Textron

Having been denied the ability to control guns by the democratically-controlled Senate last Wednesday in the biggest slap to the administration's face in a long time, Obama decided promptly to put as many guns as he possibly can in the hands of US soldiers and various non-Americans. First, it was the announcement that Obama would send more troops to Jordan to prepare for "stability operations" which is a euphemism for Syrian rebel support (much of it controlled by the otherwise dreaded Al Qaeda), and now we learn that Obama is set to announce the sale of $10 billion worth of weapons to Israel, Saudi Arabia and the United Arab Emirates. It appears that Obama, like a true expert of Sun Tzu, is well aware that the only way forward to a Nobel prize winning global peace, is under the barrel of a gun, or on the receiving end of a hot AGM-65 Maverick missile.

• Boston bomb probe looking at pressure cooker, backpacks (Reuters), Boston Bomb Clues Surface (WSJ) Forensic Investigators Discover Clues to Boston Bombing (BBG)
• China local authority debt ‘out of control’ (FT)
• Gold Wipes $560 Billion From Central Banks as Equities Rally (BBG)... or the same impact a 2% rise in rates would have on the Fed's balance sheet
• More Wall Street leakage: Stock Surge Linked to Lobbyist (WSJ)
• China's bird flu death toll rises to 16, government warns of spread (Reuters)
• Chinese official endorses monetary easing (FT)
• As global price slumps, "Abenomics" risks drive Japan gold bugs (Reuters)
• North Korea rejects US call for talks (FT)
• IMF Renews Push Against Austerity (WSJ)
• India Gains as Gold Plunge Boosts Scope for Rate Cuts (BBG)
• Germany set to approve Cyprus aid (FT)
• Easing Is an Issue as G-20 Meets (WSJ)

• Doubt Greets Bank of Japan's Easing Shift (WSJ)
• Japan hits back at currency critics (FT)
• Japan upgrades economic view for first time in eight months (Australian) - only to lower them in a few months again
• GOP critics get opportunity to grill Secretary Clinton on Benghazi (Hill)
• Global economy set for ‘slow recovery’ (FT)
• Obama to back short debt limit extension (FT)
• Unfinished Luxury Tower Is Stark Reminder of Las Vegas’s Economic Reversal (NYT)
• Draghi Says ‘Darkest Clouds’ Over Europe Have Subsided (BBG)
• High-Speed Dustup Hits a Clubby Corner (WSJ)
• U.S. Budget Discord Is Top Threat to Global Economy in Poll (BBG)
• Sir Mervyn King says abandoning inflation target would be 'irresponsible' (Telegraph)
• Spain Says It May Cover 13% of 2013 Funding in January (BBG)

• Obama takes offensive against Romney in debate rematch (Reuters)
• Obama Says Romney Words Aren’t ‘True’ in Second Debate (Bloomberg)
• Obama takes Romney head-on in debate (FT)
• And another joins the club: Thailand Unexpectedly Cuts Rate as Global Outlook Worsens (Bloomberg)
• PBOC Injects Less Cash (WSJ)
• Japan to Hold Special Cabinet Meeting After Economy Downgraded (Bloomberg)
• Greek Coalition Duo Reject Labour Moves Proposed by Troika (WSJ)
• Opposition wanes to Spanish aid request (FT)
• RBS to Exit U.K. Asset Protection Plan After $4 Billion Fees (Bloomberg)
• Spain Retains Investment Grade Credit Rating From Moody’s (Bloomberg)
• US diplomat asks Japan, ROK to resolve islands spat (China Daily)
• Stagnation not due to austerity, says OBR (FT)

We have long discussed the colossal maturities pending among the state-sponsored FDIC-backed TLGP bonds due over the next few months but adding the financials exposure to other investment grade corporate bonds shows some incredible supply is pending. Bloomberg noted the fourth quarter alone has over $200bn coming due - based on a search of their database.

Here is the updated 13F summary just filed from Third Point as compared to the holdings as of March 31. We leave readers to do their homework on how Dan Loeb is positioning himself per his holdings as of 45 days ago. Stakes completely cut since March 31 include Apple ($69MM), Aspen Tech ($51MM), Carefusion ($20MM), CBS Corp ($25MM), KKR ($20MM), Madison Square Garden ($2MM), PHH ($65MM), Smurfit-Stone ($87MM), Tesoro ($67MM), Textron ($37MM), Viewpoint Fin ($21MM) and YPF SA ($45MM).

Even as the situation in Tunisia continues deteriorating broadly, the country realizes that it needs its shiny assets back, and needs them fast, regardless of edibility or recent market corrections. As such it has just issued an international arrest warrant for deposed president Ben Ali. From the BBC: "Mr Chebbi said Mr Ben Ali should be tried for property theft and transferring foreign currency." We can't repeat enough: any dictatorial or Hewlett Packardian banana republic should make sure all of its gold is secure. In fact, since we are positive all of the gold, pardon, tungsten held at Ft. Knox is right there, it may be a good idea to put tracker beacons in the fake material. We are confident that sooner or later it will lead the broader population to not only the Textron vehicle used for one way transit, but to which non-extradition countries will soon be hosting our very own versions of the Tunisian President.

Norway's Auditor General recently issued a report to the parliament that was highly critical of Norges Bank Investment Management (NBIM), the arm of the central bank which runs the $512 billion Government Pension Fund.

The following is Part I to David DeGraw’s new book, “The Road Through 2012: Revolution or World War III.” This is the second installment to a new seven-part series that we will be posting throughout the next few weeks. You can read the introduction to the book here. To be notified via email of new postings from this series, subscribe here.

• Asia stocks mixed after Fed said it was ready to do more to recharge the US economy.
• Fed hinted it is becoming uneasy about the outlook, but deferred taking any new steps.
• Fed suggest it could buy more bonds; Way eased for new programme of QE.
• Iceland cuts base rate by 0.75% to 6.25%.
• Las Vegas home sales fall as area unemployment lingers near 15%
• Oil hovers above $75 in Asia after report shows US supplies unexpectedly rose last week.
• UK Business Secretary plans to announce a review of takeovers, executive pay.

• Euro weakens versus Dollar, Yen on speculation tests to reveal loan losses.
• 3M net income climbs 43%; raises 2010 EPS view to $5.65-5.80 (prev $5.40-5.60).
• Adidas posts 2Q results 'significantly above' market expectations.
• Akzo Nobel says net profit rose 76% in 2Q thanks to sales growth.
• Amazon's Q2 earnings rose 45% to $207M on a 41% increase in sales of $6.57B.
• AmEx's Q2 profit rose to more than $1B from $337M, and Capital One's increased to $608M from $223M.
• AT&T's Q2 net income jumps 25% to $4.0B; adds 1.6 million wireless accounts.

IG is at its widest (on-the-run adjusted) since 5/28/09 today (and we note that the last time IG was here, HY was over 1000bps) - but different portfolios make the comps a little tricky. Across the broad universe of credit, 5Y was pretty much unch on aggregate as 3Y underperformed with APC, RIG, and HAL the worst performers on a DV01-adjusted basis (along with UAL and CONTI). No clear ratings-related theme today as cohorts were very mixed as we saw bond volumes low once again but underperforming where we did see them (smells like Monty Python's Holy Grail - investors bringing out the dead as markets show any appetite for risk). FINLs and Energy were the worst performing sectors by far today with Utilities and Capital Goods the best performers. One day to go til the greatest sporting event in the world (aside from my eldest daughter's U10 Soccer matches) and we have started to prepare ourselves - bets placed (in my home country of course or that would be illegal) and Fantasy Squad selected. Ennngggeeerrrrlaaannnddd.

Spreads ended the day notably wider (HY wider than 'flash-crash' close) with stocks managing to slightly underperform on a beta-adjusted basis as broad-based selling in single-names and indices made today feel a little more 'real' than recent swings. There are a few signals of regime change today that make us nervous even with potential clarity from Germany and FINREG due very soon. After some midday covering on EUR (eh hem intervention), the cloture vote triggered more selling and that weakness gathered pace and stocks and credit closed considerably weaker. ES_F closed at the lows of the day and while credit was weak, equity's beta-adjusted performance was notably worse than credit's on the day. HY, which traded over 690bps intraday (shy of the intraday wides of 706bps on 5/6), closed wider than the 'flash-crash' day's close taking it back to end NOV09 wides. IG was weak but remained inside of the 5/6 closing levels. HY-IG decompressed further and we hop those clients who followed us into this trade move those stops up to at least breakeven now (with a target of 600bps).

Spreads were broadly wider today with breadth very negative as single-names caught up to the index underperformance from yesterday. Despite what appeared a better-than-expected jobs print, derisking was rife once again and European financials led the way. High beta single-names underperformed low-beta dramatically and curves generally flattened at the short-end and steepened at the long-end (though liquidity out from 5Y was less than average).

As an aside, it may be time for IG accounts to take a look at NRUC again. May be getting ready to blow again

• Administration pledges support for Greece while market regulators launch trading investigation.
• Calif. AG sues former pension fund officials for fraud.
• E. coli outbreak sickens 19 people in 3 states.
• Euro zone summit to try to cover debt crisis.
• Geithner urges Congress to equip regulators.
• German lower approves a law to free up Germany's contribution to a multi-billion euro rescue package for Greece.
• Jobs expected to grow in April; Wall Street tremors over debt crisis could limit future gains.