Bull Radar

Style Outperformer:

• Large-Cap Value (+.24%)

Sector Outperformers:

• 1) Energy +.69% 2) Banks +.58% 3) Telecom +.46%

Stocks Rising on Unusual Volume:

• COG, EBAY, ULTA, VRUS, HRBN, NOG, TFM, PXP and OAS
  

Stocks With Unusual Call Option Activity:

• 1) ATML 2) AMD 3) ODP 4) BJ 5) CIEN
  

Stocks With Most Positive News Mentions:

• 1) ULTA 2) GIII 3) COG 4) WLP 5) GCC
  

Charts:

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

Wednesday Watch

Evening Headlines

Bloomberg:

• Germany Seeks Extending Greece Bond Maturities 7 Years in Clash With ECB. German Finance Minister Wolfgang Schaeuble said bondholders must contribute a “substantial” share of a second aid package for Greece, proposing a swap that credit-rating companies may term a default. Schaeuble told European Central Bank President Jean-Claude Trichet and fellow euro finance ministers in a June 6 letter that maturities on Greek bonds should be extended seven years to give the debt-wracked nation time to overhaul its economy. Any agreement on aid at a ministers’ meeting on June 20 “has to include a clear mandate -- given to Greece possibly together with the IMF -- to initiate the process of involving holders of Greek bonds,” Schaeuble wrote in the letter. The German position clashes with the stance of European Commission officials and the ECB, which oppose anything beyond a voluntary rollover of debt as they struggle to avert the euro area’s first sovereign default. A swap offering investors terms that are “worse” than those of existing securities would constitute a coercive or distressed exchange, and be considered a default, Fitch Ratings said this week. With a return to capital markets in 2012 “more than unrealistic,” Greece needs more aid to avert “the real risk of the first unorderly default within the euro zone,” Schaeuble wrote.
• Emerging Markets Must Speed Up Rate Increases, World Bank Says. Emerging-market economies need to speed spending cuts and interest-rate increases as they fight inflation and overheating, the World Bank said. Real interest rates are low or negative in many countries even as policy makers from India to Peru raise borrowing costs because of inflation, according to the bank. Developing nations also need to allow more exchange rate flexibility, the World Bank’s Global Economic Prospects report said. Emerging markets now account for almost half of global crude-oil demand and China absorbs 40 percent of the world’s metal supplies, contributing to the increase in prices observed since the recovery, the bank said in the report. The rise in commodity prices and strong capital inflows have contributed to faster inflation, which in developing countries was close to 7 percent in April from a year earlier, more than 3 percentage points higher than in July 2009, according to the report. Policy makers “will need to make fuller use of all the tools at their disposal to keep inflation under control,” the World Bank said. “While the more unstable capital inflows that characterized the third quarter of 2010 have abated, many of the underlying conditions that attracted those flows remain in place.” The World Bank also estimated that domestic food prices in developing countries may increase this year and next, even if international prices decline. Risks to the global economy also include continued turmoil in Arab countries, where civil unrest has lifted oil prices. Higher energy costs could also push food prices further, the bank said.
• Greek Bailouts Risk More EU Nations Being Junked: Euro Credit. European Union plans to include private investors in a second Greek bailout are a threat to the creditworthiness of Ireland and Portugal, and risk driving up both nations' borrowing costs. Ratings companies warn that they may consider any duress or worsening terms for bondholders in a debt deal to be a default, and that they would cut Greece's credit rank accordingly. Irish and Portuguese securities, teetering on the brink of junk ratings, risk removal from government bond indexes that would force fund managers with a mandate to track the benchmarks to offload their holdings.
  
• Dimon Asks Bernanke If Regulators Went Too Far. JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon asked Federal Reserve Chairman Ben S. Bernanke whether regulators have gone too far by reining in the U.S. banking system and are slowing economic growth. Dimon asked whether the central banker has measured the cumulative effects of new capital requirements, mortgage standards and other rules imposed on the system in the wake of the U.S. financial crisis. Dimon, 55, spoke yesterday in a question-and-answer session after Bernanke addressed a conference of bankers in Atlanta. Dimon asked Bernanke if he “has a fear like I do” that overzealous regulation “will be the reason it took so long that our banks, our credit, our businesses and most importantly job creation to start going again. Is this holding us back at this point?” Banks have tightened lending standards to what they were 30 years ago, Dimon said. “There’s no more subprime, there’s no more Alt-A, there’s no more mortgages being packaged, the CMBS market has been completely reformed,” he said, referring to commercial mortgage-backed securities. “I have a great fear someone’s going to try to write a book in 20 years and the book is going to talk about all the things that we did in the middle of the crisis to actually slow down recovery.” Dimon’s points are valid, Bernanke said at the American Bankers Association’s International Monetary Conference. The central bank doesn’t have the quantitative tools to study the net impact of all the regulatory and market changes over the last three years, he said.
• China Building Ability for Border Conflicts: Panetta. CIA director Leon Panetta, who has been nominated to succeed Defense Secretary Robert Gates, said China appears to be building the capability “to fight and win short-duration, high-intensity conflicts” along its borders. “Its near-term focus appears to be on preparing for potential contingencies involving Taiwan, including possible U.S. military intervention,” Panetta said in a 79-page set of answers to questions from the Senate Armed Services Committee in advance of his confirmation hearing, scheduled for June 9. China’s efforts to modernize its military “emphasize anti- access and area capabilities,” Panetta said in his written answers. China also is modernizing its nuclear forces and improving its space and counter-space operations as well as its computer network operations, Panetta said.
• Corn Costlier Than Wheat in Chicago for First Time Since 1984. Corn futures are more expensive than wheat futures on the Chicago Board of Trade for the first time since 1984, according to data compiled by Bloomberg. Corn for July delivery, the most active contract, traded at $7.43 a bushel at 7:25 a.m. in Singapore while wheat for delivery in the same month traded at $7.3875 a bushel.
• Treasury Said to Be Reluctant to Sell Part of GM(GM) Holding at Current Price. The U.S. Treasury Department is reluctant to sell part of its 33 percent stake in General Motors Co. (GM) to the company at this point because the price is too low, a person familiar with the matter said. The Treasury doesn’t want to sell GM while the shares are trading at 13 percent less than the $33 initial public offering price, the person said.
• Swap Exemption May Pose Risk to U.S. Financial System, Exchange Group Says. A U.S. Treasury Department proposal exempting foreign exchange swaps and forwards from Dodd-Frank Act regulations could increase risk in the financial system and undermine the regulatory overhaul, a trade association for exchanges and users of the derivatives market said. The proposed exemption, released on April 29, doesn’t account for the credit risk that buyers and sellers face in the $4 trillion global daily foreign exchange market, the Washington-based Commodity Markets Council said in a letter yesterday to the Treasury Department. The council’s 40 members include the CME Group Inc. (CME), Kansas City Board of Trade and Archer-Daniels-Midland Co. (ADM). The council “believes exempting foreign exchange forwards and swaps at this time from the clearing and trading requirements of Dodd-Frank could increase systemic risk at a time when regulators around the globe are trying to reduce it,” according to the letter, which was submitted in response to the Treasury’s proposal. “Our concern is the creation of a loophole,” Christine M. Cochran, president of the association, said in an interview.
• After India, Lagarde Takes IMF Campaign to China. Christine Lagarde is due in China today to seek the government’s backing for her bid to become the next managing director of the International Monetary Fund after failing to secure an endorsement from India. The French finance minister’s two-day trip, which will include a press briefing tomorrow in Beijing, is part of a tour that has also included Brazil.
• Clinton to Discuss With NATO Libya Outlook After Qaddafi as Yemen Unravels. Secretary of State Hillary Clinton heads to Abu Dhabi to discuss with NATO allies the outlook for Libya without Muammar Qaddafi even as the focus may shift further east to Yemen, which is on the brink of civil war. With North Atlantic Treaty Organization jets stepping up daytime strikes on the Libyan capital of Tripoli, the United Arab Emirates will host Clinton and other members of the 22- nation Libya Contact Group on June 9. Qaddafi yesterday said “martyrdom is a million times better” than surrender, in his first broadcast comments in more than three weeks. President Barack Obama renewed his demand that Qaddafi leave as a growing chorus of world leaders predicted the demise of the Libyan dictator, who after a 42-year rule has failed to crush a popular uprising that began mid-February.

Wall Street Journal:

• Companies Seen Cutting Health Plans. A report by McKinsey & Co. has found that 30% of employers are likely to stop offering workers health insurance after the bulk of the Obama administration's health overhaul takes effect in 2014. The findings come as a growing number of employers are seeking waivers from an early provision in the overhaul that requires them to enrich their benefits this year. At the end of April, the administration had granted 1,372 employers, unions and insurance companies one-year waivers to the law's requirement that they not cap annual benefit payouts below $750,000 a year. The law doesn't allow for such exemptions starting in 2014, leaving all those entities—and other employers whose plans don't meet the requirement—to change their offerings or drop coverage. Previous research has suggested that the number of employers who opt to drop coverage altogether in 2014 would be minimal. But the McKinsey study predicts a more dramatic shift away from employer-sponsored health plans once the new marketplace takes effect. Starting in 2014, all but the smallest employers will be required to provide insurance or pay a fine, while most Americans will have to carry coverage or pay a different fine. Lower earners will get subsidies to help them pay for plans. In surveying 1,300 employers earlier this year, McKinsey found that 30% said they would "definitely or probably" stop offering employer coverage in the years after 2014. That figure increased to more than 50% among employers with a high awareness of the overhaul law.
• Office Owners Seek to Cash In. Owners of big-name office buildings in some U.S. cities are racing to put them up for sale to exploit surging prices before it is too late.
• Tripped Up by the Margin. Commodity investors have long been used to wild market swings driven by wars and hurricanes. But recently a new risk has been added to their list: margin requirements. Margins, the amount of collateral investors must post against their trades, are designed to help reduce the risk to exchanges and calm overheated markets. But recently that safety valve is being blamed by some for wreaking havoc on markets such as silver, gasoline and cotton.
• FCC Backs Away From Aiding Media. Two years ago, the FCC and FTC launched reviews of the media industry with an eye toward changes in laws or tax code that could help struggling traditional media companies. Since then, the federal government's interest in helping the newspaper industry appears to be waning. On Thursday, the Federal Communications Commission will release its long-awaited report on the "Future of Media," but according to people who have seen the voluminous document, it holds little more than minor suggestions for rule changes, such as requiring broadcasters to put more information online. The report will also suggest that the Internal Revenue Service consider helping struggling media companies get an easier path to becoming non-profits. The report's recommendations aren't binding.
• Hedge Funds Less Bearish On Yen Despite Intervention Threat. Some big hedge funds are becoming less convinced the yen will weaken despite growing speculation Japanese officials will intervene in the foreign exchange market to curb the currency's strength.
• Former Hedge-Fund Manager Cites at Least 18 Illicit Trades. A former portfolio manager at hedge-fund firm SAC Capital Advisors LP testified Tuesday that he was involved in at least 18 instances of insider trading while at SAC and another firm.
• California Investigating Unusual Move in Muni-Bond CDS Price. California's state treasurer is looking into what he believes were erroneous prices reported last month for credit-default swaps tied to the state's debt. The annual cost of protecting $10 million of California debt against default over the next five years fell by $45,000 from one day to the next last month, an extraordinarily big overnight move. Tom Dresslar, a spokesman for Treasurer Bill Lockyer, said that CMA DataVision provided the prices to Bloomberg's fixed-income data service. Lockyer suspects the cost of credit-default swaps, which are expressed as a percentage of the amount of debt covered, was artificially high before the adjustment. "To the extent our prices are wrong, particularly if they are on the high side, that presents an inaccurate picture of our creditworthiness, at least in some corners," said Dresslar in an interview Tuesday.
• Pawlenty's Growth Market. Among GOP Presidential contenders, Tim Pawlenty is offering the most ambitious reform agenda so far, and his economic address yesterday continued the trend. While details remain to be filled in, the former Minnesota Governor is rightly focusing on a growth revival that ought to define the 2012 campaign.
• Expect more bad news until someone enacts a plan to bring deficits under control without raising taxes.

MarketWatch:

• Apple's(AAPL) Cloud Offering Could Ignite Price War.

CNBC:

• Fed Easing 'Miserable Failure' That Risks Depression: Bove. The Federal Reserve is risking a second Great Depression by putting pressure on banks to raise more capital, banking analyst Dick Bove writes in a scathing note that accuses the central bank of losing “all sense of reality.” Among other charges, the Rochdale Securities analyst says the Fed’s quantitative easing program was a “miserable failure,” primarily because all it did was raise asset prices but injected little new money into the economy. Much of the venom is directed at an idea that Bove acknowledges is unlikely to go anywhere: Recent suggestions from Fed Governor Daniel Tarullo that banks could raise another 20 to 100 percent in capital beyond Basel III requirements. “I unfortunately believe these people may have lost their minds just as the US Congress did when it passed the Dodd/Frank Act,” he says. “However, the proposal may be taken seriously by investors. If so it spells dangers for bank stocks. This is because it is likely that some form of this inane proposal may actually be put into place.” Bove breaks down the cause of the crisis and Washington’s reaction as such: Too much money in the economy helped create the crisis at a time when the Fed should have been clamping down on banks. Now, he says, the banks need to be given room to lend money and conduct business to reinvigorate the economy but instead are being handcuffed by onerous capital restrictions.
• Geithner Triggers Asian Backlash on Regulation. Tim Geithner’s warning that the world could face another global financial crisis unless Asia adopts US regulations on derivatives transactions triggered a largely critical response in the region.

Business Insider:

• Here's The Amazing Video of Jamie Dimon Ambushing Ben Bernanke After His Speech Today.
• TEPCO Death Spiral Accelerates, As Japan Continues to Hike Radiation Estimates.
• 20 Dirty Facebook Chats Sent By Anthony Weiner To A Las Vegas Blackjack Dealer. From bad to worse.
• Iran Is Two Months Away From Building A Nuclear Bomb.
• SocGen's Dylan Grice on China's "Great Suppression" That Could Result In A Crisis Bigger Than 2008.
  

Zero Hedge:

• How Goldman(GS) Dissembled In The Wall Street Journal. You have read Dealbook's superficial (and practically dictated) defense of Goldman's subprime bet. Below we present David Fiderer's a vastly different perspective than the one shared by straight-to-HBO expert A.R.S., which provides a far more realistic perspective of what really happened with Goldman and its "big short."
• Bernanke Speech and Word Cloud.
  

IBD:

• FEI's(FEIC) Electron Microscopes Unearth New Markets.

Forbes:

• Launch Sequence for Human Genome Stocks. There are hundreds of firms doing research and seeking to capitalize on new technologies in this space. Two of them are Life Technologies Corp. (nasdaq: LIFE) and Illumina, Inc. (nasdaq: ILMN).
• If Health Care Is A Basic Human Right, Can Doctors Be Rationed?
  

NY Post:

• GE Capital Eyes Subprime Loans. General Electric(GE), which is still paying back a $60 billion government guaranteed loan, is gearing up for the first time to start selling what are essentially subprime corporate loans, The Post has learned. The company's huge finance arm, GE Capital, is asking private-equity firms to invest $600 million in a new venture that will work alongside GE when it makes corporate loans, mostly to midsize companies.
  

Dealbreaker:

• Harbinger Capital Will Pay Redemptions...In Illiquid LightSquared Equity.

Morningstar:

• Higher Copper Prices Are Driving Users Away From The Metal. Copper consumers are increasingly seeking to substitute away from the expensive red metal to more cheaper materials as copper prices remain high, a panel of copper product makers said at the Metal Bulletin Copper Markets Forum in New York.

Credit Writedowns:

• Will Greece Allow Central Bankers to Destroy Sovereignty?
  

Reuters:

• Brokerage Bans Borrowing to Buy Some China Stocks. Interactive Brokers Group Inc(IBKR) is banning clients from borrowing money to buy some Chinese stocks, according to the brokerage firm's website. The ban comes amid a rash of Chinese accounting scandals and inquiries by U.S. regulators that have resulted in auditor resignations, sharp stock declines and some delistings. Interactive Brokers' ban applies to about 160 Chinese securities and cites "elevated risk concerns" as the reason for the action. The brokerage began enforcing the ban on Monday and will phase it in over the course of this week.
• Solar Price Drop to Weigh on SuPower(SPWRA), LDK(LDK). Steep declines in prices for solar products will shrink profit margins for SunPower Corp (SPWRA.O) and LDK Solar Co Ltd (LDK.N) this year, the companies said on Tuesday. Germany and Italy, the world's two largest solar markets, both have cut subsidies for the renewable energy source in recent months, though manufacturers have ramped up output of the modules that turn sunlight into electricity. SunPower Chief Executive Tom Werner said the industry was seeing intense competition for sales that could drive prices for solar modules down 20 percent this year. "You are seeing points where it's not economically viable for some (of our) competition to produce product," he told Reuters.
• Ulta Salon(ULTA) Q1 Trumps Wall Street, Shares Jump. Ulta Salon, Cosmetics & Fragrance Inc posted quarterly results above market estimates as more beauty conscious people visited its stores, and the beauty retailer forecast stronger-than-expected second-quarter earnings. The strong earnings and outlook lifted the company's shares 12 percent in after-market trade.

Market News International:

• China's current inflation pressure remains large, citing an official with the National Development and Reform Commission.

Financial Times:

• Dissent Lands Chinese Blogger in Labor Camp. A blogger from Chongqing has been sent to a labour camp for posting a political joke on the municipality’s ambitious Communist party chief on his microblog. The dire consequences of mocking Bo Xilai shed more light on the strict regime the high-profile politician runs in Chongqing, seen by many as his springboard to one of the coveted spots in the country’s new leadership, which will be chosen late next year.
• Obama Fears Greece Default. Barack Obama, the US president, weighed into Europe’s debate about whether to restructure Greek debt on Tuesday saying it would be “disastrous” for the US if the crisis led to “an uncontrolled spiral and default in Europe”.

National Business Daily:

• China should raise interest rates now as current deposit rates make people unwilling to save their money at banks, citing Chen Daofu, a researcher with the State Council's Development Research Center.

Evening Recommendations
Citigroup:

• Reiterated Buy on (F), target $18.
  

Night Trading

• Asian equity indices are -1.25% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 110.0 -2.0 basis points.
  
• Asia Pacific Sovereign CDS Index 115.0 -1.0 basis point.
  
• S&P 500 futures -.08%.
  
• NASDAQ 100 futures -.31%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (VRNT)/.56
• (CIEN)/-.11
• (PNY)/.67
• (MW)/.50
• (GEF)/.96
• (PLL)/.71

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory decline of -1,375,000 barrels versus a +2,878,000 barrel gain the prior week. Distillate inventories are expected to rise by +125,000 barrels versus a -976,000 barrel decline the prior week. Gasoline supplies are expected to rise by +1,050,000 barrels versus a +2,553,000 barrel gain the prior week. Finally, Refinery Utilization is estimated unch. versus a -.3% decline the prior week.

2:00 pm EST

• Fed's Beige Book
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Hoenig speaking, 10-Year Treasury Note Auction, weekly MBA Mortgage Applications report, (TXN) Mid-Quarter Update and the (NSC) 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 mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Rising Slightly into Final Hour on Bargain-Hunting, Euro Bounce, Short-Covering

Broad Market Tone:

• Advance/Decline Line: Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 17.63 -4.76%
  
• ISE Sentiment Index 136.0 +47.83%
  
• Total Put/Call 1.12 +1.75%
  
• NYSE Arms .99 -70.57%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.54 +1.35%
  
• European Financial Sector CDS Index 105.92 -2.13%
  
• Western Europe Sovereign Debt CDS Index 187.92 -.35%
  
• Emerging Market CDS Index 215.57 -2.47%
  
• 2-Year Swap Spread 20.0 unch.
  
• TED Spread 22.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .03% +1 bp
  
• Yield Curve 259.0 +2 bp
  
• China Import Iron Ore Spot $170.70/Metric Tonne +.29%
  
• Citi US Economic Surprise Index -109.90 +2.8 points
  
• 10-Year TIPS Spread 2.23% unch.
  

Overseas Futures:

• Nikkei Futures: Indicating +7 open in Japan
• DAX Futures: Indicating +7 open in Germany

Portfolio:

• Slightly Higher: On gains in my Retail, Medical and Biotech sector longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and then added them back, added slightly to my (SODA) long
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is mildly bullish as the S&P 500 trades slightly higher despite global growth worries, emerging markets inflation fears, rising Mideast unrest, Japan nuclear concerns, eurozone debt angst and rising food/energy prices. On the positive side, REIT, Biotech, Medical Equipment and Semi shares are especially strong, rising more than +1.0%. Small-Cap and Cyclical shares are outperforming. (IYR) has traded well throughout the day. Copper is rising +.22% and Lumber is up +1.8%. The Russia sovereign cds is falling -1.75% to 132.64 bps and the Saudi sovereign cds is falling -2.18% to 94.31 bps. Weekly retail sales rose +4.3% this week versus a +3.9% gain the prior week and down from a +5.1% increase the first week of May. On the negative side, Computer, Disk Drive, Hospital, Gaming, Education and Software shares are down on the day. Oil is rising +.6% and the UBS-Bloomberg Ag Spot Index is gaining +.4%. The US price for a gallon of gas is down -.01/gallon today to $3.76/gallon. It is up .62/gallon in less than 4 months. The Spain sovereign cds is rising +.77% to 241.88 bps, the Portugal sovereign cds is rising +.74% to 678.92 bps, the Greece sovereign cds is rising +.44% to 1,402.06 bps and the US Muni CDS Index is gaining +2.87% to 131.17 bps. Overall, today's stock bounce is of low quality, considering recent losses. I still suspect a test of DJIA 12,000 is likely over the coming days. One of my longs, (SODA), is making another new high today on volume. I still see substantial upside to these shares over the longer-term. 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, rising food/energy prices, technical selling and more shorting.

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