“The financial sector was the best performing index out of the S&P 500 during the first quarter.  That was when investors were decoupling from the woes of Europe.  With European bank shares falling now that European nations are back front and center, the obvious fear is that the big US banks are going to get pulled down much further as their brethren get pummeled overseas…”

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“Service industries in the U.S. expanded at a slower pace than projected in April, a sign the largest part of the economy may struggle to accelerate in the absence of faster job growth.

The Institute for Supply Management’s non-manufacturing index fell to a four-month low of 53.5 from 56 in March, the Tempe, Arizona-based group’s data showed. The median forecast of 74 economists surveyed by Bloomberg News called for a decrease to 55.3. Readings above 50 signal expansion.

Limited job and wage gains, combined with depressed property values, may make it difficult for Americans to step up their spending after purchases rose in the first quarter by the most in a year. Increased demand for services, which make up about 90 percent of the economy, would help broaden the almost three-year-old expansion beyond manufacturing.
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“It’s that day of the month again: jobs day!

Tomorrow, the BLS will release the Non-Farm Payrolls report for April.

The current consensus is that there will be a gain of 160K jobs, which is up from the 120K created in March.

Private payrolls are expected to come in at 165K, implying another 5K reduction in public sector workers.

The stakes are pretty big. At just 160K, this is already in the low-end of what Bernanke considers acceptable levels of job creation.

Thus a bad number has big implications for the question of whether there will be QE3. The current thinking is that QE3 is unlikely, but… it’s certainly not totally off the table if things get bad….”
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Preliminary pricing puts a value of $75-$95 billion…

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A round up of growth companies for your consideration:

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The rich are getting richer these days whereas the bottom 95 percent in the U.S. are falling deeper in debt, a study by International Monetary Fund economists finds.

In 1983, the bottom 95 percent of the U.S. population owed 62 cents in debt for every dollar they earned, the economists find, CNNMoney reports.

By 2007, that number had risen to $1.48 of debt for every $1 in earnings.

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Gapping up

APKT +11.3%, ARTC +6.2%, INTT +5%, RIG +4.9%, Z +4.7%, GLUU +4.1%, ISIG +4%, CNQR +3.9%,

SNN +3.6%, WFM +2.7%, ALL +2.4%, HTZ +2.3%, TSO +2.1%, AGNC +2%, STD +1.5%, V +1.5%,

Gapping down

MITK -41.2%, GMCR -39%, VCLK -14.4%, WTW -14%, DEG -13.2%, CENT -8.6%, SKUL -8.1%,

UNTD -7.9%, HNSN -6.7%, AXTI -5.9%, NVTL -5.7%, PRU -5.6%, JDSU -5.3%, NMM -5%, PPO -3.1%,

EXXI -3%, HT -2.3%, HOTT -1.9%, THO -1.8%, CXS -1.5%, RIO -1.4%,

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In Play

On the Wires

“You have to love this: The title of Albert Edwards’ latest note is: The biggest bubble in recent history is heading for the mother of all hard landings.

So what’s that bubble?

Australia!

Edwards’ post is building off the work of his colleague Dylan Grice, who wrote about an Australian bubble built on the back of a China bubble in his recent note.

So what’s Edwards’ big complaint with Australia? ”

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“When it comes to predicting a dark future, Nouriel Roubini – the NYU economist who earned the moniker Dr. Doom after he correctly predicted the financial crisis – is not about to let anyone get in his way.

Even if it’s his host. And even, or maybe especially, when there are 500 witnesses.

That’s precisely what happened Wednesday morning, when Michael Milken – the former junk-bond king – shared the stage with Roubini at Milken’s Global Conference. What was billed as an interview in one of the Beverly Hilton’s grand ballrooms had the feel of a pitched battle.

Roubini warned of a massive oil shock following a potential clash between Iran and Israel – or possibly the United States, sometime after the November presidential elections.  He talked about geopolitical instability in the Middle East. “It’s a mess,” he said…”

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The Stock Sage presents a good example of how to trade what you see, applied to recent $AAPL action.

Read the rest here.

Quickly does not seem to be the signature of EU politicians….

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“The United States is facing a massive economic crisis that is both predictable and avoidable, says former North Carolina Senator Erskine Bowles, head of a former White House deficit-reduction commission.

According to Bowles, 100 percent of the tax revenue coming into the Treasury in 2011 went right out the door to pay for mandatory spending — such as Medicare, Medicaid and Social Security — and to pay the interest on the country’s massive $15.6 trillion national debt, Bowles says, according to Bloomberg View…”

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(CNN) — Israel, by necessity, has developed one of the most able security and intelligence apparatus in the world. There has been no necessity to develop a world-class political apparatus, however, and it shows.

In a single week, the Israeli army’s chief of staff, the former head of internal security and the former head of external security have all publicly questioned Israeli Prime Minister Benjamin Netanyahu’s judgment on Iran. While the current army chief spoke narrowly about the Iranian government, the former security officials directed their fire at Israeli politicians. On Friday, the former internal security chief told an Israeli audience, “I don’t believe in a leadership that makes decisions based on messianic feelings” — and he was speaking not of Iran, but of Israel.

Last week was Israel’s independence day, traditionally an occasion of pride and celebration. Instead, Israelis are in a deep funk.

At its founding in 1948, Israel seemed an improbable state. An ingathering of Jews from Eastern Europe, the Arab world and beyond had no real economy, no common language and no common idea of what it was to be an Israeli. Tensions between religious Jews and secular Jews, European Jews and Oriental Jews, and Jews and Arabs simmered for decades. They made accommodations in the name of survival, but few conceded the fight for control of the state.

To hear many Israelis tell it now, their nation has become an impossible state. Politics are more contentious than ever. The Israeli welfare state is in full view, as the religious, the poor and the religious poor make increasing demands on the state. Prices are skyrocketing, and the public feels squeezed. A diminishing number of Israelis serve in the army, which once prided itself on universal conscription.

Read more here:

“After a few months of decent data, most people suddenly think the U.S. economy is finally headed towards a recovery. Not Jim Rogers.

Rogers, who stopped by our offices the other day, thinks another economic slowdown is coming and that it will be much worse than what we’ve just experienced. Rogers says the good news we’re hearing about the economy is basically just propaganda from a government hoping to be re-elected this fall….”

 Full article

“FRANKFURT – On a recent trip to Germany, I was struck by two distinct narratives. One narrative features a robust German economy with low unemployment, strong finances, and the right competitive position to exploit the most dynamic segments of global demand. The other narrative describes an economy that is encumbered by never-ending European debt crises whose perpetrators seek to shift their responsibility – and their financing needs – onto Germany’s pristine balance sheet.

Both narratives are understandable. But they cannot co-exist forever. After all, it is difficult to be a good house in a deteriorating neighborhood. Either the neighborhood improves, or the value of the house declines. And it matters a great deal which narrative prevails – for Germany, for Europe, and for the global economy….”

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“WASHINGTON (Reuters)- New orders for U.S. factory goods in March recorded their biggest decline in three years as demand fortransportation equipment and a range of other goods slumped, government data showed on Wednesday.

The Commerce Department said orders for manufactured goods dropped 1.5 percent after a revised 1.1 percent rise in February.

Economists had forecast orders falling 1.6 percent after a previously reported 1.3 percent increase in February.

While the report showed broad weakness in March in a sector that has carried the economic recovery, anecdotal evidence suggests factories continued to expand as the second quarter started….”

Full report

“Banks and investors are jumping into the “junk” bond market with both feet, as the thirst for yield and the appetite for risk continue to rage.

Banks are lending and investors are buying to the point that some experts worry a bubble is forming.

“It’s not yet unduly dangerous, but we’re moving in that direction,” Wilbur Ross, the billionaire chief of buyout firm WL Ross & Co., tells The Wall Street Journal…”

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