Today's Headlines

Bloomberg:

• Europe's Anti-Austerity Calls Mount as Elections Near. A recession in Spain and forecasts of rising unemployment in the 17-nation euro area are amplifying criticism of the German-led austerity agenda in election campaigns this week in France and Greece. With Spain’s largest unions leading marches involving thousands of protesters in 55 cities yesterday, Prime Minister Mariano Rajoy’s government battled to prevent Spain from becoming the next country to seek a bailout. In France, where the presidential-election runoff is set for May 6, Socialist frontrunner Francois Hollande pushed back against German Chancellor Angela Merkel’s focus on deficit reduction.
• Italy Faces 20 Billion-Euro Gap, Tremonti Tells Corriere. Italy may post an unexpected budget gap of as much as 20 billion euros ($26.5 billion) by mid-year due to the government’s austerity measures, former Finance Minister Giulio Tremonti told Corriere della Sera. The implementation of a new property tax and changes to the pension system passed in December will require extra financial resources, Corriere cited Tremonti as saying. The shortfall will also include as much as 8 billion euros to fund other programs such as Italy’s international peacekeeping missions, Tremonti said, according to the Milan-based newspaper.
• European Stocks Fall as Spain Contracts; AB InBev Sinks. European stocks fell for the first time in five days, extending the biggest monthly drop since September, as Spain entered a recession and U.S. business activity expanded at the slowest pace since November 2009.
• Banks in EU May Face 3% Capital Surcharges Under Basel Agreement. Bank regulators in the European Union may win powers to impose capital surcharges of as much as 3 percent on lenders’ activities at home and abroad as part of a compromise plan for applying Basel rules.
• Fed Chief Says Worst Not Over in Europe, Handelsblatt Reports. John Williams, the president of the Federal Reserve Bank of San Francisco, said he’s “very worried” about the risk of a worsening debt situation in Europe and the “worst is not yet over,” Handelsblatt reported. It’s difficult for troubled European countries to return to normal economic performance when the business situation is weak and too many countries save money at the same time, Williams said in an interview with the German newspaper. That makes it more difficult to fight budget deficits and debt and European countries must find the “right balance” between austerity and growth, Handelsblatt cited Williams as saying. The U.S. economy is likely to grow 2.5 percent this year and there’s currently no need for new monetary measures, Williams told the newspaper.
• 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. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments added 1.5 basis points to 275.5 at 3 p.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbed 5.5 basis points to 650.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 2.5 basis points to 140.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers was 0.5 basis point higher at 242.5 and the subordinated index increased one to 401.
• IMF Ready to Lend Egypt $3.2 Billion at 1% Interest, Ahram Says. The International Monetary Fund is prepared to lend Egypt $3.2 billion at a reduced interest rate of 1 percent, the Muslim Brotherhood’s now disqualified presidential candidate said, the state-run al-Ahram reported. Khairat el-Shater, the Brotherhood’s chief strategist who was knocked out of the May race on electoral-law technicalities, said the offer came when IMF officials met with his group during a visit to Egypt earlier this month. He also said the U.S. deputy secretary of state had agreed to back Islamic bonds issued by Egypt abroad, the newspaper reported.
• Manufacturing Cools Even as U.S. Consumers Still Spend. Business activity in the U.S. expanded in April at the slowest pace since the end of 2009, adding to evidence that manufacturing is cooling. The Institute for Supply Management-Chicago Inc. said today its barometer decreased to 56.2 during the month, lower than the most pessimistic forecast in a Bloomberg News survey, from 62.2 in March. Readings greater than 50 signal growth. The pace of production eased in April, reflecting a recession in Europe and a slowdown in China that may keep holding back orders. A separate report today showed U.S. consumer spending and incomes climbed in March, indicating that household demand will help underpin the economy as long as the job market continues to heal. “We’re likely to see manufacturing growth ease a bit,” said Peter Newland, a U.S. economist at Barclays in New York. “A gradual improvement in the labor market is going to be key for consumer spending. This is consistent with further moderate growth.” Economists projected the purchasing managers’ gauge would fall to 60, according to the median of 55 estimates in the survey.
• LDK Solar(LDK) Cuts 5,554 Workers Amid Clean-Energy Shakeout. LDK Solar Co. (LDK), the world’s second- largest maker of wafers for cells, cut 5,554 jobs this year after plunging prices cut margins to a record low amid a renewable-energy shakeout that’s pushed at least eight solar companies into bankruptcy and prompted thousands of industry firings. LDK, which reported the lowest margins among its publicly traded peers, has cut its staff about 22 percent to 19,195 workers since the end of 2011, Chief Operations Officer Xingxue Tong said on a conference call today. The Chinese maker of polysilicon, wafers and solar panels has pared a third of its workforce since July, when it peaked at more than 28,000, in reaction to the “highly competitive” solar market.
• Illinois Faces 25% Cost Increase to Borrow $1.8 Billion. Illinois plans to sell $1.8 billion of general-obligation debt tomorrow as its relative borrowing costs may increase by almost a quarter. The tax-exempt deal for the state, rated lowest by Moody’s Investors Service, includes a 10-year segment that underwriter Jefferies & Co. plans to offer to investors at 1.85 percentage points above benchmark AAA securities, according to a person familiar with the sale.
• Occupy Wall Street Plans Global Protests in May Day Resurgence. Occupy Wall Street demonstrators, whose anti-greed message spread worldwide during an eight-week encampment in Lower Manhattan last year, plan marches across the globe today calling attention to what they say are abuses of power and wealth.

Wall Street Journal:

• Chinese Microblogs Survive Real-Name Rules - So Far. Sina Corp.(SINA) has escalated its warnings to investors that the rules requiring weibo sites to verify the identities of users remain a major threat to the future of weibo. The company’s annual report filed with the U.S. Securities and Exchange Commission this month added the real-name rules to an already long list of regulatory risks that come with owning an Internet business in China.
• Coke(KO) in Talks to Buy Monster(MNST) Beverage. Coca-Cola Co. is in talks to acquire Monster Beverage Corp., a move that could help the world's biggest soft drinks maker expand its presence in the growing energy-drinks market, people familiar with the matter said.
• ISDA Set to Decide on CDS Rules Revamp Within Weeks. When is a default a default and when does a default trigger payouts on credit default swaps? CDS market watchers and participants have been raising those questions for more than a year. But the issue has garnered greater urgency in the wake of grievances from CDS buyers who felt they weren’t adequately covered going into the Greek debt restructuring.
• Microsoft(MSFT) to Invest in Nook. Microsoft Corp. is making a $300 million investment in Barnes & Noble Inc.'s(BKS) Nook digital-book business and college-texts unit in a move that helps value the prized Nook business, the companies said. Microsoft will have a 17.6% stake in a new subsidiary for the businesses in a transaction that values them at $1.7 billion, the companies said. That compares with Barnes & Noble's current market capitalization of about $791 million and could fuel the argument of some analysts and investors that the digital business should be separated from the retail division.
• Egypt Military Bends to Islamists Will. Egypt's ruling military said it would appoint a new cabinet within 48 hours, awarding a major victory to Islamist politicians and cooling a political confrontation that threatened to gridlock Egypt's emerging democratic institutions. Field Marshal Hussein Tantawi's pledge to lawmakers on Sunday came hours after parliament speaker Saad Al Katatni, a senior member of the Brotherhood's Freedom and Justice Party, which dominates the legislature, suspended sessions on Sunday until the military agreed to dissolve the cabinet.
  

Fox News:

• Top EPA Official Resigns After 'Crucify' Comment.

CNBC.com:

• Spain Default Could Hit US Market 10%-20%; Economist. Spain's newly announced recession won't be ending any time soon and it could force the U.S. stock market to fall anywhere between 10 percent and 20 percent, economist Harry Dent told CNBC Monday.
• Euro Lending Growth Slows, Banks Spend ECB Cash on Bonds. Growth in lending to euro zone firms and consumers slowed in March as banks scaled up purchases of government bonds, showing that an ambitious funding drive by the European Central Bank has yet to trickle down to the real economy.
• Small Business Hiring Takes Step Back in April. Small business hiring slowed considerably in the April and employees saw a reduction in their hours, an independent survey showed on Monday, adding to signs of weakening in labor market conditions. Businesses added 40,000 new jobs, a step back from the 75,000 positions created in March, according to Intuit, a payrolls processing firm. The average workweek for small business employees dipped 0.14 percent.

Business Insider:

• People Are Freaking Out Over A Conservative Whose Twitter Account Keeps Getting Shut Down.
• The World's Biggest Companies Reveal What's Really Happening In The Global Economy.
• Chart of the Day: The #1 Reason The Housing Recovery Is So Slow.
• This Is The Technological Breakthrough That's Making People Wildly Bullish On America.
• All The Latest On Spain's Banking Disaster.
• NYC is Apparently Considering a Ban on Happy Hour.
  

Zero Hedge:

• Savings Rate Rises From 4 Year Low as Spending Tumbles, Income Boosted By Government Transfer Receipts. (graph)
• Goose-Stepping Hitler-ites Threaten Greece's Utopia.
  

Reuters:

• Emerging Markets Hold Breath as EU Banks Shrink. From Beijing to Bucharest, emerging market policymakers are as worried as those in Brussels that the rapid contraction in western European banks' balance sheets will compound the debt crisis and further delay economic recovery. In a striking indication of that concern, the International Monetary Fund said developments in the euro area pose a greater risk to the Asia-Pacific region than either a hard landing in China or a rise in commodity prices. "An escalation of the crisis with a disorderly, large-scale, and aggressive trimming of balance sheets could have a serious impact on Asia," the IMF said in a report released on Friday.
• Exclusive: China Mulls Guarantees For Ships Carrying Iranian Oil. China is considering sovereign guarantees for its ships to enable the world's second-biggest oil consumer to continue importing Iranian crude after new EU sanctions come into effect in July, the head of China's shipowners' association said. Tough new European Union sanctions aimed at stopping Iran's oil exports to Europe also ban EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world. Around 90 percent of the world's tanker insurance is based in the West, so the measures threaten shipments to Iran's top Asian buyers China, India, Japan and South Korea.
• China Wants "drastic" U.S., Russia Nuclear Arms Cuts. China called on the United States and Russia on Monday to make further "drastic" cuts in their nuclear arsenals and said all states with atomic arms should undertake not to be the first to use them. The development of missile defense systems which "disrupt" the global strategic balance should be abandoned, a senior Chinese diplomat also told a nuclear meeting in Vienna in a possible reference to U.S. plans that have angered Russia.
• US Homeownership Rate Drops to 15-Year Low in Q1. The share of privately owned U.S. homes fell to a 15-year low in the first quarter, government data showed on Mo nday, suggesting that falling house prices are discouraging Americans from being homeowners. The home ownership rate slipped to 65.4 percent, the lowest since the first quarter of 1997, the Commerce Department said. The rate was at 66.0 percent in the fourth quarter.
• Caterpillar(CAT) Braces for Strike Amid Labor Dispute. Caterpillar Inc is preparing for a strike at its Joliet, Illinois, plant after union workers there overwhelmingly turned down a new six-year contract during weekend voting.
• Portugal Risks Spillover From Spain's Misfortunes. Spain's deteriorating economy has made Portugal's job of riding out its debt crisis harder as its main trading partner slides into recession and the threat of contagion across the Iberian peninsula intensifies.

Telegraph:

• UK Business Loan Write-Offs to Hit Highest Since 1990s. Losses on corporate loans will hit their highest level since the 1990s recession this year, fuelled by a weak consumer sector and further crippling lending according to a leading group of economists.
• Debt Crisis Live: Germany maintains hardline stance on austerity, telling Spain it must not change direction, despite figures showing Spain officially fell back into recession in the first three months of the year.