Quartz Daily Brief—EU bailout agreement, Portuguese protests, Ikea refugee tents

Good Morning, Quartz readers!

What to watch for today

Portugal braces for protests.  The country’s largest union has called for a strike to protest the government’s austerity measures.

Brussels braces for meetings. European Union leaders will meet to discuss the debt crisis, unemployment and long-term budgets after reaching a late-night agreement on bank bailouts (see below).

Watch a double-dip recession magically disappear. Revised UK GDP figures are expected to show that the economy didn’t, in fact, contract in the first quarter of 2012.

Nike’s China challenge. The footwear giant is expected to post just a 2.6% increase in revenue, as sluggish sales in China outweigh strong growth in the US.

The US Ambassador to China visits Tibet. In the first visit by an American ambassador since 2010, Gary Locke is expected to raise concerns over a recent spate of self-immolations and deteriorating human rights conditions.

Data deluge. Japanese inflation data, euro zone economic confidence, German unemployment and French consumer confidence are due to be released. Across the pond, investors will digest US personal income and spending figures, pending home sales, and initial jobless claims.

While you were sleeping

Sharing the pain on bailouts. After hours of late night discussions, European finance ministers agreed on a framework for bank bailouts. Shareholders, depositors and bondholders with more than €100,000 will be liable for some of the cost.

Protests, protests, everywhere. In Egypt, President Mursi offered up constitutional changes to bring an end to ongoing street violence and opposition protests. In Brazil, politicians gave in to many protester demands, but that didn’t stop tens of thousands or people from returning to the streets to demand better public services.

The US grew less than it thought. Revised data showed first-quarter growth was only 1.8%, as against the earlier estimate of 2.4%. Weak business investment and a slowdown in consumer spending were the main drags.

No rush on Snowden. Ecuador said it would take weeks to arrive at a decision on the NSA leaker’s asylum request. Ecuador also asked the US to make its case for Snowden’s extradition.

Dish got double-dashed. A months-long bidding war ended after US satellite TV company Dish Networks, which earlier this week lost its last hope of buying wireless provider Sprint Nextel, also gave up a bidding contest with Sprint to buy Clearwire.

How do you “vet” a rebel? The US will reportedly to start arming Syrian rebels—though only “vetted” ones—within a month.

Quartz obsession interlude

Roberto A. Ferdman on how Argentina’s dollar policy has blown up in its face. “In an attempt to tamp down capital flight and prevent Argentines from hoarding dollars—both of which deprive the central bank of foreign reserves—Kirchner has, since late 2011, progressively introduced a series of forcible measures known as the ‘dollar clamp’ that restrict Argentines’ ability to buy them. But a problem has surfaced. By limiting access to dollars, the government has made them more desirable, and led to even fewer of them reaching the central bank than before.” Read more here.

Matters of debate

Why drones fail. The guidelines for how the US uses drones have fallen behind how easy it is to use them.

Why drones work. Devastating al Qaeda at little financial cost, no risk to U.S. forces, with fewer civilian casualties.

Ixnay “say on pay.” Shareholders don’t care about compensation, as long as their stocks are going up.

Russia is keeping the UN corrupt. Business is business, after all.

The dark side of stimulus. China’s ghost cities epitomize the problem of printing money Paul-Krugman-style.

Surprising discoveries

The running of the interns. When a big US Supreme Court decision is released, young staffers race up their sneakers.

Refugee tents by Ikea. The UN’s new housing units come with solar powered roofs (some assembly required).

The countries with the biggest gender pay gap.  Austria, Korea, Norway, Britain and the US.

Afghan diplomats are defecting en masse. As the withdrawal of Western forces nears, many just aren’t coming home.

Not enough criminals. The Netherlands is shutting eight prisons because of a drop in the crime rate.

North Korea has built its own tablet. Without internet access, natch.

Our best wishes for a productive day. Please send any news, comments, intern race photos and surplus hex wrenches to hi@qz.com. You can follow us on Twitter here for updates during the day.

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Eurogroup to approve Spanish banking sector bailout

By Jan Strupczewski and RobinEmmott
BRUSSELS, July 20 (Reuters) – Euro zone finance ministers are expected to approve an agreement on Friday to lend up to 100 billion euros to Spain so it can recapitalise its banks, but the exact size of the loan will probably only bedetermined in September.

Ministers are expected in a conference call to sign off on a lengthy memorandum of understanding (MoU) with Spain spelling out the terms of the aid, which will be fully disbursed by the end of 2013.

But before Spaincan decide exactly how much money it needs, it must first see the results of in-depth audits of its banking sector, which is riddled with bad property loans.

“The plan is to formally endorse the draft as it stands,” one euro zone official said ofthe conference call, which is due to begin at 1000 GMT.

“All the rest will come later in the year, with the results of the bank-by-bank stress tests in September clarifying recapitalisation needs and paving way for restructuring plans to be drawn up in October, as set out in the timeline annexed to the MoU.”

The bank bailout, together with fresh austerity measures and looser fiscal targets agreed with Madrid, are aimed at avoiding a full sovereign bailout that the euro zone can barelyafford.

There are signs of growing discontent at the economic pain being heaped on the Spanish public. Hundreds of thousands of Spaniards marched against the centre-right government’s latest measures on Thursday evening, following more than aweek of demonstrations across the country. (news)
Parliament approved on Thursday a package of 65 billion euros ($80 billion) of spending cuts and tax hikes which are likely to deepen the recession already gripping Spain.

Under thebailout memorandum, 14 banking groups that make up about 90 percent of Spain’s banking system will be tested for their recapitalisation needs in a review due to be completed by the second half of September.

Madrid expects 30 billion euros in afirst tranche of money that will be available immediately for state-rescued banks that urgently need funds.

An independent audit from consultancy firms Oliver Wyman and Roland Berger, published on June 21, showed the banking sector needed up to62 billion euros in total.

But a second, more detailed audit, as well as new stress tests, will help determine precisely how much each bank needs and in which form – loans or cash.

Spain’s three biggest banks – Banco Santander (SAN.MC), BBVA (BBVA.MC) and Caixabank (CABK.MC) – would not need extra capital even in a stressed scenario, the independent audit said.

It also said immediate problems were limited to four banks: Bankia (BKIA.MC), and CatalunyaCaixa, NovaGalicia and Banco de Valencia, the last three of which have been nationalised.

That leaves seven banking groups in the spotlight: Sabadell , Popular (POP.MC), Ibercaja-Caja3-Liberbank, Unicaja-CEISS, Kutxabank, Banco Mare Nostrum and Bankinter (BKT.MC).

FOCUS ON SAVINGS BANKS
The money for the capital will be provided by the euro zone’s temporary rescue fund, the European Financial Stability Facility (EFSF), a 440 billion euro fund set up in 2010 that has about 250 billion euros left, notcounting the money for Spain.

The EFSF has already been used to bail out Greece, Ireland and Portugal, making Spain the fourth euro zone nation to receive emergency aid in the 2-1/2-year-old crisis.

The EFSF loans to Madrid will have anaverage maturity of 12.5 years and a maximum of 15 years, with interest rates of between 3 percent and 4 percent.

Once the permanent European Stability Mechanism (ESM) is operational, probably in September, it will take over the job of fundingSpain’s programme.

All Spain’s banks will have to increase their core capital ratios to 9 percent by the end of 2012 and keep them at this level until the end of 2014. However, the government will review by December the requirements forsetting aside capital to cover losses on real estate assets.

There will be a special focus on savings banks, or “cajas”, which had close links with local governments and were responsible for much of the unsustainable lending over the last decade, and their governance structure will be reviewed.

According to the MoU, Spanish authorities will prepare by the end of November a new law to reduce the stakes that savings banks have in commercial lenders to non-controlling levels. Banksthat are controlled by the cajas and receive state aid would become listed companies.

The measure is mostly symbolic, applying only to a handful of banks representing a small share of Spain’s banking system, but a failure to implement it couldworry investors.

The document also says that holders of hybrid capital and subordinated debt in state-rescued banks will have to take a haircut on their investments in order to minimise the cost to taxpayers of the restructuring.

Hundredsof thousands of small shareholders who bought instruments such as preference shares are likely to be affected.

The first injection of capital into banks not already rescued by the state and unable to raise capital by themselves can be expected byOctober, after reviews by the Spanish government and the European Commission.

(Reporting By Jan Strupczewski. Editing by Mike Peacock) Messaging:jan.strupczewski.reuters.com@reuters.net)

Merkel MP says Bundestag must ok any direct bank aid

Merkel MP says Bundestag must ok any direct bank aid 29/06/2012 14:41 – RSF

BERLIN, June 29 (Reuters) – Direct recapitalisation of banks via Europe’s permanent rescue fund must first be approved by Germany’s lower house of parliament before it can be implemented, a budget expert for Angela Merkel’s conservatives, NorbertBarthle, said on Friday.

Euro zone leaders agreed earlier on Friday to bend their aid rules to shore up banks and bring down the borrowing costs of stricken members like Italy and Spain, in an attempt to solve the bloc’s two-year old debt crisis.

Under the agreement, the European Stability Mechanism (ESM), would be able to recapitalise banks directly without increasing a country’s budget deficit.

“The direct recapitalisation of banks through the ESM would, in my opinion, represent anew aid instrument of the ESM that the plenary of the German Bundestag (lower house) must first agree to,” said Barthle in a statement.

The Bundestag, which is set to vote on the ratification of the ESM and Merkel’s “fiscal pact” later on Friday,is already likely to reconvene during the summer recess to sign off on the rescue packages for both Spain and Cyprus.

Tension between Germany’s democratic principles and a push to give Brussels more power to intervene in national policy appearsto be approaching breaking point.

In a series of rulings since 2009, Germany’s constitutional court in Karlsruhe has expressed reservations about the steady transfer of power to Brussels, and affirmed the right of Germany’s parliament to vetdecisions taken at European level.

Speaking of the recapitalisation of banks, Barthle said: “Clearly such aid would also only be guaranteed under strict conditions and control.”

Merkel has insisted the deal at the summit to use the rescue funds to ease Spanish and Italian borrowing costs without extra austerity measures, and to recapitalise banks directly, did not violate her mantra of no aid without conditionality.

(Reporting By Sarah Marsh)

Stop worrying about the European debt crisis

Fellow Investor,

The European debt crisis is back in the news today with the G-7 finance ministers holding an emergency conference call about the crisis this morning.

Concerns about Greece leaving the euro following their upcoming June 17th elections continue to grow.

Spain’s banking system is looking increasingly fragile.

Italy’s economy continues to struggle.

And while U.S. markets largely ignored the European story today, you can be sure we’ll continue to see volatility over the summer due to the crisis in Europe.

Today, though, I’m not worried, and I’ll tell you why: We’re getting much closer to the endgame in Europe.

Polls show Greek voters want to stay in the euro zone. They just want to renegotiate the terms of some of the international aid they’ve received. Given that there’s a philosophical shift underway in some quarters – recognizing that austerity measures can inhibit growth, undercutting economic recovery – they might get their wish.

The United States, Canada and Japan are pushing European finance ministers and their governments to move faster, and they are starting to get results.

Then there’s the biggest factor of all – Germany. Germany has the biggest national economy in Europe, and is enjoying a strong economy, low unemployment and low interest rates. Recently they’ve indicated that they might finally be open to bolder measures to save the euro zone and prop up Greece, Spain and Italy. There are a lot of reasons for this, but the one that surprised me was how interconnected Germany and Greece really are.

Back before the 2004 Olympics, Greece invested a LOT of money ($11 billion) in the Olympic Park. That $11 billion doesn’t even include the cost of the new infrastructure they invested in as well, paying workers to work round the clock to build a new highway, new airport and new metro and tram system.

Some of those construction contracts went to German companies, and the financing for the spending the Greeks were doing came from German banks. Add in the money that Greece has received from German banks in the form of EU bailouts, and you’ve got a pretty big number. Germany holds €15.9 billion worth of Greek debt, second only to France.

Germany can’t afford to let Greece leave the euro, and Germany has the power to keep a Greek exit from happening.

Which means it’s time for investors to stop worrying about Europe’s debt crisis and starting looking for buying opportunities. The first one on my list is Sanofi (SNY) a French pharmaceutical company.

Pharmaceuticals are a safe haven in rocky economic times, and Sanofi is a major drug manufacturer with a product line that includes vaccines, diabetes drugs and animal health products. The stock is trading around $33, well off its 52 week highs. Plus it has a 5% dividend yield! You get the best of both worlds: Growth and income.

I’m recommending SNY as a buy at current levels.

Sincerely,

FOREX FOCUS: An ECB Rate Cut: A Matter of When Not If – by antieuropeist Nicholas Hastings

By Nicholas Hastings

A DOW JONES NEWSWIRES COLUMN

LONDON (Dow Jones)–The European Central Bank will have little choice but to cut interest rates as early as next week.

It isn’t just the increased tensions over the debt crisis in the euro zone putting pressure on the central banks to move. It is the growing evidence of recession as austerity measures bite further into the euro zone and growing signs that global demand isn’t going to be there to help.

With the focus of the debt crisis moving away from Greece and on to Spain for now, the threat to the future of the single currency is greater now than it has ever been. While a bail out for Greece could be negotiated under existing agreements, a bail out for Spain would be on a scale that European institutions are totally unprepared for.

As financial markets watch European politicians and policy makers scramble to find some solution to prevent contagion, investors have started an even greater wholesale reduction in exposure to the region than has been seen in the past.

As a result, the funding problems for most peripheral debtors are multiplying with even the cost of Italian loans now rising close to levels that are unsustainable.

For the ECB, however, it is the cost of the deficit-curbing programs adopted by most members of the euro zone that is starting to become of equal, if not greater, concern.

Not only has economic sentiment collapsed this month but so have inflationary pressures.

And signs are that, despite early hopes that the ECB’s own liquidity injections would help to boost lending, this has not been the case. Certainly, the liquidity squeeze many European banks had been experiencing has eased. But, improved credit conditions haven’t trickled down to the private sector

If anything, new M3 money supply figures showed a sharp deterioration in April, with year-on-year growth slumping to 2.5% from 3.1%.

It is hardly surprising, therefore, that many forecasters are now looking for the region to have slipped back into recession in the second quarter, with ING Financial Markets looking for at least a 0.4% contraction over the three-month period.

The outlook for the euro zone has also been hit by the deteriorating outlook for the world economy.

Doubts over the recovery in the U.S. and China’s ability to stage a soft landing have grown due to slowing demand in emerging markets and a steady decline in commodity prices over the last few weeks.

At every turn, the news flow appears to get worse. Brazil has slashed interest rates to a record low and more cuts are expected. China’s four largest banks have reported another month of poor lending activity.

And even Graff Diamonds, the sort of luxury goods company that was very much in favor not so long ago, was forced to postpone its initial public offering in Hong Kong because of a lack of interest.

As the ECB officials contemplate the global landscape before next Wednesday’s meeting, they can hardly use inflation as an excuse not to ease rates.

New data Thursday showed pan-euro-zone inflation falling to 2.4% from 2.6% ,even lower than forecast, with even further declines expected in months to come as energy prices subside.

Bloomberg TNI FRX POV

Reuters USD/DJ

Thomson P/1066 or P/1074

(Nicholas Hastings is a Senior Correspondent in London for Dow Jones Newswires who has written about foreign exchange for more than 20 years. He previously covered a variety of markets, including equities, fixed income, commodities and energy. He can be contacted on +44-20-7842-9493 or by email: nick.hastings@dowjones.com or on twitter @NickHastingsDJ)

CWS Market Review – May 11, 2012

The stock market finally broke out of its trading range this week. Unfortunately, it was to the downside. More troubles from Europe, including shake-up elections in France and Greece, helped the S&P 500 close Wednesday at its lowest level in nine weeks. However, the initial jobless claims report on Thursday helped us make up a little lost ground.

In this week’s CWS Market Review, I’ll explain why everyone’s so freaked out (again) by events in Europe. I’ll also talk about the latest revelations from JPMorgan Chase ($JPM). The bank just told investors that it lost $2 effing billion on effing derivatives trades gone effing bad. I’ll have more to say on that in a bit. We also had more strong earnings reports from our Buy List stocks DirecTV ($DTV) and CA Technologies ($CA), and shares of CR Bard ($BCR) just hit a 10-month high.

Greece Is Bad but the Real Story Is Spain

But first, let’s get to Greece. Here’s the 411: The bailout deals reached by Greece required them to get their fiscal house in order. The problem is that no one asked the voters. Now they’ve been asked and the voters don’t like it at all. Actually, I understated that—they’re royally PO’d.

Greece is massively in debt. They owe the equivalent of Switzerland’s entire GDP. Politically, everything has been upended. In Greece, there are two dominant political parties and both got creamed in the recent election. Seventy percent of Greeks voted for parties opposed to the bailouts. Mind you, the supposed beneficiaries of the bailout are the ones most opposed to them.

Since there was no clear-cut winner in the election, folks are scrambling to build a governing coalition. This won’t be easy. Whatever they do come up with probably won’t last long and they’ll need new elections. As investors, we fortunately don’t need to worry about the minutia of Greek politics. The important aspect for us is that the Greek public wants to ditch the austerity measures into the Aegean, but that means giving up all that euro cash that was promised them.

My take is that the bigwigs in Greece will do their best to stay in the euro but try to get the bailout terms renegotiated. That puts the ball in Europe’s court, and by Europe, I mean Germany. Too many people have invested too much to see the European project go down in flames. I think the Europeans will ultimately make some concessions in order to keep the euro going. If one country leaves the euro, it sets a precedent for others to leave—and that could start a flood.

As bad of a shape as Greece is in, they’re small potatoes (olives?). The real story is what’s happening in Spain. For the fourth time, the country is trying to convince investors that its screwed-up banks aren’t screwed-up. The problem is that Spanish banks are loaded down with toxic real estate debt.

The Spanish government is trying to prop up the banks, but it may delay the problem rather than solve it. It just took control of Bankia which itself was formed when the government forced some smaller banks together in an effort to save them. What’s most troubling about the problems in Spain is that the future is so cloudy. I really can’t say what will happen. Nouriel Roubini said that Spain will need an external bailout. If so, that may lead to a replay of what we’re seeing in Greece, except it would be much, much larger.

The immediate impact of the nervousness from Europe is that it spooked our markets. On May 1st, the Dow got to its highest point since 2007. The index then fell for six straight days which was its longest losing streak since August. But here’s the key: not all stocks are falling in the same manner.

Investors have been rushing away from cyclical sectors and towards defensive sectors. For example, the Utilities Sector ETF ($XLU) closed slightly higher on Thursday than it did on May 1st. Low-risk bonds are also doing well. Two months ago, the 30-year Treasury nearly broke above 3.5%. This past week, it dipped below 3%. On Thursday, Uncle Sam auctioned off $16 billion in 30-year bonds and it drew the heaviest bidding in months.

The trend towards defensive stocks is holding back some of our favorite cyclical stocks like Ford ($F), Moog ($MOG-A) and AFLAC ($AFL). Let me assure investors that these stocks are very good buys right now and I expect them to rally once the skies clear up.

JPMorgan Chase Reveals Huge Trading Losses

Now let’s turn to some recent news about our Buy List stocks. The big news came after Thursday’s closing bell when JPMorgan Chase ($JPM) announced a special conference call. CEO Jamie Dimon told investors that the bank took $2 billion in trading losses in derivatives and that it could take another $1 billion this quarter. Jamie, WTF?

For his part, Dimon was clear that the bank messed up. This is very embarrassing for JPM and frankly, I don’t expect this type of mismanagement from them. The stock will take a big hit from this news, but it doesn’t change my positive outlook for the bank. (Matt Levine at Dealbreaker has the best explanation of the losses: “This was not driven by the market moving against them (though it seems to have); it was driven by them getting the math wrong”).

As ugly as this is, it’s not a reflection of JPM’s core business operations. Sure, it’s terrible risk-management. But as far as banking goes, JPM is in good shape. Don’t be concerned that JPM faces a similar fate as the banks in Spain. They don’t. In fact, most banks in the U.S. are pretty safe right now. Warren Buffett recently contrasted U.S. banks with European banks when he said that our banks have “liquidity coming out of their ears.” He’s right. JPMorgan Chase remains a very good buy up to $50 per share.

Bed Bath & Beyond ($BBBY) surprised us this week by buying Cost Plus ($CPWM) for a half billion dollars. The deal is all-cash which is what I like to hear. The best option for any company is to pay for an acquisition without incurring new debt.

BBBY said they expect the deal to be slightly accretive. That means that BBBY is “buying” CPWM’s earnings at a price less than the going rate for BBBY’s earnings. As a result, the deal will show a net increase to BBBY’s bottom line for this year. The press release also said: “Bed Bath & Beyond Inc. continues to model a high single digit to a low double digit percentage increase in net earnings per diluted share in fiscal 2012.” I’m keeping my buy price at $75.

Now let’s look at some earnings. On Monday, Sysco ($SYY) had a decent earnings report although the CEO said the results “fell short of our expectations.” Sysco is a perfect example of a defensive stock since the food service industry isn’t adversely impacted by a downturn in the business cycle. The key with investing in Sysco is the rich dividend. The company has increased their payout for 42 years in a row, and I think we’ll get #43 later this year, although it will be a small increase. Going by Thursday’s close, Sysco yields 3.87%. Sysco is a good buy up to $30.

DirecTV ($DTV) reported Q1 earnings of $1.07 per share. That’s a nice jump over the 85 cents per share they earned a year ago. DirecTV’s sales rose 12% to $7.05 billion which was $10 million more than consensus. The company has done well in North America, but they see their future lying in Latin America. DTV added 81,000 subscribers in the U.S. last quarter. In Latin America, they added 593,000. Yet there are more than twice as many current subscribers in the U.S. as there are in Latin America. Last year, revenue from Latin America revenue grew by 42%.

DirecTV has projected earnings of $4 per share for this year and $5 for 2013. This earnings report tells me they should have little trouble hitting those goals. The shares are currently going for less than 11 times this year’s earnings estimate. They’re buying back stock at the rate of $100 million per week. DirecTV is a solid buy below $48 per share.

On Thursday, CA Technologies ($CA) reported fiscal Q4 earnings of 56 cents per share. That’s a good result and it was four cents better than Wall Street’s estimates. For the year, CA made $2.27 per share which is a nice increase over the $1.92 from last year. For fiscal 2013, CA sees revenues ranging between $4.85 billion and $4.95 billion and earnings-per-share ranging between $2.45 and $2.53. I’m impressed with that forecast, but Wall Street had been expecting revenues of $5 billion and earnings of $2.50 per share. The stock was down in the after-hours market on Thursday, but I don ’t expect any weakness to last. CA is going for less than 11 times the low-end of their forecast.

A quick note on Oracle ($ORCL): The stock took a hit this week on the news of Cisco’s ($CSCO) lousy outlook. Oracle is also in the middle of a complicated intellectual property trial with Google ($GOOG). I doubt the trial will go Oracle’s way, but the dollar amounts involved are pretty small compared with the size of these two firms. On Thur sday, Oracle fell below $27 for the first time since January. That’s a very good price. The stock is a good buy up to $32.

That’s all for now. Wall Street will be focused on Facebook’s massive IPO scheduled for next Friday. The stock might fetch 99 times earnings. I’m steering clear of this one. Be sure to keep checking the blog for daily updates. I’ll have more market analysis for you in the next issue of CWS Market Review!

– Eddy

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Named by CNN/Money as the best buy-and-hold blogger, Eddy Elfenbein is the editor of Crossing Wall Street. His free Buy List has beaten the S&P 500 for the last five years in a row. This email was sent by Eddy Elfenbein through StockTwits with mailing address at 5110 N. 40th Street #108, Phoenix, AZ 85018; Telephone: 1-888-785-8948 / eddy@crossingwallstreet.com

Tuesday Gold -31.48 CRB -2.36 NAS -11.20 S&P -5.86 DOW -76.44 USD +0.271

E X T R E M E   M A R K E T   C O M M E N T A R Y
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STOCK INDEXES & MARKETS http://quotes.ino.com/exchanges/?c=indexes+

GENERAL STOCK MARKET COMMENT: The U.S. stock indexes closed
weaker today but did close well up from their early-session
lows. It was another “risk off” trading day following some
fresh turmoil in the European Union, specifically Greece
elections last weekend that call into question that
country’s willingness to adhere to austerity measures.
While the stock index bulls maintain the slight overall
near-term technical advantage, they have faded and need to
show fresh power soon. The “sell in May and go away”
trading adage has come back into vogue.

_____________________________________________________________________

INTEREST RATES http://quotes.ino.com/exchanges/?c=interest

June U.S. T-Bonds closed up 18/32 at 144 10/32 today.
Prices closed near mid-range today and hit another fresh
7.5-month high early on, and saw more safe-haven demand
amid a “risk off” trading day today. Bulls have the solid
overall near-term technical advantage. Prices are in a
seven-week-old uptrend on the daily bar chart.

ENERGY MARKETS

ENERGIES: June crude oil closed down $0.62 a barrel at
$97.32 today. Prices closed nearer the session high again
today. Prices Monday hit a 4.5-month low of $95.34. The
bears have the overall near-term technical advantage with
the recent price downdraft. It was another “risk off”
trading day today and as the U.S. dollar index was higher—

both bearish for crude.

June heating oil closed up 75 points at $2.9889 today.
Prices closed near the session high today and did hit a
fresh 3.5-month low early on. Bears have the near-term
technical advantage as prices are in a two-month-old
downtrend on the daily bar chart.

June (RBOB) unleaded gasoline closed up 257 points at
$2.9998 today. Prices closed near the session high on short
covering. Prices Monday hit a 3.5-month low. Bears still
have the near-term technical advantage. A six-week-old
downtrend is still in place on the daily bar chart.

June natural gas closed up 9.4 cents at $2.43 today. Prices
closed nearer the session high today and hit a fresh six-

week high. The bulls gained fresh upside near-term
technical momentum today. The bears do still have the
overall near-term technical advantage, however.

CURRENCIES

CURRENCIES: The June Euro currency
closed down 28 points at 1.3026 today. Prices closed near
mid-range today and closed at a fresh two-month low close
today. Bears have the near-term technical advantage.

The June Japanese yen closed up 17 points at 1.2531 today.
Prices closed nearer the session high today. Bulls have the
slight near-term technical advantage. Prices are in a
seven-week-old uptrend on the daily bar chart.

The June Swiss franc closed down 22 points at 1.0847 today.
Prices closed near mid-range today and closed at a fresh
seven-week low close. The bears have the near-term
technical advantage in the Swissy.

The June Canadian dollar closed down 48 points at 1.0009
today. Prices closed near mid-range today and hit a fresh
three-week low. Bulls are fading. The bulls do still have
the slight overall near-term technical advantage.

The June British pound closed down 21 points at 1.6158
today. Prices closed near mid-range today. Bulls still have
the solid overall near-term technical advantage.

The June U.S. dollar index closed up 19 points at 79.91
today. Prices closed nearer the session high today and
closed at a fresh three-week high close. Bulls have gained
some fresh upside near-term technical momentum recently and
are on a level near-term technical playing field with the
bears.

PRECIOUS METALS http://quotes.ino.com/exchanges/?c=metals

METALS: June gold futures closed down $35.20 an ounce at
$1,604.00 today. Prices closed nearer the session low and
hit a fresh four-month low today as fresh, serious near-

term chart damage was inflicted. It was yet another “risk
off” trading day today and the key “outside markets” were
in a bearish posture for gold as the U.S. dollar index was
firmer and crude oil prices were lower. Gold bears have the
near-term technical advantage and gained more downside
momentum today. A two-month-old downtrend has been re-

established on the daily bar chart.

July silver futures closed down $0.732 an ounce at $29.39
today. Prices closed nearer the session low today and hit
another fresh four-month low. It was another “risk off”
trading day today and the key “outside markets” were in a
bearish posture for silver as the U.S. dollar index was
firmer and crude oil prices were lower. Silver prices are
in a nine-week-old downtrend on the daily bar chart. The
silver bears have the near-term technical advantage.

July N.Y. copper closed down 965 points 367.70 cents today.
Prices closed nearer the session low today and hit a fresh
two-week low as bulls quickly faded today. It was a “risk
off” trading day today and the key “outside markets” were
in a bearish posture for copper as the U.S. dollar index
was firmer and crude oil prices were lower. Copper bulls
and bears are still on a level near-term technical playing
field.

FOOD & FIBER http://quotes.ino.com/exchanges/?c=food

SOFTS: July sugar closed down 72 points at 20.33 cents
today. Prices closed near the session low today and hit a
fresh 12-month low. It was another “risk off” trading day
today and the key “outside markets” were in a bearish
posture for sugar as the U.S. dollar index was higher and
crude oil prices were lower. Sugar bears have the solid
overall near-term technical advantage. There are no early
technical clues to suggest a market low is in place.

July coffee closed up 30 points at 175.50 cents. Prices
closed near mid-range again today and saw tepid short
covering in a bear market. Prices Monday hit a 1.5-year
low. It was another “risk off” trading day today and the
key “outside markets” were in a bearish posture for coffee
as the U.S. dollar index was higher and crude oil prices
were lower. Coffee prices are still in an eight-month-old
downtrend on the daily bar chart. The bears have the solid
overall near-term technical advantage.

July cocoa closed down $26 at $2,331 a ton. Prices closed
nearer the session high today. It was another “risk off”
trading day today and the key “outside markets” were in a
bearish posture for cocoa as the U.S. dollar index was
higher and crude oil prices were lower. Trading has been
very choppy and cocoa bulls have the slight near-term
technical advantage.

July cotton closed down 49 points at 86.18 cents today.
Prices closed near the session low and hit another fresh
4.5-month low. It was another “risk off” trading day today
and the key “outside markets” were in a bearish posture for
cotton as the U.S. dollar index was higher and crude oil
prices were lower. Cotton bears have the solid near-term
technical advantage.

July orange juice closed down 405 points at $1.1575 today.
Prices closed near mid-range today and hit another fresh
contract low. It was another “risk off” trading day today
and the key “outside markets” were in a bearish posture for
FCOJ as the U.S. dollar index was higher and crude oil
prices were lower. FCOJ bears have the solid overall near-

term technical advantage. There are still no early clues of
a market low being close at hand. Prices are in a 3.5-

month-old downtrend on the daily bar chart.

July lumber futures closed down $1.50 at $279.70 today.
Prices closed nearer the session high. Bulls still have the
slight near-term technical advantage, but are fading and
need to show fresh power soon.

GRAINS http://quotes.ino.com/exchanges/?c=grains

GRAINS: July corn futures closed up 3 cents at $6.23
today. Prices closed nearer the session low today and saw
tepid short covering. Buying interest was limited by
another “risk off” trading day today as the key “outside
markets” were also in a bearish posture for corn as the
U.S. dollar index was firmer and crude oil prices were
lower. Traders are awaiting Thursday morning’s USDA monthly
supply and demand report.

July soybeans closed down 27 1/2 cents at $14.38 1/4 a
bushel today. Prices closed nearer the session low and hit
a fresh two-week low today and saw more profit taking. The
bean bulls faded a bit today and prices could not rally on
fresh demand for U.S. beans from China. That’s one bearish
early clue of a near-term market top being in place. It was
also a “risk off” trading day today and the key “outside
markets” were in a bearish posture for beans as the U.S.
dollar index was higher and crude oil prices were lower.
Traders are awaiting Thursday morning’s USDA monthly supply
and demand report. Bean bulls still have the overall near-

term technical advantage.

July soybean meal closed down $9.20 at $417.30 today.
Prices closed nearer the session low again today and hit a
fresh two-week low. Meal bulls do still have the overall
near-term technical advantage but have faded. Prices are
still in a four-month-old uptrend on the daily bar chart.

July bean oil closed down 31 points at 53.27 cents today.
Prices closed nearer the session low today, hit a fresh
three-month low and scored a bearish “outside day” down on
the daily bar chart. It was another “risk off” trading day
today and the key “outside markets” were in a bearish
posture for bean oil as the U.S. dollar index was higher
and crude oil prices were lower. Bean oil bears have the
near-term technical advantage. Bean oil prices have been
trending lower for four weeks.

July Chicago SRW wheat closed up 3 cents at $6.15 today.
Prices closed near mid-range today and saw more short
covering in a bear market. It was another “risk off”
trading day today and the key “outside markets” were in a
bearish posture for wheat as the U.S. dollar index was
higher and crude oil prices were lower. That did limit the
upside in wheat. Traders are awaiting Thursday morning’s
USDA monthly supply and demand report. Wheat bears have the
solid overall near-term technical advantage.

July K.C. HRW wheat closed up 4 3/4 cents at $6.36 today.
Prices closed nearer the session low today and saw more
short covering in a bear market. The bears still have the
solid overall near-term technical advantage.

LIVESTOCK http://quotes.ino.com/exchanges/?c=livestock

LIVESTOCK: June live cattle closed down $0.50 at $115.77
today. Prices closed near mid-range today. There were
bearish outside markets and a “risk off” trading day today
that helped to pressure the cattle market. Cattle bears
have the overall near-term technical advantage.

August feeder cattle closed down $0.67 at $158.77 today.
Prices closed near mid-range today on a corrective pullback
from recent solid gains. The bulls still have the overall
near-term technical advantage.

June lean hogs closed down $0.10 at $84.30 today. Prices
closed near mid-range today. There were bearish outside
markets and a “risk off” trading day today that helped to
pressure the hog market. Hog bears have the solid overall
near-term technical advantage. Prices are in a steep nine-

week-old downtrend on the daily bar chart.

______________________________

______________________________________________

E X T R E M E   F U T U R E S
____________________________________________________________________________

Updated every 10 minutes around the clock.
More at http://quotes.ino.com/analysis/extremes/futures/

WINNERS

BCX.N13 SOYBEANS CRUSH INDEX Jul 2013               70.75      5.50  +8.43
NN.X12  HENRY HUB NATURAL GAS SWAP Nov 2012         2.952     0.047  +1.62
C.U12   CORN Sep 2012                              538.00      4.75  +0.89
KW.N12  HARD RED WINTER WHEAT Jul 2012             636.00      4.75  +0.75
RR.K12  ROUGH RICE May 2012                        15.065     0.100  +0.67
YC.Z12  CORN (MINI) Dec 2012                       528.00      3.25  +0.63
US.M12  T-BONDS Jun 2012                        144.46875   0.71875  +0.50
LH.K12  LEAN HOGS May 2012                          80.25      0.20  +0.25
YW.Z12  WHEAT (MINI) Dec 2012                       652.5       1.5  +0.23
LB.K12  LUMBER (RANDOM LENGTH) May 2012             289.6       0.6  +0.21

LOSERS

KB.Y$$  CHEESE-BLOCKS Cash                         1492.5     -42.5  -2.77
HG.N12  COPPER Jul 2012                            3.6775   -0.0960  -2.55
CSI.N12 SOYBEAN-CORN PRICE RATIO Jul 2012           2.309    -0.055  -2.33
SI.N12  SILVER Jul 2012                            29.459    -0.663  -2.20
SM.N12  SOYBEAN MEAL Jul 2012                       417.3      -9.2  -2.16
GC.M12  GOLD Jun 2012                              1604.5     -34.6  -2.11
BCX.U12 SOYBEANS CRUSH INDEX Sep 2012               76.00     -1.50  -1.94
S.N12   SOYBEANS Jul 2012                         1438.25    -27.50  -1.88
YK.N12  SOYBEAN (MINI) Jul 2012                   1438.25    -27.50  -1.87
LB.F13  LUMBER (RANDOM LENGTH) Jan 2013             291.6      -5.3  -1.79

———————————————————————

Today’s Top 50 Stocks

http://club.ino.com/topstocks/?ampmbottom

———————————————————————
____________________________________________________________________________

E X T R E M E   S T O C K S
____________________________________________________________________________

Updated every 10 minutes around the clock.
More at http://quotes.ino.com/analysis/extremes/stocks/

WINNERS

IEC     IEC ELECTRONICS                              6.01      1.25  +26.26
GNRC    GENERAC HOLDINGS                            28.92      5.88  +25.52
RST     ROSETTA STONE                             12.7100    2.0300  +19.01
KKPNY   KONINKLIJKE KPN                              9.94      1.41  +16.53
VSI     VITAMIN SHOPPE                            51.5900    6.8300  +15.26
QLTY    QUALITY DISTRIBUTION                        12.20      1.41  +13.07
LOPE    GRAND CANYON EDUCATION                      17.99      1.96  +12.23
GGAL    GALICIA FINANCIAL GROUP                      5.86      0.61  +11.62
VRTX    VERTEX                                      64.18      6.06  +10.43
PRAA    PORTFOLIO RECOVERY                          73.47      6.81  +10.22

LOSERS

FOSL    FOSSIL                                      78.51    -47.26  -37.58
MAKO    MAKO SURGICAL                              26.155   -15.245  -36.82
SNCR    SYNCHRONOSS                                 20.20     -8.14  -28.72
DNDN    DENDREON                                    8.745    -2.945  -25.19
TCCO    TECHNICAL COMMUNICATIONS                     7.75     -2.39  -23.57
SUNH    SUN HEALTH CARE GROUP                        5.82     -1.18  -16.86
SMG     SCOTTS MIRACLE GRO                          46.09     -8.91  -16.20
MM      MILLENNIAL MEDIA                            16.22     -2.78  -14.63
SWHC    SMITH & WESSON HOLDINGS                    6.9799   -1.1901  -14.57
LRN     K12                                         19.97     -3.28  -14.11
_____________________________________________________________________

T H A N K   Y O U
_____________________________________________________________________

Spain May Pump Public Funds Into Banks

MADRID — Spain may pump public funds into its banking system to revive lending and its recessionary economy, Prime Minister Mariano Rajoy said Monday, signalling a policy U-turn.

The government had pledged to not give money to the banking industry that is struggling in the wake of a collapsed, decade-long, housing boom.

“If it was necessary to reactivate credit, to save the Spanish financial system, I wouldn’t rule out injecting public funds, like all European countries have done,” Rajoy said in interview with Onda Cero radio stations.

The weakness of Spain’s banks is weighing on the economy that contracted 0.3% in the first and fourth quarters, meeting most economists’ definition of a recession. The unemployment rate is at an 18-year high 24.4%, data showed April 27. Banks have sharply reined in credit in the face of rapidly growing bad debt and problems getting finance on international markets.

Government borrowing costs soared as investors fear the price tag of a banking-sector clean up could break already strained finances. Yields on Spanish debt, up five basis points at 5.78% Monday, have risen above 6% this year, a level seen as unsustainable in the long run. The government is cutting costs to lower its budget deficit to 5.3% of gross domestic product this year from 8.5% in 2011.

Similar austerity measures by governments across Europe have provoked a popular backlash. The two mainstream parties in Greece were given a drubbing in parliamentary elections Sunday. Combined they garnered less than 33% of the vote compared with 77% in the previous election three years ago. Greece, Portugal and Ireland have received bail outs from the International Monetary Fund and European Union.

In France, Socialist candidate Francois Hollande was elected president on Sunday. He has vowed to renegotiate a German-inspired fiscal pact among the 17 euro-zone countries to tighten budget discipline to make it more growth-friendly.

An official at Spain’s finance ministry said the measures that are expected to be approved by cabinet on Friday will include guidelines to remove impaired real-estate assets from banks’ balance sheets.

The government has already forced Spanish banks to set aside a big chunk of earnings to cover potential losses on loans to real-estate developers and foreclosed properties. The segregation of toxic assets is seen as key to completing the clean up and calming investors.

The ministry official added that the government and central bank are studying a specific clean-up plan for Bankia SA (BKIA.MC) and parent company Banco Financiero y de Ahorros SA, which could include a shake up of their management. Daily El Pais said Monday the government also plans an injection of state funds via convertible bonds with a rate of about 8%.

Bankia’s parent, considered one of the weakest banks in the Spanish financial sector, recently carried out a EUR2.75 billion write-down of the group’s assets by lowering the value of its real-estate holdings.

A Bankia spokesman declined to comment.

Spain’s central bank estimates the country’s banks’ total exposure to the country’s ailing real estate industry at EUR338 billion, of which it considers some EUR176 billion problematic.

In new evidence of a deepening downturn, the local statistics agency said Monday that industrial output fell by 7.5% in a calendar-adjusted annual rate in March, after falling by 5.3% in February and by 4.4% in January.

-By Jonathan House, Dow Jones Newswires; +34 91 395 8121; jonathan.house@dowjones.co

(Darcy Crowe in Madrid contributed to this report.)

WORLD FOREX: Euro Shrugs Off Election Slide

By Jessica Mead 
   Of DOW JONES NEWSWIRES

LONDON (Dow Jones)–The euro stabilized during holiday-thinned European trading Monday after suffering steep falls in Asian hours sparked by the rejection of further German-led austerity measures in French and Greek elections.

The common currency was able to climb off its overnight low against the dollar of $1.2955, its weakest since late January, but has appeared to settle in a slightly lower trading range around the $1.30 level as market pressure has abated and London remains shut for a public holiday.

Markets have been unnerved by the election of pro-growth Socialist Francois Hollande as France’s next president and the failure of Greece’s two main political parties to muster the necessary support to form a coalition government, based on 99% of the vote counted. Pro-bailout parties secured just 33% of the public vote, down from 77% at the last election three years ago.

European bourses were in the red, led lower by French banks and Greek equities while prices of riskier euro-zone peripheral states’ bonds rose following the Greek election. Economists at Citigroup said the probability of Greece leaving the euro was now as high as 75%.

But currency markets remained relatively calm during European trading hours, waiting to see whether the weekend’s political developments would derail euro-zone budget consolidation and the distribution of further bailout money to Greece.

“When European trade started we did not see further pressure [on the euro]. I would not expect a further sell-off when London gets back tomorrow,” said Lutz Karpowitz, senior currency strategist at Commerzbank AG in Frankfurt. Investors had already predicted these election results, limiting the scope for further euro falls, he said.

Still, both the French and Greek elections highlight growing public discontent with austerity measures and a greater focus on pro-growth policies.

“The results thus add to the uncertainty surrounding the path to fiscal recovery, even if it can be argued that anything that brings about less negative growth outcomes in the euro zone may ultimately be positive,” said Robert Ryan, currency strategist at BNP Paribas.

Consequently, expectations are that the euro will remain under pressure, with Nomura chief G-10 currency strategist Jens Nordvig anticipating a $1.26-$1.28 range against the dollar over the next few weeks.

Adding to euro bears’ ammunition, Spain provided further evidence of economic stress, with industrial output falling by an annual rate of 7.5% in March.

But robust German manufacturing orders for March and comments from a German government spokesman that the new relationship between German chancellor Angela Merkel and Hollande would succeed underpinned the euro, which traded as high as $1.3037.

Emerging market currencies also initially suffered steep falls as the weekend election results in France and Greece heightened uncertainties. The South Korean won slipped 0.63% against the dollar during Asian trade, its largest single-day drop in a month.

In the session ahead, the focus is likely to remain on the fallout from the weekend’s elections because there is little scheduled apart from U.S. April employment trends index at 1400 GMT and March consumer credit data at 1900 GMT.

At 1034 GMT, the euro was trading at $1.3033 against the dollar, compared with $1.3083 late Friday in New York, according to trading system EBS. The dollar was at Y79.82 against the yen, compared with Y79.89, while the euro was at Y104.05 compared with Y104.47. Meanwhile, the pound was trading at $1.6169 against the dollar, compared with $1.6154 late Friday in New York.

-By Jessica Mead, Dow Jones Newswires; +44 (0) 20 7842 9256;

jessica.mead@dowjones.com;@djfxtrader/@jessicacmeadFX

Italy’s Monti Calls EU Leaders, Urges Growth-Boosting Moves

ROME (Dow Jones)–Italian Prime Minister Mario Monti Sunday called Francois Hollande to congratulate him after his victory in France’s presidential election and discuss the need for close collaboration between Rome and Paris on policies to boost economic growth.

In a statement issued late Sunday, Monti’s office said the Italian premier also spoke with European Council President Herman Van Rompuy, German Chancellor Angela Merkel and U.K. Prime Minister David Cameron to discuss the outcome of weekend elections in France and Greece.

Monti said budget discipline remained an essential element of the monetary union, but also urged concrete policies aimed at promoting growth.

“The results of the elections in France and Greece impose a reflection on European policies,” Monti said, after talking to the other European leaders.

“Responsible public finances remain a necessary condition but certainly not sufficient for the key objective: sustainable growth which creates jobs and is oriented towards social equity,” Monti added.

In last weekend’s elections Greece saw a dramatic reshaping of its political landscape, with voters largely rejecting austerity measures.

In France, voters elected Hollande as the country’s first Socialist president since the 1980s, promising to change how the euro zone is dealing with its debt crisis.

-By Giada Zampano, Dow Jones Newswires, +39 06 6976 6920;

giada.zampano@dowjones.com