Bloomberg:
- Euro Recession Seen Persisting to Longest in Bloc’s Era. Euro-area data this week will probably reveal economic scars of the sovereign debt crisis confirming that the region is now suffering the longest recession since the single currency’s creation. Gross domestic product in the 17-nation economy fell 0.1 percent in the first three months of 2013, a sixth straight quarterly decline, according to the median of 39 economists’ forecasts in a Bloomberg News survey. That would exceed the 15-month long contraction in 2008-2009 during the financial crisis.
- France Suffers ‘Adjustment Fatigue’ on Austerity, Moscovici Says. France’s Finance Minister Pierre Moscovici said that his country is suffering “adjustment fatigue” as he reiterated his government’s push for policies to spur growth and fight unemployment. “Our people, they feel that there is something of an adjustment fatigue, and they want jobs, jobs, jobs,” he said yesterday in an interview with Bloomberg Television at the Group of Seven meeting of finance chiefs in Aylesbury, near London. “It doesn’t mean that now we can be relaxed -- we cannot be relaxed. But it means we must think structural reforms. We must first of all reduce structural deficit and at the same time we preserve the capacity of France to grow and to create jobs.”
- Yen Slides Past 102 as G-7 Tolerates Drop; Japan Stocks Advance. The yen weakened past 102 per dollar for the first time since October 2008 as Group of Seven finance chiefs indicated they will tolerate the currency’s decline. Japanese stocks led Asian shares higher, while gold fell. The yen dropped 0.3 percent to 101.90 a dollar at 11:21 a.m. in Tokyo after losing 2.6 percent last week, the most in five weeks.
- China’s Stocks Drop Before Industrial Output, Retail Sales Data. China’s stocks fell, led by property and consumer-discretionary companies, before the release of data on industrial production, fixed-asset investment and retail sales later today. Poly Real Estate Group Co. paced losses for developers after the Xinhua News Agency reported the government is studying “long-term” measures to curb home prices. Great Wall Motor Co. tumbled 3 percent, dragging down a measure of companies reliant on growth in the economy. Ping An Insurance (Group) Co. slid 1.4 percent as its brokerage unit was suspended from underwriting for three months after the China Securities Regulatory Commission said the unit helped a fraudulent company to list.
- Tombini Says Brazil Will Do What It Takes to Slow Inflation. Brazil’s central bank President Alexandre Tombini said policy makers will do what’s needed to slow inflation that has been above the mid-point of the target range since he took office. The bank’s board, led by Tombini, voted 6-to-2 last month to increase the benchmark Selic rate to 7.50 percent after holding it at a record-low 7.25 percent since October. The first increase since July 2011 came after annual inflation accelerated beyond the 6.5 percent upper limit of the bank’s target range in March. President Dilma Rousseff is facing growing pressure to slow inflation that is threatening Brazil’s economic recovery as higher prices sap domestic demand.
- Rebar Falls as Rising Steel Output in China Increases Supplies. Steel reinforcement-bar futures fell in Shanghai as rising output from Chinese steel mills last month added to supply of the building material. Rebar for delivery in October on the Shanghai Futures Exchange fell as much as 0.5 percent to 3,622 yuan ($589) a metric ton before trading at 3,631 yuan at 9:47 a.m. local time.
- Coking Coal Contracts Seen Slipping to Record Low, Survey Shows. BHP Billiton Ltd. (BHP), the world’s biggest exporter of steelmaking coal, may face a drop in contract prices to a record low in the third quarter amid rising supply and weaker Asian demand. Asian buyers will probably pay $165 a metric ton for hard coking coal in the three-month period starting July 1, according to the median estimate of five analysts surveyed by Bloomberg News. That would match the record low for contracts set in the first quarter and compare with $172 a ton in the second quarter. Spot prices have slid 11 percent since March, data compiled by Bloomberg show.
- WTI Drops a Third Day as OPEC Boosts Output to Five-Month High. West Texas Intermediate crude fell for a third day, the longest run of declines in four weeks, as OPEC boosted output to the highest level in five months. WTI futures slid as much as 0.9 percent in New York, and London-traded Brent decreased for a second day.
- Top IRS Officials Knew of Tea Party Spying Months Before Denial. Top U.S. Internal Revenue Service officials knew as early as June 2011 that agents were singling out groups promoting limited government for special attention, nine months before the agency’s head told lawmakers that such targeting wasn’t occurring, according to an inspector general’s report to be released later this week. A timeline of written criteria for identifying political cases noted that the standards were changed in July 2011, “based on the concerns” the director of Exempt Organizations “raised in June 2011,” according to the report by the Treasury Inspector General for Tax Administration.
- Sebelius Solicits Companies for Health Law Publicity Fund. President Barack Obama’s health secretary has called companies and other organizations, seeking financial contributions to help promote the 2010 health-care law that takes full effect next year.
- A Top Contender at the Fed Faces Test Over Easy Money. The next chief of the Federal Reserve will decide when to reverse the easy-money policies of Ben Bernanke, a judgment that could strangle the economic recovery if made too early or trigger runaway inflation if made too late. The task could fall to Fed vice-chairwoman Janet Yellen, a meticulous and demanding Yale-trained economist, who issued prescient, early warnings about the housing bust. After the financial crisis, she helped focus the Fed on jobless Americans, with policies aimed at stimulating the economy at least until unemployment falls to 6.5%.
- Amid Vote, Dimon Has Considered Departure. In a meeting with investors this week, James Dimon raised the possibility that he might leave J.P. Morgan Chase & Co. if shareholders vote to separate his roles of chief executive and chairman, according to people who attended the private meeting at the bank's headquarters.
- GOP Probes Deeper Into Benghazi Review. Lawmakers Seek to Question Accountability-Board Leaders, Saying Clinton's Handling of Attacks Wasn't Fully Explored. House Republicans on Monday plan to take another step in a widening Benghazi investigation, by asking leaders of an independent review board to agree to be questioned about their investigation of last year's attacks in Libya.
- IPOs Set to Raise Most Cash Since Crisis. U.S. Firms Have Raised $16.8 Billion in 2013, on Pace for Best Year Since 2007.
Marketwatch.com:
- Fed maps exit from stimulus. Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy -- an effort to preserve flexibility and manage highly unpredictable market expectations. Officials say they plan to reduce the amount of bonds they buy in careful and potentially halting steps, varying their purchases as their confidence about the job market and inflation evolves. The timing on when to start is still being debated.
Fox News:
- Republicans slam IRS targeting of Tea Party as 'chilling,' a form of intimidation. Washington Republicans on Sunday characterized the IRS targeting Tea Party groups and other conservative political organizations as “chilling” and intimidating acts that heighten Americans' mistrust in government. Their comments follow the IRS acknowledgment Friday that the agency targeted such groups during the 2012 election cycle to see whether they were violating their tax-exempt status -- a revelation followed by a report that such activity dated back to the previous year. “The conclusion that the IRS came to is that they did have agents who were engaged in intimidation of political groups,” Michigan Rep. Mike Rogers told “Fox News Sunday.” “I don't care if you're a conservative, a liberal, a Democrat or a Republican, this should send a chill up your spine. It needs to have a full investigation.” Evidence that the IRS was flagging such groups in 2011 was included in a draft inspector general's report obtained Saturday by Fox News and other news organizations and is expected to be released in full later this week.
- As many as 19 injured in shooting at New Orleans Mother's Day parade. New Orleans police are searching for three suspects Sunday after at least 19 people were shot during a Mother’s Day parade. Police spokeswoman Remi Braden said in an email that many of the victims were grazed and most of the wounds weren't life-threatening. No deaths were reported. The FBI said that the shooting appeared to be "street violence" and wasn't linked to terrorism.
- Soros: Italy Market Calm Will Be Short-Lived. The market recovery which has brought Italy's borrowing costs down over recent months is unlikely to be sustained for long, while the fundamental problems facing the euro zone remain, investor George Soros said in comments published on Sunday.
- Eurogroup Chief: France Must Speed Up Reforms. Jeroen Dijsselbloem, the president of the 17-nation euro bloc of nations, said France needs to accelerate its reform program after the country was given a two-year extension to meet European Union budget-deficit targets.
Zero Hedge:
Business Insider:- FBI Planes Flying Over Boston Metropolitan Area 'Frighten' Residents. Although they are painted as normal private planes, some of these aircraft are equipped with night surveillance and eavesdropping systems, including thermal and video imagery, and are capable to track suspected terrorists and criminals.
New York Times:
- Chinese Creating New Auto Niche Within Detroit. Dozens of companies from China are putting down roots in Detroit, part of the country’s steady push into the American auto industry.
MercuryNews.com:
- Latest cleantech funding woes spark fears of industry slide. Venture capitalists here and around the country are bailing out of cleantech in droves, spooked by low returns and an uncertain political landscape. "It's quite worrisome," said Dan Reicher, head of the Steyer-Taylor Center for Energy Policy at Stanford and a former assistant secretary in the U.S. Department of Energy.
Reuters:
The Economist:- Italy PM Letta warns coalition allies as tension mounts. Italian Prime Minister Enrico Letta warned his centre-right coalition partners on Sunday that the future of the government was at risk following a furious row over Silvio Berlusconi's attacks on magistrates in a rally at the weekend. Simmering tensions between the partners in Letta's uneasy coalition between traditional rivals on the right and left broke out into the open after the rally in the northern city of Brescia attended by ministers from Berlusconi's People of Freedom (PDL) party.
- Shaken, not stirred. The breadth of the latest global slowdown is disconcerting. Global growth sank below 2.5% in the second half of 2012. A small rebound at the start of 2013 appears to have faded. First-quarter GDP reports disappointed in America and China. Unemployment in Europe ticks relentlessly upwards. And in April an important index of global economic activity sank to its lowest level since last October, suggesting that the world economy is barely managing to grow (see chart).
- Schäuble warns EU bank rescue agency needs treaty changes. Germany’s finance minister has warned that a single EU bailout agency and rescue fund for ailing banks is legally untenable until the bloc’s treaties have been overhauled. In today’s Financial Times, Wolfgang Schäuble calls for a “two-step approach” that would leave bank rescues in the hands of “a network of” national authorities until treaty changes can take place.
- Spanish prelate fears 'mutual hatred' over euro crisis. The Catholic Primate of Spain has called for a profound shift in Europe's debt crisis policy to avert social collapse, warning that soaring unemployment in Spain and across southern Europe has become "very dangerous".
- Schaeuble Criticizes Draghi's Debt-Purchase Plan. German Finance Minister Wolfgang Schaeuble criticized ECB President Mario Draghi's plan to help some euro-area states by offering to buy securitized debt. Schaeuble said ECB assuming EU70b of Italian debt would amount to veiled state financing, violating EU treaties.
- Dijsselbloem Says Bank Stress Tests Not Tough Enough. Stress tests didn't sufficiently reveal the problems at banks in the past, citing Dutch Finance Minister and Eurogroup head Jeroen Dijsselbloem. Says it's not clear what new ECB banking tests will show; says "all the pictures are insecure". Says problem banks can be everywhere, not only in Southern Europe.
- S. Korea, U.S. to hold naval exercises involving nuclear-powered aircraft carrier. South Korea and the United States plan to hold two days of joint naval exercises off the east coast this week that will involve the nuclear-powered U.S. aircraft carrier USS Nimitz, a government source said Sunday.
- China is Studying 'Long-Term' Home Price Curbs. China is studying "long-term" measures including land finance reform to control the country's property prices, citing people familiar with the matter. Measures also include increasing land supplies.
- China Pollution Curb Plans May Be Submitted 'Soon'. Plans to prevent air and water pollution and protect rural environment may be submitted to the State Council "soon", citing people familiar with the matter. Measures in the plan will be targeted and stricter.
- China End-1Q Local Govt Trust Financing Rise 161% Y/Y. End-1Q outstanding local government financing through trust companies 655b yuan, citing data from China Trustee Association.
- China Overcapacity Curb Plan May Be Submitted Soon. Plan to curb production overcapacity may be submitted to the State Council "soon," citing people with knowledge of the matter. The plan may involve steel, electrolytic aluminum, cement, shipbuilding, polysilicon, wind power equipment and new materials industries. Plan may lmit new projects and increase entry barrier through power use benchmarks, bank loans and environment protection check standards.
- Turkey sends military reinforcements to Syrian border after blast. The Turkish military dispatched additional troops to the Syrian border after car bombs killed at least 40 people in the Reyhanlı district of Hatay on Saturday. The Cihan news agency said the military began deploying huge number of air and ground military reinforcements to Reyhanlı on the Syrian border after the blasts. Two car bombs exploded in a Turkish town near the border with Syria on Saturday, killing at least 40 people and injuring some 100 others, officials said. The blasts raised fears that Syria's brutal civil war violence was crossing into its neighbor.
Weekend Recommendations
Barron's:- Bullish commentary on (WU), (EQR), (TCO), (VNO) and (OEH).
- Bearish commentary on (UNXL), (PF) and (BNNY).
- Asian indices are -.75% to +.25% on average.
- Asia Ex-Japan Investment Grade CDS Index 101.0 +.5 basis point.
- Asia Pacific Sovereign CDS Index 82.25 +.25 basis point.
- FTSE-100 futures -.05%.
- S&P 500 futures -.29%.
- NASDAQ 100 futures -.24%.
Earnings of Note
Company/Estimate
- (SSYS)/.38
- (SCTY)/-.32
8:30 am EST
- Advance Retail Sales for April are estimated to fall -.3% versus a -.4% decline in March.
- Retail Sales Less Autos for April are estimated to fall -.2% versus a -.4% decline in March.
- Retail Sales Ex Auto & Gas for April are estimated to rise +.3% versus a -.1% decline in March.
- Business Inventories for March are estimated to rise +.3% versus a +.1% gain in February.
- None of note
- The China Industrial Production/Retail Sales data, Italian 10Y Bond auction, Eurogroup meetings, EU Finance Ministers meeting and the (SODA) analyst day could also impact trading today.
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