Bear Radar

Style Underperformer:

• Small-Cap Value (+.74%)

Sector Underperformers:

• 1) REITs -.81% 2) Gaming -.31% 3) Steel -.05%

Stocks Falling on Unusual Volume:

• BIDU, SINA, IMAX, SLG, WLL, CLF, VRTX, CIEN, LAYN, NICE, ONXX, TNAV, PZE, UNG and PHK
  

Stocks With Unusual Put Option Activity:

• 1) COG 2) IYR 3) GT 4) TXN 5) ATI
  

Stocks With Most Negative News Mentions:

• 1) SPG 2) C 3) MSFT 4) GM 5) PPL
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value (+.82%)

Sector Outperformers:

• 1) HMOs +2.13% 2) Agriculture +1.81% 3) Gold & Silver +1.62%

Stocks Rising on Unusual Volume:

• JVA, TITN, IPXL, AVGO, EBIX, WPRT, SJM, MW, MTN, TPX, MOS, IPG, URI, SEE, CF, CI, DE and TWI
  

Stocks With Unusual Call Option Activity:

• 1) FLEX 2) EGO 3) VRTX 4) GT 5) TXN
  

Stocks With Most Positive News Mentions:

• 1) HLF 2) AVGO 3) TGI 4) OAS 5) SJW
  

Charts:

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

Thursday Watch

Evening Headlines

Bloomberg:

• Trichet May Play ECB Rate Card as Germany Risks Split on New Greek Rescue. European Central Bank President Jean- Claude Trichet may today play the interest-rate card and signal to European governments that the euro region’s debt crisis is theirs to solve. Two days after German Finance Minister Wolfgang Schaeuble opened a rift with the ECB over how to fix Greece’s debt crisis, Trichet is likely to signal that the ECB is ready to raise interest rates for a second time in three months in July, a Bloomberg News survey showed. The central bank today will keep its benchmark at 1.25 percent, a separate survey showed. The latest phase of the Greek crisis risks exacerbating tensions between the ECB and the German government. “If there’s a hardening of attitudes between Germany and the ECB, the ECB are just going to dig in their heels and insist on their independence,” said James Nixon, chief European economist at Societe Generale SA in London. “They’re going to tell European governments it’s their problem and they can clear up the mess.”
• Papandreou's Tourism Gains Threatened by Fresh Wave of Strikes. Prime Minister George Papandreou’s attempts to draw tourists to Greece may be undermined by union calls for strikes against new government austerity measures. Unions representing more than 3 million workers are planning walkouts this month as Papandreou completes 78 billion euros ($114 billion) of budget cuts and state asset sales to meet European Union bailout requirements. Members of the PAME labor union took over the Finance Ministry offices in Athens on June 3 and 50,000 people demonstrated two days later. Unions have proposed a general strike for June 15 and transport, communications and power unions plan demonstrations today.
• Texas Instruments(TXN) Cuts Earnings Forecast on Slower Chip Orders From Nokia. Texas Instruments Inc. (TXN), the largest analog-semiconductor maker, gave a second-quarter sales and profit forecast that fell short of analysts’ estimates, dragged down by sluggish demand for wireless-phone chips. Second-quarter profit will be 51 cents to 55 cents a share on sales of $3.36 billion to $3.5 billion, the Dallas-based company said in a statement today. Analysts on average had projected profit of 57 cents on $3.55 billion in revenue, according to a Bloomberg survey. Texas Instruments’ analog chips go into everything from e- book readers to industrial air conditioners, making its earnings a broad indicator of demand across the electronics industry. A decline in chip orders from Nokia Oyj, its main wireless customer, is eroding revenue, Texas Instruments said. Texas Instruments fell as low as $30.87, a decline of 5.5 percent, in late trading after the announcement.
• South Korea to Weigh Rate Increase as Household Debt Poses Risk for Growth. The Bank of Korea will weigh an interest-rate increase tomorrow as swelling household debt and weakness in the global economy pose threats to growth. Officials must decide whether protecting the nation’s expansion is more important than taming inflation that’s exceeded a 4 percent target ceiling each month this year.
• Power Shortages Loom in Japan. The Fukushima nuclear crisis will extend a power shortage beyond Tokyo as local authorities resist starting idle reactors around Japan until safety guidelines are set in the wake of the worst atomic disaster since Chernobyl.
• Brazil Raises Key Interest Rate to 12.25% After Inflation Exceeded Target. Brazil’s central bank raised its benchmark interest rate for a fourth straight meeting today after consumer prices exceeded the upper limit of its target range for the first time since 2005. Policy makers, led by central bank President Alexandre Tombini, raised the Selic rate by a quarter point to 12.25 percent, as expected by 51 of 52 analysts surveyed by Bloomberg. Annual inflation in the world’s seventh-largest economy rose to 6.51 percent, above the top of the bank’s target range, in April and accelerated to 6.55 percent in May. Policy makers said in April, and repeated today, that a “sufficiently prolonged” series of rate increases will ease prices back to target in 2012.
• Three-month dollar Libor may fall below the fed funds target rate today for the first time in 16 months, signaling a decline in interbank lending as banks hoard cash, according to Brown Brothers Harriman & Co. "If Libor were to slip below the Fed's target rate, it would signal growing concerns about financial fundamentals," said Lena Komileva, global head of Group of 10 strategy at Brown Brothers in London.
• Regions Financial(RF) Says Debit-Card Rule May Erase 75% of Swipe-Fee Revenue. Regions Financial Corp. (RF), Alabama’s biggest bank, said a proposed rule that caps debit-card swipe fees may cost the lender 75 percent of its revenue from that business. Regions collected $346 million in such fees last year, Chief Financial Officer David Turner said today at an investor conference in New York. “The 12-cent cap that they put on just isn’t even remotely close to covering our costs,” Turner said, referring to rules proposed by the Federal Reserve. The lender may have to decide whether to “even offer a debit card, or, if we do, have the customer pay for that,” he said.
• N. Korea Poses 'Growing' U.S. Threat: Panetta. North Korea’s 1 million troops, ballistic missile program and nuclear enrichment activities underscore that it’s a “growing and direct threat” to the U.S., according to CIA Director Leon Panetta, nominated to succeed Defense Secretary Robert Gates.
• Obama Team Eyes Payroll Tax Break for Employers. President Barack Obama’s advisers have discussed seeking a temporary cut in the payroll taxes businesses pay on wages amid economic reports suggesting the recovery is slowing, according to people familiar with the matter. The idea, in preliminary stages of discussion, is among several being debated in the administration with the aim of boosting hiring, the people said on condition of anonymity to discuss internal deliberations. The unemployment rate in May rose to 9.1 percent, the highest level this year, and the economy is a main focus of the political discussion in Washington.

Wall Street Journal:

• The Great Property Bubble of China May Be Popping. After years of housing prices gone wild, China's property bubble is starting to deflate. Residential prices are heading downward in some major cities, damping some undesired real-estate speculation but raising the prospect that the Chinese economy may slow more rapidly than anticipated with profound consequences for global growth. World Bank economists warned at a Beijing press briefing on Wednesday that a real-estate bubble was among the biggest economic risks China faces. Already, in nine major cities tracked by Rosealea Yao, an analyst at market-research firm Dragonomics, real-estate prices fell 4.9% in April from a year earlier. Standard Chartered Bank estimates that China's so-called tier-two cities, such as Dalian and Tianjin, may have 20 months of housing inventory by year end, putting "substantial" pressure on prices. Standard Chartered forecasts price cuts of 10% to 20% "in many cities." A number of analysts think official data, which have continued to show a slight rise in prices, understate the slowdown as the government can affect the numbers by pressing developers to withhold or add high-value properties to the market depending on what it wants the data to show. Chinese officials, facing widespread anger from ordinary citizens who can no longer afford to buy a home, have sought to slow the rise in housing prices. The unanswered question is whether the government can manage to reduce prices gradually in a way that won't undermine economic growth. Calculations based on Soufun data show that in the opening months of 2006 an average-price new apartment in China's capital would cost around $100,000—the equivalent of 32 years' disposable income for the average resident. By 2011, the average price had more than doubled to $250,000, but relatively modest increases in income mean it would now take 57 years of saving for the average resident to cover the cost. In Shanghai, apartment sales tumbled 37% in April, to 11,000 units, compared with 17,500 units in January, according to the Shanghai Real Estate Trading Center. According to Dragonomics, sales volume in the nine cities it tracks fell by about half since the start of the year.
• Case for ObamaCare Repeal Grows Stronger.
• Big Funds See Red in China. Hedge-fund titan John Paulson is hardly alone in his wager on a Chinese company whose stock lately has swooned. Several other prominent money managers, including mutual-fund giants that invest individuals' money, made similar bets on stocks now struggling. A Wall Street Journal review shows that some big-name investors, from Fidelity Investments to Carlyle Group, in recent years snapped up shares in Chinese companies that trade on Western exchanges.
• Eyes on Goldman(GS)-Libya Dealings. Regulators Are Examining Whether the Big Bank, and Others, May Have Broken Bribery Laws.
• FrontPoint's Eisman to Exit Firm. Hedge-fund manager Steve Eisman, known for his big bets against subprime mortgages and for-profit colleges, is leaving his firm, FrontPoint Partners, a person familiar with the matter said.
• Policy Makers Split Over Size of Bank Capital. U.S. regulators aim to propose higher capital standards for financial firms in late July but remain divided over how much money banks and other firms should hold to protect against potential losses. The Federal Reserve, Treasury Department and many international policy makers agree that large financial institutions that pose risk to the global financial system should have bigger capital cushions. But policy makers are split over just how much capital is necessary.
• New Cracks in Oil Cartel. An acrimonious OPEC meeting failed to produce an agreement to increase oil production despite tight supplies and rising prices, bringing to the fore long-simmering divisions between key cartel players Saudi Arabia and Iran and calling into question the group's ability to influence oil prices.
• Rents on the Rise Again. Landlord Concessions Disappear as Vacancy Rate Falls; Bidding Wars Return.

MarketWatch:

• Fed On Hold Until Sept., Bullard Says: Report. The Federal Reserve will want to wait until after its meeting in mid-September before deciding on an exit strategy, St. Louis Fed president James Bullard said in a published interview on Wednesday.

CNBC:

• 'Monstrous Risks' in Emerging Markets: Bernstein. Emerging markets face "monstrous" risks this year, with investors continually ignoring intensifying inflationary pressures and credit bubbles, leading market strategist Richard Bernstein warned on Wednesday. Bernstein, who now runs his own firm after being chief investment strategist for Merrill Lynch & Co, said the love affair with emerging markets is overdone. "I think what people are completely missing is that the risk is not here in the United States," he told the Reuters 2011 Investment Outlook Summit. "The risk is in emerging markets. There are just monstrous risks in emerging markets right now in my opinion." Red flags are mounting. Brazil's and India's government yield curves are inverting, a condition in which short-term rates rise above longer yields. Historically, such an inversion almost invariably precedes a recession, as investors temporarily accept lower long rates in anticipation of the decline in yields that typically accompanies an economic downturn. Bernstein noted that the Standard & Poor's 500 Index is up 1.7 percent this year and that U.S. equities have been the better bet than emerging markets over the last two years. A government yield curve in general would be upward sloping. But the signal that there's increased risk of a bear market is not at the beginning of a tightening cycle, it's when a central bank has tightened too much, he said. The markets almost always take notice. "How do you know when the central bank has tightened too much? It's when the yield curve inverts. Historically that has been a fantastic indicator," Bernstein said. Indian and Brazil's yield curve inverted last week. "If you look at inverted yield curves around the world, the most inverted yield curves are Greece, Ireland and Portugal, and then comes India and Brazil. There is your warning sign that no one is talking about," he said. Bernstein said emerging market investors are putting a blind eye to the warning signals of a deep decline in emerging markets. "The common thing you hear, is 'well, they are overheating,' which is such a positive spin," Bernstein said. "The markets are still priced for very rapid unhindered growth, and I just think the probability of that is getting less and less."
  
• The Next-Big Shift in Social Networking: 'Niche' Sites.

Zero Hedge:

• Time For Chinese Fraudcaps to Exit Stage Left. One of the most unbelievable developments in the past few days has been the rank, unprecedented, totally amateur and outright pathetic backlash against writers of "short China" theses by the management teams of these same companies that have garnered the all too deserved definition of "Fraudcaps." We have shown before that the hit rate of pieces accusing Chinese companies is well north of 80% as exhibited by the fact that virtually all companies currently halted indefinitely on the Nasdaq are of Chinese origin.

IBD:

• Altera(ALTR) Rides The Rise Of Wireless Networks.

NY Times:

• Bank Said No? Hedge Funds Fill a Void in Lending. Hedge fund managers have been called plenty of names. Now, they can add another: local banker.
• U.S. Is Intensifying a Secret Campaign of Yemen Airstrikes. The Obama administration has intensified the American covert war in Yemen, exploiting a growing power vacuum in the country to strike at militant suspects with armed drones and fighter jets, according to American officials.
• Lagarde 'Very Positive' After Talks With China. Finance Minister Christine Lagarde of France, the top candidate to run the International Monetary Fund, said Thursday that she backed a bigger say for China at the organization while making it clear that the euro zone crisis would be a priority if she wins the job.

Politico:

• Sources: Huma Abedin, Anthony Weiner's Wife, Is Pregnant.

Reuters:

• Citi(C) Confirms Data Breach at Citi Account Online. Citigroup Inc confirmed a computer breach at Citi Account Online, giving hackers access to the data of hundreds of thousands of bank card customers.
• Chinese Stocks in US Hit as Brokers Wary of Lending. Chinese stocks listed in the United States took a beating on Wednesday as brokers raised red flags about trading risks following a series of accounting scandals that have afflicted the sector. The New York-traded shares of Chinese real estate service provider Syswin Inc (SYSW.N) tumbled 23.1 percent to $4 and online video company Ku6 Media Co Ltd (KUTV.O) lost 9.7 percent to $3.18. Orsus Xelent Technologies Inc (ORS.A), a designer and distributor of cellular phones, dropped 13.5 percent to $1.99. However, well-known bigger companies not on the list, such as Renren Inc (RENN.N), were also hit. Renren lost 13.6 percent to close at $10.51.
• China to Play Major Role in Cuban Oil Development. China looks ready to play a major role in the development of Cuban oil, including the island's soon-to-be explored fields in the Gulf of Mexico, after the signing of energy-related accords during a visit this week by Vice President Xi Jinping. The text of the agreements has not been disclosed, but they appear aimed at making China a significant oil partner with its fellow communist-run country, which is likely to raise eyebrows in the nearby United States.
• Urban Outfitters(URBN) Retail Segment Comp Sales Down So Far in Q2. Urban Outfitters Inc said its comparable retail segment net sales are down in the low single-digits so far in the second quarter on top of a 1.1 percent fall in the most recent quarter.
• U.S.-Focused Equity Fund Outflows Hit Six Weeks - ICI.
  

AFP:

• Bashir Committing New Crimes in Darfur: Prosecutor. Sudan's President Omar al-Bashir is committing new crimes in Darfur and challenging the authority of the UN Security Council, the chief international warcrimes prosecutor said Wednesday. "Crimes against humanity and genocide continue unabated in Darfur," International Criminal Court chief prosecutor Luis Moreno-Ocampo told the Security Council. He said new air attacks on civilians and killings of ethnic minorities had been carried out in the conflict-stricken western region, where the United Nations says at least 300,000 people have died since an uprising started in 2003. "These millions of victims displaced are still subjected today to rapes, terror and conditions of life aimed at the destruction of their communities, constituting genocide," Moreno-Ocampo said.

Financial Times Deutschland:

• German banks shed about a third of the Greek debt they held in May 2010, perhaps reducing their role in negotiations on a second bailout for Greece. German banks in January and February held more than 10.3 billion euros in Greek bonds, compared with about 16 billion euros in April 2010. The numbers appear to contradict figures from the Bank for International Settlements.

Commercial Times:

• Taiwan plans to ban some telecommunications equipment imports from China because of national security concerns.

Shanghai Securities News:

• China's small- and medium-sized companies may face the worst cash shortage since the 2008 financial crisis, citing a report from All-China Federation of Industry & Commerce. Cash, labor and power shortages as well as high costs and taxes are making it difficult for the enterprises to survive.

Evening Recommendations
William Blair:

• Rated (MMM) Outperform, target $110.
• Rated (ABB) Outperform, target $31.
• Rated (TYC) Outperform, target $59.

Night Trading

• Asian equity indices are -1.0% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 113.0 +3.0 basis points.
  
• Asia Pacific Sovereign CDS Index 116.0 +1.0 basis point.
  
• S&P 500 futures +.13%.
  
• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SJM)/.99
• (MTN)/2.17
• (TITN)//.22
• (BF/B)/.64
• (NSM)/.27

Economic Releases
8:30 am EST

• Initial Jobless Claims for last week are estimated to fall to 419K versus 422K the prior week.
• Continuing Claims are estimated to rise by 3700K versus 3711K prior.
• The Trade Deficit for April is estimated to widen to -$48.8B versus -$48.2B in March.
  

10:00 pm EST

• Wholesale Inventories for April are estimated to rise by +1.0% versus a +1.1% gain in March.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Plosser speaking, Fed's Yellen speaking, ECB Rate Announcement, BoE Rate Announcement, 30-Year Treasury Bond Auction, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory data, Sandler Exchange/Brokerage Conference, (PLXS) investor day, (PRU) investor day, (NVE) investor meeting and the (APD) investor conference could also impact trading today.
  

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

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Global Growth Worries, Rising Food/Energy Prices, Technical Selling

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Slightly Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 18.29 +1.22%
  
• ISE Sentiment Index 81.0 -36.72%
  
• Total Put/Call 1.06 -.93%
  
• NYSE Arms 1.27 +8.06%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 96.85 +1.37%
  
• European Financial Sector CDS Index 112.58 +5.67%
  
• Western Europe Sovereign Debt CDS Index 192.58 +2.48%
  
• Emerging Market CDS Index 219.97 +1.42%
  
• 2-Year Swap Spread 20.0 unch.
  
• TED Spread 21.0 -1 bp
  

Economic Gauges:

• 3-Month T-Bill Yield .03% unch.
  
• Yield Curve 257.0 -2 bp
  
• China Import Iron Ore Spot $171.70/Metric Tonne +.59%
  
• Citi US Economic Surprise Index -108.70 +1.2 points
  
• 10-Year TIPS Spread 2.20% -3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating -39 open in Japan
• DAX Futures: Indicating -5 open in Germany

Portfolio:

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

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows on global growth worries, emerging markets inflation fears, rising Mideast unrest, Japan nuclear concerns, rising eurozone debt angst and rising food/energy prices. On the positive side, Utility, Telecom and Tobacco shares are slightly higher on the day. On the negative side, Airline, Networking, Disk Drive, Semi, Oil Tanker, Alt Energy, Education, Homebuilding and Coal shares are especially weak, falling more than -1.75%. Small-cap and cyclical shares are underperforming. Tech shares have traded poorly throughout the day. Oil is rising +1.9%, Copper is falling -1.0% and the UBS-Bloomberg Ag Spot Index is gaining +1.0%. The US price for a gallon of gas is down -.01/gallon today to $3.75/gallon. It is up .61/gallon in less than 4 months. The Spain sovereign cds is jumping +5.0% to 253.66 bps, the Italy sovereign cds is climbing +6.6% to 157.83 bps, the Portugal sovereign cds is gaining +4.43% to 709.08 bps, the Greece sovereign cds is surging +6.4% to 1,488.39 bps, the Ireland sovereign cds is up +5.2% to 682.76 bps, the Belgium sovereign cds is rising +5.8% to 141.17 bps and the UK sovereign cds is rising +5.83% to 59.15 bps. The Portugal sovereign cds is hitting a new record high and the Greece/Ireland sovereign cds are right at their all-time highs. The euro currency faces significant downside risk over both the short and longer-term, in my opinion. The Bloomberg Anchored Ships Custom Index is surging to a new high over the last week, which is also a negative. The Citi Latin America Economic Surprise Index is close to a 52-week low. The rise in food/energy prices today, despite equity weakness and dollar strength, is also a large negative. The China Pork Wholesale Spot Price has risen another +2.9% over the last 7 days and is very close to its Feb. 2008 record high. It has risen +50.4% over the last year. I doubt China takes its foot off the break after the next hike and if it does it would eventually prove a large mistake. Inflation pressures in most emerging markets remain a larger problem than most investors perceive, in my opinion. Investor sentiment remains relatively subdued given the news, recent equity losses and economic data. However, stocks are getting pretty oversold near-term and should bounce soon. I expect US stocks to trade mixed-to-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:

• OPEC Can't Find Consensus on Output Quotas. OPEC failed to reach an agreement on crude production for the first time in at least 20 years, after six countries opposed a Saudi Arabia-led group that urged members to raise output as oil trades above $100 a barrel. “It was one of the worst meetings we’ve ever had,” Saudi Arabian Oil Minister Ali al-Naimi said as representatives of the 12-member group left the meeting in Vienna after five hours of talks. “We were unable to reach an agreement.” Crude jumped 2.7 percent in 20 minutes in New York after the meeting ended. The split underscores growing divisions within the Organization of Petroleum Exporting Countries. OPEC announced its biggest-ever output cuts in December 2008 amid a collapse in global demand, capping production at 24.845 million barrels a day for all members except Iraq, which is exempt from the quota system. The limit has remained unchanged since then.
• Merkel Faces Dissenting Lawmakers on Greece as Schaeuble Stokes ECB Clash. Less than 24 hours after Angela Merkel was urged by President Barack Obama to take the lead in managing Europe’s debt crisis, the German chancellor faces members of her own coalition who say she’s done enough. Merkel and Finance Minister Wolfgang Schaeuble briefed lawmakers in Berlin today on a second bailout for Greece, outlining a stance at odds with central bankers, French allies and German voters. That’s a circle not easily squared, said Christoph Rieger, head of fixed-income strategy at Commerzbank AG in Frankfurt. By calling for bondholders to contribute a “substantial” share of the rescue, Schaeuble is “openly clashing” with European Central Bank President Jean-Claude Trichet, Rieger said. “Either Schaeuble softens his calls or the ECB makes further concessions,” he said. “One will have to give in.”
• Senate Rejects Delay of Debit Swipe-Fee Rule. The U.S. Senate rejected a six-month delay of a Federal Reserve rule capping debit-card swipe fees set by Visa Inc. (V) and MasterCard Inc. (MA), whose shares fell after the vote was completed. Senator Richard Durbin of Illinois, the No. 2 Democrat in the chamber, led the opposition to the delay amendment, which was defeated today in a 54-45 vote. The measure needed 60 votes for approval. Visa Inc. and MasterCard Inc., the world’s biggest payment networks, dropped the most since Dec. 16. Visa fell 3.8 percent to $76.78 at 2:38 p.m. in New York Stock Exchange composite trading. MasterCard declined 3.3 percent to $265.18. Shares of U.S. banks also slipped. The Fed now has until July 21 to implement the final rule on capping the fees, which accounted for more than $16 billion in 2009, according to the Fed.
• German Industrial Production Unexpectedly Declined in April. German industrial production unexpectedly declined for the first time in four months in April, led by a drop in construction output. Production fell 0.6 percent from March, when it rose a revised 1.2 percent, the Economy Ministry in Berlin said today. Economists had forecast a gain of 0.2 percent, the median of 36 estimates in a Bloomberg News survey showed. Construction output fell 5.7 percent in April from March, when it advanced 5.5 percent, today’s report showed. Manufacturing declined 0.6 percent, led by a 1.5 percent drop in investment-goods production.
• Harbinger Said to Face $1 Billion in Redemptions. Harbinger Capital, the $6 billion investment firm run by Philip Falcone, is facing at least $1 billion in redemptions from its main hedge fund after assets shrank by almost $2 billion in 2010, according to two investors. The main fund had $4.25 billion in assets at the end of 2010, 30 percent less than at the start of the year due to client withdrawals and losses, according to the people, who asked not to be identified because the information is private. Investors, who can pull 25 percent of their money every quarter, have asked to redeem $1 billion, which would be paid between now and next March, said the people, who have seen the fund’s financial statement.
• Exxon(XOM) Finds Biggest Oil Field in Gulf of Mexico Since 1999. Exxon Mobil Corp. (XOM) announced it found the equivalent of 700 million barrels of oil beneath the Gulf of Mexico, the biggest discovery in the region in 12 years. The estimated size of the Hadrian field may increase as drilling continues, Exxon said in a statement today. The discovery is about 250 miles (400 kilometers) southwest of New Orleans in water about 7,000 feet (2,000 meters) deep, Irving, Texas-based Exxon said. Exploratory drilling began in 2009 at the prospect and was halted last year after a record oil spill from BP Plc’s Macondo well prompted a U.S. moratorium on deep-water exploration. “This is a very, very significant find,” Rahman said. “When a supermajor like Exxon Mobil throws a number like 700 million at you, it indicates they are very confident in what they’ve got here.” The Gulf accounted for 29 percent of U.S. crude production in 2009, according to the Energy Information Administration.
• Greek Jobless Rate Breached 16% for First Time on Record in March. Greece’s unemployment rate exceeded 16 percent in March, extending a record high as the nation’s economy remained mired in the third year of a recession. Greece’s jobless rate has risen every month since July, after Prime Minister George Papandreou’s government cut wages and pensions and increased taxes to narrow a budget deficit that reached 15.4 percent of gross domestic product in 2009.

Wall Street Journal:

• U.S. Hedge Funds to Fight Bank of Ireland Restructuring. A group of U.S. hedge funds with large stakes in the Bank of Ireland's subordinated debt is preparing to fight the government's proposed restructuring of €2.6 billion ($3.82 billion) in junior bonds.
• Japan Opposition Says Bond Market "Doomsday" Could Come in 7 Years. Japanese bond yields, which have remained at record-low levels despite the country's ballooning debt, may rise sharply in seven years as the country's savings and current account surplus decrease, the main opposition party said Wednesday. The report by the Liberal Democratic Party's "X-day" project team--tasked with preparing for such a crunch in the nation's finances--comes as the party debates the possibility of forming a coalition with the ruling party following Prime Minister Naoto Kan's announcement that he will step in the near future. Despite Japan's huge outstanding debt--twice the size of its annual economic output--the bond market has so far been supported by domestic investors, who hold well over 90% of Japanese government bonds.
• Tepco Plans Radioactive Water Release From Second Plant. Tokyo Electric Power Co. plans to release 3,000 tons of lightly radioactive water into the ocean from the Fukushima Daini nuclear complex, the sister plant of the stricken Fukushima Daiichi complex, officials said Wednesday. The announcement casts the first major spotlight on disaster-related issues at the Daini plant, which officials said was quickly brought under control after Japan's March 11 earthquake and tsunami.

CNBC.com:

• Abercrombie & Fitch(ANF) Shares on Weak Sales Outlook. Teen apparel retailer Abercrombie & Fitch reiterated its second-quarter forecast, but said sales during the quarter will not be as good as those in the first, according to CFO Jonathan Ramsden, who was speaking at a conference in New York.

Business Insider:

• The World's Best Business Schools.
• Beige Book Out: Slowing Seen In Multiple Districts, Only Dallas Is Accelerating.
• Meredith Whitney On Muni Doom: "I Know I'm Right On This".
• France Tells Ireland: Increase The Corporate Tax Rate, Or We Won't Cut Your Bailout Rate.
  

Zero Hedge:

• Greek Economy Grinding to a Halt as Daily Protests Cripple Industrial Production. (graph)
• Greek CDS Surges to All Time Record on Talk Accord for Greek Bailout Faces Major Obstacles. (graph)
• Structural Unemployment: The Average Unemployed American Looks For a Job for 20 Weeks Before Giving Up. (graph)
  

NY Post:

• Slasher Street. The Closing Bell Tolls for Thousands of Jobs. On Wall Street the hatchet man cometh. Deep-pocketed bankers and traders are bracing for what could be a fresh round of job cuts on the Street, concentrated in equities trading and investment banking, where firms are considering eliminating thousands of jobs in the coming weeks, The Post has learned. Barclays Capital(BCS), Goldman Sachs(GS), Bank of America(BAC), JPMorgan Chase(JPM) and Morgan Stanley(MS) currently are among those financial institutions either weighing staff cuts or actually paring payroll as they struggle to rein in costs and eke out profits in a choppy market, sources told The Post.

Forbes:

• California's Green Jihad.

Politico:

• Poll: Record-High Number Think Country Headed Into Depression. A record-high of nearly half the country fears the economy is careening toward a depression, helping push President Barack Obama’s approval rating down by six points in just the last two weeks, according to a new CNN/Opinion Research poll.

Reuters:

• Pharmasset(VRUS) Says HCV Drugs Show Promise. Pharmasset Inc said interim analyses of clinical studies of its two drugs for chronic hepatitis C showed promise.
• Ciena(CIEN) Forecasts Weak Q3 Revenue; Shares Tumble. Ciena Corp (CIEN.O) forecast third-quarter sales below Wall Street expectations as the network equipment maker's transition to a new technology for its optical switches might take longer than expected. Shares of the company, which makes optical switches that help telecom carriers such as AT&T (T.N) and Verizon Communications (VZ.N) manage their networks, fell more than 16 percent to $20.43 -- their biggest fall in at least two years.

Financial Times:

• Gates Criticises 5 Allies Over Libya. Robert Gates, the US defence secretary, criticised five European Nato members on Wednesday for not doing enough in the air war over Libya, a rare diplomatic breach that underlines the growing tensions within the alliance over who is bearing the burden of the two-month-old campaign. During a closed-door meeting of Nato defence ministers, Mr Gates specifically named Germany and Poland as two countries with the capabilities to assist in the air war who were currently not contributing at all.

Telegraph:

• UK's Cable Threatens Harsher Taxes for Banks Over Lending. Vince Cable, the Business Secretary, has warned banks could face 'more forceful' taxes if lending fails to rise and they don't become more open about pay.
• UK Warned Credit Rating Could Be At Risk. Britain's top-notch credit rating could be slashed if growth stays weak and the Government does not stick to its austerity plans, one of the world’s top credit rating agencies warned.

Figaro:

• French local government is holding "toxic" loans worth about 7 billion euros, minister for local government Phillippe Richert said in an interview. It's possible that there are more such loans that haven't yet been uncovered, Richert said.

Bear Radar

Style Underperformer:

• Small-Cap Growth (-1.15%)

Sector Underperformers:

• 1) Networking -3.22% 2) Oil Tankers -3.0% 3) Alt Energy -2.75%

Stocks Falling on Unusual Volume:

• TSL, IPGP, CMTL, ADSK, IVN, CCJ, BTM, QNST, CIEN, IPXL, MEAS, LOGM, FWRD, WPRT, GIII, SINA, FNSR, CRESY, DTSI, CVGI, PRMW, URBN, ADTN, ZUMZ, RRD, ANF, KLD, JKJ, OXM, RCL, FGP and AAN
  

Stocks With Unusual Put Option Activity:

• 1) CY 2) ALTR 3) AXL 4) TTM 5) CIEN
  

Stocks With Most Negative News Mentions:

• 1) FST 2) SPWRA 3) CIEN 4) DAL 5) CCL
  

Charts:

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