“If a battered stock refuses to sink any lower no matter how many negative articles appear in the papers, that stock is worth a close look” — J. Fraser.

1. Sarkozy and Hollande win through to final round — Nicolas Sarkozy and left-wing challenger Francois Hollande will face off against each other in two weeks’ time after they received the most number of votes in the first round of France’s presidential election. Run-off is scheduled for May 6.
2. Eurozone looks to be sinking deeper into recesson — Eurozone factory activity continued to contract in April as PMI fell to a preliminary 46 in April from 47.7 in March and vs. expectations of 48.1.
3. FOMC stays the course — the FOMC announced no major change in policy. The committee sees moderate growth with strains in global financial markets providing a big downside risk. Revised 2012 forecasts: jobless rate at 7.8-8.0% from 8.2-8.5%; inflation at 1.9-2.0% from 1.4-1.8%; GDP growth at 2.4-2.9% from 2.2-2.7%.
4. U.K. sinks into double-dip recession — the U.K. has slid back into recession for the second time since the financial crisis after Q1 GDP unexpectedly fell a preliminary 0.2% on a quarterly basis following a fall of 0.3% in Q4.
5. Banks scramble to prevent ratings cuts — the WSJ reported five major banks facing potential downgrades from Moody’s – and $22B in extra costs – CEOs are pushing back against the ratings agency with an aggressiveness not seen since before the financial crisis.
6. Business spending drop limits U.S. growth to 2.2% — Marketwatch reported that GDP misses economic estimates after surprise drop from business sector. The Commerce Department said gross domestic product rose at a 2.2% annual rate between January and March, slower than the 3.0% pace in the prior three months.
7. Standard & Poor’s downgrades Spain for the second time this year— S&P slashed Spain’s sovereign debt rating to BBB+ from A with a negative outlook. The ratings agency said the downgrade reflects worries about increased risks of the country’s government debt balanced against difficult economic conditions, as well as the potential need of more support for the banking sector.
8. AAII Sentiment Survey — according the the latest survey from AAII, Bullish Sentiment fell to a 7-month low to 27.6%. This is also the fourth consecutive week that bullish sentiment has been below its historical average of 39%.

This week’s AAII Sentiment Survey results:
Bullish: 27.6%, down 3.5 percentage points
Neutral: 35.0%, unchanged
Bearish: 37.4%, up 3.6 percentage points

Historical averages:
Bullish: 39%
Neutral: 31%
Bearish: 30%

The week ahead — Economic data from Econoday.com:

“I keep hearing “Should I buy?” – When I start hearing “Should I sell?” that’s the bottom.” — Nick Moore (PM).

1. $60B pledge from Japan to help IMF reach $400B goal — While Spanish borrowing costs soar, IMF chief Christine Lagarde hopes the IMF will reach “critical mass” in raising more than $400B from contributing governments.
2. Buffett Rule falls in the Senate — with a 51-45 vote, Senate Republicans blocked the “Buffett Rule” to make those earning $2M annually pay federal tax of at least 30%. The measure fell nine votes short of the 60 required for the debate to continue.
3. China home prices fall in March, raising concerns of a major slowdown — according to MarketWatch — out of the 70 cities surveyed by the National Bureau of Statistics, 46 reported weaker prices from the previous month, up slightly from 45 cities that reported declines in February. Dariusz Kowalczyk, Credit Agricole CIB economist, said in a note “sliding home prices will lead to weakness in residential land prices, which will in turn add to the financial strains already weighing on local governments”.
4. Facebook aims to IPO in May — Facebook (FB) plans to carry out its IPO on May 17, TechCrunch reports, as long as the SEC signs off on the company’s paperwork in time. As expected, Facebook will aim to raise under $10B at a market cap of $100B, reflecting recent trading on secondary markets.
5. China set for further easing — The People’s Bank of China might cut banks’ required reserve ratios, among other easing measures, in order to boost liquidity and bank lending, Xinhua reports.
6. France votes, investors fret — France held a Presidential election this past Sunday, with polls showing that the left-wing Francois Hollande to beat Nicolas Sarkozy but only after a run-off on May 6. Hollande has pledged to renegotiate the EU fiscal compact to tilt it away from austerity and towards growth, putting him on a collision course with Angela Merkel and providing the potential for further market chaos.

The week ahead — Economic data from Econoday.com:

“I always keep these seasonal patterns in the back of my mind. My antennae start to purr at certain times of the year.” Kenneth Ward.

1. China Consumer Prices Rise Faster-Than-Estimated 3.6% — Bloomberg News reported that China’s inflation accelerated more than forecast in March on a pickup in food prices, signaling that policy makers may exercise caution in adding stimulus to boost growth.
2. Servicers Face More Rules — WSJ reported that The Consumer Financial Protection Bureau plans to propose new rules that would force mortgage servicers to be far more transparent about the costs faced by homeowners and to provide warnings before any interest rate changes. The rules, if approved, would affect such giants as Wells Fargo (WFC), Citigroup (C), BofA (BAC) and JPMorgan (JPM), as well as the smaller mortgage servicers.
3. Santorum quits White House race — trailing in polls and fundraising, the conservative former Pennsylvania senator suspended his campaign and cleared the way for Romney to clinch the nomination to face President Barack Obama in the November 6 general election.
4. Germany, Italy suffer poor bond auctions — Germany has experienced very weak demand at an auction of 10-year Bunds, able to move just €3.87B of paper vs. a target of €5B. The bid-cover ratio was just 1.1. The notes were priced to yield 1.77% – a record-low for an auction. Italian yields jumped in an auction of €11B of 12- and 3-month paper as Spain’s budget woes hit other vulnerable countries.
5. Spain Default Insurance Costs Hit Record — the cost of insuring Spanish government debt against default via instruments known as credit default swaps, or CDS, hit an all-time high Friday as worries mounted over the country’s banking sector. The spread on five-year Spanish CDS widened to 505 basis points from 476 basis points, according to data provider Markit. Spanish banks’ borrowings from the ECB jumped nearly 50% in March to €227.6B, as they took up 29% of the central bank’s late-February LTRO. “A consequence of the (LTRO) is that the correlation between sovereign risk and banking risk increased all over Europe.”
6. Growth in China cools down — Chinese Q1 GDP grows 8.1% Y/Y vs. expectations for 8.3% and 8.9% growth in 2011 Q4. Industrial production: +11.9% Y/Y vs. estimates of 11.4%, and retail sales +15.2% vs. 15.1%.

The week ahead — Economic data from Econoday.com:

“The market is voting machine, whereon countless individuals register choices which are the product partly of reason and partly of emotion.” — Graham & Dodd

1. Euro zone unemployment reaches new high in February — according to Reuter, Unemployment in the 17 nation euro zone rose to 10.8 percent in February, highest in almost 15 years – as expected by economists’ polled by Reuters – and compared to 10.7 percent in January.
2. SEC poised to charge Goldman over another mortgage bond deal — the SEC is likely to soon bring charges against Goldman Sachs (GS) over a mortgage-bond deal called the Fremont Home Loan Trust.
3. Regulators Move Closer to Oversight of Nonbanks — according to NYTimes, The Financial Stability Oversight Council, the country’s top financial regulatory body, moved closer to increasing its oversight of nonbank financial institutions, like hedge funds, private equity firms and insurers. Possible candidates include BlackRock (BLK), GE Capital (GE) and Berkshire Hathaway (BRK.A).
4. FOMC gets more hawkish over QE — Fed policy makers expressed less interest in another round of bond buys at their March 13 meeting, with only a couple of members suggesting more easing could become necessary if the economy lost momentum.
5. Spanish yields jump above 5.7%; Italian yields up — Spanish and Italian bond yields continued to rise on last week, as the broader European equity market declined. Yields on 10-year Spanish government bonds added 5 basis to 5.71%, the highest level since December last year. Yields on 10-year Italian government bonds jumped 11 basis points to 5.4%

The week ahead — Economic data from Econoday.com:

“Good judgment is usually the result of experience and experience frequently is the result of bad judgment” — Robert Lovell

1. Enbridge, Enterprise plan U.S.-Canada pipelines — Enbridge (ENB) and Enterprise Products Partners (EPD) are planning to build new pipelines that will transport up to 850K barrels of crude oil a day from Canada to refineries along the Gulf Coast by mid-2014.
2. France discussing strategic oil release with UK, U.S — according to Reuter, France is in talks with the United States and Britain on a possible release of strategic oil stocks to push fuel prices lower, four weeks before the country’s presidential election. Such a release could happen “in a matter of weeks”, Le Monde daily stated.
3. EBay Targets India Growth — eBay (EBAY) is targeting growth in India, investing more money and fine-tuning its strategy there as it tries to steer Indian customers away from low-margin electronic goods to higher-margin purchases like clothes and shoes. The stakes are huge, with India’s online shopping market expected to hit $70B by 2020 from just $600M currently.
4. Facebook plans IPO for May — Facebook (FB) intends to hold its IPO in May, The Wall Street Journal reports, with the company planning to release another amended S-1 prior to its offering after filing.
4. Euro-zone boosts anti-contagion firewall — Euro-zone finance ministers agreed to temporarily boost the lending capacity of the region’s rescue funds to 700 billion euros ($934 billion) from €500 billion in an effort to convince markets they can contain the region’s long-running sovereign debt crisis.

The week ahead — Economic data from Econoday.com:

“The four most expensive words in the English language, ‘This time it’s different'”—Sir John Templeton (Founder Templeton Fund)

1. China raises retail gas, diesel prices by up to 7% — China raised retail gasoline and diesel prices for the second time this year, by 6.4% and 7% respectively, to ease losses faced by the nation’s refiners in view of rising global crude-oil prices and a decline in domestic consumer price inflation.
2. BHP exec: China demand for iron ore flattening — Demand for iron ore from top consumer China will flatten out as the world’s second-largest economy cools, an executive at mining giant BHP Billiton Ltd.
3. Chinese, eurozone factory activity worsens — PMI data out of China and Europe indicates that the contraction in factory activity has got worse in March. HSBC’s manufacturing purchasing managers’ index for March, released Thursday, printed at 48.1 on a 100-point scale, down from a final reading of 49.6 in February. an early economic indicator that reflects trends in industrial output and economic growth, raised worries about the Chinese outlook.
4. Oil giants in talks over $40B Alaska-Asia project — Financial Times reported that BP (BP), Exxon Mobil (XOM) and ConocoPhillips (COP) are discussing a $40B project to export natural gas from Alaska to Asia.
5. Obama to fast-track part of Keystone pipeline — President Obama announced a fast-tracking of the approval of the southern half of TransCanada’s (TRP) Keystone XL pipeline.
6. Fed Hosts Global Gathering on Easy Money — according to the WSJ, the Fed hosted the world’s leading central bankers last Frid. to discuss the impact of the money printing some of them have been doing. Those joining Ben Bernanke include the BOE’s Mervyn King, the BOJ’s Masaaki Shirakawa and former ECB Chief Jean-Claude Trichet.

The week ahead — Economic data from Econoday.com:

“It ‘s a buy when the 10-week MA crosses the 30-week MA and the slope of both averages is up” — Victor Sperandeo

1. U.S. to file rare earths complaint — the U.S. filed a complaint with the WTO over China’s quota for rare earth exports.
2. Chip Maker Intel (INTC) Working on a Web-Based Video Service to Compete With Cable, Satellite Providers — Intel (INTC) is developing an Internet-based TV service to sell to consumers, and has been talking with media companies about creating a “virtual cable operator” that would offer channels in a bundle. The TV service would rely on Intel-built set-top boxes that feature the company’s own processors.
3. Pfizer likely to spin off animal-health unit — Pfizer (PFE) said that it’s more likely it will spin off its animal-health unit than sell it to one of the many companies rumored to be in the hunt to buy it.
4. Banks Stress-Tests — The Federal Reserve released the results of its stress tests, showing that “despite large hypothetical declines, the post-stress test capital level … of 15 of the 19 bank holding companies were estimated … above all 4 of the regulatory minimum levels … even after considering the proposed capital actions, such as dividend increases or share buybacks.” Citigroup (C), SunTrust (STI), MetLife (MET) and Ally Financial failed to get their capital plans approved in the Fed’s stress tests
5. Chinese Economy Already in ‘Hard Landing,’ — Bloomberg reported China’s economy is already in a so- called “hard landing,” according to Adrian Mowat, JPMorgan Chase & Co.’s chief Asian and emerging-market strategist. “China is in a hard landing. Car sales are down, cement production is down, steel production is down, construction stocks are down. It’s not a debate anymore, it’s a fact.”
6. Iranian banks to be cut off from global payments system — the international community has ratcheted up the pressure on Iran by several more notches, with the EU ordering Swift, the Belgian organization that handles over $6T worth of international payments a day, to cut off Iranian banks blacklisted by the EU from its messaging system.
7. 10-Year Treasury Yield Breaks Above 200 DMA & VIX falls below 15 — below are the charts of the US 10-Year T-Bill and VIX courtesy from the Bespoke Investment Group.

The week ahead — Economic data from Econoday.com:

“The best traders have no ego. You have to swallow your pride and get out of the losses.” — Tom Baldwin

1. Markets fall as China cuts GDP target — China has lowered its GDP target to 7.5% from the 8% goal that’s been in place since 2005. Chinese leaders are determined to cut reliance on exports and capital spending in favor of consumption.
2. Iran Offers To Resume Nuclear Talks, Allow Inspectors Into Military Site — Iran stated it would be willing to allow inspectors from the UN’s International Atomic Energy Agency (IAEA) to visit its Parchin military complex, which the West believes is part of a suspected Iranian nuclear weapons program.
3. China to cap expansion of major industries — China is planning to limit growth in some of its largest industries, according to a work report Premiere Wen Jiabao recently delivered to the nation’s legislature. The report lists four sectors in which capacity increases should be curbed: auto manufacturing, steel making, shipbuilding and cement production.
4. European Central Bank leaves rates unchanged — Mario Draghi expected to take a wait-and-see approach after the completion last week of the ECB’s second, three-year long-term refinancing operation, or LTRO. The Feb. 29 LTRO saw 800 banks snap up nearly 530 billion euros ($700.3 billion) in three-year loans fixed to the ECB’s 1% refi rate.
5. Over 80% of Greek creditors accepted debt swap — Greece avoids default with debt swap. Greece said €172B of bonds were tendered by private investors in its debt swap, making the participation rate 85.8%. The country intends to amend the terms of all Greek law governed bonds, bringing the participation rate to 95.7%. However, the country’s activation of collective action clauses will likely force the ISDA’s hand in declaring a “credit event,” triggering payouts on CDS.

The week ahead — Economic data from Econoday.com:

“I’m not nearly so concerned about the return on my capital as I am the return of my capital.” Will Rogers (American Humorist and Celebrity, 1879-1935)

1. G-20 Defers Move On Aid for Europe — G-20 officials met. Issues raised were the potential of rising oil prices to hurt a global recovery and the need to change the part of the Volcker Rule which bans prop trading of foreign sovereign debt. Ministers delayed consideration of new international support for Europe until the G-20’s next gathering in April.
2. Blackstone bets on natgas — Blackstone (BX) announced $2B investment in Cheniere Energy Partners (CQP) that will allow the company to build a gas-liquefaction plant in Sabine Pass, La., the first of its kind in the continental U.S.
3. Warren Buffet Posted 2011 Annual Letter — click here for the link to Buffet’s annual letter.
4. ECB allots $713 billion to banks in LTRO — The European Central Bank on Wednesday allotted a larger-than-expected 529.5 billion euros ($713.4 billion) in loans to euro-zone banks in its second and possibly last three-year long-term refinancing operation. The ECB said a total of 800 banks were allotted funds under the LTRO.
5. China slashes dollar reserves — WSJ reported that China has sharply cut the share of its foreign reserves held in dollars, Dow Jones calculates. Although the exact composition of China’s $3.2T reserves has always been a mystery, the portion of dollar holdings appears to have dropped to a decade-low 54% as of June 2011 from 65% in 2010 and 74% in 2006.
6. Banks Park $1 Trillion of Cheap Money Back at ECB — reported by CNBC, Commercial banks parked a record 777 billion euros ($1.03 trillion) with the ECB overnight, roughly three-quarters of the money the central bank has shovelled into the financial system in two injections of ultra-cheap three year funding since December. The deposits at the ECB highlight the continued lack of trust between European banks.

The week ahead — Economic data from Econoday.com:

“The worst trades are generally when people freeze and start to pray and hope rather than take some action” — Robert Mnuchin

1. Europe agrees to second Greek bailout — European finance ministers and other top European officials said they stand ready to provide up to 130 billion euros ($171.9 billion) of extra financial aid to Greece until 2014. The Eurogroup said they had the “expectation that the International Monetary Fund will make a significant contribution” to the new Greek aid program.
2. Oil climbs as Iran Stops Selling Oil to U.K., France — Iran said it had stopped selling crude to British and French companies, in retaliation for the EU’s import ban.
3. Fitch Downgrades Greece, Says Default ‘Highly Likely’ — AP reported that Fitch ratings agency says it has downgraded Greece further into junk status, from ‘CCC’ to ‘C’ following the announcement of the details of the country’s debt swap deal with private creditors. The agency said the downgrade indicated “that default is highly likely in the near term.”
4. Moody’s reviewing thousands of U.S. muni obligations — Moody’s Investors Service is sweeping a magnifying glass over thousands of U.S. municipal sector obligations that are linked to 26 banks currently under review for possible credit rating downgrades.
5. Tensions grow over Iran — the IAEA says it failed to win access to Iran’s suspected nuclear-related military base during two days of talks. Meanwhile, Iran said it would consider preemptive action if it felt threatened, underscoring the real possibility of a military conflict in a region holding half the world’s oil reserves.
6. Payroll-tax cuts extended — President Obama signed the payroll tax bill into law, which will extend payroll-tax cuts through the end of 2012, prolong extended unemployment benefits, and prevent a cut in pay for doctors who treat Medicare patients.

The week ahead — Economic data from Econoday.com: