Stocks Slightly Lower into Final Hour on Rising Eurozone Debt Angst, Less US Economic Optimism, Less Financial Sector Optimism, Global Growth Fears

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.98 +2.29%
  
• ISE Sentiment Index 127.0 +14.41%
  
• Total Put/Call 1.02 +13.33%
  
• NYSE Arms 1.38 +95.45%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 94.35 +.54%
  
• European Financial Sector CDS Index 238.16 +1.96%
  
• Western Europe Sovereign Debt CDS Index 275.25 unch.
  
• Emerging Market CDS Index 244.32 -1.14%
  
• 2-Year Swap Spread 28.5 +.75 basis point
  
• TED Spread 38.5 unch.
  
• 3-Month EUR/USD Cross-Currency Basis Swap -43.50 +1.5 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .08% unch.
  
• Yield Curve 165.0 -4 basis points
  
• China Import Iron Ore Spot $144.60/Metric Tonne -.55%
  
• Citi US Economic Surprise Index -20.40 -7.6 points
  
• 10-Year TIPS Spread 2.27 -1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating a -40 open in Japan
• DAX Futures: Indicating +27 open in Germany
  

Portfolio:

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

BOTTOM LINE: Today's overall market action is mildly bearish as the S&P 500 trades just slightly lower despite rising Eurozone debt angst, less financial sector optimism, high energy prices, rising global growth fears and less US economic optimism. On the positive side, HMO and Homebuilding shares are especially strong, rising more than +1.0%. Oil is falling -.82%, Gold is down -.5% and the UBS-Bloomberg Ag Spot Index is down -1.7%. Major Asian indices rose around +1.0% overnight, led by a +1.8% gain in China. The Russia sovereign cds is down -1.75% to 188.50 bps. On the negative side, Utility, Coal, Alt Energy, Energy, Oil Service, Computer, Disk Drive, Networking, I-Banking, Bank and Education shares are under pressure, falling more than -.75%. Financial shares have lagged throughout the day. As well, cyclical shares are relatively weak. Copper is falling -1.5%. Major European indices are falling around -1.5%, led lower by a -2.6% decline in Spain. Spanish equities are now down -20.2% ytd and are very close to their March 09 lows. The Bloomberg European Bank/Financial Services Index is falling -1.9%(-16.0% in less than 6 weeks). The Spain sovereign cds is gaining +1.6% to 482.02 bps, the Germany sovereign cds is gaining +.54% to 86.61 bps and the US sovereign cds is gaining +3.5% to 39.43 bps(+42.0% in less than 2 weeks). Moreover, the European Investment Grade CDS Index is gaining +2.3% to 139.86 bps and the Italian/German 10Y Yld Spread is rising +1.6% to 393.68 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. Moreover, the Citi US Economic Surprise Index has fallen back to early-Oct. levels. Lumber is -4.0% since its Dec. 29th high despite improving sentiment towards homebuilders and the broad equity rally ytd. 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 -50.0% from its Oct. 14th high and is now down around -35.0% ytd. China Iron Ore Spot has plunged -20.0% since Sept. 7th of last year. Shanghai Copper Inventories are still near their recent all-time high and have risen +625.0% ytd. China's March refined-copper imports fell -8.0% on the month. Singapore Electronics exports decelerated to a gain of +2.8% in March from a +23.3% gain in February. The 10Y T-Note continues to trade too well, despite the big surge in the US sovereign credit default swap and the euro currency still can't sustain a bounce. The Citi Eurozone Economic Surprise Index is dropping -18.6 points today to -27.9, which is the worst since mid-November of last year. US stocks remain extraordinarily resilient, however breadth and volume remain lackluster. I continue to believe there is a fairly high level of complacency among US investors 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 mixed-to-lower into the close from current levels on rising Eurozone debt angst, less US economic optimism, high energy prices, rising global growth fears, more shorting, profit-taking and less financial sector optimism.

Today's Headlines

Bloomberg:

• European Unemployment Rate Rises to Highest in Almost 15 Years. Euro-region unemployment rose to the highest in almost 15 years and manufacturing contracted for a ninth month, adding to signs the economy continues to weaken. The jobless rate in the 17-nation euro area increased to 10.9 percent in March from 10.8 percent in February, the European Union’s statistics office in Luxembourg said today. That’s the highest since April 1997, when the rate reached a record high, according to Bloomberg News data going back to 1990. A manufacturing gauge in the region fell to 45.9 in April from 47.7 in March, Markit Economics said. Spain had the region’s highest unemployment rate in March, at 24.1 percent, with Greece at 21.7 percent, the report showed.
• Spanish Stocks Plunge to Three-Year Low as Banks Tumble. Spanish stocks plunged, pushing the IBEX 35 Index (IBEX) to its lowest level in more than three years, as a selloff in banks sent the benchmark measure tumbling. Banco Santander SA (SAN), the country’s largest lender, lost more than 3 percent as Moody’s Investors Service prepared to concluded its review of the euro area’s banks. Sacyr Vallehermoso SA (SYV) dropped 4 percent as a report showed manufacturing in Spain contracted. Red Electrica Corp. slid 2.2 percent as Bolivia seized the company’s local assets. The IBEX 35 dropped 2.6 percent to 6,831.9 at the close in Madrid, its lowest level since March 2009. The gauge has sunk 20 percent this year, the worst performance of 24 developed markets tracked by Bloomberg, as the Spanish economy entered its second recession since 2008. “The euro-zone debt crisis has become center stage once more with Spain the focus of attention,” said Ted Scott, director of global strategy at F&C Asset Management in London, in a note to clients. Spanish bond yields “reflect the diminishing effect of the European Central Bank’s liquidity program and increasing concerns about the Spanish economy and especially its banking sector.” Spain’s benchmark 10-year bonds fell today, pushing yields eight basis points higher to 5.85 percent.
• Hollande Envoys Said to Brief ECB Officials on His Economic Plan. Aides to French Socialist presidential candidate Francois Hollande have had contacts with top European Central Bank officials to brief monetary policy makers on his economic plans, four advisers to Hollande said. Hollande’s team has spoken to at least two members of the ECB’s executive board, said the advisers, who declined to be named because the discussions were confidential. An ECB spokeswoman denied any such contacts have taken place. She spoke on condition of anonymity, in line with ECB policy. The meetings and telephone conversations, which began last year and have carried on as Hollande’s campaign progressed, underscore concern that a change in government in Europe’s second-largest economy risks upsetting efforts to quell the region’s financial crisis.
• Sovereign, Company Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to BNP Paribas SA. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments climbed 3.5 basis points to 277.5 at 9:15 a.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings jumped 12.5 basis points to 640.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose two to 138.5. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased two basis points to 236 and the subordinated index rose 0.5 to 392.5.
• Madness in Spain Lingers as Ireland Chases Recovery. From atop the stone walls of Avila, Spain, a medieval city an hour’s drive northwest of Madrid, beyond the parking lots and empty playgrounds and thousands of vacant new apartments, a construction crane can be seen moving on the horizon as building continues. “Avila isn’t an exception,” said Jesus Encinar, co- founder of Madrid-based Idealista, Spain’s largest property website, and an Avila native. “It’s a small-scale example of the madness that gripped the whole real estate industry.” In the stages of death of a real estate boom, Spain is still in denial.
• ECB Immunity on Greek Debt Blunts Bond-Buying Tool: Euro Credit. European Central Bank President Mario Draghi’s insistence on shielding his institution from losses on Greek debt risks blunting his crisis-fighting tools. Investors forgave about 100 billion euros ($132 billion) of Greek debt in March in the biggest sovereign restructuring ever, swapping existing bonds for new securities with clauses making future overhauls easier. The ECB’s holdings, however, were excluded from both the losses and the new terms.
• Payroll Survey Signals U.S. Jobs Slowing as Factory Orders Drop: Economy. Companies in the U.S. added fewer workers last month, according to data from a private survey, pointing to a cooling in the job market, as the Commerce Department also reported a decline in factory orders in March. Private employment increased by 119,000, the smallest gain in seven months, after rising by 201,000 in March, Roseland, New Jersey-based ADP Employer Services said. Orders to factories fell 1.5 percent following a 1.1 percent gain in February.
• Oil Drops From Five-Week High on U.S., European Jobs. Oil fell after the U.S. Energy Department reported that crude inventories surged to the highest level in more than 21 years and production and imports climbed. Futures dropped as much as 1.2 percent after the department said supplies rose 2.84 million barrels to 375.9 million last week, the most since September 1990. Output increased 8,000 barrels a day to 6.12 million, the highest level since November 1999. Crude also decreased as U.S. employers added fewer jobs than forecast in April and factory orders decreased in March. Crude oil for June delivery fell 78 cents, or 0.7 percent, to $105.38 a barrel at 12:39 p.m. on the New York Mercantile Exchange. Oil traded at $105.54 a barrel before release of the inventory report at 10:30 a.m. The price dropped as low as $104.91. Futures have declined 7.2 percent in the past year. Brent oil for June settlement dropped $1.28, or 1.1 percent, to $118.38 a barrel on the London-based ICE Futures Europe exchange.
• Wealthy Americans Renouncing US Citizenship Rises 700% in 4 Years on Tax Concerns. Rich Americans renouncing U.S. citizenship rose sevenfold since UBS AG (UBSN) whistle-blower Bradley Birkenfeld triggered a crackdown on tax evasion four years ago. About 1,780 expatriates gave up their nationality at U.S. embassies last year, up from 235 in 2008, according to Andy Sundberg, secretary of Geneva’s Overseas American Academy, citing figures from the government’s Federal Register. The embassy in Bern, the Swiss capital, redeployed staff to clear a backlog as Americans queued to relinquish their passports.
• Chinese Legal Activist Chen Leaves Beijing U.S. Embassy. Hours after the deal was announced, the Associated Press reported that Chen said by phone that he now wants to leave China with his family. Chen said a U.S. official relayed a threat by Chinese authorities to beat his wife to death if he stayed in the U.S. embassy, according to the AP. An American official, who spoke on condition of anonymity because of the sensitivity of the issue, denied that any U.S. official passed on such a threat.
• Dimon Cites ‘Give and Take’ After Bank Chiefs Meet at Fed. JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon said there was “give and take” when bank leaders met with Federal Reserve officials to discuss industry oversight in New York today. Dimon, who said “everything” was a potential topic as he and other CEOs entered the New York Fed’s offices, declined to elaborate on the talks as he left. Top executives were scheduled to meet with Fed Governor Daniel Tarullo today, four people familiar with the meeting said earlier this week.
• Egypt Clashes Kill 9; Presidential Hopefuls Suspend Campaign. Clashes between Egyptian protesters and unknown assailants left at least nine people dead, as the worst street violence in Cairo this year added to the unrest in the country three weeks before slated presidential elections. The violence that erupted around dawn near the Defense Ministry prompted two leading presidential candidates to announce they were suspending their campaigns in protest. Mohamed Mursi, who was fielded for the presidency by the Muslim Brotherhood’s Freedom and Justice Party, put the blame primarily on the ruling military.

Wall Street Journal:

• France Poll: Hollande 53.5%, Sarkozy 46.5% In 2nd Round - BVA. French Socialist Party presidential candidate Francois Hollande narrowed his lead over incumbent President Nicolas Sarkozy in the latest poll, released five days before the second round of presidential elections. The poll, published Tuesday and carried out April 30 and May 1 by BVA, shows 53.5% of potential voters would choose Hollande if elections were held now, while 46.5% of them would pick Sarkozy. Hollande lost one percentage point since the last poll under one week ago, while Sarkozy gained one percentage point. Among the voters who chose to support far-left candidate Jean-Luc Melenchon in the first round of elections, 87% said they would vote for Hollande in the second round, while only 4% plan to vote for Sarkozy, said Harris Interactive. As for supporters of far-right candidate Marine Le Pen and centrist candidate Francois Bayrou, Sarkozy was backed by 36% of Bayrou's supporters and 57% of Le Pen's, the poll showed. Hollande drew 36% of Bayrou's supporters and 21% of Le Pen's. In the first round of French presidential elections held last Sunday, Hollande garnered 28.6% of votes, while Sarkozy got 27.2%. They move on to the next round on May 6. Le Pen came in third with 17.9%, Melenchon drew 11.1% and Bayrou 9.1%. Five other candidates shared the remaining votes.
• Honeywell(HON) Chairman: Foreign Firms Scared of India Now. The chairman of Honeywell International Inc. warned that India's labyrinthine bureaucracy and aggressive regulation and tax policies are spooking foreign investors and will divert investment to China and elsewhere. "Foreign companies are starting to become scared here," said David M. Cote, 59 years old, in an interview in India's financial capital. "They are starting to say, 'What am I doing here?'"
• Iran's Oil Production at Lowest Level in 20 Years - Consultant.
• Microchip Tech(MCHP) to Buy Standard Microsystems(SMSC) for $939M. Microchip Technology Inc. (MCHP) agreed to acquire semiconductor-equipment and circuit maker Standard Microsystems Corp. (SMSC) for about $939 million as the analog chip company seeks to expand into the automotive, industrial and other markets.
• U.S. Charges 107 People With Medicare Fraud. Federal authorities charged 107 doctors, nurses and social workers in seven cities with Medicare fraud Tuesday in a nationwide crackdown on alleged scams that bilked the taxpayer-funded program of $452 million—the highest dollar amount in a single Medicare bust in U.S. history.
  

MarketWatch:

• Retailers' Sales Expected to Slow in April. After warmer weather and the timing of Easter boosted retailers’ sales in March, colder weather along the East Coast toward the end of the month likely slowed sales in April, analysts said. Ahead of retailers’ same-store sales reports on Thursday, analysts expect sales in April to rise 1.5%. That compares with an 8.7% gain in the year-earlier period, Retail Metrics data showed.

CNBC.com:

• Legendary Energy Trader John Arnold to Retire. John Arnold, the billionaire manager of the Houston hedge fund Centaurus Advisors, told investors and employees Tuesday that he plans to retire, according to people familiar with the matter. The energy trader, who is in his late 30s, told associates he plans to devote his time to philanthropic pursuits, said one person familiar with the matter, and that he’ll return assets to investors.
• What's This 'Fiscal Cliff' Anyway? Do I Need to Worry? "Fiscal cliff" is a term you'll be hearing much more often between now and the end of the year. That's when a half-trillion dollars worth of tax cuts and spending boosts go by the wayside, possibly dragging the U.S. economy into the abyss of another recession.

Business Insider:

• 10 Hedge Funds Losing Big On Chesapeake Energy(CHK).
• 15 Stocks That Traders Are Shorting Like Crazy.
  

Zero Hedge:

• China's Unsustainable PMI. (graph)
• Hugh Hendry on Europe "You Can't Make Up How Bad It Is".
• Global April PMI Summary. (table)
• Europe's Scariest Chart Just Got Scarier-er. (graph)

Reuters:

• Copper Slips on Weak Euro, China Demand Concerns.
• Special Report: Inside Chesapeake(CHK), CEO Ran $200 Million Hedge Fund. As chairman and CEO of Chesapeake Energy Corp, Aubrey McClendon has been a powerhouse in the vast U.S. natural gas market, directing the company's multibillion dollar energy-trading operation and setting output targets for America's second-largest producer. Behind the scenes, a Reuters investigation has found, McClendon also ran a lucrative business on the side: a $200 million hedge fund that traded in the same commodities Chesapeake produces.
• Spain Sounding Out Investment Banks On Crisis Options. Spain is sounding out investment banks including Credit Suisse, Goldman Sachs and UBS as it seeks a credible fix for its banks roiled by a collapse in real estate prices and now threatening the creditworthiness of Spain itself, sources familiar with the matter said.
• Fed's Lacker: High Inflation Target "Dangerous". It would be "very dangerous" for the Federal Reserve to adopt a higher inflation target to spur growth in the hopes that it could bring inflation down later when it needed to, a top Federal Reserve official said on Wednesday. "I don't think it would be easy to temporarily adopt a higher target and then successfully return to a lower inflation," Richmond Federal Reserve President Jeffrey Lacker told reporters after a speech. "In fact, I think it would be very dangerous."

Financial Times:

• Playing the CDS-Bomb Basis. After holding our heads in our hands and getting over a wave of nausea, FT Alphaville looked up and realised that yes, we really were looking at a trade idea involving credit default swaps that takes a view on the likelihood of an Israeli missile strike on Iran. It’s a ugly world.

Telegraph:

• The Eurozone Crisis is Back With a Bang. The data on the eurozone labour market and manufacturing sector as a whole is appalling, with the recession now manifestly metastasising out from the euro area periphery to the core. Even the German unemployment rate is now rising.
• Debt Crisis: Live. Poor manufacturing data from Italy, Spain, France and Germany erodes early gains on European markets, while eurozone unemployment hits a record high of 10.9pc.

Shanghai Daily:

• Home Buyers in Short Supply as Sales Decline 23.5%. HOME sales fell in Shanghai last month, according to the latest market research. Sales of new homes, excluding government-funded affordable housing, dropped 23.5 percent from March to 610,900 square meters in April, ending a two-month rally since February, according to a Shanghai Deovolente Realty Co report. New homes were selling at an average of 22,566 yuan (US$3,600) per square meter, an increase of 2.3 percent from March. "Purchases of new homes costing less than 20,000 yuan per square meter fell nearly 30 percent from March while those with a price tag of between 20,000 yuan and 50,000 yuan a square meter only climbed about 10 percent, giving rise to a quite notable decrease in volume," said Lu Qilin, a researcher at Deovolente.

Bear Radar

Style Underperformer:

• Large-Cap Value -.91%

Sector Underperformers:

• 1) Coal -4.21% 2) I-Banking -1.63% 3) Networking -1.53%

Stocks Falling on Unusual Volume:

• CHK, INT, DB, COP, E, CEVA, NVDA, ALK, LPLA, UBNT, KEYN, OTEX, OPEN, CAVM, PEET, CGNX, CTCT, VMED, IGTE, RIMM, ARUN, RRD, TRS, FARO, WBMD, NTAP, FISV, HSC, MSCI, CLX, UNM, CLH, AGN, CTCT, RBC, WXS, RATE and PLT
  

Stocks With Unusual Put Option Activity:

• 1) PLX 2) CTL 3) NTAP 4) PPO 5) PCYC
  

Stocks With Most Negative News Mentions:

• 1) UBNT 2) EQT 3) HRS 4) CHK 5) OPEN
  

Charts:

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

Bull Radar

Style Outperformer:

• Mid-Cap Growth -.33%

Sector Outperformers:

• 1) HMOs +1.77% 2) Homebuilders +1.66% 3) Hospitals +1.09%

Stocks Rising on Unusual Volume:

• SMSC, WWWW, ASNA, AZPN, TRIP, IACI, CNW, AEO, VSH, DGI, ENR, AGP, KND, RCG, WCG, WWW, TRLG and TWTC
  

Stocks With Unusual Call Option Activity:

• 1) AET 2) PLX 3) OPEN 4) ALL 5) GRMN
  

Stocks With Most Positive News Mentions:

• 1) PEP 2) WWW 3) BA 4) LMT 5) AEO
  

Charts:

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

Wednesday Watch

Evening Headlines
Bloomberg:

• Madness in Spain Lingers as Ireland Chases Recovery: Mortgages. From atop the stone walls of Avila, Spain, a medieval city an hour's drive northwest of Madrid, beyond the parking lots and empty playgrounds and thousands of vacant new apartments, a construction crane can be seen moving on the horizon as building continues. "Avila isn't an exception," said Jesus Encinar, co-founder of Madrid-based Idealista, Spain's largest property website, and an Avila native. "It's a small-scale example of the madness that gripped the whole real estate industry." In the stages of death of a real estate boom, Spain is still in denial.
• Europe Puts at Record Versus S&P 500 Before Elections: Options. Traders have never paid so much to protect against European stock losses relative to the U.S. as investors prepare for weekend elections in France and Greece. Implied volatility for three-month contracts closest to the level of the Euro Stoxx 50 (SX5E) Index was 54 percent higher yesterday than the Standard & Poor’s 500 Index, according to data compiled by Bloomberg. The gap widened from a 2012 low of 18 percent on March 13, the data show. Investors are insuring equities on concern the elections will undermine plans to contain the debt crisis. French voters pick a president on May 6, the same day as Greece holds parliamentary elections. Francois Hollande, who topped Nicolas Sarkozy in the first round of French voting, has criticized the president’s attempt with German Chancellor Angela Merkel to quell the crisis through budget cuts.
  
• ECB Immunity on Greek Debt Blunts Bond-Buying Tool: Euro Credit. European Central Bank President Mario Draghi's insistence on shielding his institution from losses on Greek debt risks blunting his crisis-fighting tools.
  
• Goldman(GS) Says Rule Curbing Counterparty Links Risks Jobs. Goldman Sachs Group Inc. (GS) said a proposed Federal Reserve rule seeking to limit links between banks could cut U.S. economic growth by as much as 0.4 percentage point and eliminate as many as 300,000 jobs. The estimate, the most specific so far in reaction to the Fed’s proposed rule, was based on New York-based Goldman Sachs’s own research and assessment of how it would affect the corporate debt market, according to an April 30 letter to the Fed that was made public yesterday. “The impact on the corporate bond market alone could drive the elimination of 150,000 to 300,000 American jobs,” wrote Goldman Sachs Chief Risk Officer Craig W. Broderick. “Smaller companies that lack access to alternative sources of capital -- and that drive job creation -- would be hardest hit.”
• Three Fed Policy Makers See No Need to Ease. Three voting members of the Federal Open Market Committee said they don’t see a need to ease policy further as the U.S. economy maintains its expansion. Federal Reserve Bank of Richmond President Jeffrey Lacker said in Washington that more monetary stimulus risks stoking inflation while doing little to strengthen the recovery. San Francisco’s John Williams said the outlook he expects doesn’t warrant more bond buying, and Atlanta’s Dennis Lockhart repeated that he’s skeptical of the benefits of such action.

Wall Street Journal:

• Mexico Balks at Fed Proposal. Mexico joined Wall Street firms in criticizing a Federal Reserve proposal to limit the exposure of banks to individual companies, governments and other banks. Bank of Mexico governor Agustín Carstens knocked the Fed's decision to exempt Treasurys but not the debt of other governments from financial-firm exposure limits, and he urged the U.S. central bank to revisit its decision in a letter dated April 26 that the Fed posted on its website Tuesday.
• The Big Doubt Over Facebook(FB). Facebook Inc. has built a $3 billion-a-year advertising business by convincing marketers to buy new forms of advertising designed to create buzz around their brands. But some advertisers with big spending accounts are wondering whether they're getting their money's worth.
• White House Efforts to Relax Gun Exports Face Resistance. U.S. homeland-security and law-enforcement agencies have objected to Obama administration proposals to relax export restrictions on high-powered firearms, threatening a centerpiece of the president's trade and national-security agenda. The agencies, in internal memos viewed by The Wall Street Journal, warn the changes could help arm drug cartels and terrorists and make it harder for the U.S. to crack down on gun-trafficking.
• Blahous and Capretta: Exposing the Medicare Double Count. The same money can't be spent twice. ObamaCare tries to do precisely that, and the government will have to borrow the difference.

Business Insider:

• INSIDE PINTEREST: An Overnight Success Four Years In The Making.
• Occupy Wall Street Completely Took Over Union Square In A Rally Thousands Of Protesters Strong.
• China HSBC Manufacturing PMI Climbs To 49.3, Employment Down At Fastest Rate In 3 Years.
• JIM CHANOS: 'Natural Gas Is Undergoing A Revolution In The US'.
• There's More And More Evidence That Spain Is The New Greece.

Zero Hedge:

• Total US Debt Soars To 101.5% Of GDP. (graph) There is nothing quite like a $70 billion debt auction settlement at the last day of a month to bring total US debt to a record $15.692 trillion, which happens to be just $600 billion shy of the $16.394 trillion debt ceiling.
• A Different Way of Looking At China.
  

CNBC:

• Cut Tax Rate, Save Small Business: Fiorina. The U.S. marginal tax rate is the highest in the world, and that is putting a big hit on small business, former Hewlett-Packard CEO Carly Fiorina said Tuesday. Small businesses are what drive the U.S. economy and provide jobs, the CNBC contributor told Closing Bell. "I would both lower the marginal rate and close the loopholes. It’s actually small business I’m worried about, not big business," she said of the tax rate on the last dollar of income earned. While big business can "put their jobs and factories anywhere" to avoid paying high U.S. taxes, "net new job creation comes from small business, not large business" and more small businesses have been failing and fewer starting than at any time in the last 40 years," she said.

IBD:

• Lululemon(LULU) Stretches To New Heights With Yoga Apparel.

Reuters:

• International business weighs on OpenTable(OPEN) revenue. OpenTable Inc forecast full-year revenue that fell short of Wall Street estimates, as the online restaurant reservation services provider's international business takes longer than expected to integrate the recent acquisition of a rival. Shares of the company were down 16 percent in extended trading after closing at $43.68 on Tuesday on the Nasdaq.
• Broadcom(BRCM) outlook for profit margin disappoints. Chip maker Broadcom Corp said its gross profit margin for the current quarter would drop from the first quarter because of acquisition-related costs, and its shares fell as much as 1.9 percent in after-hours trade.
• Sturm Ruger(RGR) profit doubles on new gun launches. Gun maker Sturm Ruger and Co Inc's first-quarter profit nearly doubled as sales of its rifles and guns were boosted by strong demand for new products, sending its shares up 4 percent in extended trading.

Financial Times:

• Commodities Prices Dent Company Profits. High oil and commodities prices are starting to dent the profitability of the world’s largest industrial and consumer goods companies, with businesses from Procter & Gamble in the US to BASF in Europe warning of a strong headwind. As companies release their results for the first quarter, executives are warning that rising raw materials prices, particularly oil, are now a problem.

Telegraph:

• Electoral silence on France's slow economic decline. France's economy has weathered the global crisis of the last five years deceptively well, shielded by a Leviathan state and the postponement of hard choices. Yet the underlying decline that began 30 years ago has gathered speed. France's share of eurozone exports has dropped from 17pc to 13pc since 2000.
• Europe needs creativity not billions of euros, says German Chancellor Angela Merkel. Angela Merkel has said Europe needs "political courage and creativity rather than billions of euros" in a thinly disguised rejection of Francois Hollande's pledge to re-write the fiscal pact if he wins the French presidential election on Sunday.

China Securities Journal:

• China New Lending May Have Fallen 30%. New yuan loans may total 700b yuan last month vs 1.01t yuan in March. Th big four banks extended only 101.7b yuan of new loans as of April 25. The big four banks lost >1t yuan of deposits in the first two weeks of April. April new lending was restricted by government loan quotas and a slowing economy.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are +.25% to +1.5% on average.
• Asia Ex-Japan Investment Grade CDS Index 163.0 -2.0 basis points.
  
• Asia Pacific Sovereign CDS Index 135.50 -1.0 basis point.
  
• FTSE-100 futures -.25%.
  
• S&P 500 futures +.13%.
  
• NASDAQ 100 futures +.22%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (CBE)/1.00
• (AB)/.24
• (BZH)/-.42
• (ENR)/1.08
• (IACI)/.46
• (WXS)/.91
• (CVS)/.63
• (RDC)/.34
• (TWX)/.64
• (WCG)/.51
• (CVD)/.60
• (ALL)/1.12
• (WFM)/.59
• (IPI)/.29
• (GMCR)./64
• (HTZ)/.00
• (ONXX)/-.78
• (SYMC)/.38
• (WLT)/.80
• (V)/1.51
• (APKT)/.17
• (HIG)/.91
• (TSO)/.27
• (MRO)/.87
• (MA)/5.30
• (AGN)/.87
• (CLX)/1.03
• (CMCSA)/.42
• (DVN)/1.43
• (SPW)/.24
• (SKYW)/-.16
• (ICE)/2.02

Economic Releases
8:15 am EST

• ADP Employment Change for April is estimated to fall to 170K versus 209K in March.
  

10:00 am EST

• Factory Orders for March are estimated to fall -1.7% versus a +1.3% gain in February.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,500,000 barrels versus a +3,978,000 barrel gain the prior week. Distillate supplies are estimated to fall by -350,000 barrels versus a -3,052,000 decline the prior week. Gasoline inventories are estimated to fall by -1,500,000 barrels versus a -2,235,000 decline the prior week. Finally, Refinery Utilization is estimated to rise by .4% versus a +.1% gain the prior week.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Lacker speaking, Fed's Tarullo speaking, ISM New York and the weekly MBA mortgage applications report could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted 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 Rising into Final Hour on More US Economic Optimism, Short-Covering, Investor Performance Angst

Broad Market Tone:

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

Equity Investor Angst:

• VIX 16.26 -5.19%
  
• ISE Sentiment Index 142.0 +31.48%
  
• Total Put/Call .85 -3.41%
  
• NYSE Arms .77 -36.54%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 93.55 -1.29%
  
• European Financial Sector CDS Index 233.63 -3.34%
  
• Western Europe Sovereign Debt CDS Index 275.25 unch.
  
• Emerging Market CDS Index 244.59 -2.73%
  
• 2-Year Swap Spread 27.75 -1.25 basis points
  
• TED Spread 38.5 +1.0 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -45.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .08% -1 basis point
  
• Yield Curve 169.0 +3 basis points
  
• China Import Iron Ore Spot $145.40/Metric Tonne unch.
  
• Citi US Economic Surprise Index -12.80 +1.2 points
  
• 10-Year TIPS Spread 2.28 +2 basis points
  

Overseas Futures:

• Nikkei Futures: Indicating a +54 open in Japan
• DAX Futures: Indicating +11 open in Germany
  

Portfolio:

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