a bank analyst at FBR Capital Markets in Arlington, Virginia. He maintains a “neutral-to-negative” outlook for the sector. “I don’t think we’ll get enough economic growth to spur strong loan demand, which is the primary revenue-driver,” he said. “Some investors are concerned the economy will just slug around for the next three or four more years.” The Financial Select Sector SPDR Fund (XLF), an exchange-traded fund that tracks the largest financial companies, has lagged behind the S&P 500 since April 14, 2010, off 15.7 percent as of 10:30 a.m. today in New York Stock Exchange composite trading, hitting a new 52-week low on a relative basis.
• VIX Drops to Lowest Level Since '07 as Intel(INTC), Yahoo(THOO) Earnings Top Estimates. The benchmark index for U.S. stock options slumped to its lowest intraday level since June 2007 as shares rallied on better-than-estimated quarterly reports from companies including Intel Corp. (INTC) and Yahoo! Inc. The VIX, as the Chicago Board Options Exchange Volatility Index is known, decreased 6.4 percent to 14.82 at 10:30 a.m. in New York, after falling as low as 14.30.
• Obama May Require Contractors to Disclose Political Donations. The Obama administration has drafted an executive order that would require government contractors to disclose some of their political donations, White House press secretary Jay Carney said. Carney said a draft of the order exists. He declined to confirm any specifics, saying it “could change over time.” President Barack Obama “is committed to improving our federal contracting system,” Carney told reporters traveling with the president on Air Force One to California. “His goal is transparency and accountability.”
• Syrian Military Response to Protest in Homs Leaves at Least 10 People Dead. Syrian activists said at least 18 protesters have died in clashes in the three days since President Bashar al-Assad ordered the Cabinet to make changes aimed at calming dissent. The government blamed terrorists for the violence, saying a general and three relatives were killed.

Wall Street Journal:

• Budget Watchdog: Obama Deficit Plan 'Falls Short'. A soon-to-be-released analysis from a nonpartisan budget watchdog group suggests that there’s somewhat less deficit reduction than meets the eye in President Barack Obama’s new framework. It’s another setback for the president’s deficit plan, which already has been criticized for providing little if any detail in some crucial areas, and for fuzzing up the size of its proposed tax increases. The draft analysis by the Committee for a Responsible Federal Budget says that “the President’s framework falls short” in deficit reduction, particularly when compared to plans put out by House Republicans and by Mr. Obama’s blue-ribbon fiscal commission panel. Those other plans deliver about $4 trillion in deficit reduction over the next 10 years, according to the analysis. Mr. Obama’s plan promises $4 trillion over 12 years but delivers only about $2.2 trillion over 10 years (the standard budget measure), according to the analysis.
• Emerging Economies' Fear: Easy Credit. Housing prices are rising rapidly in Australia, Canada, China, Hong Kong, Israel, Singapore, South Africa and Sweden. Housing prices are flat—or falling—in Britain, France, Germany, Ireland, Italy and the U.S. Welcome to the two-speed global economy.
• IEA Urges China to Reduce Energy Subsidies. The head of the International Energy Agency called on China to more quickly reduce subsidies on gasoline, diesel and electricity. In an interview Wednesday with The Wall Street Journal, Nobuo Tanaka, executive director of the industrialized world's energy watchdog, said prices in China should reflect the fact that the age of cheap energy is over, a reality underlined by the Japanese nuclear crisis.

CNBC.com:

• $6 Gas? Could Happen if Dollar Keeps Getting Weaker. A dollar plumbing three-year lows is hitting Americans squarely in the gas tank, and one economist thinks it could drive prices as high as $6 a gallon or more by summertime under the right conditions.
• At NY Auto Show, Biggest Fear is....$5 Gallon Gas.
  

Business Insider:

• Obama Privately Pled For Weeks With S&P Not To Lower The US Debt Outlook. Earlier it was reported that the White House got a heads up last Friday that the US debt outlook would be lowered by S&P. It turns out that back and forth pleading went on for weeks before the decision, according to Zachary Goldfarp at The Washington Post (via @stefcat23). The administration's line: Yes, we can come together to solve the debt "problem". S&P's line: No, you can't. A couple things are interesting here aside from the jostling. The first is that the administration obviously knew that the outlook was under review when Obama made his big deficit speech, so to some extent that speech must've been aimed at S&P. But considering the fact that the speech only seemed to divide Washington, it was a real flop.
• Rift Threatens NFL Union as 70 Players Hire Their Own Lawyers to Intervene In Lockout Talks.
• Silver's Meteoric Rise in Perspective: Up Nearly 300% in Just Over a Year, 41% Since February. (graph)
• Putin Delivers Big, Mocking Speech of US Debt, Trade Balance, And Out of Control Fed.
• Why Dick Bove Took Out The Hatchet To Goldman(GS) After Its Blistering Earnings.
  

Zero Hedge:

• China's Jasmine Revolution Is Back: Trucker Strike Hits Shanghai in Protest Over Surging Fuel Costs and Low Wages. (video)
• Tepco Releases First Robot-Captured Video From Inside Reactors 2 and 3.
  

New York Times:

• Borrowing Costs Rise for Spain and Portugal. Spain and Portugal on Wednesday managed to raise the targeted amounts in their latest debt auctions, an important test of market confidence amid Lisbon’s negotiations for a financial bailout and Madrid’s attempts to avoid needing one. Spain sold €3.37 billion, or $4.9 billion of debt, with the average yield on the benchmark 10-year bond rising to 5.47 percent from 5.16 percent last month. The auction met with strong demand and was at the top end of its target. That was an improvement on a Treasury bill auction on Monday, when Spain barely managed to meet its minimum target despite offering higher rates to investors.

Fox Business:

• NYSE(NYX) CEO May Be Asked to Recuse Himself From Bid Consideration Process. Officials at the NYSE Euronext (NYX) may have accepted a deal from Deutsche Boerse, but rival exchanges aren’t walking away quietly. Sources tell FOX Business that the NASDAQ OMX(NDAQ) and IntercontinentalExchange(ICE) are considering asking NYSE CEO Duncan Niederauer to recuse himself from the process of considering their joint bid. The demand would come in a letter to Niederauer citing conflicts of interest that may impair his judgment as to whether a NASDAQ/ICE bid would be better for shareholders than Deutsche Boerse’s $35.29 a share offer. It is speculated that Niederauer, who has served as CEO since 2007, would be out of a job under a NASDAQ/ICE deal.

Politico:

• Jan Brewer: White House Snubbed Me On Immigration Talks. Arizona Gov. Jan Brewer says that the White House gave her a “snub” by leaving her off the guest list for a meeting about immigration reform. “I wish I would have been invited,” the Republican said Tuesday night on Fox News. “You would have thought one of the governors would have been invited, since we are on the front lines fighting for security there. It was a little bit of a snub, if you will.” More broadly, she said, the meeting illustrated a disconnect between President Barack Obama’s immigration policy goals and the reality on the ground in border states.
• Bobby Jindal Hammers President Obama on Drilling. The people of Louisiana have been “resilient” in responding to the spill, which came on the heels of five tough years following Hurricane Katrina and other storms that hit the Gulf Coast, he said. He encouraged Americans to support the region by buying Gulf Coast seafood and taking trips to the area. “It’s the safest, most delicious seafood you’ll ever find. … If you’re a tourist, visit the coastal areas. They would love your business.” But Jindal’s message wasn’t all boosterism. As he touted his state’s progress, he once again criticized the Obama administration for its moratorium last summer on deepwater drilling. “One of the side effects, one of the things we need to recover from is the administration imposed a one-size-fits-all moratorium after the spill,” he said. “We want drilling to be done safely but we don’t want to lose thousands of jobs down here.”

Reuters:

• China Set to Unearth Shale Power. China has spent tens of billions of dollars buying into energy resources from Africa to Latin America to slake the unquenched thirst for fuel from its growing industry and burgeoning cities. But China may have more energy riches under its own soil than policy makers in the world's second-largest economy ever dared imagine. Just over a year ago, Beijing awakened to a technology revolution that has unlocked massive reserves of gas trapped within shale rock formations in the United States.
• Exclusive: Gaddafi's Libya Dodges Fuel Sanctions Via Tunisia. Muammar Gaddafi's government is circumventing international sanctions to import gasoline to western Libya by using intermediaries who transfer the fuel between ships in Tunisia.
• Rajaratnam Guilt 'Overwhelming' - US Closes at Trial. Raj Rajaratnam wanted to "conquer the stock market at the expense of the law," a U.S. prosecutor said in closing arguments of the hedge fund manager's insider trading trial on Wednesday.

Le Soir:

• Belgian Finance Minister Didier Reynders doesn't support a restructuring of Greece's public debt, citing an interview.

Le Monde:

• The U.S. "lacks a credible plan, in the medium term, to reduce its budget deficit," Olivier Blanchard, chief economist at the IMF said in an interview. "There are reasons to be worried," Blanchard said. European Union governments facing financial problems won't save themselves by budgetary measures alone, he said. "Given that it's impossible for them to devalue because of the common currency - the euro - they must improve productivity considerably or cut salaries, or both," Blanchard said.

Kyodo News:

• Tokyo Electric Power Co. said it's possible that melting has occurred in the core of the No. 1 reactor at the Fukushima Dai-Ichi nuclear plant.

China Business News:

• China's consumer price index will keep "high levels" in the second quarter, citing Zhou Wangjun, a deputy director of the National Development and Reform Commission's pricing department.

Haaretz.com:

• Abbas: Britain and France Would Recognize Palestinian State. In interview to Palestinian daily Al-Ayyam, Palestinian President says PA seeks to fulfill Obama's vision to see a Palestinian state established in September. Palestinian Authority President Mahmoud Abbas reiterated that the Palestinians are ready for statehood, but that the PA does not agree with the Israeli idea of temporary borders. Speaking to the Palestinian daily Al-Ayyam, Abbas also said the PA would fulfill the vision of U.S. President Barack Obama, who said he wanted to see a Palestinian state established in September as determined by the Quartet of Mideast peacemakers.