Bear Radar

Style Underperformer:

• Large-Cap Value (+.74%)

Sector Underperformers:

• 1) Airlines -.88% 2) Utilities -.46% 3) Education -.41%

Stocks Falling on Unusual Volume:

• VE, TGT, CTRN, SPLS, CISG, BRC, CHS, AFL and HSY
  

Stocks With Unusual Put Option Activity:

• 1) EK 2) SPLS 3) EWJ 4) AFL 5) YONG
  

Stocks With Most Negative News Mentions:

• 1) LFT 2) KRC 3) CTRN 4) ATML 5) ITMN
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth (+1.17%)

Sector Outperformers:

• 1) Disk Drives +2.21% 2) Oil Service +1.76% 3) Computer Hardware +1.38%

Stocks Rising on Unusual Volume:

• ADI, CPX, BEXP, EROC, SBGI, SODA, DELL, SIMO, VOLC, RMBS, MAKO, VECO, MPEL, CREE, EXPE, MOBI, RIMM, SOLR, WTM, ANF, CVI, TZOO, LYV, VSAT, WNR, NANO, WNR, EVEP, UCO, UA, FOE, CALX and POL
  

Stocks With Unusual Call Option Activity:

• 1) ADI 2) SPLS 3) SYMC 4) AMD 5) DELL
  

Stocks With Most Positive News Mentions:

• 1) UA 2) ADI 3) GIS 4) ALL 5) S

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.03%

Sector Outperformers:

• 1) Gold & Silver +4.88% 2) Oil Service +.99% 3) I-Banking +.69%

Stocks Rising on Unusual Volume:

• SHLD, WMT, EGO, PAAS, PCYC, JACK, NTES, PLCE, CTRP, KNM, MM, GDX and BKE
  

Stocks With Unusual Call Option Activity:

• 1) ALR 2) ABV 3) DLTR 4) VRSN 5) ZSL
  

Stocks With Most Positive News Mentions:

• 1) CAT 2) TIF 3) NOC 4) WMT 5) CSC
  

Charts:

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

Wednesday Watch

Evening Headlines

Bloomberg:

• IMF's Strauss-Kahn Said to Be Placed on a Suicide Watch at Rikers Island. Dominique Strauss-Kahn, the International Monetary Fund chief jailed at New York’s Rikers Island prison complex on charges of sexual assault and attempted rape, was placed on suicide watch at the facility, a person familiar with the matter said. Strauss-Kahn has made no attempt to injure himself, said the person, who declined to be identified because the information isn’t public. An assessment of Strauss-Kahn and other factors, including that it’s his first time in jail, led to the precaution, the person said. Being on suicide watch at Rikers means that an inmate is watched constantly and given a specially designed prison jumpsuit and shoes with no laces, the person said.
• China April Home Prices Gain as Smaller Cities Defy Efforts to Curb Prices. China’s home prices rose in 67 of 70 cities monitored by the government in April from last year, led by smaller cities that are defying efforts to control property prices nationwide. Housing prices increased at a faster pace in smaller cities and slowed in major ones, data posted on the statistics bureau’s website today showed. New home prices in Urumqi, capital of far western Xinjiang province, posted the biggest gain, up 9.3 percent last month from a year earlier, while prices in northern Mu Danjiang climbed 8.7 percent. In the capital Beijing, prices rose 2.8 percent in April, compared with 4.9 percent in March, while those in Shanghai slowed to a 1.3 percent gain.
• Illinois Senator Kirk Wants Dominique Strauss-Kahn to Resign IMF Position. U.S. Senator Mark Kirk wants the U.S. executive director of the International Monetary Fund, Meg Lundsager, to seek the resignation of IMF chief Dominique Strauss-Kahn, the lawmaker’s spokeswoman said. Kirk, an Illinois Republican who serves on a Senate appropriations subcommittee that has partial oversight of the IMF, is also seeking hearings on how the international fund has managed the European debt crisis, his spokeswoman, Kate Dickens, said today in an e-mail. Kirk would like to see Lundsager “call for the immediate resignation of Mr. Strauss Kahn,” who was charged with sexual assault and attempted rape by New York prosecutors, Dickens said.
• Treasury Yields May Fall Bellow 3% on Neckline Breach: Technical Analysis. Treasury 10-year yields may fall below 3 percent after breaking through the so-called neckline of a head-and-shoulders pattern, according to Bank of Tokyo- Mitsubishi UFJ Ltd. The pattern is formed by highs reached on Dec. 16, Feb. 9 and April 8, according to data compiled by Bloomberg. Yields dropped as low as 3.10 percent yesterday, falling below the neckline at about 3.15 percent that connects the base of the three peaks, said Kenichi Imai, chief manager of proprietary trading at the unit of Japan’s largest bank. “A clear break below the 3.15 percent level suggests yields will head toward a 200-day moving average at 3.06 percent,” Tokyo-based Imai said. “Rates may even drop below 3 percent,” he said.
• U.S. Senators Question Aid to Pakistan. The Senate Armed Services Committee chairman, Carl Levin, said the U.S. should curtail economic aid to Pakistan unless that government stops harboring insurgent groups that target American troops in neighboring Afghanistan. Levin, a Michigan Democrat, said that continued U.S. financial support to Pakistan should hinge on whether the Pakistani military takes action against the Haqqani network, an Afghan Taliban-allied group based in Pakistan’s northwestern border region with Afghanistan. “There is a real problem with continuing financial support for Pakistan when they continue to support the Haqqani network,” Levin told reporters in Washington yesterday. “These are people killing us. These people are killing us. And this is open.”

Wall Street Journal:

• Obama to Pledge New Mideast Aid. President Barack Obama will announce this week a new aid plan for the Middle East and North Africa that U.S. officials say will be far bolder than previous American economic assistance to the region. Mr. Obama will outline the plan, which could include debt cancellation and a reprogramming of financial aid the U.S. already provides to countries like Egypt, in a speech he is scheduled to deliver Thursday at the State Department. Whatever aid he announces, though, is unlikely to assuage Arab governments, which had been hoping the White House would push forcibly for a resumption of Palestinian-Israeli peace talks. The president's aides say his speech will focus only briefly on the issue. Senior U.S. officials are particularly alarmed by the deterioration in Cairo's finances since the street revolt that ousted President Hosni Mubarak in February. The Egyptian government has been forced to spend between $3 billion and $3.5 billion of its foreign-exchange reserves a month to pay for food and other commodities as tourism has plunged and overseas remittances have dried up. Egypt's government has been seeking relief on around $1 billion in debts tied to wheat purchases in the 1970s, according to officials involved in the talks. Cairo has paid off the principal on these loans, but continues to service interest payments. The administration is looking at a mixture of direct aid, debt relief, and export credits to help stabilize Egypt's finances. "There are a whole range of tools we could use," said a U.S. official. "We've been looking for the right mix." Mr. Obama may struggle to win over skeptics in Congress. The U.S. already provides Egypt with roughly $1.3 billion a year, and lawmakers are pushing the White House for deep spending cuts. Additionally, a number of lawmakers have raised concerns in recent weeks about Egypt's post-Mubarak foreign policy, particularly its warming relations with Iran and militant Palestinian group Hamas, which the U.S. and the European Union designate as a terrorist entity.
• As Field Thins, Search Goes On. The stumbling start of Newt Gingrich and the withdrawals of Mike Huckabee and Donald Trump from the presidential race have boosted Mitt Romney's standing in the Republican nominating contest, while opening lanes for other candidates to jump in.
• Banks and Merchants Reload for Fee Battle. Banks and credit unions are using a recent debit-card scam at Michaels Stores Inc. as fresh ammunition in their fight against a federal proposal to reduce the amount they can charge merchants for processing such payments.
• Ronald McDonald Called Out by Health Groups. More than 550 health professionals and organizations have signed a letter to McDonald's Corp. asking the maker of Happy Meals to stop marketing junk food to kids and retire Ronald McDonald. The letter, slated to run in the form of full-page ads in six metropolitan newspapers around the country on Wednesday, acknowledges that "the contributors to today's (health) epidemic are manifold and a broad societal response is required. But marketing can no longer be ignored as a significant part of this massive problem." "We are committed to responsible advertising and take our communications to children very seriously," McDonald's said in a statement. "We understand the importance of children's health and nutrition, and are committed to being part of the dialogue and solution. We serve high quality food, and our Happy Meals offer choice and variety in portions just for kids. Parents tell us they appreciate our Happy Meal choices."
• Clive Capital Not Facing Giant Losses. Today, rumors swept energy and grains markets that London-based Clive Capital, the largest commodity-focused hedge fund, was suffering huge losses on a wrong-way bet on energy prices, as well as a short, or negative stance, on wheat. But people close to the matter say the $5 billion firm is down about 10% so far this month. Certainly, that’s a sizable loss. But it’s not much changed from where Clive’s performance stood just about a week ago.
• The Hidden State Financial Crisis by Meredith Whitney. My latest research into opaque state financial statements suggests taxpayers will be surprised by how much pensions are underfunded.

MarketWatch:

• China Private Equity Taking Risk For High Yields. PE favors firms with ties to monopolies, opaque business practices.

CNBC:

• Fed Wants Annual US Bank Stress Tests. The Federal Reserve wants to subject US banks to annual stress tests, reserving the right to veto dividend pay-outs if they do not pass.
• Dell(DELL) Profit Beats Forecasts, But Sales Miss Slightly. Dell shares jumped in extended-trading Tuesday after earnings easily exceeded Wall Street estimates, though the firm handed in revenue that fell just shy of analysts' forecasts.

Business Insider:

• MATT TAIBBI: Here's How Goldman Sachs(GS) Lied To Its Customers and Congress. Matt Taibbi, the Rolling Stone writer who labeled Goldman Sachs a "vampire squid" in one of the defining stories of the financial collapse, has written another article on the Wall Street firm. This one is potentially more devastating.

IBD:

• Watchmaker Rides The Comeback Of The Wristwatch. It's a company called Fossil Inc. (FOSL) that's riding high atop a surprising fashion wave that has revived the wristwatch.

NY Times:

• Europeans Face Up to Chance of 2nd Greek Bailout. Confronting the looming prospect of a second bailout for Greece, European finance ministers insisted Tuesday on further deficit-cutting efforts from the government in Athens and acknowledged for the first time that the private sector could be included in a restructuring of Greek loans.
• Chemical Suspected in Cancer Is In Baby Products. More than 30 years after chemical flame retardants were removed from children’s pajamas because they were suspected of being carcinogens, new research into flame retardants shows that one of the chemicals is prevalent in baby’s products made with polyurethane foam, including nursing pillows, car seats and highchairs. The research does not determine if children absorbed the chemical, chlorinated Tris, from the products. But in an article to be published Wednesday in the journal Environmental Science & Technology, the researchers suggest that infants who use the products have higher exposure to the chemical than the government recommends.

Politico:

• Gang of Six at 'Impasse' as Tom Coburn Drops Out. The Gang of Six lost its strong blocker on the right Tuesday, as Sen. Tom Coburn pulled out of the bipartisan deficit reduction talks and predicted no meaningful deal can be reached until Democrats accept a greater share of savings from government benefit programs. “These guys have worked hard, and we had 80 percent of some significant things the country needs to do,” the Oklahoma Republican told POLITICO. “But right now, I don’t see us solving what needs to be solved.”

USA Today:

• 7 in 10 Americans Say High Gas Prices Hurt. As gas prices hover near $4 a gallon, nearly seven in 10 Americans say the high cost of fuel is causing financial hardship for their families, a new USA TODAY/Gallup Poll finds. More than half say they have made major changes to compensate for the higher prices, ranging from shorter trips to cutting back on vacation travel. For 21%, the impact is so dramatic they say their standard of living is jeopardized. Nationally, the price of a gallon of regular gasoline averages $3.96. That's up 38%, or $1.09, from levels a year ago.
• $50 LED Light Bulbs Hit 100 Watts as Federal Ban Looms. Two leading makers of lighting products are showcasing LED bulbs that are bright enough to replace energy-guzzling 100-watt light bulbs set to disappear from stores in January. Their demonstrations at the LightFair trade show in Philadelphia this week mean that brighter LED bulbs will likely go on sale next year, but after a government ban takes effect. The new bulbs will also be expensive — about $50 each — so the development may not prevent consumers from hoarding traditional bulbs.

Reuters:

• Tunisia Warns Libya Over "Enemy Actions". The Tunisian government may report Libya to the U.N. Security Council for committing acts of an enemy, Tunisian television reported on Tuesday. Tunisia considers recent acts carried out by its neighbour as "enemy actions," the broadcast said, citing a government communique. It was not immediately clear which acts were being referred to but earlier on Tuesday at least four Grad rockets fired from Libya landed inside Tunisia, according to a Reuters reporter at the scene.
• Emerging Nations Push for Say on Next IMF Chief. Emerging market countries challenged Europe's grip on the leadership of the International Monetary Fund on Tuesday as pressure mounted for the fund's jailed managing director Dominique Strauss-Kahn to quit. In a significant move China, which last year become the IMF's third most powerful member country, called for "fairness, transparency and merit" in the selection of the next IMF boss.

Financial Times:

• Banks Offer Pre-Crisis Loan Terms in Spain. Spanish banks have resumed offering mortgages on pre-crisis terms as they struggle to offload billions of euros of residential real estate repossessed during Spain’s property crash. The rush to get rid of repossessed homes in a housing market that has officially fallen 17 per cent from its peak comes at a time when Spanish banks have tightened lending for regular mortgages sharply while offering looser terms for distressed property. Banco Santander SA, Banco Bilbao Vizcaya Argentaria SA and Caja Madrid, Spain's three largest banks by assets, have started offering mortgages on pre-crisis terms, with loan-to-value ratios of up to 100% for 40 years, as they try to sell off repossessed homes.
• Housing Boom Raises Fears of Brazil Bubble.
• World Bank Sees End to Dollar's Hegemony. The World Bank expects the US dollar to lose its solitary dominance in the global economy by 2025, as the euro and the renminbi establish themselves on an equal footing in a new “multi-currency” monetary system.
  

Financial Times Deutschland:

• An emerging-market candidate should head the International Monetary Fund, Michael Fuchs, deputy floor leader of Chancellor Angela Merkel's Christian Democratic Union, said. It may be easier for an IMF leader who isn't from Europe to implement a "return to a solid budget" in some European countries affected by the debt crisis, Fuchs said.

Economic Observer:

• China's pork prices may rise to the highest level since 2008 because of high feed costs and low breeding stocks, citing a person familiar with the industry.

National Business Daily:

• About 1,000 of Beijing's real estate agents may close over the next three months because of low demand for housing, citing Beijing Homelink Real Estate Co. Vice President Lin Qian. The city's current existing home transaction volumes fell 50% from December and dropped about 20% from April of last year.

21st Century Business Herald:

• Beijing's home prices may fall more than 15% by March 2012, citing property agent Beijing Homelink Real Estate Co. Vice President Lin Qian.

ABS-CBN:

• Al Qaeda Has Caretaker Head, Expert Says. A leading specialist on al Qaeda said on Tuesday an Egyptian veteran militant was acting as an interim operational leader pending the expected appointment of deputy chief Ayman al-Zawahri as successor to Osama bin Laden. Noman Benotman, a former associate of bin Laden and now an analyst with Britain's Quilliam Foundation think tank, told Reuters Saif al-Adel was operating in effect as interim leader while the organisation collected pledges of loyalty to Zawahri.

Evening Recommendations
Citigroup:

• Reiterated Buy on (DKS), target $47.

Oppenheimer:

• Rated (THOR) Outperform, target $40.
• Rated (PODD) Outperform, target $25.
  

Night Trading

• Asian equity indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 107.0 -1.0 basis point.
  
• Asia Pacific Sovereign CDS Index 115.50 -.25 basis point.
  
• S&P 500 futures +.42%.
  
• NASDAQ 100 futures +.45%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CHS)/.25
• (TGT)/.94
• (ANF)/.13
• (BJ)/.56
• (DE)/2.06
• (EV)/.46
• (ALKS)/-.13
• (PETM)/.55
• (AAP)/1.37
• (SNPS)/.45
• (JACK)/.19
• (LTD)/.39
• (SPLS)/.32
  

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,700,000 barrels versus a +3,781,000 barrel gain the prior week. Distillate inventories are estimated to rise by +250,000 barrels versus a -843,000 barrel decline the prior week. Gasoline supplies are expected to rise by +950,000 barrels versus a +1,275,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.43% versus a -1.1% decline the prior week.
  

2:00 pm EST

• Minutes of FOMC Meeting.
  

Upcoming Splits

• (ALXN) 2-for-1
• (TDSC) 2-for-1
  

Other Potential Market Movers

• The Fed's Bullard speaking, 5-Year Treasury Note Auction, weekly MBA mortgage applications report, UBS Leveraged Finance Conference, (SYK) analyst meeting, (CAB) investor day, (PLT) analyst day and the (MTSN) analyst meeting could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by financial and technology shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 75% net long heading into the day.

Stocks Slightly Lower into Final Hour on Global Growth Worries, Rising Eurozone Debt Angst, Emerging Market Inflation Fears, Growing Mideast Unrest

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Above Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 17.61 -3.45%
  
• ISE Sentiment Index 112.0 +19.15%
  
• Total Put/Call 1.12 +19.15%
  
• NYSE Arms .80 -15.45%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 90.47 +1.92%
  
• European Financial Sector CDS Index 106.43 +15.16%
  
• Western Europe Sovereign Debt CDS Index 176.42 +.09%
  
• Emerging Market CDS Index 206.70 +.26%
  
• 2-Year Swap Spread 18.0 -1 bp
  
• TED Spread 23.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .03% +1 bp
  
• Yield Curve 260.0 -3 bps
  
• China Import Iron Ore Spot $178.10/Metric Tonne -.22%
  
• Citi US Economic Surprise Index -43.80 -5.5 points
  
• 10-Year TIPS Spread 2.30% -5 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +33 open in Japan
• DAX Futures: Indicating +35 open in Germany

Portfolio:

• Slightly Higher: On gains in my Biotech, Retail & Tech sector longs, Index Hedges and Emerging Market Shorts
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short, then added back (IWM), (QQQ) hedges
  
• Market Exposure: Moved to 75% Net Long

BOTTOM LINE: Today's overall market action is just mildly bearish as the S&P 500 trades near session highs despite rising eurozone debt angst, eurozone equity weakness, growing Mideast unrest, emerging market inflation fears, global growth concerns and rising food prices. On the positive side, Steel, Coal, Utility, Computer Service, Bank and Airline shares are especially strong, rising more than +.5%. (XLF) has outperformed throughout the day again. Gold is down -.68% and copper is gaining +.93%. The 10-year TIPS spread continues to weaken. The 10-year yield is falling -3 bps to 3.12%. Weekly retail sales rose +4.3% last week versus a +4.7% gain the prior week. On the negative side, Road & Rail, Education, Construction, HMO, Networking, Disk Drive, Semi, Computer, Oil Service, Oil Tanker and Alt Energy shares are under pressure, falling more than -1.0%. Cyclical stocks are badly underperforming with the MS Cyclical Index dropping -1.72%. The US price for a gallon of gas is falling -.02/gallon today to $3.94/gallon. It is up .80/gallon in 90 days. The UBS-Bloomberg Ag Spot Index is rising +1.39% and Lumber is dropping -4.31%. Lumber has collapsed about -35% in less than 2 months. The Spain sovereign cds is climbing +4.3% to 235.05 bps, the Portugal sovereign cds is climbing +1.8% to 604.91 bps, the Greece sovereign cds is gaining +3.2% to 1,270.64 bps, the Ireland sovereign cds is rising +1.9% to 612.66 bps and the Belgium sovereign cds is gaining 5.68% to 134.33 bps. The huge gain in the Eurozone Financial Sector CDS Index is a large negative. Commodities, in general, continue to trade as if further downside is in store. India's Sensex continues to trade very poorly and fell another -1.13% overnight, which leaves it down -11.56% ytd. Investor complacency remains fairly high given the developing headwinds. Market-leaders are trading better today. The S&P 500 found support right below its 50-day moving average this morning. Some more near-term equity strength is possible, but a solid bottom from the recent pullback is likely further out. I expect US stocks to trade mixed-to-higher into the close from current levels on less financial sector pessimism, short-covering, bargain-hunting and technical buying.

Today's Headlines

Bloomberg:

• Production Stalls on Autos, Housing Starts Fall. Industrial production in the U.S. unexpectedly stalled in April and housing starts dropped, posing hurdles to a rebound from the first quarter’s economic slowdown. Output at factories, mines and utilities was unchanged after a 0.7 percent gain in March, figures from the Federal Reserve showed today, led by a drop in auto production after parts supplies were disrupted by the earthquake and tsunami in Japan. Work began on 523,000 houses at an annual pace, down 11 percent, as tornadoes and floods in the South shut down construction sites.
• Spain May Have Billions of Euros of 'Hidden' Public Debt. Spain's regional and local administrations have "hidden" debt, not included in the official accounts, amounting to about $37 billion, according to research by Freemarket Corporate Intelligence, a consulting firm. The latest figures from the Bank of Spain show that the country's 17 autonomous regions have almost doubled their public debt, to 115 billion euros, since 2008, while municipal and provincial debt has risen to 35 billion euros and central government debt stands at 488 billion euros. However, public companies owned by local and regional governments also have substantial debt, and in many cases it doesn't have to be included in the figures under European Union guidelines. This "hidden" debt is likely to be revealed by new regional and local administrations to be elected on May 22.
• Investors Stick With Stocks as Hedge Funds Borrow, Merrill Says. Equities remained the asset class of choice for investors this month as hedge funds raised the level of borrowed money invested in stocks to a 3 1/2-year high, a BofA Merrill Lynch Global Research survey showed. A net 41 percent of 284 respondents, who together manage $814 billion, were “overweight” equities. That compares with 50 percent in April. A net 44 percent were “underweight” bonds in May, 6 percent overweight cash and 12 percent overweight commodities, which halved from April. An index of risk appetite slipped to 43 from 45, though remained above the long-term average of 40, the brokerage said.
• China Swaps Near 10-Week High on Risk of Further Tightening. China’s one-year swap rate was near a 10-week high on speculation further monetary tightening is planned after this year’s fifth increase in reserve-ratio requirements takes effect tomorrow. The yuan was little changed. “The impact of the latest reserve-ratio hike is already priced in, but we expect more tightening to come,” said Frances Cheung, a senior strategist at Credit Agricole CIB in Hong Kong. Cheung. “It’s not likely that inflation will ease until the third quarter.”
• The Baltic Dry Index, a measure of commodity-shipping costs, had a sixth consecutive fall on fleet expansion and weaker demand to haul grain cargoes. The index fell 1.3% to 1,274 points today. That's the lowest since April 28.The "grain season is starting to wane out of South America," Peter Norfolk, an analyst at Freight Investor Serviced Ltd. in London, said. There's a "relentless" supply of capesizes being delivered to owners and insufficient iron-ore cargoes to match it, he said.
• Greece Default Risk Rising With IMF Turmoil: El-Erian. The probability of Greece defaulting or restructuring its debt has increased since the arrest of International Monetary Fund head Dominique Strauss-Kahn, Pacific Investment Management Co.’s Mohamed El-Erian said. “Don’t underestimate how important Dominique Strauss-Kahn was in coordinating action” among European nations, El-Erian, the chief executive officer of Pimco, said in a Bloomberg Television interview on “In the Loop” with Betty Liu. “It’s the worst possible time to lose your general. You need the IMF to coordinate this global healing.”
• Oil Falls as Decline in U.S. Housing Starts Damps Economic Growth Optimism. Oil fell for a second day as U.S. housings starts dropped and industrial output stalled in April, damping optimism about the economic and fuel-demand outlook. Crude slipped as much 2.4 percent after the Commerce Department said work began on 523,000 houses at an annual pace, down 11 percent from March.
• California Cash Crisis May Loom Even as Brown Adds $6.6 Billion to Budget. California Governor Jerry Brown’s revised budget with $6.6 billion more revenue may not avert a cash crisis looming in July that may force the most-populous U.S. state to pay bills with IOUs for the first time since 2009. Brown yesterday proposed asking lawmakers to keep $9.1 billion of taxes and fees from expiring, then having a referendum to validate the extension in November or later, when a statewide ballot can be arranged. The state won’t be able to borrow cash from Wall Street in July or August with that validation vote pending unless Brown and lawmakers agree on spending cuts that would be activated if voters turn down the tax plan, Treasurer Bill Lockyer said.
• Syrians Protest in Capital After Report of Mass Grave Denied by Government. Syrian protesters kept up demonstrations, gathering in the suburbs of the capital and the central city of Homs, following reports of the discovery of a mass grave containing the bodies of anti-government activists. The Ministry of Interior in Damascus denied accounts of the burial ground in the southern city of Daraa, saying the allegation was part of a “campaign of provocation and baseless falsehoods,” state television reported today.
• Apple iPad Poised to Lead Tablet Sales Surge: Chart of the Day. Apple Inc. (AAPL)’s iPad and other tablets will cannibalize personal-computer sales “to an extent greater than we can currently envision,” according to Jefferies & Co. The CHART OF THE DAY depicts the firm’s annual sales estimates for tablets through 2014, along with last year’s total. The figures were provided in a report today by Peter Misek, an analyst at Jefferies. Sales will almost quadruple to 70 million devices this year, according to Misek. In the following three years, the annual total will more than triple to 246 million.

Wall Street Journal:

• Pressure Grows on Head of IMF. International pressure mounted Tuesday against International Monetary Fund Managing Director Dominique Strauss-Kahn, who is being held without bail in New York's Rikers Island jail on sexual-assault charges, as French broadcast authorities and politicians urged restraint in rushing to judgment. Several top French and European officials also urged fellow leaders to hold back on quick judgment against Mr. Strauss-Kahn, who was arrested by New York police on Saturday and charged with sexually assaulting a housekeeper in his suite at the Sofitel Hotel near Times Square.
• Fox Shifts How It Sells Online Video Ads. Fox Broadcasting plans to increase its load of online-video ads, and start combining its online and TV audiences when selling commercials to advertisers, as media companies race to boost revenue from Internet viewing of their TV shows.
• LinkedIn Hikes IPO Price Range by 30%.
• European Commission Raids Shipping Companies. The European Commission raided the offices of shipping lines in a probe of possible price fixing, the first step in an investigation that could lead to fines totaling more than a billion dollars.

MarketWatch:

• Gold, Silver Fall in Commodities Selloff.

CNBC.com:

• Kids' Book With 'F' Word in Title is No.1 on Amazon(AMZN).

Business Insider:

• Get Ready For The Mother Of All Commodity Paradigm Shifts, Which No One Sees Coming. People who are staring at a tsunami of demand for commodities from the developing world and predicting a doomsday of $400 oil and $4000 gold are missing the longer-term retreating tide of demand as citizens of the developed world actually demand decreasing amounts of energy, large goods, and heavy infrastructure.
• The Maid's Brother Speaks Out, As DSK Accuser Described as "Shy, Religious" Immigrant From West Africa.
• UBS' Andy Lees: "You Cannot Prepare To Deal With a Loan Situation as Bad as China's". Earlier we brought you the latest note from Art Cashin, who highlights mounting concerns in China. Cashin was riffing off his colleague UBS colleague Andy Lees, who has one of the gloomier notes about China we've seen in a long time.
• Art Cashin On The Worrisome China Situation That Everybody Needs To Watch.
  

Zero Hedge:

• TEPCO Provides Complete Fukushima Status Update And "Roadmap to Recovery".

New York Times:

• Agreement Between BP(BP) and Russian Oil Giant Collapses.
• Battered Dollar's Decline May Be Starting to Reverse. Could the dollar’s long slide be over?

Washington Post:

• U.S. Speeds Up Direct Talks With Taliban. The administration has accelerated direct talks with the Taliban, initiated several months ago, that U.S. officials say they hope will enable President Obama to report progress toward a settlement of the Afghanistan war when he announces troop withdrawals in July.
  

FINalternatives:

• BlueGold Down 26% in May's First Days. The first week of May is getting worse and worse for BlueGold Capital Management with each new report. The London-based commodity hedge fund, which was originally reported to have suffered “double-digit” losses, later quantified to a 20% drop during the week’s oil rout, actually lost 26%—twice as much as oil dropped during the week. The collapse comes little more than a year after the US$2.3 billion firm was forced to deny liquidation rumors after losing 11% during 2010’s first few weeks.

agrimoney.com:

• Goldman(GS), Not Hedge Funds, To Blame for Pricey Food. Banks such as Barclays and Goldman Sachs appear the villains of the potentially "irresponsible" wave of money which has driven food prices to record highs – and not hedge funds or speculators, anti-hunger campaigners have said. Institutional investors such as pension funds have played an "unwitting" role in directing of billions of dollars into commodity investments, and indices that "so far [have] always delivered a return". The wall of money from fund managers "more or less [guaranteed]… a profit in commissions" from investing in commodity indices may have distorted markets' response to supply and demand fundamentals, the charity said. "It may be that some of the more prudent financial actors, institutional investors including pension funds, are responsible for helping drive up food prices globally."

Politico:

• Rep. Paul Ryan: Health Reform Already Hurting Economy. House Budget Committee Chairman Paul Ryan framed health care costs and the president’s health law as key drivers of the nation’s economic and fiscal problems Monday, while warning that the president’s plan could lead to waiting lists for today’s seniors.

Reuters:

• Retailers See Consumers Hit By Higher Prices. Higher costs for gasoline, food and clothing are crimping the fledgling U.S. economic recovery, especially for lower-income consumers, earnings reports from several retailers showed on Tuesday.
• US Senators Want Price-Fixing Probe on Refiners.
  

Valor Economico:

• Brazil doesn't rule out employing capital controls to slow the inflows of foreign currencies that are helping stoke inflation, citing a government official. Dollar inflows are fueling the expansion of credit in the domestic market and inflation.
• Brazil's central bank is worried about companies' ability to repay dollar-denominated debt if the real depreciates sharply, citing a government official. The central bank plans to meet the threat by continuing to moderate credit growth and debts in foreign currencies, and by strengthening its defenses against a currency crisis.
  

Globe and Mail:

• Could U.S. Target Another Giant Hedge Fund? The dramatic conviction of hedge-fund kingpin Raj Rajaratnam on insider trading charges last week raises the question of where the long-running investigation will turn next. Although the answer to that question remains unclear, there are some signs that U.S. authorities have been sniffing around a big target. Various strands of their ongoing probe into illegal insider trading have turned up connections to SAC Capital Advisors, the mammoth hedge fund firm founded by Steven Cohen.

Shanghai Daily:

• Chinese Platinum Demand Falls. CHINESE demand for platinum jewelry fell to 51.3 tons in 2010, down 21 percent from a record year of 2009, specialty chemicals company Johnson Matthey said in a report. A combination of higher metal prices, adequate levels of manufacturers' stock and a greater focus on producing gold jewelry contributed to the decline in 2010.