Stocks Falling into Final Hour on Rising Eurozone Debt Angst, Less US Economic Optimism, Less Financial Sector Optimism, Market Leader Weakness

Broad Market Tone:

• Advance/Decline Line: Lower
  
• Sector Performance: Most Sectors Declining
  
• Volume: Light
  
• Market Leading Stocks: Underperforming
  

Equity Investor Angst:

• VIX 17.32 +6.13%
  
• ISE Sentiment Index 106.0 +37.66%
  
• Total Put/Call .85 +1.19%
  
• NYSE Arms 1.18 -15.38%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 95.15 +.91%
  
• European Financial Sector CDS Index 241.71 -.19%
  
• Western Europe Sovereign Debt CDS Index 275.25 +.46%
  
• Emerging Market CDS Index 252.33 -.43%
  
• 2-Year Swap Spread 29.0 -1.25 basis points
  
• TED Spread 37.5 -.5 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -45.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .09% unch.
  
• Yield Curve 166.0 -1 basis point
  
• China Import Iron Ore Spot $145.40/Metric Tonne unch.
  
• Citi US Economic Surprise Index -14.0 -6.0 points
  
• 10-Year TIPS Spread 2.26 -1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating a -100 open in Japan
• DAX Futures: Indicating +3 open in Germany
  

Portfolio:

• Slightly Lower: On losses in my Tech and Biotech sector longs
  
• Disclosed Trades: Added to my (IWM)/(QQQ) hedges and to my (EEM) short
  
• Market Exposure: Moved to 50% Net Long

BOTTOM LINE: Today's overall market action is bearish as the S&P 500 trades near session lows on rising Eurozone debt angst, less financial/homebuilder sector optimism, high energy prices, rising global growth fears, weakness in some key market leaders and less US economic optimism. On the positive side, Energy, Oil Service and Coal shares are relatively strong, rising more than +.75%. Copper is rising +.27%. Major Asian indices rose around +.75% overnight(Shanghai Comp, Nikkei closed), led by a +1.7% gain in Hong Kong. The Italian/German 10Y Yld Spread is falling -2.3% to 384.85 bps. The Saudi sovereign cds is falling -1.2% to 119.0 bps. On the negative side, Homebuilding, Education, Construction, HMO, Bank, Steel, Networking and Hospital shares are under meaningful pressure, falling more than -1.25%. Financial shares have lagged throughout the day again. As well, small-cap and cyclical shares are relatively weak. Oil is rising +.2%, Gold is gaining +.2%, Lumber is falling -.8% and the UBS-Bloomberg Ag Spot Index is rising +.4%. Major European indices are falling around -1.0%, led lower by a -1.9% decline in Spain. Spanish equities are now down -18.2% ytd. The Bloomberg European Bank/Financial Services Index is falling -1.0%. The Germany sovereign cds is gaining +2.76% to 85.50 bps and the US sovereign cds is gaining +1.5% to 38.22 bps(+37.0% in 9 days). US Rail Traffic continues to soften. The Philly Fed ADS Real-Time Business Conditions Index continues to trend lower from its late-December peak. Moreover, the Citi US Economic Surprise Index has fallen back to early-Oct. levels. Lumber is -4.0% since its Dec. 29th high despite improving sentiment towards homebuilders and the broad equity rally ytd. Moreover, the weekly MBA Home Purchase Applications Index has been around the same level since May 2010 despite expectations for a strong spring home selling season. The Baltic Dry Index has plunged around -50.0% from its Oct. 14th high and is now down around -35.0% ytd. China Iron Ore Spot has plunged -19.7% since Sept. 7th of last year. Shanghai Copper Inventories are still near their recent all-time high and have risen +634.0% ytd. China's March refined-copper imports fell -8.0% on the month. Singapore Electronics exports decelerated to a gain of +2.8% in March from a +23.3% gain in February. The 10Y T-Note continues to trade too well, despite the big surge in the US sovereign credit default swap and the euro currency can't sustain a bounce. US Economic data releases later this week will likely also prove mildly disappointing. Concerns over the collision course Germany and France appear headed towards during the next escalation phase of the European debt crisis are intensifying. This will eventually become an even greater problem than the market currently perceives, in my opinion. US stocks remain extraordinarily resilient, however breadth and volume remain lackluster. For the recent equity advance to regain traction, I would expect to see further European credit gauge improvement, a further subsiding of hard-landing fears in key emerging markets, a rising 10-year yield, better volume, stable-to-lower energy prices and higher-quality stock market leadership. I expect US stocks to trade mixed-to-lower into the close from current levels on rising Eurozone debt angst, less US economic optimism, high energy prices, rising global growth fears, weakness in some key market leaders and less financial/homebuilder sector optimism.

Today's Headlines

Bloomberg:

• Europe's Anti-Austerity Calls Mount as Elections Near. A recession in Spain and forecasts of rising unemployment in the 17-nation euro area are amplifying criticism of the German-led austerity agenda in election campaigns this week in France and Greece. With Spain’s largest unions leading marches involving thousands of protesters in 55 cities yesterday, Prime Minister Mariano Rajoy’s government battled to prevent Spain from becoming the next country to seek a bailout. In France, where the presidential-election runoff is set for May 6, Socialist frontrunner Francois Hollande pushed back against German Chancellor Angela Merkel’s focus on deficit reduction.
• Italy Faces 20 Billion-Euro Gap, Tremonti Tells Corriere. Italy may post an unexpected budget gap of as much as 20 billion euros ($26.5 billion) by mid-year due to the government’s austerity measures, former Finance Minister Giulio Tremonti told Corriere della Sera. The implementation of a new property tax and changes to the pension system passed in December will require extra financial resources, Corriere cited Tremonti as saying. The shortfall will also include as much as 8 billion euros to fund other programs such as Italy’s international peacekeeping missions, Tremonti said, according to the Milan-based newspaper.
• European Stocks Fall as Spain Contracts; AB InBev Sinks. European stocks fell for the first time in five days, extending the biggest monthly drop since September, as Spain entered a recession and U.S. business activity expanded at the slowest pace since November 2009.
• Banks in EU May Face 3% Capital Surcharges Under Basel Agreement. Bank regulators in the European Union may win powers to impose capital surcharges of as much as 3 percent on lenders’ activities at home and abroad as part of a compromise plan for applying Basel rules.
• Fed Chief Says Worst Not Over in Europe, Handelsblatt Reports. John Williams, the president of the Federal Reserve Bank of San Francisco, said he’s “very worried” about the risk of a worsening debt situation in Europe and the “worst is not yet over,” Handelsblatt reported. It’s difficult for troubled European countries to return to normal economic performance when the business situation is weak and too many countries save money at the same time, Williams said in an interview with the German newspaper. That makes it more difficult to fight budget deficits and debt and European countries must find the “right balance” between austerity and growth, Handelsblatt cited Williams as saying. The U.S. economy is likely to grow 2.5 percent this year and there’s currently no need for new monetary measures, Williams told the newspaper.
• Sovereign, Corporate Bond Risk Rises, Credit Default Swaps Show. The cost of insuring against default on European sovereign and corporate debt rose, according to BNP Paribas SA. The Markit iTraxx SovX Western Europe Index of credit- default swaps on 15 governments added 1.5 basis points to 275.5 at 3 p.m. in London. Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-yield credit ratings climbed 5.5 basis points to 650.5. The Markit iTraxx Europe Index of 125 companies with investment-grade ratings rose 2.5 basis points to 140.5 basis points. The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers was 0.5 basis point higher at 242.5 and the subordinated index increased one to 401.
• IMF Ready to Lend Egypt $3.2 Billion at 1% Interest, Ahram Says. The International Monetary Fund is prepared to lend Egypt $3.2 billion at a reduced interest rate of 1 percent, the Muslim Brotherhood’s now disqualified presidential candidate said, the state-run al-Ahram reported. Khairat el-Shater, the Brotherhood’s chief strategist who was knocked out of the May race on electoral-law technicalities, said the offer came when IMF officials met with his group during a visit to Egypt earlier this month. He also said the U.S. deputy secretary of state had agreed to back Islamic bonds issued by Egypt abroad, the newspaper reported.
• Manufacturing Cools Even as U.S. Consumers Still Spend. Business activity in the U.S. expanded in April at the slowest pace since the end of 2009, adding to evidence that manufacturing is cooling. The Institute for Supply Management-Chicago Inc. said today its barometer decreased to 56.2 during the month, lower than the most pessimistic forecast in a Bloomberg News survey, from 62.2 in March. Readings greater than 50 signal growth. The pace of production eased in April, reflecting a recession in Europe and a slowdown in China that may keep holding back orders. A separate report today showed U.S. consumer spending and incomes climbed in March, indicating that household demand will help underpin the economy as long as the job market continues to heal. “We’re likely to see manufacturing growth ease a bit,” said Peter Newland, a U.S. economist at Barclays in New York. “A gradual improvement in the labor market is going to be key for consumer spending. This is consistent with further moderate growth.” Economists projected the purchasing managers’ gauge would fall to 60, according to the median of 55 estimates in the survey.
• LDK Solar(LDK) Cuts 5,554 Workers Amid Clean-Energy Shakeout. LDK Solar Co. (LDK), the world’s second- largest maker of wafers for cells, cut 5,554 jobs this year after plunging prices cut margins to a record low amid a renewable-energy shakeout that’s pushed at least eight solar companies into bankruptcy and prompted thousands of industry firings. LDK, which reported the lowest margins among its publicly traded peers, has cut its staff about 22 percent to 19,195 workers since the end of 2011, Chief Operations Officer Xingxue Tong said on a conference call today. The Chinese maker of polysilicon, wafers and solar panels has pared a third of its workforce since July, when it peaked at more than 28,000, in reaction to the “highly competitive” solar market.
• Illinois Faces 25% Cost Increase to Borrow $1.8 Billion. Illinois plans to sell $1.8 billion of general-obligation debt tomorrow as its relative borrowing costs may increase by almost a quarter. The tax-exempt deal for the state, rated lowest by Moody’s Investors Service, includes a 10-year segment that underwriter Jefferies & Co. plans to offer to investors at 1.85 percentage points above benchmark AAA securities, according to a person familiar with the sale.
• Occupy Wall Street Plans Global Protests in May Day Resurgence. Occupy Wall Street demonstrators, whose anti-greed message spread worldwide during an eight-week encampment in Lower Manhattan last year, plan marches across the globe today calling attention to what they say are abuses of power and wealth.

Wall Street Journal:

• Chinese Microblogs Survive Real-Name Rules - So Far. Sina Corp.(SINA) has escalated its warnings to investors that the rules requiring weibo sites to verify the identities of users remain a major threat to the future of weibo. The company’s annual report filed with the U.S. Securities and Exchange Commission this month added the real-name rules to an already long list of regulatory risks that come with owning an Internet business in China.
• Coke(KO) in Talks to Buy Monster(MNST) Beverage. Coca-Cola Co. is in talks to acquire Monster Beverage Corp., a move that could help the world's biggest soft drinks maker expand its presence in the growing energy-drinks market, people familiar with the matter said.
• ISDA Set to Decide on CDS Rules Revamp Within Weeks. When is a default a default and when does a default trigger payouts on credit default swaps? CDS market watchers and participants have been raising those questions for more than a year. But the issue has garnered greater urgency in the wake of grievances from CDS buyers who felt they weren’t adequately covered going into the Greek debt restructuring.
• Microsoft(MSFT) to Invest in Nook. Microsoft Corp. is making a $300 million investment in Barnes & Noble Inc.'s(BKS) Nook digital-book business and college-texts unit in a move that helps value the prized Nook business, the companies said. Microsoft will have a 17.6% stake in a new subsidiary for the businesses in a transaction that values them at $1.7 billion, the companies said. That compares with Barnes & Noble's current market capitalization of about $791 million and could fuel the argument of some analysts and investors that the digital business should be separated from the retail division.
• Egypt Military Bends to Islamists Will. Egypt's ruling military said it would appoint a new cabinet within 48 hours, awarding a major victory to Islamist politicians and cooling a political confrontation that threatened to gridlock Egypt's emerging democratic institutions. Field Marshal Hussein Tantawi's pledge to lawmakers on Sunday came hours after parliament speaker Saad Al Katatni, a senior member of the Brotherhood's Freedom and Justice Party, which dominates the legislature, suspended sessions on Sunday until the military agreed to dissolve the cabinet.
  

Fox News:

• Top EPA Official Resigns After 'Crucify' Comment.

CNBC.com:

• Spain Default Could Hit US Market 10%-20%; Economist. Spain's newly announced recession won't be ending any time soon and it could force the U.S. stock market to fall anywhere between 10 percent and 20 percent, economist Harry Dent told CNBC Monday.
• Euro Lending Growth Slows, Banks Spend ECB Cash on Bonds. Growth in lending to euro zone firms and consumers slowed in March as banks scaled up purchases of government bonds, showing that an ambitious funding drive by the European Central Bank has yet to trickle down to the real economy.
• Small Business Hiring Takes Step Back in April. Small business hiring slowed considerably in the April and employees saw a reduction in their hours, an independent survey showed on Monday, adding to signs of weakening in labor market conditions. Businesses added 40,000 new jobs, a step back from the 75,000 positions created in March, according to Intuit, a payrolls processing firm. The average workweek for small business employees dipped 0.14 percent.

Business Insider:

• People Are Freaking Out Over A Conservative Whose Twitter Account Keeps Getting Shut Down.
• The World's Biggest Companies Reveal What's Really Happening In The Global Economy.
• Chart of the Day: The #1 Reason The Housing Recovery Is So Slow.
• This Is The Technological Breakthrough That's Making People Wildly Bullish On America.
• All The Latest On Spain's Banking Disaster.
• NYC is Apparently Considering a Ban on Happy Hour.
  

Zero Hedge:

• Savings Rate Rises From 4 Year Low as Spending Tumbles, Income Boosted By Government Transfer Receipts. (graph)
• Goose-Stepping Hitler-ites Threaten Greece's Utopia.
  

Reuters:

• Emerging Markets Hold Breath as EU Banks Shrink. From Beijing to Bucharest, emerging market policymakers are as worried as those in Brussels that the rapid contraction in western European banks' balance sheets will compound the debt crisis and further delay economic recovery. In a striking indication of that concern, the International Monetary Fund said developments in the euro area pose a greater risk to the Asia-Pacific region than either a hard landing in China or a rise in commodity prices. "An escalation of the crisis with a disorderly, large-scale, and aggressive trimming of balance sheets could have a serious impact on Asia," the IMF said in a report released on Friday.
• Exclusive: China Mulls Guarantees For Ships Carrying Iranian Oil. China is considering sovereign guarantees for its ships to enable the world's second-biggest oil consumer to continue importing Iranian crude after new EU sanctions come into effect in July, the head of China's shipowners' association said. Tough new European Union sanctions aimed at stopping Iran's oil exports to Europe also ban EU insurers and reinsurers from covering tankers carrying Iranian crude anywhere in the world. Around 90 percent of the world's tanker insurance is based in the West, so the measures threaten shipments to Iran's top Asian buyers China, India, Japan and South Korea.
• China Wants "drastic" U.S., Russia Nuclear Arms Cuts. China called on the United States and Russia on Monday to make further "drastic" cuts in their nuclear arsenals and said all states with atomic arms should undertake not to be the first to use them. The development of missile defense systems which "disrupt" the global strategic balance should be abandoned, a senior Chinese diplomat also told a nuclear meeting in Vienna in a possible reference to U.S. plans that have angered Russia.
• US Homeownership Rate Drops to 15-Year Low in Q1. The share of privately owned U.S. homes fell to a 15-year low in the first quarter, government data showed on Mo nday, suggesting that falling house prices are discouraging Americans from being homeowners. The home ownership rate slipped to 65.4 percent, the lowest since the first quarter of 1997, the Commerce Department said. The rate was at 66.0 percent in the fourth quarter.
• Caterpillar(CAT) Braces for Strike Amid Labor Dispute. Caterpillar Inc is preparing for a strike at its Joliet, Illinois, plant after union workers there overwhelmingly turned down a new six-year contract during weekend voting.
• Portugal Risks Spillover From Spain's Misfortunes. Spain's deteriorating economy has made Portugal's job of riding out its debt crisis harder as its main trading partner slides into recession and the threat of contagion across the Iberian peninsula intensifies.

Telegraph:

• UK Business Loan Write-Offs to Hit Highest Since 1990s. Losses on corporate loans will hit their highest level since the 1990s recession this year, fuelled by a weak consumer sector and further crippling lending according to a leading group of economists.
• Debt Crisis Live: Germany maintains hardline stance on austerity, telling Spain it must not change direction, despite figures showing Spain officially fell back into recession in the first three months of the year.

Bear Radar

Style Underperformer:

• Small-Cap Growth -1.10%

Sector Underperformers:

• 1) HMOs -2.40% 2) Homebuilders -1.92% 3) Steel -1.71%

Stocks Falling on Unusual Volume:

• HUM, FIO, CRAY, KB, UNH, HBHC, OLN, HOLX, RCII, ABFS, SCHL, SOHU, ARBA, LPLA, UBNT, AKAM, UTHR, ONXX, NANO, BJRI, ARMH, DECK, PACW, CTCT, CALM, COLM, PAY, TEN, ABD, AWI, GNC and ALR
  

Stocks With Unusual Put Option Activity:

• 1) MRVL 2) XLB 3) PAY 4) XLY 5) EMR
  

Stocks With Most Negative News Mentions:

• 1) ABFS 2) COP 3) GOOG 4) LDK 5) PG
  

Charts:

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

Bull Radar

Style Outperformer:

• Large-Cap Value -.30%

Sector Outperformers:

• 1) Oil Tankers +.56% 2) Energy +.29% 3) Drugs +.25%

Stocks Rising on Unusual Volume:

• RGR, WWW, GPRO, CPTS, TGE, WCRX, FRAN, ZAGG, STX, BKS, SUN, HAE, HAR, ETE and MDRX
  

Stocks With Unusual Call Option Activity:

• 1) SUN 2) MDRX 3) SU 4) BKS 5) EMN
  

Stocks With Most Positive News Mentions:

• 1) MDRX 2) MDT 3) ENPH 4) KFT 5) EQT
  

Charts:

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

Monday Watch

Weekend Headlines
Bloomberg:

• Europe Seeks to Restore Calm After Spain Downgrade, Growth Spat. European leaders will seek to restore market calm this week after Spain was cut by Standard & Poor’s and a German-led austerity agenda to resolve the debt crisis came under fire ahead of elections in France and Greece. With Spain’s largest unions leading marches involving thousands of protesters in 55 cities yesterday, Prime Minister Mariano Rajoy’s government battled to prevent Spain from becoming the next country to seek bailout aid. In France, the final round of presidential elections on May 6 and the prospect of victory for Socialist candidate Francois Hollande steered debate toward whether a focus on budget cuts worsens the crisis. “Watching Spain now is exactly like watching Ireland around October 2010 before Ireland was forced into its bailout,” Megan Greene, a senior economist at Roubini Global Economics LLC, told Bloomberg Television’s “Street Smart” on April 27. “The government can’t win no matter what it does.”
• Schaeuble Says EU Fiscal Pact Will Come Into Force, Welt Says. German Finance Minister Wolfgang Schaeuble said the fiscal pact agreed by leaders of 25 European nations will come into force, Welt am Sonntag reported, citing an interview. The pact brings “confidence in the long-term stability of the system,” Die Welt cited Schaeuble as saying. Renegotiating the fiscal pact completely is a utopia, Jean-Claude Juncker, the head of the group of euro-area finance ministers told Die Welt. Juncker told the German newspaper that he would talk to Francois Hollande, who wants the pact renegotiated, if he is elected a France’s new president on May 6. European Central Bank Executive Board member Joerg Asmussen said the fiscal pact should be kept in its current form, Welt am Sonntag reported. German Chancellor Angela Merkel on April 28 ruled out reopening negotiations on the fiscal pact.
• Spanish Unions March in Madrid Against Government Spending Cuts. Spain’s two largest unions led marches in cities across the country to protest Prime Minister Mariano Rajoy’s spending cuts, including the reduction of health care subsidies. Thousands of people marched to El Sol square in downtown Madrid, gathering under umbrellas to shelter from the rain. Comisiones Obreras and UGT led protests in 55 cities across Spain today, El Mundo newspaper reported.
• Record-High Gasoline Further Burdens Consumers in Europe. Mumtaz Ozkaya, a leather-clothing salesman in London, is slashing his usual 1,000 miles (1,609 kilometers) a month of driving by 30 percent and taking cheaper vacations, as record fuel prices burden European motorists. “Wages are still the same so I am cutting back on miles and also on holidays,” Ozkaya said in an April 23 interview at a Shell-branded service station near Old Street in the U.K. capital, where regular gasoline costs 143 pence a liter ($8.76 a gallon). “Whereas we used to go on holiday to a five-star hotel for three weeks that is now a four-star for two weeks.” The average retail price in the European Union’s 27 member nations surged to a peak of 1.69 euros a liter ($8.44 a gallon) on April 20 with Germany, France, the U.K., Greece, Italy and Spain all at records, according to European Commission data. The cost of gasoline at the pump in the continent, more than double U.S. levels, had made a fresh high every week since Jan. 13. U.K. gasoline advanced to a new all-time high last week.
• Saudis Accept Bin Ladens on 'Humanitarian Grounds,' Awsat Says. Saudi Arabia allowed the widows and children of slain al-Qaeda leader Osama bin Laden to enter the kingdom on “humanitarian grounds” after they were deported from Pakistan, the London-based Asharq al-Awsat reported, citing an unidentified Saudi official.
• Hon Hai Drops by Limit After Net Misses Estimates: Taipei Mover. Hon Hai Precision Industry Co. (2317), assember of Apple Inc. (AAPL)’s iPhone and iPad, dropped by the daily limit in Taipei trading after posting profit that missed the average estimate of 10 analysts by 31 percent. The stock price fell 7 percent to NT$92.40 as of 10:27 a.m., the biggest intraday decline since December 2008. The benchmark Taiex (TWSE) index lost 0.7 percent.
• Oil Slips From Near Four-Week High; Hedge Funds Cut Bullish Bets. Oil slid from the highest close in almost four weeks, trimming a monthly gain, as investors speculated that recent price gains may be unsustainable. Futures fell as much as 0.3 percent after climbing for a second week. Oil’s advance halted after it failed to surpass its 50-day moving average, a technical resistance level at which traders typically sell. Hedge funds cut bullish crude bets last week, the Commodity Futures Trading Commission said. Output by the Organization of Petroleum Exporting Countries climbed to the highest level in more than three years in April. A report this week may show U.S. employment rose this month. Crude for June delivery fell as much as 27 cents to $104.66 a barrel on the New York Mercantile Exchange and was at $104.69 at 11:11 a.m. Sydney time. The contract advanced 38 cents, or 0.4 percent, to $104.93 on April 27, the highest close since April 2. Prices are 1.6 percent higher this month and up 6 percent this year.

Wall Street Journal:

• Falcone Agrees To Step Aside. Hedge-fund manager Philip Falcone agreed to step aside eventually as the public face of his LightSquared Inc. venture, a concession that may keep the wireless-telecommunications company from defaulting on its debt, people familiar with the negotiations said. Mr. Falcone's compromise is expected to prompt LightSquared's lenders to approve a one-week extension on a debt-term violations waiver that expires Monday morning, the people said.
• Warren Stephens: How Big Banks Threaten Our Economy. We should promote competition and innovation in the financial industry, not protect an oligopoly.

Business Insider:

• Hugh Hendry Is Back: Here's What's In His Monster New Letter To Shareholders.
• The Scope Of The Alberta Oil Sands Must Be Seen To Be Believed. (pics)
• Morgan Stanley(MS) Explains How Next Weekend's Greek Election Could Lead To The Unraveling Of The Entire Euro.
• You Must Read This Paragraph From Francois Hollande's Big Speech.
• California Tax Revenue Is Coming Up Wildly Short Of Expectations.
  

Zero Hedge:

• Don't Forget Portugal: MS Sees A Second Bail-Out By September With A Bail-In To Follow.
• Europe's "Dead Bank Walking" List And An ETA Until The Next Contagion Peak.
• “A Trillion Here, A Trillion There...” – Why 90% Of The European Bank Sector’s Market Cap Is Vaporware*.

CNBC:

• Exporters Unable to Rely on China's Growth.
  

Seeking Alpha:

• 9 Undervalued Healthcare Stocks Being Snapped Up By Hedge Funds.

IBD:

• Shuffle Master(SHFL) Deals Wall Street Strong Hand In Q1.

Forbes:

• 4 Shocks That Could Change China.
  

CNN:

• Hedge Funds Bet Against Eurozone. Hedge fund managers make for unlikely supporters of François Hollande, the French socialist presidential candidate. But it is Mr Hollande's potential victory in the coming second round of the French elections, and with it a sharp deterioration in sentiment surrounding France's creditworthiness in the bond market, that many hedge funds are now anticipating. Indeed, their bets against the bonds of "core" eurozone countries -- not just France, but Germany and the Netherlands too -- represent a new, deeper level of bearishness on the single currency area's prospects. The European Central Bank's longer-term refinancing operation provided a huge shot in the arm to banks and markets in the first quarter of the year and triggered a huge rally in credit. But its impact is now being questioned by growing numbers of hedge funds. "The deeper balance of payments problems in the eurozone remain unresolved, and cannot be resolved by liquidity assistance alone," noted Brevan Howard, Europe's biggest global macro hedge fund in its last letter to investors.

ABC News:

• President Obama on Palin: 'What's the difference between a hockey mom and a pit bull? A pit bull is delicious.' (video)
  

Real Clear Politics:

• Swing Voters Dissatisfied With Obama.
  

Financial Times:

• German Banks Rein In Exposure To Spain. The aftermath of Spain’s property boom is providing a reminder that German banks have not been far away from some of the frothiest lending of banking’s bubble years.
  

The Telegraph:

• Hollande's 'Growth Bloc' spells end of German hegemony in Europe. The French-led counter-attack and rumblings of revolt through every branch of the EU institutions last week have brought this aberrant phase of the eurozone crisis to an abrupt end. "It’s not for Germany to decide for the rest of Europe," said François Hollande, soon to be French leader, unless he trips horribly next week. Strong words even for the hustings. "If I am elected president, there will be a change in Europe's construction. We’re not just any country: we can change the situation," he said.
• Spain's woes to deepen as it double-dips into recession. Spain is set to officially confirm that it fell back into recession in the first quarter of the year, marking the beginning of what is expected to be another rocky week for the ailing eurozone economy.

BBC:

• London 2012 Olympics: Missiles May Be Placed At Residential Flats. The Ministry of Defence is considering placing surface-to-air missiles on residential flats during the Olympics. An east London estate, where 700 people live, has received leaflets saying a "Higher Velocity Missile system" could be placed on a water tower.

ABC:

• A Spanish decision to leave the euro would be positive for the country, according to a third of people polled for a survey. About 54% said a Spanish exit would be negative compared with 33.5% who would view it as economically positive, according to a DYM survey.
  

JoongAng Ilbo:

• The U.S. expects North Korea may conduct a third nuclear test as early as this week, citing a person familiar with the issue in Washington D.C.

The Economic Times:

• Spain's Housing Bubble A Threat To Its Banking Sector.

Weekend Recommendations

Barron's:

• Made positive comments on (EBAY), (TMO), (CMVT) and (ORCL).

Night Trading

• Asian indices are -.25% to +.75% on average.
• Asia Ex-Japan Investment Grade CDS Index 163.0 -4.0 basis points.
• Asia Pacific Sovereign CDS Index 136.50 unch.
• FTSE-100 futures +.17%.
  
• S&P 500 futures +.12%.
• NASDAQ 100 futures +.16%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (WPI)/1.59
• (NYX)/.48
• (HUM)/1.54
• (MCK)/2.06
• (FLS)/1.61
• (JEC)/.74
• (PCL)/.24
• (SPF)/.00
• (APC)/.83
• (WMS)/.42
• (CNA)/.68
• (L)/.89

Economic Releases
8:30 am EST

• Personal Income for March is estimated to rise +.3% versus a +.2% gain in February.
• Personal Spending for March is estimated to rise +.4% versus a +.8% gain in February.
• The PCE Core for March is estimated to rise +.2% versus a +.1% gain in February.

9:45 am EST

• The Chicago Purchasing Manager Index for April is estimated to fall to 60.5 versus a reading of 62.2 in March.

10:30 am EST

• Dallas Fed Manufacturing Activity for April is estimated to fall to 8.0 versus 10.8 in March.
  

Upcoming Splits

• (SCVL) 3-for-2
• (ASUR) 3-for-2
  

Other Potential Market Movers

• The Spain Q1 GDP report, NAPM-Milwaukee for April and the RBC Capital Financial Institutions Conference could also impact trading today.
  

BOTTOM LINE: Asian indices are mostly higher, boosted by industrial and commodity shares in the region. I expect US stocks to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the week.

Weekly Outlook

U.S. Week Ahead by MarketWatch (video).
Wall St. Week Ahead by Reuters.
Stocks to Watch Monday by MarketWatch.
Weekly Economic Calendar by Briefing.com.

BOTTOM LINE: I expect US stocks to finish the week mixed as rising global growth fears, less US economic optimism, Eurozone debt angst and high energy prices offset short-covering, mostly positive earnings reports and investor performance angst. My intermediate-term trading indicators are giving mostly bullish signals and the Portfolio is 75% net long heading into the week.