Today's Headlines

Bloomberg:

• Merkel Steps Up Defense of Budget Agenda, Targets Excessive Debt. Chancellor Angel Merkel stepped up her budget-cutting message in the face of rising criticism of Germany’s focus on austerity, saying that excessive debt robs states of their ability to make independent decisions. Referring to euro-area countries shouldered with too much debt, Merkel told supporters in the northern German state of Schleswig-Holstein that certain nations had themselves brought on austerity by spending more than they raised in revenue. Too much debt “harms countries’ ability to make their own decisions, so that they’re more and more dependent on the markets, and have to step up savings and make harsher cuts,” Merkel told a campaign rally today in Flensburg on the Danish border. Schleswig-Holstein holds an election on May 6. Merkel stressed her defense of consolidating budgets as the best way to resolve the two-year-old debt crisis even as the focus in Europe shifts away from austerity to promoting economic growth.
• Spain Yields at 6% Show Bank, Economy Risk: Euro Credit. As Spain’s recession undermines efforts to cut the deficit, the risk of bank losses is keeping 10-year yields at almost 6 percent as investors speculate the government will be forced to bail out the financial system. The nation’s 10-year borrowing costs have climbed about 70 basis points this year as Prime Minister Mariano Rajoy struggles to convince investors he can control public finances amid soaring unemployment and a contracting economy. Banks threaten to disrupt the premier’s efforts as bad loans reach the highest levels in almost two decades. “Spain is likely to need support in both the banking and government sectors,” said Jamie Stuttard, head of international bond portfolio management at Fidelity Investments, which has $1.2 trillion of assets. “Government bond market developments hold the key.”
• Anti-Euro Le Pen's Gain Spooks Overseas French Investors. Pierre Mouton, a fund manager at Notz Stucki & Cie. in Geneva, looks at the rise of anti- European, anti-austerity parties across the border in France with concern. It may keep him out of the country’s stock market. “We’re cautious on French stocks,” Mouton, whose firm manages $7.5 billion and has been reducing its holdings in France, said in an interview. “If the new president breaks under pressure from these groups, stocks will suffer. We prefer not to take that risk.”
• Oil Rises to One-Week High. “The dollar is down, which is helping most of the commodities,” said Phil Flynn, an analyst at futures brokerage PFGBest in Chicago. Crude oil for June delivery rose 32 cents, or 0.3 percent, to $104.44 a barrel at 12:37 p.m. on the New York Mercantile Exchange. Futures touched $104.92, the highest level since April 17. Prices are up 5.7 percent this year. Brent oil for June settlement increased 45 cents, or 0.4 percent, to $119.57 a barrel on the London-based ICE Futures Europe exchange.
• Consumer Comfort in U.S. Falls by the Most in More Than a Year. Consumer confidence in the U.S. dropped last week by the most in more than a year as perceptions of personal finances and the buying climate dimmed. The Bloomberg Consumer Comfort Index fell to minus 35.8 in the period to April 22 from minus 31.4 the previous week, the biggest decline since March 2011. A gauge of the buying climate decreased to a two-month low, and a measure of household financial wherewithal fell by the most since September.
• Pending Sales of U.S. Existing Home Increased 4.1% in March. Signed contracts to buy U.S. homes rose more than forecast in March as low interest rates drew buyers back into the market. The index of pending home purchases rose 4.1 percent to 101.4, the highest level since April 2010, after a 0.4 percent gain in February that was revised from a previously estimated 0.5 percent drop, the National Association of Realtors reported today in Washington. The median forecast of 43 economists surveyed by Bloomberg News called for a 1 percent rise in the measure, which tracks contracts on previously owned homes.
• Gold Climbs on Jobless Claims. Gold rose the most in two weeks on speculation that the Federal Reserve may increase stimulus measures to bolster the U.S. economy after more Americans than forecast filed applications for unemployment benefits last week. “The job market is softening, and the Federal Reserve may be forced to look at some form of easing,” James Cordier, portfolio manager at OptionSellers.com in Tampa, Florida, said in a telephone interview. “Investors have started pricing that in.” Gold futures for June delivery rose 0.7 percent to $1,653.80 an ounce at 9:33 a.m. on the Comex in New York. A close at that price would mark the biggest gain for a most- active contract since April 12. Before today, the precious metal gained 4.8 percent this year.
• Providence Said Selling Hulu Stake at $2 Billion Value. Hulu.com owners Walt Disney Co. (DIS), Comcast Corp. (CMCSA) and News Corp. (NWSA) are close to buying out Providence Equity Partners Inc.’s stake at a price that values the company at $2 billion, said two people with knowledge of the matter. Providence is selling its 10 percent share in Hulu for $200 million after investing $100 million when the venture began in 2007, according to the people, who weren’t authorized to talk publicly.
• Fed Sells CDOs From AIG Rescue to Barclays(BCS), Deutsche Bank(DB). The Federal Reserve Bank of New York said it sold $7.5 billion of collateralized debt obligations linked to commercial mortgages to Barclays Plc and Deutsche Bank AG. The joint winning bid “represents good value for the public and significantly exceeds the original price” the central bank paid for the assets, New York Fed President William C. Dudley said today in a statement on the regional bank’s website.
• Banks Likely to Cut Pay, Staff, Boston Consulting Says. Investment banks, faced with a weak industry outlook, probably will reduce the amount of revenue set aside for pay and should cut 20 percent to 30 percent of managers, according to Boston Consulting Group Inc.

Wall Street Journal:

• Sympathy for the Devils May Be Running Short at Goldman(GS). A few years ago, Mick Jagger was asked why the Rolling Stones were about to embark on one of their gray-haired, past-their-prime tours with big beer-company sponsorships and pricey tickets. "Is it about the money?" the questioner said. Without missing a beat, Mr. Jagger replied: "It's always been about the money."
• Appetite Is Back for AIG Bonds. Two bundles of bonds that once helped sicken American International Group Inc.(AIG) now have Wall Street salivating.
• FDA Plans ID-Tag System to Detect Faulty Devices. The Food and Drug Administration is devising a new system for detecting malfunctions in medical devices that will tap medical and billing records from hospitals and insurance companies. The system is designed to catch malfunctioning devices like the St. Jude Medical Inc. heart defibrillator wires recently linked to at least 20 deaths. The agency wants to assign a new bar-code-like identification number to medical devices. It would use that number to search large databases of records that could include veterans' and other hospitals, as well as large insurance companies.

CNBC.com:

• Foreclosure Activity Returns in Majority of US Markets. Big jumps in foreclosure activity in cities like Pittsburgh, Indianapolis, New York and Raleigh pushed the national numbers higher in the first three months of this year, according to a new report from RealtyTrac, an online foreclosure sales and data company. A majority of U.S. housing markets posted a quarterly increase in foreclosure activity.
• Growth in Europe? Call It a Very Vague Aspiration.
  

Business Insider:

• Another Poll of Independents Spells CATASTROPHE for Obama.

Zero Hedge:

• 84% of All Stock Trades Are By High-Frequency Computers … Only 16% Are Done By Human Traders.
• LTRO #Fail 2: European Credit Supply and Demand Fading Fast. (graphs)
• The Bailout Of The US Postal Service Begins: Cost To Taxpayers - $110,000 Per Union Vote "Saved Or Gained".

Wall Street Pit:

• Apple(AAPL) Remains the "Best of Breed".

Telegraph:

• China's Property Boom Has Peaked, Forever. Here is some food for thought, if you are a China "take-over-the-world" bull. I have just been listening to a talk on the Chinese housing market by Xianfang Ren, Beijing analyst for IHS Global Insight. Land sales make up 30pc of total tax revenue for the central government and 70pc for local government. (For those of us who watched the Irish state balloon on the back of property taxes – when they had a fat budget surplus – this has a familiar ring.) Construction makes up 10pc of total jobs, and a further 20pc indirectly in cement, steel, metallurgy etc. The government is building 36m homes for the poor, but that will start to run down in two years or so. Residential investment typically peaks at 8pc to 9pc of GDP for emerging nations during their catch-up growth spurts. It is already 12pc in China. Japan’s ratio peaked in 1973, long before the property price bubble burst. China has almost certainly peaked too on this crucial measure.
• Europeans Will Never Accept a Federal Banking System. The latest crackpot idea for shoring up Europe's monetary union, much discussed at last week's spring meeting of the International Monetary Fund and now widely promoted by eurocrats, is the establishment of a federal banking system, with a single framework for regulation, bailouts, deposit insurance, supervision and resolution.

Europa:

• EU Sues Italy Over Rules on Energy Performance of Buildings. Buildings are responsible for around 40% of energy consumption and 36% of the CO2 emissions in the European Union. The European legislation aims to achieve a significant reduction in the energy consumption of buildings, thus helping to combat climate change and strengthen the EU’s energy security. Large energy savings will also enable households to drastically reduce their bills. It is therefore essential that Member States fully apply this legislation.

Bear Radar

Style Underperformer:

• Mid-Cap Value +.55%

Sector Underperformers:

• 1) HMOs -1.69% 2) Networking -1.38% 3) Coal -1.26%

Stocks Falling on Unusual Volume:

• ISIL, ATMI, AET, GG, AZN, DOW, FURX, HURN, AKAM, MFRM, NIHD, ODFL, CROX, IDCC, SCSS, CELG, ITRI, LSTR, YNDX, CHRW, VCI, VAR, HRB, AZN, CAB, BC, BG, HP, TPX, LVS, BWA, SPPI, TRN, NUS, KMT and GGG
  

Stocks With Unusual Put Option Activity:

• 1) HRB 2) KLAC 3) AKAM 4) CTXS 5) THOR
  

Stocks With Most Negative News Mentions:

• 1) HES 2) XOM 3) HRB 4) BMY 5) PCS
  

Charts:

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

Bull Radar

Style Outperformer:

• Small-Cap Growth +.44%

Sector Outperformers:

• 1) Education +4.44% 2) Computer Hardware +1.47% 3) Semis +1.31%

Stocks Rising on Unusual Volume:

• NRGY, CRUS, COG, XLNX, RDS/A, PATK, HTWR, NTGR, IFSIA, ACOM, SLAB, REGN, STRA, CTXS, EQIX, INCY, NUAN, ARRS, ORLY, BCO, SWI, AH, SKX, RYL, STMP, DFT, JAH, PMTC, WPI, VHC, TWI, EA, CRI, IPG, CLGX, OPEN and SUSQ
  

Stocks With Unusual Call Option Activity:

• 1) CS 2) HUM 3) LEAP 4) CROX 5) SLM
  

Stocks With Most Positive News Mentions:

• 1) CTXS 2) LVS 3) XLNX 4) AKAM 5) CCE
  

Charts:

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

Thursday Watch

Evening Headlines
Bloomberg:

• Spanish Yields at 6% Show Risks of Banking Bailout: Euro Credit. As Spain's recession undermines efforts to cut the deficit, the risk of bank losses is keeping 10-year yields at almost 6% as investors speculate the government will be forced to bailout out the financial system. The nation's 10-year borrowing costs have climbed about 70 basis points this yer as Prime Minister Mariano Rajoy struggles to convince investors he can control public finances amid soaring unemployment and a contracting economy. Banks threaten to disrupt the premier's efforts as bad loans reach the highest levels in almost two decades. "Spain is likely to need support in both the banking and government sectors," said Jamie Stuttard, head of international bond portfolio management at Fidelity Investments, which has $1.2 trillion of assets. "Government bond market developments hold the key."
• Swedish CDS Surge Tops Spain's as Crisis Spreads: Nordic Credit. Sweden's credit-default swaps soared more than debt derivatives for any other European government this month as Scandinavia's biggest economy succumbs to crisis contagion via its export markets. The cost of protecting Swedish debt against default rose about 36% in April, the biggest increase in western Europe. Swaps on Germany advanced 19% in the same period while the cost of protecting Spanish debt against default grew 9%.
• Three Reasons Japan's Economic Pain Is Getting Worse. Japan’s economic problems are serious and getting worse. Foremost among them is the crushing burden of government debt. Japan’s ratio of government debt to gross domestic product, currently about 2.28, is by far the highest in the industrial world, almost double that of even Greece and Italy, and steadily growing. Already, the combined costs of interest on that debt and social security are approximately equal to total government tax revenue. Japan’s trade balance is about to go negative for the first time since 1980. Land values and Nikkei stock values have fallen to about 30 percent of 1989 levels. Now, educated young Japanese women are emigrating, Japanese companies are shifting production overseas (even to the U.S.), national politics are in gridlock (six prime ministers in the past five years), and last year Japan experienced its first mass street protests in decades. The economic troubles are symptoms of at least three sets of deeper social problems.
• Buffett-Backed BYD Says First-Half Net May Fall Up to 95%. BYD Co. (1211), the Chinese carmaker partly owned by Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), said first-half profit may fall as much as 95 percent because of reduced earnings from solar energy and mobile handsets. Net income for the six months ended June 30 may drop to between 13.8 million yuan ($2.2 million) and 68.8 million yuan, the Shenzhen-based manufacturer said in a statement to the Hong Kong stock exchange yesterday. Demand for BYD’s cars slowed after the government ended buying incentives and the popularity of its top-selling F3 sedan waned. First-quarter sales fell 8 percent on year to 108,755 vehicles, the company said. China’s total passenger-car sales fell for the first time since 2005, dropping 1.3 percent from a year earlier, as the slowing economy and rising fuel costs curbed buying. BYD blamed the forecast decline in profit mainly on a “great loss” in its solar cell business. “The whole solar industry has a tremendous amount of excess capacity,” said Theodore O’Neill, an analyst at Wunderlich Securities in New York. “If you’re in an industry that’s borderline profitless and you’re a smaller player like BYD, it’s maybe going to be worse than profitless.”
• Is 'Fiscal Cliff' a Keynesian Topography Mistake? by Caroline Baum.
• Brazil Puts Reach Record High on China, Europe Concern: Options. Options traders are paying record prices to protect against Brazilian equity losses as growth slows in China, its biggest trading partner, and concern increases that Europe's debt crisis will worsen. Puts priced 10% below the iShares MSCI Brazil Index Fund cost 1.38 times more than calls betting on a 10% gain, data on three-month options compiled by Bloomberg show. The price relationship known as skew rose to an all-time high of 1.42 on April 20. Contracts that profit should the ETF lose 10% by June were the most-owned, the data show.
  

Wall Street Journal:

• Car Dealers Fight On. Auto Dealers Cut in 2009 Bailout Continue to Take on Constitutionality Issue. U.S. government bailouts of General Motors(GM) and Chrysler became a constitutional battleground when they were pushed through bankruptcy court in 2009. Turns out the battle isn't over just yet. More than 220 former car dealers are pressing their case that the Obama administration violated the U.S. Constitution when the car makers terminated franchise agreements while in bankruptcy restructuring.

Fox News:

• TSA Screeners Charged in Los Angeles Drug Trafficking Probe. Two former and two current Transportation Security Administration employees have been arrested and indicted on drug conspiracy charges for allegedly allowing large amounts of cocaine and other drugs to pass through security screening at Los Angeles International Airport last year. Seven people face drug-related charges in a 22-count indictment unsealed Wednesday in Los Angeles federal court. Other charges include paying and receiving bribes by a government official.

Business Insider:

• You'll Feel Differently About George Zimmerman And The Trayvon Martin Shooting After You Read This.
• Meredith Whitney: State Finances Are Still Doomed, And These Three States Are In The Most Trouble.
• The 12 Startups Everyone Is Talking About In Silicon Valley.
  
• NYT: Bo Xilai Was Wiretapping The Chinese President.
• Caterpillar(CAT) Answered 5 Burning Questions About China Today.

Zero Hedge:

• A Spinning Blankfein Responds If Goldman(GS) Is Still A Vampire Squid. (video)

CNBC:

• ICBC Chairman: China Bank ‘Monopoly’ Should Be Broken.

NY Times:

• Hedge Fund Managers See Tough Year for Industry. Hedge fund managers are predicting a tough year for the sector in 2012. A report by the consulting firm Rothstein Kass found about half of the 400 hedge fund managers who responded believed that 2012 would be a “a difficult or somewhat difficult” year for the industry. Almost 40 percent expressed concerns that the United States would enter a double-dip recession. Only about 32 percent of those who responded in 2011 thought it would be a rough year for hedge funds. Political and economic uncertainty, tougher requirements by the Securities and Exchange Commission and brutal competition for investment dollars are among the challenges facing the industry in 2012, said Howard Altman, co-chief executive of the Financial Services Group at Rothstein Kass. “Less people are optimistic; they’re thinking about the economy, the way the markets have behaved post-crisis, and the regulatory environment that’s facing them,” he said.

Seeking Alpha:

• 9 High-Growth Retail Stocks Snapped Up By Hedge Funds.
  

TechCrunch:

• YouTube Is 27% Of Mobile Video Traffic In North America, Netflix(NFLX) Just 2%. YouTube is the largest source of mobile video traffic, according to a new report from Sandvine, and now accounts for as much as 25% of network data, and no less than 12% at any given time. The report examined traffic across a selection of Sandvine’s 200+ customers in North America, Europe, the Middle East, Africa, the Caribbean, Latin America, and the Asia-Pacific. Combined with other services like Pandora and Netflix, audio and video streaming make up more than half of mobile data traffic in North America, and it’s on track to reach 60% by 2014, the company says.

The Examiner:

• Two Years On, Health Care Bill Is Like A Plague. Democrats are regretting the passage of the Patient Protection and Affordable Care Act. Now that we know it is nothing if not unaffordable, the act is itself the main danger from which they seek political protection and shelter. Why now? Perhaps to get a jump on things before the act is ruled unconstitutional, or before it causes even more Democrats to lose in November, or before President Romney repeals it in 2013. "I think that the manner in which the issue was dealt with ... cost Obama a lot of credibility as a leader," said Sen. James Webb, D-Va. Webb, who voted for passage and is retiring after one term, added that if Obama had gone for a small, simple measure, he could have won some Republican votes. Rep. Brad Miller, D-N.C., who is also retiring, remarked that "[w]e would all have been better off if we had dealt first with the financial system" and said Democrats wasted time and political capital creating problems that dragged the economy down. Rep. Dennis Cardoza, D-Calif., who is also retiring, said the bill should have been done in "digestible pieces," and they should have 'figure[d] how they were going to pay for the bill, and then figure[d] out what they could afford." Rep. Barney Frank, D-Mass., of all people, says the Democrats should have stopped after Scott Brown won his election. Former Rep. Artur Davis, D-Ala., who lost a gubernatorial primary after voting against it, got it right when he said "the Affordable Care Act is the single least popular piece of major domestic legislation in the past 70 years."

Rasmussen Reports:

• Daily Presidential Tracking Poll. (graph) The Rasmussen Reports daily Presidential Tracking Poll for Wednesday shows Mitt Romney earning 49% of the vote, while President Obama attracts support from 44%. Three percent (3%) would vote for a third party candidate, while another four percent (4%) are undecided.

Reuters:

• Xilinx(XLNX) 4th-quarter beats, sees upbeat Q1. Chipmaker Xilinx Inc posted better-than-expected quarterly results and it guided first-quarter revenue well above market estimates, signaling a faster recovery in its communications business. Shares of the company rose 8 percent in after-market trading.
• Akamai(AKAM) forecast weak Q2, shares down. Internet content delivery company Akamai Technologies Inc's outlook for second-quarter profit fell short of analysts' estimates, sending its shares down 10 percent in aftermarket trade.

Telegraph:

• Europe Faces Japan Syndrome as Credit Demand Implodes. (graph) Europe (minus Germany) looks more like post-bubble Japan each month. The long-feared credit crunch has mutated instead into a collapse in DEMAND for loans. Households and firms are comatose, or scared stiff, in a string of countries. Demand for housing loans fell 70pc in Portugal, 44pc in Italy, and 42pc in the Netherlands in the first quarter of 2012. Enterprise loans fell 38pc in Italy. The survey took place in late March and early April, and therefore includes the second of Mario Draghi’s €1 trillion liquidity infusion (LTRO). The ECB said net demand for loans had fallen "to a significantly lower level than had been expected in the fourth quarter of 2011, with the decline driven in particular by a further sharp drop in financing needs for fixed investment." Demand fell 43pc for household loans, and 30pc for non-bank firms.
  

Evening Recommendations

• None of note

Night Trading

• Asian equity indices are -.25% to +.50% on average.
• Asia Ex-Japan Investment Grade CDS Index 161.50 -4.5 basis points.
  
• Asia Pacific Sovereign CDS Index 134.50 -1.25 basis points.
  
• FTSE-100 futures -.03%.
  
• S&P 500 futures +.10%.
  
• NASDAQ 100 futures +.11%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (OXY)/1.92
• (LMT)/1.71
• (ESI)/2.12
• (MWW)/.02
• (LLL)/1.87
• (XOM)/2.08
• (PHM)/-.03
• (DOW)/.59
• (GR)/1.64
• (STRA)/2.09
• (VMC)/-.44
• (CRI)/.41
• (LIZ)/-.12
• (HOT)/.52
• (WHR)/1.08
• (AET)/1.40
• (BG)/1.17
• (MO)/.49
• (ZMH)/1.30
• (ABC)/.81
• (CME)/4.00
• (CL)/1.24
• (CNX)/.58
• (BMY)/.64
• (CELG)/1.13
• (UPS)/1.01
• (K)/.99
• (EXPE)/.14
• (KLAC)/1.10
• (WDC)/1.53
• (MET)/1.29
• (CERN)/.50
• (SBUX)/.39
• (CSTR)/1.39
• (MXIM)/.28
• (DECK)/.25
• (MHS)/.99

Economic Releases
8:30 am EST

• Initial Jobless Claims are estimated to fall to 375K versus 386K the prior week.
  
• Continuing Claims are estimated to fall to 3293K versus 3297K prior.
  

10:00 am EST

• Pending Home Sales for March are estimated to rise +1.0% versus a -.5% decline in February.
  

11:00 am EST

• The Kansas City Fed Manufacturing Activity Index for April is estimated to fall to 7.0 from 9.0 in March.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• The Chicago Fed National Activity Index, weekly Bloomberg Consumer Comfort Index, weekly EIA natural gas inventory report, (CBRL) Analyst Day and the 7-Year Treasury-Note Auction could also impact trading today.
  

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

Stocks Surging into Final Hour on Less Eurozone Debt Angst, Fed Commentary, More Tech Sector Optimism, Short-Covering

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Below Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 17.05 -5.91%
  
• ISE Sentiment Index 110.0 +15.79%
  
• Total Put/Call .84 -7.69%
  
• NYSE Arms .79 -6.54%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 97.93 -1.81%
  
• European Financial Sector CDS Index 247.0 -3.57%
  
• Western Europe Sovereign Debt CDS Index 274.66 -2.55%
  
• Emerging Market CDS Index 258.38 -2.87%
  
• 2-Year Swap Spread 29.0 -2.25 basis points
  
• TED Spread 38.0 -.5 basis point
  
• 3-Month EUR/USD Cross-Currency Basis Swap -44.50 +1.5 basis points
  

Economic Gauges:

• 3-Month T-Bill Yield .09% +1 basis point
  
• Yield Curve 171.0 +1 basis point
  
• China Import Iron Ore Spot $146.70/Metric Tonne unch.
  
• Citi US Economic Surprise Index -.1 -4.3 points
  
• 10-Year TIPS Spread 2.27 +1 basis point
  

Overseas Futures:

• Nikkei Futures: Indicating a +58 open in Japan
• DAX Futures: Indicating +7 open in Germany
  

Portfolio:

• Higher: On gains in my Tech, Medical, Biotech and Retail sector longs
  
• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges and some of my (EEM) short
  
• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• Merkel Backs Draghi's Call for Growth to Combat Debt Crisis. Chancellor Angela Merkel backed European Central Bank President Mario Draghi’s call to focus on spurring economic growth, as German officials rejected charges they are fixated on budget austerity to fight the debt crisis. Europe needs growth “in the way that Mario Draghi, the president of the European Central Bank, said it today, that is in the form of structural reforms,” the chancellor told a conference of her Christian Democratic bloc in Berlin today. Hollande called the remarks helpful and said France won’t ratify the fiscal pact in its current form if he is elected. “The main risk at this time is that the European economy remains in a recession because not enough credit is provided to companies,” the Socialist candidate told a news conference in Paris today.
• Hollande Vows Not to Ratify Euro Pact, Auguring Merkel Clash. French Socialist Francois Hollande, the leading presidential candidate, said France won’t ratify the European agreement pushed by Germany to tighten budget rules if he’s elected. “There will be a re-negotiation,” Hollande told journalists today in Paris. “Either there will be a new treaty, or there will be a modification of the existing treaty. It’s about negotiation.” The comments put Hollande on a collision course with German Chancellor Angela Merkel, who has championed debt reduction as the key to ending the region’s fiscal crisis. Hollande, who has also pledged to eliminate France’s budget deficit, is aiming to use popular support at home to strengthen his hand in talks to promote an alternative. Merkel and her ruling party are standing firm on German-led remedies, including the commitment to cut debt that was signed last month by all 17 euro-area leaders, among them Hollande’s opponent, President Nicolas Sarkozy. “If Mr. Hollande were to say that he wants to increase government spending and save less, he’ll lose the confidence of the financial markets,” Peter Altmaier, the parliamentary whip of Merkel’s Christian Democrats, said in an interview in Berlin yesterday. “We will stick to our fundamental principles because there’s really no alternative.”
• Credit Suisse Chief Says April Market Conditions Less Favorable. Credit Suisse Group AG (CSGN) Chief Executive Officer Brady Dougan said market conditions worsened in April from the first quarter, when its investment bank returned to profit after a 2011 loss. “So far in April market conditions haven’t been as favorable as they were in the first quarter,” Dougan said in an interview with Bloomberg Television in Zurich today. “We’re pretty constructive about what we hope we’ll see for the rest of the year. We certainly have to be prepared for volatility in the markets.”
• EAA Confounds Schaeuble's Debt Reduction Plan, Handelsblatt Says. Erste Abwicklungsanstalt, the so- called bad bank formed to wind down assets of German state-owned lender WestLB, will confound Finance Minister Wolfgang Schaeuble’s plan to reduce the country’s debt load, Handelsblatt newspaper said, citing people it didn’t identify. EAA expects WestLB to transfer a portfolio of about 100 billion euros ($132 billion) in the next months, of which about 50 billion euros will be added to the government’s debt, the newspaper said. The amount isn’t included in a debt-reduction plan that Schaeuble sent to European authorities in Brussels and may boost Germany’s debt load to 84 percent from 82 percent of gross domestic product this year, Handelsblatt said.
• Barclays Accused Over Libor Fixing in U.K. Rate Swaps Lawsuit. Barclays Plc (BARC) was accused of undermining the integrity of the London interbank offered rate in a lawsuit filed by a care home company which claims it was sold unfair interest rate swaps linked to the measure.
• Fed Says Economy Will 'Pick Up Gradually'; Policy Unchanged. Federal Reserve policy makers said they expect growth to gradually accelerate, while refraining from new actions to lower borrowing costs. “The committee expects economic growth to remain moderate over coming quarters and then to pick up gradually,” the Federal Open Market Committee said in a statement today at the conclusion of a two-day meeting today in Washington. “Despite some signs of improvement, the housing sector remains depressed.” Policy makers led by Chairman Ben S. Bernanke are holding off on additional steps to boost the economy amid signs the more than two-year expansion is gaining strength. Still, the jobless rate isn’t declining fast enough to satisfy central bankers, who repeated their view today that borrowing costs are likely to remain “exceptionally low” at least through late 2014. “Strains in global financial markets continue to pose significant downside risks to the economic outlook,” according to today’s statement. The Fed has cited the risk from strains in global markets in its previous five meetings. In March it said those strains had “eased.”
• China Auto Scraps IPO After Struggling to Lure Investors.
• Caterpillar(CAT) Revenue Misses Estimates as China, Brazil Sales Slow. Caterpillar Inc., the largest maker of construction and mining equipment, reported a gain in first- quarter revenue that missed analysts' estimates as sales of construction equipment fell in China and Brazil. Revenue climbed 23 percent to $16 billion, the Peoria, Illinois-based company said in a statement today. The average of 13 estimates compiled by Bloomberg was for $16.1 billion. Net income rose to $2.37 a share, beating the $2.13 average of 21 estimates. Caterpillar raised its full-year profit forecast while maintaining its projected 2012 revenue. The shares fell in pre-market trading in New York. "They still reported a big number but lower than expected on near-term softness in China and Brazil," Larry De Maria, a New York-based analyst for William Blair & Co. who recommends buying the shares, said in an interview.
  

Wall Street Journal:

• EU Parliament President: Collapse of EU "Realistic Scenario". The collapse of the European Union has become a "realistic scenario," with national governments claiming back more power, xenophobia increasing, calls to reintroduce border controls and concerns about the euro emerging, the president of the European Parliament said Wednesday.
• Gingrich to End GOP Bid, Endorse Romney. Newt Gingrich plans to end his presidential campaign and endorse Mitt Romney next week at an event in Washington, aides to the former House speaker said.
• 5 Cities Where Home Prices Hit New Lows.
  

CNBC.com:

• Lloyd Blankfein: 'We Haven't Gotten Everything Right'. In his first interview in two years, Goldman Sachs CEO Lloyd Blankfein told CNBC Wednesday, "We haven't gotten everything right in how we deal with the public." In the March 14 piece, Greg Smith, head of Goldman's U.S. equity derivatives business in Europe, the Middle East and Africa, said the firm put its own profits ahead of clients, with some executives disparaging some clients as "muppets."
• Investors Face 'Bumpy Journey' as Euro Crisis Grows: El-Erian. "Bimodal" conditions mean that those employing the simple "risk-on" or "risk-off" approaches are missing both opportunities and dangers, El-Erian said during an interview on CNBC's "Squawk Box." "We are on this bumpy journey to this unusual destination, which is three to five years" long, said El-Erian, co-chief investment officer at Pimco, which runs the largest bond fund in the world. "The length depends on policymakers, and policymakers have been postponing the deleveraging, which makes this journey even more uncertain."
• UK Slides Back Into Recession in First Double Dip Since 1970s. Britain's economy slid into its second recession since the financial crisis after official data unexpectedly showed a fall in output in the first three months of 2012, piling pressure on Prime Minister David Cameron's embattled coalition government.

Business Insider:

• Even Liberal Justice Sonia Sotomayor Shredded The Government's Arizona Immigration Arguments Today.
• The Bank Bailout Wasn't "Profitable" - It Will Cost Taxpayers $120 Billion.
• Meet The Man Revealing The Huge Scandals That The Chinese Government doesn't Want You To Know.
• Dylan Grice Warns: Australia's Credit Bubble Is Built On An Even Bigger Chinese Credit Bubble.
• The Radical Implications of America's Dirt-Cheap Natural Gas.
• Yes, You Should Be Astonished By Apple(AAPL)...
  

Zero Hedge:

• Has America Been Crippled by Intellectual Idiots?

Reuters:

• Plunge in Durable Goods Orders Clouds U.S. Outlook. Demand for long-lasting manufactured goods tumbled by the most in three years in March and businesses cut back on spending plans, suggesting the economy slowed as the first quarter drew to a close. Durable goods orders dropped 4.2 percent, the largest decline since January 2009 when the economy was nose-diving, Commerce Department data showed on Wednesday. Economists had expected a drop of just 1.7 percent.February orders were revised to show only a 1.9 percent increase instead of the previously reported 2.4 percent rise."This adds to the evidence that momentum in the economy sort of fell flat in March," said Ellen Zentner, a senior U.S. economist at Nomura Securities in New York. Although non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, fell 0.8 percent in March, the prior month's figure was revised up to show a 2.8 percent gain from a 1.7 percent increase. In addition, shipments of non-defense, non-aircraft capital goods orders, which go into the calculation of gross domestic product, rose 2.6 percent after increasing 1.4 percent in February. "Unexpected weakness in core orders in March suggests less growth of equipment and software spending in the second quarter, and more first-quarter inventory investment suggests a larger decline in inventory investment in the second quarter," said Ben Herzon, an economist at Macroeconomic Advisers in St. Louis. The drop in orders for durable goods and an expected rise in inventories in the first quarter could set the economy up for a soft patch heading into the middle of the year. Orders for durable goods last month were dragged down by a 12.5 percent plunge in bookings for transportation equipment - the most since November 2010 - as aircraft orders tumbled. Boeing received only 53 orders for aircraft, according to the plane maker's website, down from 237 in February. Orders for motor vehicles barely rose last month. Excluding transportation, orders fell 1.1 percent after a 1.9 percent rise in February.

Xinhua:

• The capital sufficiency levels of China Guangdong's property developers in the 1Q are at their lowest since 2009, citing a report by the province's real estate industry association.

Shanghai Daily:

• Slower Expansion Seen Through 2015. HAVING experienced an economic slowdown for the past five quarters, China may lag the growth rate of the global commercial vehicle industry through 2015, an industry study shows. The revenue of medium and heavy-duty commercial vehicle sector, which is affected by a country's business circle, may grow 3.2 percent within three years in China against the estimated 4.3 percent for the world, according to a study by consulting firm AlixPartners. China's commercial vehicle sector posted an explosive revenue growth of 45 percent in 2010 after the government introduced a 4 trillion yuan (US$634 billion) stimulus package in 2009 .