Today's Headlines

Bloomberg:

• German First-Quarter Growth Damped by Construction, Investment. The German economy’s return to growth in the first quarter was hampered by declines in construction activity and investment as a severe winter and a recession in Europe damped demand. Construction fell 2.1 percent from the fourth quarter and capital investment dropped 1.5 percent, the Federal Statistics Office in Wiesbaden said today. Gross domestic product increased 0.1 percent, the office said, confirming a May 15 estimate. From a year earlier, the economy shrank 0.2 percent when adjusted for working days.

• Corporate Bond Sales Slow in Europe on Fed Stimulus Speculation. Sales of corporate bonds in Europe fell to the lowest in nearly two months this week as concern the Federal Reserve will taper asset purchases roiled markets. U.K. tour operator Thomas Cook Group Plc (TCG) and French real estate investment company Gecina SA (GFC) were among companies that sold 8.4 billion euros ($10.9 billion) of bonds, down from 19.5 billion euros last week and the least since the week ending April 6, according to data compiled by Bloomberg. The cost of insuring the debt rose, with the Markit iTraxx Europe Index of credit-default swamps climbing 4.5 basis points to 96. 

• European Stocks Post Weekly Drop Amid Fed Stimulus Signs. European stocks posted their first weekly loss in more than a month as investors debated when the Federal Reserve will scale back momentary stimulus and Chinese manufacturing unexpectedly shrank.FirstGroup Plc tumbled 43 percent after the U.K. bus and rail company halted its dividend and announced a rights offer to avert a credit downgrade. SAP AG, the largest maker of enterprise-management software, dropped the most in 21 months after changing its board structure. Bankia SA (BKIA), the nationalized Spanish bank, sank 85 percent before a debt swap next week. The Stoxx Europe 600 Index fell 1.7 percent to 303.35 this week, including the worst drop in 10 months on May 23 after Fed Chairman Ben S. Bernanke said the central bank will consider paring its stimulus measures if the U.S. economy improves.

• Dollar Bond Sales Slump in Asia as Costs Leap on Stimulus Doubts. Sales of U.S. dollar-denominated bonds by Asian issuers slumped more than 70 percent this week as yields rose the most in almost four months. Vedanta Resources Plc, the miner controlled by billionaire Anil Agarwal, led $2.1 billion of new sales in the region outside Japan, the least since the week ending April 5 in which companies halted issuance through a holiday period in Hong Kong and China, data compiled by Bloomberg show. Yields climbed 13 basis points to 4.4 percent as of yesterday, on track for the biggest weekly rise since the start of February, according to JPMorgan Chase & Co. indexes. The Markit iTraxx Asia index of 40 investment-grade borrowers outside Japan dropped 1 basis point to 106 basis points as of 8:21 a.m. in Hong Kong, Australia & New Zealand Banking Group Ltd. prices show. The gauge is set for its biggest weekly increase in nine weeks, and yesterday rose to the highest since May 2, according to data provider CMA. The Markit iTraxx Japan index fell 3.5 basis points to 81.25 basis points as of 9:20 a.m. in Tokyo, according to Citigroup Inc. prices. The benchmark climbed 8.33 basis points yesterday to 82.33, the steepest increase this year, according to CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the private market. The Markit iTraxx Australia index declined 0.5 basis point to 103.5 as of 11:07 a.m. in Sydney, according to Westpac Banking Corp. prices. The measure also touched a three-week high yesterday, CMA data show.

• HSBC Says ‘Worrying’ Countries Act Unilaterally on Rules. HSBC Holdings Plc (HSBA) Chairman Douglas Flint said it’s “worrying” that more countries are acting unilaterally on regulation as financial oversight undergoes its biggest change since the Great Depression of the 1930s. “This puts at risk globally consistent regulation and also risks ‘balkanizing’ firms’ capital and liquidity resources,” Flint told shareholders at the bank’s annual meeting in London today. “This risks a retreat from globalization and greater financial exclusion -- neither consistent with the pursuit of growth.” He didn’t mention specific countries. 

• Copper Declines for Second Straight Day on China Outlook. Copper futures declined for the second straight day on signs of slowing economic growth in China, the world’s biggest consumer of industrial metal. Yesterday, a Purchasing Managers’ Index from HSBC Holdings Plc and Markit Economics showed a preliminary reading of 49.6 for May, below the level of 50 separating growth and contraction, driving copper down 2.3 percent, the most in three weeks. “The weak Chinese numbers hung heavily over the metals group and seemed to be dwarfing concern about the legitimate supply bottlenecks that have cropped up in the copper complex the last few weeks,” Edward Meir, an analyst at INTL FCStone in New York, said in a report. “It remains to be seen if China will invest more in urbanization projects.” Copper futures for July delivery declined 0.5 percent to 3.288 a pound at 10:29 a.m. on the Comex in New York. The price headed for the second straight weekly drop.

• More Evidence Shows Teens Prefer Twitter, Reddit to Facebook(FB). Some of Facebook’s (FB) core users have told researchers that their enthusiasm is waning with each visit to the social network. They get increasingly annoyed when their friends share inane details or broadcast the trivial drama of their lives. Furthermore, keeping up with the daily discourse on Facebook is becoming a chore for some and a source of stress for others.

Wall Street Journal:

• Google(GOOG) Plans to Fund, Develop Wireless Networks in Emerging Markets.

Fox News:

• Obama Admin's Attempts to Intimidate Will Fail by Roger Ailes.

• Nearly 70 percent of adoption credit claims were audited by IRS, report finds.

CNBC:

• Nikkei Goes for Wild Ride for Second Day. Japan's stock market witnessed a second-straight day of heightened volatility on Friday, swinging from gains of 3 percent to deep losses before bouncing back again, leaving traders puzzled as to what was going on in Asia's biggest stock market. The Nikkei, which rose about 3 percent in early trade, fell more than 3 percent in the final hour of Tokyo trade before paring those losses. The Nikkei closed up 0.9 percent at14,612 points.

Zero Hedge:

• Why Italian Bonds Have A Long Way Down To Go. (graph)

• The Rout In Spain.

• The Housing UnRecovery Is Here: Architectural Billings Plunge Most Since 2008. (graph)

• Spot The Trend In US Durable Goods And CapEx Spending. (graph)

• The Two Charts That Keep Draghi Up At Night.

• European Bonds Plunge Most In 8 Months, Stocks Worst Week In 2 Months. (graphs)

• Europe Opens $80 Trillion Shadow Banking Pandora's Box: Will Seek To Collapse Repo "Collateral Chains".

Business Insider:

• This Week's Volatility Reflects A Major Change In The Market's Trend.

• Why Democrats Can't Be Trusted To Control Wall Street by Robert Reich. Who needs Republicans when Wall Street has the Democrats? With the help of congressional Democrats, the Street is rolling back financial reforms enacted after its near meltdown.

• Jon Stewart Hammers Obama And The Justice Department For Leak Investigations On Journalists. (video)

• 70 Out Of 85 Lines In A House Committee Financial Regulation Bill Were Written By Citigroup(C).

• There's No Magic Keynesian Bullet That'll Save Europe.

@RonnieSpence: 

• ALL YOU NEED TO KNOW ABOUT SENTIMENT:NYSE Margin Debt hit all time record highs in April. (graph)

NBC News:

• Holder OK'd search warrant for Fox News reporter's private emails, official says. Attorney General Eric Holder signed off on a controversial search warrant that identified Fox News reporter James Rosen as a “possible co-conspirator” in violations of the Espionage Act and authorized seizure of his private emails, a law enforcement official told NBC News on Thursday.

Reuters: 

• COMMENT: Nikkei nosedive not just a correction.

• Valeant Pharma(VRX) near deal to acquire Bausch & Lomb -source.

• Hedge funds bet on Aussie dollar slide. Hedge funds hungry for trade ideas after the success of their bets on Japan's recovery have been turning their attention to the Australian dollar, betting the end of the commodities boom will drive down the currency. 

• Brazil bank lending slows in April, sign of uneven economy. Growth in Brazil's bank lending slowed in April, the latest sign that an expansion in Latin America's largest economy remains uneven in the face of faster inflation and a robust job market. Outstanding bank loans in Brazil totaled a record 2.45 trillion reais ($1.2 trillion) at the end of April, while growth in bank lending slightly slowed to 16.4 percent in the 12 months through March, ther central bank said in a report on Friday.

Telegraph:

• Southern Europe slides back to 'analogue dark age'. A lack of digital investment and the shrinking number of local subsidiaries owned by large firms is sending Southern European states on a "backwards slide" to an analogue age, a new study has revealed.

Xinhua:

• China's Xi Vows Not to Sacrifice Environment for Growth. China to promote green, sustainable, low-carbon development pattern, citing President Xi Jinping's remarks to a study session. China to set, "strictly observe" environmental "red line" restricting industrial development to protect nature. Nature needs more space to restore itself, he said. China to set up evaluation system to cover waste of resources, environmental damage, ecological benefits.