- Slovenia Plans Tax Increases as Debt Sale Eases Concern Over Aid. Slovenia plans to increase taxes to make up for the swelling budget shortfall as the country works to recapitalize its banks after its first international debt sale this year. The government will increase the sales tax and introduce a “crisis” tax on wages, Prime Minister Alenka Bratusek told reporters yesterday in Brdo, Slovenia. The country’s largest banks need 900 million euros ($1.2 billion) by the end of July, according to the government. That capital boost will widen the budget deficit to 7.8 percent this year from 4 percent at the end of 2012, Bratusek said.
- Enel Profit Falls as Europe’s Economic Slump Cuts Power Demand. Enel SpA (ENEL), Italy’s largest utility, said first-quarter profit dropped 26 percent as Europe’s economic slump cut electricity sales. Net income slid to 852 million euros ($1.12 billion) from 1.15 billion euros a year earlier after 125 million euros of writedowns, according to a stock-exchange statement. The Rome- based company said revenue fell 1.5 percent to 21 billion euros. Economic stagnation in the company’s main markets in Italy and Spain is hurting earnings as clients reduce energy consumption. Enel said electricity sales in the quarter fell 7.1 percent to 76.7 terrawatt hours, while gas sales remained flat at 3.4 billion cubic meters.
- Europe Stocks Rise as SocGen, Commerzbank Results Beat. European stocks climbed, extending a near five-year high for the region’s benchmark gauge, as financial companies from HSBC Holdings Plc (HSBA) to Allianz SE reported results that topped analysts’ estimates.
- China Said to Tighten Approvals for Local Government Bond Sales. China has ordered greater scrutiny of bond sales by local government finance vehicles with higher levels of debt, three people with knowledge of the matter said. The National Development and Reform Commission, which approves bond sales by companies that local governments set up to finance projects, will more strictly review applications for debt with credit ratings below AA+ sold by issuers with debt-to- asset ratios exceeding 65 percent, said the people, who asked not to be identified as they weren’t authorized to speak publicly about the order.
- North Korea Threatens Retaliation as South’s Leader Visits U.S. North Korea threatened “immediate counteractions” if shells fired as part of military drills hit its waters, as the U.S. an South Korea conducted annual anti- submarine exercises in the region. U.S. and South Korean forces are trying “to push the present state of war to an actual war,” the official Korean Central News Agency said today. The two allies on April 30 concluded the annual two-month Foal Eagle exercises, which rehearse ground-based operations.
- Pentagon Report on Cyber Attack ’Irresponsible,’ Xinhua Says. A Pentagon report that accuses China of a cyber espionage campaign is irresponsible and harmful to the mutual trust, the official Xinhua News Agency said, citing a military researcher. The Pentagon report said the Chinese military has targeted U.S. government computers with intrusions that seek sensitive data. It was irresponsible for the Pentagon to make such an assertion as the Chinese government and armed forces have never sanctioned hacking activities, Xinhua cited Wang Xinjun as saying. Wang is a researcher at the Academy of Military Sciences of the Chinese People’s Liberation Army. “It is an allegation based on presupposition,” Wang said, according to Xinhua. “The groundless accusations reflect the U.S. distrust of China.”
- Copper Falls From Three-Week High on Chinese Concerns. Copper futures fell from a three-week high on concern that trade data this week in China, the world’s top user of industrial metals, will add to evidence that the country’s economy is slowing.
- Gold Futures Decline as Haven Demand Ebbs. Gold futures for June delivery fell 1.7 percent to $1,442.60 an ounce at 10:17 a.m. on the Comex in New York. Bullion dropped 7.7 percent last month, including the biggest two-day drop in 33 years, as some investors lost faith in the precious metal as a store of value.
- Einhorn Increases Apple Bet, Praises Plan to Return Capital. Hedge fund manager David Einhorn said he increased his bet on Apple Inc. (AAPL) and that the iPhone maker took a “major step forward” by issuing debt (AAPL) so it could return cash to investors. Einhorn anticipates more innovations from the Cupertino, California-based technology company, he said on a conference call today held by his Greenlight Capital Re Ltd. (GLRE) reinsurer. “Our thesis remains that Apple has a terrific operating platform,” he said. “Its loyal, sticky and growing customer base will make repeated purchases of a growing portfolio of Apple products.”
- Emerson(EMR) Trims 2013 Forecast as Sluggish Economy Curbs Demand. Emerson Electric Co. (EMR), a maker of parts for refrigerators and air conditioners, cut its 2013 earnings forecast after a sluggish worldwide economy curbed demand in the first quarter. “Economies around the world are struggling for momentum,” Chief Executive Officer David Farr said in the statement. “Demand slowed in the second half of the quarter as overall global business confidence deteriorated. We do not see a catalyst to economic growth over the next six to nine months.”
- NY Fed Warns of Continued Risk to Financial System. The Federal Reserve Bank of New York said in a paper released Tuesday that a key short-term funding market remains vulnerable to destabilizing runs that can threaten the broader health of the financial system. “Limited tools are available to mitigate the risk of pre-default fire sales,” the paper’s authors warned. What’s more, “no established tools currently exist to mitigate the risk of post-default sales.”
- Islamist militia linked to Sept. 11 Benghazi attack operates freely in city. The Ansar al Sharia Brigade, the Islamist terror group linked to the Sept. 11, 2012, attack on the U.S. diplomatic compound in Benghazi, continues to operate freely in that Libyan city, according to U.S. military officials. The group remains active in the Mediterranean port city, operating patrols and checkpoints, and earlier this year reached an agreement with other Islamist groups allowing it to operate openly, said military officials familiar with intelligence reports from North Africa. The group "continues to spread its ideology in the Benghazi area, particularly targeting youth," said one official, who noted that the lack of central government security was the key reason the militia has not been suppressed.
Zero Hedge:
- No Recovery Here Either: Home Renovation Spending Plummets To 2010 Levels. (graph)
- French Industrial Production Confirms Hollande's Triple-Dip Fears. (graph)
- A Hard Look At Europe.
- The Reality-Is-Perception Gap. (graph)
- JOLTS Jolts Jobs Report Cheerleaders, Implies Worst Job Growth Since September 2010. (graph)
- Missing Cleveland Women Were Allegedly Raped By Captors, Resulting In Up To 5 Pregnancies.
- RUMOR: Google(GOOG) Is Planning Stores Just For Google Glass.
- 3 Things Investors Are Telling Themselves To Explain The Divergence Between Stocks And The Economy.
- Billionaire Paul Singer Says Bernanke Is 'Uprooting The Basic Stability Of Society' In Latest Letter.
- BofA(BAC): All Of Our Clients Except For The Hedge Funds Have Been Selling Stocks For Weeks.
- America's Retail Workforce May Already Be Getting Squeezed By Obamacare.
- ANALYST: Merkel Is Losing Ground, And We're Getting 'Ominous Long-Term Vibes' Out Of Germany.
- Sub-Prime: Fitch Sends Shot Across Bow Of Auto Lenders. Seeing delinquencies and credit losses going up while used car sales and lending standards deteriorate, rating agency Fitch warned today that “U.S. auto lenders will likely report further weakening in asset quality metrics this year.” Translated into English, lenders will become increasingly dependent on sub-prime loans and exposed to their perils. Fitch saw average credit losses go up 16 basis points in the first quarter, delinquencies rose 67 basis points. Double-digit increases in auto leasing volumes may boost auto sales, but Fitch views this “with caution, particularly since used car values will likely return to more typical levels after recent rises.” Translated into English: Their residual value assumptions are based on fantasy, and there will be a rude awakening.
- Vale CEO sees trouble in Brazil's currency, fast-rising wages. Brazil has enjoyed years of prosperity but its competitiveness is now hindered by fast wage growth and a currency that looks "out of place," said Murilo Ferreira, chief executive of giant mining company Vale SA , at an event on Tuesday. Those two factors are the "cost, although very low," of the social and economic progress that is bolstering Latin America's largest economy, Ferreira said.
- Long-term investors bet on commodity currencies falling. The Australian, Canadian and New Zealand dollars may be set for a decline, dragged down by a slowdown in China and a sharp fall in commodity prices.
- The ghosts of Benghazi have not disappeared. And we should still demand answers regarding the Obama administration's disingenuous handling of the attack.
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