Today's Headlines

Bloomberg:  

• Draghi Leaves Door Open to Further Monetary Easing. European Central Bank President Mario Draghi opened a new front in the battle against the debt crisis after cutting the benchmark interest rate to a record low today. Speaking in Bratislava, Draghi signalled that officials may take the unprecedented step of charging banks to park excess cash with the ECB overnight and that another reduction in the main rate is possible. “We will look at all the incoming data and stand ready to act if needed,” Draghi said at a press conference in the Slovakian capital after the ECB cut its key rate by a quarter point to 0.5 percent. Asked if further action could include taking the deposit rate negative from its current level of zero, he said: “We will look at this with an open mind.”
• Euro-Area Manufacturing Contracted for 21st Month in April. Euro-area manufacturing output contracted for a 21st straight month in April, adding to pressure on the European Central Bank to cut interest rates to spur lending and growth. A gauge of manufacturing in the 17-nation euro area declined to 46.7 last month from 46.8 in March, London-based Markit Economics said today. That’s above an initial estimate of 46.5 on April 23. A reading below 50 indicates contraction. “There is nothing here to suggest that manufacturing will turn the corner and stabilize any time soon, putting greater onus on policy makers to act quickly to reinvigorate growth,” Chris Williamson, chief economist at Markit, said in today’s report. 
• Euro Drops as Draghi Open to Negative Rates; Dollar Strengthens. The euro fell for the first time in five days against the dollar after European Central Bank President Mario Draghi said policy makers may take the unprecedented step of charging banks to hold excess reserves. The single currency dropped against all except one of its 16 most-traded peers as the ECB cut its main refinancing rate and Draghi said policy makers had an open mind on a negative deposit rate.
• European Power Prices Slide to Record Low as Coal Slumps on Surplus. European power prices dropped to records as thermal coal slumped to the cheapest level in almost three years amid a glut of the fuel. Germany's gross power use last year dropped 1.3% to the lowest level since 2003. "The oversupply in the coal market is driving prices down and power is following suit," said Thomas Randel, a power trader at EnBW Energie Baden-Wuerttemberg AG. "The market is in such a bearish mood, it's awful.
• Natural Gas Tumbles Most in Nine Months After Stockpile Increase. Natural gas futures dropped the most in almost nine months after a government report showed that U.S. stockpiles expanded by more than forecast. Gas in New York slid as much as 6.4 percent after the Energy Information Administration said inventories rose 43 billion cubic feet in the week ended April 26 to 1.777 trillion cubic feet. Analyst estimates compiled by Bloomberg showed a gain of 29 billion. 
• Crude Gains First Time in 3 Days. WTI for June delivery rose $2.23, or 2.5 percent, to $93.26 a barrel at 12:38 p.m. on the New York Mercantile Exchange. The volume of all futures traded was 25 percent above the 100-day average for the time of day. Prices fell the most since April 15 yesterday. Brent for June settlement gained $2.03, or 2 percent, to $101.98 a barrel on the London-based ICE Futures Europe exchange.
• Lumber Futures Fall, Head for Longest Slump Since at Least 1986. The contract for July delivery fell .7% to $340.2 per 1,000 board feet on the Chicago Mercantile Exchange, after touching $339, the lowest for a most-active contract since Dec. 6. The price is headed for the 12th straight decline, the longest slump since at least April 1986, when Bloomberg data begins.
• VIX Clings to Stocks Like It’s 2007 as S&P 500 Peaks. Historical relationships between U.S. equity and options prices have come under increasing strain in the past week, with the record rally in the Standard & Poor’s 500 Index awakening demand among both speculators and hedgers. The Chicago Board Options Exchange Volatility Index (VIX) moved in the same direction as the S&P 500 (SPX) for four straight days through April 29, including three advances and one drop. That’s the longest stretch of lockstep moves since February 2007, according to data compiled by Bloomberg. The indexes swing in the opposite direction about 80 percent of the time.
• Suicide Rate Rises as Economy Stresses Middle-Age America. More middle-aged Americans are killing themselves, and the economy may be the reason, according to a government report. The annual suicide rate of people 35 to 64 years old rose 28 percent from 1999 to 2010, more than any other age group, the U.S. Centers for Disease Control and Prevention said in the report today. The working-age group probably is more affected by the economic downturn in the past half-decade than the young or old, and that may be driving suicide rates higher.

Wall Street Journal: 

• U.S. Denounces North Korea Arrest. The Obama administration lashed out Thursday at North Korea's leaders after an American citizen was sentenced to 15 years of hard labor for unspecified "hostile acts" against the country. The sentencing of Kenneth Bae, a 44-year-old tour operator from Washington state, came after he was tried Tuesday by North Korea's highest court, state news agency Korean Central News Agency reported in a brief dispatch Thursday.
• China's Slowing Growth, Rising Credit. China's growth is slowing even as lending soars. Where's the money going? The latest signs on China's growth are depressing. The HSBC purchasing managers' index for April came in at 50.4, down from 51.6 in March and only fractionally above the 50 mark that separates growth from contraction. Steel futures prices in Shanghai fell 7.6% over the month, edging close to levels seen at the nadir of the financial crisis.

Fox News: 

• Special ops called for military backup during Libya attack, sources say. On the night of the Benghazi terror attack, special operations put out multiple calls for all available military and other assets to be moved into position to help -- but the State Department and White House never gave the military permission to cross into Libya, sources told Fox News. The disconnect was one example of what sources described as a communication breakdown that left those on the ground without outside help. "When you are on the ground, you depend on each other -- we're gonna get through this situation. But when you look up and then nothing outside of the stratosphere is coming to help you or rescue you, that's a bad feeling," one source said. Multiple sources spoke to Fox News about what they described as a lack of action in Benghazi on Sept. 11 last year, when four Americans, including Ambassador Chris Stevens, were killed. "They had no plan. They had no contingency plan for if this happens, and that's the problem this is going to face in the future," one source said. "They're dealing with more hostile regions, hostile countries. This attack's going to happen again." 

MarketWatch:

• Is China no longer factory of the world? Maybe. (graph)

CNBC: 

• Investment Banking Bonanza: Best Year Since '02. Despite regulatory pressure and the general negative public stigma, big banks are getting still bigger, and big American banks are doing even better against their global competitors. The latest evidence of reasons not to feel sorry for large financial institutions comes from what they're doing on the investment banking side.
• Mario Draghi Calls for Continued Austerity, Lower Taxes. European stock markets have rallied in the last few months as it has become clear that bureaucrats in Brussels will be more lenient on countries, giving them more time to reduce their deficits and debt levels. It has led many market participants to herald "the end of austerity" in Europe, thrilling holders of equities. But during a news conference Thursday, ECB President Mario Draghi made clear more than once that "governments should not unravel efforts" to contain spending. So is Draghi still pro-austerity? When a reporter asked Draghi if he is "the last man standing" when it comes to a commitment to austerity, he responded: "Fiscal consolidation is, and I've said this since the very beginning of my tenure, is contractionary in the short term and in the medium term as well. So you want to mitigate this. You want to take action to mitigate the contractionary effects.

Zero Hedge: 

• Initial Claims Lowest Since Jan 2008 Levels; Import Plunge Leads To Much Lower Trade Deficit. (graphs)
• Bank Of Ireland Doubles Mortgage Rates, Homeowners Fear More To Come.
• S-t-r-e-t-c-h-e-d! (graph)

Business Insider: 

• Chinese Soldiers March Into Indian Territory, Pitch Tents, Declare Land For China.
• JPMORGAN(JPM): Global Manufacturing Growth Has Stagnated.

NYPost:

• Lawsky Poised to Act on Ailing MBIA(MBI). Time has just about run out for MBIA Insurance Corp. — once one of the country’s most respected specialty insurers. New York state regulators are poised — within “weeks or perhaps days” — to seize the company’s money-losing mortgage insurance arm because it is running out of cash, a source close to the situation said. The company ran into trouble when it guaranteed billions in mortgage-backed securities that Wall Street peddled to investors — bonds that blew up when the housing bubble burst.

Reuters:

• Italy April Manufacturing PMI 45.5, MNI Says. 
• France April Manufacturing PMI 44.4, MNI Says.
• Germany April Manufacturing PMI 48.1, MNI Says.
• Euro-Area Manufacturing PMI 46.7, MNI Says.
• French car sales decline slowed in April. France's car sales decline slowed down in April to a 5.2 percent drop, data published on Thursday showed, raising hopes that demand may be about to stabilise. April registrations fell to 157,859 cars last month, the Paris-based CCFA industry association said, with sales for the first four months down 12.3 percent. The slump in demand slowed from a 16.4 percent drop in March.
• Italy new car sales fall 10.83 percent in April - ministry. New car sales in Italy, Europe's fourth-largest car market, fell 10.83 percent in April from the same month a year ago to 116,209 vehicles, Italy's Transport Ministry said on Thursday. In March, car sales in recession-hit Italy plunged 4.9 percent, adding to a decline for all of 2012 of 19.8 percent.

Telegraph: 

• Half of businesses don't want to stay in EU without reforms - survey. One in two London businesses says they will suffer if Britain stays in the European Union without reforms.

Handelsblatt:

• An interest-rate cut by the ECB would have a limited effect, Marcel Fratzscher, head of the Berlin-based DIW economic institute, says in an interview. An ECB rate cut could have negative as well as positive consequences, he said.

Expansion:

• Spain to Collect EU3 Bln More in Corporate Tax. Spain aims to collect EU3b in tax from companies with revenue of more than EU20m. Spain won't raise rates of tax but will limit deductions for financial expenses, depreciation, compensation for losses, citing people in the budget ministry.
  

Qiushi: 

• China should "appropriately" raise resource taxes and start levying environment taxes, Vice Premier Ma Kai writes.

Xinhua:

• CBRC to Push for Risk Control of LGFV Loans. China Banking Regulatory Commission to focus on controlling total amount of loans to local government financing vehicles, citing a CBRC official familiar with the situation. CBRC will strive to prevent large defaults. CBRC to ensure wealth mgmt products invested in areas in line with nation's macro, industrial policies. CBRC to closely monitor bank ops using money from wealth mgmt product sales, orders banks to fully disclose info on products.
• China Cracking Down on Online-Rumor Makers, Spreaders. State Internet Information Office says "extreme minority" of people have spread rumors, fabricated pictures, citing the govt agency. At least 11 peo0ple detained for up to 10 days for "fabricating" posts about H7N9 flu virus. Office to punish Internet cos. that fail to stop spread of rumors.