Today's Headlines

Bloomberg:

• ADP: U.S. Added Fewer Workers in May. Companies in the U.S. added fewer workers than forecast in May, a sign that job growth is struggling to gain momentum, data from a private report based on payrolls showed today. Employment increased by 38,000 last month, the smallest increase since September, from a revised 177,000 in April, according to figures from ADP Employer Services. The median estimate in the Bloomberg News survey called for a 175,000 advance for May. Such gains in employment are insufficient to help the world’s largest economy accelerate after a surge in food and fuel costs earlier this year.
  
• Factory Growth Slows in Europe, US. Manufacturing growth from China to the euro region and the U.S. slowed in May, adding to signs that momentum is weakening in a global economy facing headwinds from rising commodity costs and regional shocks. A purchasing managers’ index for China showed the slowest pace of expansion in nine months, while the equivalent measure for the euro area fell to a seven-month low. The U.S. gauge of factory growth was at its weakest in a year, Russia’s index signaled “near stagnation,” and reports from Poland to Hungary also showed a loss of manufacturing momentum. The synchronized drop in global factory indicators is adding to evidence that the world’s economy is struggling to withstand the combination of rising oil prices, the aftermath of Japan’s earthquake and Europe’s sovereign-debt crisis.
• Job Cuts Announced in U.S. in May Fell 4.3% From Year Ago, Challenger Says. Employers in the U.S. announced fewer job cuts in May than a year earlier, signaling the labor market is improving. Planned firings dropped 4.3 percent to 37,135 last month from May 2010, according to figures released today by Chicago- based Challenger, Gray & Christmas Inc. Government and nonprofit agencies had the most cutbacks. Announced job reductions in the first five months of 2011 were down 21 percent from the year-earlier period, consistent with other data that indicate the economic expansion is prompting companies to retain staff.
• EU May Sweeten Greek Debt Extension. European officials preparing Greece’s second bailout in two years may offer bondholders incentives to roll over maturing debt without triggering a credit-rating downgrade that would roil Europe’s banking system, two people with knowledge of the talks said. Investors may be given preferred status, higher coupon payments or collateral as inducements to buy bonds replacing Greek debt maturing between 2012 and 2014, said the people, who declined to be identified because the talks are in progress.
• QE3 Would Be 'Excessively Bearish': Belski. Stocks would suffer after an initial jump should the Federal Reserve decide to extend economic stimulus beyond the June expiration of its current quantitative easing program, Oppenheimer & Co.’s Brian Belski said. “We become excessively bearish if the Fed goes to QE3,” Belski said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “We do not want to see QE3,” the New York-based chief investment strategist said.
• Analyst: Goldman(GS) 'Too Big' to Face Prosecution. Goldman Sachs Group Inc. (GS) won’t face criminal prosecution related to sales of mortgage-linked securities because such a move could threaten the U.S. financial system, according to Brad Hintz, an analyst at Sanford C. Bernstein & Co. The U.S. Department of Justice, which is reviewing a Senate subcommittee report that alleged Goldman Sachs misled clients before the financial crisis, will avoid jeopardizing the fifth- largest U.S. bank by assets because it’s viewed as “too big to fail,” Hintz wrote in note to clients today. “If an alleged violation is identified during a Goldman investigation, we expect a reasoned response from the Justice Department,” Hintz wrote. “In a worst case environment, we would expect a ‘too big to fail’ bank such as Goldman to be offered a deferred-prosecution agreement, pay a significant fine and submit to a federal monitor in lieu of a criminal charge.”
• Twitter Use Climbs to 13% of U.S. Adults Online. Twitter Inc., the social-networking site that lets people share 140-character messages, is now used by 13 percent of U.S. adults online, up from 8 percent in November, as more older Americans embrace the service. Among Twitter users who own cell phones, 54 percent have used the mobile devices to access the social-media service, according to a report today by the Pew Research Center. Additionally, Twitter use has more than doubled since late 2010 among people ages 25 to 34, to 19 percent from 9 percent, and increased among adults ages 35 to 44, to 14 percent from 8 percent. Usage for those ages 55 to 64 doubled to 8 percent.
• GM(GM), Ford(F) Sales Fall as Higher Gas Prices Hit Buyers. General Motors Co. (GM) and Ford Motor Co. (F) reported U.S. sales in May that fell from a year earlier and trailed analysts’ estimates as higher gasoline prices and smaller discount offers deterred purchases. GM deliveries dropped 1.2 percent to 221,192 vehicles, the Detroit-based automaker said today in a statement. The average estimate of three analysts was for a 1.5 percent increase. Ford light-vehicle deliveries fell 2.6 percent to 191,529, compared with five analysts’ average estimate for a 0.5 percent decline. Nissan Motor Co.’s U.S. sales also trailed analysts’ estimates. Gasoline that has exceeded $3.50 a gallon since early March led some buyers to defer purchases, and the industry reduced sales incentives in May, said Don Johnson, GM’s vice president of U.S. sales.

Wall Street Journal:

• Schwab's(SCHW) Bold Bet on ETFs. Jim McCool, Charles Schwab Corp.'s executive vice president of institutional business, made waves at an asset-management conference in March when he announced that the brokerage firm soon would offer 401(k) retirement plans stuffed solely with exchange-traded mutual funds—and let investors trade them without charge. "You could tell the rest of the room was nervous about it," says Mike Alfred, co-founder and chief executive of BrightScope Inc., an independent rater of 401(k) plans, who heard the comments. "The idea is disruptive."
• Europe's Stress Tests to Be Delayed. The results of Europe's latest round of bank "stress tests" will be delayed until July thanks to haggling between European regulators, the banks and their national supervisors over whether the banks submitted overly optimistic data, according to people familiar with the matter. The European Banking Authority had planned to release the test results later this month.
• UnitedHealth CEO: Assessing Options On Medco Relationship. UnitedHealth Group Inc. (UNH), one of the largest U.S. health insurers, is weighing the future of its relationship with Medco Health Solutions Inc. (MHS) and whether to bring in-house some of the drug-benefit business that Medco handles for its health-plan members.
• GOP: Obama Rebuffs Call for Deficit Plan. Republican leaders said they told President Barack Obama at a White House meeting Wednesday that he needs to offer up a detailed plan to reduce the federal budget deficit, a call they said Obama rejected.
  

CNBC.com:

• LightSquared Near $2 Billion a Year Sprint Deal. Sprint Nextel Corp is close to completing a $2 billion-a-year network sharing agreement with hedge fund billionaire Phil Falcone's LightSquared telecommunications venture, sources familiar with the matter said on Wednesday.
• El-Erian: Why Fed Is Unlikely to Have Third Round of Easing.
  

Business Insider:

• NYT Publishes Huge Goldman(GS) Story, And Everyone is Obsessed With Mystery Laptop That Broke It Wide Open.
• Nobel Prize Winner Explains How America's Economy Is Becoming... EUROPEAN! Nobel Prize winning economist Robert Lucas believes the U.S. is struggling to grow with any strength because we've chosen a path of European style reforms (via the FT). Lucas believes that leaders at the Fed made the correct decision when confronting the recession head on, providing liquidity to the market and preventing the sequel to the Great Depression. But he believes that since then, we've strayed, and are now looking at slower than pre-recession growth rates. The reason: fiscal policy that threatens higher taxes on the rich, and promises higher spending on programs like healthcare. Essentially, Lucas says we're turning into Europe, and should expect similar weak growth rates as a result.
• The ENTIRE Global Economy In One Gigantic Chart.
  
• 5 Warning Signs That A Chinese Stock May Be A Fraud.
  

Zero Hedge:

• John Taylor Says Fed Funds Rate Should Be 1.0%, Sees No Rationale for Further QE.

Rasmussen Reports:

• 26% Say U.S. Heading in Right Direction. That's down three points from 29%, the finding for the previous three weeks.

Reuters:

• EIB Halts Glencore Lending on Governance Concerns. The European Investment Bank has frozen all new loans to commodities trader Glencore and its subsidiaries, it said in a statement on Wednesday, citing "serious concerns" over the group's corporate governance.

Sina.com:

• China will investigate local-government debt in the June-to-September quarter, and isn't yet ready to start restructuring action, citing Wu Xiaoling, vice director of the National People's Congress finance and economy committee. The government can't complete the program in three months time Wu said. She was responding to a Reuters report yesterday that China will shift as much as $463 billion of debt off local governments by September.

International Oil Daily:

• Saudi Arabia is preparing to raise oil output by 500,000 barrels a day this month, citing industry sources. The country's production would reach about 9.5 million barrels a day in June.