Bloomberg:
- Emerging Markets Growing at Slowest Pace Since 2011, HSBC Says. Emerging-market economic growth was probably the weakest since September 2011 last month as global demand for manufacturing and services declined, HSBC Holdings Plc said, citing a survey of purchasing managers. The HSBC Emerging Markets Index, which is compiled by London-based Markit Economics and tracks conditions at more than 5,000 companies, fell to 51.3 in April from 52.5 in March, HSBC said today in a report. A value above 50 indicates expansion and below 50 signals contraction.
- PBOC Signals It May Resume Bill Sales as Capital Inflows Rise. China’s central bank signaled it will resume sales of bills for the first time in 17 months as global funds pour money into the country to take advantage of the yuan’s rise. “The central bank’s gauging of demand shows it will resume bill sales soon,” said Shi Lei, Beijing-based head of fixed- income research at Ping An Securities Co., a unit of the nation’s second-biggest insurance company. “Foreign capital inflows are too big. The central bank needs more tools to mop up excess liquidity.”
- Asian Stocks Climb Third Day. Komatsu Ltd. (6301), the world’s second-biggest maker of construction and mining equipment, advanced 3.3 percent in Tokyo, leading industrial companies higher. Wilmar International Ltd. (WIL), the world’s No. 1 palm-oil processor, climbed 3.9 percent in Singapore as first-quarter profit surged 23 percent. Toshiba Corp. (6502) slumped 3.9 percent in Tokyo after the Nikkei newspaper reported sales at the No. 2 maker of flash-memory will miss the company’s forecast. The MSCI Asia Pacific Index climbed 0.9 percent to 143.33 as of 11:01 a.m. in Tokyo, with all 10 industry groups on the gauge rising.
- Bond-Loan Inversion Exposes Fed-Induced Excesses: Credit Markets. Yields on junk-rated corporate bonds have fallen below loans that rank higher in the capital structure by the most ever, underscoring the anomalies being created by the Federal Reserve's unprecedented monetary policies. At about 5.08%, yields on speculative-grade bonds are 51 basis points less than rates on U.S. leveraged loans, according to data from JPMorgan Chase(JPM). Before this year, creditors had almost never accepted lower payments on junk bonds over loans, which get repaid first in a bankruptcy. Concerns that credit markets are overheating are rising as the Fed, which has pumped about $2.5 trillion into the financial system since the financial crisis, keeps its benchmark rate at about zero for a fifth year. Repressed investors are seeking out almost anything that generates higher yields regardless of the risk. "Junk-bond yileds are in freefall, and every time that is pointed out, you look like an alarmist," Martin Fridson, CEO of NY-based financial research firm FridsonVision LLC, said in an interview. "People think it's okay as long as they are the first ones out when things change direction. Of course, everybody is not going to be the first one out."
- Hedge Funds Rush to $108 Billion Trading Where Wall Street Tread. Hedge funds using debt-trading strategies honed on Wall Street are expanding at a record pace as they profit from risks big banks are no longer taking. BlueCrest Capital Management LLP doubled its New York staff in the two years through December, while Pine River Capital Management LP increased its global workforce by one-third in 2012. Hedge-fund firms are hiring from companies such as Deutsche Bank AG (DBK), Barclays Plc (BARC) and Bank of America Corp. as their credit funds have attracted $108 billion since 2009, data compiled by Chicago-based Hedge Fund Research Inc. show.
- Egypt Investment Is Collapsing as Citizens Turn Into Vigilantes. In a dimly lit Cairo workshop, Hussein spins a metal pipe on a lathe, sending sparks flying. In a few minutes, it’ll become the barrel of a gun. Sometime after that it will join the growing arsenal of illegal weapons on the streets of Egypt. Artisans who make machine parts by day are turning into bootleg gunmakers at night, says Hussein, 54, who asked not to be identified by his full name for fear of prosecution.
- CIA’s Brennan Picks New Spy Chief Passing Over Woman Holding Job. John Brennan, director of the Central Intelligence Agency, picked an undercover officer as the new head of the agency’s national clandestine service, passing over a woman who had been serving as the acting chief. The acting chief wasn’t chosen because she was associated with the CIA’s interrogation program, which is said to have resorted to torture to elicit information from al-Qaeda suspects, said Reuel Marc Gerecht, a former CIA case officer who’s now a fellow at the Foundation for Defense of Democracies.
- Pentagon Plans for the Worst in Syria. The Pentagon is stepping up plans to deal with a dangerous regional spillover from Syria's possible collapse—a scenario it had recently seen as remote—drawing up proposals including a Jordanian buffer zone for refugees secured by Arab troops, said U.S. officials familiar with the discussion. The plans seek to minimize direct U.S. involvement, but they reflect a reassessment of the Pentagon's hands-off approach. The shift comes after Defense Secretary Chuck Hagel's trip last month to the Middle East, during which Arab leaders appealed for the U.S. to focus on the danger of Syria's disintegration into warring sectarian fiefdoms. "The Syria message was loud and strong," said a senior diplomat briefed on Mr. Hagel's trip. "Everybody's scared. And nobody knows what the hell we are going to do there."
- Boehner Says He 'Probably' Won't Support Online Sales-Tax Bill. House Speaker John Boehner said he "probably" wouldn't support a bill to give states the right to force out-of-state online retailers to collect sales tax for them, sounding more negative than fellow Republicans who have themselves been lukewarm on the measure.
- Egypt's Brotherhood Gains More Power. Egyptian President Mohammed Morsi swore in new cabinet ministers Tuesday in a reshuffle of his government that strengthened the position of the Muslim Brotherhood in key ministries and provoked complaints from the nation's disparate opposition. Members of the opposition had demanded that Mr. Morsi form a more inclusive government—one including liberals, moderates, Coptic Christians and women—ahead of parliamentary elections due to take place later this year. They also sought the removal of Prime Minister Hisham Qandil, who is viewed by his critics as lacking political experience and charisma. But Mr. Qandil retained his post in the reshuffle, helping to form the new cabinet that includes 10 officials belonging to the ruling Freedom and Justice Party, the political arm of the Muslim Brotherhood.
- Battery-Driven Tesla(TSLA) May Run Out of Juice. Without so much as a puff of smoke, Tesla Motors Inc.'s stock has rallied an incredible 64% this year. One catalyst: an announcement last month that it had reached "full profitability" for the quarter through March. Analysts don't seem so sure, though, projecting the company on Wednesday will report a loss of seven cents a share.
- Republicans look to show 'cover-up' as whistle-blowers give Benghazi testimony. Republican lawmakers hounding the Obama administration for months over unanswered questions on the Benghazi attack will have their moment, on Wednesday, to demonstrate whether the internal response amounted to a cover-up -- as whistle-blowers give long-awaited testimony expected to challenge the White House's version of events. Two of the whistle-blowers' opening statements were obtained by Fox News, and in the statements they affirm their credentials and credibility in testifying about what happened last Sept. 11 in Libya. "I am a career public servant," Greg Hicks' statement reads. "Until the aftermath of Benghazi, I loved every day of my job." He was deputy chief of mission in Libya and became top U.S. diplomat in the country after Ambassador Chris Stevens was killed in the terror attack. The other statement, by Mark Thompson of the State Department Counterterrorism Bureau, is mostly biographical. Testimony also is due Wednesday from Eric Nordstrom, a diplomatic security officer who was formerly the regional security officer in Libya.
- Muni defaults still rare, but alarming trend developing, Moody’s says. While in the past defaults were usually confined to specific projects like healthcare facilities and housing infrastructure, the most recent year saw general governments take three of the five spots. Rating analysts, led by Merxe Tudela, write:
- Whole Foods(WFM) Beats on Earnings, Raises Outlook. Whole Foods on Tuesday beat on earnings and raised its full-year forecast, saying store sales had recently accelerated.
- Zillow(Z) Raises Revenue Forecast After Subscriptions Boost. Real estate website Zillow reported first-quarter revenue ahead of analysts' estimates after subscriptions were boosted by a recovering U.S. housing market, and the company raised its full-year revenue forecast.
- JC Penney(JCP) Cites Ousted CEO's Plans in Sales Miss. JC Penney on Tuesday said it expects first-quarter revenue to be down about 16 percent from a year earlier, which it attributed in part to strategies set up by recently ousted CEO Ron Johnson.
New York Times:
- Small Firm Could Turn the Vote on Dimon. The fate of Jamie Dimon of JPMorgan Chase(JPM) could hinge on a small, London-based firm that is virtually unknown, even on Wall Street.
- U.S. Weighs Wider Wiretap Laws to Cover Online Activity. The Obama administration, resolving years of internal debate, is on the verge of backing a Federal Bureau of Investigation plan for a sweeping overhaul of surveillance laws that would make it easier to wiretap people who communicate using the Internet rather than by traditional phone services, according to officials familiar with the deliberations.
- Gun crime has plunged, but Americans think it's up, says study. Gun crime has plunged in the United States since its peak in the middle of the 1990s, including gun killings, assaults, robberies and other crimes, two new studies of government data show. Yet few Americans are aware of the dramatic drop, and more than half believe gun crime has risen, according to a newly released survey by the Pew Research Center. In less than two decades, the gun murder rate has been nearly cut in half. Other gun crimes fell even more sharply, paralleling a broader drop in violent crimes committed with or without guns. Violent crime dropped steeply during the 1990s and has fallen less dramatically since the turn of the millennium.
- Authorities: 42 Dead in Nigeria Islamic Extremist Attacks. Coordinated attacks by Islamic extremists armed with heavy machine guns killed at least 42 people in northeast Nigeria, authorities said Tuesday, the latest in a string of increasingly bloody attacks threatening peace in Africa's most populous nation. The attack struck multiple locations in the hard-hit town of Bama in Nigeria's Borno state, where shootings and bombings have continued unstopped since an insurgency began there in 2010. Fighters raided a federal prison during their assault as well, freeing 105 inmates in another mass prison break to hit the country, officials said.
Real Clear Politics:
Reuters:
- China April trade data beats expectations, scepticism remains. China's exports and imports grew more than expected in April from a year earlier, possibly easing some of the concerns about weakness in the recovery of the world's second-largest economy, though doubts remained over the strength of real demand and the accuracy of the figures.
- Symantec(SYMC) beats estimates on demand for security products. Symantec Corp's results beat estimates for the fourth consecutive quarter driven by demand for its data loss prevention and information security products.
- U.S. consumer credit posts smallest gain in 8 months. U.S. consumer credit recorded its smallest increase in eight months in March, a possible hint that Americans are still trying to pare their debts. Consumer installment credit rose by $7.97 billion to $2.81 trillion, the Federal Reserve said on Tuesday. It was the smallest increase since July and well below economists' expectations for a $16 billion rise.
- Hong Kong Unattractive to Hot Money as Asset Prices High. Hong Kong stocks have high valuations and the property market has slowed since the govt's cooling measures, making the city unattractive to hot money, citing Stuart Gulliver, CEO at HSBC Holdings.
- U.S. Is Real 'Hackers Empire'. The U.S. is the "real hacker empire" and has been strengthening Internet tools in recent years to engage in political subversion in other countries, a commentary said today. Pentagon report accusing the Chinese military of a cyber espionage creates an "imaginary enemy," the commentary said.
Bernstein:
- Rated (ETN) Outperform, target $76.
- Asian equity indices are +.25% to +1.0% on average.
- Asia Ex-Japan Investment Grade CDS Index 100.0 -1.0 basis point.
- Asia Pacific Sovereign CDS Index 80.75 -1.5 basis points.
- FTSE-100 futures +.31%.
- S&P 500 futures -.03%.
- NASDAQ 100 futures +.06%.
Earnings of Note
Company/Estimate
- (WEN)/.02
- (CTSH)/.92
- (AOL)/.46
- (NWSA)/.35
- (GMCR)/.73
- (ATVI)/.11
- (CXW)/.66
- (CF)/6.00
- (TSLA)/.04
- (MNST)/.46
- (GRPN)/.03
- (MDR)/.14
- (JOE)/.-01
- (MRX)/.71
- (SKYW)/-.01
- (MBI)/.15
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,000,000 barrels versus a +6,696,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -475,000 barrels versus a -1,818,000 barrel decline the prior week. Distillate supplies are estimated to rise by +500,000 barrels versus a +474,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a +.9% gain the prior week.
- None of note
- The China Trade data, 10Y T-Note auction, China CPI data, weekly MBA mortgage applications report, Wells Fargo Industrial/Construction Conference and the (SNDK) investor day could also impact trading today.
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