Today's Headlines

Bloomberg: 

• German Ifo Sentiment Fell After Winter Chilled Recovery: Economy. German business confidence fell for a second month in April after winter weather hindered the recovery in Europe’s largest economy, adding to signs that the European Central Bank may cut interest rates. The Ifo institute in Munich said its business climate index, based on a survey of 7,000 executives, dropped to 104.4 from 106.7 in March. Economists in a Bloomberg News survey forecast a decline to 106.2, according to the median of 44 estimates. 
• Pimco Reduced Its Holdings of Spanish, Italian Bonds, Balls Says. Pacific Investment Management Co. cut its holdings of Spanish and Italian government debt starting last month after a rally in the securities, according toAndrew Balls, the London-based head of European portfolio management. “We’ve been reducing credit risk in our portfolios and in recent weeks we’ve cut Italy and Spain,” Balls said today in a telephone interview. “It’s a function of levels and fundamentals. The spreads look reasonable but not as attractive as they were.”
• Bird Flu Strain Spreads as Taiwan Reports First H7N9 Infection. Taiwan confirmed an H7N9 bird flu infection in a traveler returning to the island from China, the first incidence of the killer virus spreading outside the mainland. A 53-year-old Taiwanese man tested positive for the latest strain of avian flu after a business trip to the eastern city of Suzhou and returning to Taiwan via Shanghai, Minister of Health Chiu Wen-ta said at a briefing in Taipei yesterday. The patient, who is in critical condition in an isolation room, didn’t come into contact with birds and poultry, Chiu said. The first discovery of the virus outside China, 10 years after an outbreak of the Severe Acute Respiratory Syndrome, or SARS, may lead to increased scrutiny of travelers into and out of the country.
• Chinese Contracts Reach Four-Year High as Economy Slows: Options. The cost of hedging against swings in Chinese equities has risen to the highest level in almost four years relative to other emerging markets on signs the world's second-largest economy is losing momentum. The difference in implied volatility for the iShares FTSE China 25 Index Fund and the iShares MSCI Emerging Markets Index Fund has more than doubled to 5.12 since Feb., based on data compiled by Bloomberg on three-month contracts with an exercise price closest to the shares. That's the biggest gap since August 2009 for the measure of options costs.
• LG Electronics Profit Plunges 91% Amid Stagnant TV Demand. LG Electronics Inc. (066570), the world’s second-largest television maker, posted a 91 percent drop in first-quarter profit as a stagnant market hurt TV sales. The shares fell.
• Jones Group to Close 170 Stores While Trimming 8% of Workforce. Jones Group Inc. (JNY), the owner of the Jones New York, Nine West and Anne Klein fashion brands, will close 170 stores and cut 8 percent of its workforce after first- quarter profit trailed analysts’ estimates.
• Senate Will Pass Online Tax Bill This Week, Reid Says. The U.S. Senate will pass a bill this week that will let states collect sales taxes from retailers outside their borders, said Senate Majority Leader Harry Reid. Reid, a Nevada Democrat, blamed a “handful” of senators for delaying a final vote on the measure, which attracted 74 supporters on a procedural vote April 22.

Wall Street Journal: 

• Airlines Seek More Clarity On Controller Shortage.

Fox News: 

• America's engine of the future to get 'Made in China' label. Thanks to generous support from a foreign backer, there is renewed hope for an American attempt to revolutionize, modernize and sanitize the automobile engine. The catch?  The finished product will be stamped “Made in China.”

MarketWatch:

• GE Capital stops lending to gun shops: WSJ.
• Modified mortgages show ‘alarming’ default trend.

CNBC:

• Small Business Owners to Banks: Can I Get a Loan, Please.
• This Is the Worst Thing About Fake-Tweet Crash.

Zero Hedge: 

• March Durable Goods Implode, Plunge -5.7%; CapEx Recovery Put On Indefinite Hiatus.
• "Working Poor" Spark 170% Increase In Britons Needing Food Handouts In Past Year.
• Why Krugman and the Keynesians Are Lackeys for the Neofeudal Debtocracy.
• European "Bad Is Good" Stock Exuberance Continues But Bonds Reverse Gains. (graphs)
• Rwanda Is Spain Even As PIMCO/Blackrock Cut European Exposure. (graph)
• US Business Cycle Index Plunges Most In 22 Months. (graphs)

Business Insider: 

• Former Israeli Intelligence Chief: Iran Has Already Crossed Israel’s Red Line.
• Two Senators Just Introduced A Bill That Could Neuter Wall Street.
• Samsung's New Phone Can't Match The Competition.
• Here's What's Next For Italy.
• 4 Reasons Atlanta Is A Great Place For Entrepreneurs.

Reuters: 

• Boeing(BA) profit beats estimates despite 787 problems. Boeing Co's first-quarter earnings jumped nearly 20 percent, handily beating analysts' estimates and showing little impact from the 787 Dreamliner problems, sending the company's shares up more than 3 percent in midday trading.
• ECB says ditching austerity would not help euro zone. ECB policymakers rebuffed suggestions that Europe should ease up on austerity and said that while the central bank has room to cut interest rates, such a move would not necessarily help the economy much. European Central Bank Vice-President Vitor Constancio said that seeking to stimulate economies by stopping measures aimed at cutting government debt could merely increase countries' borrowing costs rather than triggering growth.
• Fisker, US govt grilled over loans to foundering carmaker. U.S. lawmakers grilled top officials from Fisker Automotive Inc on Wednesday over what was termed "the U.S. Department of Energy's bad bet" when it backed the "green" car-maker with hundreds of millions of dollars in loans. 
• METALS-Copper rebounds over $7,000 but capped by economy worries.

CNN:

• Apple(AAPL) hints at 'exciting new product categories'.

Telegraph:

• Euro may only last five years, says senior German government advisor. The euro has a “limited chance of survival” and may only endure another five years, Kai Konrad, one of the German government’s closest economic advisers, has claimed. 
• Bundesbank chief Jens Weidmann attacks FTT. The head of the German central bank or Bundesbank has warned that a planned European financial transactions tax could have unexpected negative implications for monetary policy.  

Australia Network News: 

• 21 people killed in social unrest in China's Xinjiang. Clashes in China's western region of Xinjiang have left 21 people dead, including police officers and social workers, a provincial government official said. Gun fights broke out in Bachu county after police went to search the home of locals suspected of possessing illegal knives, a report on government-run news website Tianshan Net said. The report said 15 of those killed were either police or social workers, including 11 members of China's Uighur ethnic minority, who live mainly in Xinjiang. A further six "gang members" were reportedly shot dead in the violence, while eight more were arrested. A provincial government official said these people were Uighurs but did not confirm their identity. The report said an investigation showed the gang members had been plotting to carry out "terrorist activities", and branded the fighting a "violent terror incident".

Bear Radar

Style Underperformer:

• Mid-Cap Growth -.27%

Sector Underperformers:

• 1) Education -7.92% 2) Biotech -2.38% 3) Telecom -1.71%

Stocks Falling on Unusual Volume:

• EW, PG, AMGN, FMX, VLY, TUP, AMCX, CFR, PEP, BCS, SO, RRC, UIS, FFIC, RES, CG, MSI, CTSH, PNRA, DV, EGOV, BBSI, PHI, ETH, AWAY, COR, SPNC, WYN, CSL, IDXX, IBB, TSS, SLAB, IRWD, FBC, CSL, T, FBC, JNPR and RHI

Stocks With Unusual Put Option Activity:

• 1) JNPR 2) GLW 3) JDSU 4) WDC 5) XLK
  

Stocks With Most Negative News Mentions:

• 1) IRWD 2) DV 3) EW 4) WYN 5) JNPR
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Value +.26%

Sector Outperformers:

• 1) Gold & Silver +2.89% 2) Oil Service +2.32% 3) Steel +1.69%
  

Stocks Rising on Unusual Volume:

• NFX, NGD, PBTH, CERS, BKI, LL, R, OC, YUM, BRCM, WLP, USG and OII

Stocks With Unusual Call Option Activity:

• 1) GLW 2) OC 3) LO 4) SYNA 5) OPK
  

Stocks With Most Positive News Mentions:

• 1) LMT 2) CIT 3) CB 4) WLP 5) WHR
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Napolitano Set to Decide on Mandate for Italian Premiership. Italian President Giorgio Napolitano is poised to announce his selection for prime minister after completing a round of talks with parliamentary leaders. “We will adhere to the choices made by the president,” Enrico Letta, a representative of Italy’s Democratic Party, said late yesterday after meeting Napolitano at the presidential palace in Rome. An announcement is due as soon as today, the president’s office said. Napolitano’s pick will have to unite the disparate forces in Italy’s divided parliament to give the country a government after an eight-week deadlock. This will be Napolitano’s second attempt at resolving the impasse after his first choice, ex- Democratic Party head Pier Luigi Bersani, failed last month to win support from a majority of lawmakers.

• China Banks’ Profit Growth Slowed Last Year as Economy Weakened. Profit growth at China’s banks slowed and bad loans climbed in 2012 as the world’s second- largest economy expanded at the weakest pace in 13 years. 

• China Stocks Rise First Time in Three Days; Phone Shares Advance. Chinese stocks rose after valuations on the benchmark index approached the lowest level since Dec. 24, as telecommunication and technology companies advanced. Chengdu Dr Peng Telecom & Media Group Co. jumped to the highest level in two years. Zhejiang Dahua Technology Co. climbed 4.9 percent to a record. Western Mining Co. rebounded from a four-month low after first-quarter net income more than doubled. Liquor-maker Sichuan Swellfun Co. (600779) lost 2.3 percent, leading declines by consumer staples producers. The Shanghai Composite Index (SHCOMP) added 0.7 percent to 2,199.41 at the 11:30 a.m. local-time break. The measure plunged 2.6 percent yesterday as a gauge of manufacturing missed estimates and trades at 12 times reported earnings.

• Rebar Trades Near Lowest in Four Months on Inventory Concerns. Steel reinforcement-bar futures in Shanghai fell for a third day to the lowest in more than four months as investors remained concerned about high inventories. The contract for October delivery on the Shanghai Futures Exchange declined as much as 0.5 percent to 3,581 yuan ($580) a metric ton, the lowest level since Dec. 5, and was at 3,599 at 10:14 a.m. local time.

• Rubber May Drop to Lowest Level Since 2009: Technical Analysis. Rubber may fall to the lowest since 2009 by October, extending a bear market that started this month, according to technical analysis by research company JSC Corp. 

• Juniper(JNPR) Forecast Misses Some Estimates on Network Sales.

Wall Street Journal: 

• Inside Merkel's Bet on the Euro's Future. Angela Merkel listened in Vatican City as Pope Francis, in his inaugural Mass last month, called on the powerful to care for the weak. A few hours later, in her limousine to the airport, the German chancellor took a phone call from the desperate president of Cyprus, Nicos Anastasiades. "I need more solidarity," he pleaded, according to officials familiar with the March 19 conversation. His parliament was about to reject a euro-zone bailout deal. His tiny country faced ruin. "I won't negotiate with you," Ms. Merkel replied. "You need to talk to the troika"—the International Monetary Fund, European Commission and European Central Bank. It was a typical Merkel move: trying to play down Germany's dominant role in reshaping Europe's currency union. Few in Europe believe it. However lightly Ms. Merkel treads, German strength in Europe is raising tensions. Many Greeks and Spaniards blame Berlin's austerity diktat for turning their countries' financial crises into economic depressions. On Monday, European Commission President José Manuel Barroso warned that German-backed austerity policies need to be softened because they lack sufficient "political and social support" in hard-hit countries. Germany's finance ministry retorted Tuesday that deficit-cutting is the only way to rebuild investors' trust in the euro zone. This account of Ms. Merkel's handling of Europe's crisis, based on interviews with 17 European policy makers, shows Cyprus's bailout flowing directly from principles that will continue to guide German leadership in Europe. In September, Ms. Merkel is expected to win a third term as chancellor. That means her agenda will dominate Europe's crisis response for years. The euro's survival hinges to a considerable extent on whether her strategy works.

• Twitter Hoax Sparks Swift Stock Swoon. A short-lived hoax on Twitter briefly erased $200 billion of value from U.S. stock markets on Tuesday, underscoring the vulnerability of financial markets to computerized trading programs that buy and sell shares without human intervention.

• Watchdog: Banks Are Still Too Intertwined. Government Inspector Criticizes 'Too-Big-to-Fail' Push as Not Going Far Enough; Mortgage Assistance Also Under Fire.

• Spain Property-Sale Efforts Face a Snag. Decree by Andalusia Region to Halt Evictions Could Crimp Moves by Country, Banks to Unwind Troubled Assets.

• Flying the Government Skies. The 4% FAA spending cut that somehow delays 40% of flights.

CNBC: 

• Is a Key Pillar of India's Economy in Jeopardy?

• For Suppliers, Good Apple(AAPL) Earnings Aren't Enough. Consumer technology giant Apple may have reported first quarter earnings that exceeded market expectations, but the company's disappointing forward guidance spells trouble for its Asian suppliers, said analysts.

Zero Hedge: 

• 1,000 Japanese Officers To Participate In "Island Recapture" Drill In California.

• The Mystery Of The "Spring Swoon" Revealed.

• Worth Over $500,000? Then QE Has Worked For You; Everyone Else Better Luck Next Time.

Business Insider: 

• Apple(AAPL) Posts Solid Quarter — But A Lousy Outlook.

• How The Boston Marathon Bombing Suspect Could Avoid The Death Penalty.

• How The Syrian Electronic Army Hacked The AP's Twitter.

• MAP: Everything That's Going Wrong In Europe.

New York Times:

• Regulators to Restrict Big Banks’ Payday Lending.

Reuters: 

• VMware(VMW) forecasts 2nd-qtr revenue below estimates, shares fall.

• Broadcom(BRCM) eyes more smartphone chip sales.

• Yum(YUM) profit beats even as bird flu batters China sales.

• Panera(PNRA) earnings rise, but miss estimates.

• FedEx(FDX) signs new $10.5 billion contract with USPS.

The Times:

• Europe’s tax on trading ‘will damage bond markets’. Serious doubts have been raised over Europe’s proposed tax on financial transactions after civil servants from participating member states suggested that it could drive up government borrowing costs and damage the functioning of the bond market.

The Guardian:

• Spain cuts deeper, brushing aside IMF warnings over deficit reduction. Prime minister Mariano Rajoy announces further round of austerity even as EU pledges to cut savings target.

Australian Financial Review:

• S&P Warns of Risk to AAA Rating. Standard & Poor’s has warned that Australia’s AAA rating could be vulnerable in five years if the credit ratings agency doubts the government’s commitment to restoring the surplus, national debt keeps rising and the economy fails to self-correct.

Sankei:

• China Communist Party's Central Military Commission on Jan. 14 approved its navy to point its artillery and fire-control radar in the direction of Japan Self-Defense Force ships, citing several people with knowledge of the matter. China approved the measures as a method to threaten Japan ships; timing of provocation was left up to captains of navy vessels.

Shanghai Securities News: 

• China's economic growth will fall to below 7.5% in 2Q, citing Zhang Ping, deputy head of the Chinese Academy of Social Sciences' economic institute.

China Securities Journal:

• China's eastern city of Hangzhou will likely start a property tax trial next month, citing people familiar with the matter. Shenzhen and Beijing have submitted property tax plans to the central government.

Evening Recommendations  
Susquehanna:

• Rated (ARO) Positive, target $18.

Night Trading

• Asian equity indices are +.50% to +1.25% on average.

• Asia Ex-Japan Investment Grade CDS Index 111.0 -1.5 basis points.

• Asia Pacific Sovereign CDS Index 89.25 -.75 basis point.

• FTSE-100 futures +.27%.

• S&P 500 futures +.10%.

• NASDAQ 100 futures +.06%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (PX)/1.39

• (PG)/.96

• (GLW)/.24

• (NOC)/1.73

• (WYN)/.67

• (WLP)/2.38

• (TMO)/1.29

• (WHR)/1.90

• (GRA)/.80

• (LLY)/1.05

• (EMC)/.39

• (F)/.37

• (ROK)/1.29

• (S)/-.34

• (OC)/.19

• (BA)/1.49

• (HES)/1.58

• (SYK)/1.01

• (QCOM)/1.17

• (CCI)/.04

• (TSCO)/.62

• (FFIV)/1.06

• (CAKE)/.42

• (AFL)/1.62

• (COG)/1.24

• (WDC)/1.77

• (LRCX)/.37

• (RYL)/.28

• (AKAM)/.45

• (CLF)/.33

• (FLS)/1.94

• (GD)/1.50

• (XLNX)/.45

Economic Releases
8:30 am EST

• Durable Goods Orders for March are estimated to fall -3.0% versus a +5.7% gain in February.

• Durables Ex Transports for March are estimated to rise +.5% versus a -.5% decline in February.

• Cap Goods Orders Non-defense Ex Air for March are estimated to rise +.3% versus a -2.7% decline in February. 

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +2,000,000 barrels versus a -1,233,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -600,000 barrels versus a -633,000 barrel decline the prior week. Distillate inventories are estimated to rise by +500,000 barrels versus a +2,364,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise by +.5% versus a -.5% decline the prior week.

Upcoming Splits

• None of note

Other Potential Market Movers

• The German/Italian 10Y  auctions, 5Y T-Note auction, Germany IFO Index, Australian CPI and the weekly MBA mortgage applications report could also impact trading today.

BOTTOM LINE: Asian indices are 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 Higher into Final Hour on Central Bank Hopes, Short-Covering, Homebuilding/Tech Sector Strength

Today's Market Take:

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Below Average

• Market Leading Stocks: Outperforming

Equity Investor Angst:

• VIX 13.54 -5.91%

• ISE Sentiment Index 100.0 +11.1%

• Total Put/Call .89 -12.75%

• NYSE Arms .97 +12.84%

Credit Investor Angst:

• North American Investment Grade CDS Index 80.76 -1.57%

• European Financial Sector CDS Index 157.40 -5.86%

• Western Europe Sovereign Debt CDS Index 97.67 -2.02%

• Emerging Market CDS Index 233.58 -1.32%

• 2-Year Swap Spread 13.5 unch.

• TED Spread 23.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -17.75 -.5 bp

Economic Gauges:

• 3-Month T-Bill Yield .05% unch.

• Yield Curve 147.0 unch.

• China Import Iron Ore Spot $136.40/Metric Tonne-1.16%

• Citi US Economic Surprise Index -4.90 +.1 point

• 10-Year TIPS Spread 2.37 +2 basis points

Overseas Futures:

• Nikkei Futures: Indicating +281 open in Japan

• DAX Futures: Indicating +20 open in Germany

Portfolio: 

• Higher: On gains in my retail, biotech, medical and tech sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Euro-Area April Manufacturing, Services Contract. Euro-area services and factory output shrank for a 15th month in April as the currency bloc struggled to emerge from a recession, adding to pressure on the European Central Bank to do more to boost growth. A composite index based on a survey of purchasing managers in both industries held at 46.5, London-based Markit Economics said today. That’s in line with the median of 26 economists’ forecasts in a Bloomberg News survey. A reading below 50 indicates contraction. The euro area’s woes were compounded today by concern global growth may falter after a report showed Chinese manufacturing expanding at a slower pace this month. “Added weakness in activity indicators and continued easing in inflation indicators will raise the pressure on the ECB to provide more stimulus,” said Jonathan Loynes, an economist at Capital Economics Ltd. in London. “What form that will come in -- interest rate cuts, LTROs or even bolder steps - - remains to be seen. The hurdles to the ECB undertaking some form of QE are a lot lower than some people would suggest.”
• Paris Hit by Property Freeze as Taxes Deter Buyers. At least one in four Paris apartments listed by realtor Agence Etoile can’t be sold, even with mortgage rates at record lows, as buyers and sellers fail to agree on price, the company’s director said. “I have some inventory that’s too expensive and sellers don’t want to lower prices,” Christine Perrissel said in an interview. “Buyers are just much more selective.” Across France, an economy that’s stalled for two years, joblessness at a 15-year high, property prices near record highs and new taxes have made households reluctant to borrow to buy homes.
• Government Bonds Surge as Italian, Irish Yields Drop to Records. European government bonds rose, with Italy’s two-year yields falling to a record, as euro-area output contracted for a 15th month in April, boosting speculation the region’s central bank will lower interest rates. The yield on Italian 10-year government bonds fell below 4 percent for the first time in almost 2 1/2 years, while Spanish and Portuguese yields dropped to the least since 2010. Borrowing costs in France and Ireland declined to the lowest on record as a purchasing managers’ index showed German services and manufacturing unexpectedly shrank. Benchmark German 10-year bund yields slid to the lowest since July. 
• Euro Declines as Weak Data Fuel ECB Rate-Cut Bets. The euro fell to a two-week low against the dollar as a report showed weakening services and manufacturing in the region, adding to speculation the European Central Bank will lower interest rates to spur economic growth.
• Abe Vows to Protect Isles as Shrine Visits Hurt Japan-China Ties. Japanese Prime Minister Shinzo Abe vowed to use force if necessary to defend islands also claimed by China as tensions rose over visits by his fellow lawmakers to a Tokyo shrine seen in Asia as a symbol of wartime aggression. China and Japan each issued formal protests today over the presence of each other’s vessels in waters around the islands, which lie in an area rich in resources including fish and oil. Abe today told a parliamentary committee that the government would not allow any Chinese boats to land on them. “In the unlikely event that they were to land, it would be natural to expel them by force,” he said.
• Goldman Cuts Commodity Outlook as It Exits Bet on Gold Drop. Goldman Sachs Group Inc. cut its “near-term” outlook for commodities and reduced forecasts for oil and coffee amid prospects for weak demand from China to Europe. The bank also exited a bet on lower gold prices. Goldman Sachs lowered its three- and 12-month return forecasts for the Standard & Poor’s GSCI gauge of 24 commodities to 2.5 percent, from 6 percent in three months and 3 percent in 12 months, and cut its near-term outlook on commodities to neutral from overweight, according to the report, dated today. It exited its bet on lower gold prices, with a potential gain of 10 percent, while saying bullion may fall even more. “Commodity returns have dropped sharply so far in April as weaker-than-expected macroeconomic data releases in the U.S., Europe and China furthered concerns around global economic growth,” New York-based analyst Samantha Dart said in the report. “The negative sentiment in the market has weighed on cyclical commodity prices in particular.” The GSCI index slid as much as 1.1 percent today as a report showed Chinese manufacturing expanded at a slower-than- expected pace, providing more evidence of a pullback in the country’s economic growth. Commodities, which touched a nine- month low on April 18, are down 6.4 percent this year.
• Zell Sells as Washington Faces Glut of Apartments: Real Estate. Washington is poised to be one of the only major U.S. cities with a decline in apartment rents this year after a surge in construction outpaced job growth, leaving the nation’s capital with a glut of properties. The Washington metropolitan area, including the suburbs of Maryland and Virginia, will see average rents decrease as much as 2 percent, making it only market other than Detroit to have a drop among the top 20 U.S. cities, according to Delta Associates. Rents will fall further in 2014, data from the Alexandria, Virginia-based property-research firm show.
• Too-Big-to-Fail Bill Increases Big Banks’ Capital Standards. Banks with more than $500 billion in assets would face higher capital standards meant to reduce risk and end an implied subsidy for the biggest lenders under a bill to be introduced tomorrow by two U.S. lawmakers. Senators Sherrod Brown, an Ohio Democrat, and David Vitter, a Louisiana Republican, said in a roundtable discussion in Washington today that their “too big to fail” legislation will focus federal assistance on core commercial banking activities while granting regulatory relief to community banks.

Wall Street Journal:

• The Boston Bombings: Live Updates.
• Republicans Say Fed ‘Willfully’ Withholding Documents. Two House Republicans have threatened to subpoena the Federal Reserve for nonpublic documents on how the central bank plans to wind down its more than $3 trillion bond portfolio without harming the nation’s economy.
• What to Watch for in Apple’s(AAPL) 2Q Earnings. 
• Germany Spurns Calls to Loosen Austerity Stance. Germany on Tuesday rebuffed growing calls for the euro zone to ease its austerity drive and urged member states to stick to fiscal consolidation and structural overhauls, a sign that the gulf between Berlin and its partners on how to pull Europe out of its crisis is widening. The German finance ministry said continuing current policies is the only way out of the crisis, despite recent calls from France, the U.S., the International Monetary Fund, and the European Commission to stem front-loading austerity and increase efforts to boost growth. "Through continuing our policies of growth-friendly consolidation we are systematically building up the trust of international investors lost in the crisis," the finance ministry said. 

Fox News:

• Israeli military official says Assad has used chemical arms in civil war. A senior Israeli military official says Syrian President Bashar Assad has used chemical weapons in his battle against insurgent groups trying to topple him. Brig. Gen. Itai Brun, the head of research and analysis in Israeli military intelligence, told a security conference on Tuesday that Assad has used chemical weapons "in a number of incidents."

CNBC: 

• China’s PMI Miss: Is It Downhill From Here? "It's a big miss. Confidence in the outlook for China has really diminished, particularly after first quarter growth data," said Tim Condon, head of research for Asia at ING. "People are now reforming their views on economy. The new view is that growth will be stagnant," he added.

Zero Hedge: 

• Spanish Bond Spreads Back Below 300bps - At 17 Month Lows. (graph)
• March New Home Sales As Expected While Average Home Price Plunges To Nine Month Low. (graphs)
• The Global Status Quo Strategy: Do More Of What Has Failed Spectacularly. 
• Sliding German Economy Unleashes Biggest European Rally In Eight Months. (graphs)
• SaxoBank CEO: "We Must Re-Evaluate The European Union".
• From A Twitter Hack To The Complete Evaporation Of All Market Liquidity In One Chart.

Business Insider: 

• Here's How A Hacked AP Tweet Instantly Got To Wall Street And Briefly Caused The Stock Market To Tank.
• Volvo's New Ads Are Anti-Rich People.
• NYSE Floor Trader Explains How Stocks Are Traded In Dark Pools.
• Here's Why Venture Capitalists Want To Make Bitcoin The 'Next Big Thing'.
• There Are Three Reasons Europe Had A Gigantic Day — And One Of Them Is Tragic.
• RICHMOND FED MANUFACTURING INDEX PLUNGES INTO NEGATIVE TERRITORY.

Washington Post:

• Japan’s no-apology diplomacy: Why a small Tokyo shrine is causing big trouble in Asia. For more than 75 years, Yasukuni was a symbol of Japan’s imperial mission; both were officially sacred. The shrine was considered the final resting place of Japanese soldiers, colonists and others who served the imperial expansion that had plunged all of East Asia and eventually the United States into a costly and horrific war.

Reuters:

• GLOBAL ECONOMY-Manufacturing data stokes fears of global spring swoon.
• German April Manufacturing PMI 47.9, MNI Says. 
• Bank of Spain forecasts Q1 GDP to fall 0.5 percent on quarter. The Bank of Spain said on Tuesday it estimated first quarter gross domestic product would fall 0.5 percent from the previous quarter and 2 percent from the year-ago period, due to sluggish consumer demand. "The Spanish economy will prolong a contraction of economic activity during the first quarter of 2013, although at a lesser pace than that seen at the end of last year," it said in its quarterly economic report.
• Factory data a new sign of slowing U.S. economic growth. U.S. factory activity expanded at its slowest pace in six months in April, the latest sign that economic growth continued to lose momentum early in the second quarter, though the recovery has not been derailed. 
• Copper falls to fresh 1-1/2 year low on weak China data.
• UN lowers Latin America 2013 growth view on Brazil, exports. A downward-revised projection for growth in regional powerhouse Brazil, and easing demand for the commodities-dependent region's exports are seen weighing on growth this year. 
• Mid-sized companies less likely to spend to expand-survey. Fewer mid-sized companies expect to make additional investments in their businesses or seek more loans than a year ago, according to a survey in the United States by banking giant JPMorgan Chase & Co. Only 35 percent of executives at the companies said they anticipate increasing capital spending in the next 12 months, down from 44 percent a year earlier, according to the survey released on Tuesday by the bank. It found that 16 percent said they will likely cut back on business investments, up from 13 percent who last year expected to retreat.
• Merkel defiant as austerity criticism mounts. Angela Merkel tried to contain her irritation when asked at a podium discussion in Berlin this week whether southern European countries could take much more German-ordered austerity. But the frustration in her voice was clear enough after a week in which several European allies broke ranks, and in a public challenge to Germany, effectively declared the era of deficit reduction in Europe to be over. "I call it balancing the budget," the German chancellor told her audience at a book presentation. "Everyone else is using this term austerity. That makes it sound like something truly evil." Merkel's appearance in Berlin this week, and the reaction of her closest allies to suggestions by the European Commission that euro member states loosen their fiscal reins, shows Germany will not soften its position. "Declaring an end to consolidation is absolute nonsense," Michael Fuchs, deputy leader for Merkel's Christian Democrats (CDU) in parliament, told Reuters. "In truth no one is really saving anyway, they're just issuing less debt than before."

USA Today: 

• Ricin suspect released from jail.

UPI:

• Retail Sales Up Slightly in Week. U.S. retail receipts rose 0.8 percent in the week ending Saturday, a U.S. trade group said. The International Council of Shopping Centers-Goldman Sachs weekly sales report said sales climbed 0.8 percent week to week and 1.9 percent compared to the same week a year earlier. The trade group said it was a strong week for staples. Sales of basic items "seemed to perform best over the past week with notable improvement at grocery stores and discounters." Business was weaker at a broad range of stores, including electronics, office supply, clothing, department stores and drug stores, the weekly consumer tracking survey found.

Financial Times: 

• OECD sounds fresh warning on Japan. The OECD has warned Japan that taming its vast debts remains the country’s “paramount policy challenge”, as prime minister Shinzo Abe goes all out to reflate the sluggish economy via aggressive fiscal and monetary stimulus.

Telegraph:

• QE is 'now a painkiller not an antibiotic'. Quantitative easing is now a "painkiller" which does not necessarily cure economic ills, but makes them easier to live with, a senior economist has told MPs.

Bild:

• Italy's Five-Star Movement leader Beppe Grillo says state will run out of revenue in September or October, in an interview. "It will have difficulty paying out pensions and wages," he said. Re-election of Giorgio Napolitano to presidency amounts to a "cunning coup d'etat," he said.

Finanz und Wirtschaft:

• Pimco is Reducing Risky Assets in Portfolios. PIMCO is slowly and globally selling risky assets that have developed "exceptionally well" until recently, CEO Mohamed El-Erian said in an interview. Says assets include bank bonds, high-yield corporate bonds. Says Pimco concentrates on robust balance sheets and success stories that are based on real growth. Says Pimco avoids "artificial" liquidity-assisted growth.

El Pais:

• EC May Allow Spain 2013 Budget Deficit at 6.5%. The new target compares with current target of 4.5%, citing people familiar with the matter. Spain will have until 2016 to reduce budget deficit to 3% compared with 2014 current deadline. France and Portugal will have one additional year to meet their budget deficit targets.