Stocks Falling into Final Hour on Less US Economic Optimism, Rising Eurozone Debt Angst, Market Leader Weakness, Some Earnings Jitters

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Around Average
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 19.20 +3.0%
  
• ISE Sentiment Index 73.0 -41.13%
  
• Total Put/Call 1.0 +2.04%
  
• NYSE Arms 1.38 +25.78%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 100.56 +1.14%
  
• European Financial Sector CDS Index 250.03 +2.04%
  
• Western Europe Sovereign Debt CDS Index 280.15 +.59%
  
• Emerging Market CDS Index 270.05 -.09%
  
• 2-Year Swap Spread 29.75 +.5 basis point
  
• TED Spread 40.0 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -47.75 +1.25 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .07% unch.
  
• Yield Curve 169.0 -2 basis points
  
• China Import Iron Ore Spot $148.50/Metric Tonne unch.
  
• Citi US Economic Surprise Index 5.3 -3.7 points
  
• 10-Year TIPS Spread 2.21 -6 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating a -43 open in Japan
• DAX Futures: Indicating -13 open in Germany
  

Portfolio:

• Slightly Lower: On losses in my Technology and Retail sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short, then covered some of them
  
• Market Exposure: 50% Net Long

BOTTOM LINE: Today's overall market action is bearish, as the S&P 500 reverses to session lows, falling below its 50-day moving-average, on rising Eurozone debt angst, some key earnings disappointments, weakness in some market leaders, rising global growth fears and less US economic optimism. On the positive side, Coal, Oil Service, Biotech, HMO and Airline shares are rising on the day. Oil is falling -.25%. Major Asian indices were mixed overnight, as a +1.0% gain in Hong Kong was offset by a -.8% decline in Japan. On the negative side, Defense, Steel, Computer, Semi, Disk Drive, Homebuliding, Restaurant and Road & Rail shares are under pressure, falling more than -1.0%. The Transports have traded poorly throughout the day. The UBS-Bloomberg Ag Spot Index is rising +.78%. The 10-year yield is falling another -2 bps to 1.96%. Major European indices are falling around -1.75% today, led lower by a -2.4% decline in Spain. Spain is now down -19.4% ytd and very close to its March 2009 low. The Bloomberg European Bank/Financial Services Index is falling another -1.4% and is down -15.9% in less than one month. The Germany sovereign cds is surging +5.4% to 82.81 bps(+18.2% in 5 days), the Italy sovereign cds is gaining +3.5% to 456.75 bps, the Belgium sovereign cds is gaining +2.5% to 259.31 bps and the Russia sovereign cds is gaining +1.7% to 200.78 bps. Moreover, the Italian/German 10Y Yld Spread is jumping +4.2% to 392.22 bps. US Rail Traffic continues to soften. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak despite investor perceptions that the US economy is accelerating. Moreover, the Citi US Economic Surprise Index has fallen back to mid-Oct. levels. Lumber is -9.0% since its Dec. 29th high despite the better US economic data, improving sentiment towards homebuilders and the broad equity rally. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010 despite expectations for a strong spring home selling season. The Baltic Dry Index has plunged around -55.0% from its Oct. 14th high and is now down around -40.0% ytd. China Iron Ore Spot has plunged -18.0% since Sept. 7th of last year. Shanghai Copper Inventories are right near a new record and have risen +723.0% ytd. China's March copper imports fell -4.6% on the month. Singapore Electronics exports decelerated to a gain of +2.8% in March from a +23.3% gain in February. AAII % Bulls rose to 31.2, while the % Bears fell to 33.8. The recent erratic technical action in shares of (AAPL), a market-leader and the largest company in the world, remains a concern. Long AAPL. Copper still trades poorly, bonds still trade too well and the euro can’t sustain a meaningful bounce. There remains a fairly high level of complacency regarding the rapidly deteriorating situation in Europe, in my opinion. The ongoing significant rises in German/French cds remain red flags. For the recent equity advance to regain traction, I would expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, less US economic optimism, weakness in some market leaders, rising global growth fears and some key earnings disappointments.

Today's Headlines

Bloomberg:

• Spain, Italy Set for Downgrade Amid Slump, Citigroup Says. Spain and Italy will be downgraded by Moody’s Investors Service and Standard & Poor’s this year as the recession and debt crisis worsen, economists and strategists at Citigroup Inc. said. Their credit ratings, along with those of Ireland and Portugal, will be lowered at least one level over the next two to three quarters, Citigroup said in a report published late yesterday. “Deficits will overshoot official forecasts in all the peripheral Economic Monetary Union countries this year and in 2013,” according to the report. “Spain will need to enter some form of a Troika program” this year, Citigroup economists including London-based Juergen Michels wrote, referring to the aid package for Greece monitored by the European Union, the European Central Bank and the International Monetary Fund. Prime Minister Mariano Rajoy has repeatedly said that Spain won’t need a bailout. The warning comes amid a flare-up of Europe’s debt crisis. Investor confidence in the debt of Europe’s so-called peripheral countries has eroded since Spain’s announcement on March 2 that it won’t meet its deficit target this year, helping to push up bond yields. Yesterday, Italy also delayed its goal to balance the budget by one year to 2014.
• Spain, France Bonds Fall Amid Renewed Debt Crisis Concern. Italian and Spanish bonds led declines among Europe’s higher-yielding government securities amid concern the regional debt crisis is worsening. Italy’s 10-year yields climbed for a second day after a government report showed industrial orders fell more than economists forecast and the Finance Ministry said debt-servicing costs will increase. French bonds dropped after Citigroup Inc. said it expects the nation’s credit rating to be cut over the next two to three years. German bunds advanced as investors sought the safest assets. Spain and France both raised the amounts they targeted at debt auctions today. “There is a quite significant widening” of Italian and Spanish yields relative to German bunds, said Peter Schaffrik, head of European interest-rate strategy at Royal Bank of Canada in London. “Those two economies have low growth and widening budgets. For euro-investors bunds are the natural safe haven.”The Italian 10-year bond yield rose 11 basis points, or 0.11 percentage point, to 5.59 percent at 4:18 p.m. London time. The 5 percent bond maturing in March 2022 fell 0.795, or 7.95 euros per 1,000-euro ($1,312) face amount, to 96.10. The extra yield investors demand to hold the securities instead of German bunds expanded 14 basis points to 390 basis points, after reaching 409 basis points on April 11, the widest since Feb. 16. Spain’s 10-year yield advanced eight basis points to 5.91 percent, increasing the spread over bunds by 11 basis points to 421 basis points.
  
• Bank Funding at Risk From Rules Considered by EU Lawmakers. European Union lawmakers are considering rules to protect bank depositors that may stymie two of the main funding sources for the region’s lenders. The proposals risk limiting how much banks can raise from covered bond sales and European Central Bank loans by placing curbs on the assets they can use for security.
  
• Corporate Bond Risk Rises in Europe, Credit-Default Swaps Show. The cost of insuring against default on European corporate debt rose, reversing an earlier decline, according to BNP Paribas SA. The Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbed 10.5 basis points to 683.5 at 3:32 p.m. in London. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 2.5 basis points to 144.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 4.5 basis points to 254.5 and the subordinated index rose 1.5 to 411.5.
• European LBO Loans Fall Most Since 2009 as Debt Crisis Extends. Loans used to fund buyouts in Europe fell 44 percent in the first quarter, the biggest decline in three years, as the number of banks willing to underwrite the debt shrank because of tighter capital rules and a smoldering fiscal crisis. Private-equity firms raised $7.9 billion of loans for purchases in the region, down from $14.2 billion a year earlier and the largest drop since the comparable period in 2009 when $465 million of leveraged buyout loans were issued, according to data compiled by Bloomberg.
• Hollande Vows Minimum Wage Rise as Sarkozy Warns on Deficit. Socialist candidate Francois Hollande promised to raise France’s minimum wage if he wins next month’s presidential vote as incumbent Nicolas Sarkozy stepped up warnings his opponent’s policies risk punishment by markets. Hollande, who is extending his lead in polls of voter intentions for the May 6 runoff, said he’ll organize a meeting of unions and employers to set an increase that would be implemented in July. “Everyone in France is aware of what’s happening to Spain,” Sarkozy said in an interview on Europe 1 radio. “It’s the result of seven years of Socialism with the same policies that Mr. Hollande is promoting.”
• More Americans Than Forecast Filed Jobless Claims. More Americans than forecast filed claims for jobless benefits and sales of previously owned homes unexpectedly dropped, indicating the almost three-year-old economic expansion may be moderating. “The economy has slowed a notch,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who is the most accurate forecaster of existing- home sales for the two years through February, according to data compiled by Bloomberg. “We’re just not going to be able to duplicate the growth we saw in the first quarter.”
• U.S. Previously Owned Home Sales Unexpectedly Fell in March. Sales of previously owned U.S. homes in March unexpectedly fell for the third time in the last four months, showing an uneven recovery in the housing market. Purchases dropped 2.6 percent to a 4.48 million annual rate from 4.6 million in February, the National Association of Realtors reported today in Washington. The median forecast of economists in a Bloomberg News survey called for an increase to 4.61 million. Residential real estate remains the economy’s soft spot, challenged by stricter lending standards, lower home values and the threat of more foreclosures. The number of previously owned homes on the market fell to 2.37 million in March from 2.4 million the month before, today’s report showed. At the current sales pace, it would take 6.3 months to sell those houses, the same as in February. Purchases declined in three of four U.S. regions, led by a 7.4 percent drop in the West. They declined 1.7 percent in the Northeast and 1.1 percent in the South. Sales were unchanged in the Midwest. Foreclosure filings, including notices of defaults and bank repossessions, fell 16 percent in the first quarter from a year earlier after lenders under legal scrutiny slowed actions against delinquent homeowners, RealtyTrac Inc. reported this month.
• Manufacturing in the Philadelphia Fed Region Cooled in April. Manufacturing in the Philadelphia region expanded at a slower pace in April as orders and sales cooled, showing the industry that led the U.S. out of the recession is decelerating. The Federal Reserve Bank of Philadelphia’s general economic index decreased to 8.5, the lowest level since January, from 12.5 in March. Economists forecast the gauge would dip to 12, according to the median estimate in a Bloomberg News survey. Readings greater than zero signal expansion in the area covering eastern Pennsylvania, southern New Jersey and Delaware. The Philadelphia Fed’s new orders measure fell to 2.7, the lowest level since September, from 3.3 in March, and the shipments gauge dropped to 2.8 from 3.5.
• CPI Conspiracy Theories Fail to Die With Banana-to-Haircut Check.
• Record Gold Seen by Top Analysts as Fund Retreat. Gold, in the 12th year of a bull market, will reach a record in the fourth quarter as central banks maintain record-low interest rates, even with hedge funds the least bullish since 2009, the most accurate analysts said. Bullion will average $1,900 an ounce in the fourth quarter, 16 percent more than now, according to the median estimate of the top five precious-metals analysts in Bloomberg Rankings in the past two years.
• IRS Inspector General Warns of Alarming Rate of Identity Theft. Criminals are continuing to file falsified tax returns using other people’s identities to receive tax refunds, Russell George, the inspector general for the Internal Revenue Service, told a U.S. House of Representatives subcommittee. “Unscrupulous individuals are stealing identities at an alarming rate,” he said today in Washington.

Wall Street Journal:

• TARP Watchdog: 'We Are Letting Our Guard Down'. U.S. regulators and the American public have become complacent toward the dangers of another financial crisis, leaving taxpayers at risk of another bailout, a top watchdog said. "We are letting our guard down against things like moral hazard and 'too big to fail' banks," Christy Romero, the special inspector general for the financial-system bailout, said in an interview. "And that causes me great concern."
• Bombings Across Iraq Kill 30.
  

MarketWatch:

• Pair of Top Democrats Lament ObamaCare. With polls showing President Obama in a tight race vs. Mitt Romney, several prominent Democrats are lamenting the White House push to pass health-care reform three years ago. In the past few days, Massachusetts Rep. Barney Frank and Virginia Sen. James Webb have both said the bitter battle over the health-care law severely wounded Democrats. Frank, a staunch liberal, and Webb, a moderate, are both retiring at the end of the year. Read Frank interview. In an interview with New York magazine, Frank said the president probably should have focused on financial reform instead, especially after Republican Scott Brown captured Ted Kennedy’s old Senate seat in January 2010 in a shocking upset in traditionally Democratic Massachusetts. “I think we paid a terrible price for health care,” lamented Frank, who nonetheless said he strongly supported the goals of the president’s plan. Webb, at a Washington breakfast event this week, also said the health-care push was costly to the Democrats.

CNBC.com:

• Cramer's Ultimate Growth Stocks for 2012.
• Hedge Fund Asserts Jump to Record Level: Report.
  

Business Insider:

• Obama Continues to Lose Independent Voters.
• Albert Edwards: Thanks to China's New Yuan Policy, A Hard Landing Is Almost Inevitable.
  

Zero Hedge:

• Complete 2012-2013 European Bond Issuance Calendar.
• Is The Real Indicator of the Global Economy in Africa? (graph)
• No Housing Recovery Until 2020 in 5 Simple Charts.

New York Times:

• For Europe, Scrutiny and Diminishing Influence. Europeans may discover this week that the debt crisis is not only threatening the euro zone economy and the integrity of the common currency, but also diminishing Europe’s influence in world affairs.
• India Struggles to Deliver Enough Electricity for Growth. The country cannot get enough fuel — principally coal — to run the plants. Clumsy policies, poor management and environmental concerns have hampered the country’s efforts to dig up fuel fast enough to keep up with its growing need for power.

Advanced Trading:

• Hedge Funds Short The Euro. Anyone else feeling a 2011 flashback? Once again Europe seems on the precipice as the Euro fell against the US dollar for the third straight day on the row. This happened despite some news that should be somewhat reassuring after a decent bond sale from Spain. According to Reuters, "Traders cited talk of hedge funds betting the euro will fall to $1.25 soon after the French poll concludes early next month." (France is holding its elections, which usually takes weeks to decide.) Reports Reuters:

Reuters:

• Hedge Funds Face "make or break" year - Allstate. Large institutional investors who have ploughed tens of billions of dollars into hedge funds may rethink their allocations if the industry performs poorly yet again this year, one large U.S.-based investor said. Christopher Vogt, global head of hedge funds at Allstate Investments, which has $95.6 billion (59.8 billion pounds) assets including around $1.5 billion in hedge funds, said the industry needed to deliver good returns in 2012 after several difficult years. "This is a make-or-break year for hedge funds," he told Reuters in a recent interview. "If they have another low-to-zero return year then you will have had a three-year cycle of very low absolute returns."
• SEC to Vote on Charges Against Egan Jones - Sources. The U.S. Securities and Exchange Commission is planning to vote on Thursday on whether or not to charge credit-rating firm Egan-Jones with making intentional misstatements to regulators when applying to be a "nationally recognized" rating agency, people familiar with the matter said.
• No Avoiding Credit Squeeze as Europe's Banks Shrink. Europe's banks are aggravating the region's economic woes by rapidly adopting tough new rules for capital, raising the risk they will have no money left to lend to companies and support economic recovery. Bloated with risky loans and bad debts, banks are slashing their assets, but this has so far failed to convince investors, hurting the banks' ability to source the capital they need to lend to credit-starved customers. "The genie is out of the bottle. Banks are hellbent on shrinking balance sheets so that they can then start to focus on running their businesses rather than spending time dealing with regulatory matters," said Chris Wheeler, analyst at Mediobanca.
• US Natural Gas Futures Hit 10-Year Low Despite Neutral Storage Data.

Financial Times:

• Bulging Chinese Inventories Undermine Copper. There is more copper in China than at any other time in history – and economic growth in the world’s largest consumer of the metal is slowing. The combination of those two facts has cast a pall over the usually bullish mood at Cesco week in Santiago, the largest annual gathering of the world’s copper miners, traders, consumers and investors. “We are definitely at the highest level of stocks in China ever,” says Paul Settles, principal copper consultant at CRU, a consultancy. He reckons there is just over 3m tonnes of copper in China, including the government’s strategic stocks, an increase of 918,000 tonnes in the past six months. That means Chinese imports of refined copper, or cathode, one of the most closely watched datapoints in the copper market, are likely to slow from the record 1m tonnes in the first quarter of the year as the country, which accounts for 40 per cent of global copper demand, works off inventories.

Telegraph:

• George Soros and the Bundesbank's Patriotic Putsch. George Soros has launched all-out war against the Bundesbank. In his latest Le Monde interview he said that if he were still an active investor, he would now "bet against the euro", at least until there is a change in European leadership or policy.

Xinhua:

• China Infrastructure Projects May Face Cash Shortage. This is due to the nation's tightened credit policy, citing He Jianzhong, spokesman for the Ministry of Transport.

Bear Radar

Style Underperformer:

• Large-Cap Growth -.73%

Sector Underperformers:

• 1) Road & Rail -2.43% 2) Restaurants -2.21% 3) Steel -1.43%

Stocks Falling on Unusual Volume:

• QCOM, PLCM, PNRA, DB, TOT, PBR, MDC, AAPL, LTM, SWK, MYL, NGLS, SVVC, EGOV, GNTX, SQI, WERN, SCSS, SWKS, MRTN, POOL, WPRT, ULTI, TZOO, NTCT, OTEX, ZBRA, APOL, HMSY, GNI, COL, HNI, EMC, ABD and BAS
  

Stocks With Unusual Put Option Activity:

• 1) MDY 2) EA 3) EBAY 4) EMC 5) QIHU
  

Stocks With Most Negative News Mentions:

• 1) CHK 2) T 3) AAPL 4) MCD 5) INTC
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.69%

Sector Outperformers:

• 1) Coal +3.19% 2) Biotech +2.03% 3) HMOs +2.0%

Stocks Rising on Unusual Volume:

• HGSI, EBAY, GILD, YPF, TNGO, ELX, ARUN, APKT, CY, XBI, MLNX, FFIV, PENN, SXCI, SIMO, CBST, FRAN, RVBD, OPEN, CVI, SPPI, BTU, GT, LHO, TRV, VMW, ARIA and HOT
  

Stocks With Unusual Call Option Activity:

• 1) HGSI 2) MAR 3) EBAY 4) FFIV 5) RVBD
  

Stocks With Most Positive News Mentions:

• 1) MLNX 2) FFIV 3) AXP 4) EBAY 5) EMC
  

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• Spain Joins France to Seek $18 Billion in Bonds. Spain and France plan to raise as much as 13.5 billion euros ($17.6 billion) in debt today as Prime Minister Mariano Rajoy’s struggles to meet deficit targets and the French presidential elections drive up yields. Spain is issuing as much as 2.5 billion euros in two- and 10-year bonds, while France has set a maximum target of 11 billion euros for securities including 2017 notes and 2018 inflation-linked debt. Scrutiny of both countries is increasing amid the fading effect of the European Central Bank’s longer-term refinancing operation, which injected about 1 trillion euros of liquidity into the region’s financial system. The yield on Spain’s benchmark 10-year bond has jumped about 1 percentage point since the beginning of March to above 6 percent, while the yield on the equivalent French security has gained about 10 basis points with Socialist Francois Hollande leading in election polls. “It’s a difficult time for both countries to sell bonds,” said Marc Chandler, head of global currency strategy at Brown Brothers Harriman & Co. in New York. “The first quarter was really about the absorption of the LTROs. The second quarter is going to be more about politics.”
• Unemployment From Italy to Spain Fuels Debt Crisis: Euro Credit. Surging unemployment rates from Spain to Italy and Greece are threatening efforts to quell the region's debt crisis and keeping bond yields close to record premiums relative to benchmark German bunds. Joblessness is soaring as European nations reduce spending and hike taxes, igniting strikes and protests from Athens to Madrid. Unemployment in Spain surged to almost 24%, pushed the euro-region level to 10.8% in February, the highest in more than 14 years. Italy's rate is at 9.3%, the most since 2001, hampering efforts to spur economic growth. Deepening recessions in Italy and Spain contributed to a five-week slide in Italian and Spanish bonds as the shrinking tax base helped lead to both countries raising their deficit targets. "The higher the jobless rate, the more that has to be spent on benefits, creating the potential for a negative spiral," said Christian Schulz, an economist at Berenberg Bank in London and a former ECB official.
  
• To Thrive, Euro Countries Must Cut Welfare State. Most criticism of government profligacy in Europe lately has focused on the obvious sinners, such as Greece, which already had massive public debts and deficits when the global financial crisis struck almost four years ago. When it comes to overspending on social welfare, though, Europe has no angels. Even the “good” Scandinavians, and governments that appeared to be in sound fiscal shape in 2008, but were then undone by unsustainable private-sector debts, were spending too much and will have to restructure. The only question is whether this will be done gradually, or via shock therapy.
• BlackRock(BLK) May Shift Business From Banks If Moody's Downgrades. BlackRock Inc., the world's biggest asset manager, may be forced to reduce business with some banks if their credit ratings are downgraded by Moody's Investors Service. BlackRock is required to comply with clients' portfolio mandates, which may govern the credit rating a counterparty must have for specific holdings, said Bobbie Collins, a spokeswoman for the New York-based firm. Potential downgrades may prompt a shift away from them, Collins said. Moody's Investors Service is reviewing 17 banks and securities firms with global capital markets operations, including Morgan Stanley(MS) and UBS AG(UBS), which could have their ratings cut to the lowest level ever.
• Law School Student Debt Exceeds $100,000 Amid Poor Jobs Outlook. Law school graduates are leaving college with an average of $100,433 in debt at a time when new lawyers outnumber legal jobs, according to a survey from U.S. News & World Report.

Wall Street Journal:

• Europe's Rescue Plan Falters. Europe's bold program to defuse its financial crisis by injecting cash into the banking system is running out of steam. The European Central Bank's roughly €1 trillion ($1.31 trillion) of emergency loans caused interest rates of troubled euro-zone countries to plummet earlier this year, easing fears about Europe's debt crisis. But lately rates have again been marching higher. One big reason: After months of using that cash to buy their government's debt, banks in Spain and Italy have little left, say analysts and other experts.
• Egypt Candidate Warns on Islamists. As Race Takes Shape, Former Foreign Minister Says a Muslim Brotherhood Presidential Victory Could Imperil Democracy.
• George Clooney to Host Obama Fundraiser. As measured by money, power, glamour and celebrity, George Clooney’s dinner party on May 10th in Los Angeles is shaping up to be the party of the year. The guest of honor is President Barack Obama. Barbra Streisand won’t sing, but she’ll be mingling in the crowd. Jeffrey Katzenberg and other major Hollywood executives are expected to attend. And at the end of the evening, Mr. Obama’s supporters hope the campaign will walk away with several million dollars. Organizers predicted the event will turn out to be Mr. Obama’s most lucrative fundraiser yet.
• Small-Firm Loans Lagged in the U.S. Lending to small and medium-size businesses after the recession recovered more slowly in the U.S. than in other countries such as Canada, France and Italy, according to a report expected to be released Thursday by the Organization for Economic Cooperation and Development. The Paris-based OECD examined small-business lending across 17 countries from 2007 to 2010.
• Anji Capital Bets the Euro Will Tumble to 1.03 Swiss Francs. A newly formed New York hedge fund is betting the the Swiss National Bank’s efforts to protect the Swiss franc from gaining against the euro will fail. Anji Capital Management and its chief investment officer, Kevin Chen, expects the euro to fall 14% versus the franc before the end of the year.
• Tumi IPO Prices At $18 A Share, Above Expected Range. Tumi Holdings Inc. said its initial public offering of about 18.8 million shares priced at $18 a share, above its expected range of $15 to $17.
• India Launches Long-Range Missile. India test launched a new nuclear-capable missile Thursday that would give it, for the first time, the capability of striking the major Chinese cities of Beijing and Shanghai, according to television news channels. The government has hailed the Agni-V missile, with a range of 5,000 kilometers, or 3,100 miles, as a major boost to its efforts to counter China's regional dominance and become an Asian power in its own right.
• Henninger: It's 1936 All Over Again. The Obama 2012 campaign is channeling the ghost of Franklin D. Roosevelt in the Depression.

MarketWatch:

• French Election Stirs Fears of Euro-Zone Turmoil. In the end, the onus will be on the victor to convince markets he can cut France’s debt load, even as renewed sovereign-debt turmoil threatens to force the French government to pony up more money for Europe’s rescue fund, along with potential bailout funds for French banks, warned economists at Nomura. “Therefore, we expect a lot of fiscal tightening after the election,” they wrote. “And that is regardless of who wins.”

Business Insider:

• COLOMBIAN PROSTITUTE SPEAKS: Here Are The Details Of My Encounter With The Secret Service.
• Check Out These Photos Of Federal Workers Vacationing On Taxpayer Dollars.
• BOMBSHELL: Colombian Prostitutes Had Contact With 'Sensitive Security' Information.
• This is the Number You Need to be Watching in Spain.
• The 25 Hottest Small Companies In America.
  

Zero Hedge:

• Keynes For Muppets: Elmo Explains The National Debt.
• US Postal Service Bailout Imminent?
  

CNBC:

• Qualcomm(QCOM) Earnings Beat but Shares Fall on Guidance. Qualcomm delivered quarterly results that beat Wall Street's expectations on guidance that trailed expectations.
• Sanctions Not Impacting Iranian Oil: Report.

IBD:

• Bed Bath & Beyond(BBBY) Reaps Hefty Profit Gains.

NY Times:

• Volcker Rule Gets Murky Treatment. The path to gaming the Volcker Rule has always been clear: Banks will shut down anything with the word “proprietary” on the door and simply move the activities down the hall. To look as if they were ready to comply with the Volcker Rule, the part of the Dodd-Frank Act that aims to prevent banks from gambling on their own account with money that taxpayers insure, financial firms quickly spun off or shut down their hedge funds, private equity firms and proprietary trading desks. But the suspicious-minded among us wonder whether it was all that simple.
• European Rescue Fund May Face Biggest Test Yet. The euro zone’s rescue fund has already helped mount full-scale bailouts of three of Europe’s smaller economies. But concern over the health of Spain’s financial institutions — laid low by a festering home-mortgage crisis — has fueled speculation that, for the first time, the bailout fund might be needed to help recapitalize the banks of a big country.

Forbes:

• U.S. Energy Independence in 15 Years?

CNN:

• Moms: 'I can't afford to work'. After factoring in the rising cost of child care, the daily commute and other work-related expenses, a growing number of mothers are figuring out that having a job just doesn't pay. "It comes down to a cost analysis and I have several clients that have taken the route of quitting," said Anna Behnam, a financial advisor at Ameriprise Financial in Rockville, Md. "Factor in taxes, transportation costs, clothing and lunch -- what is the true net that you bring home after salary?"

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows that 24% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-one percent (41%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -17 (see trends).

Reuters:

• EBay(EBAY) Quarterly Results Top Expectations. EBay Inc said quarterly sales and profit grew more than expected and raised its 2012 forecasts, citing growth in the e-commerce company's Marketplaces and PayPal businesses. Ebay's stock rose 6.9 percent to $38.35 in extended trading, after hitting $38.83 - the highest level since late 2007.
• F5 Networks(FFIV) 2nd-Qtr Beats, Co Reaffirms FY Revenue Target. F5 Networks Inc posted second-quarter results above market expectations and forecast a muted third quarter, leading to a fall in shares, but the stock recovered after the company reaffirmed its full-year growth target. The network gear maker's shares, which fell 4 percent immediately after F5 announced its results, reversed course after the company allayed fears of a slow down in its business.
• Yum(YUM) China Disappoints as Chinese Growth Cools.
• Stanley Black & Decker(SWK) 1st-qtr profit misses Street estimates. Stanley Black & Decker Inc posted a quarterly profit that missed market expectations, sending its shares down 4 percent in extended trade, as the toolmaker was hit by a rise in costs.
• Brazil Cuts Rate, Surprises With Dovish Tone. Brazil has been flirting with recession since the second half of last year, and President Dilma Rousseff has expressed hopes that lower rates will help spur spending and spark a return to the high growth rates that made the country one of the world's most dynamic economies.

Hedge Fund Alert:

• Pershing Square Details Plan for Listed Fund.
  

Financial Times:

• Spain Eyes Retaliation for YPF Seizure. Britain and Mexico came out with unequivocal support for Spain’s position soon after the renationalisation. The US – which had been criticised by Mr Soria on Spanish state television for its “unenthusiastic” reaction to the expropriation of Argentina’s largest oil group – on Wednesday sharpened its rhetoric over the move, saying it was “very concerned” about it.

Telegraph:

• Dozens Under Arrest in China in Connection with Bo Xilai Scandal. China has detained dozens people with connections to Bo Xilai, it was claimed as the Communist party pledged to "thoroughly investigate" the politician and his wife's alleged role in the death of British businessman Neil Heywood.
• This Crisis Cannot Be Resolved While Monetary Union Remains. "One has the feeling that at any moment, things could get very bad again.” With these words, Olivier Blanchard, the International Monetary Fund’s chief economist, has set the tone for this year’s spring meeting of the IMF.
• Fitch doubts Dutch AAA as property slump reaches 'coma'. Fitch Ratings has issued the clearest warning to date that Holland faces losing its AAA rating if it fails to deliver austerity cuts or lets political conflict intrude on economic management.

The Standard:

• Bo Xilai's Wife Dying From Bone Cancer. The wife of disgraced former Chongqing chief Bo Xilai is suffering from bone cancer and has only a short time to live. According to a source in Beijing, that may explain the sudden change in the character of Gu Kailai, 53, who is accused of murdering British businessman Neil Heywood.
  

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.75% to +.25% on average.
• Asia Ex-Japan Investment Grade CDS Index 166.50 +5.0 basis points.
  
• Asia Pacific Sovereign CDS Index 134.0 -1.0 basis point.
  
• FTSE-100 futures +.19%.
  
• S&P 500 futures +.17%.
  
• NASDAQ 100 futures +.42%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SHW)/.94
• (TRV)/1.52
• (GPC)/.87
• (BBT)/.58
• (LH)/1.67
• (BX)/.40
• (BSX)/.08
• (ADS)/2.19
• (DO)/.99
• (BTU)/.55
• (KEY)/.19
• (DHR)/.71
• (UNH)/1.17
• (DD)/1.53
• (LUV)/-.05
• (FITB)/.36
• (BAC)/.12
• (BAX)/1.00
• (EMC)/.36
• (PM)/1.19
• (MS)/.44
• (VZ)/.57
• (FCX)/.87
• (UNP)/1.63
• (PPG)/1.78
• (NUE)/.39
• (CMG)/1.93
• (SNDK)/.67
• (COF)/1.39
• (ALTR)/.36
• (MSFT)/.57
• (AMD)/.09
• (TPX)/.84
• (CB)/1.51
• (RVBD)/.20
• (WYNN)/1.42
  

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to fall to 370K versus 380K the prior week.
• Continuing Claims are estimated to rise to 3300K versus 3251K prior.

10:00 am EST

• Philly Fed for April is estimated to fall to 12.0 versus a reading of 12.5 in March.
• Existing Home Sales for March are estimated to rise to 4.62M versus 4.59M in February.
• Leading Indicators for March are estimated to rise +.2% versus a +.7% gain in February.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The weekly EIA natural gas inventory report, Bloomberg Economic Expectations Index for April, weekly Bloomberg Consumer Comfort Index and the 5Y TIPS auction 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 mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Dropping into Final Hour on Rising Eurozone Debt Angst, Some Key Earnings Disappointments, Rising Global Growth Fears

Broad Market Tone:

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

Equity Investor Angst:

• VIX 18.30 -.87%
  
• ISE Sentiment Index 130.0 +38.30%
  
• Total Put/Call .98 +15.29%
  
• NYSE Arms .91 +107.89%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 99.35 +.87%
  
• European Financial Sector CDS Index 250.03 +2.61%
  
• Western Europe Sovereign Debt CDS Index 279.90 +.39%
  
• Emerging Market CDS Index 269.29 +2.13%
  
• 2-Year Swap Spread 29.25 +.75 basis point
  
• TED Spread 40.0 +1.0 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -49.0 +3.0 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .07% -1 basis point
  
• Yield Curve 171.0 -2 basis points
  
• China Import Iron Ore Spot $148.50/Metric Tonne -.47%
  
• Citi US Economic Surprise Index 9.0 -.2 point
  
• 10-Year TIPS Spread 2.27 -4 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating a -31 open in Japan
• DAX Futures: Indicating +13 open in Germany
  

Portfolio:

• Higher: On gains in my Technology and Medical sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is bearish, as the S&P 500 trades lower on rising Eurozone debt angst, some key earnings disappointments, rising global growth fears, less financial sector optimism and less US economic optimism. On the positive side, Oil Service, Computer Hardware and Restaurant shares are especially strong, rising more than +.75%. Tech shares are outperforming. Oil is falling -1.5%, Lumber is rising +1.9%, Gold is down -.64% and the UBS-Bloomberg Ag Spot Index is down -1.1%. Major Asian indices rose around +1.25% overnight, led by a +2.1% gain in Japan. On the negative side, Coal, Alt Energy, Oil Tanker, Networking, Computer Service, Insurance and Homebuilding shares are under pressure, falling more than -1.0%. Small-caps are underperforming. Financial are also relatively weak. Copper is dropping -.42%. Major European indices are falling around -2.25% today, led lower by a -4.0% decline in Spain. Spain is now down -17.4% ytd and very close to its March 2009 low. The Bloomberg European Bank/Financial Services Index is falling another -2.2% and is down -14.9% in less than one month. The Germany sovereign cds is gaining +1.09% to 78.68 bps(+7% in 5 days), the France sovereign cds is jumping +5.2% to 200.5 bps(+7.5% in 5 days), the Italy sovereign cds is gaining +2.0% to 441.0 bps and the Spain sovereign cds is gaining +1.2% to 495.0 bps. Moreover, the European Investment Grade CDS Index is rising +4.1% to 142.60 bps. US Rail Traffic continues to soften. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak despite investor perceptions that the US economy is accelerating. Moreover, the Citi US Economic Surprise Index has fallen back to mid-Oct. levels. Lumber is -9.0% since its Dec. 29th high despite the better US economic data, improving sentiment towards homebuilders and the broad equity rally. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010 despite expectations for a strong spring home selling season. The Baltic Dry Index has plunged around -55.0% from its Oct. 14th high and is now down around -40.0% ytd. China Iron Ore Spot has plunged -18.0% since Sept. 7th of last year. Shanghai Copper Inventories are right near a new record and have risen +760.0% ytd. China's March copper imports fell -4.6% on the month. Singapore Electronics exports decelerated to a gain of +2.8% in March from a +23.3% gain in February. The MBA Home Purchase Apps Index plunged -11.2% this week. This index is now back in the middle of the range it has been trapped in since May 2010. This week’s decline is one of the biggest during this period, as well. I continue to believe that nationwide housing, while stabilizing, is nowhere near in the vigorous recovery that many perceive. The recent erratic technical action in shares of (AAPL), a market-leader and the largest company in the world, is a bit disconcerting. Long AAPL. Copper still trades poorly, bonds still trade too well and the euro can’t sustain a bounce. As well, the ongoing rises in German/French cds are also red flags. In my opinion, the still persistent aggressive dip buying in US equities on any swoon indicates a fairly high level of complacency regarding the rapidly deteriorating situation in Europe. For the recent equity advance to regain traction, I would expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade modestly lower into the close from current levels on rising Eurozone debt angst, less US economic optimism, less financial sector optimism, rising global growth fears and some key earnings disappointments.