- Spain Joins France to Seek $18 Billion in Bonds. Spain and France plan to raise as much as 13.5 billion euros ($17.6 billion) in debt today as Prime Minister Mariano Rajoy’s struggles to meet deficit targets and the French presidential elections drive up yields. Spain is issuing as much as 2.5 billion euros in two- and 10-year bonds, while France has set a maximum target of 11 billion euros for securities including 2017 notes and 2018 inflation-linked debt. Scrutiny of both countries is increasing amid the fading effect of the European Central Bank’s longer-term refinancing operation, which injected about 1 trillion euros of liquidity into the region’s financial system. The yield on Spain’s benchmark 10-year bond has jumped about 1 percentage point since the beginning of March to above 6 percent, while the yield on the equivalent French security has gained about 10 basis points with Socialist Francois Hollande leading in election polls. “It’s a difficult time for both countries to sell bonds,” said Marc Chandler, head of global currency strategy at Brown Brothers Harriman & Co. in New York. “The first quarter was really about the absorption of the LTROs. The second quarter is going to be more about politics.”
- Unemployment From Italy to Spain Fuels Debt Crisis: Euro Credit. Surging unemployment rates from Spain to Italy and Greece are threatening efforts to quell the region's debt crisis and keeping bond yields close to record premiums relative to benchmark German bunds. Joblessness is soaring as European nations reduce spending and hike taxes, igniting strikes and protests from Athens to Madrid. Unemployment in Spain surged to almost 24%, pushed the euro-region level to 10.8% in February, the highest in more than 14 years. Italy's rate is at 9.3%, the most since 2001, hampering efforts to spur economic growth. Deepening recessions in Italy and Spain contributed to a five-week slide in Italian and Spanish bonds as the shrinking tax base helped lead to both countries raising their deficit targets. "The higher the jobless rate, the more that has to be spent on benefits, creating the potential for a negative spiral," said Christian Schulz, an economist at Berenberg Bank in London and a former ECB official.
- To Thrive, Euro Countries Must Cut Welfare State. Most criticism of government profligacy in Europe lately has focused on the obvious sinners, such as Greece, which already had massive public debts and deficits when the global financial crisis struck almost four years ago. When it comes to overspending on social welfare, though, Europe has no angels. Even the “good” Scandinavians, and governments that appeared to be in sound fiscal shape in 2008, but were then undone by unsustainable private-sector debts, were spending too much and will have to restructure. The only question is whether this will be done gradually, or via shock therapy.
- BlackRock(BLK) May Shift Business From Banks If Moody's Downgrades. BlackRock Inc., the world's biggest asset manager, may be forced to reduce business with some banks if their credit ratings are downgraded by Moody's Investors Service. BlackRock is required to comply with clients' portfolio mandates, which may govern the credit rating a counterparty must have for specific holdings, said Bobbie Collins, a spokeswoman for the New York-based firm. Potential downgrades may prompt a shift away from them, Collins said. Moody's Investors Service is reviewing 17 banks and securities firms with global capital markets operations, including Morgan Stanley(MS) and UBS AG(UBS), which could have their ratings cut to the lowest level ever.
- Law School Student Debt Exceeds $100,000 Amid Poor Jobs Outlook. Law school graduates are leaving college with an average of $100,433 in debt at a time when new lawyers outnumber legal jobs, according to a survey from U.S. News & World Report.
- Europe's Rescue Plan Falters. Europe's bold program to defuse its financial crisis by injecting cash into the banking system is running out of steam. The European Central Bank's roughly €1 trillion ($1.31 trillion) of emergency loans caused interest rates of troubled euro-zone countries to plummet earlier this year, easing fears about Europe's debt crisis. But lately rates have again been marching higher. One big reason: After months of using that cash to buy their government's debt, banks in Spain and Italy have little left, say analysts and other experts.
- Egypt Candidate Warns on Islamists. As Race Takes Shape, Former Foreign Minister Says a Muslim Brotherhood Presidential Victory Could Imperil Democracy.
- George Clooney to Host Obama Fundraiser. As measured by money, power, glamour and celebrity, George Clooney’s dinner party on May 10th in Los Angeles is shaping up to be the party of the year. The guest of honor is President Barack Obama. Barbra Streisand won’t sing, but she’ll be mingling in the crowd. Jeffrey Katzenberg and other major Hollywood executives are expected to attend. And at the end of the evening, Mr. Obama’s supporters hope the campaign will walk away with several million dollars. Organizers predicted the event will turn out to be Mr. Obama’s most lucrative fundraiser yet.
- Small-Firm Loans Lagged in the U.S. Lending to small and medium-size businesses after the recession recovered more slowly in the U.S. than in other countries such as Canada, France and Italy, according to a report expected to be released Thursday by the Organization for Economic Cooperation and Development. The Paris-based OECD examined small-business lending across 17 countries from 2007 to 2010.
- Anji Capital Bets the Euro Will Tumble to 1.03 Swiss Francs. A newly formed New York hedge fund is betting the the Swiss National Bank’s efforts to protect the Swiss franc from gaining against the euro will fail. Anji Capital Management and its chief investment officer, Kevin Chen, expects the euro to fall 14% versus the franc before the end of the year.
- Tumi IPO Prices At $18 A Share, Above Expected Range. Tumi Holdings Inc. said its initial public offering of about 18.8 million shares priced at $18 a share, above its expected range of $15 to $17.
- India Launches Long-Range Missile. India test launched a new nuclear-capable missile Thursday that would give it, for the first time, the capability of striking the major Chinese cities of Beijing and Shanghai, according to television news channels. The government has hailed the Agni-V missile, with a range of 5,000 kilometers, or 3,100 miles, as a major boost to its efforts to counter China's regional dominance and become an Asian power in its own right.
- Henninger: It's 1936 All Over Again. The Obama 2012 campaign is channeling the ghost of Franklin D. Roosevelt in the Depression.
- French Election Stirs Fears of Euro-Zone Turmoil. In the end, the onus will be on the victor to convince markets he can cut France’s debt load, even as renewed sovereign-debt turmoil threatens to force the French government to pony up more money for Europe’s rescue fund, along with potential bailout funds for French banks, warned economists at Nomura. “Therefore, we expect a lot of fiscal tightening after the election,” they wrote. “And that is regardless of who wins.”
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- BOMBSHELL: Colombian Prostitutes Had Contact With 'Sensitive Security' Information.
- This is the Number You Need to be Watching in Spain.
- The 25 Hottest Small Companies In America.
- Qualcomm(QCOM) Earnings Beat but Shares Fall on Guidance. Qualcomm delivered quarterly results that beat Wall Street's expectations on guidance that trailed expectations.
- Sanctions Not Impacting Iranian Oil: Report.
- Volcker Rule Gets Murky Treatment. The path to gaming the Volcker Rule has always been clear: Banks will shut down anything with the word “proprietary” on the door and simply move the activities down the hall. To look as if they were ready to comply with the Volcker Rule, the part of the Dodd-Frank Act that aims to prevent banks from gambling on their own account with money that taxpayers insure, financial firms quickly spun off or shut down their hedge funds, private equity firms and proprietary trading desks. But the suspicious-minded among us wonder whether it was all that simple.
- European Rescue Fund May Face Biggest Test Yet. The euro zone’s rescue fund has already helped mount full-scale bailouts of three of Europe’s smaller economies. But concern over the health of Spain’s financial institutions — laid low by a festering home-mortgage crisis — has fueled speculation that, for the first time, the bailout fund might be needed to help recapitalize the banks of a big country.
- Moms: 'I can't afford to work'. After factoring in the rising cost of child care, the daily commute and other work-related expenses, a growing number of mothers are figuring out that having a job just doesn't pay. "It comes down to a cost analysis and I have several clients that have taken the route of quitting," said Anna Behnam, a financial advisor at Ameriprise Financial in Rockville, Md. "Factor in taxes, transportation costs, clothing and lunch -- what is the true net that you bring home after salary?"
- Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).
- EBay(EBAY) Quarterly Results Top Expectations. EBay Inc said quarterly sales and profit grew more than expected and raised its 2012 forecasts, citing growth in the e-commerce company's Marketplaces and PayPal businesses. Ebay's stock rose 6.9 percent to $38.35 in extended trading, after hitting $38.83 - the highest level since late 2007.
- F5 Networks(FFIV) 2nd-Qtr Beats, Co Reaffirms FY Revenue Target. F5 Networks Inc posted second-quarter results above market expectations and forecast a muted third quarter, leading to a fall in shares, but the stock recovered after the company reaffirmed its full-year growth target. The network gear maker's shares, which fell 4 percent immediately after F5 announced its results, reversed course after the company allayed fears of a slow down in its business.
- Yum(YUM) China Disappoints as Chinese Growth Cools.
- Stanley Black & Decker(SWK) 1st-qtr profit misses Street estimates. Stanley Black & Decker Inc posted a quarterly profit that missed market expectations, sending its shares down 4 percent in extended trade, as the toolmaker was hit by a rise in costs.
- Brazil Cuts Rate, Surprises With Dovish Tone. Brazil has been flirting with recession since the second half of last year, and President Dilma Rousseff has expressed hopes that lower rates will help spur spending and spark a return to the high growth rates that made the country one of the world's most dynamic economies.
- Spain Eyes Retaliation for YPF Seizure. Britain and Mexico came out with unequivocal support for Spain’s position soon after the renationalisation. The US – which had been criticised by Mr Soria on Spanish state television for its “unenthusiastic” reaction to the expropriation of Argentina’s largest oil group – on Wednesday sharpened its rhetoric over the move, saying it was “very concerned” about it.
- Dozens Under Arrest in China in Connection with Bo Xilai Scandal. China has detained dozens people with connections to Bo Xilai, it was claimed as the Communist party pledged to "thoroughly investigate" the politician and his wife's alleged role in the death of British businessman Neil Heywood.
- This Crisis Cannot Be Resolved While Monetary Union Remains. "One has the feeling that at any moment, things could get very bad again.” With these words, Olivier Blanchard, the International Monetary Fund’s chief economist, has set the tone for this year’s spring meeting of the IMF.
- Fitch doubts Dutch AAA as property slump reaches 'coma'. Fitch Ratings has issued the clearest warning to date that Holland faces losing its AAA rating if it fails to deliver austerity cuts or lets political conflict intrude on economic management.
- Bo Xilai's Wife Dying From Bone Cancer. The wife of disgraced former Chongqing chief Bo Xilai is suffering from bone cancer and has only a short time to live. According to a source in Beijing, that may explain the sudden change in the character of Gu Kailai, 53, who is accused of murdering British businessman Neil Heywood.
- None of note
- Asian equity indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 166.50 +5.0 basis points.
- Asia Pacific Sovereign CDS Index 134.0 -1.0 basis point.
- FTSE-100 futures +.19%.
- S&P 500 futures +.17%.
- NASDAQ 100 futures +.42%.
Earnings of Note
8:30 am EST
- Initial Jobless Claims are estimated to fall to 370K versus 380K the prior week.
- Continuing Claims are estimated to rise to 3300K versus 3251K prior.
10:00 am EST
- Philly Fed for April is estimated to fall to 12.0 versus a reading of 12.5 in March.
- Existing Home Sales for March are estimated to rise to 4.62M versus 4.59M in February.
- Leading Indicators for March are estimated to rise +.2% versus a +.7% gain in February.
- None of note
Other Potential Market Movers
- The weekly EIA natural gas inventory report, Bloomberg Economic Expectations Index for April, weekly Bloomberg Consumer Comfort Index and the 5Y TIPS auction could also impact trading today.