Today's Headlines

Bloomberg: 

• Euro-Area Unemployment Increases to Record 12.1% Amid Recession. The euro-area jobless rate rose to a record in March, increasing pressure on the European Central Bank to take additional measures to boost growth. The euro-area unemployment rate advanced to 12.1 percent from 12 percent in the previous two months, the European Union’s statistics office in Luxembourg said today. That’s in line with the median of 31 economists’ estimates in a Bloomberg News survey. Soaring unemployment “cannot be ignored, because this is the biggest fragmentation that is happening in Europe,” ECB Vice President Vitor Constancio said on April 25. “It’s even worse in what regards youth unemployment.” Today’s report showed that 19.2 million people were jobless in the euro area in March, up 62,000 from the previous month. Youth unemployment was at 24 percent.
• German Unemployment Climbs in Sign Economic Recovery Delayed. German unemployment rose for a second month in April, adding to signs that Europe’s largest economy is struggling to recover from a slump at the end of last year. The number of people out of work climbed a seasonally adjusted 4,000 to 2.94 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted an increase of 2,000, according to the median of 29 estimates in a Bloomberg News survey. The adjusted jobless rate held at 6.9 percent, just above a two-decade low of 6.8 percent.
• Slovenia Bank Rescue at 20% of GDP Means No Escaping EU Aid. Slovenia, the first former Communist nation in the euro zone, is facing a typically capitalist dilemma: whether to protect creditors of big banks. Rising loan losses resulting from a housing bust and a second recession in two years have left a hole of about 7.5 billion euros ($9.8 billion) at Slovenia-based lenders, investment bank Keefe Bruyette & Woods estimates. That’s a lot for a 35 billion-euro economy: A bank bailout would push government debt above 70 percent of economic output. Even after a successful domestic debt sale two weeks ago, the country may need assistance from the European Union, and holders of bank bonds, including the most senior creditors, could be forced to take losses, according to Raoul Ruparel, head of research at London-based Open Europe. Such a bail-in, which would be the second in the euro zone, after Cyprus, risks deepening divergence in the monetary union by keeping borrowing costs higher in economically weak nations.
• Fiat Industrial Cuts 2013 Goals on Iveco Europe Truck Sales. Fiat Industrial SpA (FI), the truck and tractor maker spun off from car manufacturer Fiat SpA (F) in 2011, cut earnings and sales targets for 2013 as a recession in Europe led to a first-quarter loss at the Iveco vehicle unit. Revenue will rise as much as 4 percent, compared with a previous forecast of 5 percent, Turin, Italy-based Fiat Industrial said today in a statement. The trading profit margin will amount to 7.5 percent to 8.3 percent of revenue, versus an earlier range prediction of 8.3 percent to 8.5 percent. Amid a recession in the 17 countries sharing the euro, demand for commercial vehicles in Europe fell for a 15th consecutive month in March. MAN SE (MAN), the region’s third-largest producer, lowered its earnings forecast for 2013 on April 26 because of the contraction. Industrywide first-quarter sales of trucks weighing more than 3.5 tons dropped 17 percent to 64,198 vehicles, according to the ACEA trade group. “The news is clearly negative and not discounted,” said Gabriele Gambarova, an analyst at Banca Akros in Milan. “Iveco encountered more difficult market conditions.” Fiat Industrial dropped as much as 5.1 percent to 8.59 euros, the biggest intraday decline since March 19, and was trading down 4.7 percent at 4:20 p.m. in Milan, valuing the manufacturer at 10.5 billion euros. 
• European Stocks Fall, Trimming 11th Straight Monthly Gain. European stocks declined, paring an 11th straight month of gains, as a report showed business activity in the U.S. unexpectedly shrank this month. Lonmin Plc tumbled 5.7 percent after shuttering a South African platinum furnace. Fiat Industrial SpA sank the most in 11 months after cutting its 2013 earnings target. UBS (UBSN) AG surged the most in six months as profit exceeded analysts’ projections. Deutsche Bank AG rallied the most since September after Germany’s largest lender announced plans to raise as much as $6.5 billion in capital.
• IBM(IBM) Raises Dividend 12%, Adds $5 Billion in Stock Buybacks. International Business Machines Corp. (IBM), the biggest computer-services company, boosted its dividend 12 percent and approved $5 billion in stock buybacks, rewarding investors after a disappointing earnings report. The dividend of 95 cents a share will be payable on June 10 to shareholders of record on May 10, IBM said today from its annual meeting in Huntsville, Alabama. With the additional buyback funds, IBM has $11.2 billion in its repurchase program. 
• Yellen Has the Right of First Refusal at Fed, Meyer Says. Federal Reserve Vice Chairman Janet Yellen has the “right of first refusal” to become the next leader of the central bank when Ben S. Bernanke’s term ends in January, said former Fed governor Laurence Meyer. Meyer, speaking at a Bloomberg Link panel in Washington, said it’s “a bit surprising” that Bernanke couldn’t manage his calendar to allow him to take part in this year’s Fed conference in Jackson Hole, Wyoming.
• Dollar Drops on Weak Data as Fed Meets; Euro Gains on ECB Bets. The dollar fell versus most major peers as business activity in the U.S. unexpectedly shrank for the first time in more than three years amid bets the Federal Reserve won’t slacken its bond buying under quantitative easing. 
• Copper Users Press London Exchange to Reduce Warehouse Backlogs. A group of industrial copper users is pressing the London Metal Exchange to reduce growing queues at warehouses that they say are contributing to supply constraints and rising fees.

Fox News:

• Obama walks back 'red line' stance on Syrian government using chemical weapons. President Obama, who earlier said use of chemical weapons by Syria on its people would be a “red line” requiring action by the U.S., walked the stance back on Tuesday, saying he needs more information on the reported attacks before responding.
• Special forces could've responded to Benghazi attack, whistle-blower tells Fox News. A military special ops member who watched as the deadly attack on the U.S. Consulate in Benghazi unfolded last September told Fox News the U.S. had highly trained forces just a few hours away, and said he and others feel the government betrayed the four men who died in the attack. Speaking on condition of anonymity, and appearing in a Fox News Channel interview with his face and voice disguised, the special operator contradicted claims by the Obama administration and a State Department review that said there wasn’t enough time for U.S. military forces to have intervened in the Sept. 11 attack in which U.S. Ambassador to Libya Chris Stevens, an embassy employee and two former Navy SEALs working as private security contractors were killed. “I know for a fact that C-110, the EUCOM CIF, was doing a training exercise in … not in the region of North Africa, but in Europe,” the operator told Fox News' Adam Housley. “And they had the ability to act and to respond.”

CNBC: 

• The Fed Is Destroying Jobs: Ken Griffin. Ken Griffin, the head of the Chicago-based hedge fund Citadel, is not at all pleased with Ben Bernanke. According to Griffin, low interest rates have encouraged businesses to invest in technology that reduces the demand for human labor. Meanwhile, health care reforms have increased the cost of human capital—so it's a double whammy.
• Sex Superbug Could Be 'Worse Than AIDS'.

Zero Hedge:

• Apple(AAPL) Files Bond Prospectus, Names Goldman Lead Underwriter.
• Europe's Scariest Chart Leaves 1 in 4 Young People Unemployed. (graph)
• Case-Shiller Composite Rises 0.3% In February, Back To September 2010 Levels. (graph)
• Chicago PMI Implodes To 49, First Sub-50 Print Since September 2009. (graph)
• Symantec(SYMC) Flash-Crash Destroys Over $1.5 Billion In Less Than A Second. (graph)
• US Homeownership Rate Drops To 1995 Levels. (graph)

Business Insider: 

• LEON BLACK: The Market Is Pricey, 'So We're Selling Everything That's Not Nailed Down'.
• OBAMA: Guantanamo Bay Is Not Necessary To Keep America Safe.
• Researchers Have Stumbled On A Massive Lithium Mine That Could Meet All US Demand.
• NBC Is In Such Rough Shape, It Could Just Stop Broadcasting.
• Why Investor Demand For Apple's(AAPL) Bonds Is Out Of This World — In One Chart.
• Chicago PMI Report Has Some Seriously Bad News On Jobs. (table)

Reuters: 

• Cummins(CMI) profit drops sharply, shares tumble 5 pct. Cummins Inc reported a sharper-than-expected drop in first-quarter earnings on Tuesday, citing weak demand for its turbines and engines, especially from the mining and oil and gas industries. The company's shares tumbled 5 percent in morning trading.
• METALS-Copper shows steepest monthly fall since last May.
• Empty shops, tight wallets threaten France with recession. French consumers bought fewer cars, tables and chairs, and clothes in the first part of the year, challenging the government's pledge to steer the euro zone's second largest economy away from recession. Consumer spending accounts for more than half of France's output and is the motor of the economy. It fell last year for the first time in 19 years. Record unemployment is still pushing households to keep their wallets closed. An unexpected rebound in March, largely due to heating staying on through cold weather, was not enough to stop a 0.4 percent January to March quarterly decline. The data prompted Jacques Creyssel, head of the FCD business federation, to warn of a fresh contraction in purchasing power this year. 

Telegraph:

• Germany will think twice before saving France next time. The Franco-German axis that has driven EU affairs ever since Schuman and Adenauer in the early 1950s is collapsing before our eyes.
• Spain sinks deeper into recession. Spain sunk deeper into recession, official data confirmed on Tuesday, as economic output contracted in the first three months of 2013 for the seventh successive quarter.