Today's Headlines

Bloomberg:

• Spanish Bonds Fall Even as Rajoy Unveils More Budget Cuts. Spain’s efforts to calm investors with 10 billion euros ($13 billion) of budget cuts in education and health failed to stem concerns the nation may be the fourth euro member to need a bailout. The yield on Spain’s 10-year benchmark bond surged 20 basis points to 5.95 percent today as Economy Minister Luis de Guindos declined to rule out a rescue for Spain and Bank of Spain Governor Miguel Angel Fernandez Ordonez said the nation’s lenders may need additional capital if the economy weakens more than expected. Prime Minister Mariano Rajoy yesterday unexpectedly announced the 10 billion-euro package, less than two weeks after unveiling the most austere budget in more than three decades. Rajoy is targeting basic public services for the first time since his election in December in a bid to convince investors he can bring order to the nation’s finances. “There are growing fears that the Spanish economy is caught in a pernicious circle,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in an e- mailed response to questions. “The weakness of government finances, the fragility of banks and worries about the scale of the recession all feed on each other.”
• Monti's Overhaul of Italy Can't Stop Pain From Spain. Prime Minister Mario Monti’s efforts to overhaul the economy and protect Italy from the region’s debt crisis may be overwhelmed by Spain’s deepening fiscal woes and the fading effect of European Central Bank three-year lending.
• European Stocks Retreat After U.S. Jobs Report Trails Estimates. European stocks tumbled to a two- month low amid mounting concern about the region’s debt crisis and as a U.S. report showed employers in the world’s largest economy added fewer jobs in March than forecast. UniCredit SpA (UCG), Intesa Sanpaolo SpA and Banca Popolare Di Milano Scarl (PMI) dropped more than 6.5 percent. Banco Santander SA (SAN) declined as Spanish bond yields rose and the country’s government increased its efforts to bring the country’s deficit under control. Vedanta Resources Plc (VED) led a retreat in mining companies as copper fell in London and the metal producer reported lower iron-ore sales. The Stoxx Europe 600 Index dropped 2.5 percent to 252.57 at the close in London, its lowest since Jan. 30. European markets were closed yesterday for the Easter Monday holiday. The volume of shares changing hands in the gauge’s companies was 7.6 percent higher today than the average of the last 30 days. “Last week’s poor jobs report raises doubts about the strength of the U.S. expansion,” Dan Morris, a global strategist at JPMorgan Asset Management in London, wrote in a report to clients. “There are some uncomfortable parallels between the current macroeconomic environment and that of July last year when equity markets began their precipitous fall. Investors are worried again about the euro-zone crisis.”
• French Business Confidence Stalls, Factory Output Drops: Economy. French business confidence stagnated and factory output dropped, underlining the challenge the victor in the country’s presidential election will face in reviving economic growth. A gauge of sentiment among factory executives was unchanged at 95 in March after dropping in February, the Bank of France said today. Manufacturing production fell 1.2 percent in February, a third month of declines, the national statistics office, Insee, said in Paris.
• Corporate Bond Risk Rises in Europe on Renewed Recovery Concerns. The cost of insuring against default on European corporate debt rose on concern that a slowdown in U.S. job creation is hampering the global recovery. The Markit iTraxx Crossover Index of credit-default swaps on 50 companies with mostly high-yield credit ratings climbed 27 basis points to 667 at 10 a.m. in London, the highest since Jan. 19, according to BNP Paribas SA. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 7 basis points to 139.5. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 11.5 basis points to 247.5 and the subordinated index climbed 17 to 398. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments jumped 5.5 basis points to 276.5.
• VIX Rises a Record Eighth Day as Europe Concerns Increase. The Chicago Board Options Exchange Volatility Index (VIX) advanced for a record eighth day as surging Spanish and Italian bond yields intensified concern about the European debt crisis. The gauge known as the VIX, which measures the cost of Standard & Poor’s 500 Index options, rose 9 percent to 20.51 at 1:10 p.m. New York time today. The VIX, which tumbled as much as 70 percent since reaching a 29-month high on Aug. 8, advanced 22 percent in the seven trading sessions before today.
• Best Buy's(BBY) Dunn Resigns as CEO; Mikan to Serve in Interim. Best Buy Co. (BBY) said Chief Executive Officer Brian Dunn resigned and board member G. Mike Mikan is taking the position on an interim basis as the company focuses on smaller stores and Internet sales.
• Shadow Banks on Trial as China’s Rich Sister Faces Death. Operating outside the banking system or government regulation, the informal networks provide an important source of economic growth, capital for private companies and return for investors seeking to beat inflation. Premier Wen Jiabao, in an unusual move, weighed in on the case at a March 14 news conference. His comments highlighted a public debate over the importance of shadow banking to the Chinese economy, government efforts to bring it under control -- and whether capital punishment is an effective means to do so. “Chinese companies, especially small ones, need access to funds,” Wen said when asked about Wu’s case. “Banks have yet to be able to meet those companies’ needs, and there is a massive amount of idle private capital. We need to bring private finance out into the open.”

Wall Street Journal:

• IMF Poised to Lower View on China's Trade. The International Monetary Fund is poised to sharply reduce its long-term forecast of China's current-account surplus, the broadest measure of a nation's trade, which would strengthen Beijing's defense against the U.S. argument that the Chinese currency is "substantially undervalued." Several individuals informed of the debate said the IMF would significantly lower its long-term current account surplus in the update of its flagship publication, the World Economic Outlook, to be released April 17, from the forecast of more than 7% of gross domestic product in the September WEO.
• Santorum Suspends Presidential Campaign. Rick Santorum abruptly suspended his White House campaign Tuesday, clearing the way for front-runner Mitt Romney to claim the Republican presidential nomination.

Barron's:

• Sony(SNE) Drops 8%: Deeper FY12 Loss Seen On Tax Adjustment. Shares of Sony (SNE) are down $1.58, almost 8%, at $18.53 after the company this morning warned its fiscal year ended in March will come in lower than expected because of a ¥300 billion non-cash charge to reflect the adjustment of certain assets. The expected net loss of ¥520 billion, or U.S. $6.4 billion, is worse than the ¥220 billion the company had forecast on February 2nd, and worse than the $2.7 billion loss the Street has been expecting.

Dow Jones:

• Small Business Confidence Retreats In March - NFIB. Small U.S. business owners became slightly less confident in March, data released Tuesday showed, as rising prices and slowing sales curbed six months of budding optimism about the economy. The National Federation of Independent Business's small-business optimism index fell to 92.5 from 94.3 in February. March's reading ended what had been six consecutive months of increases. "What could have been a trend in job growth is more likely a blip," said NFIB Chief Economist Bill Dunkelberg, who authored the report. "The mood of owners is subdued--they just can't seem to shake off the uncertainties out there," he said. Businesses surveyed by the NFIB cited building inflation pressures as "the number one business problem," with worker compensation costs rising to their highest level since 2008. A net 21% of the respondents expect to raise their prices in the coming months, NFIB said. A positive trend in profits that had materialized in earlier months appeared to " fizzle." According to the report, only one of the index's 10 subcomponents rose during March. The subindex of expected business conditions in the next six months fell 2 percentage points to -8% last month, coinciding with a downturn in earnings trends, which fell four points to -23%. The sole index that showed positive growth was the "inventories too low" subcomponent, which only advanced by one point, to 3%.

Business Insider:

• It Begins: The First Casualty of China's Real Estate Crash.
• Charts: Why Obamacare Adds Hundreds Of Billions To The Deficit.
• Goldman(GS) Says The Worst of the Good Weather 'Payback' Hasn't Even Happened Yet.
• The US Army is Stocking Up On a Ton of Anti-Radiation Pills To Protect Troops.
• JPMorgan(JPM): One of These 15 Companies Could Be The Next Apple(AAPL).
  

Zero Hedge:

• Carnage Ala Milanese: Italian Stock Bloodbath.
• Muddy Waters Is Back, Alleging Fushi Copperworld(FSIN) Representing High Risk Of Fraud.
  

InvestmentWeek:

• German Bonds Yielding Less Than Japan For First Time. Yields on tranches of German debt fell below the amount paid by Japan for the first time ever mid-afternoon, as investors considered the likelihood of another round of stimulus in Europe. As Spanish bond yields rose ever nearer to 6%, and the country's equity market hit a 3-year low, investors were seen buying up German debt, driving down yields to new lows. The payout on 2-year bunds fell to 0.109%, below that of even Japan which yields 0.111% on its 2-year note. It is the first time since Bloomberg began collating data in 1990 that it has yielded less than Japan. The record low came as Spanish rates soared, with the yield on the country's 10-year debt hitting 5.972%, the highest level since mid-December. Investors are spooked by what is being seen as a worsening of the debt crisis, and are now betting intervention from the European Central Bank will not be enough to tackle the problems seen in peripheral Europe.

US News:

• How 'Shadow Inventory' Hurts the Housing Market. A shadow inventory explosion? Roger Staiger, an adjunct faculty member of the John Hopkins Carey Business School, warns that the numbers cited by the National Association of Realtors are too low. He believes the shadow inventory is going to get much, much bigger. "I'm predicting another 2 million homes to be foreclosed," says Staiger. "I would say there are about 3 million homes close to foreclosure or in distress, meaning owners are 90 days delinquent on payments."

Reuters:

• China Removes Bo Xilai From Elite Central Committee - Sources. China's Communist Party has decided to expel former leadership contender Bo Xilai from the elite Central Committee, sources said on Tuesday, citing a decision likely to disclose details of a scandal that has shaken a looming leadership succession.
• China Says Bo Xilai's Wife Suspected of Murder - Xinhua. The wife of the former high-flying Communist Party chief of China's Chongqing city is suspected in the murder of British national Neil Heywood, Chinese state media reported on Tuesday.
• Copper Near 3-Month Low; Nerves Fray on Growth Worries. China March copper imports fell 4.6 pct on month. The data showed that the use of copper for financing purposes by traders in China's cash-strapped market was still popular, although suggested that weak end-use demand may be feeding through to imports, analysts said, keeping a lid on prices.
• Commodity Exporters Should Brace For Lower Prices: IMF. The IMF said some commodity-exporting nations should save their windfalls from current higher prices to protect their economies in the event of a price downswing. Other exporting countries should use commodities profits to reduce their debt, the IMF said in analytical chapters of its World Economic Outlook report. Commodity-exporting countries should prepare for lower prices given weaker global economic activity and lower demand, the International Monetary Fund said on Tuesday. "Given weak global activity and heightened downside risks to the near-term outlook, commodity exporters may be in for a downturn," the IMF said. "If downside risks to global economic growth materialize, there could be even greater challenges facing commodity exporters, most of which are emerging and developing economies," the IMF said.
• CEOs Worried Fed Setting 'Inflationary Fire' - Fisher. Chiefs of U.S. companies big and small are worried the Federal Reserve's bond-buying programs could lead to uncontrolled inflation, a top Fed official known for his opposition to further monetary stimulus said on Tuesday. "To a person that I speak to, I am pleaded with, 'please no more liquidity'," Dallas Federal Reserve Bank President Richard Fisher told students at the University of Oklahoma's Price College of Business. There is "real concern that with our expanded balance sheet that we are just a little bit of an ember in what could become an inflationary fire."
• US Gasoline Prices Rise, Demand Drops - MasterCard. U.S. gasoline demand fell once again last week, down 0.8 percent from the previous week, as prices rose to just under $4 a gallon, MasterCard said in its weekly Spending Pulse report on Tuesday. Gasoline demand in the week to April 6, which covered the Easter and Passover holiday weekend, fell 2.4 percent compared with the same week last year, MasterCard said. A gallon of gasoline cost $3.94 at the pump last week , 2 cents higher than the previous week. This was 5.9 percent more expensive than a year earlier. MasterCard data also showed the four-week moving average for demand dropped for the 55th straight week, down 4.7 percent from a year earlier.

Financial Times:

• Eurotrashing, Again. Risk is ‘off’ again, clearly. At this point we should default to Bob Janjuah, the Nomura bear who has just published a fresh take on central bank bubble blowing. A taste:
• JPMorgan's(JPM) Giant Unwitting Catalyst Trade.
  

Open Europe:

• Spanish Banks May Be Forced to Seek Eurozone Bailout. The increasing exposure of its banks to potentially toxic loans, the difficulty in curbing Spanish regions' spending and the risk of reforms not taking effect quickly enough, all raise serious questions as to whether the Spanish economy will make it through without some sort of external help.
  

Finanz und Wirtschaft:

• China's real estate market may already be a burst bubble, citing an interview with James Chanos, founder of Kynikos Associates Ltd. If the Chinese government slows the building boom, it's not clear what will fill the gap to support the economy, Chanos said.
  

Expansion:

• Deputy Budget Minister Miguel Ferre said Spain will have to consider increasing sales tax should an amnesty for tax-evaders fail to raise sufficient revenue. "Spain is in an emergency situation," citing Ferre.