“Zebras have the same problem as institutional portfolio managers. First, both seek profits. For portfolio managers, above average performance; for zebras, fresh grass. Secondly, both dislike risk. Portfolio managers can get fired; zebras can get eaten by lions. Third, both move in herds. They look alike, think alike and stick close together. If you are a zebra, and live in a herd, the key decision you have to make is where to stand in relation to the rest of the herd. When you think that conditions are safe, the outside of the herd is the best, for there the grass is fresh, while the middle see only grass which is half-eaten or trampled down. The aggressive zebras, on the outside of the herd, eat much better. On the other hand – or other hoof – there comes a time when lions approach. The outside zebras end up as lion lunch, and the skinny zebras in the middle of the pack may eat less well but they are still alive.” — Ralph Wanger

1. German factory activity Contraction deepens — Flash German manufacturing PMI unexpectedly fell to 47.9 in April from 49 in March, while the services print dropped to 49.2 vs 50.9.
2. U.K. avoids triple-dip recession — the U.K.’s GDP recovered to grow a quarterly 0.3% in Q1 compared with a fall of 0.3% in Q4, topping expectations of +0.1% and ensuring that Britain avoided the ignominy of a triple-dip recession. The growth, tepid as it was, could reduce the pressure on the Bank of England to increase its QE program.
3. Twitter Hoax Sparks Swift Stock Sell-Off — WSJ, a short-lived hoax on Twitter briefly erased $200 billion of value from U.S. stock markets last Tuesday, underscoring the vulnerability of financial markets to computerized trading programs that buy and sell shares without human intervention.
A tweet purportedly from the Associated Press just before 1:08 p.m. reported two explosions in the White House and that President Barack Obama had been injured. The posting sent the Dow Jones Industrial Average tumbling roughly 145 points in an instant.
4. ECB ready to cut rates — momentum is building for the ECB to cut rates at its policy next week, reports Reuters, citing senior sources at the central bank. The meeting is taking place away from the bank’s Frankfurt home, and the ECB rarely changes policy at away games, but recent economic data paint a bleak enough picture to allow a move.
5. Mediocre Earnings And Revenues for 1Q 2013 — courtesy of BIG, below is an updated look at the earnings and revenue beat rates for stocks that have reported so far in 1Q 2013. The earnings beat rate stood at 58%, while the revenue beat rate was much lower at 43.9%. Another 250 companies have already reported this week.

Also, the current revenue beat rate this season stands at 44.1%, up from the 43.9% from last Friday.

6. 1Q Gross Domestic Product expanded at a 2.5 percent annual rate — due to an accounting change, for the first time see government statistics take into account 21st century components such as film royalties and spending on research and development. Most of the growth came at the hands of the consumer, with a little help from housing, which offset the continued decline in government spending as well as a drag from high imports. Consumer spending grew 3.2% in the first quarter, the best result in two years.

The week ahead — Economic data from Econoday.com:

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