Beazer

• U.S. Wants Criminal Charges for RBS (WSJ)
• Bernanke Seen Buying $1.14 Trillion in Assets in 2014 (BBG)
• Irish banks at mercy of international paymasters (Reuters)
• Do badly, and we will let you do even worse: Rehn Signals EU May Ease Spain Budget Goal in Austerity Retreat (BBG)
• Too Soon to Celebrate for Europe's Banks (WSJ)
• Army says political strife taking Egypt to brink (Reuters)
• Media Firms Probed on Data Release (WSJ) - No Criminal Charges Seen
• Japan’s Government Proposes First Spending Cut in 7 Years (BBG)
• Nazi Goebbels’ Step-Grandchildren Are Hidden Billionaires (BBG)
• Goldman seeks to reduce China exposure (FT)
• More than 70% of Chinese airports generate losses (People's Daily)

• Jefferies to be bought by Ian Cumming's Leucadia in an all-stock deal for $3.59 billion or about $17/share (WSJ)
• FBI Scrutinized on Petraeus (WSJ)
• Identity of second woman emerges in Petraeus' downfall (Reuters)
• SEC staffers used government computers for personal use (Reuters)
• Japan edges towards fifth recession in 15 years  (FT)
• Europe Finance Chiefs Seek Greek Pact as Economy Gloom Grows (BBG)
• Americans Say Europe Lesson Means Act Now as Austerity Will Fail (BBG) - of course it would be great if Europe had ever implemented austerity...
• Greece battles to avert €5bn default  (FT)
• You don't bail out the US government for nothing: No Individual Charges In Probe of J.P. Morgan (WSJ)
• Israel Warns of Painful Response to Fire From Gaza, Syria (BBG)
• Greece's far-right party goes on the offensive (Reuters)
• Don’t fear fiscal cliff, says Democrat  (FT)
• Apple Settles HTC Patent Suits Shifting From Jobs’ War (BBG)
• Man Set on Fire in Argentina Over Debt (EFE)
• Iraq cancels $4.2-billion weapons deal with Russia over corruption concerns (Globe and Mail)
• An Honest Guy on Wall Street (Bloomberg)

• OECD: Japan Public Debt in 'Uncharted Territory' (WSJ)
• Germany holds firm on Greece as IMF pressure mounts (Reuters)
• Schäuble and Lagarde clash over austerity (FT) - it would be great if someone actually implemented austerity...
• Merkel hints at tax cuts for growth boost (FT)
• Hollande Robbed of Growth Engine as Companies Cut Investment (BBG)
• Romney Narrows Gap With Obama in Swing State Polling (BBG)
• Sluggish Growth Seen Into Next Year (WSJ)
• Softbank Founder Has 300-Year Plan in Wooing Sprint Nextel (BBG)
• Singapore Forgoes Currency Stimulus on Inflation Risk (Bloomberg) - as does China day after day
• Sharp Jabs Dominate Combative Vice-Presidential Debate (WSJ)
• Japan and China Agree to Hold Talks on Rift After Noda Call (Bloomberg)

Stop a Wells Fargo Eviction at the Tehiva/Phillips’ Home 5305 Hana Hwy Monday Jan 2...

• BOJ becomes 'wild card' as Kan may demand stimulus after Yen intervention.
• EU new car registrations fall 13% YoY in August.
• Geithner says US examining ways to pressure China into faster Yuan rise.
• Greece rules out possibility of default; FM says restructuring would ‘break’ Eurozone.
• India hikes rates to contain inflation; move signals end of loose monetary policy.
• Most Asian stocks fall, led by mining shares; Japanese exporters advance.
• Naked-short sellers, derivatives traders face European Union restrictions.

• Asian shares mixed on Friday, weighed by caution ahead of key U.S. jobs data.
• China's stocks decline on inflation, policy outlook; Developers retreat.
• European stocks advance ahead of jobs data; financial-sector earnings provide a lift.
• US Same-store sales rose 2.9% in July vs. cons est. of 3.1%: Retail Metrics.
• AIG's operating profit rises 17%.
• Allianz's Q2 profit down 46% on lower income from own investments.
• Beazer's orders falls 33%; posts loss of $27.8M despite $55.2M in debt-retirement gain.

Stocks were the worst performers on a beta-adjusted basis relative to IG and HY in the US as EUR seemed to lose it status as worst of a bad bunch for a week as SovX and FINLs managed decent gains on the week. It seems our view of the credit market anticipating a turn in the cycle was correct and the consumer-sensitive sectors have seen equity play catch up to credit's warning signs from MAY. Many sectors are getting closer to fair across the capital structure but Leisure, Energy, Telecoms, and Consumer NonCyclicals still have room to drop in equities relative to credit's perception of risk. Tech, if anything, looks a little overdone in its sell-off in equities but this is perhaps due to less liquid credit and more highly levered Tech plays in stocks.

Today's action in CDS land was negative pretty much across the board with breadth extremely negative as only a handful of single-names managed to eke out gains as there was a quite evident up-in-quality shift. HY names handily underperformed IG names on the day. High beta IG names also underperformed significantly as off-the-run indices underperformed on-the-run once again and the Top 100 CDO referenced names significantly underperformed the broad market.

Paulson & Co's March 31 13F has been released. The fund is increasingly playing the barbell strategy, adding materially to both financial and gold stakes (both new and existing) across the board. While there were no new additions in the list of top 10 names, Paulson did add to some key names: the fund upped its stake in Bank of America by 16.8 million shares, bringing total value in BofA to $3 billion at 3/31 (combined with selling 3 million BAC Warrants); Paulson also has continued to increase its stakes in various gold producers, including Anglogold and Kinross. Other names added to included XTO, Hartford Financial, CBRE, First Horizon, and Macerich. The firm established new positions in MGM (40 million share), Apache (3.4 million), Mylan (11.4 million), Family Dollar (6 million), Devon Energy (3.3 million), Novell (25 million), Novagold (20 million), Supermedia (2.6 million), Dex One (3.7 million), Smith International (2 million), Boyd Gaming (4 million), Randgold (0.5 million), Iamgold (2.7 million), Beazer (5 million), Barrick Gold (0.4 million), and First Midwest (0.4 million). In short, Paulson added 4 new gold exposures in addition to its massive $3.4 billion stake in GLD, Anglogold ($1.7 billion), Kinross ($567 million), and Gold Fields ($297 million). Stakes eliminated completely consist primarily of various M&A arb deals that closed: Burlington Northern, Dr Pepper, Chattem, IMS Health, Encore Acquisition, Fifth Third, Kraft, Liberty Media, New York Community Trust, Pepsi Bottling and Pepsi Americas, Philip Morris, Sun Micro and Valley National. Of Paulson's $21 billion in total notional holdings at March 31, 30% were held in names directly related to gold extraction, production or gold ETFs.

• Crude oil little changed after falling to six-week low on stronger dollar
• Nigerian President Umaru Yar'Adua Dies, Aged 58
• Oil spill threatens price for jumbo crab cakes at top-ranked U.S. eateries
• U.S. retailers may report smallest monthly sales increase since November after shutting it because of a leakage on May 2.
• Alcatel-Lucent shares plunge after quarter's loss is double estimates
• BNP Paribas 1Q net rises 47% on fortis assets and lower provision
• BP plans to lower containment dome on to seabed of gulf of Mexico

Spreads were mixed today with the major US indices managing modest gains as HY outperformed IG. This spread compression is optically misleading though as, in general, curves flattened in 3s5s and more technically indices outperformed weak single-names as the theme of the day appeared to be skew compression and profit-taking. Modest short-covering and single-name (sovereign and corporate) repricing was the mood of the day and while we rallied it seemed like there was very little conviction to it (despite IG closing at the day's tights) - though well off yesterday's tights.

Spreads were considerably wider across the board today as the peripheral European nation contagion, that we have discussed, started to spread. The scrambling of debt investors dominated any macro data or earnings today as risk appears to be getting repriced fast and furiously and Main traded wide of IG (for the first time on record) as dispersion rose, low beta underperformed, breadth was terribly negative, and movements were considerable in single-name CDS.

Spreads managed to hold onto modest widening today in the US as IG underperformed HY, indices underperformed intrinsics, single-name activity was extremely muted, and low beta underperformed high beta. Notable underperformance in Europe, spreading idiosyncratic sovereign risk to SovX to FINLs to Main and up to XOver was not enough to upset the optimistic US investor today, though it was one of the least convicted days in a long time.

• Abu Dhabi is set to award almost $2B in onshore oil service contracts.
• Most Asian stocks decline as European deficit concerns increase.
• China's January surge in lending probably exceeded fourth quarter's total.
• Copper imports by China may halve from last year’s record.
• Dow closes below 10,000 for first time in 3 months.
• ECB may be forced to delay exit of emergency lending measures amid Greece concern.

Nearly a year ago, Zero Hedge first brought broad public attention to the nebulous aspects of the dark and dirty underworld of the market, exposing the "second-tier" of privileged market participants, consisting of quant traders, high frequency trading, flash trading, sponsored access, co-location, latency arbitrage, Morgan Stanley's discussed-below PDT operation, and many other topics (check our Glossary for much more). In April, Zero Hedge wrote an open letter to the quant community, pleading for more transparency absent which the eventual result would be "larger, systematic problems at the largest, most sophisticated quant managers." Since April, the impact of market neutral quants has progressively declined, as factors, one after another, have failed, and market neutral indexes are probing multiyear lows (HSKAX). The question of who has stepped in to replace the whales' liquidity provisioning is still unanswered, although the explosion of small, inexperienced 3 man quant shops consisting of a math Ph.D. and two programmers, may be part of the answer. The integration of Goldman within the structure of the NYSE and other exchanges, may be another: at last check, Goldman is still a key component of the NYSE's SLP program, regarding which there is still barely any information, despite promises by NYSE representatives to the contrary (and with Goldman's prop operation potentially terminally crippled, the question of how extensively intertwined prop trading is with liquidity provisioning, will be a major topic going forward). Today, the WSJ's Scott Patterson takes advantage of the recent furor over quants and in extensive article promotes his new book "The Quants" in which "he suggests how this new breed of mathematicians and computer scientists took over much of the financial system—and the damage they inflicted in the 2007 meltdown." We are glad that, after nearly a year of writing about it, the topic of the market systemic threat presented by a small subcommunity of quantitative traders is finally emerging on the mainstream scene.