EU concerns push the euro to close to a two-year low. (Reuters)

Goldman Sachs (NYSE: GS) will invest $40 billion into alternative energy in the next decade. (Reuters)

TV networks battle with Dish Network (NASDAQ: DISH) over a DVR that can skip ads. (Reuters)

Apple (NASDAQ: AAPL) CEO Tim Cook gives up $75 million in dividends on his stock holdings. (Reuters)

Warren Buffett’s Berkshire Hathaway (NYSE: BRK-B) may buy more newspapers. (Reuters)

Goldman Sachs and Morgan Stanley (NYSE: MS) loan shares to short sellers who want to hedge Facebook’s stock. (WSJ)

U.S. bank lending falls in the first quarter, a possible sign of economic slowing. (WSJ)

Toyota (NYSE: TM) will push further into emerging markets. (WSJ)

Comcast’s (NASDAQ: CMCSA) NBCUniversal division may buyout Microsoft’s (NASDAQ: MSFT) part ownership in MSNBC.com. (WSJ)

Japanese power companies invest in U.S. shale gas to help replace nuclear power. (WSJ)

Yahoo! (NASDAQ: YHOO) releases an Internet browser call Axis, which will compete with Google’s (NASDAQ: GOOG) product. (WSJ)

Spain is concerned about a run on its banks. (NYT)

Large European institutional funds begin to sell euro assets. (FT)

Italian Prime Minister Mario Monti says most leaders in the region back regionwide bonds. (Bloomberg)

Douglas A. McIntyre

Costco Sales

Costco (NASDAQ: COST) continues its extraordinary run as the most successful big-box retailer. Its club membership system has bettered the more traditional store operations of Walmart (NYSE: WMT) and Target (NYSE: TGT). Net sales for the quarter that ended May 6 increased 8% from last year to $21.85 billion. Net sales for the first 36 weeks increased 10% to $65.54 billion. Same-store sales were up 5% for the most recent quarter. Costco’s shares trade at $83.50, up from a 52-week low of $70.22. Costco’s revenue per employee was $569,488, compared to $206,117 for Walmart.

Best IPOs

A quick review of the 25 largest U.S. IPOs ever shows how badly Facebook has done in early trading. Most of the companies on the list have tremendous revenue, traditional business plans that they have been able to freshen, and large profits. Among these are Visa (NYSE: V), UPS (NYSE: UPS), General Motors (NYSE: GM), MetLife (NYSE: MET) and Prudential Financial (NYSE: PRU). The thing that stands out most about the list is how few tech companies it has. Google (NASDAQ: GOOG) is on the list, of course. But most of the companies are financial ones or firms that are manufacturing based. (Data from CapitalIQ.)

Facebook Investigation

The debate over whether some large investors were warned about a revenue downgrade of Facebook (NASDAQ: FB) continues. Several media have carried stories about Morgan Stanley (NYSE: MS) and Goldman Sachs (NYSE: GS) passing on numbers that showed lowered forecasts for earnings and revenue in the second quarter and the full year. The attorney general of Massachusetts has begun an investigation into whether information was selectively disclosed. Morgan Stanley insists that it was in compliance with all the regulations that set rules for IPO behavior. Even if Morgan Stanley makes its case successfully, the news likely will keep individual investors out of the market. Many of these investors have turned to mutual funds, exchange traded funds and fixed income paper to protect their interests. That behavior has been reinforced by the Facebook IPO.

Douglas A. McIntyre

The attorney general of Massachusetts has begun an investigation into whether information was “selectively disclosed”. Morgan Stanley insists that it was in compliance with all the regulations that set rules for IPO behavior. Even if Morgan makes its case successfully, the news is likely to keep individual investors out of the market. Many of these investors have turned to mutual funds, ETFs, and fixed income paper to protect their interests. That behavior has been reinforced by the Facebook IPO

Douglas A. McIntyre

Facebook IPO Mess

The Facebook (NASDAQ: FB) IPO mess has worsened considerably in just 24 hours. The federal government will examine why analysts at Goldman Sachs (NYSE: GS) and Morgan Stanley (NYSE: MS) lowered their financial forecasts for the social network just ahead of the IPO. The concern is that favored clients knew about the changes, but the broader investment world did not. Nasdaq claims that if it had known how badly its technical glitches would be, it would have suspended the IPO until there was full confidence shares could trade smoothly. There are also rumors that Facebook’s CFO David Ebersman decided at the last minute to increase the number of shares that would be offered by 25% without enough conversation with his entire team of bankers. Ebersman discussed his plans with lead underwriter Morgan Stanley. But the decision caught many large investors by surprise and caused them to wonder whether the market had enough of an appetite for all of the new shares. Based on how Facebook has traded since the IPO, the answer is no.

Fiat and Mazda

Fiat and Mazda will build a small convertible together. Fiat is the controlling shareholder of Chrysler. The deal is an example of how large car companies that face slow sales in Europe and slowing sales in China have started to band together to save costs. General Motors (NYSE: GM) and Peugeot plan to jointly operate production facilities in Europe. GM’s Opel division is bleeding money in the region. Peugeot is one of the most financially troubled European car companies. GM also has made in investment in Peugeot. And trouble is probably what binds Fiat and Mazda together. Fiat’s sales in Europe have collapsed. Mazda sales run well behind Japanese rivals Toyota (NYSE: TM), Honda (NYSE: HMC) and Nissan. Nissan already has a close alliance with Renault. Fiat and Mazda do not have the capacity to easily develop many new models on their own.

Getty Images for Sale

Private equity firm Hellman & Friedman, which owns Getty Images, has begun the process to sell the company it bought for $2.4 billion in 2008. It reckons using investment banks Goldman Sachs and JP Morgan (NYSE: JPM), it can get $4 billion. Getty has one of the world’s great inventories of photos, some of them artistic icons taken by photographers years ago. The company gets a ready stream of licensing revenue for use of its inventory. The Financial Times points out that there have already been a number of deals in the sector. That by itself may hurt interest and bring down the price that outside investors would pay.

Douglas A. McIntyre

The NASDAQ claims that if it had known how badly its technical glitches would be, it would have suspended the IPO until there was full confidence shares could trade smoothly.

There are also rumors that Facebook’s CFO David Ebersman decided at the last minute to increase the number of shares that would be offered by 25% without enough conversation with his entire team of bankers. Ebersman  discussed his plans with lead underwriter Morgan Stanley. But, the decision caught many large investors by surprise and caused them to wonder whether the market had enough of an appetite for all of the news shares. Based on how Facebook has traded since the IPO, the answer is “no”

Douglas A. McIntyre

According to a report at Business Insider:

But, just as important, news of the estimate cut was passed on only to a handful of big investor clients, not everyone else who was considering an investment in Facebook.

That’s a big no-no because such information is “material” according to the SEC and selectively disseminating news about a company implies insider trading.

The SEC, along with ahandful of other government agencies, have begun investigating the Facebook IPO. As the days pass, more goodies land on their plates.

Shares are down about -2.5% just before noon, at $33.34.

Paul Ausick

Avon Products Inc. (NYSE: AVP) Cut to Sell at UBS.

Bank of America Corporation (NYSE: BAC) Cut to Market Underperform at JMP Securities.

Best Buy Co. (NYSE: BBY) Cut to Hold at BB&T.

Boeing Co. (NYSE: BA) Raised to Buy at Argus.

Donaldson Company. Inc. (NYSE: DCI) Reiterated Outperform and raised estimates at Credit Suisse.

Facebook, Inc. (NASDAQ: FB) Started as Positive at Susquehanna.

Goldman Sachs Group Inc. (NYSE: GS) Cut to Market Underperform at JMP Securities.

Herbalife Ltd. (NYSE: HLF) Reiterated Buy at Argus.

Kirkland’s, Inc. (NASDAQ: KIRK) named Bear of the Day at Zacks.

Morgan Stanley (NYSE: MS) Cut to Market Underperform at JMP Securities.

Myriad Genetics (NASDAQ: MYGN) Raised to Outperform at Leerink Swann.

Nuance Communications (NASDAQ: NUAN) Started as Neutral with $25 target at Goldman Sachs.

Petrobras (NYSE: PBR) Raised to Buy at Societe Generale.

Robert Half International (NYSE: RHI) named as Bull of the Day at Zacks.

Ross Stores, Inc. (NASDAQ: ROST) Cut to Hold at Canaccord Genuity.

Safeway (NYSE: SWY) Raised to Buy at Citigroup.

Splunk, Inc. (NASDAQ: SPLK) Started as Overweight at Barclays.

TJX Companies (NYSE: TJX) Cut to Hold at Canaccord Genuity.

Zebra Technologies (NASDAQ: ZBRA) Cut to Neutral at JPMorgan.

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JON C. OGG

“Economists responding to the latest NABE Outlook Survey expect moderate growth in the near-term with improvement coming in the post-election year,” said NABE Outlook Survey Chair Shawn DuBravac, chief economist at the Consumer Electronics Association.

Almost all key indicators, particularly housing and unemployment, will improve, but not really by much, if the numbers are taken one by one. Monthly jobs added are expected to be 188,000 for nonfarm payrolls. This is up from 170,000 in the forecast done a quarter ago. In 2012, housing starts are expect to move up 18% to 720,000 and then to 850,000 in 2013. None of these numbers, if reached, would be enough to drive the U.S. economy higher quickly.

Low Gas Prices

Gasoline prices reached a three-month low, according to the carefully watched Lundberg Survey. Prices nationwide for regular fell to $3.7833 for the two weeks that ended May 19. This represents a drop of 6.1 cents from the two weeks prior. The data are based on a canvassing of 2,500 stations. Lundberg reports that prices peaked in the two weeks that ended April 6, when they were only four pennies short of $4. AAA Fuel Gauge data supports Lundberg. It showed yesterday’s price for regular gas based on the nationwide average at $3.689, down from $3.727 a week ago and $3.871 a month ago. The national average for a gallon of premium finally has dropped below $4 to $3.991, AAA reports. As the summer driving season begins next weekend, prices were supposed to rise. But WTI crude is below $92 and falling. Less than three months ago, the price was higher by more than $10. Based on anecdotal evidence, oil demand from China has fallen. Of course, the recession in Europe has killed oil demand as well.

Whither the Dow?

The DJIA starts the week at 12,269.38. Plenty of forecasters believe it will fall to 11,000 long before its makes it back to 14,000. The index is down 7% in less than two months. The so-called headwinds against stocks number at least three. The most obvious is trouble in Europe. The recession there not only will hurt the demand for goods and services from U.S. companies, there could be bank balance sheet fallout for some American financial firms, if Greece defaults. China’s economy also has hit a snag, making it another region where demand for U.S. products likely will falter. Last, key data about the U.S. economy has been relatively poor. The number of jobs added per month has dropped well below the 200,000 pace set earlier this year. Housing starts have improved somewhat, but home prices have not. If there will be any stimulus added to the economy by the federal government, it will not be until after the election — which means next year. And both individuals and companies are uncertain about what their tax status will be. Congress could decide to allow relatively low tax rates, which have been in place since the Bush administration, to expire.

Insider Trading Trial

Rajat K. Gupta, a former head of McKinsey & Co. and director of Goldman Sachs (NYSE: GS), will go on trial for insider trading. He will sit in federal district court today and hear the charges against him read. Gupta allegedly gave Raj Rajaratnam, former head of the Galleon Group hedge fund, confidential information about two companies. The information helped create $63 million in illegal trading profits. Much of the evidence presented will be based on phone bills that show Gupta’s calls, during which he may have talked about the confidential matters. Other evidence is based on his trading records. A number of legal experts do not think there are enough smoking guns to show Gupta’s guilt. U.S. prosecution of insider trading would be badly hurt if a prized target like Gupta gets off.

Douglas A. McIntyre

The heads of Samsung and Apple (NASDAQ: AAPL) will discuss a settlement to patent wars between the two companies over smartphone IP. (Reuters)

General Motors’ (NYSE: GM) Opel faces a harsh reaction from workers arising from plant closures. (Reuters)

Nasdaq (NASDAQ: NDAQ) will change its trading systems after trouble with the Facebook (NASDAQ: FB) IPO. (Reuters)

Google (NASDAQ: GOOG) says its has Chinese approval to buy Motorola Mobility (NYSE: MMI). (Reuters)

Dalian Wanda Group, based in China, will buy the AMC movie chain for $2.6 billion. (WSJ)

Greece’s conservative parties, which favor austerity, begin to show improvements in U.S. polls. (WSJ)

The European Union’s José Manuel Barroso says Greece should expect pressure over austerity to remain high despite indications otherwise from the G8 meeting. (WSJ)

Some accountants say that Chesapeake Energy (NYSE: CHK) costs misrepresent the firm’s financial position. (WSJ)

The G8 meeting and the opinions of EU leaders may press Merkel to allow Europe to aid some large banks in the region. (WSJ)

UK and US bank regulators prepare for any failure of several financial firms, which include Goldman Sachs (NYSE: GS), JP Morgan (NYSE: JPM) and Barclays (NYSE: BCS). (FT)

China begins to cancel or delay some commodities imports — another sign its economy has slowed. (FT)

UK Prime Minister David Cameron says the EU should prepare for the departure of Greece. (FT)

Douglas A. McIntyre

Gupta allegedly gave Raj Rajaratnam, former head of the Galleon Group hedge fund, confidential information about two companies. The information helped create $63 million in illegal trading profits. Much of the evidence presented will be based phone bills that show Gupta’s calls in which he may have talked about the confidential matters. Other evidence is based on his trading records.

A number of legal experts do not think there are enough smoking guns to show Gupta’s guilt. US prosecution insider trading would be badly hurt if a prized target like Gupta gets off.

Douglas A. McIntyre