Bull Radar

Style Outperformer:

• Small-Cap Growth (+.75%)

Sector Outperformers:

• 1) Coal +2.16% 2) Construction +1.62% 3) Oil Tankers +1.45%

Stocks Rising on Unusual Volume:

• MICC, PTR, CDTI, RUE, MRVL, BRCM, VHC, KRA, DRC, DMD, SGI, NDAQ and HAIN
  

Stocks With Unusual Call Option Activity:

• 1) CVS 2) BCSI 3) MHS 4) BRCM 5) OVTI
  

Stocks With Most Positive News Mentions:

• 1) CVS 2) GORO 3) IM 4) WBC 5) AIN

Charts:

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

Friday Watch

Evening Headlines

Bloomberg:

• Euro Heads for Weekly Decline on Debt Woes. Gains in the euro were tempered before a European Commission report today forecast to show an index of executive and consumer sentiment in the region slid to 105.7 this month from 106.2 in April. The single currency slid to an all-time low against the franc after Luxembourg’s Jean-Claude Juncker, who heads euro- area finance chiefs, said the International Monetary Fund may not release its share of aid to Greece next month. “Concerns about sovereign debt are spreading in the region, weighing on the euro,” said Masahide Tanaka, a senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s third-biggest bank by market value. “The European and U.S. economies are slowing down.” The euro has weakened 2.5 percent over the past month according to the Bloomberg Correlation-Weighted Currency Indexes, which track 10 developed-nation currencies.
• Fukushima Faces 'Massive' Radioactive Water Problem. As a team from the International Atomic Energy Agency visits Tokyo Electric Power Co.’s crippled nuclear plant today, academics warn the company has failed to disclose the scale of radiation leaks and faces a “massive problem” with contaminated water. The utility known as Tepco has been pumping cooling water into the three reactors that melted down after the March 11 earthquake and tsunami. By May 18, almost 100,000 tons of radioactive water had leaked into basements and other areas of the Fukushima Dai-Ichi plant, according to Tepco’s estimates. The radiated water may double by the end of December. “Contaminated water is increasing and this is a massive problem,” Tetsuo Iguchi, a specialist in isotope analysis and radiation detection at Nagoya University, said by phone. “They need to find a place to store the contaminated water and they need to guarantee it won’t go into the soil.”
• Pandora Sales More Than Double Ahead of IPO. Pandora Media Inc., the Internet- music company preparing for an initial public offering, said revenue more than doubled last quarter and its user base topped 90 million, solidifying its lead in streaming radio. Sales rose to $51 million in the three months ended April 30, from $21.6 million a year earlier, the Oakland, California- based company said today in a regulatory filing.
• South Korean builders may struggle to refinance $9.7 billion of short-term debt due through July even as the government backs a "bad bank" to buy up soured real-estate loans, according to Eugene Investment & Securities Co. "These short-term notes are a time bomb that have been moved from one basket to another," said Kim In, a Seoul-based Eugene Securities banking analyst. "No one will be willing to roll over these debts, so builders' liquidity will be squeezed even further, leaving more of them at risk of defaulting."
• U.S. Senate Advances Extension of Patriot Act Wiretap Power. The U.S. Senate voted to advance a four-year extension of provisions of the USA Patriot Act allowing law enforcement to track suspected terrorists with roving wiretaps. The Senate voted 79-18 to move toward a final vote on the provisions, now scheduled to expire at midnight. They would be extended until June 1, 2015.
• Emerging Stock Funds Post 2nd Week of Outflows, Citi Says. Emerging-market equity funds reported a second consecutive week of outflows as escalating concerns over Europe’s sovereign debt crisis dented demand for riskier assets, according to Citigroup Inc. Funds investing in developing-nation stocks lost an overall $1.03 billion during the week ended May 25, compared with net outflows of $1.64 billion the previous week, Citigroup analysts led by Markus Rosgen said in a report today, citing data compiled by EPFR Global. “Investors remained cautious amid lingering credit concerns in Europe,” the analysts wrote.
• Goldman Sachs Group Inc.(GS), once the most profitable securities firm in Wall Street history, is veering toward being the riskiest in the eyes of debt investors. Credit-default swaps on Goldman Sachs have jumped 36 basis points in May to 149 basis points, poised for the largest gain in 13 months, according to data provider CMA. The contracts surpassed Citigroup Inc.(C) and Bank of America Corp.(BAC) this month and are now tied with Morgan Stanley, perceived to be the least creditworthy of the six largest U.S. banks.
  

Wall Street Journal:

• Goldman(GS) Restructures Hotel Debt. Goldman Sachs Group Inc.'s (GS) Whitehall Real Estate Funds restructured $1.42 billion of debt coming due on one of its largest hotel portfolios, the latest indication that property owners are working through some of their most troubled assets. Under terms of the deal, the Abu Dhabi Investment Authority, the investment arm of the United Arab Emirates capital city, will inject $475 million into the portfolio, people familiar with the matter said.
• House Votes to Ban Troops for Libya War. The House on Thursday overwhelmingly voted to prohibit ground troops from being sent to Libya and only narrowly defeated a measure to force President Barack Obama to lay out plans to end the Afghanistan war, in moves that show the limits of congressional support for military involvement in overseas conflicts. The U.S. military's actions on three fronts—Libya, Afghanistan and Iraq—are wearing on the public, polls show, and lawmakers are leery of additional open-ended military commitments amid a severe budget crunch.
• Fed's Focus Turns to Firm's Executives. A sprawling federal insider-trading investigation involving public-company employees who freelance as consultants has widened to include the top executives of Primary Global Research LLC, a so-called expert-network firm at the heart of the probe, according to people familiar with the matter. The focus on Unni Narayanan, Primary Global's chief executive, and Phani Kumar Saripella, its chief operating officer, would bring prosecutors to the top of the California-based firm, which has been under scrutiny by federal prosecutors for more than two years.
• Public Pensions Leap Back to Hedge Funds. Public pension plans are lifting hedge-fund investment, seeking to boost long-term returns despite losses suffered in some funds in the financial crisis. Also, pension officials are using the historically strong returns of hedge funds to justify a rosier future outlook for their investment returns. By generating more gains from their investments, pension funds can avoid the politically unpalatable position of having to raise more money via higher taxes or bigger contributions from employees or reducing benefits for the current or future retirees. The Fire & Police Pension Association of Colorado, which manages roughly $3.5 billion, now has 11% of its portfolio allocated to hedge funds after having no cash invested in these funds at the start of the year.
• California Regulators Move to Investigate AT&T(T), T-Mobile Deal. California state regulators moved Thursday to launch an investigation of AT&T Inc.'s proposed $39 billion acquisition of T-Mobile USA, opening another front in the battle over the controversial deal.
• Saudi Bid to Curb Iran Worries U.S. Saudi Arabia is rallying Muslim nations across the Middle East and Asia to join an informal Arab alliance against Iran, in a move some U.S. officials worry could draw other troubled nations into the sectarian tensions gripping the Arab world. Saudi officials have approached Pakistan, Malaysia, Indonesia and Central Asian states to lend diplomatic support—and potentially military assistance in some cases—to help stifle a majority Shiite revolt in Sunni-led Bahrain, a conflict that has become a symbol of Arab defiance against Iran.
• Ballmer Bares China Travails. Rampant piracy means Microsoft Corp.'s revenue in China this year will only be about 5% of what it gets in the U.S., even though personal-computer sales in the two countries are almost equal, Chief Executive Steve Ballmer told employees in a meeting here.
• Mediscare: The Surprising Truth. Republicans are being portrayed as Medicare Grinches, but ObamaCare already has seniors' health care slated for draconian cuts.
• Options Traders Salivate Over LinkedIn(LNKD). Get ready for a big options play on LinkedIn Corp. Friday.
• Greece Aid Is Under Threat, Europe Finance Chief Says. A top euro-zone policy maker suggested the International Monetary Fund may withhold its next payment on Greece's €110 billion ($155 billion) bailout, rattling financial markets with questions about whether a new Greek payments crisis is imminent. Luxembourg Premier Jean-Claude Juncker, who heads the conclave of euro-zone finance ministers, suggested Thursday that an important review of the bailout program might conclude that Greece doesn't have enough loan commitments to carry it through the next 12 months.

CNBC:

• Why the Dollar's Blue Period May Be Ending.
• China Drought Ignites Global Grain Supply Concerns. Analysts are closely watching the weather in China, warning any further supply shocks in the grain markets would fuel a further rally in U.S. corn and wheat futures, already stoked by harsh crop weather in the United States and Europe.

Business Insider:

• Morgan Stanley(MS) Warns On The Euro: "THIS TIME IT COULD BE DIFFERENT'. Basically since the Fall of 2009, we've gone through several bouts of Euro-panic that either fade with some kind of bandage deal, or just fade because there are no new headlines to report. Now we're back in Euro crisis mode, and in the firm's latest FX Pulse, Morgan Stanley's Ronald Leven warns: This Time Could Be Different. The two things to realize: One is that Spanish weakness is growing more pronounced, and two that the appetite to just kick the can is fading, especially in Germany.
• California Accidentally Released Violent Inmates To Reduce Prison Crowding.
• Why Goldman Sachs(GS) Cut Its S&P Forecast Today.
• Tragic Before And After Pictures Of Joplin, Missouri.
  

Zero Hedge:

• Super Typhoon Songda Projected to Pass Over Fukushima Nuclear Power Plant. Super Typhoon Songda, which according to Weather Underground will form shortly as a Category 5 storm with 156+ mph winds, will take a northeasterly direction and 2 days later will pass right above Fukushima.

Forbes:

• Where Google(GOOG) Mobile Payment Goes.
• In India, Bad Loans Rising. State run banks in India, long seen as one of the key pillars in a healthy and regulated banking sector, are seeing a rash of bad loans on their books, the Times of India reported Friday.

NY Daily News:

• GOP, Get Off Your Heels and Attack Obamacare.

Rasmussen Reports:

• 50% Expect U.S. Government To Go Bankrupt Before Budget is Balanced. The latest Rasmussen Reports national telephone survey finds that 50% of Likely U.S. Voters think it’s more likely that the government will go bankrupt and be unable to pay its debt before the federal budget is balanced. Thirty-three percent (33%) believe the budget is more likely to be balanced first.

Reuters:

• Top US Lobbying Banks Got Biggest Bailouts - Study. The more aggressively a bank lobbied before the financial crisis, the worse its loans performed during the U.S. economic downturn -- and the more bailout dollars it received, according to a study published by the National Bureau of Economic Research this week. The report, titled "A Fistful of Dollars: Lobbying and the Financial Crisis," said that banks' lobbying efforts may be motivated by short-term profit gains, which can have devastating effects on the economy. "Overall, our findings suggest that the political influence of the financial industry played a role in the accumulation of risks, and hence, contributed to the financial crisis," said the report, written by three economists from the International Monetary Fund. Data collected by the three authors -- Deniz Igan, Prachi Mishra and Thierry Tressel -- show that the most aggressive lobbiers in the financial industry from 2000 to 2007 also made the most toxic mortgage loans. They securitized a greater portion of debt to pass the home loans onto investors and their stock prices correlated more closely to the downturn and ensuing bailout. What the economists could not determine definitively was the banks' motivation for lobbying. If banks were looking to generate income at society's expense, then it would make sense to curtail their lobbying. If banks were concerned mainly about short-term profit and not thinking about the long-term consequences, then executive compensation practices should be changed, the report said. And if banks just wanted to inform lawmakers, and were overoptimistic about their prospects, it would be more difficult to suggest reforms.
• Equity Fund Outflows for Third Straight Week - Lipper.
• US Senator Says CFTC Breaking Law By Not Acting on Oil.
  

Financial Times:

• Internet Chiefs Unite Against Regulation. Internet entrepreneurs confronted their would-be regulators in Deauville on Thursday as the leaders of Facebook, Google and other technology companies warned the G8 leaders to tread carefully in attempting to police the web. Mark Zuckerberg, founder of Facebook, and Eric Schmidt, executive chairman of Google, said that mooted rules on copyright or privacy could stymie innovation and inhibit the free expression that fuelled the recent Arab uprisings.

National Business Daily:

• China's consumer prices may increase as much as 5.5% from a year earlier this month, rather than 5.4%, citing Huachuang Securities Co. The brokerage raised its May consumer price index estimate because vegetable prices in southern China had large gains due to drought.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are +.25% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 111.50 +2 basis points.
  
• Asia Pacific Sovereign CDS Index 116.0 +.5 basis point.
  
• S&P 500 futures +.23%.
  
• NASDAQ 100 futures +.29%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (MENT)/.18

Economic Releases
8:30 am EST

• Personal Income for April is estimated to rise +.4% versus a +.5% gain in March.
• Personal Spending for April is estimated to rise +.5% versus a +.6% gain in March.
• The PCE Core for April is estimated to rise +.2% versus a +.1% gain in March.

9:55 am EST

• Final Univ. of Mich. Consumer Confidence for May is estimated at 72.4 versus a prior estimate of 72.4.

10:00 am EST

• Pending Home Sales for April are estimated to fall -1.0% versus a +5.1% gain in March.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• None of note
  

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 100% net long heading into the day.

Stocks Higher into Final Hour on Euro Bounce, Tech Sector Strength, Short-Covering, Bargain-Hunting

Broad Market Tone:

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

Equity Investor Angst:

• VIX 15.99 -6.44%
  
• ISE Sentiment Index 122.0 +2.52%
  
• Total Put/Call .97 +34.72%
  
• NYSE Arms .75 -42.38%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 91.11 +.12%
  
• European Financial Sector CDS Index 122.59 -.62%
  
• Western Europe Sovereign Debt CDS Index 196.92 +.04%
  
• Emerging Market CDS Index 219.65 +3.42%
  
• 2-Year Swap Spread 18.0 unch.
  
• TED Spread 21.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.
  
• Yield Curve 257.0 -2 bps
  
• China Import Iron Ore Spot $171.30/Metric Tonne -.98%
  
• Citi US Economic Surprise Index -57.90 -9.0 points
  
• 10-Year TIPS Spread 2.29% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -2 open in Japan
• DAX Futures: Indicating +65 open in Germany

Portfolio:

• Higher: On gains in my Tech, Medical, Retail and Biotech sector longs
  
• Disclosed Trades: Covered all of my (IWM)/(QQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 100% 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 eurozone debt angst, rising food prices, global growth concerns and emerging market inflation fears. On the positive side, Coal, Software, Computer, Disk Drive, HMO, Homebuilding and REIT shares are especially strong, rising more than +1.5%. Small-cap shares are outperforming. (IYR) is relatively strong. Tech stocks have also traded well throughout the day. Lumber is gaining +4.32% and oil is falling -1.1%. The US Muni CDS Index is falling -2.8% to 120.31 bps. The AAII % Bulls fell to 25.61 this week, while the % Bears rose to 41.42, which is also a positive. On the negative side, Oil Tanker, Defense, Utility, Computer Service and Airline shares are down on the day. The UBS-Bloomberg Ag Spot Index is rising +.64%. The US price for a gallon of gas is unch. today at $3.81/gallon. It is up .67/gallon in 99 days. The 10-year yield is starting to fall too much too quickly, declining another -7 bps to 3.06%. The Russia sovereign cds is gaining +2.13% to 143.15 bps, the Brazil sovereign cds is rising 2.62% to 107.75 and the Portugal sovereign cds is gaining +1.46% to 678.13 bps. The +36% rise in the Eurozone Financial Sector CDS Index over the last 9 days is also a large negative. Moreover, the Shanghai Composite continues to trade poorly, falling another -.2% last night and finishing near session lows, as the rest of Asia saw strong gains. The Citi Latin America Economic Surprise Index fell to -12.6 today, which is the lowest reading since February. The major US averages remain very resilient in the face of mounting headwinds. However, I suspect equity weakness will reappear later next week. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, a bounce in the euro, tech sector strength and lower energy prices.

Bear Radar

Style Underperformer:

• Large-Cap Value (+.26%)

Sector Underperformers:

• 1) Oil Tankers -.62% 2) Computer Services -.27% 3) Hospitals -.19%

Stocks Falling on Unusual Volume:

• CSC, ABT, QSII, HRBN, MICC, MMYT, CRZO, FSLR, SPRD, SAFM, CMCO, ITMN, LULU, GMAN, PCRX, VELT, VRTX, EDE and BWS
  

Stocks With Unusual Put Option Activity:

• 1) EP 2) TIF 3) KBH 4) KRE 5) PHM
  

Stocks With Most Negative News Mentions:

• 1) DMND 2) AAP 3) WMS 4) EWA 5) RSH
  

Charts:

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

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.