Today's Headlines

Bloomberg:

• S&P Puts 'Negative' Outlook on U.S. AAA Credit Rating. Standard & Poor’s put a “negative” outlook on the AAA credit rating of the U.S., citing a “material risk” the nation’s leaders will fail to deal with rising budget deficits and debt. “We believe there is a material risk that U.S. policy makers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013,” New York-based S&P said today in a report. “If an agreement is not reached and meaningful implementation does not begin by then, this would in our view render the U.S. fiscal profile meaningfully weaker than that of peer ‘AAA’ sovereigns.” Under President Barack Obama’s fiscal year 2012 budget, released in February, the total debt subject to the ceiling would be $20.8 trillion in 2016. The cost to protect against losses on Treasuries in the credit-default swaps market jumped to the highest in 11 weeks. Credit-default swaps on U.S. Treasuries climbed 7 basis points to 48.5 basis points as of 10:25 a.m. in New York, according to data provider CMA. That’s the highest level since reaching 49.4 basis points on Feb. 1 and means it would cost the equivalent of 48,500 euros a year to protect 10 million euros of debt against default for five years. The negative outlook by S&P means that the firm views a one-in-three chance it will cut a borrower’s rating within a two-year horizon, David Beers, S&P’s global head of sovereign and international public finance ratings, said in a Bloomberg TV interview. “This debate in the country really is just beginning and hard choices are going to have to be made,” Beers said.
• Fed's Fisher, Lockhart Say Rising Oil Prices Threaten Growth. Rising oil prices threaten U.S. growth, Federal Reserve Bank of Dallas President Richard Fisher and Federal Reserve Bank of Atlanta Dennis Lockhart said. "It is a double whammy" as "it slows down our economy" and "adds to inflationary pressures," Fisher said on a panel discussion in Atlanta today. "It adds to the volatility of the financial system," he said. Fisher, who has criticized the Fed's asset purchase program and expressed concern about rising prices, said the central bank has "successfully fought off" deflation.
• Kenny Says Ireland Won't Default on Debt as Greece Investor Concerns Mount. Irish Prime Minister Enda Kenny said the nation won’t default on its debt as he tries to rebuild confidence at a time when investors speculate Greece may struggle to pay back its borrowings. Irish, Greek and Portuguese bonds fell today amid mounting speculation Greece will have to restructure its debt. All three countries have sought bailouts from the European Union and International Monetary Fund, and Kenny’s government wants a reduction on the rate on its loans, which he has described as “too severe.” Irish bonds fell today, pushing the yield on the country’s 10-year debt to 9.76 percent at the close of trading in London, the highest in two weeks. The yield on Greek and Portuguese bonds of the same maturity rose to euro-era records.
• Tepco Sets Plan to End Fukushima Nuclear Crisis by October as Robots Find High Radiation. Robots sent into two buildings at Japan’s crippled Fukushima Dai-Ichi nuclear station detected radiation still too toxic for humans as the plant operator set out a plan to end the crisis in six to nine months. Measurements show one hour inside the No. 3 reactor building would expose humans to more than one-fifth of the radiation Japan has said is the most workers can endure in a year, the atomic safety agency said yesterday.
• India Marxists Face Kolkata Rout in Vote Revolt That Sends Signal to Singh. For the first time, Rajesh Babani won’t vote for West Bengal’s communists, joining a revolt that may end the 34-year rule of the world’s longest-serving elected Marxist government. The reason: his two sons can’t find jobs. “Almost everyone around here is searching for work,” said Babani, 43, as he leaned against the wall of a teashop painted with the Left Front’s red hammer-and-sickle motifs in a slum in Kolkata, the state capital. Babani, who can earn 100 rupees ($2) a day sweeping streets, will vote in elections that started today and that polls say will be won by the All India Trinamool Congress party. Elections in West Bengal and four other regions this month and next may evict three governments, sending a message to Prime Minister Manmohan Singh that voters are angry about unemployment, rising food prices and corruption. With 130 million people set to join India’s workforce in the next decade, the nation must boost labor-intensive manufacturing in states like West Bengal to avoid social unrest. “A volatile mass of young people out of work, sitting around doing nothing, will pose major problems for social stability,” said Jahangir Aziz, an economist at JPMorgan Chase & Co. in Mumbai. “It doesn’t require much to see a scenario where India’s advantage of having a young population very quickly turns into a major hindrance.”
• U.S. Homebuilder Confidence Fell in April on Sales Outlook. Confidence among U.S. homebuilders fell in April, led by a decline in the outlook for sales, a sign the residential construction market may languish near record-low levels. The National Association of Home Builders/Wells Fargo sentiment index declined to 16 this month from 17 in March, data from the Washington-based group showed today. A measure of sales expectations for the next six months dropped to the lowest level since October, and a gauge of current purchases also fell.
• Sales Gains Signal More U.S. Growth, Business Economists Say. More U.S. companies than at any time since 1994 reported sales gains in the first quarter, a sign they’ll keep hiring and investing, a survey showed. The percentage of businesses reporting an increase in sales in the past three months climbed to 63 percent, while fewer companies said revenue fell, according to a survey issued today by the National Association for Business Economics. Rising sales and profit margins help explain why economists project the labor market will improve in coming months and capital spending will keep manufacturing at the helm of the economic expansion. At the same time, the share of firms that raised prices to recoup higher materials costs more than doubled from the prior survey, signaling inflation may pick up.
• Libyan Rebel Attack by Qaddafi Loyalists as Migrants Flee Misrata. People fleeing the embattled Libyan port city of Misrata under fire from Muammar Qaddafi’s forces were ferried out today, while rebels in pickup trucks mounted with machine guns repelled an attack at a strategic outpost. Almost 1,000 migrants, mostly Ghanaians, who had been stranded in Misrata, were rescued by the International Organization for Migration. In the east, loyalists earlier shelled Ajdabiya, about 160 kilometers (100 miles) south of the rebel stronghold of Benghazi, Mustafa Gheriani, spokesman for the rebels’ Interim Transitional National Council, said in an interview. Rebels have struggled for weeks to take and hold cities in central Libya, which have been the focus of most of the fighting since the uprising began in February, calling for deliveries of heavy weaponry and for the coalition led by the North Atlantic Treaty Organization to increase attacks. NATO air strikes have so far failed to stop Qaddafi forces from endangering civilians.
• Finland's Euro-Skeptics Poised to Form Government Following Election Upset. Finland’s euro-skeptic bloc is poised to enter a government with the pro-Europe National Coalition led by Finance Minister Jyrki Katainen after voters used yesterday’s election to protest against funding bailouts. The True Finns, whose leader Timo Soini says taxpayers shouldn’t have helped rescue Greece or Ireland, surged almost 15 points to 19 percent, the Justice Ministry said. Katainen’s group won 20.4 percent to become Finland’s biggest party for the first time. Prime Minister Mari Kiviniemi’s Center Party got 15.8 percent and the Social Democrats, which also opposed bailouts for the two countries, won 19.1 percent. Kiviniemi will lead her party in opposition after its “huge defeat,” she told broadcaster YLE.
• Iron-Ore Ship Rents Fall to Six-Week Low on Surplus Vessels. Rents for capesize ships that haul iron ore fell to the lowest level in six weeks on excess vessel supply. Hire rates dropped 2.9 percent to $6,655 today, according to data from the Baltic Exchange in London. That’s the lowest since March 7 and the 11th straight decline. Rentals fell 36 percent in the three weeks to April 15. “Ship supply continues to outpace demand for most asset classes,” Jonas Advocaat Kraft, an analyst with Pareto Securities AS in Oslo, said in a note today. The carrying capacity of the fleet of ships to haul commodities such as coal, iron ore and grains will expand 13 percent this year, compared with a six percent increase in demand, according to forecasts from London-based Clarkson Plc. Companies ordered too many ships in 2007 and 2008, when the Baltic Dry index, a measure of commodity shipping costs, averaged 6,730 points. The index then plunged 60 percent during the next two years, according to the exchange. The gauge fell 0.9 percent to 1,284 points today, a 15th straight drop.

Wall Street Journal:

• S&P Cuts U.S. Ratings to Negative. Standard & Poor's cut its outlook on the U.S. to negative, increasing the likelihood of a downgrade from its triple-A credit rating, as the U.S. continues to struggle with large budget deficits and rising government debt. "More than two years after the beginning of the recent crisis, U.S. policy makers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," S&P credit analyst Nikola G. Swann said.

CNBC.com:

• Goldman Sachs(GS) Pays Back Buffett His $5.5 Billion. Billionaire investor Warren Buffett received a $5.5 billion check from Goldman Sachs, repaying an investment Buffett made in Goldman at the height of the financial crisis, CNBC learned Monday.
• Inflation on the Rise: Fed's Bullard. The Federal Reserve should not exclude food and energy from the inflation numbers it targets, and those figures have been rising recently, St. Louis Federal Reserve Bank President James Bullard said on Monday.
• IMF Warns Response to Credit Boom 'Insufficient'. The International Monetary Fund on Monday said the policy response by emerging market economies to deal with a surge in capital inflows was "insufficient" and warned it could lead to a hard landing.

Business Insider:

• Did The President's Disastrous Budget Speech Cause The Shock US Downgrade? The merits of the S&P outlook downgrade aside -- we're skeptical -- it's interesting that the official downgrade announcement specifically talks about the political events of the past few weeks: The Ryan Plan and the Obama speech. One charge that's been leveled against the President is that he didn't actually introduce a plan, but rather gave a campaign speech centered around accusing the GOP of throwing grandma and grandpa underneath the bus.
• S&P: There's Still A Huge Risk Of More Bailouts, More Money For Fannie and Freddie, And a Collapsing Student Loan Market. One of the more interesting paragraphs from S&P's downgrade of the US debt outlook focuses on the financial sector:
• Saudi Arabia Spits In The Face Of Everyone Who Wants OPEC To Pump More Oil.
  

Zero Hedge:

• Greek 2-Year Bond Yield Passes 20%. (graph)
• Obama's Budget Increases Deficit By 41% Over CBO Baseline Over Next Decade. In release timed perfectly so as not to interfere with the congressional vote last week, late on Friday the CBO put out its comparison of the Obama's budget, proposed back in February, with the CBO baseline assumption. The bottom line, and probably the main reason for the implicit S&P downgrade of the US, is that comparison the President's budget to the CBO baseline indicates that deficits are expected to rise by 41% over the next 10 years: the CBO project a deficit of $6.7 trillion while the President's number is $9.5 trillion, a 41% increase or $2.7 trillion. Got printing presses?

Washington Post:

• U.S. Secretly Backed Syrian Opposition Groups, Cables Released by WikiLeaks Show. The State Department has secretly financed Syrian political opposition groups and related projects, including a satellite TV channel that beams anti-government programming into the country, according to previously undisclosed diplomatic cables.

Miami Herald:

• Building Boom in Low-End Housing Underway in South Florida. There’s a quiet building boom taking place in South Florida, but it’s nothing like the mid-decade condo rush that ended in an epic economic bust. The new towers going up today are not being built on the water for the affluent, but on the chipped sidewalks of gritty neighborhoods for the region’s poorest families. The 2009 federal stimulus package and other government programs aimed at fixing the housing crisis have helped boost the affordable housing sector, which uses government funds to build rental communities for low-income residents.
  

LA Times:

• Mexican Cartels Setting Up Shop Across U.S. As the cartels expand up and out from the Southwest border, they are sending waves of men like Pineda, many of them trained in Mexico, to run their U.S. operations. In the last few years, they have established a prosperous retail industry, with cartels staking out "market territories," lining up smuggling routes, and renting storage bins and drug houses.
• Summer Airfares May Climb 15% From A Year Earlier. Higher fuel costs and rising demand for flights are expected to push up the average fare for domestic travel to nearly $390 by the time the season peaks.
  

Charlotte Observer:

• MoveOn.org Plans Bank of America(BAC) HQ Protest Over Taxes. The liberal advocacy group MoveOn.org is making Bank of America a target in a campaign over what it calls unfair tax policies. Members of the group plan to rally outside the bank's Charlotte headquarters Monday, the day federal income tax payments are due. It's part of a national campaign aimed at other major corporations, including Google(GOOG), Wells Fargo(WFC) and Goldman Sachs(GS). MoveOn says the companies are using loopholes in the tax code to avoid paying their fair share.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Monday shows that 20% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Thirty-seven percent (37%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).

Reuters:

• GE(GE), Google(GOOG) to Invest in $2 Billion Oregon Wind Farm.
• Commodity Costs Send GM(GM) Prices Up $123 Per Car. General Motors Co (GM) on Monday said it will raise prices for its cars and trucks in the U.S. market an average of $123 per vehicle starting May 2, due to rising commodity costs.
• Cantor Calls S&P Action 'Wakeup Call' on Debt Limit. U.S. House of Representatives Republican leader Eric Cantor on Monday called the Standard & Poor's downgrade of U.S. credit outlook "a wake-up call" against those seeking to "blindly increase" the U.S. debt limit. Cantor said the S&P action makes clear that any increase in the debt limit must be accompanied by "meaningful fiscal reforms that immediately reduce federal spending and stop our nation from digging itself further into debt."

Financial Times:

• El-Erian: A Warning For The US, And For The Global Economy. Mohamed El-Erian, chief executive and co-chief investment officer at PIMCO, responds to Standard & Poor’s latest action on US debt.

Telegraph:

• European Sovereign Debt Crisis Worsens As Investors Bet Against Ireland, Portugal and Greece. The European debt crisis worsened as investors ignored Greece's claims it won't need to restructure its debt, Ireland's banks were cut to junk status and Portugal's planned bailout was threatened by a possible veto from Finland.

Die Welt:

• Restructuring of Greece's debt is inevitable and only a question of time, citing an unnamed serving Greek government minister.

Frettabladid:

• Moody's Investors Service and Standard & Poor's will probably decide whether to cut Iceland's credit grade this week, citing Finance Minister Steingrimur J. Sigfusson.

El Pais:

• Spain's big companies may face higher expenses from plans to cut their workforce through early retirement, citing a draft to be sent by the government for congressional consideration. Big companies with profit will have to pay unemployment benefits that have been funded by the state until now.

Diario Economico:

• The European Union and the IMF oppose extending the deadline for Portugal to reduce its budget deficit after that country requested financial assistance.

Eleftherotypia:

• Greece's government asked the IMF and the European Union to extend the maturities of all the country's debt.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-2.28%)

Sector Underperformers:

• 1) Construction -3.15% 2) HMOs -3.13% 3) Coal -3.01%

Stocks Falling on Unusual Volume:

• WYNN, TI, FST, AIXG, PTR, BCS, DB, SI, HTWR, VPHM, QNST, ITMN, CRUS, LAYN, VRA, ACOR, PANL, AMTD, GOOG, PRMW, CVLT, MWIV, TDSC, GTLS, TZOO, GOLD, SODA, PBE, PID, PRF, PWO, PXQ, MDY, IRS, SNN, PTI, CYH, MTL, PJP, PVD, HNP, WTR, SIL, KNL and DMD
  

Stocks With Unusual Put Option Activity:

• 1) AVP 2) CRUS 3) EP 4) RIO 5) CMA
  

Stocks With Most Negative News Mentions:

• 1) GPS 2) HRB 3) LLY 4) GCI 5) D
  

Charts:

• ETFs Falling on Unusual Volume
• Stocks Falling on Unusual Volume
  

Bull Radar

Style Outperformer:

• Large-Cap Value (-1.67%)

Sector Outperformers:

• 1) Homebuilders -.90% 2) Retail -1.11% 3) Utilities -1.13%

Stocks Rising on Unusual Volume:

• CBEY, AMRN, TITN, THOR, RGLD, HRBN, REGN, SBR, GWW, TZA, FAZ, QID, SCO, SDS and SKF
  

Stocks With Unusual Call Option Activity:

• 1) AONE 2) AMRN 3) JNJ 4) MNTA 5) GFI
  

Stocks With Most Positive News Mentions:

• 1) BWC 2) CFNL 3) CBEY 4) FDO 5) AMED

Charts:

• ETFs Rising on Unusual Volume
• Stocks Rising on Unusual Volume
  

Monday Watch

Weekend Headlines
Bloomberg:

• IMF Thinks Greece Should Consider Debt Restructuring, WSJ Says. The International Monetary Fundbelieves Greece’s debt is unsustainable and that the country’s government should consider a restructuring as early as next year, the Wall Street Journal said, citing three unidentified people familiar with the situation. Senior IMF officials have told European Commission and euro-zone governments that a restructuring should be considered, the paper said. IMF, which hasn’t recommended a restructuring of all the country’s debt, has considered extending its loan repayment schedule, IMF spokesman William Murray told the paper. Euro-zone officials, including finance ministers, have said it is necessary to restructure Greece’s debt and the European Central Bank responded by saying it didn’t want a public discussion, an unidentified official familiar with the situation told WSJ. A first step would be to substantially extend Greek bond maturities, another unidentified official said, according to the paper. That may include extending debt repayments by as much as 30 years, the official said.
• Euro Falls Versus Dollar, Yen on Concern Sovereign Debt Crisis Worsening. The euro fell for a second day against the dollar on speculation Greece may be unable to avoid a default even as officials said debt restructuring is not being discussed. Europe’s common currency declined to the lowest in more than two weeks against the yen with Finland’s euro-skeptic bloc poised to form a government. New Zealand’s dollar slid against all its major peers on concern monetary tightening will slow growth in China and after consumer prices in the South Pacific nation rose less than some economists forecast. “We are seeing signs the debt crisis in Europe is resurfacing,” said Misato Nakashima, a currency analyst at Himawari Securities Inc. in Tokyo. “The euro is poised to weaken as people have been cautious about its rapid advance recently.” The cost of insuring Greek government debt rose to a record on April 15, with the contracts indicating investors see a more than 60 percent chance the nation will default within five years. Greece received a bailout from the European Union and the International Monetary Fund last year, and was followed by Ireland and Portugal in seeking aid. Resistance to bailouts is growing in Europe. Support for the True Finns, whose leader Timo Soini says taxpayers shouldn’t have helped rescue Greece or Ireland, jumped almost 15 points to 19 percent in Finland’s elections, the Justice Ministry said. The National Coalition won 20.4 percent to become Finland’s biggest party for the first time. The formation of an anti-European coalition government in Finland would weigh on the euro, London-based Sara Yates and Tokyo-based Yuki Sakasai, strategists at Barclays Captal, wrote in a note to clients. “Investors are starting to get more cautious about risk exposures with fears of increasing Chinese policy tightening and difficulties with regard to a Greek debt restructuring,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington.
• Zhou Pledges More Tightening as China Raises Reserve Ratios. China increased banks’ reserve requirements to lock up cash and cool inflation, and central bank Governor Zhou Xiaochuan said monetary tightening will continue for “some time.” Reserve ratios will rise a half point from April 21, the People’s Bank of China said on its website yesterday, pushing the requirement to a record 20.5 percent for the biggest lenders. The move came less than two weeks after an interest-rate increase. Zhou sees no “absolute” limit on how high reserve requirements can go, he said April 16. The nation’s fifth interest-rate increase since the financial crisis may come as soon as next month after inflation accelerated in March to the fastest pace since 2008, Societe Generale SA said. Chinese policy makers may also consider allowing faster appreciation in the yuan, described by the U.S. as “substantially” undervalued, to reduce the cost of imported commodities such as oil. Higher reserve requirements “will help tighten monetary conditions and prevent banks from lending aggressively in the coming month,” said Liu Li-Gang, an Australia & New Zealand Banking Group economist in Hong Kong who formerly worked for the World Bank. Policy makers may also increasingly rely on the yuan to contain “imported inflation,” Liu added. “Our monetary policy will continue to move from moderately loose to prudent,” Zhou said at a briefing in the southern Chinese province of Hainan, where he attended the Boao Forum for Asia. “The trend will continue for some time.” He said that the government will “remove the monetary factors that are related to inflation,” echoing comments made by Premier Wen Jiabao. Officials are grappling with the aftermath of a record 17.5 trillion yuan of lending over 2009 and 2010 that drove up property prices, leading to official concern at the risk of social discontent. Taming inflation is the government’s top and “urgent” priority, China’s cabinet said after meeting in Beijing to review the performance of the world’s second-biggest economy ahead of the release of the quarterly GDP numbers.
• Tighter Monetary Policy Likely as Europe Fights Price Pressure, Weber Says. Bundesbank President Axel Weber said today that European price pressures have increased significantly and that tighter monetary policy can be expected. Weber, who is a European Central Bank governing council member, told reporters in Washington that the ECB “countered” inflationary pressure with its interest-rate increase April 7. “We see a significant increase in inflationary pressure,” Weber said. “We’re still of the opinion that the current monetary policy stance at an interest rate level of 125 basis points continues to be supportive of the economy and expansive.”
• Libya Fighting Rages Amid Conflicting Reports on Rebels Fleeing. Fighting raged around the Libyan cities of Misrata and Ajdabiya amid conflicting reports that rebels trying to oust Muammar Qaddafi were fleeing. Rebels in pickup trucks mounted with machine guns were running away from Ajdabiya, according to the New York Times and the Associated Press, while Al-Jazeera and Al-Arabiya television networks said the rebels had halted Qaddafi’s forces at the Western gate of the city. All the news services have correspondents on the scene. Shelling in Misrata, the main rebel-held city in the west and Libya’s third-largest city, has killed five people and injured 47 since yesterday, Al-Jazeera reported. Qaddafi’s forces have fired rockets and cluster bombs into residential areas, according to the New York Times and Human Rights Watch. “The rebels don’t have the logistics or organization to move forward with major objectives at this time,” said Andrew Terrill, a Middle East specialist at the Strategic Studies Institute of the U.S. Army War College in Carlisle, Pennsylvania. “Unless we see large scale surrender from Qaddafi loyalists, I don’t see too many cities changing hands.”
• Crude Oil Declines as Saudi Arabia Says Market Is 'Oversupplied'. Oil declined for the first time in four days in New York after Saudi Arabia, the world’s biggest exporter, said the global market has adequate crude supplies. Futures slipped as much as 0.9 percent after Saudi Arabia’s Oil Minister Ali al-Naimi said yesterday the “market is oversupplied.” Crude fell 2.8 percent last week on speculation price gains spurred by conflicts in the Middle East will curb economic expansion. The World Bank said last month East Asia needs to tighten monetary policy and governments should let stimulus packages lapse. “You don’t see a major supplier of crude make comments like that unless there’s a genuine feeling to get prices lower,” Jonathan Barratt, managing director of Commodity Broking Services Pty in Sydney, said by telephone today. “If the price is too high as stimulus packages come off, you’re going to grind to a halt quickly.” Crude oil for May delivery slid as much as 94 cents to $108.72 a barrel in electronic trading on the New York Mercantile Exchange.
• World's Poor 'One Shock' From Crisis as Food Prices Climb, Zoellick Says. World Bank President Robert Zoellick said the global economy is “one shock away” from a crisis in food supplies and prices. Zoellick estimated 44 million people have fallen into poverty due to rising food prices in the past year, and a 10 percent increase in the food price index would send 10 million more people into poverty. The United Nations FAO Food Price index jumped 25 percent last year, the second-steepest increase since at least 1991, and surged to a record in February. Food price inflation is “the biggest threat today to the world’s poor,” Zoellick said at a press conference following meetings of the World Bank and the International Monetary Fund. “We are one shock away from a full-blown crisis.” “For most commodities, stocks are relatively low,” he said. “You have one other weather event in some of these areas and you really take a danger zone and start to push people over the edge.” Economic growth “is leveling off after a post-crisis recovery,” Zoellick said. “The question now is whether it’s strong enough to reduce unemployment, particularly in developed countries. Inflation is up in developing countries, and this could lead to overheating or asset price bubbles.”
• G-20 Names 'Too Big to Ignore' Economies, Downplays Shocks. The U.S., China and five other large economies will face deeper scrutiny from their peers to ensure their policies don’t derail a global expansion that finance chiefs bet is strong enough to absorb recent shocks. The seven countries have a gross domestic product greater than 5 percent of the Group of 20 nations’ economy, and so carry “the greater potential for spillover effects,” G-20 central bankers and finance ministers said during weekend talks in Washington. Drawing up the list is part of a plan to spot imbalances in individual economies such as large trade gaps, and prescribe policies to fix them before they harm global growth.
• Ex-MLB Player Lenny Dykstra Charged With Bankruptcy Fraud. Former Major League Baseball player Lenny Dykstra was charged with removing, selling and destroying property from his $18.5 million mansion after he had filed for bankruptcy in 2009. Dykstra, 48, was arrested April 14 in Encino, California, by the Los Angeles Police Department on separate grand theft charges, according to an e-mailed statement from Thom Mrozek, a spokesman for the U.S. attorney’s office in Los Angeles. Dykstra is held on $500,000 bail.

Wall Street Journal:

• Eerie Hush Descends on Japan's Nuclear Zone. Life, by and large, is what is absent in this town, just a few miles away from the troubled Fukushima Daiichi nuclear plant. Futaba, once home to 7,000 residents, is one of eight towns forced to evacuate the day after the March 11 earthquake and tsunami damaged the nuclear plant. In the following days, tens of thousands of residents living within 12 miles of the damaged reactors fled. Last Monday, the Japanese government expanded the mandatory evacuation zone to encompass more towns.
• Storms Leave at Least 43 Dead Across Six States. A devastating storm system spawned dozens of tornadoes as it barreled from Oklahoma to North Carolina, decimating communities in six states and leaving at least 43 people dead in its wake.
• More Firms Flex Pricing Power. More companies that had resisted raising prices are conceding they have few alternatives with commodity costs continuing to climb on everything from steel to cocoa beans. In the quarters following the recession, the ability to raise prices and make them stick re-appeared primarily at industrial companies selling to other businesses. Now, consumer-oriented companies that haven't been able to raise prices are running out of ways to hold the line on margins. The result is more retailers, construction-related and consumer-oriented companies are finding they must raise prices, even at the risk of undermining sales.
• Detroit Moves Against Unions. A new state law has emboldened the Detroit mayor and schools chief to take a more aggressive stance toward public unions as the city leaders try to mop up hundreds of millions of dollars in red ink.
• Hedge Funds Bounce Back. Hedge funds are bounding back, with return-hungry investors pumping up the industry to a size not seen since before the financial crisis laid it low. Total hedge-fund assets are approaching $2 trillion and are soon expected to surpass their peak in early 2008, according to industry analysts. Even start-ups and smaller funds, which were shunned by many investors in the wake of the crisis, are benefiting.
• States Seek Greenhouse-Gas Curbs. A battle over whether states can use nuisance laws to curb greenhouse-gas emissions from power plants will come to the Supreme Court Tuesday in a case that puts a twist on the debate over climate policy. The case pits a coalition of states against five of the nation's biggest power companies and the Obama administration, which has said it intends to curb greenhouse-gas emissions from big utilities but objects to the way the states want to do it. The arguments come amid a running dispute between the administration and members of Congress who want to block the Environmental Protection Agency's effort to regulate the carbon dioxide pumped out of power plant smokestacks as a hazardous pollutant under the Clean Air Act. At issue is whether a state can seek a federal court order to force power plants in another state to curb emissions of carbon dioxide and other gases linked to climate change on grounds that those emissions create a public nuisance.
• Biggest Obstacles for Small Hedge Funds in Rules Overhaul. As healthier markets lift the hedge-fund industry, small managers could bear the brunt of regulations spawned by the financial crisis. Under the new rules, most hedge-fund managers are required to register with regulators and strengthen their compliance programs. The Dodd-Frank Act, which took effect in July, added layers of supervision for the hedge-fund industry, long seen as loosely regulated. Being registered with the Securities and Exchange Commission means managers have to appoint a chief compliance officer and review policies and procedures annually.
• Emerging Nations Reject Capital Plan. IMF Delays Program to Help Countries Manage Short-Term Inflows; as Geithner Blames China, Others Blame the Fed.
• Brazil's Inflation Economics.
• For Greece, the Path to Restructuring Holds Pitfalls. To many private-sector economists, the idea that Greece eventually will have to default on its towering debts is almost a foregone conclusion. But the path has plenty of pitfalls.
• China's Wealth-Fund Chief Warns on Global Growth. The head of China's sovereign wealth fund, China Investment Corp., said he sees gathering clouds over the global economy, with the continuing debt crisis in Europe, no end in sight to the U.S. property slump and natural disasters that have set back a nascent recovery in Japan.
• Where the Tax Money Is. Obama targets the middle class while pretending to tax only the rich.
• The 30-Cent Tax Premium by Arthur Laffer. Tax compliance employs more workers than Wal-Mart, UPS, McDonald's, IBM and Citigroup combined. There is a lot more to taxes than simply paying the bill. Taxpayers must spend significantly more than $1 in order to provide $1 of income-tax revenue to the federal government.

Marketwatch.com:

• Japan Nuclear-Plant Fix May Take 9 Months: Tepco. The operator of the Fukushima Daiichi nuclear power plant on Sunday said it may take six to nine months to stop radiation leaks and stabilize reactors damaged in the devastating March 11 earthquake and tsunami.

CNBC:

• That's Pricey: 13 Items That Cost More, Or Will.
• World Finance Chiefs Chastise US on Budget Gap. World finance leaders Saturday chastised the United States for not doing enough to shrink its massive overspending and warned that budget strains in rich nations threaten the global recovery. Finance ministers in Washington for semi-annual talks took sharper aim than in previous years at the United States' $14 trillion debt.
• China's Growth Could Halve to 5% in Next 10 Years. China’s miraculous growth era is over. The financial crisis has dealt a major blow to its export-led growth model by ushering in a prolonged period of weak global growth. Even if China is successful at igniting domestic consumption, GDP growth could well halve to 5 percent a year on average in this decade.

NY Times:

• Unions Woo Airport Security Screeners. Public employee unions may be taking a shellacking in Wisconsin and Ohio, but that has not discouraged the unions representing federal employees from vying to recruit 44,000 airport screeners. It is the largest unionization effort of federal workers in the nation’s history. By next Tuesday, the screeners, employees of the Transportation Security Administration, are to finish casting their votes on whether to unionize. Almost everyone agrees that they will choose to do so.
• On School Buses, Ad Space for Rent. Cash-hungry states and municipalities, in pursuit of even the smallest amounts of revenue, have begun to exploit one market that they have exclusive control over: their own property. With the help of a few eager marketing consultants, many governments are peddling the rights to place advertisements in public school cafeterias, on the sides of yellow school buses, in prison holding areas and in the waiting rooms of welfare offices and the Department of Motor Vehicles. The revenue generated by these ads is just a drop in the bucket for states and counties with deficits in the millions or billions of dollars. But supporters say every penny helps.
• Inflation in China Poses Big Threat to Global Trade. As the United States and Europe struggle to get their economies rolling again, China is having the opposite problem: figuring out how to keep its revved-up growth engine from generating runaway inflation.
• Seeking Clues in Goldman's(GS) Succession Plan.
  

Business Insider:

• Jesse Jackson Jr. Makes Unbelievably Ignorant Claims That The iPad Is Killing American Jobs. (video)
• Timo Soini's First Order of Business: Torpedoing The Portugal Bailout.
• Bahrain Moves Troops Into The Capitol For A New Crackdown On Protests.
• Black Swan: $10 Oil.
• Saudi Arabia Vs. Iran: The New Cold War.
• 20 Signs That We're Approaching A Global Food Crisis.
• Images of Devastation in Japan a Month After The Earthquake. (pics)
  

Zero Hedge:

• A Golden Tipping Point: University of Texas Take Delivery of $1 Billion in Physical Gold.
• Must See: TEPCO Releases Video From Unmanned Helicopter Drones Above Fukushima as Robots Are Finally Used in Restoration Effort.
• Will The Finnish Vote Dead End Europe's Bailout Bonanza?
  

Seattle Times:

• Future of Proposed Solar-Power Plant Looks Dim. A proposal to build the largest solar photovoltaic plant in the Pacific Northwest may be on the verge of collapse due to financing problems. The $300 million Teanaway Solar Reserve, planned near the Central Washington town of Cle Elum, was announced to much hoopla two years ago. At the time, backers said generous federal tax incentives and a citizen initiative requiring utilities to buy power from renewable sources helped make the project attractive. But project backers now say that even with big subsidies, the Teanaway Solar Reserve may not pencil out.

CNN Money:

• Video: Prosecute Goldman Sachs(GS) or Quit, Spitzer Tells Holder.

Politico:

• Once Shunned, Al-Jazeera Has Fans in Obama White House.
• President Obama to Ignore 'Czar' Ban.
  

USA Today:

• Obama Hits Low Point in Gallup Poll -- 41%. President Obama's approval rating in the Gallup daily tracking survey is down to 41%, matching the lowest level of his presidency. "President Obama is now as unpopular as he has been at any time since he became president," reports Gallup. Possible reasons include the economy and the federal debt.
• Some Gas Stations Are Starting to Charge $5 a Gallon.
  

AP:

• Underground Beijing Church Members Detained. Nearly 50 members of an underground Beijing church were detained Sunday and its leaders were kept under house arrest as part of a crackdown on the unregistered congregation, a U.S.-based rights group said. Fu said 47 Shouwang members who tried to worship in an open-air public space on Sunday were detained and all the church's pastors and leaders were under house arrest or in detention. In an earlier statement, Fu said some church members had lost their homes or jobs amid an official campaign to shut down the church.While China's Constitution guarantees freedom of religion, Christians are required to worship in churches run by state-controlled organizations. However, more than 60 million Christians are believed to worship in unregistered "house" churches, compared to about 20 million in the state churches, according to scholars and church activists. The growth of house churches has accelerated in recent years, producing larger congregations that are far more conspicuous than the small groups of friends and neighbors that used to worship in private homes that gave the movement its name. Their expansion and growing influence have unsettled China's rulers, always suspicious of any independent social group that could challenge Communist authority. Shouwang members have for years been at odds with Beijing officials over their right to worship. Tensions escalated earlier this month when the church was evicted from its usual rented place of worship, a Beijing restaurant. Church leaders decided to temporarily hold services in a public space, prompting police to tape off the area and detain anyone who showed up to take part, with nearly 200 people kept at a local school for several hours. A second attempt at open-air services in northwest Beijing's Haidian district resulted in Sunday's 47 detentions. Numerous uniformed and plainclothes police were parked near the office and shopping complex where Shouwang members were supposed to gather. An Associated Press journalist was followed and warned by plainclothes police not to conduct any interviews in the area.
  

Financial Times:

• German officials are considering allowing holders of Greek debt to swap them for safer securities, citing Chancellery and Finance Ministry officials. Under the plan, bondholders would swap Greek debt securities, at market prices, for less risky securities that would be guaranteed by Eurozone nations. Another option being considered would be for a trust to buy the bonds and extend their maturity or retire them. The plans would only work if the Greek government accepted them, an official said.
• Bair Puts Foot Down on Bail-Outs. Ending the “too big to fail” problem that makes taxpayers the guarantors of large financial institutions was one of the main goals of last year’s US financial reforms. To her evident chagrin, there are signs of life. Moody’s and Standard & Poor’s, the two main rating agencies, have declined to remove the implicit government subsidy they use to judge the creditworthiness of the biggest banks. “Read the law,” she says. “I hope they will rethink that . . . I think it’s a disservice to investors. They raise expectations of investors that they’re going to get bailed out when they’re not.
• European banks may not be subject to the higher capital rules proposed by the UK's Independent Commission on Banking, meaning they could enjoy a competitive advantage over domestic banks in the U.K., which "is a big worry," citing a person close to the Commission.
• Chevron Corp.(CVX) CEO John Watson said the UK government's decision to increase taxes on oil and gas production in the North Sea "without consulting with industry" makes the UK "one of the more unstable investment climates for our business," citing an interview with Watson.
  

Mail on Sunday:

• U.K. house prices may fall by as much as 25% by the end of next year, citing a report to be published by consultant CheckRisk tomorrow. Commercial property prices may fall more than residential property, according to the CheckRisk report.
  

Le Parisien:

• The conflict in Libya may go on for a long time, French Defense Minister Gerard Longuet was quoted as saying. Longuet called the conflict in Libya "long and complicated," and that he considered it a "weakness" for NATO forces to be pursuing aerial raids when they lacked information about what was happening on the ground and what the objectives were.

Journal du Dimanche:

• French President Nicolas Sarkozy's popularity fell to a record low, with 28% of voters polled by Ifop approving of his performance 12 months ahead of presidential elections.

Expansion:

• The number of unemployed in Spain may reach 5 million, Spanish Labor Minister Valeriano Gomez said.

ORF:

• European Central Bank Governing Council member Ewald Nowotny said he sees Greek and Portuguese banks struggle in the European Union stress tests.

Xinhua:

• China will curb "unreasonable" home demand to reflect the "real supply and demand balance," citing Housing and Urban-Rural Development Vice Minister Qi Ji. The government will increase the supply of land and new homes as part of efforts to control property prices.

Communist Party Magazine:

• Vice-Premier Li Keqiang said property bubbles may form in China if home prices gain "over-rapidly," according to a summary of a speech posted on the website. Surging home prices may bring financial risks to the country, Li said.
  

Caijing:

• China Banking Regulatory Commission Chairman Liu Mingkang urged scrutiny of the nation's so-called shadow banking system, including evaluating their risks and costs. The nation's so-called shadow banking system should be required to set aside reserve funds just as commercial banks do, Liu said. The shadow banking system should also be required to hold a minimum 10.5% overall capital adequacy ratio based on current Chinese banking industry standards, he said. The regulator will evaluate issuing of banks' licenses and be very strict with banks' applications to open new branches, Liu said.

Hexun.com:

• China should increase the frequency at which it raises interest rates and increase the magnitude of each increase, citing Wang Xiaoguang, a researcher with the Chinese Academy of Governance. These changes would help alleviate China's negative real interest rates, Wang said

China Securities Journal:

• China has room to raise interest rates and banks' reserve requirement ratios this year because of high inflation expectations, the paper said in a front page editorial today. The country faces difficulties achieving its 4% goal for consumer price increases this year.

21st Century Business Herald:

• China Merchants Bank Co. may raise about 60 billion yuan in 12 months, citing a person from the bank's investor relations department.

China Business Journal:

• China has "abundant" policies in reserve for property control and may announce new measures to implement current real-estate policies, citing an official from the Ministry of Housing and Urban-Rural Development.

China Times:

• The Chinese government may intervene directly in home prices, citing a housing ministry official. The housing and land ministries may also shift to using land policies to curb property prices.

Haaretz:

• Netanyahu Concerned New Egypt Government Will be Anti-Israel. Egyptian FM called Israel 'the enemy' in a statement that angered Israel in view of recent Egyptian requests for help in investments or in receiving more aid from the U.S. Congress. Three months into the Egyptian revolution, Israel is concerned that the new government's policy toward Israel could become hostile, Prime Minister Benjamin Netanyahu told European Union ambassadors last week in Jerusalem. "I am very concerned over some of the voices we've been hearing from Egypt recently," Netanyahu told the envoys. "I'm especially concerned over the current Egyptian foreign minster's statements." A minister from the forum of seven told Haaretz in Israel there are fears that as the September elections in Egypt draw closer, candidates will make harsh anti-Israel statements to win favor from the public.

Weekend Recommendations
Barron's:

• Made positive comments on (BA).

Night Trading

• Asian indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 106.0 -1.0 basis point.
• Asia Pacific Sovereign CDS Index 113.50 -1.75 basis points.
  
• S&P 500 futures -.16%.
• NASDAQ 100 futures -.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (LLY)/1.17
• (HAL)/.58
• (KEY)/.14
• (AMTD)/.29
• (MTB)/1.41
• (C)/.09
• (MMR)/-.14
• (GWW)/1.80
• (GCI)/.41
• (LNCR)/.49
• (TXN)/.58
• (STLD)/.41
• (TITN)/.36
  

Economic Releases
10:00 am EST

• The NAHB Housing Market Index for April is estimated at 17.0 versus a reading of 17.0 in March.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Fisher speaking, Fed's Lockhart speaking, Fed's Bullard speaking and the $30 Billion 3-Month/$28 Billion 6-Month T-Bill Auctions could also impact trading today.
  

BOTTOM LINE: Asian indices are slightly higher, boosted by mining and retail shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on Japan concerns, profit taking, rising eurozone debt angst, more shorting, technical selling, Mideast unrest, rising energy prices and emerging market inflation fears. My intermediate-term trading indicators are giving neutral signals and the Portfolio is 75% net long heading into the week.

Market Week in Review

S&P 500 1,319.68 -.64%*



The Weekly Wrap by Briefing.com.

*5-Day Change