Today's Headlines

Bloomberg:

• Rajoy Says Spain in 'Extreme Difficulty' as Bond Demand Drops. Prime Minister Mariano Rajoy said Spain’s situation is one of “extreme difficulty” and signaled that his budget cuts are less painful than a bailout would be, as demand for the nation’s debt slumped at an auction. “Spain is facing an economic situation of extreme difficulty, I repeat, of extreme difficulty, and anyone who doesn’t understand that is fooling themselves,” Rajoy told a meeting of his People’s Party today in the southern coastal city of Malaga. Rajoy raised the threat of an international bailout for the second time this week as he sought to defend the deepest austerity moves in at least three decades. While “no one likes” the budget presented last week, he said “the alternative is infinitely worse.”
• Spanish Bonds Slump on Auction as ECB Loans Boost Fades. Spanish notes led losses in European sovereign debt markets after demand fell and borrowing costs rose in the nation’s first auctions since announcing that public debt will surge to a record this year. The yield on Spain’s five-year securities climbed to the highest in 12 weeks amid concern the boost from loans provided under the European Central Bank’s longer-term refinancing operations is waning. Italian, Portuguese and Greek bonds also fell, underperforming benchmark German bunds. The ECB held its main refinancing rate at 1 percent, and President Mario Draghi said downside risks to the economic outlook prevail, including the potential for renewed debt-market tension. “There was a big pop in Spanish yields after the auction results,” said Lyn Graham-Taylor, a fixed-income strategist at Rabobank International in London. “There’s a concern that the benefit to auctions and Spanish yields from the LTROs is beginning to fade because of the consistently weak economic picture. Some banks may be full up with what they want to buy.” Spain’s five-year note yield climbed 26 basis points, or 0.26 percentage point, to 4.52 percent at 4:30 p.m. London time. It reached 4.55 percent, the highest since Jan. 10.
• Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to BNP Paribas SA prices for credit-default swaps. The Markit iTraxx SovX Western Europe Index of swaps on 15 governments climbed six basis points to 271 at 2:15 p.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings rose 22.5 basis points to 632.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings was up 5.25 basis points at 129.75 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 10.5 basis points to 227.5 and the subordinated index jumped 14 to 371.
• European Stocks Fall On Above Average Volume. Volvo AB (VOLVB) tumbled 4.8 percent after ACT Research said North American preliminary truck orders in March were less than expected. Carmakers declined, with Peugeot SA and Renault SA (RNO) dropping at least 4 percent each, after a report showed U.S. sales of light vehicles rose less than forecast. Royal Bank of Scotland Group Plc lost 3.2 percent after people familiar with the matter said the lender canceled a bond sale. The Stoxx Europe 600 Index retreated 2.2 percent to 258.50 at the 4.30 p.m. close in London, the biggest decline in almost a month. The number of shares changing hands on the benchmark index was 29 percent more than the average over 30 days, data compiled by Bloomberg show.
• Service Industries in U.S. Kept Growing in March: Economy. The Institute for Supply Management’s non-manufacturing index fell to 56 from a one-year high of 57.3 in February, the Tempe, Arizona-based group’s data showed today. New orders, business activity and prices all expanded at a slower pace last month.
• Company Payrolls in U.S. Grow by Estimated 209,000 Workers. Employment increased by 209,000 for the month after a revised 230,000 gain in February, figures from ADP Employer Services showed today. The median estimate in the Bloomberg News survey called for a 206,000 increase.
• Fed's Lacker Says Markets Saw Odds of Policy Easing as Too High. Federal Reserve Bank of Richmond President Jeffrey Lacker said financial markets had assigned too high a probability that the Fed would begin a new round of asset purchases to reduce borrowing costs and spur economic growth. “I was surprised a couple months ago at the probability market participants seemed to ascribe to further easing,” Lacker, a voting member of the Federal Open Market Committee (FDTR), told reporters and editors today at the Bloomberg News Washington bureau. “While further easing is obviously something that’s conceivable, I wouldn’t favor it unless conditions deteriorated quite substantially” for growth and inflation.
• GE Capital Swaps Gain After Moody's Cuts Debt Rating Two Levels. The cost to protect debt from General Electric Co.'s finance unit against a default rose to the most in almost a month after Moody's Investors Service cut its credit rating by two steps. Credit default swaps on GE Capital Corp. climbed 10 basis points to 147 basis points, the biggest increase since March 6, as of 9:10 a.m. in New York, according to data provider CMA. "Heightened risk" from the finance unit prompted Moody's to cut GE Capital's rating to A1 and reduce the parent company's grade one level to Aa3, the ratings company said yesterday.
• Oil Declines After U.S. Stockpiles Surge the Most Since 2008. Oil tumbled after the Energy Department said U.S. stockpiles surged the most since 2008 as U.S. crude output climbed to the highest level in 12 years. Futures fell to a six-week low as inventories rose 9.01 million barrels to 362.4 million last week, the most since June. Production gained 2.9 percent to 6.05 million barrels a day. Oil also decreased after the Federal Reserve signaled it may refrain from more monetary stimulus. Crude oil for May delivery fell $2.35, or 2.3 percent, to $101.66 a barrel at 12:26 p.m. on the New York Mercantile Exchange. Futures touched $101.08, the lowest level since Feb. 16. The contract traded at $102.78 a barrel before release of the inventory report at 10:30 a.m. Prices have risen 2.9 percent this year. Brent oil for May settlement dropped $1.83, or 1.5 percent, to $123.03 a barrel on the London-based ICE Futures Europe exchange. U.S. crude output last week was at the highest level since December 1999. Domestic production averaged over four weeks rose 5.2 percent from a year earlier, the department said.
• Gold Falls for Second Day. Gold fell to a 12-week low in New York as the dollar strengthened on signs the Federal Reserve may refrain from providing more stimulus measures. Silver retreated the most in five weeks. Silver futures for May delivery slumped 5.5 percent to $31.45 an ounce on the Comex. A close at that level would make it the biggest drop for a most-active contract since Feb. 29. Silver was the biggest decliner on the Standard & Poor’s GSCI Spot Index of 24 raw materials.
• Atlantic Storm Season to Be Below Average, Forecast Says. A cooler Atlantic Ocean will probably produce 10 named storms in the hurricane season that begins June 1, about half last year’s total, according to researchers at Colorado State University. Of those systems, four will probably become hurricanes with winds of at least 74 miles (119 kilometers) per hour and two may grow into major storms with winds of 111 mph or more, according to the forecast. “What we’re expecting right now is a somewhat below- average hurricane season compared to the 1981 to 2010 average,” said Phil Klotzbach, lead author of the forecast begun at the university 29 years ago by Bill Gray, a pioneer in long-range hurricane predictions.
• Obama Health Remarks Draw Order for U.S. View on Court Power. A federal appeals court hearing a challenge to part of the 2010 health-care law ordered President Barack Obama's administration to give its view on whether the U.S. Supreme Court can strike down laws it considers unconstitutional.
• Best Buy's(BBY) Rating May Be Cut to Junk by S&P. Best Buy Co.’s credit rating may be downgraded to junk, or below investment grade, by Standard & Poor’s as the world’s largest consumer-electronics retailer closes stores to reduce costs. “These actions underscore that its current business model is not working and that the steps taken to date have not been enough to improve performance,” S&P said in a statement.

Wall Street Journal:

• Hedge Funds Go On Attack In India. After years of complaining about poor treatment as minority investors in India's publicly traded companies, some Western hedge funds are turning to activist tactics that have not often been tried here. The recent moves may mark the beginning of a more confrontational period between foreign investors and Indian companies, which tend to be owned by either their founders or the government.
• Copper Falls -2.3%. Copper futures slumped as traders continued to cash out of metals on diminished expectations for Federal Reserve stimulus, while an uptick in Spain's borrowing costs renewed concerns about the health of Europe's financial system. The most actively traded copper contract, for May delivery, was recently down 9.15 cents, or 2.3%, at $3.8275 a pound on the Comex division of the New York Mercantile Exchange.
• Shell Considers Building Gas-to-Diesel Plant in Louisiana. Royal Dutch Shell PLC is considering building a giant plant in Louisiana that would convert natural gas into diesel fuel, several people familiar with the company's plans said. The plant, which could cost more than $10 billion, would be similar in size to Shell's Pearl gas-to-liquids facility in the Mideast nation of Qatar, the people said.
• Romney Says Obama Hides His Agenda. Mitt Romney, fresh off of three momentum-building wins in the race for the Republican presidential nomination, accused President Barack Obama on Wednesday of "rhetorical excess" and of muddling his second-term agenda in order to win election. "He wants us to reelect him so we can find out what he will actually do," Mr. Romney told a gathering of newspaper reporters and editors at a Washington hotel. "With all the challenges the nation faces, this is not the time for President Obama's hide-and-seek campaign."
  

Dow Jones:

• Spanish Debt Insurance Costs Climb After Auction. At around 0900 GMT, Spain's five-year credit default swap was 16 basis points wider at 453 basis points, its widest level since November 28, according to data-provider Markit.

MarketWatch:

• Emerging Markets Suffer a Setback on China Worries. Emerging markets made a sizable retreat in the past month, owing largely to concern over a slowdown in China, but that may hardly dent their prospects as a long-term investment.

CNBC.com:

• Europe's Banks Face Capital Hole Under New Rules. Europe's top banks would have had to raise 242 billion euros ($323 billion) or more to achieve minimum capital ratios if tougher rules that are coming in for the industry had been in force last year.

Business Insider:

• Man Kills Himself In The Middle Of The Main Athens Square And This Was His Suicide Note.
• The NSA's General Didn't Lie To Congress About Spying On Americans — They Hire It Out To The Israelis.
• You Have To See This Gorgeous Concept Design Of Google's Top-Secret 'Terminator' Glasses.
• Israel Says The Sanctions Against Iran Absolutely Are Not Working.
• An Impossible 57% of Spain's Budget Is Devoted To Pensions, Unemployment Benefits and Interest.
• It Turns Out Warren Buffett Is A Master Of Avoiding Taxes.
  

Zero Hedge:

• Art Cashin On The End of the "LTRO Effect".
  
• NYSE Margin Debt At Highest Since July. (graph)
• High-Yield Credit Fundamentals Starting to Crack.
• A Thought Experiment: Why Not Just Print, Print, Print and Then Print Some More?
  

New York Times:

• Regulators Penalize JPMorgan(JPM) Over Lehman Ties. When Lehman Brothers collapsed at the height of the financial crisis, JPMorgan Chase was at the center of the storm. The bank was a major lender to the firm, which filed the biggest bankruptcy in United States history. Now, more than three years later, regulators have penalized JPMorgan for actions tied to Lehman’s demise. The Commodity Futures Trading Commission filed a civil case against JPMorgan on Wednesday, the first federal enforcement case to stem from Lehman’s downfall. The bank settled the Lehman matter and agreed to pay a fine of approximately $20 million.

Reuters:

• Israel To Make Do With Fewer Iron Dome Interceptors. Israel is expanding the reach of its Iron Dome rocket interceptors to make do with fewer given the prospect of reduced financial support from a cash-strapped United States, a senior Israeli official said on Wednesday.
• Italy's Monti Makes Concession on Labour Reform. Italian Prime Minister Mario Monti made concessions to unions and a major centre-left party on Wednesday in a bid to ensure swift approval in parliament of labour reforms that would make it easier to fire workers. Monti and Labour Minister Elsa Fornero said the revised proposals would allow courts to order the reinstatement of workers laid off for business reasons where the justification was "manifestly non-existent".

Telegraph:

• Debt Crisis: Live.