Today's Headlines

Bloomberg:

• Euro-Area Recovery Stutters as China’s Factory Weakness Persists. The euro area’s economic recovery stuttered in May as Germany lost momentum, while weakness in China’s manufacturing industry persisted. Markit Economics said its composite index of services and manufacturing in the euro zone slipped to 53.4 from 53.9 in April. While that’s above the 50 mark that divides expansion from contraction, it’s less than the 53.9 forecast by economists in a Bloomberg survey. A Chinese factory gauge came in at 49.1, missing the median estimate of 49.3.

• Merkel Says Russia Can’t Return to G-7 as Ukraine Festers. German Chancellor Angela Merkel said Russia can’t rejoin Group of Seven meetings unless it respects international law, underscoring President Vladimir Putin’s exclusion from the G-7 summit she’s hosting next month. Addressing Germany’s lower house of parliament in Berlin on her summit agenda, Merkel said Putin’s encroachment on Ukraine signals that Russia isn’t part of the group of advanced economies’ “community of values.” Resolving the Ukraine conflict will require “patience and staying power,” she said.

• Germany Loses Further Momentum as Manufacturing, Services Weaken. Germany’s economy stuttered again this month, with a gauge of output falling more than economists forecast to the lowest this year. Markit Economics said its composite index of services and manufacturing dropped to 52.8 from 54.1 in April. While that’s above the 50 mark that divides expansion from contraction, it’s the second straight decline and was less than the reading of 53.8 forecast by economists in a Bloomberg survey.

• Lenovo Posts Slower Profit Growth as PC, Smartphone Market Slump. Lenovo Group Ltd. posted its slowest full-year profit growth in five years amid weak demand for PCs and slowing growth in smartphone shipments. Net income for the the year ended March 31, was $829 million compared with the $830.2 million average of 26 analyst estimates compiled by Bloomberg. Sales climbed to $46.3 billion, with analysts expecting $46.9 billion.

• Six Reasons You Should Be Paying More Attention to Canada. Ignore it at your peril. 

• Obama Dismisses Fall of Ramadi in Iraq as ‘Tactical Setback’. The fall of the Iraqi city of Ramadi to Islamic State was only a “tactical setback” and not a sign the U.S. and its allies are failing in the fight against extremists, President Barack Obama said in an interview published Thursday in the Atlantic magazine. “I don’t think we’re losing,” Obama said in the interview conducted by Jeffrey Goldberg Tuesday at the White House. “There’s no doubt there was a tactical setback, although Ramadi had been vulnerable for a very long time, primarily because these are not Iraqi security forces that we have trained or reinforced.” Obama also defended his pursuit of a nuclear deal with Iran, saying he has a personal stake in resolving a conflict with “profound national security” implications. “Twenty years from now, I’m still going to be around, God willing,” he said. “If Iran has a nuclear weapon, it’s my name on this.” 

• Emerging Stocks Slide as Eastern Europe Declines Outweigh China. Emerging-market stocks fell for a fourth day as markets from Turkey to the Czech Republic slumped after data showed growth in manufacturing and services in the euro zone expanded less than forecast, outweighing gains in China. Brazilian stocks slid as unemployment rose more than forecast and a gauge of gross domestic product contracted more than estimated. Equities in Istanbul sank the most this month. Taiwan Semiconductor Manufacturing Co. led declines in the Taiex index. A measure of developing-nation technology companies slid the most among 10 industry groups. Chinese shares jumped 1.9 percent on bets sluggish manufacturing will spur more stimulus. The MSCI Emerging Markets Index slid 0.4 percent to 1,032.31 at 10:51 a.m. in New York, pushing the decline this week to 1.1 percent.

• European Stocks Extend Three-Week High as Energy Producers Climb. European stocks rose for a fourth day, led by energy companies, as weaker-than-forecast U.S. data fueled speculation the Federal Reserve won’t rush to raise rates. The Stoxx Europe 600 Index added 0.4 percent to 407.87 at the close of trading, reversing an earlier drop of 0.4 percent.

• Consumers’ Expectations for U.S. Economy Drop Most Since 2013. Americans’ expectations for the economy slumped in May by the most since October 2013, casting doubt on consumers’ ability to revive growth. A measure tracking the economic outlook fell by 6 points to 44 this month, data from the Bloomberg Consumer Comfort Index showed Thursday. Thirty-nine percent said the U.S. economy is getting worse, the largest share since the federal government shutdown 19 months ago.

Fox News:

• Emails reportedly show confidant told Clinton Benghazi attack planned by fighters tied to Al Qaeda. (video) A longtime Clinton confidant reportedly advised then-Secretary of State Hillary Clinton two days after the 2012 Benghazi terror attack that an Al Qaeda-tied group had planned the deadly assault and used a protest as cover -- but despite this warning, Clinton's U.N. ambassador went on to publicly claim the attack was "spontaneous."

ZeroHedge: 

• Chinese 'Virus' Spreads To Germany: Meet The Company That Went From Record High To Zero In 1 Week.

• Housing Recovery - Real Or Memorex. (graph)

• Shake Shock(SHAK): Spot The Fast Food Outlier. (graph)

• "We Reached The Tipping Point": Income Inequality Is Highest Since Records Began. (graph)

• Kansas City Fed In Recession Territory After Respondent "Laid Off 8% Of Workforce In 2 Months". (graph)

• Crash Contagion: Second Chinese Billionaire Wiped Out In Seconds After Stock Instacrash. (graph)

• Stocks Recover Post-FOMC Losses After 4-For-4 Economic Data Misses. (graph)

• Public Confused Why World's Biggest Banks Admitting Criminal Fraud, Leads To Public Yawns.

• 40% Of Existing Home Sales At Or Above Asking Price, Highest On NAR Record. (graph)

• Philly Fed Hovers Near 15-Month Lows, Prices Paid Collapse Most Since Lehman. (graph)

• US Manufacturing PMI Tumbles To Lowest In 16 Months As New Orders Tumbled. (graph)

• Lumber Liquidators Loses Leader - Surprise CEO Resignation Extends Loss To 75% In 3 Months. (graph)

• Chicago Fed Contracts For 4th Month In A Row As Initial Jobless Claims Hover Near 40 Year Lows. (graph)

Business Insider:

• Tesla's(TSLA) home battery doesn't make economic sense for homeowners.

• Boy Scouts' leader says ban on gay adults is not sustainable.

• Crude oil is surging. (graph)

• Everything we know so far about the sudden implosion of the world's biggest solar stock.

• BUSTED: Paul Krugman removed 20 years of data from a chart to show a correlation that wasn't really there.

• China and the US just had a confrontation over the South China Sea.

Reuters:

• CME(CME) developing European gold futures contract.

Les Echos:

• Germany's Schaeuble Doesn't Rule Out Greek Bankruptcy. "I would consider for a long time before repeating that Greece won't go bankrupt," German finance minister Wolfgang Schaeuble said in an interview. Schaeuble said in October 2012 that there would be no Greek bankruptcy; the situation today is very different, he said. Far too little progress has been made in talks with Greece, Schaeuble said.

Economic Times:

• Tata Steel Falls as Q4 Results Disappoint. Shares of Tata Steel plunged as much as 5.56 per cent in early trade as the company disappointed on bottomline and topline figures in Q4FY15 due to weakening commodity prices and low volumes.

ISIS has built near-impregnable base and mass appeal: New book - See more at: http://www.straitstimes.com/news/world/europe/story/isis-has-built-near-impregnable-base-and-mass-appeal-new-book-20150205#sthash.TSyXsl7s.dpuf

ISIS has built near-impregnable base and mass appeal: New book - See more at: http://www.straitstimes.com/news/world/europe/story/isis-has-built-near-impregnable-base-and-mass-appeal-new-book-20150205#sthash.TSyXsl7s.dpuf