Today's Headlines

Bloomberg:

• Greek Vote Escalates Crisis as Schaeuble Raises Euro-Exit. Greece’s decision to return to the ballot box in the search for a government unleashed a hazardous new phase in Europe’s debt crisis, with German Finance Minister Wolfgang Schaeuble calling the vote a referendum on whether the country stays in the euro. Post-election attempts to form a ruling coalition in Athens broke down today after nine days, sending Greeks back to the polls next month with surveys giving the lead to an anti-bailout party that would tear up the conditions attached to 240 billion euros ($307 billion) of aid. “If Greece -- and this is the will of the great majority - - wants to stay in the euro, then they have to accept the conditions,” Schaeuble told reporters at a meeting of European finance ministers in Brussels. “Otherwise it isn’t possible. No responsible candidate can hide that from the electorate.” The euro tumbled to a four-month low, European stocks dropped and investors sought the safety of German bonds amid speculation that Greece would be forced out and pull other countries with it, doing untold damage to the European financial system. The Greek quagmire raised the tension for a meeting in Berlin tonight between German Chancellor Angela Merkel, the dominant figure in euro crisis management, and Francois Hollande, who took office as French president today in the first power shift to the Socialists in France since 1981.
• Schaeuble Says Greek Program Unnegotiable, Help Possible. German Finance Minister Wolfgang Schaeuble said the adjustment program set up to stabilize Greece’s debt isn’t debatable and is not being negotiated though bilateral measures can be taken to help the country. Euro-region finance ministers meeting in Brussels yesterday didn’t discuss whether the program’s “architecture” can be changed, Schaeuble told reporters after European Union finance ministers met today. “The fundamental question the second program for Greece is about -- namely to spare Greece’s financial system, as a part of the common European monetary union, access to financial markets for some time and at the same time help it to return to financial markets at some point in time on the basis of sustainable growth -- is agreed and not negotiable in its economic parts, and isn’t being negotiated,” he said. “If we can help with additional, bilateral measures, that’s an entirely different question.”
• European Stocks Retreat as Greece Will Hold New Election. European stocks dropped for a second day, pushing the Stoxx Europe 600 Index to its lowest level since December, as Greece called a new election after the country’s politicians failed to form a government. Banks (SXXP) posted the biggest contribution to the Stoxx 600’s decline. Julius Baer Group Ltd. (BAER) plunged 6.1 percent, its biggest slide in almost eight months, as revenue from assets under management fell in the first four months of the year. The Stoxx 600 retreated 0.7 percent to 245.76 at the close in London, extending its drop from this year’s peak on March 16 to 9.8 percent.
• Sovereign, Corporate Bond Risk Rises, Credit-Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, reversing an earlier decline, 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 296.5 at 3:39 p.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings jumped 14.5 basis points to 730.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 3.5 to 172.5. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers was up seven basis points at 287.5 and the subordinated index was 9.5 higher at 473.5.
• Hungary Default Swaps Gain for 8th Day as Greece Calls Elections. Hungary’s cost of insuring against default on government debt gained for an eighth day and the forint dropped as Greece headed for new elections, raising concern that Europe’s debt crisis will escalate. The country’s five-year credit-default swaps rose 3 basis points to 553 basis points by 5 p.m. in Budapest, the longest rising streak since November, according to data compiled by Bloomberg. The currency of Hungary, the European Union’s most indebted eastern member, retreated 0.4 percent to 293.4 per euro. That means a 1.5 percent loss in the past three days, the most in a similar period since March 29. Hungary’s benchmark 10-year bonds dropped, lifting yields 4 basis points to 8.34 percent, the highest since April 24.
• Spanish Bond Slump Risks LCH Margin Increase: Chart of the Day. Spanish government bonds risk incurring higher trading costs at LCH Clearnet Ltd. as their performance relative to Europe's safest assets deteriorates. The difference in yield between Spanish 10-year bonds and a benchmark of AAA rated euro-region sovereign debt is approaching 450 bps for the first time since the shared currency was created. LCH, Europe's biggest clearing house, increased the cost of trading Irish and Portuguese bonds by 15% when yield spreads for those securities climbed to similar levels.
• EU Ministers Reach Deal To Boost Bank Capital. European Union finance ministers agreed on a plan to force banks to hold more capital in a deal that gives the U.K. full powers to implement its so-called Vickers banking agenda. U.K. Chancellor of the Exchequer George Osborne said at a meeting of EU finance ministers in Brussels he won assurances from other nations that the U.K. will be able to follow through on its banking agenda, which will force large retail banks to hold more capital than the minimum international standards. That broke a deadlock reached two weeks ago, when 16 hours of talks left ministers divided on whether countries would need to seek permission when imposing extra loss buffers.
• U.S. Retail Sales Cool After Warm-Weather Spree: Economy. Retail sales rose in April at the slowest pace of the year as Americans took a break from a shopping spree induced by unseasonably warm weather in prior months and an earlier Easter holiday. The 0.1 percent gain followed a 0.7 percent increase in March, Commerce Department figures showed today in Washington. The April advance matched the median forecast in a Bloomberg News survey.
• Manufacturing in NY Region Rises More Than Forecast. The Federal Reserve Bank of New York’s general economic index increased to 17.1 this month from 6.6 in April. The median estimate in a survey of Bloomberg economists called for an increase to 9.
• Homebuilder Confidence in U.S. Climbs. The National Association of Home Builders/Wells Fargo index of builder confidence rose to 29, the highest since May 2007, a report from the Washington-based group showed today. The gauge exceeded the highest projection in a Bloomberg News survey in which the median estimate was 26. Readings below 50 mean more respondents said conditions were poor.

Wall Street Journal:

• Boehner Wants Cuts to Offset Debt-Ceiling Increase. House Speaker John Boehner (R., Ohio) will demand Tuesday that any increase in the government's borrowing limit be accompanied by spending cuts and other budget changes of greater size, according to excerpts of his prepared remarks. His comments, to be delivered in the afternoon at a Washington "fiscal summit" organized by the Peter G. Peterson Foundation, mark one of the first salvos delivered by Republican leaders this year on the fiscal scramble that is expected to take place after the November elections.
• Justice Department Opens JPMorgan(JPM) Inquiry. The Justice Department has opened an inquiry into J.P. Morgan Chase & Co.'s $2 billion-plus trading loss, according to a person familiar with the matter.
• Lagarde: Outcome of Greece Euro Exit Could be 'Quite Messy'. The consequences of Greece leaving the euro zone would be difficult to assess, but the situation could easily degenerate into turmoil, the head of the International Monetary Fund said Tuesday. "The spillover effects, the chain of consequences that could result from that [Greek euro exit] are very difficult to assess," Christine Lagarde told news station France24 in an interview. "We can certainly assume that it would be quite messy."
• Greek Depositors Withdrew $898 Million From Banks Monday. Greek depositors withdrew €700 million ($898 million) from local banks Monday, the country's president said, as he warned that the situation facing Greece's lenders was very difficult.

MarketWatch:

• Mexico, Brazil Stocks Fall; Real Hits 3-Year Low. Major Latin American stock markets fell Tuesday, with benchmark indexes in Mexico and Brazil extending recent losses and touching their lowest levels in at least three months.

CNBC.com:

• Whale Watch: Why Copying Big Investors Is 'Dangerous'.
• As Investors Fawn Over Facebook(FB), Poll Finds User Distrust, Apathy.

Zero Hedge:

• A Greek Affair To Remember And Mr. Hollande's Opus.
• Euro-Dumpfest Continues as LTRO Banks Implode.
• Santelli Explains Why A Broke California "Likes" A Hot Facebook(FB) IPO.
• Complete April and YTD Hedge Fund Performance Summary.
  

NY Post:

• Obama's Gay Marriage Decision Helped Raise $21M for Presidential Run In Just Days

Reuters:

• Hedge Funds Eye Further Profits From JPMorgan(JPM) Losses. Hedge funds are holding out for further gains from their bets against JPMorgan's massive position in U.S. credit derivatives, racking up tidy profits from a lucrative trade that could cost the U.S. bank more than $3 billion. Managers - some of them ex-employees of the biggest U.S. bank - started betting in credit derivative markets, including on an index of credit default swaps against its constituents, during the first quarter, believing JPMorgan's huge positions had created dislocations in the market which would disappear over time. Some of those funds are sticking with their positions just as the bank tries to unwind its trades, industry insiders say.
• ECB and Banks Brace for "Blockupy" Protest Chaos. The European Central Bank plans to hold its mid-month policy meeting early, move staff out of its headquarters and shift a farewell event for one of its board members out of town, all to avoid clashes with anti-capitalist 'Blockupy' protesters. 'Blockupy' activists angry at the way the financial crisis is affecting ordinary people are set to demonstrate in central Frankfurt from Wednesday to Saturday and have made the ECB and its building their central target.
• Copper at 4-Month Low as EU Concerns Mount. Copper hit a four-month low on Tuesday, shrugging off upbeat German growth data, as other EU economies contracted, the euro fell and concerns over slower growth in China and a political stalemate in Greece kept prices in check. Benchmark copper on the London Metal Exchange closed at $7,760, from a close of $7,775 on Monday. Earlier, the metal used in power and construction hit a session low of $7,732 a metric ton (1.1023 tons), its lowest since January 12.
• Home Depot(HD) Sales Miss Wall St Estimates. Home Depot Inc posted quarterly sales that fell short of Wall Street's heightened expectations on Tuesday after demand slowed in April following a jump in home improvement projects spurred by an unusually warm winter.

Financial Times:

• The State of the Eurozone, Credit Edition. Have you been wondering how Greece’s “new” bonds are doing? As in, the ones that were given to all those debtholders when they finally agreed — or were voted into by collective action clauses — the restructuring in March. Well, here they are:

Telegraph:

• This is How the Euro Ends - Not With a Whimper But a Bang. With Greece unable to form a government and therefore now set on new elections, how's this going to pan out? Very badly, is the almost certain answer.
• Appetiser cost of Greek exit is €155bn for Germany, France: trillions for meat course. Eric Dor's team at the IESEG School of Management in Lille has put together a table on the direct costs to Germany and France if Greece is pushed out of the euro.

Independent.ie:

• Largest Banks in America Cut Exposure to Ireland by Up to $1Bn. SOME of the largest banks in the world have cut their exposure to Ireland by almost a billion dollars since the start of the year, as big investors move away from this country. Latest filings in the US show Goldman Sachs and Bank of America cut the amounts they have invested in Irish-related securities by at least $800m (€622m) between the end of last year and March 31; while JP Morgan's Irish investments are now so small they are bundled in with Greece and Portugal.

The Australian:

• China Growth 'has slowed to a walk'. TROUBLE is looming. Even in the few days since last week's federal budget, some of its basic assumptions, particularly about Chinese growth, are looking shaky. Heavy-hitting economists in Beijing are now worrying that China's growth has already slowed to a walking pace at best, well beyond the Chinese government's intention to calm down earlier runaway expansion. "It has been a nice ride for Australia, a fantastic ride," says Patrick Chovanec, associate professor at the School of Economics and Management at Tsinghua, one of China's top universities. "I wouldn't blame anyone for riding that wave. But it's starting to putter out. Australia has been growing out of China's bubble, and it wasn't sustainable . . . we're starting to see what that looks like." A growing number of economists are stating that the 8.1 per cent year-on-year growth China's National Bureau of Statistics announced for the first quarter of this year was suspiciously rosy, even by the generally unreliable standards often ascribed to those statistics. The reason for widespread questioning about the 8.1 per cent to 7.4 per cent growth figure is the unusually wide range of other data that points to a much slower pace. These include electricity output rising just 0.7 per cent last month, when imports grew only 0.3 per cent, real estate sales were down 16 per cent, and new property construction was down 4.2 per cent. The Bank of China, the third-biggest of the state-owned "pillar" banks by assets, announced that its new loans fell 17 per cent in the first quarter, year-on-year. Deposits in Chinese banks as a whole fell by 0.5 per cent last month, according to the central bank. The People's Bank of China's announcement last weekend of a cut of half a percentage point in the reserve ratio requirement is unlikely, in such circumstances, to achieve its aim of freeing up further funding for banks to lend out. The tight controls over margins are driving lenders away now that alternatives are emerging. And if deposits keep falling, reserve ratios will have to keep falling too, just to maintain the amount of money available for lending out. Industrial production rose just 0.35 per cent in April from March, after increasing 1.22 per cent from February. And value-added industrial output rose 9.3 per cent in April from a year earlier, slowing sharply from a 11.9 per cent year-on-year increase in March. Retail sales increased 14.1 per cent in April from a year earlier, compared with a 15.2 per cent rise in March. UK risk-analysis firm Business Monitor International has forecast air-freight tonnage to increase by 4.4 per cent in China this year, Port of Shanghai throughput to rise by just 2.3 per cent, national road freight by 3.6 per cent and rail freight by 3.7 per cent. According to US cables revealed via Wikileaks, Li Keqiang, who is to become Premier said he used three core statistics to track the performance of the Chinese economy, rather than the bald growth figure: electricity consumption, rail-cargo volume and bank lending. Aggregating these three from the performance in the year so far, it is hard to see how China can reach anywhere near the 8.5 per cent overall growth the federal government's budget anticipates. "When you look at the trend lines, they are down: for instance, real estate, which accounts for a lot of the demand for steel and has especially benefited Australia, which has been perfectly positioned to feed China's investment boom of the past three years." Real estate comprises a quarter of China's fixed-asset investments, and half its GDP growth. But its sales are down this year and starts are either flat or down. The apparently contradictory 24 per cent lift in investment in real estate has come, he says, from "developers rushing to complete projects, to get into the market, cash out and pay off debts". Completions are up 33 per cent. Only 14 per cent of Chinese consumers say they are interested in buying property, the lowest rate since 1999, because they see that prices falling. Despite the common international perception, he says, "there are not many levers they can pull, and all of them come at a cost". China could pump money back in to reflate the asset bubble, he says, but the quality and value of the resulting infrastructure would be questionable. "There has always been a strong incentive for officials to overstate growth," he says. "But if growth is lower than the official figures, why have commodity prices stayed reasonably high?" One answer, he suspects, is the additional stock-piling of non-food commodities. He says 90 per cent of the copper held in warehouses in Shanghai is used for financing -- and if prices come down, there will be margin calls, and China will temporarily become a copper exporter. He says a slowdown is certainly under way in China, and reducing the reserve requirement -- as the country's central bank did on Saturday -- will not help much. "It is the loan quota that has been the real binding constraint, but that is now shifting so that demand (or the lack of it) is the new restraint on the economy."

China Daily:

• Chines State Councilor Dai Bingguo said China "won't be bullied" by a "small nation" like the Philippines.

Shanghai Daily:

• Shanghai's Growth Slows Again. SHANGHAI'S economic growth weakened further in April as exports, imports and fixed-asset investment all declined. The weak performance also nibbled away at industrial production growth in the first four months, the Shanghai Statistics Bureau said yesterday. With less inflationary pressure around the country, Shanghai, in particular, needs stimulus to boost its growth, analysts said. Exports fell 5.6 percent from a year earlier to US$16.3 billion last month, and imports were down 1.6 percent to US$18.2 billion. It was the first time since October 2009 that Shanghai had reported declines in both exports and imports, the bureau said. Fixed-asset investment in the first four months lost 0.4 percent to 122.3 billion yuan (US$19.4 billion), led by a cut of 25.8 percent in urban infrastructure construction investment. Industrial production also slumped 0.2 percent to 1.01 trillion yuan during the four months, compared with 0.7 percent expansion in the first quarter. "Shanghai's economic growth is weakening faster than feared," said Li Maoyu, a Changjiang Securities Co analyst.

Bear Radar

Style Underperformer:

• Mid-Cap Value -.43%

Sector Underperformers:

• 1) Coal -5.03% 2) Oil Service -1.63% 3) Gold & Silver -1.33%

Stocks Falling on Unusual Volume:

• CHK, LFL, ANGI, BMA, FIO, EPAM, DB, ACAT, VTUS, PHMD, FRAN, WCRX, HMIN, JAZZ, FOSL, AUXL, PETD, LUFK, AKO/A, EWO, KNM, AL, GORO, VAL, CHKR, ANR and AVP
  

Stocks With Unusual Put Option Activity:

• 1) EWJ 2) CX 3) LOW 4) EWG 5) EWY
  

Stocks With Most Negative News Mentions:

• 1) BBY 2) PRU 3) CHK 4) JPM 5) AVP
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Growth +.13%

Sector Outperformers:

• 1) Internet +.93% 2) Disk Drives +.91% 3) Oil Tankers +.56%

Stocks Rising on Unusual Volume:

• OPNT, TJX, DKS, P, ACXM, IOC, GRPN, SVVC, GSVC, AMLN, MAKO, A and LEN
  

Stocks With Unusual Call Option Activity:

• 1) UUP 2) SYY 3) GRPN 4) P 5) AMLN

Stocks With Most Positive News Mentions:

• 1) OPNT 2) JBL 3) A 4) ZNGA 5) HD
  

Charts:

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

Tuesday Watch

Evening Headlines
Bloomberg:

• UniCredit, Intesa Among 26 Italian Banks Cut by Moody’s. UniCredit SpA (UCG) and Intesa Sanpaolo SpA (ISP) were among 26 Italian banks that had their credit ratings cut one to four levels by Moody’s Investors Service, which cited weakened earnings and the country’s economic outlook. UniCredit, Italy’s biggest bank, had its long-term debt rating lowered one step to A3, Moody’s said in a spreadsheet on its website yesterday. Milan-based Intesa, the nation’s second- largest lender, also was downgraded to A3 from A2. “Italian banks are particularly vulnerable to adverse operating conditions, which are likely to cause further asset quality deterioration, earnings pressure, and restricted market funding access,” Moody’s said in a statement. “These risks are exacerbated by investor concerns over the sustainability of the Italian government’s debt burden, which has contributed to the difficult wholesale funding conditions faced by Italian banks.”
• Greek President Pitches New Government Plan to Break Stalemate. Greek President Karolos Papoulias will attempt to persuade divided party leaders today to accept his proposal for a government of prominent non-politicians to steer the country and avert new elections as doubts mount that Greece can avoid an exit from the euro area. Papoulias will meet with all leaders of parties represented in parliament except for an ultra-nationalist party today at 2 p.m. in Athens, said Evangelos Venizelos, the leader of Pasok, the third-biggest party. Venizelos, who did not provide further details of the president's plan, spoke after meeting with Papoulias and the leaders of two other parties yesterday. "Pasok is taking a responsible stance," Venizelos said in comments televised live on state-run NET TV. "We support a government of prominent figures as a necessary solution." The new plan threatens to extend the political gridlock that has left the country without a government for more than a week since the inconclusive May 6 elections. Democratic Left leader Fotis Kouvelis, who attended yesterday's meeting, said he was opposed to the new plan and will attend today to press for his unity-government proposal, which has already been rejected by the second-biggest party, Syriza.
• Money Market Stresses Rise Fastest in Six Months: Credit Markets. Stress in global credit markets is climbing at the fastest pace in six months as speculation Greece may exit Europe's common currency sparks anxiety that the region's leaders can't stem their sovereign-debt crisis. Interest-rate swap spreads, which gauge fear in debt markets, and a measure of corporate credit risk in the U.S. climbed to four-month highs yesterday. A gauge of banks' reluctance to lend to each other reached the most since February.
• Euro Chiefs May Offer Leniency to Greece. European governments hinted at giving Greece extra time to meet budget-cut targets, as long as the financially stricken country’s feuding politicians put together a ruling coalition committed to austerity. Calling talk of a Greek pullout from the euro “nonsense” and “propaganda,” Luxembourg Prime Minister Jean-Claude Juncker said only a “fully functioning” Greek government would be entitled to tinker with the conditions attached to 240 billion euros ($308 billion) of rescue aid. “The government would have to stand by the program,” Juncker told reporters after chairing a meeting of euro-area finance ministers in Brussels late yesterday. “If there are dramatic changes in circumstances, we wouldn’t close ourselves off to a debate over extending the deadlines.”
• Huether Says Greece May Be Forced to Exit Euro, Bild Reports. Michael Huether, the German economist and head of the IW economic institute, said eurozone governments may have to force Greece to exit the common currency unless the country adheres to its austerity promises, Bild-Zeitung reported. Greece may shun such a step because of the “dramatic consequences” for the country, the newspaper cited Huether as saying in a preview of an interview in tomorrow’s edition.
• Appaloosa’s Tepper Bets on Technology With Apple(AAPL), Google(GOOG) Buys. Appaloosa Management LP, the hedge fund run by David Allan Tepper, bet on technology in the first quarter with purchases of Apple (AAPL) Inc., Google Inc. (GOOG) and an exchange-traded fund that mimics the Nasdaq 100 Index. The hedge fund, based in Chatham, New Jersey, bought 503,000 shares of Apple valued at $337 million, 162,000 shares of Google valued at $104 million and 18.9 million shares of the PowerShares QQQ Trust, valued at $1.27 billion, according to a filing today with the Securities and Exchange Commission.
• Dimon on New York Fed Board Renews Concern About Conflict. JPMorgan Chase & Co. (JPM) Chief Executive Officer Jamie Dimon’s position as a director on the Federal Reserve Bank of New York’s board renewed concern that the central bank is too close to the institutions it oversees.
• JPMorgan(JPM) Said to Weigh Bonus Clawbacks After Loss. JPMorgan Chase & Co. (JPM), the biggest U.S. bank, will consider reclaiming incentive pay from employees including former Chief Investment Officer Ina Drew after her unit had a $2 billion trading loss, said two senior executives. The lender can cancel stock awards or demand they be repaid if an employee “engages in conduct that causes material financial or reputational harm,” JPMorgan said in its annual proxy statement. The company will claw back pay if it’s appropriate, said one of the executives, who asked not to be identified because no decisions have been made.
• China Foreign Investment Falls 0.7% in Sixth Monthly Drop. Foreign direct investment in China fell for a sixth month in April, as faltering global growth and renewed turmoil in financial markets dented company spending in Asia’s biggest economy. Inbound investment dropped 0.7 percent from a year earlier to $8.4 billion, the Ministry of Commerce said today in Beijing. That compares with a 6.1 percent drop in March and extends the longest stretch of declines since the global financial crisis.
• Amylin(AMLN) Said to Attract Interest From Pfizer, AstraZeneca. Amylin Pharmaceuticals Inc. (AMLN) has lured suitors such as Pfizer Inc. (PFE), AstraZeneca Plc and Sanofi, which signed confidentiality agreements on the drugmaker’s sale process, said people familiar with the matter.
• Rubber Plunges to a Four-Month Low on Greek Impasse. Rubber plunged to a four-month low as the political impasse in Greece raised speculation the nation may leave the euro, deepening an economic slump in the region and weakening demand for the commodity used in tires. October-delivery rubber slumped as much as 5.1 percent to 265 yen a kilogram ($3,317 a metric ton), the lowest level for a most-active contract since Jan. 6, before trading at 268 yen on the Tokyo Commodity Exchange at 10:15 a.m. local time. Prices have trimmed this year’s advance to 1.7 percent.

Wall Street Journal:

• Spain's Bank Crisis Hits Aerospace. A Spanish manufacturer of critical components for major aircraft makers including Airbus, Boeing Co. and Embraer is slowing production and struggling to pay its bills. Alestis Aerospace SL is facing a cash crunch because of Spain's banking crisis, a powerful illustration of how Europe's financial upheaval is hurting its industrial economy and risks disrupting some of the world's most successful jetliner programs. Seville-based Alestis earlier this month was placed under court administration, the Spanish equivalent of U.S. bankruptcy protection.
• Iran Exile Group Nears U.S. Rebirth. The Obama administration is moving to remove an Iranian opposition group from the State Department's terrorism list, say officials briefed on the talks, in an action that could further poison Washington's relations with Tehran at a time of renewed diplomatic efforts to curtail Iran's nuclear program. The exile organization, the Mujahedin-e Khalq, or MeK, was originally named as a terrorist entity 15 years ago for its alleged role in assassinating U.S. citizens in the years before the 1979 Islamic revolution in Iran and for allying with Iraqi strongman Saddam Hussein against Tehran.
• Brown Warns Californians: Taxes or Cuts. California Gov. Jerry Brown laid out a revised budget plan that relies on deeper spending cuts and higher taxes to bridge a projected state deficit that has widened to $15.7 billion from $9.2 billion since January. The Democratic governor said Monday he had no choice but to cut even deeper into social services to help close a budget gap that has shot up due to lower-than-expected tax revenue and delays and court-ordered impediments to spending cuts.
• JPMorgan(JPM) Moves to Protect Dimon. J.P. Morgan Chase & Co. closed ranks around Chief Executive James Dimon ahead of a shareholder meeting and announced the departure of a senior executive at the center of a trading blunder that has cost the bank more than $2 billion in losses.
• The Union Pension Bomb. Imagine the panic if investors discovered that many of the nation's biggest public companies had hidden liabilities so large as to make them worth a fraction of their value. That's something akin to the shock created by the recent Credit Suisse report on multi-employer pension plans.

Business Insider:

• This Former CIA Officer Reveals Everything You Want To Know About Being An American Spy. "I would hazard to guess there are more foreign intelligence officers inside the U.S. working against U.S. interests now than even at the height of the Cold War,"said Crumpton.
• GREEK MINISTER: An Exit From The Eurozone Could Trigger Civil War.

Zero Hedge:

• JPM Chase(JPM) Chairman, Jamie Dimon, The Whale Man, And Glass-Steagall.
• It's An Interconnected World After All.
• Deja Deja Deja Etc. As S&P 500 Closes Below 50DMA First Time Since November.

CNBC:

• Groupon(GRPN) Beats Expectations on Domestic Growth, Lower Costs. Investors who snapped up Groupon shares on Friday certainly snagged a deal. After reporting earnings after the bell Monday, the online deals service's shares climbed, gaining some 33 percent since Friday’s close. The after-hours action extended today’s rally—Groupon's stock soared 18 percent as 14.7 million shares traded hands—the heaviest trading of the stock since its IPO on November 4.
• Facebook(FB) Raises IPO Price Range to $34-38 per Share.
• Where Are the Investors? Turnover in Major Asian Markets Plunges. Trading, measured by the turnover in Hong Kong and Singapore equities, fell in the first four months of the year on concerns over Europe’s debt crisis and as investors seek alternative investments to stocks after recent corporate scandals and the 2008 global financial crisis.
• Coty Withdraws Takeover Bid for Avon(AVP). Coty said on Monday it is withdrawing its $10.7 billion takeover bid for Avon Products, saying the world's largest cosmetics direct seller had missed its deadline to start talks.

NY Times:

• Red Flags Said to Go Unheeded by Chase Bosses. In the years leading up to JPMorgan Chase’s $2 billion trading loss, risk managers and some senior investment bankers raised concerns that the bank was making increasingly large investments involving complex trades that were hard to understand. But even as the size of the bets climbed steadily, these former employees say, their concerns about the dangers were ignored or dismissed.

LA Times:

• Disk Network(DISH) Ad-Skipping Feature Auto Hop Irks Network TV Execs. An NBC executive called the satellite broadcaster's new offering enabling customers to block commercials from certain recorded shows 'an attack on our ecosystem' while a Fox executive described Dish's decision to offer the feature 'a strange thing to do.'

CBS News:

• Poll: Romney 46%, Obama 43%. Last month, a CBS News/New York Times poll showed Mr. Obama and Romney locked in a dead heat, with both earning 46 percent support among registered voters.

Rasmussen Reports:

• Generic Congressional Ballot: Republicans 45%, Democrats 38%.

Reuters:

• Fed Examining Other Risks Being Taken by JPMorgan.(JPM). The Federal Reserve is examining whether JPMorgan Chase & Co is taking risks elsewhere in the bank similar to the botched trading strategy that could cost the bank more than $2 billion, a Fed spokeswoman said on Monday. The central bank is also reviewing whether the trading losses have any broader implications for how JPMorgan manages its risk, the spokeswoman said.
• Maybe Europe Should Abandon Euro - Canada's Flaherty. If European countries are not prepared to bail out fellow euro zone members, maybe they should just abandon the whole concept of a common currency, Canadian Finance Minister Jim Flaherty said on Monday in some of his most direct remarks on the issue. "This is a time of crisis in the euro zone. The whole future of the euro zone is up for grabs, and this is very important for many of the euro zone member countries, given the history of Europe in the last 100 years or so," Flaherty told CTV television. "So they have to show courage. They have to do the right thing, use some of their taxpayers' money to bail out some of the weaker members of the euro zone - or start moving away from the euro zone and just say this was an experiment that has not worked."
• Agilent(A) profit beats; forecasts strong revenue. Electronics testing equipment maker Agilent Technologies Inc posted a better-than-expected profit as orders rose in its core business, and forecast third-quarter revenue above estimates.

Financial Times:

• Faith Fades in Eurozone Firewall. Fears that the eurozone’s firewall will prove insufficient to shield Spain and other embattled countries against the effects of a possible disorderly Greek exit from the currency union hit European financial markets on Monday.

Telegraph:

• Brace, Brace. Dark Times Ahead as Greece Heads for the Exit. European policymakers are about to commit another major blunder in their handling of the eurozone debt crisis, and this time it could well be fatal. Mistakenly, they have convinced themselves that it won't much matter if Greece leaves, and indeed that it might even help resolve the wider crisis to get rid of this persistent thorn in the flesh. Bring it on, they mutter callously; it will be a lot worse for them than for us. On one level, this is just bravado. It's an attempt to put as nonchalant a face as possible on the now apparently inevitable. But they also seem to believe in their validity of their own analysis – that they have indeed used the past two years well, and are now fully prepared for a Greek exit. Believe it if you will. The ineptitude to date of the eurozone's crisis response strongly suggests a different conclusion – both that the likely contagion from an exit has been hugely underestimated, and that by prompting a wider breakup, thereby tipping Europe into depression, it may end up as bad for everyone else as it is for Greece.

Die Welt:

• IG Metall, Germany's main labor union for manufacturing workers, plans to ask its members in the state of Baden-Wuerttemberg to vote on unlimited strikes unless there is progress in wages talks. The union, which is demanding a 6.5% pay raise, will start the voting process on May 16 unless talks scheduled for tomorrow reach a breakthrough, citing an interview with union leader Joerg Hofmann.

Financial Times Deutschland:

• Germany's financial regulator Bafin wants to boost the number of Germans serving at European regulatory agencies, citing an interview with Bafin chief Elke Koenig.

South China Morning Post:

• Chinese Railway Ministry's Massive Debt Tipped To Get A Lot Worse, Dagong Says. Rising costs to hurt profitability, credit rating agency says, citing a report on the ministry's first issue of short-term bonds in 2012. The Ministry will issue 20b yuan of 1-yr bonds to fund construction, buy rolling stock, citing the prospectus. Ministry total debt was 2.4t yuan on March 31 vs. 1.3t at the end of 2009.

People's Daily:

• Problems associated with "unbalanced", "uncoordinated" and "unsustainable" development in China remain "apparent," Zhou Yongkang, a member of the nation's Politburo Standing Committee, said in a speech from May 9th published today. China will be at the "beginning stages" of socialism for a long period of time, Zhou said. Many factors currently exist that affect social stability, he said.

21st Century Business Herald:

• China Investment Corp. has asked the U.S. Federal Reserve to give it status as a sovereign wealth fund and not a bank holding company to be exempted from the Volcker rule, citing people familiar with the matter. The exemption would allow the fund to avoid the compulsory sale of some of its U.S. assets, particularly private equity investments and hedge fund investments, the report says.

China Securities Journal:

• Shanghai Tightens Home Purchase Restrictions. Single residents with Shanghai registration, so-called hukou, are no longer allowed to buy a second home, citing the city's real estate trading centers. Shanghai previously said local families with hukou, including single persons, could buy a second home.

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -1.25% to unch. on average.
• Asia Ex-Japan Investment Grade CDS Index 190.0 +7.0 basis points.
  
• Asia Pacific Sovereign CDS Index 150.50 +5.0 basis points.
  
• FTSE-100 futures -.40%.
  
• S&P 500 futures +.25%.
  
• NASDAQ 100 futures +.20%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (HD)/.65
• (DKS)/.38
• (SKS)/.18
• (TJX)/.54
• (JCP)/-.08
• (RAH)/.85

Economic Releases
8:30 am EST

• The Consumer Price Index for April is estimated unch. versus a +.3% gain in March.
• The CPI Ex Food & Energy for April is estimated to rise +.2% versus a +.2% gain in March.
• Empire Manufacturing for May is estimated to rise to 9.0 versus a reading of 6.56 in April.
• Advance Retail Sales for April are estimated to rise +.1% versus a +.8% gain in March.
• Retail Sales Less Autos for April are estimated to rise +.2% versus a +.8% gain in March.
• Retail Sales Ex Autos & Gas for April are estimated to rise +.3% versus a +.7% gain in March.

9:00 am EST

• Net Long-Term TIC Flows for March are estimated to rise to $32.5B versus $10.1B in February.

10:00 am EST

• Business Inventories for March are estimated to rise +.4% versus a +6% gain in February.
• The NAHB Housing Market Index for May is estimated to rise to 26.0 versus 25.0 in April.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Hollande/Merkel meeting in Berlin, Greek bond redemption, Italian GDP, weekly retail sales reports, (BA) investor conference, JPMorgan Tech/Media/Telecom Conference, BofA Merrill Metals/Mining/Steel Conference, Oppenheimer Industrials Conference and the JPMorgan Homebuilding Conference could also impact trading today.
  

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

Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Rising Global Growth Fears, Less Financial Sector Optimism, Technical Selling

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  
• Sector Performance: Almost Every Sector Declining
  
• Volume: Below Average
  
• Market Leading Stocks: Performing In Line
  

Equity Investor Angst:

• VIX 21.55 +8.59%
  
• ISE Sentiment Index 75.0 -1.88%
  
• Total Put/Call 1.30 +4.84%
  
• NYSE Arms 1.06 -18.04%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 114.15 +5.13%
  
• European Financial Sector CDS Index 280.55 +5.78%
  
• Western Europe Sovereign Debt CDS Index 293.57 +2.83%
  
• Emerging Market CDS Index 286.52 +6.38%
  
• 2-Year Swap Spread 38.0 +4.0 basis points
  
• TED Spread 38.0 +.5 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -48.0 -3.0 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .09% unch.
  
• Yield Curve 152.0 -6 basis points
  
• China Import Iron Ore Spot $136.70/Metric Tonne -.65%
  
• Citi US Economic Surprise Index -23.40 +.9 point
  
• 10-Year TIPS Spread 2.14 unch.
  

Overseas Futures:

• Nikkei Futures: Indicating a -101 open in Japan
• DAX Futures: Indicating -20 open in Germany
  

Portfolio:

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

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows and is testing its early-March low on rising Eurozone debt angst, less financial sector optimism, high energy prices, rising global growth fears, technical selling and more shorting. On the positive side, Disk Drive and Education shares are rising on the day. Oil is falling -1.5%, the UBS-Bloomberg Ag Spot Index is down -.4%, Lumber is gaining +.3% and Gold is down -1.3%. On the negative side, Steel, Bank, I-Banking, Alt Energy, Oil Tanker, Energy, Oil Service, Ag, Paper, Construction, Homebuilding and Gaming shares are under significant pressure, falling more than -1.75%. Cyclical and small-cap shares are underperforming. Financial shares have also lagged throughout the day. Copper is down -3.5%. Major Asian indices were mostly lower, led down by a -1.15% decline in Hong Kong despite the China RRR cut. Major European indices are falling around -2.5%, led lower by a -3.2% decline in Italy. Italy is now down -10.3% ytd and down -20.7% in less than 2 months. As well, Spain is down another -3.1% today. The IBEX is down -20.9% ytd and just 81 points away from its March 2009 low. The Bloomberg European Bank/Financial Services Index is down -3.2% today and down -20.0% in less than 2 months. The Germany sovereign cds is surging +6.2% to 93.50 bps, the France sovereign cds is rising 4.0% to 215.33 bps, the Spain sovereign cds is rising +3.4% to 535.0 bps(all-time high), the Italy sovereign cds is rising +5.7% to 485.34 bps, the Ireland sovereign cds is gaining +6.0% to 630.67 bps, the Brazil sovereign cds is surging +6.5% to 140.59 bps, the Russia sovereign cds is soaring +8.9% to 226.84 bps, the China sovereign cds is gaining +3.3% to 122.63 bps and the US sovereign cds is gaining +3.2% to 42.11 bps. Moreover, the European Investment Grade CDS Index is rising +6.7% to 168.64 bps and the Italian/German 10Y Yld Spread is gaining +6.2% to 424.01 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 -3.0% 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 -30.0% ytd. China Iron Ore Spot has plunged -25.0% since Sept. 7th of last year. Shanghai Copper Inventories have risen +515.0% ytd. The Citi Eurozone Economic Surprise Index is falling another -6.2 points today to -42.10 points, which is the worst reading since mid-Nov. The recent intensification of the downturn in Eurozone economies raises the odds of further sovereign/bank downgrades. Overall, recent credit gauge deterioration is a big worry with most key sovereign cds breaking out technically. I still believe the level of complacency among US investors regarding the rapidly deteriorating situation in Europe is fairly high. Moreover, the 10Y T-Note continues to trade too well, with the yield only 10 bps from its record low of 1.67%. The T-Note is technically extended and the yield is at the lower-end of the range it has been in since Sept. However, I continue to believe the T-Note yield will move significantly lower over the intermediate-term during the next US recession. Copper continues to trade poorly and is breaking down from the range it has been trapped in since Jan. The CRB Commodities Index is gapping down below the trading range it has been in since Oct. 2010. This index is now technically in a bear market, having declined -21.7% since May 2nd of last year. Moreover, the euro currency continues to trade poorly and is moving towards its Jan. low. I do not expect this low to hold over the coming months. It is looking increasingly likely that another intense escalation phase of the European debt crisis has already begun. I currently do not hear any “solutions” to the crisis that will prove anything other than very painful for the region’s economies and thus the global economy over the intermediate-term. 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, a US "fiscal cliff" solution and higher-quality stock market leadership. I expect US stocks to trade modestly lower into the close from current levels on rising Eurozone debt angst, rising global growth fears, more shorting, technical selling and less financial sector optimism.

Today's Headlines

Bloomberg:

• Greece Euro-Exit Debate Goes Public. European finance ministers grappled with the costs of keeping Greece in the euro area or letting it go, as Greece’s post-election political feud dragged on with little progress toward forming a government. German Finance Minister Wolfgang Schaeuble said Europe has done the “utmost” to prop up the financially stricken country, limiting any further room for leniency after about 240 billion euros ($308 billion) of aid pledges. “There’s no easy way for Greece, whatever the outcome will be,” Schaeuble told reporters before a meeting of euro-area finance ministers in Brussels today. “It’s not about the question of being more or less generous toward Greece. It’s simply about what is still economically justifiable, what can be done that’s still convincing in economic terms, that still has credibility.” Signs of stress abounded in European markets today. The euro fell for the 10th time in 11 days and bond yields in recession-wracked Spain, the next potential candidate for financial aid, touched a five-month high. On the eighth day of Greece’s post-election maneuvering, the head of the biggest anti-bailout party, Alexis Tsipras, said he would boycott an evening meeting in Athens, the latest attempt to form a unity government, and pushed for a new election.
• Hollande Jobs Pledge Faces Test as Corporate France Readies Job Cuts. France Inc. risks losing more than 15,000 jobs in the months ahead, testing Socialist President- elect Francois Hollande’s resolve to block firings. Companies from Carrefour SA (CA) and Peugeot SA to Air France- KLM and Vivendi SA (VIV) are reorganizing operations to counter shrinking growth as the economy at home and across Europe slows. The presidential race prompted many companies to put job-cutting plans on hold to avoid becoming a campaign subject. With the May 6 vote behind them, the wave of firings may start, unions say.
• Ifo’s Sinn Says S. Europe Faces ‘Infirmity,’ Handelsblatt Says. Hans-Werner Sinn, president of the Munich-based Ifo economic institute, said supplying southern European countries with continued, cheap, public credit will lead to a infirmity if not to a complete economic collapse in Europe, Handelsblatt said. When the euro region becomes the central administrator with investment management carried out by the state, the system can’t work because it prevents the capital market from being the important economic driver, Sinn wrote in a guest commentary in the German newspaper. The European Central Bank is causing private capital to flee countries such as Italy and Spain because it offers cheap credit, Sinn wrote in Handelsblatt.
• Papademos Says Hard for Greece to Make June Payments, Ta Nea Says. The Greek state will find it difficult to cover its payment needs in June, Ta Nea said citing Prime Minister Lucas Papademos in a letter given to Greek President Karolos Papoulias. The withholding of 1 billion euros ($1.3 billion) from the May loan tranche from the European Union, the European Central Bank and the International Monetary Fund and May 6 elections stalling the tax collection process are putting pressure on the state’s coffers the Athens-based newspaper reported, without saying how it obtained the letter.
• European Stocks Drop on Greek Deadlock, Merkel's Setback. European stocks retreated, snapping two days of gains, as Greece moved closer to a possible exit from the euro currency union and German Chancellor Angela Merkel’s party lost a state election. Banks paced losses, with HSBC Holdings Plc (HSBA) dropping 1.5 percent. Infineon Technologies AG (IFX), Europe’s second-largest semiconductor maker, retreated after Chief Executive Officer Peter Bauer decided to step down. ING Groep NV (INGA) tumbled 6 percent as European Union regulators will reexamine its rescue by the Dutch government. The Stoxx Europe 600 Index lost 1.8 percent to 247.43 at the close of trading. All 19 industry groups on the gauge fell. The Stoxx 600 has pared this year’s gains to 1.2 percent as an inconclusive election in Greece left political parties struggling to form a government, risking the collapse of proposed austerity measures.
• Europe's Cross-Border Bank Model at Risk, Development Bank Says. Euro-area governments are encouraging local lenders to trim their foreign exposure, threatening the continent's cross-border banking model, European Bank for Reconstruction and Development economists wrote in the Times. The governments want banks to lend more at home at the expense of subsidiaries elsewhere in Europe, causing capital and liquidity to be hoarded, the economists wrote. That's leading to a shortage of credit in some countries, with emerging Europe and the U.K. at risk, they added. "We are witnessing an astonishing process of financial fragmentation," Erik Berglof, chief economist at the London-based EBRD, and Jeromin Zettelmeyer, his deputy, wrote today in the newspaper. "Sovereign and bank risk are impairing the ability of banks in the periphery countries to lend."
• Sovereign Debt Risk Rises as Spain Bank Woes Heighten Euro Alarm. The cost of insuring against a sovereign default in Europe surged as Greece’s political deadlock and Spain’s bank capital crisis heightened speculation the euro region may start to crumble. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments jumped 7.5 basis points to 293.5 at 3:15 p.m. in London, signaling deterioration in perceptions of credit quality. Contracts on Spain soared as much as 26 basis points to a record 543, according to Bloomberg data. European officials are starting to consider a Greek abandonment of the euro as authorities in Athens struggle to form a government that agrees to the austerity terms of the nation’s bailout. Spain’s plan to force banks to increase provisions by 30 billion euros ($39 billion) and inject less than 15 billion euros of cash will worsen its debt burden and may not be enough, Moody’s Investors Service said. “The risk eventually is some kind of euro exit,” said Harpreet Parhar, a strategist at Credit Agricole SA (ACA) in London. “There’s the rise of austerity rebels in other countries as well, and Spain’s bank recapitalization plan isn’t going to be sufficient to convince people.” Swaps on Spain were trading at 539, while Italian debt jumped 29 basis points to a four-month high of 487 and Ireland climbed 28 to 621, Bloomberg data show. The cost of insuring against default on European corporate and financial debt rose to the highest levels since January, according to BNP Paribas SA. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings soared 43 basis points to 728. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 13 to 171. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers jumped 21 basis points to 286.5 and the subordinated index was up 32 at 467.
• India Inflation Quickens, Curbing Room for Cutting Rates. Indian inflation unexpectedly accelerated in April, crimping the central bank’s scope to bolster economic growth by extending interest-rate cuts. Stocks fell, reversing earlier gains. The benchmark wholesale-price index rose 7.23 percent from a year earlier, after climbing 6.89 percent in March, the Ministry of Commerce and Industry said in a statement in New Delhi today. The median of 32 estimates in a Bloomberg News survey was for a 6.67 percent gain.
• China Growth Seen at 13-Year Low by PIMCO. China’s slowdown may deepen as policy makers unwind the excesses of a record credit boom while only gradually increasing stimulus, leaving 2012 growth at the weakest in 13 years, Pacific Investment Management Co. says.
• Dimon Fortress Breached as Push From Hedges to Bets Blows Up.
• Brown Calls for $8.3 Billion Cuts to Close Wider Deficit. California Governor Jerry Brown proposed $8.3 billion of cuts from welfare and medical care for the poor to help close a $15.7 billion state deficit for the year starting July 1. The revised deficit is about 70 percent more than Brown projected in January after tax revenue fell short, spending exceeded projections and some savings were blocked by the federal government, courts and Democrats in the Legislature.
• Facebook(FB) Said Set to Finish Taking IPO Orders Tomorrow. Facebook Inc. plans to stop taking orders for its initial public offering tomorrow, two days ahead of schedule, according to a person with knowledge of the transaction. Facebook will likely finish taking orders for the IPO after U.S. markets close May 15, said the person, who declined to be identified as the plans are private. The offer of 337.4 million shares at $28 to $35 each has been oversubscribed, people with knowledge of the matter said. Jonathan Thaw, a spokesman for Facebook, declined to comment.

Wall Street Journal:

• Iran Talks' Moment of Truth Has Arrived. In the long and winding American quest to curb Iran's nuclear program, the next month is the most critical period yet. And there are three men to keep an eye on as it unfolds: President Barack Obama, Iranian Supreme Leader Ali Khamenei and Israeli Defense Minister Ehud Barak.
  
• John Snow: 'Taxmaggedon' Is a Real Threat. Next year's scheduled increases on dividends and capital gains will retard investment and derail the recovery.

CNBC.com:

• Copper Hits 4-Month Low On China, Eurozone Fears. Copper hit a four-month low on Monday as political deadlock in Greece kept alive the risk of the country leaving the euro zone and as investors worried about slowing growth in top copper consumer China.
• Europe's Woes Hit Global Demand for Luxury Homes.
  

Business Insider:

• El-Erian: The Eurozone Is Facing A Lose-Lose Situation.
• Meet Matt Zames, The Former Long-Term Capital Management Trader Who Is Now JPMorgan's(JPM) CIO.
• 3 Reasons Why You Should Care About Chesapeake Energy(CHK).
• The Romney Campaign Responds: Obama is a Crony-Capitalist Who Is Wrecking America With Debt.
• Putin's Decision To Not Attend This Week's G-8 Summit Is A Huge Snub, And No One Can Work Out Why He Did It.
• 5 Reasons Why Everyone Is Panicking About Spain.
• Are You Sitting Down? JPMorgan's(JPM) Losses May Be $1 Billion More Than Revealed Last Week.
• Here's Why Facebook's(FB) Big Profit Margins Won't Last Long.
  

Zero Hedge:

• Greece Virtually Out Of Cash One Day Before Critical Bond Maturity.
• Must See: Greece Explained In One Picture.
• Iberia Implodes to 17-Year Lows as Stigma Trade +200%. (graphs)
• The New European Serfdom.
  

NY Post:

• Political Hedge. Blackstone Group(BX) President Tony James is holding a $35,800-per-plate fund-raiser tonight at his Park Avenue co-op that has hauled in around $1.5 million for President Obama’s re-election campaign. “He’s pushing hard, and I think he’s struggling a bit,” said a Democratic source close to the event.
• Break Up The Big Banks Before Its Too Late by Charles Gasparino.
  

US News:

• Why JPMorgan's(JPM) Jamie Dimon Should Resign.
  

Reuters:

• Brazil Economy to Miss 2012 Growth Target - Sources. Brazil's economy is set to expand slightly above the 2.7 percent growth rate of last year despite a barrage of government actions to revive consumption and industry, and an aggressive cycle of interest rate cuts that is driving borrowing costs close to a record low.
• Greek Socialist Leader Says Not Optimistic About Forming Coalition.
  

Telegraph:

• Debt Crisis: Live. Markets have fallen heavily and debt yields have risen, as EU finance ministers meet this afternoon for 'political' talks that are expected to focus on the ongoing crises in Greece and Spain.

RTHK:

• Li & Fung Says Europe Uncertainties May Affect Exports. Exports to Europe seen to be impacted by the debt crisis in the region, citing Chairman William Fung. Fung said market growth in China may be slower than that of last year. The Co. says price increases of export orders to China can offset volume decline.