Today's Headlines

Bloomberg: 

• Schaeuble to Press G-20 for Debt Cuts Armed With German Example. German Chancellor Angela Merkel’s Cabinet backed a spending plan that will yield budget surpluses this year and next, strengthening the government’s hand as it presses international partners to focus on cutting debt. Ministers meeting in Berlin today adopted the annual Finance Ministry report to the European Commission in which they agreed to cut Germany’s debt over the next four years. The German stance sets up a potential clash among finance chiefs from the Group of 20 biggest economies when they gather in Washington from tomorrow. Finance Minister Wolfgang Schaeuble plans to press the group to sign up to similar “growth- friendly,” deficit-reduction policies to those he pursues at home, a government official told reporters in Berlin yesterday. “Germany is committed to complying with all the national and European fiscal policy requirements,” the Finance Ministry said in a statement after the Cabinet meeting. “Sound public finances are a significant basis for effective government action and on-going favorable growth conditions.”
• Italy May Need $9.2 Billion of Spending Cuts, Official Says. Italy may need to make as much as 7 billion euros ($9.2 billion) in additional spending cuts this year to cover jobless benefits and other expenses, said Finance Undersecretary Gianfranco Polillo. “There are additional expenses worth 5 billion euros to 7 billion euros that need to be covered,” Polillo said in an interview in Rome on April 15. These include as much as 600 million euros to finance military operations abroad and about 1.2 billion euros for unemployment programs, he said. Funding the expenses through tax increases would aggravate Italy’s fourth recession since 2001, he said.
• Europe Car Sales Heading for 20-Year Low on German Slide. European car sales are sliding to a 20-year low after German concerns over the debt crisis sent demand plunging last month in the region’s biggest economy and removed the main buffer protecting automakers. Registrations in March fell 10 percent to 1.35 million vehicles, the 18th consecutive decline, with Germany’s auto market plunging 17 percent, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today. First-quarter deliveries in the region dropped 9.7 percent to a record-low 3.1 million cars. 
• IMF Sees Some Corporate Debt Unsustainable in Parts of EU. As much as 20 percent of non-bank corporate debt in the weakest euro-area economies is unsustainable and may force companies to cut dividends and sell assets, dealing further blows to investor confidence, the International Monetary Fund said. Businesses (SXXP) in Italy, Spain and Portugal have the largest “debt overhang,” according to the IMF’s Global Financial Stability Report released today, which analyzed 1,500 publicly traded non-financial European firms. Strains in the corporate sector may in turn hurt banks’ asset quality, the report showed. “Firms in the euro-area periphery have built a sizable debt overhang during the credit boom, on the back of high profit expectations and easy credit conditions,” the IMF said. Now they “face the challenge of reducing the debt overhang in an environment of lower growth and higher interest rates, in part related to financial fragmentation in the euro area.”
• Cyprus Finance Minister Sees Gold Sale Within Next Months. The Cypriot government plans to sell part of its gold reserves within the next months, a decision that needs to be approved by the country’s central bank, Finance Minister Haris Georgiades said. “The exact details of it will be formulated in due course primarily by the board of the central bank,” Georgiades, 41, told Bloomberg TV’s Ryan Chilcote in an interview in Nicosia. “Obviously it’s a big decision.”
• Former ECB Board Member Bini Smaghi Says Draghi Will Weaken Euro. Former European Central Bank Executive Board member Lorenzo Bini Smaghi said policy makers led by President Mario Draghi will act to weaken the euro. “They have to find ways to avoid that the euro appreciates and actually try to make it depreciate,” Bini Smaghi said in an interview on “Bloomberg Surveillance” with Sara Eisen and Tom Keene today. “They will do something, I think that’s unavoidable.” 
• Spanish Squatters Invoking Robin Hood Deter Investment. The proliferation of illegal tenants threatens to complicate efforts to manage the bad bank, set up by Spain under the terms of a European bailout for its financial system to absorb 37 billion euros of soured real estate.
• Washington Gripped by Alarm as Ricin Poison Letters Found. Washington went into terrorism alert mode as authorities reported preliminary tests showed a letter sent to President Barack Obama contained the poison ricin and suspicious packages triggered a lockdown in parts of two Senate office buildings. With the capital already on edge following the Boston Marathon bombing, alarm spread on both ends of Pennsylvania Avenue as officials tried to determine the extent and nature of the threats. There is “no indication” the ricin mail is connected to the terrorist bombing in Boston, the FBI said in a statement. 
• Rosengren Says Banks With Broker-Dealer Units Need More Capital. Boston Federal Reserve President Eric Rosengren said banks should hold more capital if they own a broker-dealer unit because such businesses pose greater risks during periods of financial stress. “Bank holding companies with large broker-dealer affiliates should hold more capital to reflect the reduced stability of their liabilities during times of stress,” Rosengren said in prepared remarks for a speech today in New York.
• Fed Says ‘Moderate’ Growth Across U.S. Was Led by Housing. The Federal Reserve said the U.S. economic expansion remained “moderate” amid gains in manufacturing, housing and autos that offset weakness in defense-related industries in some regions. 
• Crude Tumbles Amid Equity Selloff as U.S. Output Climbs. West Texas Intermediate oil fell to a four-month low as equities declined and U.S. output rose to a 20-year high. Brent slid below a key technical level at $97.91. WTI dropped for the fourth time in five days as U.S. stocks tumbled on disappointing corporate earnings and after the dollar strengthened against the euro. Output was 7.2 million barrels a day, the most since July 1992, and fuel use slid, according to the Energy Information Administration, the Department of Energy’s statistical arm. Brent breached the 23.6 percent Fibonacci retracement level from 2012’s low to the year’s high.
• U.S. Amasses Big Data on 10 Million Consumers as Bankers Protest. The new U.S. consumer finance watchdog is gearing up to monitor how millions of Americans use credit cards, take out mortgages and overdraw their checking accounts. Their bankers aren’t happy about it. The Consumer Financial Protection Bureau is demanding records from the banks and is buying anonymous information about at least 10 million consumers from companies including Experian Plc. While the goal is to sharpen enforcement and rule-making, banking executives have questioned why the bureau is collecting so much without being more specific about the benefits. “Do they need the reams and reams and reams of data we’re having to provide to them?” Susan Faulkner, senior vice president at Bank of America Corp., asked at a banking conference in March. “Don’t we have to find a healthier balance here?”
• BofA(BAC) Slides Most Since November as Net Misses Estimates. Bank of America Corp. led the Dow Jones Industrial Average lower today after shortfalls in mortgage banking and trading marred first-quarter results and slowed the company’s turnaround. While net income quadrupled to $2.62 billion, or 20 cents a share, analysts surveyed by Bloomberg had predicted 23 cents a share, and revenue dropped 8.4 percent on an adjusted basis to $23.9 billion. Bank of America slid 6.7 percent to $11.46 at 12:30 p.m. in New York, near its low for the day and the biggest decline since November. Chief Executive Officer Brian T. Moynihan, 53, has sold more than $60 billion in assets, settled more than $40 billion in mortgage claims and repaired the bank’s balance sheet since taking over in 2010. He’s now focused on trimming $8 billion in annual expenses and adding revenue. “It’s going to be very hard for these banks to generate revenue, and mortgage is continuing to shrink,” Chris Whalen, managing director at Carrington Investment Services LLC, an asset manager in Greenwich, Connecticut, said in an interview. “The regulatory environment for mortgage is so hostile.” 
• Online Sales-Tax Bill Said to Be Primed for Senate Vote. A bill to let states collect taxes on out-of-state sellers may get a vote in the U.S. Senate as early as next week, said a Senate Democratic aide. The bill, backed by Wal-Mart Stores Inc. (WMT) and Amazon.com Inc., would let states collect some of the $24 billion in revenue they lose to untaxed sales made by retailers with no physical presence in their states. EBay Inc. (EBAY) and anti-tax groups such as Americans for Tax Reform oppose the measure.

Wall Street Journal:

• FBI Says Suspect Identified in Boston Marathon Blasts. The Federal Bureau of Investigation has isolated images of what it believes to be a suspect in the Boston Marathon bombings, a government official said Wednesday. Surveillance video and other images helped FBI agents identify a suspicious person right around the moment one of the bags believed to contain a bomb was deposited near the finish line of the race, the official said. The FBI and the Boston police department said no arrests have been made in the case. The Associated Press reported that a suspect was in custody but later retracted the report.
• The Boston Bombings: Live Coverage.

MarketWatch: 

• Europe faces threat of full-fledged depression. Data taking turn for the worse, a likely black eye for earnings. Data taking turn for the worse, a likely black eye for earnings.

CNBC:

• Insider Trading in DC Just Got Easier.
• Sliding Yen Could Herald New Asian Currency Crisis: Albert Edwards. The falling yen coupled with a fall-off in Chinese investment inflows "increasingly resembles" the run-up to the 1997 currency crisis, said Albert Edwards, Societe Generale's ultra-bearish strategist.
• The VIX Is Getting Ready to Take Market on a Ride. Call options buying recently hit a three-year high for the CBOE's Volatility Index, a popular measure of market fear that usually moves in the opposite direction of the Standard & Poor's 500 stock index.

Zero Hedge: 

• Cyprus Parliament To Vote On Bail-out After All: Fire And Brimstone Threats Begin.
• Goldman(GS) Throws In The Towel On A 2013 "Recovery" As Does Bank Of America. 
• European Stocks Plunge Most In Six Months. (graphs)
• Farage Unleashed: "You Are Common Criminals". (video)
• Boston Bombing Suspect Arrested. (video)

Business Insider: 

• Here's What Ricin Poison Can Do To The Human Body.
• CHART: These Major Retailers Are Most Threatened By Mobile Showrooming.
• LIVE: Democratic Senator To Vote No On Background Checks — Gun Control Bill Basically Dead.
• RICHARD RUSSELL: I See A Bearish Pattern In The Latest Buffett, Paulson, And Soros Trades.
• CHART OF THE DAY: Apartment Construction Is Reaching 'Dangerous Levels'.
• Bomb Squad Called To Senate Office Buildings.
• UBS: Now Is The Time For Investors To Dial Back Risk.

The Hill:

• Leading Democrat Baucus warns of 'huge train wreck' enacting ObamaCare provisions. Sen. Max Baucus (D-Mont.) said Wednesday he fears a "train wreck" as the Obama administration implements its signature healthcare law. Baucus, the chairman of the powerful Finance Committee and a key architect of the healthcare law, said he fears people do not understand how the law will work. "I just see a huge train wreck coming down," Baucus told Health and Human Services Secretary Kathleen Sebelius at a Wednesday hearing. "You and I have discussed this many times, and I don't see any results yet."

Reuters: 

• METALS-Copper drops as IMF report strengthens growth fears.
• IMF frets about U.S. corporate borrowing excesses. Easy monetary policy in the United States has led to looser standards for corporate borrowing as company debt continues to grow, posing a risk to financial stability, the IMF warned on Wednesday. Pension funds and insurance companies may also be taking on more risk than they should as they search for higher-yielding assets to fill a funding gap, which for pension funds stood at 28 percent at the end of last year, the International Monetary Fund said in its Global Financial Stability Report. All of this is happening while the United States is still only one-third of the way through the current credit cycle, the Washington-based global lender said. Usually looser borrowing standards only emerge in the later parts of the cycle, as happened in 2007, the IMF said.

Telegraph: 

• European debt crisis could last a decade, warns Bundesbank chief Jens Weidmann. Germany's top central banker Jens Weidmann has warned that Europe's debt crisis could last for a decade. 
• Global economy faces 'chronic' crisis if reforms are not completed, warns IMF. A growing trend towards excessive risk-taking and lack of action to repair broken bank balance sheets could trigger a “chronic” new phase in the financial crisis, the International Monetary fund has warned. 

Euromoney:

• China must slow growth to tackle 'unsustainable' debt. China’s new government must push through reforms to slow the country’s economic growth within the next two to three years or its rapidly rising debt levels will get out of control, a leading financial academic has told RBS.

Digitimes:

• China market: Veeco(VECO), Aixtron(AIXG) cut MOCVD prices by 30-40% due to competition from local makers. MOVCD vendors US-based Veeco Instruments and Germany-based Aixtron SE have lowered quotes in the China market from about US$2 million to about US$1.4 million for a single-wafer MOCVD set and by 30-40% for a multi-wafer model mainly because at least four China-based makers are set for market competition, according to industry sources.
• iPad mini shipments expected to drop as high as 30% in 2Q13. Upstream sources in the iPad mini supply chain expect a 20-30% decline in shipments for the device during the second quarter of 2013 due to lacking demand in the market. The lacking demand stems from consumers waiting for the release of the next generation iPad mini, said the sources.

The Australian: 

• Russia's Growth Slows Drastically. RUSSIA has reported a sharp slowdown in growth over the first three months of the year to 1.1 per cent from 4.9 per cent in the same period of 2012, amid growing alarm over the state of its economy amid a slew of poor data and falling oil prices. Deputy Economy Minister Andrei Klepach said the estimate came in after downward revisions for the figures for January and February - a month in which the economy contracted by 0.4 per cent. But he added that a stronger March helped Russia's overall performance in the first quarter. "By our estimate, GDP grew in March by 2.3 per cent in annual terms, and we confirm our estimate of 1.1 per cent for the first quarter," the RIA Novosti news agency quoted Klepach as saying. The estimate was released a week after Russia slashed its 2013 growth forecast to 2.4 from 3.6 per cent due to a slowdown in both industrial output and consumer demand.

Xinhua:

• Beijing Home Sales Rise 80.7% Y/Y. Beijing's 1Q home sales total 3m square meters, citing the city's official statistics.

China Daily:

• Chinese Authorities test family infected by H7N9. China's top health authority confirmed that a family infected by H7N9 in Shanghai might involve human-to-human transmission of the new bird flu strain. The family involves two brothers and their 87-year-old father, who died on March 4 and was reportedly China's first human death from H7N9.

Bear Radar

Style Underperformer:

• Small-Cap Value -2.23%

Sector Underperformers:

• 1) Steel -4.02% 2) Coal -3.41% 3) Semis -3.23%

Stocks Falling on Unusual Volume:

• AAPL, FCX, GDP, SFY, PGI, FULT, FBP, PBR, TV, HES, BCO, RLD, SHLM, THO, INWK, EOPN, CRUS, TXT, BMI, PACW, APL, SI, BERY, WTFC, ACOR, CVE, FLTX, SLW, MAIN, BHLB, GNT, EC, GVA, WDR, ATW, FSL, FCS, AVGO, OIH, EWG, RRC, ADI, SNDK, ESC, KMX, LLTC, MAIN, UCO, RTI, WLT and ADNC

Stocks With Unusual Put Option Activity:

• 1) SCCO 2) FXI 3) UNP 4) BBT 5) FOSL
  

Stocks With Most Negative News Mentions:

• 1) DE 2) MCD 3) EQR 4) BK 5) TXT
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -2.01%

Sector Outperformers:

• 1) Medical Equipment -.85% 2) Telecom -1.05% 3) Utilities -1.06%
  

Stocks Rising on Unusual Volume:

• MAT, ATLS, ALKS, ABMD and UNXL

Stocks With Unusual Call Option Activity:

• 1) LLY 2) DNR 3) OCR 4) SWKS 5) CRUS
  

Stocks With Most Positive News Mentions:

• 1) FTNT 2) MAT 3) NCR 4) ABT 5) NOC
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Europe’s Future Central Bankers Confront Draghi’s Policy Dilemma. Europe’s central bankers of tomorrow already know how hard Mario Draghi’s job is. High school students from across the euro area spent the past six months analyzing the state of the 17-nation economy and preparing proposals on how Draghi’s European Central Bank should respond to the region’s debt crisis. The winners of the second annual “Generation Euro Students’ Award” will attend an awards ceremony hosted by Draghi in Frankfurt today. “There is no clear solution,” Alejandro Goffa Martinez, a winning student at IES Josep Sureda i Blanes school in Palma de Mallorca, Spain, said in an interview. “The lack of credit is decisive because credit is the mechanism that is essential for growth. Lowering interest rates even more wouldn’t really help.” 

• Cleaning ‘Toxic’ Assets Slovenia’s Primary Concern, Moody’s Says. Quickly cleaning up Slovenian banks and transferring “toxic” assets to a new institution designed to deal with them should be the government’s main goal, Moody’s Investors Service said. Slovenia, the euro-area’s fourth-smallest economy, is trying to avoid becoming the currency-region’s sixth member to seek a bailout after international lenders agreed to help Cyprus. The Cabinet is offering 500 million euros ($657 million) in 18-month Treasury bills today as it tries to raise confidence that it can recapitalize banks without seeking outside aid. While Slovenia’s situation isn’t as bad as Cyprus, the “trends are certainly negative,” Jaime Reusche, a sovereign- debt analyst at the ratings company, said in an April 15 interview in Prague.

• Monte Paschi Prosecutors Seek Seizure of $2.4 Billion. Prosecutors in Italy are seeking to seize 1.8 billion euros ($2.4 billion) of assets from Nomura Holdings Inc. (8604) as part of an investigation into Banca Monte dei Paschi di Siena SpA’s use of derivatives to hide losses. Sadeq Sayeed, Nomura’s former European head, and Raffaele Ricci, a managing director in fixed-income sales, are also being probed for colluding to obstruct regulators and making false statements, prosecutors in Siena, where the bank is based, said in a statement yesterday. They are also sequestering 14.4 million euros of assets from three former Monte Paschi managers already under investigation, including Chairman Giuseppe Mussari, General Manager Antonio Vigni and finance chief Gianluca Baldassarri.

• China Set to Deepen N. Korea Ties as Yalu River Bridge Rises. Across the Yalu River dividing China and North Korea, towers that will support a sleek suspension bridge rise south of one that U.S. bombers targeted during the Korean War to prevent China from supplying its ally. The bridge into the northeastern Chinese city of Dandong, set to open next year, is a bet that trade will swell even as the U.S. pressures Communist Party leaders to exert economic leverage on the North to abandon its nuclear program. Secretary of State John Kerry said last week China needs to “put some teeth” into restraining Kim Jong Un’s regime. 

• Bird Flu Fears Mount in China as Herbal Remedies Run Out. A popular herb called ban lan gen, or blue root, has been flying off pharmacy shelves across China as local governments encourage people to consider traditional remedies to ward off the latest bird flu virus. With scientists so far unable to pinpoint the H7N9 influenza virus’ animal host, locals are preparing for a possible pandemic by stocking up on popular plant remedies as well as face masks and hand sanitizers and other over-the- counter remedies.

• China’s Stocks Drop, Led by Banks; Moutai Rises Before Earnings. Chinese stocks fell, led by banks, on speculation new lending will slump this month. China Minsheng Banking Corp. (600016), the nation’s first privately owned bank, slid 2.6 percent after the China Securities Journal said new lending may slide to 800 billion yuan ($129.4 billion) this month. “China’s banks will suffer from falling demand for loans as the old growth model of relying on investment cannot be sustained,” said Wang Zheng, Shanghai-based chief investment officer at Jingxi Investment Management Co., which manages $120 million.

• Asia Stocks Gain First Day in Three. Asian stocks advanced for the first time in three days as new-home construction in the U.S. jumped more than forecast, the International Monetary Fund raised its forecast for Japanese growth and the yen weakened.

• Hog Glut Gains as U.S. Exports Drop Most in Decade: Commodities. U.S. hog farmers are poised to produce a record amount of pork at a time when exports are slumping the most in more than a decade, prolonging a global glut into a fifth consecutive year. The 10.66 million metric tons produced will be the most since at least 1970, the U.S. Department of Agriculture estimates. Exports fell 14 percent in the first two months, the most for the period in government data since 2000. Futures may drop 19 percent to 72 cents a pound by the end of the year on the Chicago Mercantile Exchange, based on the median of nine trader and analyst estimates compiled by Bloomberg. 

• Rebar Near Lowest in Four Months as Iron Ore Price Declines. Steel reinforcement-bar futures fell to near the lowest level in more than four months as the price of iron ore, used to make the building material, fell. The contract for delivery in October on the Shanghai Futures Exchange dropped as much as 0.8 percent to 3,722 yuan ($603) a metric ton and traded at 3,727 yuan at 10:40 a.m. local time. 

• Rubber Heads for Five-Month Low as China Demand Seen Faltering. Rubber declined for a fourth day, heading for a five-month low reached yesterday, on concerns that a slowing economy and rising inventories in China, the biggest buyer, will reduce demand for the commodity used in tires. The contract for delivery in September lost as much as 1.2 percent to 254.5 yen a kilogram ($2,590 a metric ton) on the Tokyo Commodity Exchange, before trading at 255.7 yen by 11:28 a.m. local time. Futures, which lost 7 percent in the past three days, plunged to 247 yen yesterday, the lowest since Nov. 15.

• Reid: Letter to U.S. Senator Containing Ricin Found. Postal officials intercepted a letter sent to a U.S. senator from Mississippi that contained poisonous ricin, with lawmakers learning of the incident as they were being briefed on yesterday’s bombings at the Boston Marathon. Investigators have identified a suspect in the mailing, a person who “writes to a lot of members,” Senator Claire McCaskill, a Missouri Democrat, told reporters. The letter was postmarked from Memphis, Tennessee, and tested positive for ricin, Senate Sergeant-at-Arms Terrance Gainer said in an e- mail. Authorities have “no indication” of any other suspicious letters, he said. Still, the timing of the letter’s discovery following the Boston bombings evoked memories at the Capitol of anthrax mailings that targeted lawmakers in 2001. 

• Google(GOOG) Outlines Web Glasses Specification Ahead of Sales. Google Inc. released technical specifications for its Glass wearable computing device, encouraging software developers to create applications for the Web-enabled spectacles as they get closer to mainstream sales.

Wall Street Journal: 

• Boston Bomb Clues Surface. Lethal Devices Believed Built From Pressure Cookers; Hotels, Rentals Canvassed. Authorities investigating the Boston Marathon blasts that killed three and injured more than 175 believe the two bombs were assembled from household pressure cookers, a crude but effective explosive that has been thwarted before in U.S. terror plots. Investigators are exploring whether the bombs were assembled not far from the scene of Monday's horrific explosions since transporting such improvised devices over any significant distance could trigger a premature detonation, according to a law-enforcement official with knowledge of the matter.

• The Boston Bombings: Live Updates.

• Firms Pinch Payments to Suppliers. Procter & Gamble Co.(PG) is planning to add weeks to the amount of time it takes to pay its suppliers, a shift that could free up as much as $2 billion in cash for the consumer products giant, people familiar with the matter said. P&G could use that cash to fund investments in new factories overseas or to help pay for stock buybacks. That added flexibility, however, will come at the expense of the companies that supply P&G with materials or services. The suppliers will have to tie up more of their own cash in receivables or eat the interest costs charged by banks to bridge the gap until P&G pays its bills.

• Reinhart-Rogoff Response to Critique. A new paper by Thomas Herndon, Michael Ash and Robert Pollin calls into question research on public debt and its effects on growth by Harvard University economists Carmen Reinhart and Kenneth Rogoff. This is their response:

Fox News:

• FBI, Boston police say range of suspects, motives remains 'wide open'. The FBI and state and local police are intensifying their probe into Monday's bombing at the finish line of the Boston Marathon, vowing a "worldwide investigation" and appealing to the public for tips and cellphone pictures that might yield clues about who was behind the horrific attack. "At this time there are no claims of responsibility," FBI officials said in a press conference Tuesday. "The range of suspects and motives remains wide open."

MarketWatch.com: 

• Gold ends higher after 2-session drop of over $200.

CNBC:

• China Local Authority Debt 'Out of Control'. A senior Chinese auditor has warned that local government debt is "out of control" and could spark a bigger financial crisis than the U.S. housing market crash. Zhang Ke said his accounting firm, ShineWing, had all but stopped signing off on bond sales by local governments as a result of his concerns. "We audited some local government bond issues and found them very dangerous, so we pulled out," said Mr. Zhang, who is also vice-chairman of China's accounting association. "Most don't have strong debt servicing abilities. Things could become very serious." The International Monetary Fund, rating agencies and investment banks have all raised concerns about Chinese government debt. But it is rare for a figure as established in the Chinese financial industry as Mr. Zhang to issue such a stark warning. 

• Yahoo(YHOO) Earnings Beat, but Revenue Disappoints. Yahoo reported first-quarter earnings that topped forecasts, but revenue fell short and shares fell after-hours.

• Scary Pattern Could Be Forming on S&P 500 Chart. A scary head-and-shoulders pattern could be building in the S&P 500, and this negative chart formation would be created if the market stalls just above current levels.

Zero Hedge: 

• The Most Disturbing Chart From Today's IMF Outlook Revision. (graphs)

• Collapsing CapEx: Intel(INTC) Edition. (graph)

• El-Erian's Summary: "Virtually Every Market Is Trading At Very Artificial Levels". (video)

• Venezuela President-Elect Warns Opposition Protests Are A Death Wish. (pics)

Business Insider: 

• Why Fracking Is Actually Helping The Environment.

• How The Deadly New Bird Flu Is Spreading Across China. 

• ROSENBERG: There's Big Trouble Coming For Corporate Profit Margins.

IBD:

• Biotech Alkermes(ALKS) Poised To Swell On Pipeline Wins.

USA Today: 

• Bond guru Gundlach calls for investors to get defensive. Jeffrey Gundlach is warning investors against joining the stampede of euphoria overwhelming the stock market, making him a startling contrast to the bulls pushing stocks markets higher. During a meeting with money managers in the Los Angeles, the head of money management firm DoubleLine Capital cautioned many bets investors are making based on aggressive actions by central banks around the world may backfire. Chasing stocks and avoiding relatively safe government bonds, an increasingly popular trade, will likely not result in a happy ending.

Reuters: 

• EU trade chief seeks backing to investigate China's Huawei, ZTE - diplomats. The European Union's trade chief will seek the backing of EU states to investigate Chinese telecoms equipment makers Huawei and ZTE, even without a complaint from European manufacturers, EU diplomats said on Tuesday. The European Commission, the EU's executive body, has been collecting evidence to prepare a possible case against Huawei and ZTE over state subsidies it says allows the companies to undercut European firms.

• U.S. Republicans press Fed on when regulators can break up a bank. U.S. Republican lawmakers on Tuesday pressed a Federal Reserve official on how to tell if any banks pose a "grave threat" to the financial system, a finding that would allow regulators to take drastic steps such as forcing a bank to sell assets. The 2010 Dodd-Frank financial oversight law gives the Federal Reserve authority to impose tough restrictions on individual firms it feels could shatter the financial system. But this authority could create uncertainty in financial markets if regulators do not explain what types of threats could trigger the tougher oversight, Republican members of a U.S. House of Representatives subcommittee said on Tuesday.

• Rate spike may lead to US muni 'Armageddon'-SEC member. Investors in the $3.7 trillion U.S. municipal bond market could soon face an "Armageddon" if interest rates spike, a member of the Securities and Exchange Commission said on Tuesday. Commissioner Dan Gallagher told a roundtable of market participants hosted by the SEC that recent bankruptcies in California pose the threat of losses to bondholders. "You tack that on to rising interest rates and we've got a real Armageddon on our hands here," he said.

• CSX(CSX) profit rises despite coal struggles. CSX Corp, the No. 2 U.S. railroad, said on Tuesday that quarterly profit rose as it cut expenses and saw shipment volumes of some merchandise rise, helping the company fight a still-weak coal business.

Telegraph: 

• Francois Hollande faces austerity revolt from own ministers. French president Francois Hollande is facing an anti-austerity revolt from his own ministers as he pushes through a fresh round of tax rises and austerity to meet EU deficit targets.

Xinhua:

• China Should Be Vigilant About Financial Overheating. Main challenge for the Chinese economy is how to convert to sustainable and consumption-driven growth, citing Jorg Decressin, the deputy director of the IMF's research department, as saying. Emerging economies should prevent capital inflow risks, he said.

China Securities Journal:

• Foreign investors may continue to short Chinese banks, citing an unidentified person from PE industry in city of Chenzhen.

Evening Recommendations 

• None of note

Night Trading

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 114.50 -2.5 basis points.

• Asia Pacific Sovereign CDS Index 90.75 -2.5 basis points.

• FTSE-100 futures +.05%.

• S&P 500 futures -.33%.

• NASDAQ 100 futures -.28%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (PNC)/1.56

• (DGX)/1.03

• (ABT)/.41

• (MAT)/.08

• (BK)/.52

• (TXT)/.45

• (BAC)/.23

• (DOV)/1.08

• (STJ)/.91

• (PJC)/.51

• (SNDK)/.79

• (AXP)/1.12

• (KMI)/.32

• (EBAY)/.62

• (STLD)/.21 

Economic Releases
10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +1,200,000 barrels versus a +250,000 barrel gain the prior week. Gasoline supplies are estimated to fall by -800,000 barrels versus a +1,699,000 barrel build the prior week. Distillate inventories are estimated to fall by -350,000 barrels versus a -169,000 barrel decline the prior week. Finally, Refinery Utilization is estimated unch. versus a +.5% gain the prior week.

2:00 pm EST

• The Fed's Beige Book.

Upcoming Splits

• (TU) 2-for-1

• (CRM) 4-for-1

Other Potential Market Movers

• The Fed's Stein speaking, Fed's Bullard speaking, Fed's Rosengren speaking, China property price data, Bank of Canada rate decision, weekly MBA mortgage applications report and the BoE minutes could also impact trading today.

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

Stocks Rebounding into Final Hour on Commodity Bounce, Short-Covering, Transports/Homebuilding Sector Strength

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Light

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• VIX 14.24 -17.64%

• ISE Sentiment Index 85.0 +16.44%

• Total Put/Call .87 -23.01%

• NYSE Arms .78 -60.32%

Credit Investor Angst:

• North American Investment Grade CDS Index 82.26 -3.62%

• European Financial Sector CDS Index 166.92 -2.40%

• Western Europe Sovereign Debt CDS Index 103.01 -.12%

• Emerging Market CDS Index 231.54 +1.97%

• 2-Year Swap Spread 14.0 -.75 bp

• TED Spread 22.0 -.25 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -16.50 +.75 bp

Economic Gauges:

• 3-Month T-Bill Yield .06% unch.

• Yield Curve 150.0 +4 basis points

• China Import Iron Ore Spot $139.40/Metric Tonne -1.06%

• Citi US Economic Surprise Index 4.10 -7.1 points

• 10-Year TIPS Spread 2.40 unch.

Overseas Futures:

• Nikkei Futures: Indicating +199 open in Japan

• DAX Futures: Indicating +29 open in Germany

Portfolio: 

• Slightly Higher: On gains in my biotech/tech/medical/retail sector longs
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 50% Net Long

Today's Headlines

Bloomberg:   

• SNB’s Danthine Says Economy Vulnerable to Credit Bubble. The Swiss economy is vulnerable to instability in the banking sector caused by an unsustainable rise in mortgage debt, the central bank’s vice president said.
• Peugeot Bank Cut to Junk at Moody’s on Europe Car Market. PSA Peugeot Citroen (UG)’s wholly owned bank was cut to one level below investment grade by Moody’s Investors Service, which said the auto-financing unit can’t escape the European car-market contraction plaguing its parent. The long-term rating on Banque PSA Finance’s debt was lowered by one step to Ba1 from Baa3, Moody’s said in a statement today. The outlook is stable, indicating the rating won’t be reduced again soon.
• European Stocks Slide as German Confidence Falls. European stocks fell for a third straight day as German investor confidence declined more than forecast and the International Monetary Fund cut its global growth outlook. Michael Page International Plc (MPI) slumped the most in 11 months after the U.K. recruiter reported lower profit. LVMH Moet Hennessy Louis Vuitton SA (MC) retreated to a five-month low as sales of fashion and leather goods slowed. Danone (BN) rallied to the highest in five weeks as the food company posted first-quarter sales growth that beat analysts’ estimates. The Stoxx Europe 600 Index (SXXP) sank 0.8 percent to 288.16 at the close of trading, extending the decline over the past three days to 2.3 percent. “The ZEW and other data shows that Germany is facing a slowdown,” Soeren Steinert, who helps manage about $24 billion as associate director for equities trading at Quoniam Asset Management GmbH in Frankfurt, wrote in an e-mail. “That will affect Europe for sure.”
• China Cities Fail to Resist Out-of-Control Property: Mortgages. All real estate markets are local, says the industry axiom, one that China’s central government is painfully aware of as its efforts to rein in home prices are undermined by uncooperative municipal authorities. Former Premier Wen Jiabao, in his final endeavor to make housing affordable, set an April 1 deadline for higher down payments and interest rates for second-home loans in cities with “excessively fast” price gains and ordered stricter enforcement of taxes on sales. Thirty-five provincial-level cities responded with measures insufficient to curb prices that climbed 150 percent from 2003 to 2012. “The local governments are just making a gesture to show they are following the orders,” said Ding Shuang, a senior China economist with Citigroup Inc. in Hong Kong. “Some of the targets are almost like jokes. The government’s enforcement of policies will be compromised.” Local officials lack the resolve to cool the market because proceeds from land sales contribute about a quarter of their fiscal income and are needed to fund infrastructure and other spending. Their reluctance to act decisively poses a challenge to Premier Li Keqiang, who replaced Wen on March 15 and inherited rising prices that aggravate social unrest by putting homes out of the reach of many Chinese.
• LDK Delinquency Flags Chance of Another Solar Bust: China Credit. LDK Solar Ltd. (LDK)’s failure to fully pay notes this week has raised the prospect of China’s second solar-industry failure this year as the company needs to repay a loan 10 times larger by June.
• Commodities Seen by IMF Dropping 2% This Year Amid Higher Supply. Commodity prices are set to fall 2 percent this year from 2012 amid increased supplies of raw materials from crude oil to grains, the International Monetary Fund said. Energy prices probably will decline almost 3 percent as supply rebounds from outages last year, the Washington-based IMF said today in an online report. Food prices will drop more than 2 percent on increasing world harvests, while metals may climb more than 3 percent on recovering world economies and increasing demand in China, the report showed. An IMF index of commodity prices is down 9 percent from a peak in April 2011 while still “elevated compared with historical levels,” according to the report. The GSCI has dropped 6.2 percent this year, compared with a 5.2 percent increase for the MSCI All-Country World Index of equities and Treasury returns of 0.5 percent, according to a Bank of America Corp. index.
• Gold Advances as Plunge Seen as Overdone, Central Banks May Buy. Gold rebounded as some investors deemed a 13 percent plunge over two days to be excessive and an Asian central banker said that policy makers may take the opportunity to buy. Silver also advanced. The two-day drop for gold was the biggest since January 1980, and prices reached the lowest since January 2011 earlier today.
• Carbon Falls Most Ever After EU Parliament Rejects Fix. European carbon permits declined by the most on record to an unprecedented low after lawmakers rejected an emergency plan to address a surplus of allowances. Carbon for December fell as much as 45 percent to 2.63 euros a metric ton on the ICE Futures Europe exchange in London, and German power prices for next year dropped to the lowest since at least 2007. Ireland, which holds the European Union presidency, vowed to continue talks on the plan after the bloc’s Parliament sent the draft back to its environment panel. The rejection may render Europe’s 54 billion-euro ($71 billion) cap-and-trade program “completely toothless,” leaving prices near zero for several years, said Patrick Hummel, an analyst at UBS AG in Zurich. Opponents of the plan, including the Polish government and the European People’s Party, the biggest political group in the Parliament, have argued it would raise energy costs and artificially boost prices.
• Goldman Shares(GS) Fall as Trading Revenue Misses Estimates. Goldman Sachs Group Inc. (GS), the Wall Street bank that generates the highest percentage of revenue from trading, dropped as much as 3 percent after revenue from that business fell more than its rivals. The shares slumped 2.5 percent to $142.80 in New York at 10:58 a.m., the largest decline in the 81-company Standard & Poor’s 500 Financials Index (S5FINL).

Wall Street Journal: 

• FBI Probe Heats Up in Deadly Boston Marathon Bombings. The FBI-led investigation into the bombings at the Boston Marathon that killed three and wounded more than 170 intensified Tuesday, with authorities interviewing witnesses and processing what one official called the "most complex crime scene" the city had ever dealt with. President Barack Obama in a brief statement Tuesday called the bombings an act of terrorism, though he added that authorities still don't know the identity or motive of the perpetrators.
• Boston Bombings: Live Coverage.
• IMF: Euro Zone at Risk of Long Stagnation. The euro zone could suffer an even more prolonged period of economic stagnation that would make the task of reducing government and private sector debt levels more difficult, particularly if "adjustment fatigue" stalls needed changes, the International Monetary Fund said Tuesday. In its twice-yearly World Economic Outlook, the Fund said the euro zone remains the weakest part of the global economy, and warned that a long period of low growth in the currency area would weaken the potential for expansion in the neighboring economies of central and Eastern Europe, as well as further afield. The Fund said that in the near-term, the euro zone still poses the greatest threat to a recovery in the global economy, citing "the fallout from events in Cyprus" and political stalemate in Italy, as well as "vulnerabilities" among the weaker members of the currency area. "What you have is weak banks, weak governments, low growth…and there is always a danger that they build on each other and things go from bad to worse." 
• Germany's Debt in 2012 Rises on Bailout Payments, Building Reserves. Contributions to European rescue efforts and the building of social insurance fund reserves helped to drive up Germany's benchmark debt level, data provided by the country's central bank showed Tuesday. German general government debt reached 2.17 trillion euros ($2.84 trillion) at the end of 2012, the Deutsche Bundesbank said in a statement. This equated to 81.9% of the country's economic output, putting it well above the European Union's upper limit of 60% as defined in the Maastricht Treaty, the 1992 agreement which helped pave the way for the common currency. Government debt rose by EUR81 billion last year, despite the fact that the general government balance actually recorded a surplus of EUR4 billion last year. "Of particular significance here were measures in connection with the European sovereign debt crisis, which accounted for EUR45 billion," the bank wrote. That amount included a EUR9 billion capital contribution to the euro zone's permanent rescue mechanism, the ESM, and EUR36 billion in loans via the temporary bailout fund, the EFSF. The EUR45 billion figure counts as debt but is not included in the country's annual budget deficit figure under European rules. This is because "in parallel with the increase in debt, an expansion in financial assets in the same amount is recorded," the bank wrote. Germany's contributions to bailout programs in troubled euro-zone states are technically loans, which, in theory at least, should be repaid in full, plus interest. As the largest contributor to euro-zone bailouts, German lawmakers are growing increasingly frustrated with being asked to prop up the currency zone's wobbliest states.
• The Best Indicator of U.S. Health is Wage Growth (or Lack Thereof).
• How and When Apple May Return More Cash to Shareholders.

Fox News: 

• Marathon bombs likely made from pressure cookers, shrapnel, sources say. Pressure cookers – possibly activated remotely by a cellphone – are believed to have been used to make the crude bombs that sent deadly shrapnel hurling into a crowd of onlookers and competitors at Monday’s Boston Marathon, experts told Fox News. Doctors treating some of the 176 injured victims believe the explosives were packed with deadly shrapnel, including pellets, nails and sharp metallic objects – with some patients having “40 or more” such fragments embedded in their bodies. “Many of them have severe wounds mostly in the lower part of their body – wounds related to the blast effect of the bomb, as well as small metallic fragments that entered their bodies – pellets, shrapnel, nails – that these bombs had,” George Velnahos, chief of trauma surgery at Massachusetts General Hospital, said Tuesday. “I wouldn't exclude completely the possibility that some of these fragments are environmental, but my opinion is that most of them were in the bomb,” Velnahos said. “They are numerous,” he added. “There are people who have 10, 20, 30 or 40 of them in their body or more.”
• Drastic security changes coming to large-scale public events, experts say.
• Target(TGT) Shares Slip After Warning 1Q Profit will Miss Forecasts. Shares of Target narrowed marginally on Tuesday after the retailer said it would likely miss expectations during the quarter due to softer-than-expected sales trends. Target, which is expected to report first-quarter earnings on May 22, saw shares slump 1% on the news in early trade.
• Redbook: U.S. Retail Sales Down 2.7% in First Week of April Vs. March. National chain store sales fell 2.7% in the first week of April from March, according to Redbook Research's latest indicator, released Tuesday. The index's fall compared with a targeted 2.1% decline. The Johnson Redbook Index also showed seasonally adjusted sales for the period were up 2% from last year, compared with a 2.6% targeted gain.

CNBC: 

• Fed's Evans Optimistic, Dudley Less So on Jobs Outlook. Two top Federal Reserve policy doves offered clashing views on the U.S. economic outlook on Tuesday, although both agreed the job market has not yet improved enough to merit any cuts to the central bank's bond-buying program.

Zero Hedge:

• Housing Starts Surge Due To Rental Housing Construction, Permits Miss Even With Seasonal Distortion. (graphs)
• Gas Price Drop Prompts Biggest Deflationary CPI Miss In 7 Months. (graphs)
• IMF Slashes World GDP Expectations; Japan Only Beacon Of Global Growth Hope. (graph)
• Germany: Land Of Poverty... Or Prosperity?
• Is The Fed's Uberdove Turning Hawkish? (video)

Business Insider:

• Time Warner Cable Is Going To Offer Live Streaming For iPhones And iPads Out Of The Home.
• The Citi Economic Surprise Index Just Went Negative...(graph)
• MICHAEL PETTIS: Urbanization May Be The Most Misunderstood Issue About China. Debt is the key problem for China, according to Pettis, due to China’s investment-driven growth.
  No one should be surprised at China’s excessive leverage, which Pettis said substantially exceeds its published number of 80% debt-to-GDP. “We have seen these investment-driven growth models before and they all end up exactly the same way,” he said. The initial spate of economically viable projects is ultimately displaced by less viable ones, and then by unviable projects. When that happens, he said, debt-servicing capacity becomes unsustainable. “That is why we always run into a debt problem,” he said. One of the least understood issues, Pettis said, is that urbanization will exaggerate China’s debt problems.
• Canada Has Got Problems.
• 4 Signs That The Housing Recovery Is Stalling. (graphs)

Reuters:

• Moody's still sees negative outlook for most US state, local governments. Moody's Investors Service said on Tuesday that most U.S. public finance sectors, such as state and local governments, still face a negative outlook and will likely continue to do so until fiscal and economic conditions strengthen. 
• France warned on growth goals, fiscal targets in doubt. France's economy could shrink this year and miss future government forecasts, the country's budget watchdog and the IMF warned on Tuesday, casting doubt on Paris's pledge to cut its deficit below 3 percent of output. 
• Italy's temporary layoff scheme runs out of cash, sparks protests. Thousands of idled Italian workers staged a sit-in in front of parliament on Tuesday and trade unions threatened strikes unless the government steps in to back a temporary jobless scheme which is running out of funds. Italy's often divided union confederations united to call on Mario Monti's caretaker government to find around 1.5 billion euros to guarantee payments due to some 700,000 workers sent home on reduced pay under the "cassa integrazione" scheme.

Telegraph:

• EU could be asked for more money to help Cyprus, says Jose Manuel Barroso. The European Commission has said that member states could be asked to provide additional help for newly bailed-out Cyprus, whose economy is set for a dramatic and painful downsizing.
• ECB 'can't do everything for everyone', says Mario Draghi. The European Central Bank, in charge of monetary policy for 17 different countries, "can't do everything for everyone at any time," ECB chief Mario Draghi has said.

Euromoney:

• CGCs: China's Murky Credit Channels.

Chinaxwcb.com:

• China Tightens Control of News Organizations' Social Media Use. State Administration of Radio Film and Television recently issued new rules banning reuse of news products from overseas media and websites without permission, according to a commentary. Editorial staff must obtain permission to set up microblogs for work purposes. Editorial staff mustn't release any information they acquire when on duty without permission.