Market Talk

- Several big name hedge-fund managers are placing bullish bets on Citi (C) and Bank of America (BAC). “Paulson, Soros, Falcone, Tepper, Ackman, Ainslie, Loeb — you name it, they own one or the other…or both,” Joshua Brown writes at The Reformed Broker. “And they own them in size.” But why the sudden interest?

- Goldman Sachs (GS) may be on the verge of resolving SEC’s fraud charge by agreeing to a settlement worth hundreds of millions of dollars, according to FT. But FusionIQ CEO Barry Ritholtz is still perplexed why GS chose to fight this charge in the first place. “Even if GS were to prevail in court, they have already lost. The reputational damage is already measured in billions of dollars, and will last years if not decades.”

- Furious decline in newspaper ad sales eased in 1Q, but struggling industry still isn’t showing signs of rebounding. “The less-awful sales in the first months of this year gave publishers the gift of a bit more time to fundamentally reposition their businesses,” Newsosaur blogger Alan Mutter says. “But there is nothing in the first-quarter numbers to suggest that the storm for newspapers has blown over.”

- S&P 500 has averaged a 0.12% gain on the Friday before Memorial Day since 1971, with positive returns coming 59% of the time, Bespoke Investment Group reports. But the performance hasn’t been so hot recently, with the index averaging a 0.28% decline throughout the last 10 years, firm notes. And the measure has dropped more than 1% on three instances in last decade.

- Warren Buffett’s testimony next week before FCIC is subpoena-driven, writes Fortune senior editor-at-large Carol Loomis, a pal of the Berkshire Hathaway (BRKA BRKB) chairman.

- FASB publishes proposal that would overhaul how companies value many assets and liabilities they hold. “Tremble US financial institutions, for FASB is about to fair value your assets,” FT’s Alphaville says.

- There are still calls for more (yes, more) government spending. “The long-term deficit needs attention, but right now it’s critical for government to spend,” says former labor secretary Robert Reich. “Otherwise we have no hope of getting free of the gravitational pull of this recession.”

- If enough tech giants go after a market, will it eventually catch on? Just a week after Google unveiled details of Google TV, Engadget reports Apple (AAPL) will take another crack at its three-year-old Apple TV product. But as MarketWatch’s John Dvorak pointed out in a column last week, it may be a hard slog, even for the biggest of behemoths.

- “The Great Recession is over, and the Great Transition is here,” James Picerno writes. In theory, distinguishing between the two is a piece of cake. In practice, reading the tea leaves is going to get complicated at times.”

- The Apple faithful struggle figuring out the best way to carry around the iPad. Aw, poor fanboys, such a conundrum – what are they gonna do??

There are red flags out there. They’re just hard to see amid the sea of red, white and blue flags being waved by the likes of Newsweek.

This morning’s weekly jobless claims is one such flag. Claims rose 24,000 to 484,000; the Street was expecting another slide, closer to the 400,000 that indicates some real hiring may finally appear. Continuing claims rose, and emergency claims rose as well.

The fact remains that more people are out of work for longer than since the Dust Bowl days. Yes, all you green-shoots smokers, jobless claims are well off their worst levels. But they have not gotten down to a level that equals consistent job growth, and that has to be a red flag.

Hiring remains sparse. A survey from Grant Thornton last week found that 29% of companies plan to increase hiring over the next six months. A green shoot, right? Wrong. It also found that 22% plan to decrease, and 49% expect it to remain the same. That 29% number is up from 24% in September, incidentally, so over the last six months, 5% of US corporations thought conditions had gotten good enough for them to start adding headcount.

It’s been curious to watch retail sales rise amid all this. Wall Street, the White House and the jingoists don’t care how or why sales are rising, so long as they are rising. But why are they rising, if the job market still stinks, if wages are still flat? Either the jobs data is so lagging it’s missing a big, real pickup in hiring (same for wage data) or the retail sales figures are either wrong, or being driven by factors that are not sustainable in the long term, or even healthy.

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Just keep cranking out that money, ladies.

We have been leery for some time now about the government’s attempts to throw a safety net under the economy and reflate it through trillions in spending and guarantees. It’s always seemed to us that the best cure for profligate spending at the corporate and consumer level isn’t necessarily profligate spending at the federal level.

But today along comes not one, but two, warnings from two big names, Warren Buffett and Bill Gross, about the costs and shortcomings of government spending. A lot of folks are going to say the market’s bout of existential angst is being driven by fears about China’s fortunes, but we think the fears can be traced to developments much closer to home.

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