Stocks Falling into Final Hour on Rising Global Growth Fears, Terror Concerns, Technical Selling, Homebuilding/Tech Sector Weakness

Broad Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Most Sectors Declining
  

• Volume: Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• VIX 18.15 +9.93%

• ISE Sentiment Index 89.0 -1.11%

• Total Put/Call 1.18 -.84%

• NYSE Arms 1.01 -65.34%

Credit Investor Angst:

• North American Investment Grade CDS Index 84.98 +1.01%

• European Financial Sector CDS Index 175.54 +2.54%

• Western Europe Sovereign Debt CDS Index 98.84 -2.31%

• Emerging Market CDS Index 241.90 +3.24%

• 2-Year Swap Spread 14.0 -.25 bp

• TED Spread 22.5 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -17.25 +.75 bp

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.

• Yield Curve 146.0 -1 basis point

• China Import Iron Ore Spot $138.60/Metric Tonne -.50%

• Citi US Economic Surprise Index -5.0 -1.3 points

• 10-Year TIPS Spread 2.26 -11 basis points

Overseas Futures:

• Nikkei Futures: Indicating +90 open in Japan

• DAX Futures: Indicating -3 open in Germany

Portfolio: 

• Slightly Higher: On gains in my index hedges and emerging markets shorts
• Disclosed Trades: None
• Market Exposure: 25% Net Long

Today's Headlines

Bloomberg:

• Italy Fails to Elect President as Bersani Coalition Fractures. Italy's Parliament failed to elect a president today as Democratic Party leader Pier Luigi Bersani faced a revolt from his allies after he sought to compromise with former Prime Minister Silvio Berlusconi. Bersani was deserted by allies on the first ballot as Franco Marini, the candidate he backed with Berlusconi forces received 521 of 1,007 possible votes, less than the necessary two-thirds majority. With no path to a Marini victory, both the Democratic Party and Berlusconi’s forces cast blank ballots on the second vote. The election continues at 10 a.m. tomorrow. “It’s another manifestation of how deeply divided Italy has become and how much resentment and mistrust there is among the leading politicians,” said Georg Grodzki, head of credit research at Legal & General Investment Management in London.
• Recession May Double Spain's Banking Bailout Needs: Euro Credit. A Spanish economic slump now in its sixth year is stocking concern the nation needs more than the 41 billion euros that it sought from European partners to bail out its banks. "The more the economy worsens, the more the capital base of the banks will get eroded and there is still a lot of cleaning up to be done," said Cesar Molinas, a partner at private equity firm CRB Inverbio in Madrid. Spanish lenders had 162 billion euros of bad loans in February, equivalent to 10.4% of the credit in the economy, according to Bank of Spain data published today. Losses make it harder for banks to bolster the economy by lending to businesses.   
• Germany Backs Cyprus Aid as Schaeuble Cites Default Risk. German lawmakers approved a rescue for Cyprus as Finance Minister Wolfgang Schaeuble warned that refusing aid to a fifth crisis-ravaged state risked triggering a sovereign default and contagion to other euro nations. The lower house, or Bundestag, backed German participation in the 10 billion-euro ($13 billion) financial lifeline by 487 votes to 101 with 13 abstentions in Berlin today, almost three years after the euro-area debt crisis first required lawmakers to act in May 2010. Lawmakers also approved extending aid terms for Ireland and Portugal. “We must avoid turning the problems in Cyprus into new problems for other euro countries,” Schaeuble told lawmakers in a speech before the vote. “Cyprus is in a dramatic situation. If we don’t help Cyprus, then Cyprus inevitably faces sovereign default.” 
• U.K. Retail Sales Drop More Than Forecast. Sales including fuel fell 0.7 percent from February, when they increased 2.1 percent, the Office for National Statistics said today in London. The median forecast of 23 economists in a Bloomberg News survey was for a 0.6 percent decline. From a year earlier, sales declined 0.5 percent. Weak wage growth and accelerating inflation are squeezing household budgets, hitting sales on Britain’s high streets and at shopping malls.
• Leading Index’s Decline Points to Slower U.S. Growth: Economy. The index of U.S. leading indicators unexpectedly declined in March, and manufacturing in the Philadelphia region slowed this month, adding to evidence the economy will cool. The Conference Board’s gauge of the outlook for the next three to six months fell 0.1 percent last month, the first drop since August, the New York-based group said today. The Federal Reserve Bank of Philadelphia’s factory index eased to 1.3 in April from 2 the prior month, another report showed.
• Copper Poised to Enter Bear Market as Industrial Metals Slide. Copper plunged through $7,000 a metric ton in London for the first time in almost 18 months and headed for a bear market on concern that demand from China to the U.S. and Europe may falter. Tin was also poised to enter a bear market. Copper for delivery in three months on the London Metal Exchange slumped as much as 4 percent to $6,800 a ton, the lowest level since October 2011, and was at $6,850.50 at 2:56 p.m. Seoul time. A close at the current level would be more than 20 percent below the metal’s last bull market peak in February 2012. Aluminum, nickel, zinc and lead also declined. 
• Morgan Stanley(MS) Shares Fall as Trading Revenue Declines. Morgan Stanley (MS) fell to a three- month low in New York after the firm reported the biggest drop in trading revenue among the largest U.S. banks. Shares of the company slumped 4.5 percent to $20.51, the biggest decline on the 81-company Standard & Poor’s 500 Financials Index. (S5FINL) Bond-trading revenue fell 42 percent in the first quarter and stock-trading revenue declined 19 percent, New York-based Morgan Stanley said today in a statement.
• Gold Climbs in New York on Signs Physical Demand Is Rebounding. Gold prices climbed in New York on signs that demand is rebounding among consumers and investors.

Wall Street Journal:

• Texas Fertilizer Plant Explosion: Live Updates.
• Credit Crunch Broadens European Business Rifts. Central banks around the world are flooding the market with liquidity in order to spark growth in the global economy. But that hasn't helped Spaniard José Blasco. Banks have cut credit lines to Mr. Blasco's sofa-bed maker Confortec SL to €100,000 ($131,000), compared with €500,000 several years ago. And while the Spanish state now borrows at around 5%, the 22-employee company would need to pay as much as 14% to get a bank loan—an option Mr. Blasco rejected.
• U.S. Probes Suspicions Syria Used Chemical Weapons. American intelligence agencies are reviewing what some officials see as the first credible indications that Syrian forces used small amounts of chemical weapons in recent fighting, said senior U.S. and European officials.
• Dr. Copper Catches a Cold.

Dow Jones:

• Lower Euro-Zone Rates May Not Spur Growth, Kranjec Says. Failure of transmission mechanism in euro area reflects fragmentation of financial markets, ECB Governing Council member and Slovenian central bank Gov. Marko Kranjec said.

Fox News: 

• Police say between 5 and 15 people killed in Texas fertilizer plant explosion, more than 160 hurt. A small Texas town where as many as 15 people were killed in an explosion at a fertilizer plant late Wednesday is reeling as rescuers comb the rubble house by house and one official laments: "part of that community is gone." Police say between 5 to 15 people were killed and more than 160 were injured during the massive blast at West Fertilizer in downtown West — a community of roughly 2,600 residents about 20 miles north of Waco.
• North Korea demands end of sanctions and drills as conditions for resuming talks.

MarketWatch:

• European markets setting up for a fast move lower.

CNBC: 

• New Study Finds China Manufacturing Costs Rising to US Level. The cost of manufacturing in China is going up and rising quickly. "It's something that we anticipated when we went to China, we just didn't know how quick it would happen," said Mark Miller, CEO of Prince Industries. 
• If I Were 'Dictator,' QE Would End Now, Fed's Lacker Says. Richmond Fed President Jeffrey Lacker told CNBC on Thursday that if you made him "dictator," the Federal Reserve would stop its massive bond purchases. He added that evidence is "sketchy" on whether the quantitative easing program has actually helped the nation's job picture. "I wouldn't have gone down this asset-purchase path. I'm in the camp that we should taper and stop right now," Lacker said in a "Squawk Box" interview from the 2013 Credit Markets Symposium in Charlotte, N.C. "You have to prepare markets, if it was up to me, if you made me dictator, that's what I would do."
• Rising Bank Profits Tempt a Push for Tougher Rules. Banks have been reporting steady growth in earnings since soon after the financial crisis. With the latest reports rolling in, analysts think the banks' first-quarter profits will be their best ever. But as welcome as such profits are to the banks, they may also become a source of discomfort. The ballooning bottom lines could embolden the lawmakers and regulators who want to introduce additional measures to overhaul the banking system.
  
  After the financial crisis, many officials involved in the regulatory revamp feared that tougher rules, like caps on bank assets, could destabilize the financial system and harm economic growth. It is a view that prominent bankers and lobbyists have also voiced.

Zero Hedge: 

• Initial Claims Snoozer, Just Higher Than Expected. (graphs)
• Philly Fed Is Latest Economic Miss: Number of Employees Dumps, Inventories Plunge.
• CLSA Breaks The Wall Street Mold: Sells Japanese Equities To Buy Gold.
• Obama Sends More Troops To Jordan, Preparing For "Stability Operations" In Syria.

Business Insider: 

• Here's The Argument That The Entire World Economy Is Starting To Go Bad.
• Boston Marathon Explosion Investigators Focus On Man Seen In Video.
• The House Just Passed The CISPA Cybersecurity Bill — Here's Why The Internet Is Up In Arms About It.
• I Just Realized How Zealously Facebook Tracks Me And Sells That Info To Advertisers.
• Videos Show Destruction Near The West, Texas Explosion.
• A Troubling 'Head-And-Shoulders' Pattern Is Quickly Developing In The Stock Market.
• This Man Pulled 16 People From A Collapsed Nursing Home After The Texas Explosion.

Reuters: 

• Diabetes, bone, pain drugs may face German price cuts. Drugs from Novo Nordisk , Amgen, Bayer and other companies could face price cuts in Germany as the country's medical cost-benefit agency widens a review into the value offered by medicines. The Federal Joint Committee, or G-BA, said on Thursday it would review the cost-effectiveness of a range of drugs in different treatment areas.
• Paulson fund hurt by sharp drop in gold -source. John Paulson's Advantage Fund, one of the hedge fund manager's biggest portfolios, is down 2.4 percent in April, largely due to the sharp selloff in gold, a source familiar with the numbers said on Thursday. 
• U.S. jobs, factory data point to slowing economy.
• In Spain, Catalan stand-off risks budget backslide. A stand-off between Spanish Prime Minister Mariano Rajoy and Catalonia, one of the country's wealthiest regions, risks the central government losing control of regional finances as Madrid seeks a softening of deficit targets from Brussels. Catalonia, which accounts for around a fifth of Spain's economy, has yet to present a 2013 budget to parliament and wants more control over the collection of its taxes.
• Fed's Tarullo says focused on big bank reliance on wholesale funding. Federal Reserve Board Governor Daniel Tarullo said on Thursday that U.S. banks were in better shape now than prior to the financial crisis, but he remained worried by the vulnerability of the very big firms to reliance on fickle market liquidity. "My concern in particular is the intersection of 'too big to fail' with very large institutions, with very large wholesale funding markets that are subject to runs, and eventually then to liquidity freezes," he told Bloomberg Television in an interview.

Open Europe Blog:

• Is the IMF turning bearish on Spain? It’s been a busy week for the IMF, releasing their latest iterations of the World Economic Outlook, Global Financial Stability Report and the Fiscal Monitor. We’ve been poring over the reports and will continue to do so (see here for some initial thoughts on the WEO). One forecast in particular caught our eye – Spain's. The IMF seems to have turned significantly more pessimistic on the prospect of a Spanish recovery. The charts below provide a comparison with the previous WEO forecasts (highlighting how these forecasts tend to be overly optimistic) - which very much confirms what we have noted before about the real risks in Spain.

Yonhap News:

• South Korea to Discuss Weak Yen's Impact at G-20. Spillover impact from weak yen will be discussed at G-20 meeting in Washington, citing South Korean Finance Minister Hyun Oh Seok.

Xinhua:

• China Detains 3 People for Spreading Bird Flu Rumors. Three people were detained in northern Chinese province of Shaanxi for spreading H7N9 bird flu rumors, citing the local government.
• China Orders Halt to Wild-Bird Sales Due to H7N9. State Forestry Administration also tells local authorities to step up epidemic surveillance, bank close contact between humans and animals in zoos, citing emergency notice from the govt agency.

Bear Radar

Style Underperformer:

• Large-Cap Growth -.77%

Sector Underperformers:

• 1) Homebuilders -2.34% 2) HMOs -2.01% 3) Internet -1.86%

Stocks Falling on Unusual Volume:

• UTEK, SNDK, UNXL, EWBC, FCS, DHR, ALB, ROG, GLNG, GHL, UNH, EBAY, EOPN, ALKS, SI, CRM, KYAK, MS, THR, FDX, AIXG, HUM, CFNL, LH, DGX, EOPN, CFNL and THR

Stocks With Unusual Put Option Activity:

• 1) XOP 2) SWN 3) KMX 4) BTU 5) IBM
  

Stocks With Most Negative News Mentions:

• 1) CAT 2) C 3) FDX 4) APA 5) EXPD
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Value -.10%

Sector Outperformers:

• 1) Gold & Silver +2.75% 2) Road & Rail +1.99% 3) Oil Service +.89%
  

Stocks Rising on Unusual Volume:

• TSM, SPRD, PEP, UNP, PVTB, THRX, SCSS, BTU, GOLD, CLDX and VZ

Stocks With Unusual Call Option Activity:

• 1) THRX 2) WLL 3) PEP 4) ESRX 5) CPB
  

Stocks With Most Positive News Mentions:

• 1) COG 2) AXP 3) AYI 4) VZ 5) AN
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Thursday Watch

Evening Headlines 
Bloomberg: 

• G-20 Draft Affirms Commitment to Avoid Competitive Devaluations. The Group of 20 economies will affirm a commitment to avoid weakening their currencies to gain an advantage for their exports, according to a draft statement prepared for a meeting this week in Washington, Bloomberg BNA reported. The draft statement, seen by a Bloomberg BNA reporter, maintains a pledge made in February in Moscow to “move more rapidly toward more market-determined exchange rate systems and exchange-rate flexibility” and to refrain from competitive devaluations. A first draft communique, prepared for meetings of finance ministers and central bankers starting today, describes the global outlook as “generally somewhat weaker and uneven” with “unbalanced” recoveries between advanced economies and emerging markets. The maintaining of the language on currencies suggests the G-20 members will withhold direct criticism of Japan’s efforts to rally its economy from 15 years of deflation so long as it doesn’t seek to do so at their expense by driving the yen down.

• China Home Prices Rise in Almost All Cities on Mild Local Curbs. China’s new home prices rose in all but two cities, led by major centers, as local governments announced milder-than-expected property measures and targets. Prices in March climbed in 68 of the 70 cities the government tracks from a year earlier, the National Bureau of Statistics said in a statement today, the most since September 2011. The southern city of Guangzhou posted the biggest gain, rising 11.1 percent from the same period last year. Beijing prices jumped 8.6 percent, while they advanced 6.4 percent in Shanghai, both the most since January 2011 when the government changed its methodology for the data. 

• China Bird-Flu Outbreak Seen Adding Risks as Growth Slows. China’s deadly bird-flu outbreak is rippling through industries from restaurants to travel, adding economic headwinds after last quarter’s unexpected slowdown. The disease “may suppress domestic consumption in the near term,” Goldman Sachs Group Inc. said in a report this week. Ding Shuang, a Citigroup Inc. economist in Hong Kong, sees a danger of “short-term volatilities” in growth and inflation and of bigger effects if found to transmit between humans. The outbreak, which has sickened at least 82 people and killed 17 so far, threatens to extend the longest streak of growth below 8 percent in at least 20 years in the world’s second-largest economy. The 2003 global pandemic of severe acute respiratory syndrome showed the risks associated with such incidents, with Credit Suisse Group AG estimating China’s expansion in the second quarter of that year was cut by about 2.4 percentage points after seasonal adjustments. “Consumption is likely to stay weak in the second quarter because of the outbreak,” said Li Wei, a Shanghai-based economist at Standard Chartered Plc. “We don’t know how the bird flu is going to evolve.” The virus is affecting restaurant sales as people eat more meals at home and having an impact on factory production through the food industry, Li said without giving specific estimates. 

• Li Ka-Shing Port Workers Widen Protests After New Wage Offer. Hundreds of port workers at Li Ka- shing’s Hong Kong terminals surrounded his Cheung Kong Center headquarters in the city’s business district after rejecting a pay raise aimed at ending a three-week strike. 

• Moutai Profit Growth Slows Amid Xi Austerity Push. Kweichow Moutai Co. (600519), China’s largest maker of baijiu liquor, said first-quarter profit rose 21 percent, less than half the pace of the year-earlier period as President Xi Jinping pushes to curb extravagant spending by government officials.

• Asian Stocks Decline, Led by Mining Companies on Growth. Asian stocks fell, led by mining companies after commodity prices slumped on concern a weaker outlook for global economic growth will crimp demand for raw materials. BHP Billiton Ltd. (BHP), the world’s biggest mining company, sank 3.3 percent in Sydney. LG Display Co., which supplies touch screens for Apple Inc.’s iPhone and iPad, dropped 3.4 percent in Seoul after audio-chip maker Cirrus Logic Inc. reported an inventory glut that suggests iPhone sales may fall short of analysts’ expectations. Softbank Corp., Japan’s third-largest wireless carrier, lost 1.7 percent as a rival’s bid for Sprint Nextel Corp. gained shareholder support. The MSCI Asia Pacific Index (MXAP) slipped 0.5 percent to 136.79 as of 11:57 a.m. in Tokyo, with about three shares falling for every two that rose on the gauge.

• Brazil Raises Rate From Record Low as Inflation Saps Growth. Brazil’s central bank raised its benchmark rate for the first time since July 2011, as policy makers seek to slow inflation levels jeopardizing an economic recovery. The bank’s board, led by President Alexandre Tombini, voted 6-to-2 to increase the Selic rate 25 basis points to 7.50 percent from a record low, matching the median forecast from 58 economists surveyed by Bloomberg. Policy makers said that “the high level of inflation” and “resilience of inflation” required a response, which was tempered by the central bank’s recognition that “external uncertainties” also required “that monetary policy be managed with caution,” according to the board’s statement posted on Banco Central do Brasil’s website. 

• Copper Below $7,000 for First Time in 18 Months as Metals Slide. Copper in London fell below $7,000 for the first time in almost 18 months as data from Europe to China, the biggest user, raised concern that demand is faltering. Aluminum, nickel, zinc, tin and lead also retreated. Copper for delivery in three months on the London Metal Exchange plunged as much as 4 percent to $6,800 a metric ton, the lowest level since October 2011, and was at $6,840.25 at 9:38 a.m. in Shanghai. Metal for delivery in August was at 50,530 yuan ($8,175) a ton, declining by a daily limit, on the Shanghai Futures Exchange. The July futures contract on the Comex dropped 3.1 percent to $3.1035 per pound. European car sales are sliding to a 20-year low as demand plunged last month in Germany.

• Rebar Falls to Lowest Level in Four Months on China Economy. Steel reinforcement-bar futures declined to the lowest level in more than four months as slowing economic growth in China, the biggest user, led to a slump in industrial metals. The contract for October delivery on the Shanghai Futures Exchange dropped as much as 2.7 percent to 3,598 yuan ($582) a metric ton, the lowest level for a most-active futures since Dec. 7, before trading at 3,665 yuan at 10:15 a.m. local time. 

• Rubber Tumbles to Lowest Level in Five Months on Demand Concerns. Rubber slumped for a fifth day to the lowest price in five months as a selloff in commodities from crude oil to metals raised concern that global demand is waning. Rubber for delivery in September lost as much as 3.9 percent to 242.6 yen a kilogram ($2,474 a metric ton) on the Tokyo Commodity Exchange, the lowest level for the most-active contract since Nov. 14. Futures traded at 247.1 yen by 11:34 a.m.

• Kim Says World Bank Can’t Reject Coal If People Freeze. The World Bank, which has boosted investment in renewable energy, cannot refuse to finance a coal- fired plant in Kosovo if the alternative is having people there “freeze to death,” the lender’s president said. As the Washington-based institution considers providing partial guarantees for a lignite-fired power plant in the Balkan country, World Bank President Jim Yong Kim said today he’s looking for all possibilities to avoid investing in coal. If the lack of energy became “a humanitarian issue” and the bank got involved, it could at least make the project cleaner, he said. “I don’t think it’s fair to tell the people in Kosovo ‘While the rich countries continue to burn coal, you’re going to have to freeze to death because it’s against our political ideology to support you,’” Kim said on a panel discussion in Washington today. “I can’t do that.”

Wall Street Journal: 

• Video Provides Clues to Bomber. Federal investigators said Wednesday they are working to identify a person in a video who appeared to leave a bag in the spot where one of two bombs later exploded near the finish line of the Boston Marathon. Authorities also are trying to identify at least one other person seen in videos of the crowd, according to people familiar with the matter.

• The Boston Bombings: Live Updates.

• Dark Pool Brawl Breaks Out. A behind-the-scenes brawl has broken out between two market powers that represent opposite ends of the stock-trading spectrum. In one corner is NYSE Euronext, which claims to represent the good of the average investor and transparent trading on public exchanges. In the other corner: Credit Suisse Group AG, which runs the nation’s largest dark pool, Crossfinder. 

• For Stocks, Fed Stimulus Wearing Thin. 

• Rove: Steaming Toward the ObamaCare 'Train Wreck'. The implementation of this unpopular law is a story of missed deadlines and general bungling. In congressional testimony last week, Health and Human Services Secretary Kathleen Sebelius blamed Republican governors for her department's failure to create a "model exchange" where consumers could shop for health-insurance coverage in states that don't set up their own exchange. Nice try, but GOP governors aren't the problem. Team Obama's tendency to blame someone else for its shortcomings is tiresome. The Affordable Care Act requires HHS to operate exchanges in states that won't operate their own. Since the act became law in March 2010, it has been abundantly clear that the agency would have to deploy a model exchange. It is Ms. Sebelius's fault there isn't one.

Fox News:

• FBI has images of two persons of interest in Boston bombings, source says. A federal law enforcement source told Fox News that investigators are looking for two men that are persons of interest in Monday's Boston Marathon terror attack and have distributed photos for “law enforcement eyes only.” The FBI is not sharing the photos with the public. A Fox News reporter has seen the photos and called them “clear.”  

• Background check plan defeated in Senate, Obama rips gun bill opponents. The Senate on Wednesday defeated a vital background check amendment seen as the linchpin to Democrats' gun control bill, dealing a major setback to President Obama -- who lashed out at opponents in unusually blunt terms during remarks from the Rose Garden. The vote was 54-46, with supporters falling six votes short of the required 60-vote threshold. 

Breaking News:

• Texas Fertilizer Plant Explosion. 

MarketWatch.com:

• Heading off a China-style subprime crisis. Warning of local governments’ high exposure to bad debts, the credit agency Fitch recently downgraded China’s long-term local-currency rating from AA– to A+. Officials should take note: the downgrade underlines how closely international markets are watching developments in the country. 

• China is repeating Japan’s economic mistakes. Commentary: Wasteful investment and spending stunts growth.

• Beware the Transports’ weakness. Commentary: A potential Dow Theory non-confirmation brewing.

CNBC: 

• EBay(EBAY) Earnings Beat by a Penny; Outlook Falls Short. EBay delivered a slight beat on earnings but its outlook disappointed and shares fell after-hours.

• American Express(AXP) Earnings Beat; Revenue Falls Short. American Express reported first-quarter earnings that beat analysts' expectations on Wednesday but revenue was light as cardmember spending growth remained muted for the fourth time in a row. After the earnings announcement, the company's shares slipped in after-hours trading.

• Oil Slide Could Continue As Demand Picture Weakens. Oil prices have cascaded lower in the global commodities rout and may still have further to go before finding a floor, analysts say.

Zero Hedge: 

• Egan-Jones Downgrades Germany From A+ To A, Outlook Negative.

• Rick Santelli Asks The $14 Trillion Dollar Question. (video)

• Massive Fertilizer Plant Explosion Shakes Texas, Town Evacuated, Toxic Fumes - Live Stream.

• More Evidence That The Economic Peak Is In. (graphs)

• Late To The Party? After 203% Annualized Surge, Record Number Of Foreigners Buy Japanese Stocks.

• A Closer Look At Today's German Stock Market Flash Crash.

Business Insider: 

• MASSIVE EXPLOSION AT TEXAS FERTILIZER PLANT — HUNDREDS INJURED. (video)

• Cars Are Becoming So Expensive Auto Loans Take Record Time To Pay Off.

• The Gold Plunge May Have Been The First ETF-Led Death Spiral.

• CNN SOURCE: Everyone Went Silent For 15 Minutes After We Screwed Up The Boston Marathon Report.

The Blaze:

• Mind-Boggling Details Emerge About Ricin Letter Suspect: ‘I’m on the Hidden Front Lines of a Secret War’.

Reuters: 

• US regulator says banks still a risk for taxpayers. A top U.S. bank regulator said on Wednesday the country must do more to protect taxpayers from having to spend billions on bank bailouts, one of a growing chorus of critics of the current rules. Tom Hoenig, vice chairman of the Federal Deposit Insurance Corp (FDIC), said in New York that the Volcker rule - which would bar banks from betting their own money on financial markets but has not yet been finalized by regulators - would not go far enough. Instead, Hoenig wants to force banks to hive off risky activities such as trading and creating derivatives and to eliminate any taxpayer subsidy for these businesses.

• Vote on Italy president risks centre-left split. Italy's divided parliament begins voting for a new state president on Thursday, with former Senate Speaker Franco Marini the main candidate in a ballot that will severely strain the unity of the centre-left alliance led by Pier Luigi Bersani. The vote for a successor to President Giorgio Napolitano, whose term ends on May 15, will be a crucial step towards resolving the stalemate since the inconclusive election in February left no party with enough support to form a government. Even by the tangled standards of Italian politics the situation is complicated, but until the new president is elected, the paralysis that has hobbled government more than 50 days after the election will continue.

• SanDisk(SNDK) sees brighter 2013 with higher NAND prices. SanDisk raised its forecast for revenue this year and said it expects higher prices for its NAND memory chips, which are used in smartphones and tablets. Chief Financial Officer Judy Bruner's comments to analysts on a quarterly conference call on Wednesday helped reverse losses in SanDisk's stock after the company posted quarterly results that disappointed some on Wall Street, despite beating estimates.

• Investors sound alarm over AAA ratings on subprime auto bonds. While many new subprime auto bonds are getting the highest Triple A ratings, the ratings agencies themselves admit standards are loosening - and some in the market say that needs to change soon. Skeptical investors are increasingly warning that ratings for the white-hot asset class should become more conservative, especially regarding smaller, second-tier lenders with no long-term record in issuing asset-backed securities (ABS). The issue is particularly pressing, as subprime auto bond issuance has skyrocketed over the past year. So far in 2013, nearly US$7.5bn of new subprime auto ABS has been issued, roughly 32% higher than in the same period of 2012, according to Deutsche Bank data. There was only US$18.5bn in issuance for all of 2012, and just US$11.75bn the year before that. As supply expands, however, there is a marked difference in the quality of issuers - even among those getting similar ratings from the agencies.

• Risk assets slip on growth worries, gold tumbles. Risk assets slipped broadly on Thursday, following the overnight drop in U.S. and European equities on fears for global growth, and gold slid as money continued to flow out of gold-backed exchange-traded funds.

Telegraph:

• Fed and Bank of Japan caused gold crash. Commodity prices have been falling since September, culminating in a rout over the past two weeks. That is a classic warning for the global economy.

Sueddeutsche Zeitung:

• Audi's Stadler Warns German Consumer Uncertainty Growing. Audi Chairman Rupert Stadler says increased insecurity driven by debt crisis in southern Europe, citing interview. Says massive concern over reforms needed to cut debt in many European countries behind slump in sales of cars in Europe.

South China Morning Post:

• China's 'Golden Decade' for Coal Ended in 2011. Cleaner-burning natural gas to develop rapidly in coming decade, citing Liu Xiangdong, deputy director-general of China Electricity Council's dept of planning and statistics. China's market for coal-fired electricity to suffer "structural oversupply". Annual growth of coal fired-power to be less than 5% in coming decade, compared with 11% in previous 10-year period.

Shanghai Securities News:

• China Investigates Fixed-Income Trades. Chinese regulators are investigating fixed-income transactions in accounts typically used by senior traders at financial institutions. The government has sent teams to inspect trading records at firms in Shanghai, Beijing and Jiangsu province. A bond sold by a local government financing vehicle is the key target of the probe, citing people familiar with the situation.

• China Economic Growth May Slow in 4Q. China's economic growth may slow in 4Q, Li Zuojun, vice director of resources and environment at the State Council's development research center, wrote in an article. Fading stimulus effects started last May and new policies likely beginning in 2Q-3Q will contribute to slowing 4Q growth.

21st Century Business Herald:

• China Shenzhen Firms May Have Falsified Trade Data. Some trading houses in the southern Chinese city of Shenzhen may have falsified exports data to bring in "hot money," citing government officials.

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 115.50 +1 basis point.

• Asia Pacific Sovereign CDS Index 92.0 +1.25 basis points.

• FTSE-100 futures +.19%.

• S&P 500 futures +.04%.

• NASDAQ 100 futures +.13%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (PPG)/1.54

• (KEY)/.19

• (UNP)/1.96

• (BTU)/-.14

• (NUE)/.24

• (ADS)/2.52

• (AN)/.64

• (SHW)/1.09

• (BX)/.53

• (BBT)/.68   

• (UNH)/1.14

• (DHR)/.76

• (FITB)/.39

• (PEP)/.71

• (BAX)/1.05

• (PM)/1.34

• (OMC)/.75

• (MS)/.56

• (VZ)/.66

• (FCX)/.71

• (CMG)/2.13

• (COF)/1.62

• (IBM)/3.05

• (MSFT)/.68

• (RH)/.61

• (GOOG)/10.67

• (ISRG)/3.96 

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to rise to 350K versus 346K the prior week.

• Continuing Claims are estimated to fall to 3075K versus 3079K prior. 

10:00 am EST

• Philly Fed for April is estimated to rise to 3.0 versus 2.0 in March.

• Leading Indicators for March are estimated to rise +.1% versus a +.5% gain in February. 

Upcoming Splits

• (CRM) 4-for-1

Other Potential Market Movers

• The Fed's Lacker speaking, Fed's Kocherlakota speaking, Fed's Raskin speaking, German/French auctions, 5Y TIPS auction, Bloomberg Economic Expectations Index for April, weekly Bloomberg Consumer Comfort Index and the weekly EIA natural gas inventory report could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and technology shares in the region. I expect US stocks to open mixed and weaken into the afternoon, finishing modestly lower. The Portfolio is 25% net long heading into the day.

Stocks Falling into Final Hour on Rising Global Growth Fears, Terror Worries, Rising Eurozone Debt Angst, Tech/Financial Sector Weakness

Broad Market Tone:

• Advance/Decline Line: Substantially Lower
  

• Sector Performance: Every Sector Declining
  

• Volume: Around Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• VIX 16.52 +18.34%

• ISE Sentiment Index 88.0 +3.53%

• Total Put/Call 1.20 +36.36%

• NYSE Arms 2.53 +260.42%

Credit Investor Angst:

• North American Investment Grade CDS Index 84.34 +3.01%

• European Financial Sector CDS Index 171.12 +2.52%

• Western Europe Sovereign Debt CDS Index 101.18 -1.78%

• Emerging Market CDS Index 234.24 +.67%

• 2-Year Swap Spread 14.25 +.25 bp

• TED Spread 22.5 +.5 bp

• 3-Month EUR/USD Cross-Currency Basis Swap -18.0 -1.5 bps

Economic Gauges:

• 3-Month T-Bill Yield .05% -1 bp

• Yield Curve 147.0 -3 basis points

• China Import Iron Ore Spot $139.30/Metric Tonne -.07%

• Citi US Economic Surprise Index -3.70 +.4 point

• 10-Year TIPS Spread 2.37 -3 basis points

Overseas Futures:

• Nikkei Futures: Indicating -62 open in Japan

• DAX Futures: Indicating +25 open in Germany

Portfolio: 

• Slightly Lower: On losses in my retail/tech sector longs
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges
• Market Exposure: Moved to 25% Net Long