Today's Headlines

Bloomberg: 

• ECB Battles Germany on Pace of EU Plans to Handle Failing Banks. The European Central Bank clashed with Germany over how the European Union will handle struggling banks and whether to create a common agency and fund to manage failures. ECB Executive Board member Joerg Asmussen called for creating a central agency and an industry-funded common backstop for handling failing banks by “the summer of next year,” when the ECB takes up new supervisory duties. He set out the central bank’s position before EU finance chiefs met in Brussels today. In a public debate during the meeting, Finance Minister Wolfgang Schaeuble held to Germany’s view that the EU shouldn’t try to create a single resolution agency without amending current treaties.
• European Stocks Rise as Earnings Offset German Confidence. European stocks advanced as companies from ICAP (IAP) Plc to European Aeronautic Defence & Space Co. rallied after reporting earnings, offsetting German investor sentiment that gained less than forecast in May. ICAP Plc surged the most in more than four years after posting full-year profit that exceeded its previous forecast. EADS advanced 3 percent after earnings beat analysts’ projections. Anglo American Plc and Glencore Xstrata Plc each retreated at least 1 percent as JPMorgan Chase & Co. cut its forecast for China’s economic growth. The Stoxx Europe 600 Index added 0.4 percent to 305.66 at the close of trading, its highest level since June 2008.
• Oil Shockwaves From U.S. Shale Boom Seen by IEA Ousting OPEC. The U.S. shale boom will send “shockwaves” through the global oil trade over the next five years, benefiting the nation’s refiners and displacing OPEC as the driver of supply growth, the IEA said. North America will provide 40 percent of new supplies to 2018 through the development of light, tight oil and oil sands, while the contribution from the Organization of Petroleum Exporting Countries will slip to 30 percent, according to the International Energy Agency. The IEA trimmed global fuel demand estimates for the next four years, and predicted that consumption in emerging economies may overtake developed nations this year.
• Commodity Holdings Tumble to Lowest in Four Years, BofA Says. Money managers are the most bearish on commodities in more than four years as a majority expected a weaker Chinese economy for the first time in 14 months, a Bank of America Corp. survey showed. A net 29 percent of the fund managers surveyed were underweight the asset class in May as their positions “collapsed” to the lowest level since December 2008. One in four now consider a “hard landing” in China as the biggest risk to their investments. The bank surveyed professional investors who together oversee $517 billion. “There has been a marked uptick” in concern about China, said John Bilton, an investment strategist at Bank of America’s Merrill Lynch unit, at a press conference in London today. “A hard landing is not our core scenario, but certainly investors are right to start thinking they should at least hedge some of that tail risk.”

Wall Street Journal:

• Holder Discloses IRS Criminal Probe. Attorney General Says He Recused Himself From AP Case. Attorney General Eric Holder said Tuesday the Justice Department has opened a criminal probe of recently disclosed actions by the Internal Revenue Service. He said he ordered the investigation Friday, after the IRS apologized for what it said was inappropriate scrutiny of tax-exemption requests by conservative groups with "tea party" or "patriot" in their names.
• CBO Sees Deficit Narrowing to $642 Billion.
• Fitch Raises Greece's Credit Rating.
• EU Probes Oil Firms Over Price Fixing.
• Loeb's Sony Plan Is a Test for Abenomics. Activist investors rarely take on Japan's stuffy and clubby corporate culture. But with Prime Minister Shinzo Abe promising structural reform of Japan Inc., maybe the time has come to agitate for change. Hedge-fund billionaire Daniel Loeb's call for a breakup of Sony will demand a shift in attitude from corporate Japan.

MarketWatch:

• Philly Fed’s Plosser: Slow, then end, bond buys. Central banker says buys should be ended this year.
• Is tumbling Australian dollar canary in coal mine for U.S. stocks?

CNBC: 

• A Warning About Canada's Banks.

Zero Hedge: 

• DOJ's "Nixonian" Phone Spying Scandal Sets Labor Unions Against Obama.
• David Tepper Blesses The Market And Awaits "Manufacturing Renaissance". (video)
• Is Lumber The New Baltic Dry? (graph)
• Households Cut Another $110 Billion In Debt Even With $577 Billion In Q1 Mortgages Originated: Most Since 2007. (graph)
• The Market Isn't Prepared For This.

Business Insider: 

• Germany Is Different From Everywhere Else In Europe, And You Can See Why Nobody Wants Anything To Change. 
• Jon Stewart Destroys Obama Over The IRS Scandal. (video) 
• GOP CHAIR: Obama's Attorney General Should Resign Over The DOJ's AP Phone Scandal.
• Sorry, But Tesla's(TSLA) Only Profitable Because Of Your Tax Dollars.
• Copper Prices Are Tumbling. (graph)
• Apple(AAPL) Is Hiring Up For Its Microsoft Office Killer.

Reuters: 

• Fidelity gets SEC permission to run actively managed ETFs.

Telegraph:

• Rate rise will trigger economic shock, former BoE policymakers warn. Raising interest rates and unwinding quantitative easing will cause an unavoidable economic “shock” even after the recovery is established, two former Bank of England policymakers have warned.

Bear Radar

Style Underperformer:

• Large-Cap Growth +.69%

Sector Underperformers:

• 1) Coal -1.11% 2) Steel -.95% 3) Gold & Silver -.56%

Stocks Falling on Unusual Volume:

• TSL, JKS, HBHC, YPF, EGY, SKM, CLMT, JBLU, WES, SPH, EOPN, TSLA, SCTY, YY, SDT, AMAP, CTRP, AL, BBRY, JOY, CVRR, SKX, TRMB and RATE

Stocks With Unusual Put Option Activity:

• 1) OCN 2) SCTY 3) VHC 4) EWJ 5) TSLA
  

Stocks With Most Negative News Mentions:

• 1) FCX 2) CREE 3) KBH 4) FB 5) EBIX
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +1.08%

Sector Outperformers:

• 1) I-Banks +1.62% 2) Biotech +1.39% 3) Gaming +1.20%
  

Stocks Rising on Unusual Volume:

• IOC, WPX, LMOS, MNST, CPA, GOL, SNE, TTWO, SSYS, SODA, CPA, XONE, DDD, ESI, GMCR, APOL, SFLY, ECYT, AXLL, LNKD, MYGN, CZR and EW

Stocks With Unusual Call Option Activity:

• 1) DNR 2) SSYS 3) CPRT 4) FXY 5) SCHW
  

Stocks With Most Positive News Mentions:

• 1) FDS 2) WY 3) AMAT 4) JEC 5) EW
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Tuesday Watch

Evening Headlines 
Bloomberg: 

• Secret U.S. Trawl of AP Calls Decried by Press Groups. Media groups and government watchdogs said the U.S. Justice Department interfered with press freedom when it secretly collected telephone records from Associated Press reporters and editors over a two-month period last year. The AP disclosed the government’s action in a letter yesterday to Attorney General Eric Holder from Gary Pruitt, the president and chief executive officer of the news service. Pruitt called the collection of phone records at four locations used by reporters a “massive and unprecedented intrusion” of AP’s right to gather news under the U.S. Constitution. The Justice Department’s seizure of the Associated Press’s phone records is “Nixonian,” said Danielle Brian, executive director of the Project on Government Oversight. Holder “has trampled a line meant to protect our free and independent press.”

• IRS Focus on Tea Parties Stirs Dissent on Health Care Law. A handful of Cincinnati-based Internal Revenue Service employees have accomplished what no bipartisan White House dinner ever could: uniting the U.S. Congress. Capitol Hill lawmakers are now on a mission to dissect how the tax agency wound up targeting Republican-friendly groups for extra scrutiny. Republican Senate Leader Mitch McConnell called it a “travesty” and the chamber’s majority leader, Democrat Harry Reid, termed the matter “very troubling.” While the top tax collectors at the IRS face grillings in Congress, the ramifications of the outrage are likely to ripple far beyond them. Even as President Barack Obama yesterday labeled the IRS action “outrageous,” the issue will complicate his ability to press other initiatives, including implementing the health-care law, in which the IRS plays an enforcement role, political scientists and strategists from both parties said yesterday. “This was dirty, no question, and it will do nothing to improve the tense relationship between the Obama administration and Republican leaders,” said Kenneth Warren, a political science professor at Saint Louis University in Missouri. 

• Cameron Gives Way to Tory Rebels in Backing EU-Referendum Bill. British Prime Minister David Cameron ceded to the rebellion in his own Conservative Party, offering to support a bill authorizing a referendum by 2017 on the U.K.’s continued membership in the European Union. The prime minister’s visit to the U.S., where he has been talking about the conflict in Syria and his agenda for next month’s Group of Eight summit, has been overshadowed by a growing number of Conservative lawmakers saying they planned a Parliamentary vote against his legislative program to protest his failure to deliver such a bill. 

• Tata Steel Flags $1.6 Billion Writedown on Weak Europe Demand. Tata Steel Ltd. (TATA), India’s biggest producer, said it expects a $1.6 billion writedown in asset values because of a drop in steel demand in Europe. Demand in Europe has fallen by almost 8 percent in the year ended March 31, Mumbai-based Tata said yesterday in a statement. Weaker economic and market conditions in Europe are expected to continue in the near and medium-term, leading to a cut in expected cash flows and the valuation of the company’s European business, Tata said. 

• China Stocks Fall Most in 3 Weeks on Economic, Property Concerns. China’s stocks fell the most in three weeks on concern an economic slowdown is deepening and the government is introducing more restrictions on the property market to limit gains in housing prices. China Vanke Co., the largest developer, dropped the most in three weeks after the 21st Century Business Herald reported Beijing tightened rules for the pre-sale of homes. China Eastern Airlines Corp. slid to a one-month low after Credit Suisse Group AG said Chinese airline traffic growth slowed last month. ZTE Corp. slumped 4.4 percent after the Wall Street Journal reported the European Union will seek to start a probe into alleged unfair trade practices by the telecom company. The Shanghai Composite Index (SHCOMP) fell 1.6 percent to 2,206.52 at the 11:30 a.m. break, the most since April 23. The CSI 300 Index slid 2 percent to 2,480.

• Asian Shares Rise for Second Day as Yen Rebounds; Gold Advances. Asian shares rose for a second day, led by Japanese utilities, as gold climbed after a three-day decline lured buyers. Japan’s yen rallied from the lowest level in more than four years, while the Malaysian ringgit advanced. The MSCI Asia Pacific Index added 0.4 percent at 11:09 a.m. in Tokyo, while South Korea’s Kospi Index increased 0.8 percent.

• Rubber Snaps Five-Day Rally as Rebound in Yen Reduces Appeal. Rubber fell from a two-month high, snapping a five-day winning streak, as a rebound in Japan’s currency against the dollar cut the appeal of yen-based futures. Rubber for delivery in October lost as much as 2 percent to 288 yen a kilogram ($2,837 a metric ton) on the Tokyo Commodity Exchange and was at 289.8 yen at 10:18 a.m.

Wall Street Journal: 

• EU Closer to China Telecom Probe. The European Union's trade chief will ask for backing this week from senior members of the bloc's executive arm to start investigations into alleged unfair trade practices by Chinese network-equipment suppliers Huawei Technologies Co. and ZTE Corp., an EU official said, amid concern from European companies that such a probe could prompt a backlash against their interests in China.

• Bank Bailout Blues Stall U.K. Recovery. Five years after rescuing one of the world's biggest banks, the British government still hasn't figured out what to do with it—a sign of the country's struggle to put its banking woes behind it.

• Red Jahncke: The Federal Revenue Surge Won't Last. Large capital gains were taken as the low tax rates enacted by Bush neared their expiration date.

• The IRS Wants You. The scandal over politicized tax enforcement is growing. There is a pattern here. Oppose the Obama Administration or liberal priorities, and you too can become an IRS target.

Fox News: 

• Justice Department secretly obtained AP phone records. The Justice Department secretly obtained two months of telephone records of reporters and editors for The Associated Press in what the news cooperative's top executive called a "massive and unprecedented intrusion" into how news organizations gather the news. The records obtained by the Justice Department listed outgoing calls for the work and personal phone numbers of individual reporters, for general AP office numbers in New York, Washington and Hartford, Conn., and for the main number for the AP in the House of Representatives press gallery, according to attorneys for the AP. It was not clear if the records also included incoming calls or the duration of the calls. In all, the government seized the records for more than 20 separate telephone lines assigned to AP and its journalists in April and May of 2012. The exact number of journalists who used the phone lines during that period is unknown, but more than 100 journalists work in the offices where phone records were targeted, on a wide array of stories about government and other matters.

• Republicans want new Clinton testimony on Benghazi, float possibility of subpoena. Calls are growing for former Secretary of State Hillary Clinton to return to Capitol Hill -- under subpoena, if necessary -- to answer new questions that have surfaced about her role in the response to the Benghazi terror attack. “I believe she was disconnected and dispassionate about what was happening,” House Oversight and Government Reform Committee Chairman Darrell Issa told Fox News on Monday. During the interview, Issa kept the option of forcing Clinton to testify on the table.

MarketWatch.com: 

• Yuan’s ‘too big to fail’ dilemma. Commentary: China being cornered into currency liberalization.

CNBC: 

• CTFC Probes Over 1 Million US Swap Contracts. A top U.S. financial regulator has launched a broad inquiry into the legitimacy of more than 1 million energy and metals transactions by the biggest traders in commodities markets over the past two years. The Commodity Futures Trading Commission has issued a "special call" asking Wall Street banks and other traders to provide documents that would prove recent derivatives transactions known as "exchanges of futures for swaps" were legal. Lawyers at the CFTC enforcement division are also scrutinizing the trades for possible violations. "They are looking at a huge amount of trading," an industry lawyer said. 

• Corn Crop Planting At Third Slowest Pace in Three Decades. Less than a third of the corn crop in key planting states is in the ground, the third lowest level for this time of year since 1980. The U.S. Department of Agriculture Monday reported that 28 percent of the expected corn crop has been planted, and in key farm belt states, like Iowa and Illinois, the levels are even lower.

Zero Hedge: 

• Santelli On IRS Witch-Hunt Repurcussions: "No Stent For You". (video)

• We Found The 'Other' Greater Fool. (graph)

• The Race For The Door. (graphs)

• China's Urban Dream Denied.

• Goldman(GS) Pours Cold Water On The Inflation Expectations In Japan.

Business Insider: 

• Two Charts Show How Depressing And Gloomy Things Have Gotten In France.

• Stunning Photos Of The Paris Riots That Ruined A Soccer Championship Parade Today.

• This Bull Market Has Gone A Mindboggling 177 Days Without A Notable Pullback.

• HUSSMAN: Recklessness, Euphoria, And Superstition Have Been Rewarded Like Insight And Genius.

• DARRELL ISSA: It's Clear That Obama Administration Officials 'See Themselves Above The Law'.

New York Times:

• Grind of Euro Crisis Wears Down Support for Union, Poll Finds. Europeans have never been wild about the European Union. With the region sapped by the euro crisis, confidence in the institution and the benefits it was supposed to provide is flagging faster and further than ever before, according to an influential opinion survey released Monday. The results of an annual survey by the Pew Research Center, a nonpartisan organization based in Washington, show a deepening disillusionment with the union in major member countries. The results of the survey suggest that more citizens than ever could end up opposing the transfer of more power to European Union institutions that may be vital for transforming the euro into a viable currency over the long term.

Reuters: 

• U.S. banks push back on change in loan loss accounting. More than a dozen of the biggest U.S. banks have questioned a proposed accounting change meant to boost reserves for risky loans, saying the results would be vastly different from those of a similar rule being developed by global standard-setters. A key reform arising out of the 2007-08 global financial crisis, the proposal would require banks to look ahead and reserve for expected losses on the day a loan is made. Currently, banks do not have to reserve for risky loans until there are signs of a loss.

• Brazil builder MRV's earnings fall as cancellations weigh. MRV Engenharia e Participacoes SA, one of Brazil's biggest homebuilders, reported a worse-than-expected first-quarter net profit as a move to tighten credit standards led to a spike in sales cancellations. 

• SolarCity(SCTY) quarterly loss bigger than expected, shares drop. SolarCity Corp on Monday reported a larger-than-expected quarterly loss, reversing a year-ago profit, due to higher costs related to its business that installs solar panels on rooftops. The company's shares slid 4.5 percent in after-hours trade following the announcement.

Telegraph:

• Europeans must face up to prospect of massive debt restructuring. Europe’s bourses have not done as well as others from renewed investor appetite for equities, but even the depression-hit eurozone periphery has seen big gains in share prices since the sovereign debt crisis began to abate last summer. 

• EU bank proposals 'risk domino sequence of failures’. Proposed European Union rules governing how losses are imposed on creditors in a failed bank pose the risk of a “domino effect” threatening financial stability in Britain, George Osborne will warn on Tuesday. 

The Standard:

• Lee & Man tips price declines. Lee & Man Paper Manufacturing (2314), the second largest containerboard manufacturer by output in the mainland, expects prices to weaken in the near term as costs for raw materials fall. Paper products in the mainland now retail at 3,300 yuan (HK$4,165) to 3,400 yuan per tonne, said executive director Edmond Lee Man-bun yesterday after the company's annual general meeting.

China Securities Journal: 

• State Economist Says China Can't Cut Rates. China can't cut interest rates due to abundant global liquidity, citing Zhu Baoliang, head of the State Information Center's economic forecast department. 

21st Century Business Herald:

• Beijing has tightened rules of pre-sales of homes, mandating approval from the mayor's office in addition to regular housing bureau approval. Pre-sales prices won't be allowed to be higher than current housing prices in the same area. Beijing new housing inventory is 60,995 units, near a historical low, citing data from Netease.

Evening Recommendations 

• None of note

Night Trading

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

• Asia Ex-Japan Investment Grade CDS Index 102.5 +1.5 basis points.

• Asia Pacific Sovereign CDS Index 82.0 -.25 basis point.

• FTSE-100 futures +.36%.

• S&P 500 futures +.06%.

• NASDAQ 100 futures +.09%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (A)/.67 

Economic Releases
7:30 am EST

• The NFIB Small Business Optimism Index for April is estimated to rise to 90.3 versus 89.5 in March.

8:30 am EST

•  The Import Price Index for April is estimated to fall -.5% versus a -.5% decline in March.

Upcoming Splits

• (CL) 2-for-1

• (AOS) 2-for-1

Other Potential Market Movers

• The Fed's Plosser speaking, German ZEW Index, German inflation data, weekly retail sales data, BofA Merrill Metals/Mining/Steel Conference, JPMorgan Tech/Media/Telecom Conference, UBS Financial Services Conference and the Citi Power/Energy/Utilities Conference could also impact trading today.

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

Stocks Slightly Lower into Final Hour on Rising Global Growth Fears, Eurozone Debt Angst, Technical Selling, Commodity/Transport Sector Weakness

Broad Market Tone:

• Advance/Decline Line: Lower
  

• Sector Performance: Mixed
  

• Volume: Below Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• VIX 12.56 -.24%

• ISE Sentiment Index 82.0 -33.87%

• Total Put/Call .83 +12.16%

• NYSE Arms .73 -16.97%

Credit Investor Angst:

• North American Investment Grade CDS Index 73.64 +2.01%

• European Financial Sector CDS Index 139.48 +3.60%

• Western Europe Sovereign Debt CDS Index 90.62 +3.0%

• Emerging Market CDS Index 236.0 +1.1%

• 2-Year Swap Spread 14.25 +.75 basis point

• TED Spread 24.0 unch.

• 3-Month EUR/USD Cross-Currency Basis Swap -14.75 -.75 bp

Economic Gauges:

• 3-Month T-Bill Yield .04% unch.

• Yield Curve 168.0 +3 bps

• China Import Iron Ore Spot $129.40/Metric Tonne -.15%

• Citi US Economic Surprise Index -8.0 -.7 point

• 10-Year TIPS Spread 2.32 -2 bps

Overseas Futures:

• Nikkei Futures: Indicating +113 open in Japan

• DAX Futures: Indicating +7 open in Germany

Portfolio: 

• Slightly Higher: On gains in my medical/biotech sector longs and emerging markets shorts

• Disclosed Trades: None

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:  

• Schaeuble Says Slovenia Right on No Aid Needed as Yields Rise. Slovenia is right to say it doesn’t need a bailout, German Finance Minister Wolfgang Schaeuble said as the country’s benchmark bond declined. “The Slovenian government says it can do it without the rescue umbrella, it doesn’t want a program and I think they are right,” Schaeuble told reporters in Brussels today before a meeting of finance ministers from the 17-member euro bloc. Jeroen Dijsselbloem, the chief of euro group and the Dutch finance minister, said Slovenia’s Finance Minister Uros Cufer will brief them on the nation’s overhaul plan and the European Commission will give its assessment later this month.
• Europe Eases Corporate Tax Dodge as Worker Burdens Rise.   
• European Stocks Decline From 2008 High; Commerzbank Sinks. Commerzbank AG sank the most in two months after Handelsblatt reported the lender will sell new shares this week. Standard Chartered Plc dropped to a four-month low as Carson Block, the short seller who runs Muddy Waters LLC, said he’s betting against the bank’s debt. Air France-KLM Group fell 4 percent. Lonmin Plc rallied 2.6 percent after the platinum producer returned to profit in the fiscal first half.
• China’s Investment Slows as Production Trails Estimates. China’s fixed-asset investment unexpectedly decelerated last month while industrial output trailed estimates, adding to concerns that the economy will fail to show much of a recovery this quarter. Fixed-asset investment excluding rural households in the first four months of the year increased 20.6 percent, the National Bureau of Statistics said today in Beijing, compared with 20.9 percent in the first quarter. Production grew 9.3 percent in April from a year earlier and retail sales climbed 12.8 percent, according to the agency. 
• China April Home Sales Fall 13% as Property Curbs Take Toll.
• Crude Drops a Third Day as China Reduces Demand. West Texas Intermediate oil fell for a third day as China’s crude processing reached the lowest level in eight months in April and OPEC boosted output. Prices dropped as much as 1.6 percent as refining in China decreased to 9.36 million barrels a day, according to data published today on the website of the Beijing-based National Bureau of Statistics. Output in the Organization of Petroleum Exporting Countries rose last month to the highest level in five months. “High supplies and weak demand are never a bullish signal,” said Michael Lynch, president of Strategic Energy & Economic Research in Winchester, Massachusetts. “People were hoping China would absorb some of the surplus. Now it looks like the surplus is going to get bigger, especially since OPEC is producing more.” WTI for June delivery fell $1.25, or 1.3 percent, to $94.79 a barrel at 11:17 a.m. on the New York Mercantile Exchange.
• Grain-Carrier Ship Rates Slide a 14th Day as Demand Seen Slowing. Rates for Panamax ships that carry grains and minerals fell for a 14th day amid speculation that demand to transport Latin American crop cargoes is slowing. Day rates for the 750-foot-long ships that haul about 75,000 metric tons slid 0.1 percent to $7,923, staying at the lowest since Feb. 28, according to the Baltic Exchange in London, which publishes prices on more than 50 maritime routes. They’ve fallen every day since April 22, the longest streak of consecutive declines since February. The Baltic Dry Index, a wider measure of commodity shipping costs, fell 0.6 percent to 879 points, the lowest since May 3, according to the exchange.
• Your Future Will Be Manufactured on a 3D Printer.
• Monsanto(MON) Wins Seed Case as High Court Backs Patent Rights. The U.S. Supreme Court bolstered Monsanto Co.'s ability to control the use of its genetically modified seeds, ruling that companies can block efforts to circumvent patents on self-replicating technologies.
  

Wall Street Journal:  

• Health Officials Detail Payment Cuts for Uninsured. The Obama administration on Monday published a plan for cuts in payments for hospitals that treat many uninsured patients and said states that decline to expand their Medicaid programs under the 2010 health law won't get preferential treatment at first.

Fox News:

• IRS scrutiny went beyond Tea Party, targeting of conservative groups broader than thought. An IRS campaign to apply additional scrutiny to conservative groups went beyond targeting "Tea Party" and "patriot" groups to include those focused on government spending, the Constitution and several other broad areas. The additional guidelines created by the agency were part of a timeline, obtained by Fox News, from the Treasury Inspector General for Tax Administration, which is looking into the controversial IRS practice. IRS officials apologized Friday for the scrutiny, but new information suggests senior leaders were apprised of the effort as early as 2011 despite public denials from the top. 
• Obama calls Benghazi controversy a 'sideshow'. The president addressed the issue during a press conference alongside British Prime Minister David Cameron, who is visiting Washington. Obama denied any suggestion that there was a cover-up, questioning recent reports that showed a State Department official trying to water down the administration's initial story-line on what happened the night of Sept. 11. "There's no there there," Obama said. The president, further, reiterated prior arguments that he called the attack terrorism from the start, dismissing claims that the administration intentionally downplayed that element. But Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, called Obama's latest comments "revisionist history." "The president can't have it both ways," Issa told Fox News.

CNBC: 

• Investors Borrow Cash From Portfolios at Record Pace. Emboldened by soaring stock prices and record-low borrowing costs, stock investors are taking out loans against their portfolios at the fastest pace since before the Great Recession hit. So-called margin debt hit $379.5 billion in March, the highest level since July 2007 when such debt hit an all-time record of $381.4 billion, according to the most recent data available compiled by the New York Stock Exchange. 
• Get Ready for Huge Drug Cost Gap in Obamacare. Cancer patients could face high costs for medications under President Barack Obama's health care law, industry analysts and advocates warn. Where you live could make a huge difference in what you'll pay.

Zero Hedge: 

• Retail Sales Post Modest Beat Despite Ongoing Plunge In Gasoline Sales. (graphs)
• Ron Paul: What No One Wants to Hear About Benghazi.
• Chinese Power Consumption Collapses: Economic Growth Slowest Since Early 2009. (graph)
• Is A Fed 'Taper' Positive For Treasuries?
• Detroit May Run Out Of Cash Next Month.

Business Insider: 

• Police Release Video Of Suspect In New Orleans Shooting. (video)
• INFOGRAPHIC: The Threats That Literally Surround Facebook(FB).
• REPORT: Saudi Arabian Traveler Arrested After Customs Agents Find Pressure Cooker In His Luggage.
• North Korea Releases Another Wild Statement As US Carrier Hits Korean Waters.
• 'Middle Eastern' Hackers Attempt To Hijack Functions Of US Energy Companies.
• CHART OF THE DAY: The Outlook For Earnings Just Keeps Getting Worse.
• BofA: 92% Of Investors Are Expecting A Great Summer, And 'No One Is Worried' About Rising Rates.
• A Complete Look At China's Latest Disappointing Data In One Chart.

ValueWalk.com:

• Hedge Fund Nasdaq Bets Just Shy of 2010 Peak: BAML.

Reuters: 

• EMERGING MARKETS-Brazil stocks fall on China data.
• EURO GOVT-Italian yields rise as investors take profit.
• Spain, Portugal push for full banking union as Germany finds hurdles.Spain and Portugal called on Monday for the euro zone to complete a banking union as Germany underscored legal hurdles before a central element of the plan to deal with failing banks can be introduced.

Telegraph: 

• France preparing tax on Apple(AAPL) and Google(GOOG) to fund culture. President Francois Hollande is preparing to impose new taxes on technology giants like Apple and Google to finance cultural projects such as art, films and music.