Bear Radar

Style Underperformer:

• Small-Cap Growth -1.42%

Sector Underperformers:

• 1) HMOs -4.80% 2) Gold & Silver -4.02% 3) Construction -2.70%

Stocks Falling on Unusual Volume:

• PBH, TSU, STAA, NZT, SFY, CLR, PAAS, CDE, SIMO, IPGP, FCX, PBR, GMCR, TRS, VCLK, EXLS, CBOU, NEWP, RSTI, OTEX, LAMR, SKUL, JIVE, FSYS, MANT, ACFN, DWA, ANSS, NSIT, ZAGG, SHOO, GLNG, VRX, HNT, WTW, HLF, XSD, AIN, PRU, GIL, CNW, NUS, HOTT, CW, ALR, VMED, V, SIL, VC, MASI, ONXX, HUM, JDSU, MGM, H, ARO, CXO, BKS, AVD, CHKM, CXW, MD, GLF, BKD, MUR, ARUN, HSC, HOS, ZIP, HEES, RGR, AEL, CLR, BKE, CVC, ACM, THO and CACI
  

Stocks With Unusual Put Option Activity:

• 1) PRU 2) SPLS 3) SU 4) ACI 5) COST
  

Stocks With Most Negative News Mentions:

• 1) ATML 2) VCLK 3) JDSU 4) HNT 5) RIMM
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth -.20%

Sector Outperformers:

• 1) Coal +1.91% 2) Road & Rail +.62% 3) Airlines +.27%

Stocks Rising on Unusual Volume:

• ALL, GEOY, LCC, LVLT, BEAM, UPL, PXP, SYNC, Z, WFM, CNQR, MGAM, LQDT, MDAS, AAWW, ASNA, SNN, TDC, SNI, WLT, VHC, SHO, MSCI, MDAS and PWR
  

Stocks With Unusual Call Option Activity:

• 1) PXP 2) GMCR 3) WFM 4) PRU 5) SYY
  

Stocks With Most Positive News Mentions:

• 1) TSCO 2) M 3) TJX 4) IACI 5) ROST
  

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• French Candidates Clash on How to Emulate Germany to Create Jobs. French President Nicolas Sarkozy and Socialist Francois Hollande clashed in their only campaign debate over everything from how to emulate German employment gains and euro bonds to the role of the European Central Bank. In heated exchanges, marked by the candidates calling each other a liar, Sarkozy and Hollande elaborated on differences over how to rekindle growth with joblessness in France at the highest level in 12 years. “Unemployment has increased,” Hollande said to Sarkozy. “In Germany they make room for social partners, unlike in France.” For his part, Sarkozy said, “after criticizing Germany, it suddenly inspires you.” He said Germany raised sales taxes to help finance lower social charges and unions backed a balanced budget rule that Hollande opposes. The war of words between the two candidates came as Sarkozy fought for his last chance to turn the tide against Hollande before the May 6 runoff. The challenger led with 53.5 percent to 46.5 percent, according to a survey of voting intentions published by BVA today. There was no margin of error published.
• Greeks Reveal Euro or No in First Election Since Downturn. “This crisis has meant a 180-degree turn, a somersault in everyone’s lives, old, young, rich, poor,” says Paschia, 35, who will vote for the anti-immigrant Golden Dawn party instead of the two main parties of Pasok or New Democracy on May 6. “We need new, different voices in parliament.” For the first time since their country became the byword for the European debt crisis, Greeks will have their say at the ballot box rather than in street protests about the economic pain they are enduring for a third successive year in the battle to retain membership of the euro. Faced with the prospect of more budget cuts to keep international funds flowing, many voters are backing small anti- bailout parties that promise an end to austerity measures. While polls show most people don’t want a return to the drachma, opponents warn that could tilt the balance in favor of rejecting the bailout terms and threaten Greece’s membership in the euro.
  
• Traders Tap German Default Swaps at Record Pace: Credit Markets. Credit traders are accumulating protection on Germany's debt at a record pace, with yields on the nation's bonds at all-time lows and speculation rising that it will bear a greater burden toward resolving Europe's sovereign-debt crisis. The net amount of credit-default swaps outstanding on German bunds surged by $671 million last week to $19.8 billion, just shy of the $19.9 billion peak on Nov. 18, and poised to surpass Italy for the first time, according to the Depository Trust & Clearing Corp.
• Merkel Is Cast as Thatcher’s Austerity Goddess. Three decades ago, U.K. Prime Minister Margaret Thatcher was confronted with a nation bordering on irrelevance, a stagnant economy and a set of entrenched beliefs about the relationship between government and the people. Thatcher faced down striking coal miners and forced through a series of free-market reforms that unshackled Britain’s economy and made it vibrant once again. To the chorus of accusations that she was killing the economy, she replied: “There is no alternative.”
• New Europe Ports Seen Unprofitable With Slump Deepening: Freight. Europe’s top container ports face a glut in capacity that’s set to crimp profit margins as new terminals ordered prior to the 2008 slump open for business. Harbors in northern Europe including Antwerp, Hamburg and Rotterdam, the continent’s top three, will increase annual capacity 21 percent to 62.2 million standard 20-foot containers by 2015, according to data compiled by M.M. Warburg & Co.
• EU Ministers Fail to Reach Deal on Bank Capital Rules. European Union finance ministers failed to reach an agreement to toughen bank capital rules in the face of British resistance and now aim for a deal at their next meeting on May 15.
• Chen in Reversal Seeks to Leave China, Criticizes U.S. Officials. Chinese legal activist Chen Guangcheng is being treated in a Beijing hospital after leaving the U.S. embassy under a deal that quickly started to unravel and now threatens to derail annual cabinet-level talks between the two nations. Chen said that, fearing for the safety of his family, he changed his mind about staying in China under the U.S.-brokered deal and now wants to leave with his family, according to interviews with the Associated Press and CNN. He told CNN that felt pressure to leave the embassy, where he was given refuge, and he appealed for help from U.S. Secretary of State Hillary Clinton, who is in Beijing for the China talks. "The embassy kept lobbying me to leave and promised to be with me at the hospital," he told CNN, according to a transcript. "But this afternoon soon after we got here, they were all gone. I'm very disappointed at the U.S. government." Chen's criticism may open President Barack Obama to attacks from Republicans and human rights advocates for failing to support a leading Chinese rights activist.
• Chesapeake(CHK) Bonds Drop After Cash-Flow Estimates Are Cut. The cost to protect against losses on the debt of Chesapeake Energy Corp. (CHK) (CHK) jumped to the highest since September 2009 as the driller, which reported an unexpected first-quarter loss, said it may run out of money next year. Credit-default swaps (CHK) on the company jumped 3.3 percentage points to 7.4 percent upfront as of about 12:30 p.m. in New York, according to CMA, which is owned by CME Group Inc. The driller’s $1.3 billion of 6.775 percent bonds due in March 2019 dropped by 4.1 cents to 94.9 cents on the dollar at 12:20 p.m., the lowest level on record, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
• Obama’s Afghan Partnership Puts Symbolism Over Substance. Perhaps the biggest surprise of President Barack Obama’s appearance in Kabul, Afghanistan, on Tuesday wasn’t the trip itself, but his use of the occasion to make a head-scratching speech and sign a strategic partnership accord that raises more questions than it answers. “Over the last three years, the tide has turned,” the president said. “We broke the Taliban’s momentum.” This triumphant note jars against a Pentagon report released this week, which warned that “the insurgency remains a resilient and determined enemy and will likely attempt to regain lost ground and influence this spring and summer.” Obama can be forgiven for wanting to put the best spin on the situation to Americans, but the Afghans present were probably not convinced about the tide’s turning. Civilian casualties have risen in the last year, and within hours of Obama’s departure, a suicide attack in Kabul killed at least seven.
• Dimon Meets Tarullo as Banks Lobby Fed on Softer Rules. JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon led Wall Street bosses in a closed-door meeting to personally lobby Federal Reserve officials about softening proposed reforms that might crimp their profits. The contingent, which included Bank of America Corp. (BAC)’s Brian T. Moynihan, 52, and Goldman Sachs Group Inc. (GS)’s Lloyd C. Blankfein, 57, pressed the Fed on rules they said would overstate trading risks and harm financial markets, the central bank said today in a statement. They also discussed what they see as flaws in Fed stress tests designed to gauge the strength of the nation’s largest lenders.
• Wells Fargo(WFC) Dominates Home Lending as BofA Retreats: Mortgages. Wells Fargo & Co., already the largest U.S. home lender, won the biggest market share ever recorded as competitors led by Bank of America Corp. pulled back after suffering more than $65 billion in combined mortgage losses. Wells Fargo made 33.9 percent of the $385 billion of mortgages originated in the first quarter, up from 30.1 percent in the preceding three months, according to Inside Mortgage Finance. That’s more than triple the share of the closest competitor, JPMorgan Chase & Co., with 10.6 percent. U.S. Bancorp moved into third place from fifth, with 5.2 percent, ahead of Bank of America, with 4.2 percent.
• Whole Foods(WFM) Profit Jumps on Demand for Organic Foods. Whole Foods Market Inc. (WFM), the largest U.S. natural-goods grocer, posted second-quarter profit that topped analysts’ estimates on increased demand for organic foods. Net income climbed 31 percent to $117.7 million, or 64 cents a share, from $89.9 million, or 51 cents, a year earlier, the Austin, Texas-based company said today in a statement. Excluding some items, profit was 64 cents a share. Analysts projected 59 cents, the average of 23 estimates compiled by Bloomberg.

Wall Street Journal:

• As ECB Convenes, France Is the Wild Card. The European Central Bank meets Thursday in Barcelona, but changing Gallic winds may chill the proceedings. The ECB is unlikely to unveil further easing measures, despite Spain's slide into recession and Wednesday's report of record euro-zone joblessness, though it may open the door to future action. Annual euro-zone inflation is 2.6%, above the ECB's 2% target, limiting its room for maneuver for now.
• South Pacific Fund Has Sinking Feeling. The Northern Mariana Islands, a U.S. territory in the Pacific Ocean, managed to recover from brutal World War II battles, but its public pension fund couldn't recover from the financial crisis. The islands' retirement system on April 17 became the first U.S. public pension fund to seek bankruptcy protection.
• Visa(V) Profit Surges; Justice Probes Debit Strategy. The U.S. Justice Department is probing Visa Inc.'s (V) fee changes made in response to new federal regulations that affect debit-card processing, which are already eating into the card giant's dominant debit-market share.
• Carlyle Prices IPO at Lower Range. Facing pushback from some investors, private-equity company Carlyle Group reduced the price for its widely anticipated public offering, a possible sign of the skepticism some investors harbor toward the business.
• CNN Feels Heat on Ratings.
• What ObamaCare May Mean for Taxes. Bischoff: The Obama health-care law includes changes for next year -- unless the Supreme Court acts.
• Henninger: Memo to the Youth Vote. In 2008, he reeled them in with promises of hope and change. In 2012 he's offering cash, promising to protect 3.4% interest on their college loans. We're about to find out if it's true that when you're young, hope springs eternal.

MarketWatch:

• Asia Stocks Pull Back as Chinese Banks Slide.

Business Insider:

• The State Leading America's Wind Farm Charge Sits On An Ocean Of Oil.
• 'The Scream' Just Sold For A Record-Breaking $119 Million.
• Green Mountain(GMCR) Slashes Guidance and Shares Collapse.
  

Zero Hedge:

• 3 Likely Triggers Of The Next Recession.
• Name The Country: 101.5% Debt/GDP And... 1.7% Effective Interest Expense.
• US Complacency Near 9 Year High Versus Europe. (graphs)
  

CNBC:

• IRS Presence at OffshoreAlert Conference Criticized.
  

IBD:

• Dollar Tree(DLTR) Lures Shoppers With More Bang For The Buck.

NY Times:

• Progress Is Seen in Advancing a Final Volcker Rule. A major new rule that has drawn the ire of Wall Street is on track for completion sooner than some bankers had expected, dashing the hopes of financial industry lobbyists, who have pressed for a delay.

Reuters:

• ECB to Hold Fire in Crisis-Hit Spain. The European Central Bank will resist pressure to do more to fight the euro zone crisis when it meets in Barcelona on Thursday, holding fire despite calls to restart its bond-buying programme to shield austerity-hit Spain from further pain. Financial markets are clamouring for the ECB to step up its efforts to fight the two-year-old crisis by buying the sovereign bonds of Spain, which is in recession and has come under intense market pressure since loosening its deficit target for 2012. But ECB policymakers, decamping to the Catalonian capital this week, are more likely to pay homage to Spain's austerity drive than to signal any fresh policy action like restarting the bond-buy programme, or Securities Markets Programme (SMP). The bank has left the plan dormant for the last seven weeks despite a rise in Spain's yields to 6 percent. A break above that, to 7 percent, is considered an unsustainable price to pay for refinancing.
• CEOs rank Texas tops for business, California worst. Texas remains the top state for business and California still holds the title for the worst, according to an annual ranking of states by Chief Executive magazine released on Wednesday. Chief Executive each year surveys CEOs and asks them to grade states in which they do business. This year 650 responded, giving Texas high marks "foremost for its business-friendly tax and regulatory environment," a report on the survey and ranking said on the magazine's website. "Texas easily clinched the No. 1 rank, the eighth successive time it has done so," the report said. "California earns the dubious honor of being ranked dead last for the eighth consecutive year." California "appears to slip deeper into the ninth circle of business hell," the report said. "Each year, the evidence that businesses are leaving California or avoid locating there because of the high cost of doing business due to excessive state taxes and stringent regulations, grows." New York was ranked just ahead of California.

Financial Times:

• Pro-Gay Stance Cost Goldman(GS), Says Blankfein. Lloyd Blankfein told a group of Wall Street gay activists that Goldman Sachs had lost at least one client because of its stance in favour of gay marriage.

Telegraph:

• The Euro Crisis Just Got A Whole Lot Worse. With Europe plunging back into recession and unemployment soaring, Francois Hollande, the French presidential candidate, is calling for growth objectives to be reprioritised over the chemotherapy of austerity. Angela Merkel, the German Chancellor, has meanwhile continued to insist that on the contrary, Europe must persist with the hairshirt. What's needed is political courage and creativity, not more billions thrown away in fiscal stimulus. Stick with the programme, she urges, as the anti-austerity backlash reaches the point of outright political insurrection. Hollande and Merkel are, of course, both wrong. What Europe really needs is a return to free-floating sovereign currencies. Only then will Europe's seemingly interminable debt crisis be lastingly resolved. All the rest is just so much prancing around the goalposts, or an attempt to make the fundamentally unworkable somehow work.

China Daily:

• Housing Prices Decline by .7% in Big Cities in April. Average home prices in 100 Chinese cities fell 0.71 percent year-on-year in April, the first year-on-year drop since June 2011, the country's largest real estate website said on Wednesday. The prices fell 0.34 percent month-on-month, the eighth consecutive fall, according to the China Real Estate Index System, which is affiliated with SouFun Holdings Ltd. "That indicates a further cooling down in the country's real estate market amid persisting tightening measures," said He Tian, director of research at China Index Academy, a Beijing-based real estate research institute. "As property developers' cash flow further tightens, we believe property prices in key cities such as Beijing and Shanghai will slide 5 to 10 percent this year, while second- and third-tier cities may see a drop of more than 10 percent," He added.

China Business News:

• ICBC's Shanghai branches stopped giving 15% discounts on loans to first-home buyers from May, citing loan service agents.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.50% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 165.0 +2.0 basis points.
  
• Asia Pacific Sovereign CDS Index 134.75 -.75 basis point.
  
• FTSE-100 futures +.43%.
  
• S&P 500 futures -.04%.
  
• NASDAQ 100 futures -.05%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (SLE)/.25
• (ATK)/1.69
• (VIAB)/.89
• (CVC)/.18
• (COCO)/.16
• (EP)/.28
• (ANR)/-.06
• (HCA)/.97
• (GM)/.85
• (LEA)/1.20
• (CXW)
• (PWR)/.17
• (CI)/1.30
• (CAH)/.88
• (AMT)/.74
• (H)/.08
• (SEE)/.21
• (APA)/3.07
• (DNR)/.38
• (KFT)/.56
• (FLR)/.87
• (AIG)/1.13
• (MHK)/.55
• (CF)/4.95
• (CEC)/1.80
• (PSA)/1.42
• (DRIV)/.29
• (JOE)/-.02
• (WRC)/.93
• (FSLR)/.48
• (LNKD)/.09
• (WYNN)/1.42

Economic Releases
8:30 am EST

• Preliminary 1Q Non-farm Productivity is estimated to fall -.6% versus a +.9% gain in 4Q.
• Preliminary 1Q Unit Labor Costs are estimated to rise +2.7% versus a +2.8% gain in 4Q.
• Initial Jobless Claims are estimated to fall to 379K versus 388K the prior week.
• Continuing Claims are estimated to fall to 3311K versus 3315K prior.
  

10:00 am EST

• ISM Non-Manufacturing for April is estimated to fall to 55.3 versus 56.0 in March.

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Fed's Plosser speaking, Fed's Williams speaking, ECB rate decision, ECB's Draghi speaking, Challenger Job Cuts report for April, ICSC Chain Store Sales for April, RBC Consumer Outlook Index for May, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (TXN) investor meeting, (JBL) analyst meeting 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 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