Bull Radar

Style Outperformer:

• Small-Cap Growth (+.19%)

Sector Outperformers:

• 1) Coal +1.12% 2) Software +.95% 3) Disk Drives +.68%

Stocks Rising on Unusual Volume:

• CAJ, CKSW, ALLT, LNG, GNOM, NTAP, ASNA, MAKO, CBST, NETL, TIF, GES, GCO, EBS, SIG, HGG, PRXL, FOE, SMTC, XTXI, SD, SHOO, LPS, IPGP, COH, BKD and OB
  

Stocks With Unusual Call Option Activity:

• 1) TIF 2) SONS 3) COH 4) CNQ 5) APOL
  

Stocks With Most Positive News Mentions:

• 1) BLUD 2) NETL 3) OCR 4) HRS 5) WCC

Charts:

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

Thursday Watch

Evening Headlines

Bloomberg:

• Fed Gave Banks Crisis Gains on Secretive Loans as Low as .01%. Credit Suisse Group AG (CS), Goldman Sachs Group Inc. (GS) and Royal Bank of Scotland Group Plc (RBS) each borrowed at least $30 billion in 2008 from a Federal Reserve emergency lending program whose details weren’t revealed to shareholders, members of Congress or the public. The $80 billion initiative, called single-tranche open- market operations, or ST OMO, made 28-day loans from March through December 2008, a period in which confidence in global credit markets collapsed after the Sept. 15 bankruptcy of Lehman Brothers Holdings Inc. Units of 20 banks were required to bid at auctions for the cash. They paid interest rates as low as 0.01 percent that December, when the Fed’s main lending facility charged 0.5 percent. “This was a pure subsidy,” said Robert A. Eisenbeis, former head of research at the Federal Reserve Bank of Atlanta and now chief monetary economist at Sarasota, Florida-based Cumberland Advisors Inc. “The Fed hasn’t been forthcoming with disclosures overall. Why should this be any different?”
• AIG(AIG) Falls as Treasury Seeks Additional Capital for 'High-Risk Proposition'. American International Group Inc. (AIG) fell to the lowest since August as investors bet that losses at the company’s largest unit will discourage buyers of the stock in future government offerings. AIG dropped $1.18, or 4 percent, to $28.28 at 4:01 p.m. in New York Stock Exchange composite trading. The U.S. Treasury Department disposed of 200 million shares yesterday at $29 each. AIG sold 100 million shares, raising $2.9 billion, according to a statement from the company. The transactions leave the government with a 77 percent stake.
• Freescale Seeks IPO at 47% Discount to Buyout Price After Stock-Price Cut. Freescale Semiconductor Holdings Ltd. is selling shares at a 47 percent discount to what private equity owners paid after cutting the price range in its initial public offering by 17 percent.
• Australia Home Loan Delinquencies Jump to Record on Rate Rises, Fitch Says. Australian home loan delinquencies jumped to the highest on record in the first quarter, driven by Christmas spending, a November interest rate increase, and recent natural disasters, Fitch Ratings said. Mortgages more than 30 days overdue rose to 1.79 percent of the nation’s residential mortgage backed securities in the quarter ended March 31, from 1.37 percent in the previous three months, according to the London-based ratings firm. The number of “low-doc” loans more than 30 days late climbed to a record 6.74 percent from 5.7 percent, according to the report.
• SEC Investigates Hybrids for Insider Trading. U.S. regulators are examining whether investors made illegal trades in Fifth Third Bancorp. (FITB)’s trust preferred securities after the volume of transactions spiked 54-fold before the bank said it would redeem the instruments, a person with knowledge of the inquiry said.
• HSBC, Goldman(GS) Held $355 Million of Libya Funds. HSBC Holdings Plc (HSBA) and Goldman Sachs Group Inc. (GS) are among banks that held funds for Libyan leader Muammar Qaddafi’s government investment fund, according to a document published by advocacy group Global Witness.
• Platinum Surplus Jumping After Japan Quake. The global platinum surplus may jump eightfold after Japan’s worst earthquake slashed car production, reducing the country’s demand to the lowest level in 28 years, said the nation’s top refiner. Supply will probably outpace demand by as much as five metric tons this year, compared with a surplus of 600 kilograms last year, Shinya Kitaoka, trading section chief at Tanaka Kikinzoku Kogyo K.K., said in an interview. The world palladium shortage may be cut by half, he said.

Wall Street Journal:

• IRS Scrutinizes Gifts of Real Estate. The Internal Revenue Service has a low-profile but sweeping effort under way to use state land-transfer records for evidence of omissions in reporting gifts of real estate to family members.
• Edwards' Lawyers in Plea Talks. Justice Department prosecutors and lawyers for former Sen. John Edwards made last-ditch efforts Wednesday to reach a plea agreement that could avert felony charges over alleged campaign-finance violations, people familiar with the matter said. If the talks fail, the prosecutors are expected to seek a grand-jury indictment against Mr. Edwards within days, these people said.
• Euro Surges on News Chinese White Knight to Make Repeat Appearance, Attempt to Bail Out Europe for Second Time ( Just as Unsuccessfully).
• No Retreat on Medicare. Republican lawmakers reaffirmed Wednesday their embrace of a controversial Medicare overhaul despite an electoral setback, ensuring the federal health program will remain a divisive issue through the 2012 election. Republicans responded to Democrat Kathy Hochul's Tuesday victory in a traditionally Republican New York Congressional district by saying they needed to attack the Democrats' Medicare position more forcefully, rather than back off their own plan. "We need to make it a choice between a do-nothing approach that will ultimately destroy Medicare, and life-saving reforms," said Rep. Tom Cole (R., Okla.). Added Rep. Cliff Stearns (R., Fla.): "It's a wake-up call on how you frame it. It obviously wasn't framed right."
• A 62% Top Tax Rate? by Stephen Moore. Democrats have said they only intend to restore the tax rates that existed during the Clinton years. In reality they're proposing rates like those under President Carter.

CNBC:

• NetApp(NTAP) Results Top Forecasts; Shares Bounce. NetApp shares jumped in extended-trading Wednesday after the company posted quarterly results that exceeded analysts' expectations and raised its outlook for the current quarter.
• US Default 'More Likely Than in Indonesia'.
  

Business Insider:

• Why Microsoft(MSFT) Is So Messed Up: Toxic Environment and Bad Managers.
• MSNBC Has Suspended Ed Schultz for 'Unacceptable' Remarks About Laura Ingraham. During his show Schultz referred to Ingraham as a "right-wing slut" and a "talk slut." And believe it or not it actually sounds worse when you listen to it.
• Hedge Fund Manager David Einhorn To Microsoft(MSFT): Fire Steve Ballmer.
• HuffPo Employees Flee AOL After "Brutal" "Awful" "Worst Few Weeks".
• Glenn Beck Reportedly Launching a Web-Based TV Channel.
• Congress Paid Millions In Staff Bonuses Amid Federal Budget Crisis.
  

Zero Hedge:

• Fukushima Reactor 1 Drywell Reading Hits All Time High 204 Sieverts/Hour.
• Presenting DSK's Brand New $14 Million Tribeca House Arrest Palace. (pics)
  

CNNMoney:

• Bill Clinton: NY Win Is No Excuse On Medicare. Bill Clinton had a word of warning on Wednesday for fellow Democrats: Don't get too cocky about voters' rejection of Paul Ryan's Medicare plan.

Reuters:

• NY Fed Probing Goldman Sachs(GS) Mortgage Servicing Unit. The Federal Reserve Bank of New York is investigating whether Goldman Sachs' mortgage servicing arm did not conduct proper reviews before denying borrowers the option to lower their payments under a government loan modification programme.
• Chanos Negative on First Solar(FSLR), Vestas(VWS).
• Big U.S. Banks Face More Exposure to State Laws.
  

Telegraph:

• Greece Risks 'Return to Drachma'. Greece will have to ditch the euro unless it agrees tougher austerity measures, said a senior Greek official, delivering the strongest warning yet from a European insider as to what is at stake.

Xinhua:

• China's declining working age population will cause a "remarkable" slowdown in China's economic growth in the next 10 years, according to Peng Wensheng, chief economist at China International Capital Corp. The labor pool is expected to fall "sharply" in absolute terms in the next two to three years, Peng wrote.

Shanghai Securities News:

• China's industrial output growth is expected to slow in coming months as companies continue to destock and power shortage restrains production, Xu Ce, a researcher with the State Information Center, wrote in a commentary.

Maeil Business Newspaper:

• Chinese President Hu Jintao agreed to economic aid worth about $100 million for North Korea, including corn and fertilizer, when he met North Korea leader Kim Jong Il in Beijing yesterday.

Shanghai Daily:

• Shanghai banks' worst-quality loans, those categorized as losses, increased both as a ratio and in absolute terms in the first quarter, citing the China Banking Regulatory Commission's local bureau. They made up 18 percent of all bad loans, up 3.3 percentage points, it said.
  

China Securities Journal:

• A cash shortage among Chinese banks may reduce the chances the monetary authority will raise lenders' reserve requirement ratios in the near term, citing traders. Money market rates may stay high and overall cash shortgage is unlikely to ease next month.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +1.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 110.0 +.5 basis point.
  
• Asia Pacific Sovereign CDS Index 115.50 +.5 basis point.
  
• S&P 500 futures +.20%.
  
• NASDAQ 100 futures +.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (PDCO)/.51
• (QSII)/.62
• (OVTI)/.64
• (RUE)//.29
• (TIF)/.57
• (BIG)/.68
• (GCO)/.47
• (BCSI)/.32
• (FRED)/.24
• (HNZ)/.72
  

Economic Releases
8:30 am EST

• Advance 1Q GDP is estimated to rise +2.2% versus a prior estimate of a +1.8% gain.
• Advance 1Q Personal Consumption is estimated to rise +2.8% versus a prior estimate of a +2.7% gain.
• Advance 1Q GDP Price Index is estimated to rise +1.9% versus a prior estimate of a +1.9% gain.
• Advance 1Q Core PCE is estimated to rise +1.5% versus a prior estimate of a +1.5% gain.
• Initial Jobless Claims for this week are estimated to fall to 404K versus 409K the prior week.
• Continuing Claims are estimated to fall to 3700K versus 3711K prior.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The G8 Summit in France, 7-Year Treasury Notes Auction, weekly EIA natural gas inventory report, weekly Bloomberg Consumer Comfort Index, the Sterne Agee Tech Conference, (HNZ) analyst day, (ITRI) investor day, (ITMN) analyst meeting, (SYMC) analyst day and the (RMBS) analyst day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by commodity 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 Higher into Final Hour on Short-Covering, Bargain-Hunting, Commodity Sector Strength

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Most Sectors Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 17.14 -3.82%
  
• ISE Sentiment Index 125.0 +73.61%
  
• Total Put/Call .71 -10.13%
  
• NYSE Arms 1.18 +51.91%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 91.0 +.23%
  
• European Financial Sector CDS Index 123.08 +11.65%
  
• Western Europe Sovereign Debt CDS Index 196.83 -1.50%
  
• Emerging Market CDS Index 213.29 +.56%
  
• 2-Year Swap Spread 18.0 -3 bps
  
• TED Spread 21.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.
  
• Yield Curve 259.0 -2 bps
  
• China Import Iron Ore Spot $173.0/Metric Tonne -.57%
  
• Citi US Economic Surprise Index -48.90 -.9 point
  
• 10-Year TIPS Spread 2.32% +1 bp
  

Overseas Futures:

• Nikkei Futures: Indicating +88 open in Japan
• DAX Futures: Indicating +22 open in Germany

Portfolio:

• Higher: On gains in my Tech, Medical and Biotech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and then added them back
  
• Market Exposure: 75% Net Long

BOTTOM LINE: Today's overall market action is bullish as the S&P 500 trades back to its 50-day moving average despite weakness in Asian equities, eurozone debt angst, higher food/energy prices, more weak economic data and emerging market inflation fears. On the positive side, Coal, Oil Service, Construction and Road & Rail shares are especially strong, rising more than +1.5%. Small-cap and cyclical shares are outperforming. Lumber is gaining +3.93% and copper is rising +2.42%. The Greece sovereign cds is falling -3.27% to 1,431.70 bps, the Saudi sovereign cds is falling -4.76% to 100.53 bps and the US Muni CDS Index is falling -3.68% to 123.77 bps. On the negative side, Airline, Retail, Telecom, Education and Oil Tanker shares are under mild pressure, falling more than -.5%. Oil is rising +1.83% and the UBS-Bloomberg Ag Spot Index is rising +1.6%. The US price for a gallon of gas is falling -.02/gallon today to $3.81/gallon. It is up .67/gallon in 98 days. The Asia Pacific Sovereign CDS Index is jumping +4.22% to 114.99 bps, the Brazil sovereign cds is gaining 1.8% to 105.0 bps and the China sovereign cds is rising +1.04% to 73.26 bps. The +36% rise in the Eurozone Financial Sector CDS Index over the last 8 days is also a large negative. The Vietnam Stock Index dropped another -4.0% last night and has plunged about -21% in less than 3 weeks. Moreover, the Shanghai Composite continues to trade poorly and has declined about -11% in 5 weeks. The recent strength in commodities is a short-term equity market positive and and much larger long-term negative as emerging market inflation pressures increase to very worrisome levels. The major US averages remain resilient in the face of mounting headwinds. Today's rebound does not appear to me to be the beginning of another sustainable move higher, however further near-term strength is possible. I expect US stocks to trade mixed-to-lower into the close from current levels on eurozone debt worries, technical selling, more shorting, rising food/energy prices and emerging markets inflation fears.

Bear Radar

Style Underperformer:

• Mid-Cap Value (+.20%)

Sector Underperformers:

• 1) Airlines -1.47% 2) Oil Tankers -.81% 3) Retail -.38%

Stocks Falling on Unusual Volume:

• LNG, HRL, AIG, CHD, CVA, VLCCF, PTNR, CSGP, COST, ASIA, CBOE, SAFM, AMAP, LONG, FEIC, GGAL, FSLR, URBN, VELT, ALGT, CME, HRBN, RL, PSS, FRO, TNE, BJ, AEO, KEM and EXPR
  

Stocks With Unusual Put Option Activity:

• 1) RL 2) PHM 3) XLK 4) STP 5) NBR
  

Stocks With Most Negative News Mentions:

• 1) MLM 2) GPN 3) CSX 4) WMT 5) ENS
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth (+.23%)

Sector Outperformers:

• 1) Oil Service +1.82% 2) Homebuilders +1.16% 3) Coal +.87%

Stocks Rising on Unusual Volume:

• PXP, DRQ, CF, IPAR, NTLS, CPKI, AVGO, TTWO, CRI, HEI, TOL, VHI, DY, HPY, BPI, BWA and LEN
  

Stocks With Unusual Call Option Activity:

• 1) CLR 2) NETL 3) STP 4) HDY 5) VVUS
  

Stocks With Most Positive News Mentions:

• 1) UNH 2) JNJ 3) FLO 4) BSX 5) CECO

Charts:

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

Wednesday Watch

Evening Headlines

Bloomberg:

• Teddy Bear Prices Rise for Christmas as China Wages Increase. A Western buyer at the Canton trade fair protested against higher prices by wearing a T-shirt emblazoned with “Too Expensive” in Chinese. That generated little sympathy from toy seller Clara Zhang. “We all laughed so hard,” said Zhang, 26, sales manager for Nanjing Happy Toy Co., maker of teddy bears and stuffed ducks. “Then we said, ‘Sorry, sir, you probably need to pay even more.’” Hundreds of toymakers at the China Import and Export Fair, the country’s largest, are charging more as the world’s second- largest economy battles inflation that soared to an almost three-year high of 5.4 percent in March. Mattel Inc. (MAT), which makes Barbie dolls, and Hasbro Inc. (HAS), owner of the Transformers brand, raised prices earlier this year as Chinese factories pass on higher costs for raw materials and labor. “If you take into account everything Chinese toymakers are dealing with -- labor, material, exchange rate -- a price hike is only a natural consequence,” said Hua Zhongwei, a macroeconomic analyst with Huachuang Securities in Beijing. “There is a big chance for shoppers in the U.S. to face higher prices for Christmas gifts this year.”
• Tornadoes Sweep U.S. States. Violent thunderstorms with hail and deadly tornadoes are sweeping across the U.S., killing at least six people in Oklahoma and Kansas about 48 hours after the deadliest U.S. twister on record leveled homes and businesses in Joplin, Missouri.
  
• Vietnam Stocks Slump, Enter 'Bear Market,' as Inflation Surges. Vietnam’s stocks slumped for a ninth day to the lowest level since May 2009, dragging the benchmark index into a so-called bear market, on concern inflation will pressure officials to boost interest rates further. The VN Index on the Ho Chi Minh City Stock Exchange sank 3.7 percent to 402.59 at the 11 a.m. local-time close, capping a nine-day, 17 percent plunge, the longest losing streak since February 2009. The gauge has tumbled 23 percent from this year’s high on Feb. 9, exceeding the 20 percent drop that marks a bear market for some investors. Asia’s worst-performing market this year has slumped on concern higher interest rates will slow economic growth. Prices rose 19.78 percent in May from a year earlier, compared with 17.51 percent in April, according to data released by the General Statistics Office in Hanoi after the stock market closed. “Inflation figures were higher than expected and people are afraid that the consumer price index gains may accelerate to more than 20 percent this year,” said Nguyen Duy Phong, a Ho Chi Minh City-based analyst from ACB Securities Inc. Overseas investors withdrew from stocks on the nation’s main bourse in Ho Chi Minh City for a third day, selling a net 107.9 billion dong ($5.2 million) of the shares since May 20, according to data from the exchange’s website. Lending rates as high as 28 percent are hampering business, according to VinaCapital Investment Management Ltd., Vietnam’s largest fund manager. “Rising inflation expectations will keep the pressure on the central bank to tighten further,” Prakriti Sofat, a Singapore-based economist at Barclays Capital, wrote in a note today, predicting that the refinancing rate will rise by a further 100 basis points to 15 percent in “coming weeks.” Inflation will probably reach 22 percent to 23 percent by mid-year before easing “as policy tightening weighs on credit growth,” Sofat wrote.
• Massey Directors Saw Government 'Conspiracy' Against Company, Filing Shows. Massey Energy Co. (MEE)’s management believed government officials, including President Barack Obama, conspired to destroy the coal producer, according to unsealed court records in a case related to a fatal mine accident. Don Blankenship, Massey’s former chief executive officer, and Chairman Bobby Ray Inman, a retired U.S. Navy admiral, made clear in sworn testimony that they “firmly believed the company was being targeted by the government,” lawyers for Massey investors who are suing the company’s directors said in filings unsealed today in state court in Delaware. Inman, a former deputy director of the Central Intelligence Agency, “was unequivocal in his assertions” in pre-trial depositions that mine regulators, union officials, plaintiffs lawyers “and President Obama himself harbored a secret agenda to destroy Massey, and that the large numbers of safety violations Massey received were proof of the conspiracy,” according to the lawyers.
  
• Brazil Government Said to Privately Support Lagarde as Next IMF Director. Brazil will privately support French Finance Minister Christine Lagarde’s candidacy to run the International Monetary Fund, a Brazilian government official familiar with the negotiations said. The Brazilian government sees no point in backing Mexican central bank Governor Agustin Carstens’s bid for the job given that Lagarde will have enough votes to win, said the official, who requested anonymity because he isn’t authorized to speak publicly about the issue.
• North Korea's Kim Jong Il Arrives in Beijing, May Meet Hu, Yonhap Reports. North Korean leader Kim Jong Il arrived in Beijing today on the sixth day of a trip to China, indicating a possible meeting with Chinese leaders including President Hu Jintao, Yonhap News reported.
• The combined sales targets of China's largest automakers could exceed total demand by as much as 32% by 2015, as the pace of building new plants outstrips growth forecasts in the world's largest market. "The industry may face excessive capacity as early as next year while Geely together with its peers may see their investments on capacity building go to waster unless they adjust their plans now," said George Yin, an analyst with BOCOM International Holdings Co. in Beijing.
• Crude Oil Manipulation Suit May Fuel Debate on Speculation Rules. A U.S. lawsuit against two traders and three firms that allegedly manipulated prices for crude oil derivatives in 2008 may bolster calls for new speculative trading limits required by the Dodd-Frank Act. The Commodity Futures Trading Commission claimed in its suit that the alleged scheme generated $50 million in unlawful profits and pushed crude oil prices higher nationwide.
• Food Inflation May Top U.S. Forecast as Nestle, Whole Foods Boost Prices. U.S. food inflation may top the government’s forecast as higher crop, meat, dairy and energy costs lead companies including Nestle SA, McDonald’s Corp. (MCD) and Whole Foods Market Inc. (WFMI) to boost prices. Retail-food prices will jump more than the U.S. Department of Agriculture’s estimate of 3 percent to 4 percent this year, said Chad E. Hart, an economist at Iowa State University in Ames. Companies will pass along more of their higher costs through year-end, said Bill Lapp, a former ConAgra Foods Inc. chief economist. The USDA will update its forecast today.

Wall Street Journal:

• EU Says China More Discriminatory Against Foreign Firms. A growing share of European companies say China's policies toward foreign businesses in the country are becoming more discriminatory, according to a survey from the European Union Chamber of Commerce in China that marks the latest sign of discontent about the business environment in the world's No. 2 economy. In the survey, released Wednesday, 43% of European-based companies with offices in China's mainland said they view the country's regulatory practices as having declined in fairness over the past two years. The government favors domestic businesses, giving them better tax incentives and financing opportunities, they said. In last year's survey, 33% expressed discontent with the regulatory environment.
  
• Iceland Financial Minutes: Watching Greek Debt Crisis To Assess Euro. Iceland, watching closely the unfolding Greek debt crisis from the debt-laden country's perspective, voiced its disappointment Tuesday at the way the euro zone is dealing with it. "What I'm mainly focusing on is what it's like for a small country that gets into trouble, how it's being dealt with," Finance Minister Steingrimur Sigfusson told Dow Jones in an interview. "There are doubts that the solution has been found yet ... the measures have been aimed at buying time."
• U.S. Weighs International Pressure on Yemen. The U.S. is considering using the United Nations to press embattled Yemeni President Ali Abdullah Saleh to step aside, according to U.S. officials and diplomats.
• Bank Face $17 Billion in Suits Over Foreclosures. State attorneys general told five of the nation's largest banks on Tuesday they face a potential liability of at least $17 billion in civil lawsuits if a settlement isn't reached to address improper foreclosure practices, according to people familiar with the matter. The figure doesn't cover additional billions of dollars in potential claims from federal agencies such as the Department of Housing and Urban Development and the Justice Department.
• Senator Wants Details on SAC. Sen. Charles Grassley has asked the Securities and Exchange Commission to account for how it handled referrals it received of suspicious trading at SAC Capital Advisors LP over the past decade.

MarketWatch:

• Nasdaq Short Interest Up 1.9% in First Half of May.

CNBC:

• Fed Could Tighten Policy in Later 2011: Bullard.
• SEC Wasting Million on Office Space: Report. At a time when the Securities and Exchange Commission is scrambling for resources, a new report by the agency's internal watchdog says the agency has wasted millions of dollars in a "deeply flawed" system for leasing office space.
• Treasury Sells AIG(AIG) Shares in Sore Reminder of Bailout. The U.S. Treasury is barely breaking even on its investment in beleaguered insurance giant American International Group, according to an early litmus test of market interest in the firm's stock.
• Glencore Makes Lackluster Hong Kong Debut; Demand Tepid.
  

Business Insider:

• Intrade.com Founder John Delaney Dies On Mt. Everest. John Delaney, founder and CEO of Intrade, the prediction market, has died while trying to climb Mt. Everest. He was less than 50 meters from the top, according to the Daily Mail. Even sadder: Delaney never got to hear the news that his wife had just given birth to a baby daughter, Hope. It was Delaney's second attempt to climb Everest, according to the Daily Mail. He was 42.
• Jim Chanos' One Big China Regret. Jim Chanos is a well-known China bear, and he claims to have made money shorting China-related property developers -- a short that's still on. In an interview today with Bloomberg TV, he regreted the inability to short Chinese IPOs in the US, many of which have been dogged by accounting issues and have plunged. "Almost all of them have odd looking financial statements,... We wish we could borrow almost all of them." Here's more notes from his Bloomberg TV interview, provided to us by the network: "Actually, our team just got back from China, my research team." "I don't ever talk to companies or CEOs anyway. I have not for 25 years…I think that what my team found [in China], they actually came back saying we are not bearish enough." "The signs of overcapacity were much even greater than their last visit, which was late last year. Increasingly, the executives that they met with were sounding a little bit more uncomfortable about the current situation." "If you look at the balance sheet of the developers that claim they are pre-selling…If you look at the balance sheets of the developers, you'd be hard-pressed to see how healthy they were because they are all loaded up with land, just as our developers were at the top of our market. So for every yuan that they are earning presale, they are plowing it back and then some into new land development. They are drinking the Kool-Aid, so to speak." "We've maintained our pretty much dramatic overweight in our Chinese shorts, and we will leave it at that." "What we are seeing now is more cracks on the façade and what they observed, almost quite literally. The buildings that were only two to three years old were already beginning to show some signs of wear and tear…The quality of all this fixed asset construction is becoming sort of suspect." "I think this is actually one of the reasons contributing to the bubble in that it is a double edged bet that could turn into a double-edged sword. Investors are counting not only on asset appreciation of fixed assets in China, but they're counting on the yuan being revalued upward. If it ever became apparent that might go the other way, you could see a real scramble to get out of these assets in China." Increasingly, the real estate developers can't get bank loans for their project financing in China. They're now going into the Hong Kong market to raise money in the bond market at very, very high rates, as high as 15%, 20%." "We covered most of our US healthcare shorts after we looked at the healthcare bill, which I think was a bigger lost opportunity for Washington than the financial reform…When it was all said and done, the sausage that came out of the grinder was in fact an enhanced coverage bill that was going to increase costs." On the Europe debt crisis: "Obviously, as market participants, we have to pay attention to it." "I think this is all about trying to protect the valuations by largest European banks have on their sovereign debt holdings, and at some point, the voters in these countries are going to figure out that, in effect, their taxpayer dollars in western Europe are going to support the banking system, much like ours did a few years ago."
• Here's How Reed Hastings and Netflix(NFLX) Won.
• Zynga Close to IPO Filing, Says Report.
• Rhode Island is 'Being Crushed' By Pension Debt, Treasurer Urges Major Overhaul of Retirement System.
• Key Points From Israeli Prime Minister Benjamin Netanyahu's Address to the U.S. Congress.
  

Zero Hedge:

• IB Blasts Preemptive Margin Hike Warning. In a blast to all exchange members, Interactive Brokers has just warned of imminent margin hikes due to "the recent spike in volatility of various commodity products."
• CFTC Charges Traders Controlled by World's Largest Tanker Company With Oil Price Manipulation.
  

Reuters:

• Gasoline Demand Dips Even as Cost Falls: MasterCard. Retail gasoline demand fell last week versus a year earlier, as prices dropped for a second straight week but stayed above 2010 levels, a report by MasterCard Advisors' SpendingPulse showed on Tuesday. Average weekly gasoline demand fell 2 percent in the week to May 20 compared with the same period a year ago, the report said. Demand fell 1.4 percent compared with the previous week.
• Applied Materials(AMAT) Warns of Weak Quarter, Stock Down. Applied Materials Inc forecast weak quarterly revenue, saying concerns about a tough economy have led chipmakers to delay spending to expand capacity, pushing down the company's shares.

Telegraph:

• Greece Crisis Worsens Amid Political Stalemate. A damaging political stalemate is threatening to plunge Greece deeper into crisis as hopes of cross-party support for further austerity measures were dashed on Tuesday by the main opposition leader.

China Economic Weekly:

• Chinese companies face losses on $18.8 billion of contracts for Libyan projects, citing a spokesman of the Ministry of Commerce. State-owned companies, including China Railway Construction Corp. and China State Construction Engineering Corp., have 50 development projects in Libya.
  

Shanghai Securities News:

• China will curb speculative demand for homes and maintain basically stable real estate prices to control the property market, citing Ni Hong, director of housing reform and development department of the Ministry of Housing and Urban-Rural Development.

National Business Daily:

• A worsening drought in south China may push up rice prices in the country, citing a statistics official at Beijing Xinfadi Agricultural Product Center. Rainfall was small in Hunan and Jiangxi provinces, which produce half of the country's early indica rice. High rice prices may boost inflation expectations and an unidentified analyst estimated May consumer prices may rise to 5.5% from a year earlier, according to the report.
  

Guangzhou Daily:

• Unilever raised prices for some products under brands of Hazeline and Lux by as much as about 10% in the southern Chinese city of Guangzhou, citing retailers in the city.

Evening Recommendations
Cowen:

• Rated (ABC) Outperform.
• Rated (MCK) Outperform.
• Rated (CAH) Outperform.
  

Night Trading

• Asian equity indices are -1.0% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 109.50 -1.5 basis points.
  
• Asia Pacific Sovereign CDS Index 115.0 -1.0 basis point.
  
• S&P 500 futures -.59%.
  
• NASDAQ 100 futures -.70%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HRL)/.40
• (AEO)/.14
• (TOL)/-.04
• (BWS)/.15
• (ZLC)/-.58
• (RL)/.79
• (NTAP)/.52
• (CSC)/1.16
• (SMTC)/.43
• (NDN)/.27
• (GES)/.44
• (COST)/.77

Economic Releases
8:30 am EST

• Durable Goods Orders for April are estimated to fall -2.5% versus a +2.5% gain in March.
• Durables Ex Transports for April are estimated to rise +.5% versus a +1.3% gain in March.
• Cap Goods Orders Non-defense Ex Air for April are estimated to fall -2.1% versus a +3.7% gain in March.

10:00 am EST

• The House Price Index for March is estimated to fall by -.5% versus a -1.6% decline in February.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,500,000 barrels versus a -15,000 barrel decline the prior week. Distillate supplies are estimated unch. versus a -1,157,000 barrel decline the prior week. Gasoline supplies are estimated to rise by +450,000 barrels versus a +119,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a +1.5% gain the prior week.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Kocherlakota speaking, 5-Year Treasury Note Auction, weekly MBA mortgage applications report, Think Equity Healthcare Conference, Raymond James Infrastructure/Construction Conference, Morgan Stanley Retail Conference, (YHOO) investor day, (ARW) investor day, (TMO) analyst meeting and the (PSSI) investor day could also impact trading today.
  

BOTTOM LINE: Asian indices are lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.