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Divide grows on asset purchases. Fed officials are increasingly divided over the efficacy and appropriate duration of monthly asset purchases, speeches delivered this week indicate. Complicating matters is economic data which at times seems to convey conflicting messages regarding the health of the nascent recovery. For instance, while the employment landscape may be improving, some of that improvement may be attributable to discouraged workers exiting the labor force. This week, the heads of the Philadelphia, Dallas, and Richmond Federal Reserve Banks all suggested bond buying should be tapered immediately while Boston's Eric Rosengren maintained his stance in favor of the purchases. Of particular note is San Francisco Fed Chief John Williams, who said the Fed could reduce the pace of asset purchases "perhaps as early as this summer," assuming conditions remain stable.

J.C. Penney misses, looks forward. "One of our top priorities this year is to restore traffic," Myron Ullman said Thursday evening after J.C. Penney (NYSE:JCP) delivered bottom line results that missed analysts' estimates. JCP lost $348M during FQ4, for an adjusted per share loss of $1.31, worse than the Street expected. Revenues and same-store sales fell 16% and 17% respectively, in line with preliminary results announced earlier this month. The company managed to burn through almost $1B in cash during the period. On the conference call, Ullman identified 30-40 areas that need improvement, but noted the company "is looking forward, not back."

Top Stock News
Dell delivers mixed report. Dell (NASDAQ:DELL) said adjusted net income fell 51% Y/Y to $372M or $0.21 per share in Q1, a quarter which saw battle lines drawn between Carl Icahn/Southeastern Asset Management and Michael Dell/Silver Lake over a proposal to take the company private. Although the bottom line results missed estimates, the report was mixed overall, as PC sales fell 9%, while revenue from enterprise solutions, services, and software rose 12%. Y/Y total revenue and desktop sales declines were narrower than those seen in Q4. The company gave no guidance.

Autodesk misses, guides below consensus. Autodesk (NASDAQ:ADSK) reported earnings and revenue that missed analysts' expectations after the bell Thursday. The company blamed a "mixed global economy" and a "weak April" for the FQ1 miss. FQ2 guidance is for revenue of $550M-$570M and EPS $0.39-$0.44, below a consensus of $597.5M and $0.51. Revenue is now expected to grow ~3% in FY14, below analysts' 5.9% projection. Two product weak spots: Platform Solutions & Emerging Business and Media & Entertainment, where revenues fell 6% and 8% respectively.

Nordstrom disappoints. Nordstrom (NYSE:JWN) reported quarterly results that missed across the board Thursday evening as Q1 EPS of $0.73 and revenue of $2.7B both fell short of the Street's expectations. Net earnings fell 2.7% Y/Y as higher input costs masked slightly better revenue and the company cut its FY14 total sales and same-store sales guidance ranges by half a percentage point each, saying it now expects 4% to 6% growth, and 3% to 5% growth, respectively. For the current period, it projects its EPS to grow by more than 7%, or around $0.86, just below the $0.87 projected by analysts.

U.K. parliament to question Amazon. The British parliament will call Amazon (NASDAQ:AMZN) back to testify before the Public Affairs Committee to explain how it justified paying just $9M in income tax on some $23B in sales to British customers over the past six years, Reuters said Friday, citing lawmakers. The company claims it should only pay tax in Luxembourg as it operates a single business in Europe from there, rather than multiple independent subsidiaries across the region. Reuters suggests this is a mischaracterization.

Mason sues Tuesday Morning. Tuesday Morning's (NASDAQ:TUES) ex-CEO Kathleen Mason filed suit against the company Thursday, claiming it discriminated against her when she developed breast cancer. Mason alleges the board of directors "regarded her as being disabled" after her diagnosis and "overreacted" when it dismissed her. Mason has rejected a $1.5M settlement offer.

Top Economic & Other News
IMF and BIS express doubts about potency of further easing. A new IMF study says central bank bond buying risks succumbing to a principle taught to first-year economics students around the world: the law of diminishing returns. Extraordinary policy maneuvers were able to restore stability to financial markets in the wake of the crisis and may still "be appropriate in some circumstances," but there "may be diminishing returns" going forward, the study said. Similarly, the general manager of the BIS suggested in a speech Thursday that the policy mix should be refocused "to rely more on repair and reform" in order to avoid "overburdening monetary policy."

In China, wages grow at healthy pace. Real, inflation adjusted wages at nonprivate Chinese companies (state-owned and public enterprises) grew 9% in 2012, up from 8.5% in the previous year, while real wages in the private sector rose 14%, China's statistics bureau said Friday. On a nominal basis, wages grew at a double-digit pace even as the pace of economic growth decelerated. While the data show the country is continuing to push towards establishing "a normal wage increase system," manufacturers could feel the heat should wage growth continue to outpace economic growth going forward.

Gold has tough week. Gold continued to slide Friday, adding to losses that total 4.4% so far this week — the SPDR Gold Trust (NYSEARCA:GLD) has shed 4%. Multiple factors have conspired to weigh on prices, including comments from San Francisco Fed Chief John Williams regarding a possible late summer pull back in the pace of the Fed's asset purchases and data showing George Soros was a seller in Q1. Meanwhile, a lower-than-expected reading on U.S. consumer prices Thursday curbed investors' appetite for the traditional inflation hedge. Comments from Credit Suisse's head of commodities research Ric Deverell didn't help matters: "Gold is going to get crushed," he told reporters in London.

European car market firms thanks to U.K. sales. New car registrations in Europe rose 1.8% in April, breaking a horrendous streak of monthly declines that dates back to September of 2011. However, even a cursory glance at the numbers reveals that the devil (as always) is in the details. U.K. auto sales jumped 15%, logging their best month since 2008. Stripping out that rather anomalous (at least in terms of the regional big picture) data point shows the European car market contracting again, albeit by a small margin.

U.S. economy reaches escape velocity, poll shows. A worldwide poll of investors, analysts, and traders conducted by Bloomberg shows more than two thirds believe the U.S. economic recovery is "sustainable," while only a little over a quarter of those surveyed see a return to recession within the next two years. Key drivers of the upbeat forecast include increasing energy independence, rising home values, and "a pause in partisan budgetary battles in Washington" (there's agreement in Washington?). Housing, it seems, is the main talking point: "Anyone who isn't long real estate housing is a moron," Axiom Management's Stan Jonas is quoted as saying.

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Today's Markets:
In Asia, Japan +0.67% to 15138. Hong Kong: Closed. China +1.38% to 2282. India +0.19% to 20286.
In Europe, at midday, London +0.34%. Paris +0.34%. Frankfurt +0.13%.
Futures at 7:00: Dow +0.31%. S&P +0.33%. Nasdaq +0.2%. Crude +0.48% to $95.64. Gold -0.68% to $1377.00.

Today's economic calendar:
9:55 Reuters/UofM Consumer Sentiment
10:00 Leading Indicators
1:45 PM Fed's Kocherlakota: ‘The Future of Financial Regulation and Monetary Policy’

Notable earnings before today's open: DCI

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