Today's Headlines

Bloomberg:

• Job Openings Fall First Time in Three Months. Job openings in the U.S. decreased in April for the first time in three months, showing companies started to lose confidence in the expansion’s durability even before hiring slumped in May. The number of positions waiting to be filled fell by 151,000 to 2.97 million, the fewest since January, the Labor Department said today in a statement posted on its website. The number of people hired and the number of workers fired also decreased. The unemployment rate rose to 9.1 percent in May while employers added the fewest workers in eight months, Labor Department data showed last week. “We’ve got a very weak, very mild recovery, which does not create enough demand for labor,” said Henry Mo, an economist at Credit Suisse in New York. “Even if all the open positions were filled overnight, we’d still have almost 11 million workers without jobs.”
  
• OPEC to Raise Oil Output Target Tomorrow, Gulf Delegate Says. OPEC will raise its oil output target tomorrow for the first time since 2008 to help replace lost Libyan supplies and meet growth in demand later this year, according to a Gulf delegate with knowledge of the matter. The Organization of Petroleum Exporting Countries is producing 2 million barrels a day above its official ceiling, the delegate said, declining to be named because he isn’t authorized to speak publicly. All the group’s ministers agree on the need to raise output, the person said, amid rising speculation that Saudi Arabia, OPEC’s largest producer, wants to add as much as 1.5 million barrels a day to global supply. Oil prices at current levels could derail a global economic recovery, the International Energy Agency’s Chief Economist Fatih Birol told reporters today in Oslo. Crude for July delivery slid as much as 90 cents to $98.11 a barrel in electronic trading on the New York Mercantile Exchange and was at $98.46 at 8:51 a.m. local time. “Saudi Arabia and other key members of OPEC, with the usual exceptions of price hawks Iran and Venezuela, appear to be leaning toward a quota increase because they are concerned about the negative impact of high prices on GDP growth and, ultimately, on oil-demand growth,” New York-based Wittner said in a note. Morgan Stanley echoed his view in an-e-mailed report forecasting an increase of 1.5 million barrels a day this summer.
  
• Eurozone Crisis Has Global Implications, Rogoff Writes in FT. If the euro survives and subsequently achieves a status equivalent to that of the dollar as a reserve currency, it will provide an impetus toward currency consolidation elsewhere, said Kenneth Rogoff, an economics professor at Harvard University. Writing in the Financial Times, Rogoff said that if, on the other hand, the eurozone is pulled apart, many decades could elapse before any other region adopts a similar program. At present it looks as though the euro, which was meant to give greater resilience in the face of financial crisis, amplifies shocks rather than otherwise, for Europe’s peripheral countries are in weak competitive positions and no currency depreciation mechanism is available to them, Rogoff wrote. European leaders’ plans to achieve effective devaluation through wage adjustment seem fanciful; the only clean rescue would be if European growth far exceeded expectations, which is unlikely, he said. The question now is whether the common currency is sustainable politically; if the global economy doesn’t soon resume rapid growth, an answer won’t be long delayed, Rogoff concluded.
• U.S. Late Boomers Poorer Than Depression Kids: Chart of the Day. The last of the U.S. baby boomers have ended up poorer than the prior two generations, including those born during the Great Depression and World War II.
• Talbots(TLB) Falls on 'High Levels' of Markdowns. Talbots Inc. (TLB), the U.S. clothing chain that targets women 35 and older, fell the most since its 1993 public offering after saying fiscal second-quarter sales will decline “significantly” and profit margins will narrow on price markdowns and fewer customer visits.
• Biogen(BIIB) Seeks Deals to Build Up MS Drugs. Biogen Idec Inc. (BIIB), the world’s largest maker of multiple sclerosis medicines, is on the hunt for new compounds to treat MS and other neurodegenerative diseases, and may purchase companies outright or partner with them, the company’s research chief said.
• World Food Prices Linger Near Record as Meat and Dairy Costs Gain, UN Says. Global wheat production will lag behind demand, helping to keep food prices high and volatile at least through next year, the United Nations’ Food and Agriculture Organization said.

Wall Street Journal:

• Fed's Evans Shaves Growth Forecasts. Charles Evans, president of the Federal Reserve Bank of Chicago, is marking down his growth forecasts for 2011 and 2012, but says he isn’t prepared to call for new Fed actions to support the economy. In an interview with The Wall Street Journal, Mr. Evans said he now expects the economy to grow by 3% to 3.25% in 2011 and 3.5% and 3.75% in 2012, compared to the 4% growth rate he was expecting before a recent string of disappointing economic data.
• Wall Street Probe Illustrates Levin's Clout. When U.S. Senator Carl Levin declared that Goldman Sachs Group Inc. (GS) “clearly misled their clients and misled the Congress,” few analysts predicted his allegations would still be reverberating two months later. The firm’s shares have fallen 16 percent in New York trading since April 13, when Levin’s investigative panel released an exhaustive report on the roots of the 2008 economic meltdown. The Justice Department and Securities and Exchange Commission are examining the findings. The Manhattan District Attorney last week joined in with a subpoena to Goldman Sachs.

CNBC.com:

• Dollar Index at 1-Month Low as China Warns on US Assets. The dollar fell to a one-month low against a basket of currencies on Tuesday and a record low against the Swiss franc after a Chinese official said the greenback would continue to weaken versus other major currencies.

Business Insider:

• The 25 Hot NYC Startups You Need to Watch.
• A Bunch of New Rail Data Is Out: Here's What It Says About The Slowing Economy. (graph)
• Another Hedge Fund Is Under Attack, As Short-Sellers Pummel Chinese Company "Like Never Before".
• The Biggest Skin Cancer Breakthrough In 30 Years. Designed by Bristol-Myers(BMY) and Roche, to work in different ways, the drugs vemurafenib and Yervoy have successfully treated late-stage patients who, according to WebMD had precious few options in the past.

Zero Hedge:

• How China Just Implemented A Stealth Bailout Bigger Than One and A Half TARPs.
• Janet Tavakoli: "Greater Global Risk Now Than At Time Of LTCM".
  

Washington Post:

• Obama Loses Bin Laden Bounce; Romney On The Move Among GOP Contenders. The public opinion boost President Obama received after the killing of Osama bin Laden has dissipated, and Americans’ disapproval of how he is handling the nation’s economy and the deficit has reached new highs, according to a new Washington Post-ABC News poll. The survey portrays a broadly pessimistic mood in the country this spring as higher gasoline prices, sliding home values and a disappointing employment picture have raised fresh concerns about the pace of the economic recovery. By 2 to 1, Americans say the country is pretty seriously on the wrong track, and nine in 10 continue to rate the economy in negative terms. Nearly six in 10 say the economy has not started to recover, regardless of what official statistics may say, and most of those who say it has improved rate the recovery as weak. Among all Americans, Obama and Romney are knotted at 47 percent each, and among registered voters, the former governor is numerically ahead, 49 percent to 46 percent. Overall, about six in 10 of those surveyed give Obama negative marks on the economy and the deficit. Significantly, nearly half strongly disapprove of his performance in these two crucial areas. Nearly two-thirds of political independents disapprove of the president’s handling of the economy, including — for the first time — a slim majority who do so strongly.In another indicator of rapidly shifting views on economic issues, 45 percent trust congressional Republicans over the president when it comes to dealing with the economy, an 11-point improvement for the GOP since March.

The Detroit News:

• GM's Akerson Pushing for Higher Gas Taxes. General Motors Co. CEO Dan Akerson wants the federal gas tax boosted as much as $1 a gallon to nudge consumers toward more fuel-efficient cars, and he's confident the government will soon shed its remaining 26 percent stake in the once-bankrupt automaker. And while he is eager to say goodbye to the government as a part owner of GM, Akerson would like to see it step up to the challenge of setting a higher gas tax, as part of a comprehensive energy policy. A government-imposed tax hike, Akerson believes, will prompt more people to buy small cars and do more good for the environment than forcing automakers to comply with higher gas-mileage standards. "There ought to be a discussion on the cost versus the benefits," he said. "What we are going to do is tax production here, and that will cost us jobs." For the years 2017-25, federal officials are considering 3 percent to 6 percent annual fuel efficiency increases, or 47 mpg to 62 mpg. That could boost the cost of vehicles by up to $3,500. "You know what I'd rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas," Akerson said. "People will start buying more Cruzes and they will start buying less Suburbans."

Politico:

• Poll: Nearly Half of NYC Voters Want Weiner Out.

Reuters:

• China has lifted a price cap on retail vegetable oil prices, citing industry sources.
• Moody's: Greek Rollover Would Likely Be Credit Event. The head of Moody's sovereign ratings group said on Tuesday it was hard to see how a private sector rollover of Greek debt would be truly voluntary and it would therefore likely constitute a default. European officials are striving to arrange a private sector rollover as a key part of a new rescue plan for Greece, to help justify to their taxpayers the burden of fresh financial aid for the struggling euro zone member. Bart Oosterveld, head of the sovereign risk group at Moody's Investors Service, said the ratings agency could classify a debt rollover as a default if it believed that bondholders had only taken part because they feared the consequences of not participating. "It's hard to imagine in the current circumstances that people would voluntarily do this," he told reporters in Paris. "Our default definition contemplates that for something to be voluntary it has to be truly voluntary ... More likely than not this would be a credit event in our view."

Financial Times:

• Fed Wary of QE3 After Latest Jobs Data. Federal Reserve officials have signalled no appetite for further monetary easing in response to the latest weakness in US economic data, meaning the second round of large-scale asset purchases introduced in November will come to an end as planned at the end of this month.
  
• Greek Restructuring Is Almost Inevitable. (video) George Magnus, senior economic adviser to UBS, the investment bank, tells John Plender that the size of Greece's public sector debt is simply too big for ongoing austerity measures to fix and that its economy is uncompetitive and in need of fiscal reform.
  

Telegraph:

• IMF Warns on UK Banks Masking Bad Debts. British banks’ lenience to struggling customers may be disguising the dangers the institutions face, the International Monetary Fund warned as it delivered its latest verdict on the UK economy.

Daily Yomiuri Online:

• The melted fuel at Tokyo Electric Power Co.'s Fukushima Dai-Ichi nuclear power station may have leaked through the pressure vessels of the Nos. 1 to 3 reactors. The Japanese government will submit a report to the IAEA that raises the possibility the fuel dropped through the bottom of the pressure vessels, a situation described as a "melt through" and considered more serious than a "meltdown," citing the document.

Study Times:

• Global stagflation may force nations to raise interest rates if an asset bubble and inflation pressure continue to grow, citing China Banking Regulatory Commission Chairman Liu Mingkang.

Bear Radar

Style Underperformer:

• Large-Cap Growth (+.39%)

Sector Underperformers:

• 1) Gaming -.23% 2) Software -.03% 3) Computer +.15%

Stocks Falling on Unusual Volume:

• BBY, RSH, AAPL, IVN, FEIC, LGCY, SMSC, GIII, JOBS, SINA, BIDU, GNOM, OPEN, SOHU, TZOO, TNAV, FMCN, MELI, MMYT, WYNN, STRA, PBY, FGP, XL and NAV
  

Stocks With Unusual Put Option Activity:

• 1) S 2) CMED 3) CTRP 4) TM 5) APKT
  

Stocks With Most Negative News Mentions:

• 1) CTXS 2) TBL 3) DNB 4) GM 5) GS
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Value (+.79%)

Sector Outperformers:

• 1) REITs +1.24% 2) Restaurants +1.10% 3) Semis +1.10%

Stocks Rising on Unusual Volume:

• SWKS, OVTI, BAP, CIB, HRBN, GPRO, BEXP, TIN, PKG, WAC, WY, SUN, CVC, MWV and RKT
  

Stocks With Unusual Call Option Activity:

• 1) TIN 2) NAV 3) SYK 4) SCCO 5) JDSU
  

Stocks With Most Positive News Mentions:

• 1) RTEC 2) AYI 3) PFCB 4) BBY 5) BYD
  

Charts:

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

Tuesday Watch

Evening Headlines

Bloomberg:

• European Banks' Capital Shortfall Means Greece Debt Default Not an Option. A failure by European regulators to make banks raise enough capital to withstand a sovereign default is complicating efforts to resolve Greece’s debt crisis. The “fragilities” of Europe’s banking industry mean a Greek default isn’t an option, European Union Economic and Monetary Affairs Commissioner Olli Rehn said in New York last week. By delaying a decision some investors consider inevitable, policy makers risk increasing the cost to European taxpayers and prolonging Greece’s economic pain. “European officials are trying to buy time for the troubled economies to get their house in order and the banks to be strengthened,” said Guy de Blonay, who helps manage about $41 billion at Jupiter Asset Management Ltd. in London. While estimates of the capital shortfall vary, the vulnerability of European banks to a sovereign shock isn’t disputed. Independent Credit View, a Swiss rating company that predicted Ireland’s banks would need another bailout last year, found in a study to be published tomorrow that 33 of Europe’s biggest banks would need $347 billion of additional capital by the end of 2012 to boost their tangible common equity to 10 percent, even before any sovereign default.
  
• Fed Said to Back 3% Surcharge for Big Banks. The Federal Reserve supports a proposal at the Basel Committee on Banking Supervision that calls for a maximum capital surcharge of 3 percentage points on the largest global banks, according to a person familiar with the discussions. International central bankers and supervisors meeting in Basel, Switzerland, have decided that banks need to hold more capital to avoid future taxpayer-funded bailouts. Financial stock indexes fell in Europe and the U.S. yesterday as traders interpreted June 3 remarks by Fed Governor Daniel Tarullo as leaving the door open to surcharges of as much as 7 percentage points. “A 7 percentage-point surcharge for the largest banks would be a disaster,” said Jason Goldberg, senior analyst at Barclays Capital Inc. in New York. “It will certainly restrict lending and curb economic growth if true.”
• Crude Declines for a Third Day on Speculation OPEC Will Increase Quotas. Oil dropped for a third day in New York amid speculation OPEC may increase output quotas when it meets in Vienna tomorrow. Futures slipped as much as 0.6 percent today after falling to the lowest in two weeks yesterday. The Organization of Petroleum Exporting Countries may raise production limits, Barclays Plc said June 6. The International Energy Agency said on May 19 it saw “an urgent need” for more oil to help bring down high prices threatening economies. Crude also slid on signs fuel demand is faltering along with economic growth. Options traders increased bets that oil prices will fall further. The most-active option was the July $95 put, which rose 17 cents to 79 cents. The second-most active contract was the August $90 put, which climbed 13 cents to $1.05. “There is speculation that OPEC may raise production targets this week, on concerns from some OPEC members that higher oil prices are curbing demand,” economists at Australia & New Zealand Banking Group Ltd., led by Warren Hogan, wrote in a note today. A “recalibration” of OPEC’s output target closer to actual output is expected, Barclays analysts led by London-based Paul Horsnell said in yesterday’s report.
  
• Regional Fiscal Revolt in Spain Risks Spreading: Euro Credit. Catalonia's refusal to meet Spain's deficit target risks encouraging other regions to join in rebellion just as Prime Minister Jose Luis Rodriguez Zapatero's authority may be weakened by the approach of general elections. Catalonia, Spain's largest region with an economy the size of Portugal's, plans a 2011 deficit twice as wide as its target, in a move Moody's Investors Service said yesterday was "credit negative" for Spain. Zapatero will have to decide between allowing Catalonia to sell enough debt to fund the shortfall or antagonizing a state that has traditionally backed Socialists in national voting.
  
• Frontline(FRO) Billionaire Fredriksen Bets Tankers Collapsing: Freight Markets. The most bearish investor in the oil- tanker market right now may be the one with the most at stake. At a time when analysts covering Frontline Ltd. expect shares of the world’s biggest supertanker operator to gain 1.7 percent in 12 months, its Chairman John Fredriksen says the biggest crash in the cost of ships has yet to happen. It will be within “a year or two” that the market “collapses,” the 67-year- old said in an interview in Oslo last month. For Fredriksen, whose fortune was valued by Forbes magazine at $10.7 billion in March, that will be an opportunity to buy more vessels at a discount, he said. For other investors, it may mean that the more than doubling in freight rates predicted for next year by forward freight agreements, traded by brokers and used to bet on future shipping costs, is too optimistic. “Betting against John Fredriksen tends to be a bad idea,” said Erik Nikolai Stavseth of Arctic Securities ASA in Oslo, whose recommendations on the shares of shipping companies returned 16 percent in three months. “He’s been a bellwether and he’s always been able to spot the cycle early,” said the analyst, who has a “sell” rating on Frontline and expects the U.S. shares to drop about 32 percent in a year. The industry is contending with a glut of capacity as the fleet expands twice as fast as demand.
• Fisher Says Central Bank Has 'Done Enough if Not Too Much' to Help Economy. Federal Reserve Bank of Dallas President Richard Fisher said the central bank has “done enough if not too much” to stimulate the economy and “one has to question the efficacy” of doing more. While “it’s going to be a very slow slog” for the economy, the U.S. should grow at more than a 3 percent annual rate in the second half of this year, Fisher, 62, said today in response to audience questions after a speech in New York. The Fed is set to complete its second round of large-scale bond purchases this month, and Fisher has said he will be among the first policy makers to push for a reversal of policy as needed.
• Peruvian Stocks' Biggest Plunge in 30 Years Forces Trading Suspension. Peru’s stock exchange halted trading after the benchmark index plunged a record 12 percent as investors speculated Ollanta Humala will seek more state control of the economy as the nation’s next president. Mining companies led the Lima General Index lower after Humala, who during the campaign pledged to raise royalties on the industry, claimed victory in yesterday’s election. The currency and bonds also fell. The bourse twice suspended trading today, ending the session three hours early, as Alturas Minerals Corp. (ALT) and Minera IRL Ltd. (MIRL) dropped more than 20 percent.
• Goldberg: Iran Wants the Bomb, and It's Well on Its Way. The Iranian government, which is known neither for transparency nor candor, has insisted for many years that the goal of its nuclear program is entirely peaceful. And for many years, the International Atomic Energy Agency, whose motto is “Atoms for Peace,” has tended to give the ayatollahs the benefit of the doubt on this question. The agency’s former chairman, Mohamed ElBaradei, now a candidate for the presidency of Egypt, seemed to take the attitude that anxiety about Iran’s nuclear objectives was motivated by the strategic self-interest, even the paranoia, of the U.S., Israel and the Arab states near Iran, rather than by the reality-based worry that bloody-minded mullahs bent on dominating the Middle East aren’t the sort of people who should have the bomb. The new chairman of the IAEA, Yukiya Amano of Japan, seems more skeptical of Iran’s claim of nuclear virginity. He is, by many accounts, preparing a comprehensive indictment of Iran’s nuclear program to be issued later this year.
• Ex-Met Dykstra Charged With Grand Theft, Drug Possession in Los Angeles. Lenny Dykstra, a former New York Mets and Philadelphia Phillies outfielder, was charged with grand theft for allegedly trying to lease cars using phony business and credit information and with drug possession. Dykstra, 48, who was indicted on a separate federal bankruptcy fraud charge May 5, tried to lease high-end cars from several dealerships by providing fraudulent information and claiming credit through a phony business, Home Free Systems, Los Angeles Deputy District Attorney Alex Karkanen said today in a statement. The ex-ballplayer was charged with five counts of attempted grand theft auto, eight counts of filing false financial statements, four counts of identity theft, three counts of grand theft auto and three counts of possession of a controlled substance, according to the e-mailed statement. Police found cocaine, the drug Ecstasy and Somatropin, a synthetic human growth hormone, during a search of his home in Encino, California, prosecutors said.
• N. Korea Setting Up Economic Zone Near China. North Korea said it will set up a new economic zone near its border with China, signaling the nation’s deepening dependence on its economic benefactor after leader Kim Jong Il’s three visits there in the past year. The Hwanggumphyong and Wihwa Islands Economic Zone will be set up to “boost friendship with China and expand and develop external economic relations,” North Korea’s state-run Korean Central News Agency said late yesterday, citing a parliamentary decree.
• Muddy Waters to Release More Sino-Forest Research After Sparking 71% Slump.
• Google(GOOG) Reports on Hacker Attacks 'Defamed' China, People's Daily Says. Google Inc. (GOOG)’s reports that Chinese hackers may have organized attacks on U.S. and Asian government officials using the company’s Gmail service “defamed China,” the official People’s Daily said in an editorial. Google was “strongly insinuating” without evidence that the Chinese government directed the alleged cyber attacks, the editorial said. The U.S. company’s accusations were “very serious” and reinforced the “western world’s negative perceptions of China,” according to the Chinese Communist Party-affiliated newspaper. Internet hackers tried to steal passwords from hundreds of users of Google’s Gmail e-mail service, targeting the accounts of government officials in the U.S. and Asia, the Mountain View, California-based company said last week.

Wall Street Journal:

• Weiner Now Says He Sent Photos. Rep. Anthony Weiner on Monday admitted sending sexually suggestive photographs or messages to six women online over three years, but said he wouldn't resign over his behavior or the lies he told to cover it up. The New York Democrat's effort to control the damage caused by disclosures about his secret online life didn't satisfy his party's leaders. House Minority Leader Nancy Pelosi (D., Calif.) called for a congressional ethics investigation of Mr. Weiner, a request that was immediately seconded by Rep. Steve Israel, head of the House Democrats' campaign arm and a fellow New York lawmaker. Ms Pelosi said an investigation was needed "to determine whether any official resources were used or any other violation of House rules occurred.''
• Obama to Lose Top Economic Adviser. Austan Goolsbee, chairman of the White House Council of Economic Advisers, will leave his position by the end of the summer, marking the latest shake-up in President Barack Obama's economic team. Mr. Goolsbee, who assumed the top job at the economic council last September, will return this fall to his position as a professor at the University of Chicago, the White House announced on Monday.
• Pimco Takes Bath on Lehman. Losses on certain Lehman bonds traded by Mr. Gross's firm, Pacific Investment Management Co., exceed $3.4 billion, according to a Wall Street Journal analysis of liquidation plans and investment disclosures filed in a federal bankruptcy court in New York.
• Hacker Group Says It Hit A Sony Unit Computer Network Again. A group of hackers said they hit a Sony Corp. (SNE, 6758.TO) unit computer network on Monday, the latest in a string of attacks on the Japanese technology-and-media giant.
• Japan Concedes Severity of Blast.
• May Storms Caused Up to $7 Billion in Insured Losses. The thunderstorms and tornadoes that struck the U.S. at the end of May caused insured losses of $4 billion to $7 billion, according to a disaster-modeling firm.
• SecurIDs Come Under Siege. Security Breach Forces RSA to Offer to Replace Nearly All of Its Millions of 'Tokens'.
• Goldman(GS) Ex-Director Sued Over Alleged Tips in Galleon Case. A Goldman Sachs Group Inc. shareholder sued a former Goldman director on Monday over tips the one-time board member allegedly gave hedge-fund founder Raj Rajaratnam about the investment bank. The lawsuit, filed in federal court in Manhattan, is seeking to recover "short-swing" profits the shareholder contends Rajat Gupta, a former Goldman director, likely made as a result of trading by Mr. Rajaratnam, the founder of Galleon Group.
• ObamaCare's Next Constitutional Challenge. The Medicaid provision of the health law spells the death knell for competition among the states.

CNBC:

• A Merciless May for Many Hedge Funds. May was a painful month for many hedge funds, as the market struggled with the double whammy of a slowing economy and the final throes of the Fed’s current quantitative easing program. In the macro space, where funds trade everything from currencies to stocks, the damage was widespread. Moore, Caxton, and Fortress, all multibillion-dollar global players, each saw declines of at least a few percentage points in their flagship macro funds, according to hedge-fund reports and people familiar with the matter.
• Saudis Raise Oil Production to Curb Prices. Saudi Arabia has been quietly increasing its crude oil production ahead of Wednesday’s meeting of the Opec oil cartel, in a sign that Riyadh is trying to bring oil prices down to more comfortable levels for consumers in the US, Europe and China. The kingdom boosted production in May by about 200,000 barrels a day and it is on course to increase it by another 200,000-300,000 b/d this month, taking its output above the critical 9m b/d level for the first time since mid-2008.

Business Insider:

• 67 Years Later: Incredible Photos From The D-Day Invasion.
• 8 Reasons Why Bank Stocks Are Getting Crushed Again.
• A Huge Supreme Court Ruling Just Paved The Way For Tons More Shareholder Lawsuits.
  

Zero Hedge:

• Quantifying The Treasury's Plunder of Retirement Accounts: $80 Billion Between The G- And CSRD Funds Since Debt Ceiling Breach. In other words, retirement funds have seen a "disinvestment" of nearly $80 billion in the past 3 weeks just to make space for further funding of bloated government, defense spending, and healthcare benefits.
• Handelsblatt Reports Second Greek Bailout Package to be Delayed.
  

Forbes:

• McKinsey: 30% of Employers to "Definitely or Probably" Stop Offering Health Insurance After 2014.

Politico:

• Weiner: 'I apologize to Andrew Breitbart'. Rep. Anthony Weiner (D-NY) doled out his first apologies to his wife and his constituents, but also apologized to the media and to Andrew Breitbart specifically during a long and rambling press conference in which he seemed determined to answer every last reporter’s question. Breitbart had demanded an apology a few minutes before from the same podium, where he climbed after Weiner did not show up on time to his own press conference. “I’d like an apology from him,” Breitbart said. “This was his strategy, to blame me…so I’m here for some vindication.”

The Hill:

• When Hedge Funds Drive Educational Policy, Who Profits? With more than two trillion dollars of debt put on the backs of American taxpayers over the last two years, it is not surprising that Washington's spending spree also produced a bumper crop of waste, fraud and abuse. With the publication of the “Gainful Employment” rule this past Thursday, we bear witness to one of the most egregious (albeit inventive) examples of the unseemly intersection of special interests and big government. Fraud and corruption take on a new face in the intersection of Wall Street, the not-for profit world, and the U.S. Department of Education (DoED). The process which produced “Gainful Employment” demonstrates a new tactic: hedge fund short-sellers seeking to enrich themselves by a campaign which benefitted from a Senatorial hearing, a flawed GAO study and a one-sided government regulation. Is this any way for educational policy to be made?

Telegraph:

• European Central Bank Risks Being 'Wiped Out' by Bail-Outs. The European Central Bank is "looking increasingly vulnerable" and may face "hefty losses" as a result of propping up indebted eurozone countries, a leading think-tank has warned. The International Monetary Fund's partner in the recent international bail-out missions is itself in danger of becoming a liability, Open Europe has argued. In a report published on Monday entitled A House Built on Sand?, Open Europe has calculated that the ECB has a total exposure of about €444bn (£397bn) to "struggling eurozone economies". The bank is now "23 to 24 times levered" as a result of bailing out Greece, Ireland, Portugal and Spain. The London-based think tank argued: "Should the ECB see its assets fall by just 4.23pc in value . . . its entire capital base would be wiped out." Open Europe said: "Hefty losses for the ECB are no longer a remote risk." It added: "The ECB is ultimately underwritten by taxpayers which means there is a hidden – and potentially huge – cost of the eurozone crisis to taxpayers buried in the ECB's books."

Economic Information Daily:

• China's central bank may raise interest rates by 25 basis points this weekend and may increase banks' reserve requirement ratios by 50 basis points next week after inflation, investment and some of the other economic indicators for May are released, citing analysts.

China Daily:

• Chinese airlines won't join the European Union's emissions trading scheme and will accept the consequences, citing Chai Haibo, deputy secretary-general of the China Air Transport Association. The group and Air China Ltd. will jointly file a lawsuit in Germany against the scheme at a future date, Chai said at a meeting of the Intl. Air Transport Assoc. in Singapore. Chai called the EU scheme "radically unreasonable." Carriers that do not participate in the scheme face possible fines and flight suspensions.
• China supports Ban Ki-moon's bid for re-election as secretary-general of the United Nations, Hong Lei, a spokesman for the China Ministry of Foreign Affairs, said in a statement.
  

China Business:

• China's restrictions on the number of homes citizens can buy in 105 cities may expand to small cities to thwart speculative property demand, citing a person close to the Ministry of Housing and Urban-Rural Development.

Evening Recommendations
Barclays Capital:

• Rated (HD) Overweight, target $41.
• Rated (ORLY) Overweight, target $71.
• Rated (PETM) Overweight, target $51.
• Rated (PIR) Overweight, target $13.
• Rated (WSM) Overweight, target $45.
• Rated (BBBY) Overweight, target $63.
• Rated (TSCO) Overweight, target $70.
  
• Rated (AZO) Overweight, target $336.
  
• Rated (ODP) Underweight, target $4.
• Rated (OMX) Underweight, target $7.
• Rated (RSH) Underweight, target $13.
• Rated (BKS) Underweight, target $17.
  

Night Trading

• Asian equity indices are -.75% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 112.0 +2.0 basis points.
  
• Asia Pacific Sovereign CDS Index 116.0 +.25 basis point.
  
• S&P 500 futures +.18%.
  
• NASDAQ 100 futures +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (NAV)/1.17
• (TLB)/.03
• (BAH)/.28
• (ABM)/.27
• (ALOG)/.44
• (BOBE)/.66
• (CMTL)/.39
• (HOV)/-.51
• (LDK)/.86
• (OXM)/1.00
• (ULTA)/.31

Economic Releases
3:00 pm EST

• Consumer Credit for April is estimated to fall to $5.0B versus $6.016B in March.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Lockhart speaking, JOLTs Job Opendings for April, IBD/TIPP Economic Optimism Index for June, 3-Year Treasury Note Auction, weekly retail sales reports, RBC Tech/Media/Communications Conference, CSFB Aerospace/Defense Conference, Wells Fargo Financial Services Conference, Needham's Internet/Digital Media Conference, Deutsche Bank Financial Services Conference, Keefe Bruyette Woods Investment/Specialty Finance Conference, JPMorgan Industries Conference, (PLCE) Analyst Day, (F) Investor Day, (G) Investor Day, (VRNM) Investor Day and the (ENOC) Investor Day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Falling into Final Hour on Global Growth Worries, Financial Sector Weakness, Eurozone Debt Angst, Rising Mideast Unrest

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Almost Every Sector Declining
  
• Volume: Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 18.27 +1.78%
  
• ISE Sentiment Index 102.0 -8.93%
  
• Total Put/Call 1.07 -13.01%
  
• NYSE Arms 2.57 +67.98%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.27 -.15%
  
• European Financial Sector CDS Index 107.83 -.60%
  
• Western Europe Sovereign Debt CDS Index 188.58 -1.05%
  
• Emerging Market CDS Index 220.80 +1.13%
  
• 2-Year Swap Spread 20.0 unch.
  
• TED Spread 23.0 +1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .02% -1 bp
  
• Yield Curve 257.0 +1 bp
  
• China Import Iron Ore Spot $170.20/Metric Tonne unch.
  
• Citi US Economic Surprise Index -112.70 +4.5 points
  
• 10-Year TIPS Spread 2.23% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating -50 open in Japan
• DAX Futures: Indicating -30 open in Germany

Portfolio:

• Slightly Lower: On losses in my Tech, Retail, Medical and Biotech sector longs
  
• Disclosed Trades: None
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is very bearish as the S&P 500 trades near session lows, breaking technical support at 1,300, on global growth worries, emerging markets inflation fears, rising Mideast unrest, Japan nuclear concerns, eurozone debt angst and financial sector weakness. On the positive side, Oil Tanker and Restaurant shares are higher on the day. Oil is falling -1.9% and the UBS-Bloomberg Ag Spot Index is dropping -2.0%. The Russia sovereign cds is falling -1.95% to 135.0 bps and the Hungary sovereign cds is falling -2.06% to 237.69 bps. On the negative side, Airline, Education, Gaming, Tobacco, Homebuilders, Construction, HMO, Hospital, Biotech, I-Banks, Banks, Disk Drives, Steel, Oil Service, Energy, Alt Energy and Coal shares are under significant pressure, falling more than -2.0%. Small-cap and cyclical stocks are underperforming again. (XLF)/(IYR) are also underperforming. Transport shares have also been heavy throughout the day. Lumber is falling -1.63% and has plunged -37.0% since January 4th. The US price for a gallon of gas is down -.02/gallon today to $3.77/gallon. It is up .63/gallon in less than 4 months. The Spain sovereign cds is rising +1.05% to 239.63 bps, the Italy sovereign cds is gaining +2.46% to 148.67 bps, the Portugal sovereign cds is rising +1.33% to 674.07 bps, the Greece sovereign cds is rising +1.53% to 1,395.96 bps, the Ireland sovereign cds is gaining +1.14% to 649.10 bps, the Brazil sovereign cds is rising +1.25% to 109.35 bps and the UK sovereign cds is rising +2.07% to 56.19 bps. The Citi Latin America Economic Surprise Index is falling another -4.9 points today to -31.60. Brazil's Bovespa is falling -2.0% today to session lows and is down -9.0% ytd, while it looks like it is rolling over again technically. The Nikkei also looks to be rolling over again. Oil is being propped up by rising Mideast unrest and US dollar weakness. Unless there is another spike in violence that actually threatens production or another unlikely euro surge very soon, I suspect oil is about to take another dive lower, which would be a longer-term positive. The broad market is worse today than the major averages suggest. A test of DJIA 12,000 is likely over the coming days. I expect US stocks to trade modestly lower into the close from current levels on global growth worries, rising eurozone debt concerns, emerging markets inflation fears, rising Mideast unrest, financial sector weakness, technical selling and more shorting.

Today's Headlines

Bloomberg:

• German Banks Top French With $23 Billion in Greek Debt, BIS Report Says. German lenders were the biggest foreign owners of Greek government bonds with $22.7 billion in holdings last year, making them a likely negotiation partner in burden-sharing deals for the country, data from the Bank for International Settlements showed. French banks, which led the group of Greek creditors with overall claims amounting to $56.7 billion, trailed their German peers on sovereign debt with $15 billion, according to the June report from the Basel, Switzerland-based BIS. The overall figure for French banks was inflated by $39.6 billion in lending to companies and households, mainly because of Credit Agricole SA (ACA)’s Greek unit, Emporiki Bank SA. (TEMP) German lenders have no major units in the country. At the end of 2010, Greek government bonds held by banks in countries reporting to the BIS totaled $54.2 billion, of which 96 percent was owned by European lenders. Germany and France, which accounted for 69 percent, may be asked to weigh in when the European Union goes ahead with plans to win Greece creditors to roll over their debt in a “Vienna-style” program.
• Goldman(GS) Survey Shows EU-Tested Banks May Need to Raise $42 Billion. Banks in the European Union may have to raise 29 billion euros ($42 billion) following this year’s stress tests, according to a survey by Goldman Sachs Group Inc. (GS) Nine of the 91 lenders examined may fail, London-based analysts Jernej Omahen, Peter Oppenheimer, Christian Mueller- Glissmann and Peter Skoog wrote in a report today, citing the average response in a survey of 113 participants from the financial industry. Spanish, German and Greek banks would need to raise the most new capital, according to the poll. The share of participants saying they expect results of the stress test to be “credible” was smaller than last year.
• Plosser: Stimulus Exit Plan Would Offer Stability. Federal Reserve Bank of Philadelphia President Charles Plosser said a plan to withdraw the central bank’s record monetary stimulus and “normalize” interest-rate policy would help avert confusion in financial markets. “By articulating a systematic plan that gets us to our objective, we improve communication with the public, reduce uncertainty in the marketplace and lend credibility to the commitment that policy makers will follow through,” Plosser said today in Helsinki in the prepared text of a speech. Plosser outlined two plans for reducing the balance sheet. The Fed could quicken the pace of sales while raising the federal funds rate. Or the pace of sales would remain constant and the central bank would use the interest rate to respond to changing economic conditions.
• Peruvian Stocks Fall Most Since 2008, Sol, Bonds Sink as Leftist Humala Claims Win. Peruvian stocks tumbled the most in two years, the currency sank and dollar bonds fell after former army rebel Ollanta Humala claimed victory in the presidential runoff yesterday and sparked concern that his government will seek more control of the economy. Peru’s benchmark Lima General Index of stocks declined the most since October 2008, retreating 8.7 percent to 19,378.78 at 9:31 a.m. New York time, before trading was halted. The cost to protect Peru’s debt from non-payment with credit-default swaps jumped 20 basis points to 168, the highest since April 27, according to data provider CMA in London.
• Apple's(AAPL) Jobs Shows New Mac Software Features. Apple Inc. (AAPL) Chief Executive Officer Steve Jobs emerged from medical leave to show off the company’s new Mac OS X Lion software, which includes more touch options and a service called AirDrop that shares files over Wi-Fi. Apple is adding 250 new features to the operating system, executives said today at the Apple Worldwide Developers Conference in San Francisco. The event marked Jobs’s second public appearance of 2011.
• Goldman Sachs(GS) Criminal Probe May Allow Use of Powerful New York State Law. The criminal investigation of Goldman Sachs Group Inc. (GS) by the Manhattan District Attorney’s Office has at its disposal a 90-year-old New York law that makes it easier for state prosecutors to bring charges than their federal counterparts. District Attorney Cyrus Vance Jr. subpoenaed Goldman Sachs, the fifth-biggest U.S. bank by assets, for records on its activities leading into the credit crisis, two people familiar with the matter said. Vance may bring charges under the state’s Martin Act, which lawyers call a potent tool for New York prosecutors probing investment frauds, Ponzi schemes and other white-collar crime.

Wall Street Journal:

• Global TV Shipments Off 29% Sequentially In 1Q On Inventory - Report.
• Live Blog: Apple's(AAPL) Unveiling of the iCloud.
  

MarketWatch:

• Banks Pull Europe Stocks Lower. Angus Campbell, head of sales at London Capital Group, said that there had been no firm progress on Greece and that investors are likely to remain wary. “We’re seeing a continuation of the lackluster performance of markets from last week,” Campbell said. “The Friday meeting [on Greece] didn’t really resolve anything, it was the same old things — just a lot of rhetoric.” Adding to the pressure on bank stocks, The Wall Street Journal reported that there is growing support among European finance officials for a plan that would press private-sector creditors into accepting delayed repayments.

CNBC.com:

• Taxpayers Dollars Still Bailing Out Banks. None of America's largest banks raise money on the free market. Every single one of them is propped up by an implicit taxpayer guarantee that is very similar to the backstops provided to Fannie Mae and Freddie Mac. It is a huge subsidy by taxpayers to the banks, enabling them to be far more profitable than they would be otherise.
• Greece Pushes Austerity Plan as Unrest Keeps Growing.
  

Business Insider:

• WEINERGATE II: It's Going to Be VERY Hard for Anthony Weiner to Explain This New Shirtless Photo.
• Welcome to the Mini "Greece" That's Inside Spain.
• Here's What Happens When US Energy Spending Passes 9% of GDP. The energy limit model to economic growth is working beautifully, having come into play prior to the 2008 crisis and now once again forcing another global slowdown.
• How Greek Protesters See The EU In One Simple Photograph. (pic)
• Dick Bove: The Economy is Slowing, SELL Wells Fargo(WFC).
  

Zero Hedge:

• Tim Geithner's Remarks to the International Monetary Conference On Systemic Risk.
• John Taylor of Currency Hedge Fund FX Concepts Says He Is Now Long The USD As Of a Week Ago. (video)
• Fitch Blows at Greek Bailout House of Cards, Says On Closing of Distressed Debt Exchange Will Place Sovereign Rating Into Default.
• Muddy Waters' Carson Block Discusses Sino-Forest, Says Will Keep Short In "Ponzi" Until Stock Hits Zero. (video)
  

NY Post:

• Watchdog Bites. FINRA Won't Let Me Hire More Brokers: Schiff. As The Post recently reported, small brokerage firms like Schiff's are complaining that the Financial Industry Regulatory Authority (Finra) has been hobbling their businesses with over-regulation. Finra is a self-regulatory agency funded by the brokerage industry. Critics charge that Finra is beholden to big brokerage firms and boosts its investigation totals by going after smaller firms that are more likely to settle than fight.
• Japan Says Fukushima's Radiation Twice as Bad as First Reported.
  

New York Times:

• Syria, Claiming 120 Officers Killed, Hints at Retaliation. Syria’s state news agency reported Monday that “armed gangs” had killed 120 police, security personnel and civilians in multiple attacks in a northwestern town, and that residents were “pleading” for the army to intervene. The reports could not be independently verified, but regardless of whether the numbers are inflated, they appear likely to presage an even harsher crackdown on antigovernment protesters.

Digital Trends:

• Sina's(SINA) Weibo Aims to Take Down Twitter With US Version. Sina Weibo’s US debut would represent the first major Chinese social network to launch in the United States. But considering the Chinese government’s stranglehold on free speech in-country, which highly restricts what users can and cannot say on Sina Weibo, it will be interesting to see if the American version takes a different approach to censorship. If not, don’t expect much of a fight.

CNN Money:

• Meredith Whitney: State Finances Are Worse Than Estimated. The outspoken municipal bond bear follows up with more evidence that the fiscal troubles in many states are far greater than we've been told.

Politico:

• Internet Sales Tax Push Gains Currency.

Rasmussen Reports:

• 54% Favor Repeal of Health Care Law, 56% Say Law Will Increase Deficit. The latest Rasmussen Reports national telephone survey of Likely Voters shows that 54% of Likely U.S. Voters at least somewhat favor repeal of the law, while 39% are at least somewhat opposed. This includes 40% who Strongly Favor repeal and 26% who Strongly Oppose it.

Daily Yomiuri Online:

• Worried Residents Near Evacuation Zone Weigh Leaving. Fearing high radiation levels from the Fukushima No. 1 nuclear power plant, people living just outside the evacuation zone established by the government are considering leaving voluntarily. The cities of Date and Soma, both in Fukushima Prefecture, are preparing to offer public housing units and other facilities to people who live close to the evacuation zone the government established outside the no-entry zone within a 20-kilometer radius from the plant.