Today's Headlines

Bloomberg: 

• IMF Sees Rising Risks for Emerging Markets’ Corporate Debt. Years of cheap credit have inflated corporate and sovereign debt in emerging markets that now find themselves at greater risk of capital flight if global interest rates rise further, the International Monetary Fund said. While the IMF predicts a smooth withdrawal of monetary stimulus by the Federal Reserve, a “bumpy exit” is possible, Jose Vinals, the head of the IMF’s capital markets department, said in prepared remarks. The result could be a faster-than-anticipated increase in interest rates, widening credit spreads and greater financial volatility, he said. “Emerging markets are especially vulnerable to a tightening in the external financial environment, after a prolonged period of capital inflows, easy access to international markets, and low interest rates,” Vinals said in remarks accompanying the release of the IMF’s Global Financial Stability Report. Years of low interest rates in advanced economies have encouraged global investors to seek higher yields in fast-growing developing countries. Investment from advanced economies into emerging-market bonds reached an estimated $1.5 trillion by the end of 2013, the IMF said. Emerging-market corporate debt tripled from 2009 to 2013, with debt levels in countries such as China, Hungary and Malaysia reaching or exceeding 100 percent of gross domestic product.

• Ruble to Micex Decline as Putin Discusses Ukraine Energy Ties. The ruble weakened for a third day and the Micex equities gauge declined as President Vladimir Putin said Russia can’t subsidize Ukraine’s economy “forever” amid continued unrest in the east of the country. The ruble retreated 0.1 percent versus the central bank’s target basket of dollars and euros to 41.8325 by 6 p.m. in Moscow, when the central bank stops its market operations. The Micex Index (INDEXCF) dropped 0.3 percent to 1,348.85, having earlier decreased as much as 1.1 percent, and yields on 10-year ruble-denominated debt fell one basis point to 8.89 percent. 

• Russia’s First-Quarter Capital Outflows Largest Since Late 2008. Russian capital outflows in the first quarter were the largest since the last three months of 2008 when the collapse of Lehman Brothers Holdings Inc. triggered the biggest credit squeeze since the Great Depression. Net outflows totaled $50.6 billion, more than double the $17.8 billion that left in the previous quarter, the central bank in Moscow said in a statement on its website today. In the final quarter of 2008, capital outflows were $132.1 billion. Outflows for the whole of last year reached $59.6 billion. 

• World Steel Use Growth to Slow as China Decelerates, Lobby Says. Growth in world steel use will slow this year as China’s consumption of the metal decelerates, the World Steel Association trade lobby said. Global “apparent” steel use will increase 3.1 percent in 2014 to 1.53 billion metric tons, after 3.6 percent growth last year, the Brussels-based group said today in a report. Chinese consumption will rise 3 percent, down from 6.1 percent. “Many emerging economies continue to struggle with structural issues and financial market volatility,” Hans Jurgen Kerkhoff, chairman of the Worldsteel Economics Committee, said in the report. “This, along with China’s deceleration, is the reason for our slightly lower global growth rate forecast for 2014.”

• China's NDRC Said to Start Inspection of Corporate Bond Risks. China's National Development and Reform Commission is conducting an inspection of risks associated with corporate bonds for which it holds oversight, people familiar with the matter said. The inspections, which began in March, focus mainly on how companies are using funds they raise from bond sales, according to the people.    

• China Stimulus Would Be ‘Mistake’: Nobel Laureate Phelps. Nobel laureate Edmund Phelps was among a group of economists who called on China to refrain from introducing a stimulus package as pressure grows on the government to take steps to support economic growth. It would be a “mistake” for Premier Li Keqiang to use stimulus to maintain the expansion, Edmund Phelps, winner of the 2006 Nobel Prize in Economic Sciences, said at the Bo’ao Forum yesterday in southern China’s Hainan province.

• Brazil March Inflation Faster Than Every Economist Estimate. Brazil’s consumer prices rose more in March than economists estimated, increasing pressure on the central bank to extend the world’s longest cycle of interest rate increases. Swap rates rose. Inflation as measured by the benchmark IPCA index accelerated to 0.92 percent from 0.69 percent in February, the national statistics agency said today in Rio de Janeiro. That was faster than forecast by all 40 analysts surveyed by Bloomberg, whose median estimate was for an 0.85 percent rise. Annual (BZPIIPCY) inflation quickened to 6.15 percent from 5.68 percent, marking its fastest rate since July.

• LVMH Sales Trail Estimates as China Destocking Hurts Cognac. LVMH Moet Hennessy Louis Vuitton SA, the world’s largest luxury-goods company, reported an unexpected decline in wine and spirit sales in the first quarter as a Chinese crackdown on lavish spending hit cognac sales. Revenue advanced 4 percent to 7.21 billion euros ($10 billion), Paris-based LVMH said today in a statement after European markets closed. Analysts predicted 7.4 billion euros, according to the median of 17 estimates compiled by Bloomberg. Sales from wines and spirits sales fell 3 percent on an organic basis, led by cognac in China, LVMH said. Analysts predicted growth of 3 percent.

• Draghi’s Hunt for QE Assets Leaves ECB Scouring Barren Market. Mario Draghi’s asset-purchase plan to ward off deflation may be lacking one key element: enough assets to buy. Since the European Central Bank President buoyed investors last week by saying policy makers backed quantitative easing as a way to boost prices if needed, officials including Governing Council member Ewald Nowotny have signaled any purchases may center on asset-backed securities. While that makes sense in an economy funded mostly by bank loans, it’s also a market Draghi once described as “dead.” 

• European Stocks Rise After Two-Day Drop as Carmakers Gain. European stocks advanced, after the region’s equities posted their first back-to-back losses in more than three weeks, as carmakers climbed. Daimler AG rose as its chief executive officer predicted significant profit growth this year. Wirecard AG jumped 5.8 percent as a broker recommended buying the stock as the company confirmed its 2014 forecast and increased its annual dividend. Norsk Hydro (NHY) ASA added 1.9 percent as U.S. peer Alcoa Inc. posted a higher-than-projected quarterly profit and reiterated its forecast for global aluminum demand to grow 7 percent this year. The Stoxx Europe 600 Index gained 0.4 percent to 335.16 at the close of trading. 

• WTI Crude Rises to One-Month High on Gasoline Demand. WTI for May delivery rose 54 cents, or 0.5 percent, to $103.10 a barrel at 1:02 p.m. on the New York Mercantile Exchange after reaching $103.19, the most since March 5. Prices were at $102.60 before the EIA report was released at 10:30 a.m. in Washington. The volume of all futures traded was 44 percent above the 100-day average. 

• Copper Futures Fall in London Amid China Demand Concern. Copper for delivery in three months fell 0.8 percent to settle at $6,617 a metric ton ($3 a pound) at 5:50 p.m. on the London Metal Exchange, the biggest loss since March 26. On the Comex in New York, copper futures for delivery in May declined 0.5 percent to $3.037 a pound.

Wall Street Journal:

• Greece's Bonds Pose Yield Riddle. 

Fox News:

• 20 wounded in multiple stabbings at Pennsylvania high school.

• UN finding on climate change is just a bunch of hot air, new report claims. A U.N.-commissioned panel says climate change is hurting the growth of crops, affecting the quality of water supplies and forcing wildlife to change the way it lives – but what if it’s all just smoke and mirrors? A new report from the Nongovernmental International Panel on Climate Change (NIPCC), written by an international collection of scientists and published by the conservative Heartl and Institute, claims just that, declaring that humanity's impact on climate is not causing substantial harm to the Earth.

ZeroHedge: 

• FOMC Minutes Confirms "Forecasts Overstate Rate Rise Pace".

• These Are The Most Levered Hedge Funds.

• House Panel Refers IRS' "Teaparty Nemesis" Lois Lerner For Criminal Prosecution.

• Consumer Spending "Recovery" Stalls As Pent-Up Demand Fails To Appear. (graph)

• Fed To The Sharks, Part 2: Housing And The Death Of The Middle Class. (graph)

• Baltic Dry Collapses To Worst Start To A Year On Record. (graph)

• No One Will Ring The Bell At The Top. (graph)

• Wholesale Inventory Build Slows As Sales Miss 3rd Month In A Row. (graph)

Reuters:

• ECB dismisses latest bank appeal over health-check deadlines. The European Central Bank has dismissed the latest appeal by the region's biggest lenders for concessions, including easier deadlines, to make rigorous health checks of their industry less logistically onerous, sources told Reuters. ECB officials indicated to representatives of the European Banking Federation, an industry lobby group, that they would not alter the timetable of this year's "asset quality review", two sources familiar with a meeting between the two sides said.

• Non-banks notch win in long-running derivatives battle. A group of small brokerages and large commodities companies have convinced lawmakers to tweak a rule they say would have made derivatives trading more expensive for them and sent more business to Wall Street banks that already dominate the market. 

• EMERGING MARKETS-Profit-taking hits Latam; Brazil off after data.

Washington Times:

• IRS under fire: Vote for Obama stickers, campaign cheerleading commonplace. Agency still under fire for Lois Lerner-tea party targeting scandal. Even as the IRS faces growing heat over Lois G. Lerner and the tea party targeting scandal, a government watchdog said Wednesday it’s pursuing cases against three other tax agency employees and offices suspected of illegal political activity in support of President Obama and fellow Democrats.

Sky News:

• IMF Warns Investors Over 'Rock-Bottom Rates'. Investors are becoming dangerously reliant on rock-bottom interest rates, with many becoming so indebted they will face serious problems when borrowing costs rise, the International Monetary Fund (IMF) has warned. The IMF said that the amount of cash spent on leveraged loans - the high-debt instruments with financial problems - now exceeds the level in 2007 before the crisis. The same is the case with covenant-lite loans, which have become more lax than normal debt - they are also being created at a significantly faster rate than in 2007. The warnings came in the IMF's Global Financial Stability Report. It said that financial markets may struggle when, eventually, the Federal Reserve, Bank of England and other central banks raise interest rates. The report's lead author, Jose Vinals, said that many economies were reliant on these "liquidity crutches".

Telegraph:

• German Finance Minister Wolfgang Schaeuble 'can't bear hearing' austerity versus growth debate. Wolfgang Schaeuble defends Germany after International Monetary Fund again encouraged the country to invest more to boost domestic demand. "The way I see it, the countries that have their budgets in order are also the ones with the best growth figures."

La Figaro:

• JPMorgan Chase(JPM) CEO Says France's Future Worries Him. Jami Dimon tells Le Figaro he worries for the future of France when he hears that thousands of French, "not just the rich but also the young and entrepreneurs" are leaving the country.

NDTV:

• China Sees Less Policy Room to Fight Growth Slowdown. China has less and less room to rely on policy tools to support the economy, the country's top economic planning agency said on Wednesday, as the government tries to arrest a slowdown this year.Policy fine-tuning is needed to smooth out economic volatility, but room for the government to underpin growth is narrowing, the National Development and Reform Commission(NDRC) said in a report evaluating the implementation of the country's 12th five-year plan (2011-2015). "Against the backdrop of rising local government debt burdens, high debt ratios and rapid money supply growth and excessively large social financing, room for simply using fiscal and monetary policy to manage demand and promote economic growth is getting smaller and smaller," the NDRC said. "Improper operation will exacerbate overcapacity and delay structural adjustments, increase inflationary pressures and accumulate debt risks."

Daily News:

• Turkey does not need Europe and its extensions, PM Erdoğan’s advisor suggests. Turkey does not need Europe and its “material-moral extensions,” according to Prime Minister Recep Tayyip Erdoğan’s economic adviser, Yiğit Bulut. Writing in his column in daily Star on April 9, Bulut suggested that the “new world order” would consist of three main components: the American continent, the Turkey-Russia-Eurasia-Middle East line, and the China-India-Iran line. He wrote that Turkey had been "used by Europe and its extensions" for years, being "humiliated and scorned" in the process. “Today we don’t need this and the most important thing is that there is no Europe and it is impossible for it to be in the new balance of the world order,” Bulut wrote.

Bear Radar

Style Underperformer:

• Large-Cap Value +.33%

Sector Underperformers:

• 1) Utilities -1.16% 2) Homebuilders -.92% 3) REITs -.82%

Stocks Falling on Unusual Volume:

• AHT, ISRG, APOL, DO, STZ, AVIV, VISN, BIS, IDA, TM, HSY, PACW, DTE, VFC, EA, AEE,  HVT, EXC, UFS, APA, JJSF, RIG, AVA and CBD

Stocks With Unusual Put Option Activity:

• 1) SPLS 2) CTSH 3) DXJ 4) XLU 5) VMW
  

Stocks With Most Negative News Mentions:

• 1) GM 2) ISRG 3) AMZN 4) EXC 5) APA
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Small-Cap Growth +.45%

Sector Outperformers:

• 1) Biotech +2.10% 2) Gaming +.85% 3) Drugs +.69%
  

Stocks Rising on Unusual Volume:

• CTCT, PCRX, CZR, QCOR, SNMX, KT, ATHL, GTN, NXST, ROVI, SBGI, TECD and FB

Stocks With Unusual Call Option Activity:

• 1) MET 2) CZR 3) VRS 4) ARCP 5) NRG

Stocks With Most Positive News Mentions:

• 1) AA 2) AAPL 3) FEYE 4) LNKD 5) NKE
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume

Wednesday Watch

Evening Headlines 
Bloomberg: 

• Ukrainians Crowd Kiev Soup Kitchens as More Flee Russian Control. Exiled during Soviet times and repatriated to Ukraine 22 years ago, Susanna Yagyaeva is on the move again as Russia’s military returns to her homeland. A week after abandoning Crimea as President Vladimir Putin’s forces overran the Black Sea peninsula, the Tatar mother of one was scrubbing pots at a makeshift hostel in a Soviet-built sanatorium 800 kilometers (500 miles) away in Kiev. As parts of eastern Ukraine now agitate for a split, the United Nations said tens of thousands more Ukrainians may seek shelter, jobs and aid because of fear of violence and discrimination. “We left everything behind,” said Yagyaeva, 47, tugging at her silk headscarf as a lunch of borscht beetroot soup and buckwheat was prepared in a cramped kitchen. “We don’t want a Russian passport. We want to live in peace and friendship with everyone. So we came here.”

• Snoozing Staff at Yiwu Show China Exports Sputtering. “I don’t see a future for these places if they continue to make low-end products,” said Ding Shuang, senior China economist at Citigroup Inc. in Hong Kong. “They have to restructure their products and move up the value chain, and that applies to China more broadly.”

• Asian Stocks Outside Japan Rise; Topix Drops on Yen Gains. Asian stocks outside Japan rose, with a gauge of regional shares heading for the highest close in five months, as consumer companies advanced. Japanese equities fell after the yen rose the most since August. David Jones Ltd. (DJS), Australia’s biggest department store by market value, surged 23 percent after agreeing to a takeover offer from South African retail chain Woolworths Holdings Ltd. Nissan Motor Co. (7201), a Japanese carmaker that gets about 79 percent of sales outside Japan, slid 2.8 percent. Mitsui O.S.K. Lines Ltd. retreated 5.8 percent in Tokyo as the world’s largest merchant-fleet operator sells convertible bonds. The MSCI Asia Pacific excluding Japan Index gained 0.8 percent to 481.92 as of 9:43 a.m. in Hong Kong. Japan’s Topix index slid 1.7 percent as the yen traded at 101.88 per dollar. The currency strengthened 1.3 percent yesterday to touch a three-week high. 

• Renzi Cuts Italy Growth Forecast With Call for Rich to Give More. Italian Prime Minister Matteo Renzi cut the government’s forecast for economic growth and renewed his promise to slash benefits for top civil servants, saying the working poor are shouldering too much of the pain. Gross domestic product will expand 0.8 percent this year, Renzi said late yesterday in a news conference in Rome after his cabinet approved his multi-year budget plan. That compares with the 1 percent growth projected in September by Renzi’s predecessor, Enrico Letta. Italy’s GDP contracted 1.9 percent last year, the second decline in a row.

• Global Growth Threatened in $623 Trillion Derivatives Overhaul. Global regulators’ failure to align efforts to reform the $693 trillion derivatives market threatens to undermine economic growth, according to the International Swaps & Derivatives Association. Investors are struggling to adapt to regional differences to changes agreed by the Group of 20 nations as the industry meets for its annual conference in Munich today. In the U.S. traders have been reporting derivatives transactions to data repositories and have been required to have central clearinghouses back their contracts since last year, while European regulators are still defining the requirements.

Wall Street Journal: 

• Ukraine Moves to Assert Control in East. Russia Warns That Use of Force Could Plunge Country into Civil War. Ukrainian police took back a government building from pro-Russian separatists in one volatile eastern city Tuesday, but armed men dug in behind reinforced barricades in other cities, warning against an assault even as some disarray began to show. Russia warned Ukraine's new government that the use of force to dislodge demonstrators who had taken over buildings in eastern Ukraine, where many ethnic Russians live, could plunge the country into civil war.

• Crisis in Ukraine. Streaming Coverage:

• U.S., China Defense Chiefs Trade Barbs Over Regional Ambitions. Chang Wanquan Tells Chuck Hagel: China 'Can Never Be Contained'.

• More Moms Staying Home, Reversing Decadeslong Decline.

• The Outlaw Vladimir Putin. Moscow's flouting of treaties, international law and the Geneva Conventions is raising world-wide dangers.

Fox News:

• Latest ObamaCare surprise: Most won't be able to buy health insurance until end of year. There is yet another ObamaCare surprise waiting for consumers: from now until the next open enrollment at the end of this year, most people will simply not be able to buy any health insurance at all, even outside the exchanges. "It's all closed down. You cannot buy a policy that is a qualified policy for the purpose of the ACA (the Affordable Care Act) until next year on January 1," says John DiVito, president of Flexbenefit which has 2,500 brokers.

MarketWatch.com:

• Busy IPO week feels like 2007.

CNBC:

• Will Japan’s tax hike spur a fiscal crisis? (video) Japan's consumption tax hike is likely to dent economic growth this quarter and some analysts believe it may shock the country into a recession and possibly even a fiscal crisis. "It is definitely a severe negative shock for Japan's economy," Takuji Okubo, chief economist at Japan Macro Advisors, told CNBC Monday.

Zero Hedge: 

• David Stockman's "Born Again Jobs Scam": The Ugly Truth Behind "Jobs Friday".

• Triple Whammy Shocker: Goldman Shutting Down Sigma X?

• Ukraine Defense Ministry "Warns" Of Imminent Russian Invasion.

• NHTSA "Punishes" GM With $7000/Day Fine.

• Alcoa's(AA) Non-GAAP Earnings, Or "Loss" On A GAAP Basis, Report Explained In Two Charts.

• CS Warns Volume & DeMark Raise "Topping Threat" In Stocks. (graph)

• Profit Margins And Stock Market Reversions. (graph)

• Russian Military Spending Soars.

• Welcome To The Casino. (graph)

• Forget Cows, Smart Car 'Tipping' Is The New Fad.

Business Insider:

• IMF Cuts Japan Growth Forecast As Some 'Abenomics' Reforms Stall.

NY Times:

• Tech-Focused Hedge Fund to Return $2 Billion to Investors. As investors nurse steep losses from  technology stocks, one hedge fund has decided to return money to investors and turn its focus to companies not listed on the stock market. Coatue Management, the $7 billion technology-focused hedge fund founded by Philippe Laffont, will return more than $2 billion to investors in its flagship fund.

Reuters:

• NATO to triple Baltic air patrol from next month. NATO will triple its usual number of fighter jets patrolling over the Baltics next month to beef up its eastern European defenses due to tension with Russia over Ukraine, a NATO military official said on Tuesday.

• Fed should be more specific about rate-hike plans - Plosser. The Federal Reserve should be even more specific about when it plans to tighten policies after it took a step in the right direction last month, a top U.S. central banker said on Tuesday. Philadelphia Federal Reserve Bank President Charles Plosser said, however, that the central bank is "not even close to withdrawing support prematurely," when asked by reporters about longer-term plans. He said the timing of the first rate rise, which will probably come next year, will be "all about the data."

South China Morning Post: 

• Mainland bad loans rising but manageable.

Evening Recommendations
Jefferies:

• Rated (CVX) Buy, target $140.

• Rated (LMNS) Buy, target $16.

Sterne Agee:

• Rated (ISRG) Underweight, target $440. 

• Rated (NMBL) Buy, target $43.
  

Piper:

• Cut (ARO) to Underweight, target $4.

• Raised (HIBB) to Overweight, target $63.

Night Trading

• Asian equity indices are -.25% to +.75% on average.

• Asia Ex-Japan Investment Grade CDS Index 122.50 -3.5 basis points.

• Asia Pacific Sovereign CDS Index 87.75 -1.25 basis points.

• FTSE-100 futures +.15%.

• S&P 500 futures +.02%.

• NASDAQ 100 futures  +.04%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (STZ)/.76

• (BBBY)/1.60

• (APOG)/.29

• (RT)/-.07

• (PSMT)/.87

• (PGR)/.39

Economic Releases
10:00 am EST

• Wholesale Inventories for February are estimated to rise +.5% versus a +.6% gain in January.

• Wholesale Sales for February are estimated to rise +1.0% versus a -1.9% decline in January.

10:30 am EST

• Bloomberg consensus estimates call for a weekly crude oil inventory build of +970,000 barrels versus a -2,379,000 barrel decline the prior week. Gasoline supplies are estimated to fall by -940,000 barrels versus a -1,574,000 barrel decline the prior week. Distillate inventories are estimated to fall by -290,000 barrels versus a +554,000 barrel gain the prior week. Finally, Refinery Utilization is estimated to rise +.09% versus a +1.7% gain the prior week.
  

Upcoming Splits

• None of note

Other Potential Market Movers

• The Fed's Evans speaking, Fed's Taruillo speaking, China Trade Balance/New Loans/Money Supply, Australia Unemployment Rate, Eurozone Trade Balance, USDA's WASDE report, $21B 10Y T-Note auction and the weekly MBA Mortgage Applications report could also impact trading today.

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

Stocks Higher into Final Hour on Central Bank Hopes, Short-Covering, Bargain-Hunting, Tech/Utility Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Higher
  

• Sector Performance: Most Sectors Rising
  

• Volume: Around Average

• Market Leading Stocks: Performing In Line

Equity Investor Angst:

• Volatility(VIX) 15.08 -3.15%

• Euro/Yen Carry Return Index 146.32 -1.04%

• Emerging Markets Currency Volatility(VXY) 8.16 -.24%

• S&P 500 Implied Correlation 56.46 +1.09%

• ISE Sentiment Index 82.0 +7.89%

• Total Put/Call .92 -6.12% 

• NYSE Arms 1.14 -22.59% 

Credit Investor Angst:

• North American Investment Grade CDS Index 67.78 -.45%

• European Financial Sector CDS Index 83.97 +.02%

• Western Europe Sovereign Debt CDS Index 41.96 -.70%
• Asia Pacific Sovereign Debt CDS Index 87.67 -1.58%

• Emerging Market CDS Index 280.78 +.75%

• China Blended Corporate Spread Index 354.14 unch.
• 2-Year Swap Spread 13.0 unch.

• TED Spread 20.25 -.75 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -2.0 -.75 basis point

Economic Gauges:

• 3-Month T-Bill Yield .03%+1 basis point

• Yield Curve 228.0 -2.0 basis points

• China Import Iron Ore Spot $118.20/Metric Tonne +.85%

• Citi US Economic Surprise Index -45.20 +.7 point

• Citi Emerging Markets Economic Surprise Index -4.10 +.8 point

• 10-Year TIPS Spread 2.12 -1.o basis point

Overseas Futures:

• Nikkei Futures: Indicating -237 open in Japan

• DAX Futures: Indicating -8 open in Germany

Portfolio: 

• Slightly Higher: On gains in my tech/retail sector longs

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges, then added them back

• Market Exposure: 50% Net Long

Today's Headlines

Bloomberg:

• Russia Warns Ukraine on Military Action in Eastern Region. Ukrainian authorities sent security forces to Kharkiv to clear the country’s second-biggest city of separatists as Russia traded accusations with the U.S. and warned that its neighbor’s crackdown risks sparking civil war. An “anti-terrorist operation” was under way in Kharkiv, with the subway closed and the downtown area sealed off in Ukraine’s second-biggest city, Interior Minister Arsen Avakov said on his Facebook page. Russia said 150 specialists from a U.S. private security company were working with Ukraine to put down protests, the Foreign Ministry said after the U.S. accused Russia of instigating unrest in the country’s eastern regions. “We call for the immediate halt of all military preparations, which risk sparking a civil war,” the ministry in Moscow said in a website statement.

• Ukraine Mounts Security Push as Russia Warns on Civil War. Ukrainian authorities sent security forces to Kharkiv to clear the country’s second-biggest city of separatists as U.S. Secretary of State John Kerry accused Russia of using “special forces and agents” to spark unrest. An “anti-terrorist operation” was under way in Kharkiv, 40 kilometers (25 miles) from the Russian border, with the subway closed and the center sealed off, Interior Minister Arsen Avakov said today. The Russian government said its neighbor’s crackdown risks sparking civil war. “Provocateurs have been sent there to create chaos,” Kerry told the Senate Foreign Relations Committee in Washington. “These efforts are as ham-handed as they are transparent,” Kerry said. He accused Russia of working to “create a contrived crisis with paid operatives across an international boundary.”   

• Yen Set for Dollar Gains With Kuroda on Hold: Technical Analysis. The Bank of Japan’s decision not to add to unprecedented monetary stimulus has the yen poised to breach a key technical level, which may see it strengthen to a two-month high, according to JPMorgan Chase & Co. 

• European Stocks Drop for Second Day Amid Ukraine Tensions. European stocks declined for a second day as investors weighed escalating tensions between America and Russia over the future of eastern Europe. Suedzucker AG plunged the most since at least 1998 after saying revenue and profit in the year through February 2015 will miss analysts’ estimates. Sports Direct International Plc slid the most this year after founder Mike Ashley sold a 4 percent stake. Nokia (NOK1V) Oyj climbed the most since October after getting China’s approval for the sale of its handsets business to Microsoft Corp. The Stoxx Europe 600 Index slipped 0.3 percent to 333.85 at the close of trading in London, after earlier declining as much as 1 percent.

• WTI Oil Gains on Cushing Supply Outlook. WTI for May delivery climbed $1.76, or 1.8 percent, to $102.20 a barrel at 1:24 p.m. on the New York Mercantile Exchange. Prices are up 3.8 percent this year. The volume of all futures traded was 42 percent above the 100-day average.

• U.S. Banks to Face Tougher Leverage Caps Than Competitors. The biggest U.S. banks will face greater restrictions on borrowing power than their overseas competitors under supplemental leverage ratio rules set to be adopted by regulators in Washington today. Eight lenders, including JPMorgan Chase (JPM) & Co. and Bank of America Corp., are going to be required to keep loss-absorbing capital at least 5 percent of total assets under the rules designed to curtail risk in the financial system. The cap being approved by the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency surpasses the 3 percent minimum set in a global agreement by the Basel Committee on Banking Supervision.

• VIX Jumps 19% as Losses Worsen Below Surface of S&P 500: Options. While two weeks of selling look like a blip on a chart of the Standard & Poor’s 500 Index (SPX), for the average investor it’s been a lot more painful. Amazon.com Inc. (AMZN), Whole Foods Market Inc. and Transocean Ltd. are among 43 companies that have lost more than 20 percent from their 52-week high, data compiled by Bloomberg show. The average stock is down 9 percent from its most recent peak, according to Bespoke Investment Group LLC. Concern that the drop will worsen pushed the VIX (VIX) to its biggest gain in three weeks.

• Biotech Suffers Record Exit at Largest ETF Signaling Turn. Investors pulled a record $372 million from the biggest biotechnology exchange traded fund in its worst day of redemptions ever. The withdrawals from the iShares Nasdaq Biotechnology ETF on April 4 were the most since its 2001 inception, with 7.5 percent of the fund’s $4.98 billion in total assets leaving what is the biggest biotech-focused ETF, according to data compiled by Bloomberg. It follows a lengthy run-up in biotechnology industry stocks.

• Goldman(GS) Strategist Sees High Chance of 10% Market Drop. Goldman Sachs Group Inc.’s David Kostin has some good news, and some bad news. First, the bad news. There’s a good chance the U.S. market will see a 10 percent drop sometime during the next 12 months. Well, as far as precision goes, “good chance” is not good enough for a quant like Kostin, so he gives an exact probability: 67 percent odds of a 10 percent retreat from a peak in the next 12 months. Now for the good news, if you can call it that: He still expects the market to end the year higher, though not by much. Kostin is sticking with his year-end S&P 500 forecast of 1,900, according to a note to clients dated yesterday. That implies a gain of less than 2.8 percent for the year and less than 3 percent from yesterday’s close.

Barron's:

• Hedge Funds Attract $32B+ In Q1: Eurekahedge.

Wall Street Journal: 

• Crisis in Ukraine. Streaming Coverage:

CNBC:

• Tech carnage hits hedge funds. (video)

ZeroHedge:

• Slaughter: Hedge Funds Have Worst Day Since June 2012. (table) 

• And The CME Breaks (Due To "Technical Issues").

• Retiring SEC Lawyer Crucifies His Employer: "It's A Cancer" Working On Behalf Of The "Bankster Turnpike".

• USDJPY Takes Out 102 Stops, Crude Surges On Ukraine Fears. (graph)

• Separatists In Ukraine City Of Luhansk Said To Take 60 Hostages, Rig Building With Explosives.

• The 'Crackdown' Begins: Ukraine Launches "Anti-Terrorist" Operations In Eastern Ukraine, Arrests 70.

ValueWalk:

• EPS Estimates For Bank Of America(BAC), Citigroup(C), JPMorgan(JPM), Others Cut.

Business Insider:

• To Enjoy Life More, Start Using Facebook(FB) Less.

• Students Are Tweeting Awful Photos Of School Lunches To Blame Michelle Obama For New 'Healthier' Meals.

Reuters:

• U.S. to trim air, sea and land nuke launchers under U.S.-Russia treaty -officials. The United States will scale back its land, sea and air nuclear missile launchers under a New START treaty with Russia but not retire a ballistic missile squadron as some lawmakers had expected, U.S. officials told Reuters. The U.S. military will disable four missile launch tubes on each of its 14 U.S. nuclear submarines, convert 30 B-52 nuclear bombers to conventional use and empty 50 intercontinental ballistic missile silos, senior administration officials said on condition of anonymity.

• Gold rises as dollar drops, Ukraine tensions rise. Gold rose 1 percent on Tuesday on a sharply lower dollar and as renewed tensions between the United States and Russia over Ukraine burnished bullion's safe-haven appeal.

TheStreet.com:

• JPMorgan(JPM) Sees Parallel to Subprime Bust at Regional Banks. A boom in leveraged loans issued by large and regional banks, or low-rated debt used to finance private-equity buyouts, is drawing alarming comparisons to the subprime mortgage boom in 2006 and 2007. According to one analyst, banks such as Regions Financial(RF), Fifth Third Bancorp(FITB), and Citigroup(C) are most at risk of getting caught up in the market froth.

@LOggOl: 

• UKRAINE'S TYMCHUK SAYS PRO-KREMLIN ACTIVISTS TOLD TO PREPARE CORRIDOR IN LUGANSK REGION FOR RUSSIAN TROOPS.

Economic Times:

• China Economy Faces Downward Pressure. China's economy faces certain downward pressure, citing Zhang Liqun, a researcher with State Council's Development Research Center, as saying. Some cos. with difficulties need to go bankrupt as part of solving the problem of overcapacity, which may affect the stability of economic growth, Zhang said. Currently China should mainly rely on fiscal policy and keep monetary policy stable, citing Zhang. The report was posted on the central government's website.