Today's Headlines

Bloomberg:

• Schaeuble Says Greece Playing Chicken With Default Risk. German Finance Minister Wolfgang Schaeuble warned that governments can sometimes default by accident, in a jab at Greek officials still holding out for a better deal from creditors as their cash supplies run critically low. Greece is preparing for a meeting of euro-region finance ministers on Monday with the European Central Bank threatening to restrict the country’s access to bank funding unless there’s progress toward an aid deal. Greece’s creditors say the government’s plans for fixing the economy aren’t yet detailed enough to justify more financial support.
• China's CSRC Said to Guide Funds to Cut Small-Cap Exposure. China's securities regulator has suggested that some funds reduce their exposure to small-cap stocks listed on the ChiNext board, said people with knowledge of the matter. The CSRC is concerned inexperienced individual investors may be misled by the rapid increase in prices of shares traded on ChiNext and may be at risk of large losses, said the people, who asked not to be identified as the discussions were private. 
• Islamic State Claims It Attacked Iraqi Prison to Free Members. The Islamic State detonated 15 bombs around an Iraqi prison in Diyala province on Friday in a bloody attack that allowed dozens of prisoners to escape, the group said. The assault, coordinated with inmates in the facility in al-Khalis, freed 30 members of the group, according to an Islamic State statement Saturday.
• America’s Oil Drilling Boom Is Sputtering Back to Life. The oil boom isn’t dead after all. For the first time in five months, a rig in the Williston Basin, where North Dakota’s Bakken shale formation lies, sputtered back to life and started drilling for crude once again. And then one returned to the Permian Basin, the nation’s biggest oil play, field services contractor Baker Hughes Inc. said Friday.
• Bills to Rein in Fed Take Shape as Lawmaker Criticism Mounts. After complaining for months about what they see as the Federal Reserve’s recalcitrance and opacity, lawmakers are now rolling out concrete legislative proposals to make the world’s most powerful central bank more accountable. Senate Banking Committee Chairman Richard Shelby is putting the finishing touches on a bill that could give Congress more power over the New York Fed and create a commission with authority to propose sweeping reforms of the entire Fed system. Other senators want to curb the Fed’s ability to bail out banks during a financial meltdown and increase transparency of its regulation.
• Iowa Says 4 Million More Hens Have Bird Flu as Toll Mounts. Iowa reported that 4 million more egg-laying chickens in Wright County probably have bird flu as losses mount from the biggest outbreak ever in the U.S. affecting commercial poultry. One site in Wright has about 2.9 million birds and another has 1.1 million, the Iowa Department of Agriculture said in an e-mail statement. The farms weren’t identified.

ZeroHedge:

• Caught On Tape: Stunned Reporter Grills State Department Why Hillary's Breaches Won't Be Investigated.
• Abenomics Is 2 Years Old - Households Even Deeper In The Hole. (graph)
• American National Pride Plunges To 30th In The World. (graph)
• Nomi Prins: The Clintons & Their Banker Friends.
• The Hard Landing Continues: China Trade Date Disappoints Amid Weak Demand.
• Class Of 2015 Sets Student Debt Record.
• Smile, Nod, Lie, & Prepare For The Reset. (graph)
• Dismal Data Delivers Stock-Buying Frenzy. (graph)
• What QE Hath Wrought (In 8 Stunning Charts). (graph)
• 5 Things To Ponder: Margin Of Safety.
• A Multinational Trojan Horse: The Trans-Pacific Partnership.
• Two Years Later, The VaR Shock Is Back. (graph)
• The Charts That Matter - Everything's Relative.
• The "Wrong" Reason Why Bernanke Is Making Bank.
• Record Numbers Of Americans Renounce US Citizenship. (graph)
• Wall Street Is One Sick Puppy. (graph)

Business Insider:

• Retailers are facing some harsh truths about employee wages.
• Putin just threw Russia's biggest military parade since the Soviet Union collapsed.
• Jeff Gundlach presented these 35 charts to an invite-only room of investors at the New York Yacht Club.
• More defaults are coming to China.
• How the liquidity 'delusion' leads to a market crash.
• There is too much of almost everything/

Reuters:

• EU antitrust regulators query Qualcomm rivals on its business practices. EU antitrust regulators are asking Qualcomm's (QCOM.O) rivals how the U.S. chipmaker's business practices and the way it licenses its products affect them, as part of an investigation begun seven months ago, a document seen by Reuters showed.
• Greece Cuts 2015 Growth Forecast. Greece expects economy to grow .8% in 2015, below 1.4% March estimate and 2.9% estimate in budget plan announced in 2014, citing Finance Ministry document.

FAS:

• Schaeuble Says Countries Can Surprisingly Go Bankrupt. German Finance Minister Wolfgang Schaeuble says in a preview of an interview to be published Sunday. "Experience elsewhere in the world has shown that a country can suddenly become unable to pay its bills." It would unwise for a politician to say whether the German government has prepared for such an instance. Doesn't see an agreement on new measures to help Greece at Monday's Euro Group meeting.

Weekly Scoreboard*

Indices

• S&P 500 2,116.10 +.37%

• DJIA 18,191.11 +.93%

• NASDAQ 5,003.55 -.04%

• Russell 2000 1,234.93 +.56%

• S&P 500 High Beta 35.48 -.28% 

• Goldman 50 Most Shorted 139.37 +.75% 

• Wilshire 5000 22,086.87 +.36%

• Russell 1000 Growth 1,010.68 -1.04%

• Russell 1000 Value 1,036.86 +.47%

• S&P 500 Consumer Staples 504.63 +.75%

• Solactive US Cyclical 140.63 +.06%

• Morgan Stanley Technology 1,042.71 -.02%

• Transports 8,766.89 +.34%

• Utilities 583.83 -1.05%

• Bloomberg European Bank/Financial Services 119.72 +1.72%

• MSCI Emerging Markets 42.64 -1.02%

• HFRX Equity Hedge 1,214.31 -.97%
• HFRX Equity Market Neutral 989.35 -.06%

Sentiment/Internals

• NYSE Cumulative A/D Line 240,539 -.04%

• Bloomberg New Highs-Lows Index -153 -25

• Bloomberg Crude Oil % Bulls 41.67 +36.35%

• CFTC Oil Net Speculative Position 314,844 -2.55%
• CFTC Oil Total Open Interest 1,717,417 -.33%

• Total Put/Call .85 -11.46%

• OEX Put/Call 1.6 +60.0%

• ISE Sentiment 91.0 -20.87%

• NYSE Arms .73 +28.1%

• Volatility(VIX) 12.86 +1.26%

• S&P 500 Implied Correlation 64.26 -1.08%

• G7 Currency Volatility (VXY) 9.68 -5.84%

• Emerging Markets Currency Volatility (EM-VXY) 10.06 -2.04%

• Smart Money Flow Index 17,558.67 -.07%

• ICI Money Mkt Mutual Fund Assets $1.729 Trillion +.41%
• ICI US Equity Weekly Net New Cash Flow -$7.268 Billion

• AAII % Bulls 27.1 -12.3%
• AAII % Bears 26.8 +22.3%

Futures Spot Prices

• CRB Index 229.16 +.53%

• Crude Oil 59.39 +.22%

• Reformulated Gasoline 199.18 -2.51%

• Natural Gas 2.88 +4.0%

• Heating Oil 195.37 -1.50%

• Gold 1,188.90 +.98%

• Bloomberg Base Metals Index 182.65 -.46%

• Copper 292.05 -.51%

• US No. 1 Heavy Melt Scrap Steel 230.0 USD/Ton unch.
• China Iron Ore Spot 61.40 USD/Ton +9.3%

• Lumber 243.0 -5.0%

• UBS-Bloomberg Agriculture 1,108.73 +.98%

Economy

• ECRI Weekly Leading Economic Index Growth Rate .5% +60.0 basis points

• Philly Fed ADS Real-Time Business Conditions Index -.2930 +6.06%

• S&P 500 Blended Forward 12 Months Mean EPS Estimate 123.75 +.37%

• Citi US Economic Surprise Index -64.3 -2.0 points

• Citi Eurozone Economic Surprise Index 14.20 +3.4 points

• Citi Emerging Markets Economic Surprise Index -17.10 -1.1 points

• Fed Fund Futures imply 58.0% chance of no change, 42.0% chance of 25 basis point cut on 6/17

• US Dollar Index 94.79 -.44%

• Euro/Yen Carry Return Index 140.30 -.21%

• Yield Curve 158.0 +6.0 basis points

• 10-Year US Treasury Yield 2.15% +4.0 basis points

• Federal Reserve's Balance Sheet $4.433 Trillion +.02%

• U.S. Sovereign Debt Credit Default Swap 17.78 +9.87%

• Illinois Municipal Debt Credit Default Swap 204.0 +2.94%

• Western Europe Sovereign Debt Credit Default Swap Index 22.89 +.37%

• Asia Pacific Sovereign Debt Credit Default Swap Index 59.30 -1.99%
  

• Emerging Markets Sovereign Debt CDS Index 314.24 -3.28%
  

• Israel Sovereign Debt Credit Default Swap 65.01 -4.17%

• Iraq Sovereign Debt Credit Default Swap 347.36 +.22%

• Russia Sovereign Debt Credit Default Swap 332.24 -7.67%

• iBoxx Offshore RMB China Corporates High Yield Index 118.0 +.12%

• 10-Year TIPS Spread 1.89% -6.0 basis points

• TED Spread 27.5 -.25 basis point

• 2-Year Swap Spread 26.5 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -21.0 -1.25 basis points

• N. America Investment Grade Credit Default Swap Index 63.08 -.68%

• America Energy Sector High-Yield Credit Default Swap Index 1,075.0 -.78%

• European Financial Sector Credit Default Swap Index 71.81 +1.97%
  

• Emerging Markets Credit Default Swap Index 291.45 -2.95%
  

• CMBS AAA Super Senior 10-Year Treasury Spread  to Swaps 87.50 unch.

• M1 Money Supply $2.970 Trillion -.16%

• Commercial Paper Outstanding 1,016.70 -.60%

• 4-Week Moving Average of Jobless Claims 279,500 -4,250

• Continuing Claims Unemployment Rate 1.7% unch.

• Average 30-Year Mortgage Rate 3.80% +15.0 basis points
• Weekly Mortgage Applications 427.30 -4.60%

• Bloomberg Consumer Comfort 43.7 -1.0 point

• Weekly Retail Sales +1.2% +10 basis points

• Nationwide Gas $2.66/gallon +.06/gallon

• Baltic Dry Index 573.0 -3.04%

• China (Export) Containerized Freight Index 888.23 -1.19%

• Oil Tanker Rate(Arabian Gulf to U.S. Gulf Coast) 35.0 unch.
• Rail Freight Carloads 282,696 +1.32%

Best Performing Style

• Small-Cap Growth +.9%

Worst Performing Style

• Small-Cap Value +.2%

Leading Sectors

• HMOs +3.3%

• Biotech +2.4%

• Agriculture +1.8%

• Networking +1.7%

• Construction +1.7%

Lagging Sectors

• Energy -1.6% 

• Alt Energy -2.0%

• Telecom -2.3%

• Disk Drives -2.8%

• Oil Tankers -3.2%

Weekly High-Volume Stock Gainers (34)

• GEVA, BRDR, QLTY, AVD, SRNE, WWWW, SRPT, NLS, BCO, NTRI, YELP, BCOR, AAWW, CHUY, ICUI, PAYC, ELLI, WEN, ABMD, NSP, LPX, BSFT, FOXF, IART, COHU, EL, MRC, ATSG, KMT, WAC, SALE, ANN, ENOC and USM

Weekly High-Volume Stock Losers (39)

• BERY, FOSL, ZU, SLRC, CXW, CPN, NSIT, TIME, BBW, INOV, HYH, PXD, OTTR, RAIL, MTSC, CEVA, PDFS, RKUS, WFM, THS, INCR, WLK, KATE, TUES, PMT, ANIP, ENPH, ABAX, CTB, GMCR, TUMI, ONDK, TNET, TYPE, NSM, LNKD, CTCT, QLYS and VRNS

Weekly Charts
ETFs

• High-Volume Gainers

• High-Volume Losers

Stocks

• High-Volume Gainers

• High-Volume Losers

*5-Day Change

Stocks Surging into Final Hour on Central Bank Hopes, Less Eurozone/Emerging Markets/US High-Yield Debt Angst, Short-Covering, Biotech/Energy Sector Strength

Broad Equity Market Tone:

• Advance/Decline Line: Modestly Higher
  

• Sector Performance: Almost Every Sector Rising
  

• Volume: Slightly Below Average

• Market Leading Stocks: Underperforming

Equity Investor Angst:

• Volatility(VIX) 13.18 -12.89%

• Euro/Yen Carry Return Index 140.21 -.51%

• Emerging Markets Currency Volatility(VXY) 10.10 -3.72%

• S&P 500 Implied Correlation 64.32 -2.66%

• ISE Sentiment Index 92.0 -8.0%

• Total Put/Call .82 -11.83%

• NYSE Arms .84 -20.89% 

Credit Investor Angst:

• North American Investment Grade CDS Index 63.22 -4.04%

• America Energy Sector High-Yield CDS Index 1,075.0 +.63%

• European Financial Sector CDS Index 74.94 -4.18%

• Western Europe Sovereign Debt CDS Index 22.88 -3.74%

• Asia Pacific Sovereign Debt CDS Index 60.21 +.01%

• Emerging Market CDS Index 291.15 -2.59%
  

• iBoxx Offshore RMB China Corporates High Yield Index 118.0 -.02%

• 2-Year Swap Spread 26.5 +.25 basis point

• TED Spread 26.5 +.5 basis point

• 3-Month EUR/USD Cross-Currency Basis Swap -21.0 +1.0 basis point

Economic Gauges:

• 3-Month T-Bill Yield .01% unch.

• Yield Curve 157.0 +1.0 basis point

• China Import Iron Ore Spot $61.40/Metric Tonne +1.72%

• Citi US Economic Surprise Index -64.30 +.4 point

• Citi Eurozone Economic Surprise Index 14.2 -2.9 points

• Citi Emerging Markets Economic Surprise Index -17.1 -3.2 points

• 10-Year TIPS Spread 1.88 -1.0 basis point

Overseas Futures:

• Nikkei Futures: Indicating +336 open in Japan

• DAX Futures: Indicating +23 open in Germany

Portfolio: 

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

• Disclosed Trades: Covered some of my (IWM)/(QQQ) hedges

• Market Exposure: Moved to 75% Net Long

Today's Headlines

Bloomberg:

• Tsipras Asks for Courage as EU Plays Down Chances of Deal. Prime Minister Alexis Tsipras said Friday there are no more technical reasons to withhold aid from Greece. The country’s creditors are not convinced. Hours after the Greek leader told lawmakers in Athens that the euro area needed only political courage to unlock more financial aid, a European Union official in Brussels told reporters there’s still technical work to be done before Europe’s most-indebted state will get any more money.
• Ukraine’s Poroshenko Says Fighting Killed 7,000 as Truce Strains. Ukrainian President Petro Poroshenko said about 7,000 civilians have been killed during the conflict with pro-Russian separatists, as military casualties placed fresh strain on the fragile cease-fire. Two soldiers were killed and 26 wounded in clashes with rebels in the past 24 hours, Ukrainian military spokesman Andriy Lysenko told reporters in Kiev on Friday. Separatists shelled government positions using weapons that should have been withdrawn from the conflict zone under the truce agreement signed in Minsk, Belarus, in February, he said.
• PBOC Vows to Walk Fine Policy Line as Debt Endangers Growth. China’s central bank said it will walk a fine line in its policy operations to avoid excessive easing as rising debts endanger the nation’s economic expansion. “We will prevent excessive easing to avoid cementing economic distortion or pushing up debt and leverage levels; on the other hand, we will create a neutral and appropriate monetary environment” for growth, the People’s Bank of China said in its monetary policy report published on Friday. The bank also said that China’s exports won’t see big improvement, hours after data showed an unexpected fall in overseas shipments in April. “Economic growth is, to a large extent, still relying on government-led investment, and the room for further expansion is quite limited,” the central bank said. “In addition, the rising debt size is forcing China to use a lot of resources in repaying and rolling over debt, which leads to contraction effects for the macro economy.” China’s total debt has reached 282 percent of GDP, according to the McKinsey Global Institute.  
• The $364 Billion Real Estate Threat Inside China’s Biggest Banks. Fitch Ratings has called real estate the “biggest threat” to Chinese banks as surging loans tied to properties coincide with defaults and falling sales. Corporate loans backed by buildings have grown almost fivefold since 2008 and residential mortgages have more than tripled in the period among lenders rated by Fitch, the company said Friday. That’s seen property loans held by China’s four biggest lenders soar to a total 2.26 trillion yuan ($364 billion), according to their annual reports.
• Another Chinese Firm Defaults on Its Dollar Bond. China’s credit markets sent their latest sign of stress Friday as coal importer Winsway Enterprises Holdings Ltd. became the nation’s second company to default on a dollar-denominated bond this year. The Hong Kong-listed company isn’t able to pay $13.15 million of semi-annual interest due Friday on $309.3 million of notes that mature next year, according to a Hong Kong stock exchange filing on Friday. A 30-day grace period expired May 8 after it skipped the payment April 8 and hired advisers to restructure its debt. The failure sends a signal that prices of coking coal used in steelmaking are far from rebounding as China’s economic slowdown deepens and the government steps up efforts to curb pollution.
• China Auto Retail Sales Climb at Slowest Pace in Five Months. Passenger-vehicle sales in China rose at the slowest pace in five months as weaker economic expansion hurt demand for big-ticket purchases. Retail deliveries of cars, multipurpose and sport utility vehicles climbed 6.2 percent to 1.61 million units in April, the China Passenger Car Association said on its website today. It’s the slowest pace of growth since November.
• China Stock Picker Beating 90% of Peers Says Rout Isn’t Over Yet. The worst isn’t over for Chinese stocks after the biggest three-day rout since June 2013, according to HSBC Global Asset Management. China’s government will probably take further steps to curb the use of borrowed money for share investment after margin debt rose to a record, said Mandy Chan, whose $111 million HSBC China A-Share Fund topped 90 percent of peers tracked by Bloomberg in the past year with a 96 percent gain. Mid- and small-capitalization stocks are most vulnerable to declines, she said.
• German Industrial Production Falls as Economy Risks Grow. German industrial production unexpectedly declined in March in a sign that Europe’s largest economy remains vulnerable to global economic weakness. Output, adjusted for seasonal swings and inflation, fell 0.5 percent after stagnating in February, data from the Economy Ministry in Berlin showed on Friday. The typically volatile number compares with a median estimate of a 0.4 percent gain in a Bloomberg survey. Production rose 0.1 percent from a year earlier. 
• Europe Stocks Jump After Cameron’s Election Win, U.S. Jobs Data. European shares posted this year’s biggest advance, buoyed by a surprise election win for British Prime Minister David Cameron’s party and improving U.S. jobs data. The Stoxx Europe 600 Index surged 2.9 percent to 400.16 at the close of trading, up 1.4 percent for the week.
• Hard Money Comes Easy as Wall Street Funds Home Flippers. Real estate buyers seeking money to renovate and flip U.S. houses are getting help from some of the world’s biggest investment firms. Colony Capital Inc., Blackstone Group LP and Cerberus Capital Management are among the companies that have started making bridge loans to investors who buy homes to sell them quickly for a profit. Borrowing costs -- traditionally the highest in residential lending -- are tumbling as the firms compete for customers. The foray represents a deepening bet on the housing market by Wall Street-backed companies, many of which have built rental-home empires during the past three years and started specialty-lending businesses to finance smaller investors. Big firms with deep pockets and access to cheap capital may have an edge over local private lenders that have dominated flipper financing.
• Bill Gross: Central Banks Are Gaming Asset Prices. (video)

Fox News:

• Military posts put on elevated alert level amid recent ISIS warnings. (video)

CNBC:

• Interest rates are too low for this economy: Pimco CIO. (video)

ZeroHedge: 

• Americans Not In The Labor Force Rise To Record 93,194,000. (graph)
• The Reason Why There Is No Wage Growth For 83% Of US Workers. (graph)
• Crude Lifts As Pace Of Rig Count Decline Slows. (graph)
• Free Lunches, Fragile Fed Faith, & Minsky Moments.
• Goldman Crushes The American Manufacturing Recovery Dream - Auto Sales Expectations Are Unrealistic. (graph)
• Bursting Bund Bubble: 2 Charts And Some Lessons From History.
• Europe "Baffled" By Bizarre Varoufakis "Blueprint".
• Old Workers Hit New All Time High As All April Jobs Go To The "55 And Older". (graph)
• Wholesale Sales YoY Worst Since Lehman As Inventories Grow At Slowest Pace In 2 Years. (graph)
• April Payrolls Miss At 223K, March Revised Much Lower, Wage Growth Disappoints Again. (graph)

Business Insider: 

• 210 Zappos employees — 14% of the staff — take buyouts after CEO ultimatum to embrace self-management or leave.
• The disconnect in the US stock market just keeps getting bigger. (graph)
• Shake Shack(SHAK) has one huge problem that could undermine its expansion. Shake Shack is entering a market already packed with similar chains.
• Syria's government has been 'lying about what they did with sarin' nerve gas Assad promised to give up.
• Ukrainian rebels may take advantage of Victory Day celebrations to launch a new offensive.
• Russian-backed Ukrainian rebels are gearing up for a new offensive.
• The eurozone is refusing to change its position on Greek debt.
• Liberal Britain just got slaughtered.

Reuters:

• Austria's Schelling warns Greece of dangers of default. Austria's finance minister warned Greece on Thursday about the dangers of defaulting on its debt and said a sensible solution to the country's financial problems was nowhere near despite months of talks.

Bear Radar

Style Underperformer:

• Small-Cap Value +.67%

Sector Underperformers:

• 1) Steel +.04% 2) I-Banks +.29% 3) Telecom +.33%

Stocks Falling on Unusual Volume:

• FLDM, TU, MNST, ENV, SFM, PRO, ICFI, SWIR, CERN, HTGC, TRUE, GDOT, UEIC, LJPC, HII, CBI, SIRO, ABTL, SGMS, TNGO, SHAK, PRA, WFM, COTY, ECPG, NUS, AVID, LC, BR, SGMS, ABMD, ENPH, HMSY, CNCE, NVDA, CORE, MTRX and ENOC

Stocks With Unusual Put Option Activity:

• 1) MNST 2) KBH 3) MON 4) GPS 5) XME
  

Stocks With Most Negative News Mentions:

• 1) FLDM 2) MNST 3) CBS 4) CBI 5) HII
  

Charts:

• ETFs Falling on Unusual Volume

• Stocks Falling on Unusual Volume

Bull Radar

Style Outperformer:

• Large-Cap Growth +1.24%

Sector Outperformers:

• 1) Biotech +2.47% 2) Drugs +1.77% 3) Agriculture +1.69%
  

Stocks Rising on Unusual Volume:

• CALA, SYT, RBA, DATA, KIP, YELP, OUTR, SSNI, NUAN, TOUR, IMPV, AOL, TGI, RBS, EBIX, OLED, TGI, MOH, AOL, POST, SGEN, RPTP, OUTR, KOP, RMTI, YELP, NRG, WWAV, CROX, CCOI and BLUE

Stocks With Unusual Call Option Activity:

• 1) MON 2) AWAY 3) MNST 4) DATA 5) SGMS
  

Stocks With Most Positive News Mentions:

• 1) DATA 2) MCHP 3) NUAN 4) MAR 5) MCD
  

Charts:

• ETFs Rising on Unusual Volume 

• Stocks Rising on Unusual Volume