Today's Headlines

Bloomberg:    

• The Major Paradox at the Heart of the Chinese Economy. “China’s economy is in a very critical period of restructuring,” said Zhang Bin, a senior fellow at the Chinese Academy of Social Sciences in Beijing. And there will be economic pain as the government pushes through overdue structural reforms. “Even if GDP growth is lower, it isn’t a bad thing. We have talked about it for many years without progress, but now it is really making progress.”
• The Latest Numbers From China Show the Government Is Facing a Huge Challenge. (graph) China’s GDP growth came in on target in the first quarter. Slumping output in March, a slide into deflation and an expanding credit bubble underline the magnitude of the challenge the economy continues to face. We believe the weeks ahead will see the government intensifying efforts to support growth. Alternative measures of growth painted a gloomier picture. Bloomberg’s monthly GDP tracker came in at 6.5 percent year on year in the first quarter. An index composed of electricity, rail freight and bank loans — measures reportedly favored by Li — suggested growth is in the mid-single digits. 
• China Steel Output Slides to Worst First Quarter in 20 Years. China’s crude steel output fell in the first three months of the year, the first decline over that period in 20 years, as the country grew at the slowest pace since the global recession. Crude steel production from January to March slid 1.7 percent from a year earlier to 200.1 million metric tons, according to National Bureau of Statistics data released Wednesday in Beijing. First quarter output hasn’t contracted since 1995. Falling production in the world’s largest steelmaker reflects the country’s slowing pace of construction and sliding exports. Output is poised to fall further as the government tries to trim overcapacity and cut pollution in its drive to shift the world’s second-biggest economy toward consumption and services.
• ECB Keeps Rates on Hold as Investors Await Draghi Assurance on QE Path. The European Central Bank kept interest rates unchanged at record lows as it focuses on a bond-buying program to bolster the improving euro-area economy. The 25-member Governing Council left the main refinancing rate at 0.05 percent at its meeting in Frankfurt on Wednesday, as predicted by all 51 economists in a Bloomberg News survey. The deposit rate and the marginal lending rate stayed at minus 0.2 percent and 0.3 percent, respectively.
• Strong Dollar’s Economic Ax to Fall on Small U.S. Exporters. The big hit from the strong dollar is going to fall on small U.S. exporters. While large U.S. multinational corporations have kicked up a storm of complaints about the currency’s advance, their broader customer and production bases make them more nimble and able to cope. For the smaller counterparts with fewer products to offer and most factories in the U.S., it’s becoming more difficult to remain competitive.  
• Europe Stocks Extend Record as Draghi Says QE Will Stay Course. European stocks rose with commodity shares after Mario Draghi said quantitative easing will continue until there’s sustained improvement in inflation. The Stoxx Europe 600 Index added 0.6 percent to 414.06 at the close of trading, with gauges of miners and energy shares posting the biggest gains.
• Saudi Arabia Leads OPEC Oil Boom as U.S. Shale Growth Slows. Saudi Arabia pumped close to a record amount of crude oil last month, leading the biggest surge in OPEC output in almost four years just as the U.S. shale boom shows signs of slowing, the International Energy Agency said. The Organization of Petroleum Exporting Countries may extend its biggest output gain since June 2011 into next month as recovery in Libya and Iraq adds to the Saudi increase, the IEA said. Average U.S. oil production of 12.6 million barrels a day in the first six months of 2015 will slide to 12.5 million by the fourth quarter as companies curb drilling, the agency said.
• Oil Production Jumps in March Even as U.S. Drilling Collapses. The U.S. keeps pumping oil at a near-record pace, in spite of the collapse in prices over the past year and cutbacks in drilling. Crude production rose 1.3 percent in March to the highest level since 1973, a Federal Reserve index showed Wednesday. Output was up 13.7 percent from a year ago, according to the central bank's report on industrial production. For all of 2014, the gauge of oil extraction climbed 15.4 percent.

Fox News:

• Fierce clashes in Iraq as ISIS takes control of villages near Ramadi. The Islamic State group launched an offensive in Iraq's western Anbar province on Wednesday, capturing three villages near the provincial capital of Ramadi and forcing villagers to flee from their homes as fierce clashes were underway between the extremists and government troops, residents said. The militants' push comes after the Islamic State was dealt a major blow earlier this month, when Iraqi troops routed the group from Tikrit, Saddam Hussein's hometown. Wednesday's fighting could also further threaten Ramadi, 70 miles west of Baghdad. The city is mostly held by government forces but militants control some parts of it, mainly on the outskirts.

ZeroHedge:

• The Madness Of Negative Bond Yields. (graph)
• Bullard Hints The Fed May Hike Rates Only To Cut Them Right After.
• WTI Spikes Above $55 After Crude Inventories Rise At Slowest Pace In 14 Weeks. (graph)
• Homebuilder Confidence In April Jumps Most Since July. (graph)
• US Industrial Production Plunges By Most Since Aug 2012, Utility Output Drops Most In 9 Years. (graph)
• German FinMin Schaeuble Sees "No Contagion" From Grexit, Don't Show Him This Chart. (graph)
• April Empire Fed Manufacturing Plunges, New Orders Crash To Jan 2013 Lows. (graph)
• Bank of America(BAC) Revenue Drops, Misses Due To Declining Trading Revenues, Loan Creation And Net Interest Margin.

Business Insider:

• Apple(AAPL) just dropped a big clue about a major new product coming in June.
• STAN DRUCKENMILLER: I just know this is going to end badly; I can feel it in my bones.
• The Fed says employers are offering more money and they're still struggling to find skilled workers. The Fed sees the economy expanding at a modest pace. 
• Health care costs continue to only go up. (graph)
• HARD LANDING? All of the charts scream 2009 for China all over again. (graph)
• Here's the case for how Marco Rubio could defeat Hillary Clinton.
• Nike(NKE) just got a great sign it will dominate in the future.
• Smith & Wesson(SWHC) said Americans are buying more guns, and now its stock is going wild.

NY Times:

• Schaeuble Says ECB Monetary Policy 'Can Only Buy Time'. Euro area budgets "need to prepare for an eventual normalization of monetary policy and capital markets," German Finance Minister Wolfgang Schaeuble said Wendesday in NYT op-ed. Debate over "tapering" in the US "shows how difficult it is to withdraw a stimulus once governments and markets get used to it," he sad. ECB policy "cannot substitute for fiscal and structural reforms in member countries." Debt problems can't be solved by heaping on new debt, Schaeuble said.

Reuters: 

• Exclusive: Six percent of U.S. adults plan to buy Apple Watch - Reuters/Ipsos poll. If calculated based on 2014 U.S. Census projections, and excluding younger teens, this could mean potential sales of about 15 million watches, if those who said they intended to buy follow through with an actual purchase.

Telegraph:

• IMF tells regulators to brace for global 'liquidity shock'. Financial engineering that preceded the last two financial crises is back, International Monetary Fund warns.
• Greece downgraded further into 'junk' as black hole in public finances widens. Standard & Poor's slashes sovereign bonds as Athens' budget surplus shrinks by more than two-thirds.

Unian:

• Ukraine Says Russia Sent Grad Systems, Tanks to Rebels. 25 tanks, 5 Grad systems were sent Wednesday to territories controlled by militants in self-proclaimed Donetsk and Luhansk republics, citing Col. Valentyn Fedichev, Ukrainian government deputy commander in Donetsk and Luhansk regions.