Today's Headlines

Bloomberg: 

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

Wall Street Journal:

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

MarketWatch: 

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

CNBC:

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

Zero Hedge: 

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

Business Insider: 

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

The Hill:

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

Reuters: 

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

Telegraph: 

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

Euromoney:

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

Digitimes:

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

The Australian: 

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

Xinhua:

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

China Daily:

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