Today's Headlines

Bloomberg:

• Euro-Region Debt Rises to Highest in Currency's History. The debt of the euro region rose last year to the highest since the start of the single currency as governments increased borrowing to plug budget deficits and fund bailouts of fellow nations crippled by the fiscal crisis. The debt of the 17 euro nations climbed to 87.2 percent of gross domestic product in 2011 from 85.3 percent the previous year, official European Union figures showed today. That’s the highest since the euro was introduced in 1999. Greece topped the list with debt at 165.3 percent of GDP, while Estonia had the least at 6 percent of GDP. Euro-region nations are on the hook for the bulk of the 386 billion euros ($508 billion) in bailouts for Greece, Ireland and Portugal after those nations were forced to seek rescues when their borrowing costs become unsustainable. Concern that Spain and Italy may follow has led their bonds to decline for six weeks, pushing yields toward the 7 percent level that triggered the other aid programs. “The different debt trajectories of the euro-area countries crystallize the process of great divergence between the periphery and the core of the euro area and even more markedly between Germany and the rest of the region,” Silvio Peruzzo, an economist at Royal Bank of Scotland Group Plc in London, said by phone.
• European Services, Manufacturing Shrink for Third Month: Economy. Euro-area services and manufacturing output declined for a third month in April as the economy struggled to rebound from a fourth-quarter contraction. A euro-area composite index based on a survey of purchasing managers in both industries fell to 47.4, a five-month low, from 49.1 in March, London-based Markit Economics said in an initial estimate today. Economists had forecast an increase to 49.3, according to the median of 17 estimates in a Bloomberg News survey. A reading below 50 indicates contraction. Budget cuts by governments and surging unemployment are curbing the pace of Europe’s economic recovery as officials across the region battle the sovereign-debt crisis. Manufacturers from Europe to China have been buffeted as the fiscal squeeze has crimped demand. “Not only does it look highly likely that the euro zone suffered further economic contraction in the first quarter of 2012 after gross domestic product fell 0.3 percent quarter-on- quarter in the fourth quarter of 2011, but the April purchasing managers’ surveys suggest that a third quarter of GDP contraction is firmly on the cards for the second quarter of 2012,” said Howard Archer, an economist at IHS Global Insight in London.
• Netherlands Leads Rise in Sovereign Credit Risk on Deficit Woes. The Netherlands led an increase in the cost of insuring against default on European sovereign debt to the highest in four weeks as the government offered to resign after lawmakers split over austerity plans. Credit-default swaps on Dutch bonds jumped 11.5 basis points to 130 at 3:20 p.m. in London, according to data compiled by Bloomberg, the highest in five months. Corporate credit risk also rose as reports showed manufacturing contracted in the euro area and China. “There is a danger that we will see a move to more radical, less Europe-friendly policies in the Netherlands,” said Elisabeth Afseth, an analyst at Investec Bank Plc in London. “A change in the Dutch government raises concern as to whether they will get the budget through and whether they lose their triple A rating which is causing the widening at the moment.” The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments jumped four basis points to 285. The debt of the 17 euro nations climbed to 87.2 percent of gross domestic product in 2011 from 85.3 percent the previous year, official European Union figures showed. That’s the highest since the euro was introduced in 1999. Greece topped the list with debt at 165.3 percent of GDP, while Estonia had the least at 6 percent of GDP. The Markit iTraxx Crossover Index of swaps linked to 50 companies with mostly high-yield credit ratings increased 22.5 basis points to 695.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings advanced 6.5 basis points to 150.25 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers rose eight basis points to 263 and the subordinated index jumped 12.5 to 422.5.
• Weidmann Says ECB Firepower is Limited, Governments Must Act. European Central Bank council member Jens Weidmann said calls for the central bank to do more to fight the sovereign debt crisis overestimate its capacity. “Monetary policy is not a panacea and central bank firepower is not unlimited, especially not in a monetary union,” Weidmann said in a speech in New York today. “We can only win back confidence if we bring down excessive deficits and boost competitiveness. And it is precisely because these things are unpopular that makes it so tempting for politicians to rely instead on monetary accommodation.”
• Europe's Austerity Backlash Gathers Steam in Merkel Test. Europe’s backlash against austerity gained momentum, in a challenge to German Chancellor Angela Merkel’s budget-cutting prescriptions for resolving the debt crisis. French President Nicolas Sarkozy lost the first round of his re-election bid and a revolt against extra spending cuts in the traditionally budget-conscious Netherlands propelled Prime Minister Mark Rutte’s coalition toward an early breakup. Together with anti-austerity rumblings in a campaign for elections in Greece, the shift in grass-roots sentiment at the heart of Europe generated fresh doubts about the German-driven strategy for getting to grips with the two-year-old crisis.
• China's Stocks Decline on Manufacturing Report, ChiNext Rules. China’s stocks fell the most in almost a week after a preliminary report on manufacturing signaled a sixth month of contraction and officials tightened standards for small companies listed on the ChiNext Board. The Shanghai Composite Index (SHCOMP) slid 18.28 points, or 0.8 percent, to 2,388.59 at the close, the biggest drop since April 17. The CSI 300 Index (SHSZ300) lost 0.8 percent to 2,606.04. The ChiNext index declined 5.3 percent. Companies listed on the ChiNext Board will be delisted if they are censured by the exchange three times over a three-year period, the exchange said in an April 20 statement. The companies will also be removed from the board if their share prices close below par values for 20 consecutive days or net asset values are negative for the latest year, according to the statement. The exchange said it won’t support ChiNext companies seeking to regain listing status by means of reverse takeovers. The rules, which amend a plan announced in February, will come into effect on May 1, according to the statement.
• China March Copper Imports Decline as Exports Surge. Refined-copper imports by China declined 8 percent in March from a month earlier while exports surged on high inventories and tepid demand. Inbound shipments were 345,667 metric tons last month, according to data e-mailed by the General Administration of Customs today. This compares with 375,831 tons in February and 192,161 tons a year ago. Exports totaled 26,537 tons, the highest since April 2011, customs data showed. “April exports will probably be even higher than March,” said Wang Lixin, a Beijing-based analyst with researcher Custeel.com. “The domestic market faces huge pressure from the high inventories, which should cap imports in coming months.” Inventories at bonded warehouses, which are located in Shanghai’s free-trade zones, were about 600,000 tons, compared with less than 100,000 tons in 2008, Goldman Sachs Group Inc. said in a report on April 19. Inventories at LME warehouses in Asia climbed to 38,625 tons, a four-month high, as of April 20. “The bad news is that copper fabricators now even have inventories of their products, which was rarely seen in the past,” Wang said.
• Social Security Fund to Run Out in 2035, Trustees Say. The Social Security program will exhaust its trust fund in 2035 and have to start reducing benefits to senior citizens unless Congress intervenes, its trustees said. That is three years sooner than projected in 2011 for the retirement benefits program, which serves 44 million people, the trustees said in an annual report today. Social Security’s disability program, which aids 11 million Americans, will run through its trust fund in 2016, two years earlier than predicted. The report attributed the fiscal stress in part to the weak economy. The combined Social Security trust funds would be depleted in 2033, three years earlier than projected. The giant retirement programs are straining the government’s finances, and what to do about them is a central issue in the election-year debate between Democrats and Republicans as President Barack Obama seeks a second term. “Lawmakers should address the financial challenges facing Social Security and Medicare as soon as possible,” the report urged. “Taking action sooner rather than later will leave more options and more time available to phase in changes so that the public has adequate time to prepare.” The main fund that supports the Medicare health-care program for the elderly will run dry in 2024, the report said.
• Facebook(FB) to Buy AOL(AOL) Patents From Microsoft(MSFT) for $550 Million.
  

Wall Street Journal:

• No One Bids on Dinner at Warren Buffett's Childhood Home. A charity auction that offered dinner for ten in Warren Buffett’s boyhood home has gone flat.
• Wall Street Prepares to Cut Senior Banker Jobs. Wall Street's latest problem: too many bankers and not enough deals. Amid new regulation, lower profits and a dreary market for mergers and acquisitions, several banks are planning to trim investment-banking units that were built for an era of deals aplenty. Having already slashed bonuses, banks including Citigroup Inc., Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Morgan Stanley are preparing to cut dozens of jobs, including some held by senior bankers, according to people familiar with the matter.
  

MarketWatch:

• Goldman Sachs(GS) Under Pressure to Reveal Lobby Ties.

Business Insider:

• Jim Cramer: 'TheStreet.com Is Really In Turmoil'.
• Europe Ends With Total Carnage, Italy Plunges Nearly 4%.
• 14 Awful Facts About The French Economy.
• Here's The Real Reason Marine Le-Pen Should Scare Europe. The big issue is that Marine Le-Pen was wildly popular among youth voters according to pre-election polls. According to one poll in early April, Le-Pen was winning among 18-24 year old voters. When the future of rich European country like France is so strongly in favor of a Euroskeptic the political establishment around the Eurozone has to be pretty terrified.

Zero Hedge:

• Europe Slumps to 3-Month Lows as Spain Nears 2009 Lows. (graphs)

New York Times:

• China's Biggest Banks Are Squeezed for Capital. Within the last year, seven of the biggest Chinese banks tapped the markets for 323.8 billion renminbi ($51.4 billion ) in new funds, according to Citigroup estimates. Several financial firms are expected to raise another $17.7 billion in the next few months, with China’s fifth-biggest lender, the Bank of Communications, accounting for $9 billion.

Real Clear Politics:

• The Pain in Spain. Just when you thought the world economy might be improving, along comes Spain. It's Europe's next economic domino, struggling to cope with big budget deficits, massive unemployment and an angry public. Will it fail -- and, if so, with what consequences?

Reuters:

• Exclusive: Half Iran Tanker Fleet Storing Oil At Sea. Iran has been forced to deploy more than half its fleet of supertankers to store oil at anchorage in the Gulf as buyers of its crude cut back because of sanctions, two Iran-based shipping sources said.
• Greece Should Exit Euro to Save Economy - Ifo Head. Greece's ability to recover competitive economic standing will be severely constrained if it continues to use the euro, and other indebted euro zone countries will likely face similar struggles, the head of Germany's prominent Ifo economics institute said on Monday.

Telegraph:

• François Hollande's potential spending spree in France has caused concern in austerity Europe. Traders, rating agencies and the European Union at large could soon be "manning the barricades" in France. The country boasts a strong tradition of popular revolt but this time it is a socialist leader who is threatening to trigger resistance.

Finansavisen:

• Norway's Financial Supervisory Authority is worried about households' debt levels, FSA Director General Morten Baltzersen said.
  

Euro2day:

• Greece's central bank forecasts the economy will contract more than 4.5% of GDP this year.

OpenEurope Blog:

• German Media Looks For Meaning In French Presidential Election Result.
  

Kathimerini:

• EIB Inserts Drachma Clauses in Loans to Greek Firms. The European Investment Bank is hedging itself against a Greek exit from the eurozone by inserting drachma clauses in the loan deals it signs with Greek enterprises. The EIB proposed for the first time two new terms, one of them being the possible renegotiation of the agreement should Greece leave the eurozone or should the common currency area break up. The second was placing the agreement under English law, in case of any irregularities in the payback process. EIB sources suggest that the currency-change clause will be included in all contracts with countries applying economic stability programs (Greece, Portugal and Ireland) and gradually expand to all eurozone countries.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.63%

Sector Underperformers:

• 1) Homebuilders -3.21% 2) Airlines -2.41% 3) Alt Energy -2.40%

Stocks Falling on Unusual Volume:

• WMT, MCP, CHL, IVN, BT, TOT, TAC, CHKP, HAS, MLNX, FRAN, EZPW, MPEL, TWIN, SWKS, CPHD, IACI, VLTR, ALTR, HMIN, STBA, INTU, ULTI, FTNT, OTEX, EXPD, XSD, ATE, SAH, K, SJT, JKL, WHG, TNC, IPHI, ANV and WY
  

Stocks With Unusual Put Option Activity:

• 1) BBD 2) CHKP 3) WMT 4) COP 5) M
  

Stocks With Most Negative News Mentions:

• 1) FSLR 2) LEN 3) K 4) C 5) PGR
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.83%

Sector Outperformers:

• 1) Road & Rail -.41% 2) Banks -.62% 3) Utilities -.83%

Stocks Rising on Unusual Volume:

• RDEA, AMLN, BEAV and EAT
  

Stocks With Unusual Call Option Activity:

• 1) GFI 2) BKS 3) CVS 4) SVNT 5) SHPGY
  

Stocks With Most Positive News Mentions:

• 1) HOG 2) RTN 3) DFS 4) MSI 5) ETN
  

Charts:

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

Monday Watch

Weekend Headlines
Bloomberg:

• Sarkozy, Hollande to Square Off as Le Pen Has Record Vote. Socialist Francois Hollande and President Nicolas Sarkozy progressed to the final round of France’s election, with the incumbent’s hopes of victory resting on winning supporters from Marine Le Pen’s anti-euro National Front. Hollande won 28.5 percent of the vote against 27.1 percent for Sarkozy, the interior ministry said in Paris. The anti- immigrant Le Pen got 18.1 percent, a record for the party that surpassed the predictions of all pollsters. The second round takes place on May 6. The presidential race was thrown open by Le Pen’s performance, which highlighted voters’ angst in the face of unemployment at a 12-year high, immigration and a worsening euro region debt crisis. While Hollande’s first-round lead was narrower than polls predicted, Sarkozy must now appeal to National Front supporters without alienating more moderate voters. “He’s going to have to hunt right-wing voters,” Antonio Barroso, a political analyst at Eurasia Group in London. “That’s a bad dynamic for the second round when you normally want to capture the center and unite the country.” Hollande would beat Sarkozy by 56 percent to 44 percent in the final round, said the CSA polling company, citing a survey it conducted after the results. The euro traded at $1.3199 in early Asian trade compared with $1.3219 on April 20.
• Coene Says Further ECB Action for Spain Now Risks Credibility. European Central Bank Governing Council member Luc Coene said immediate further measures to quell financial turmoil in Spain risk stretching the credibility of the bank’s monetary policy. “We have done what we can do so far within our mandate and within the possibilities we have,” Coene told Bloomberg News in an interview yesterday in Washington. “The only thing we could do is overstretch ourselves and then we would even lose the credibility we have at that moment.” The Frankfurt-based ECB hasn’t bought any government bonds for five straight weeks even as Spain’s borrowing costs have risen amid market uncertainty over its budget-cutting plans. Executive Board member Joerg Asmussen said on April 20 that while the ECB will “monitor closely” Spain’s market situation, the problem can’t be solved by a more active central bank.
• Draghi's ECB Rejects Geithner-IMF Push for Measures. European Central Bank officials led by President Mario Draghi resisted calls from the International Monetary Fund and U.S. Treasury to do more to stem the debt crisis roiling the euro-area economy. As talks of global finance chiefs ended yesterday in Washington, euro-area central bankers from Draghi to Bundesbank President Jens Weidmann argued they have done enough by cutting interest rates and issuing more long-term bank loans. “None of the advice that the IMF is offering has been discussed by the Governing Council, in recent times at least,” Draghi said on April 20 while attending IMF meetings in Washington. Weidmann said in an interview that “the problems in Europe can’t be solved by monetary policy measures.” Officials in Europe and around the world are bickering about additional crisis-calming steps, as turmoil returns to the continent’s bond market amid concern that Spain may need a bailout. While Draghi says Spain and Italy need to agree further action, Prime Minister Mariano Rajoy’s government wants the ECB to reactivate its bond-buying program.
• Weidmann Says ECB Liquidity Must Not Delay Reforms, FAS Reports. Bundesbank President Jens Weidmann said “the generous supply” of liquidity from the European Central Bank must not result in banks and governments postponing necessary reforms, Frankfurter Allgemeine Sonntagszeitung reported. European banks need to “thoroughly adjust” balance sheets and strengthen capital levels while governments have to quickly implement structural reforms and credibly consolidate budgets, the newspaper cited Weidmann as saying in a preview of a story that will run tomorrow. If countries need bridging help during that process, providing such aid is the task of European rescue programs and not of central banks, Weidmann said. Central banks’ monetary measures must “not replace, nor delay, adjustments,” Weidmann told the German newspaper.
• IMF's Lagarde Enjoys Funds Victory, Rift Exposed. Three months after waving her purse in front of global finance chiefs, Christine Lagarde filled it up with more than $430 billion in pledges for the International Monetary Fund. She may not enjoy her victory for long. The lender’s spring meetings ended yesterday in Washington with the doubling of its war chest and a number of sores exposed among its 188 members. Managing Director Lagarde fell short of her original $600 billion goal as the U.S. refused to chip in, while Canada proposed making it harder for Europe to tap aid. Big emerging markets demanded more power at the IMF before writing checks. The tensions leave Lagarde pushing her home continent to justify the show of solidarity with greater crisis-fighting just as Spain’s interest rates soar and Dutch austerity talks flop. If Europe resists, she could find it harder to rally support for sending it more money or face criticism for bailing out undeserving governments. “Any further lending to euro zone economies is likely to be under even greater scrutiny from the IMF’s other members,” said Eswar Prasad, a former IMF official now at the Brookings Institution in Washington. “Lagarde faces a difficult balancing act.”
• Balls Says IMF Not Substitute for ECB, Daily Telegraph Reports. Ed Balls, finance spokesman for the U.K.’s opposition Labour Party, said the International Monetary Fund shouldn’t become a substitute for the European Central Bank during the euro-region crisis, the Daily Telegraph reported. Chancellor of the Exchequer George Osborne, a Conservative who offered 10 billion pounds ($16.1 billion) to the IMF in Washington, shouldn’t give it “a single extra penny,” Balls told the paper. Austerity in Southern Europe isn’t working and deficits can’t go down without growth, he told the newspaper. While the ECB and the euro region doesn’t have “the capacity” to deal with Italy’s and Spain’s issues “it would be wrong to ask the global taxpayer to put up” the money, the Telegraph cited him as saying.
• Nagel Rules Out Direct EFSF Aid to Banks, Handelsblatt Reports. Bundesbank board member Joachim Nagel rejected proposals to allow European banks in crisis to get direct help from the European Union’s rescue funds, Handelsblatt newspaper reported in a preview of an article that will be published tomorrow, citing an interview with Nagel. Spain is responsible for Spanish banks in need of aid and for recapitalizing, restructuring or closing them, Nagel said, according to Handelsblatt. Nagel says he rules out direct financial aid from the European Financial Stability Facility as that would pass on the risks of a bank bailout to all European taxpayers, the newspaper reported.
• Italy May Cut Spending by 20 Billion Euros, Corriero Says. The Italian government aims to cut state spending by 20 billion euros ($26.4 billion) to 25 billion euros, the newspaper Corriere della Sera reported, without saying how it got the information. The spending review, which will be presented in a few days, has a “fundamental role” in Prime Minister Mario Monti’s plan to reduce debt, Corriere reported. Measures being considered include slashing rent costs by relocating to vacant public buildings and bringing together agencies, Corriere said. The plan may also increase the role of Consip, the government agency that runs public tenders, to centralize purchases, and a review of the tech platforms of ministries and local administrations, the daily said. Some ministers including the Interior and Defense are opposing possible cuts to their departments, Corriere said.
• IMF’s Chopra Says Risks for Ireland ‘High,’ Irish Times Reports. Ajai Chopra, the International Monetary Fund’s mission head to Ireland, said that “risks” for the country remain “high” as household debt and economic uncertainty continue to weigh on demand, the Irish Times reported. If domestic demand doesn’t improve, and constrained export growth keeps Irish growth “stuck at about 0.5 percent,” Ireland’s debt will continue to rise, Chopra was reported as saying. The IMF has been pushing for “additional European support” for Ireland beyond existing arrangements, Chopra said, according to the report.
• Spain Rules Out More Health Austerity Measures, Mato Tells ABC. Spain is ruling out the need for a second wave of austerity measures to reduce the country’s public health care costs, Health Minister Ana Mato said in an interview with the ABC newspaper. The Spanish health system’s “sustainability is guaranteed” after the latest measures approved by the Cabinet on April 20, Mato was quoted as saying, according to the paper.
• EFSF's Bond-Protection Certificates Primed to Fail: Euro Credit. Insurance contracts designed to ensure Europe's most indebted nations can raise funds in times of stress are unlikely to underpin demand for government debt or restrain borrowing costs, according to investors. The plan is "not something that appears immediately hugely attractive," said John Stopford, co-head of fixed income and currency in London at Investec Asset Management, which manages about $90 billion. "Either investors will buy peripheral bonds outright, because they're attractive enough, or they won't buy them at all, and financial engineering I'm not sure is necessarily going to change that dynamic."
  
• Netanyahu Warns of Islamist, Nuclear ‘Marriage,’ Welt Reports. Israeli Prime Minister Benjamin Netanyahu said the greatest threat to world peace is “the marriage of a militant Islamist regime with nuclear weapons,” including Iran developing the bomb or the Taliban seizing power in Pakistan, Welt am Sonntag reported. The world would “change harshly” if Iran developed nuclear weapons, with “terrorism on a much greater scale than before,” Netanyahu said, according to the German newspaper. Terrorists would believe that their “backward and apocalyptic creed” had a chance of materializing and Iran would have the ability to attack Israel, which is “their propensity to do,” Welt cited him as saying.
• Syria Violence Kills 17 After UN Approves Observers. At least 17 people were killed in violence in Syria, a day after the United Nations Security Council unanimously backed sending observers to monitor a cease- fire agreement between President Bashar al-Assad’s forces and rebel groups fighting to oust him. Resolution 2043, sponsored by Russia and China, nations that objected to tougher U.S.-backed measures against Syria, will allow 300 unarmed monitors to be deployed for an initial period of 90 days.
• Yellen Revealing Twists With No Turns as Fed Assesses Expansion. Vice Chairman Janet Yellen says the end of the Federal Reserve’s so-called Operation Twist won’t amount to a tightening of monetary policy. Whether investors agree may help determine the central bank’s next steps. The Fed’s program to swap $400 billion of short-term securities in its portfolio for longer-term debt is scheduled to be completed in June, and Yellen, 65, doesn’t see the need for additional stimulus purely to blunt the impact. That’s because the measure eases policy by expanding the Fed’s balance sheet, not through the flow of purchases, she said April 11.

Wall Street Journal:

• Spanish Government Has No Plans To Create Vehicle For Banks' Impaired Assets -De Guindos. The Spanish government has no plans to create a vehicle to help the country's ailing banks unload impaired assets, Finance Minister Luis de Guindos said Saturday. Spanish central bank officials have said in recent days they are urging local banks to remove impaired assets from their balance sheets, reviving speculation that Spanish authorities could set up a vehicle that would take over the management of these assets. Some media have reported the Spanish government could set up a so-called bad bank, a state-financed vehicle that would purchase the assets from the banks. "The government is not going to create anything, not a bad bank or a good bank," de Guindos said. Spain's finance chief reiterated the Spanish government's strategy for cleaning up a banking system reeling from the collapse of a decade-long housing boom is based around forcing banks to raise provisions to cover losses from impaired assets. The government believes creating these cushions to absorb losses will encourage the banks to unload the assets on their own.
• Online Video Turns Up Heat. Though television may be losing viewers to online video, it has been holding on to advertisers. But with online-video outlets this week making their most organized push yet for ad dollars, that may be starting to change.
• Behind a Chinese City's Growth, Heavy Debt. Borrowing Fueled Chongqing's Infrastructure Projects, Highlighting National Problem of Reliance on Government Spending.
• E.F. Hutton Breaks Silence. A group of former officials from the old brokerage firm E.F. Hutton & Co. plan to start a new boutique financial-advisory firm under the same name. The group, led by former E.F. Hutton and Smith Barney manager Frank Campanale, plans to announce Monday that it will launch the firm in coming weeks with the hiring of financial advisers and others, according to Mr. Campanale.
• MF Global Customers Press JPMorgan(JPM). Customers of MF Global Holdings Ltd. are pushing regulators to get tougher on J.P. Morgan Chase & Co. about money that went missing from accounts just before the firm's collapse. The move comes as a bankruptcy trustee representing brokerage customers of MF Global has said he is conducting an investigation of J.P. Morgan and had entered "substantive discussions regarding the resolution of claims" against the Wall Street firm.

Business Insider:

• NEW YORK TIMES PUBLIC EDITOR: Yes, Our Paper Is Totally In The Tank For Obama.
• The Savviest Money Managers Are Gaining An Edge With A New Weapon - Twitter.
• Here's A List Of The Pledges By Francois Hollande That Terrifies The Rest Of Europe.
• CHOVANEC: China's Official Numbers Don't Match Up With The REAL Numbers. Early last week, I went on Bloomberg to talk about China’s latest economic figures, and boy did I kick up a hornet’s nest. In a nutshell, I said that I was finding it harder and harder to reconcile China’s official CPI, GDP, and PMI numbers with what I was seeing and hearing on the ground. In my Bloomberg remarks, I made three core assertions: That the reported decrease in China’s consumer inflation rate (CPI) does not seem to accord with my own daily experience of rising prices in China; That there is reason to suspect the Chinese economy may be growing substantially below China’s reported real GDP growth rate of 8.1% for Q1, and may actually be in contraction (negative growth); and That Chinese companies I have been talking to are seeing flat performance (near zero growth) in Q1, compared to last year.

Zero Hedge:

• Israel's Key Energy Provider, Egypt, Cuts Off All Natural Gas Supplies.
• Europe's EFSF 'Firewall' Risk At 3 Month Highs, Accelerating At Fastest Rate In 6 Months. (graph)
  

CNBC:

• China Factory Activity Contracts Slightly. The HSBC Flash Purchasing Managers Index, the earliest indicator of China's industrial activity, recovered slightly to 49.1 in April from a final reading of 48.3 in March, but still remained below the level that signifies contracting economic activity for the sixth month running.
• Global Crisis Not Over, China Reforms to Go On: Wen. The global financial crisis is not over and technical innovation and investment will be key to sustaining what remains a "tortuous" recovery, Chinese Premier Wen Jiabao said on Sunday during a visit to Germany.
• After $14 Trillion Bailout, Global Recovery Still Uncertain. The amount of money thrown at rescuing the world economy since the Great Recession began is truly staggering, probably more than $14 trillion, and the financial spigots are still open.

Wall Street All-Stars:

• Indicator Update: Will the Fed Disappoint the Market?
  

IBD:

• Buyout Chatter Puts Watson Pharma(WPI) In The Spotlight.

NY Times:

• Prime-Time Ratings Bring Speculation of a Shift in Habits. It is the police procedural that has network executives scratching their heads this season: The Case of the Disappearing Viewers.

NY Post:

• It's a Marvel-ous Idea. Marvel Comics is implementing a first-of-its-kind digital feature that will allow readers access to new, single issues of their favorite superheroes’ adventures the same day they hit store shelves. By providing a download code inside the comic book for various tablet formats — an industry first — Marvel is giving consumers a reward for visiting the dusty old comic-book retailers while opening the eyes of the publishing world.
  

Washington Post:

• After Ouster of Bo Xilai, Questions Surround China's Security Chief. With Chinese politics roiled by the purge of Bo Xilai, a former provincial Communist Party chief, there are growing questions about whether the corruption and murder scandal that felled him might reach into the Party’s highest echelon to undercut an official considered Bo’s staunchest ally and defender. Zhou Yongkang, China’s top official in charge of the country’s internal security apparatus, is considered close to Bo, and was the most prominent backer of some of Bo’s most controversial measures in Chongqing. Those included Bo’s ferocious clampdown on organized crime, his social welfare policies and a campaign to revive “red” culture that many saw as a worrying throwback to China’s violent Cultural Revolution.

courier-journal.com:

• House Shoppers Find FHA Loans Cost More. Mortgages insured by the Federal Housing Administration — often called “FHA loans” — have long been an option for home buyers who don’t have a lot of cash for a down payment or whose credit is less than optimal. For that reason, FHA loans became vastly more popular after the implosion of the subprime mortgage market. But now these loans are getting more expensive, meaning buyers who get FHA-insured mortgages have less purchasing power when they go house shopping, according to local mortgage professionals.“It’s been a real challenge for some customers,” said Louisville loan officer Adam Hall, president of the Mortgage Bankers Association of Kentucky.

Rasmussen Reports:

• Daily Presidential Tracking Poll. The Rasmussen Reports daily Presidential Tracking Poll for Sunday shows that 26% of the nation's voters Strongly Approve of the way that Barack Obama is performing his role as president. Forty-two percent (42%) Strongly Disapprove, giving Obama a Presidential Approval Index rating of -16 (see trends).

USA Today:

• 50% of New College Graduates Are Jobless or Underemployed. The U.S. college class of 2012 is in for a rude welcome to the world of work. A weak labor market already has left half of young college graduates either jobless or underemployed in positions that don't fully use their skills and knowledge.

Reuters:

• Chinese Firm Suspected in Missile-Linked Sale to North Korea - U.S. Official. The United States believes a Chinese firm sold North Korea components for a missile transporter showcased in a military parade last weekend and will press Beijing to tighten enforcement of a U.N. ban on such military sales, a U.S. official said on Saturday.
• South Korean Central Bank Report Warns of Surge in Government Debt. South Korea's government debt could surge above 100 percent of the country's annual gross domestic product by the year 2030 from just a little more than 34 percent now, the country's central bank said in a report released on Sunday.
• Congress Presses Investigation of Secret Service Scandal. Two senior House of Representatives Republicans expressed confidence in the head of the U.S. Secret Service on Sunday despite the agency's Colombia prostitution scandal while a Senate committee chairman planned hearings into the matter. Senator Joseph Lieberman, an independent, said that the Homeland Security and Governmental Affairs Committee that he chairs will send specific questions to the Secret Service this week about the scandal before the panel holds public hearings. Other congressional committees also are investigating.
• Executives Still Too Worried for Deals - Ernst & Young.
  
• IMF Chief Seeks Fresh Funds for Poor Countries.
  

AP:

• Bahrain Opens Probe into Death in Protest Area. Bahraini opposition groups claimed Saturday that a man was killed during clashes with security forces, threatening to sharply escalate the Gulf nation's unrest as officials struggle under the world spotlight as hosts of the Formula One Grand Prix. Authorities opened an investigation in a bid to defuse tensions. At least 50 people have died in the unrest since February 2011 in the longest-running street battles of the Arab Spring. Bahrain's Shiite majority seeks to break the near monopoly on power by the ruling Sunni dynasty, which has close ties to the West.

Financial Times:

• US Hedge Funds Rules Relaxed by Accident. Earlier this month, President Obama signed into law the Jobs Act, short for Jumpstart Our Business Startups. This Act won bipartisan support because it purports to create jobs by making it easier for small businesses to raise capital. However, the Jobs Act will also significantly loosen the regulatory requirements on hedge funds – whether or not this was the intent of Congress.
• US Regulators Look to Ease Swaps Rules. US regulators are exploring ways to give large foreign banks and overseas subsidiaries of US lenders a reprieve from stringent new derivatives rules, potentially alleviating one of the biggest concerns facing global financial institutions.

The Telegraph:

• IMF Encourages Europe's Economic Suicide. China, Japan, America, the oil powers, and the rising economies of Latin America had a chance to pull Europe back from suicide through IMF pressure, but the world dropped the ball.
• Dutch Crisis Puts Eurozone Debt Rescue Plans at Risk. The Dutch prime minister will on Monday launch a bid to salvage his austerity budget amid political chaos that could cost the country its AAA credit rating and plunge Europe’s debt rescue plans into disarray.

WirtschaftsWoche:

• Ulrich Kater, chief economist at DekaBank Deutsche Girozentrale, said Germany faces inflation of as much as 4% in coming years, driven by domestic demand for services and higher rents, citing Kater.
  

The Citizen:

• Euro Banks Could Spark Crisis. According to the IMF’s latest Global Financial Stability Report (GFSR), one of the most pressing threats facing the global economy and the international financial system is the possibility of massive, synchronised deleveraging at European banks.
  

ynet:

• Israeli Army Chief: IDF Prepared for Iran Strike. IDF ready to attack Tehran’s nuclear facilities if needed, Chief of Staff Benny Gantz says; military constantly engaged in covert, high-risk operations beyond Israel’s borders, he says.
  

Weekend Recommendations

Barron's:

• Made positive comments on (DVN), (SPLS) and (LSI).
• Made negative comments on (FRAN).
  

Night Trading

• Asian indices are -.50% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 167.50 unch.
• Asia Pacific Sovereign CDS Index 134.75 +1.5 basis points.
• FTSE-100 futures -.31%.
  
• S&P 500 futures -.18%.
• NASDAQ 100 futures -.15%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (BEAV)/.62
• (WWW)/.55
• (STI)/.33
• (HAS)/.07
• (ETN)/.90
• (DHI)/.03
• (COP)/2.08
• (NFLX)/-.27
• (TXN)/.17
• (BXS)/.17
• (HMA)/.22
• (ILMN)/.32
• (EAT)/.56
  

Economic Releases

• None of note

Upcoming Splits

• (HEI) 5-for-4
  

Other Potential Market Movers

• The (NEM) Investor Day could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology and financial 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 week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week modestly lower on profit-taking, rising global growth fears, less US economic optimism, more shorting, rising Eurozone debt angst, less financial sector optimism and high energy prices. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 50% net long heading into the week.

Market Week in Review

S&P 500 1,378.53 +.60%*



The Weekly Wrap by Briefing.com.

*5-Day Change