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Chris Whalen talks to Tom Keene about the weakness of the banking sectors in the U.S. and Europe. He mentions margin compression, lack of demand and higher costs, and the lack of pricing power as problems for U.S. banks.

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The IMF's latest economic report says there is a very real risk that Greece's debt crisis could spread. "Contagion to the euro area, and then onwards to emerging Europe, remains a tangible downside risk," the report says. Sentiment in the financial markets is for Greece restructuring its debt, possibly as soon as late 2011. Increasingly the concern focusses on Greece never being able to pay back the $464 billion in debt, as a result pushing losses onto bondholders and banks in Europe. The IMF's director for Western hemisphere, Nicolas Eyzaguirre, said Latin America is in danger of going into a full blown economic crisis if the situation is not managed correctly with overheating in their economies. Speaking at a conference of central bankers in Rio de Janeiro, he said the Latin American region could see major weakness in currencies with an external shock such as drop in commodities prices or increase in U.S. interest rates. He said Brazil "should rein in the economy through an array of measures to avoid excessive exuberance, or it could end in tears."...

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Mahmoud Gebril is interim prime minister of the Transitional National Council of the Libyan Republic. Here he outlines assistance his government needs to succeed in establishing a democratic process in Libya in place of the Ghadaffi regime. This includes official recognition by the U.S., access to Libyan funds overseas, NATO operations, and humanitarian aid.

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Google expresses concern about new internet rules in India that consider Internet providers such as Google responsible for all objectionable content, if it is not removed at the government's request. Google says it is difficult for Google to check the huge amount of content that it sends through its pipelines.

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The impact of HSBC's large deposit base on the banking operations. HSBC has $1.2 trillion in deposits and $1 trillion in assets, and $100 billion still there for lending before it hits the 90% loan to deposit ceiling set by the bank. Nixon says this large deposit base may have led HSBC into a badly planned international expansion and the disastrous acquisition of Household Finance leading to loss of $15 billion.

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HSBC CEO, Stuart Gulliver, says the bank will move away from its emphasis on retail banking. After completing a stategic review of the bank's businesses Gulliver says the global retail banking business has grown haphazardly, with HSBC trying "to be all things to all people in all markets." There are about 39 countries where the retail operations are smaller and less efficient than competitors. HSBC has 6000 plus retail outlets worldwide. And Gulliver says outside of the U.K. and Hong Kong retail has not added substantially to the bank's returns. This means capital will be allocated in a more disciplined way going forward.HSBC will pull back from retail operations in Russia and focus on key markets- Germany, Turkey, Brazil and Singapore. Cost cuts of $2.5 to $3.5 billion are planned by 2013. Costs went up after management was preoccupied with the disastrous acquisition of Household Finance in the U.S. Focus will be on growing business such as the Global Banking and Markets Business which Gulliver headed previously. ...

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Japan's three largest banks will see an impact in coming quarters of the valuation losses from Tepco after the nuclear plant disaster.

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Profits at Cisco for the third fiscal quarter declined by about 18%, with revenue going up by 5%. Cisco plans to cut operating costs by $1 billion. Cisco is facing stiff competition in switching systems. Revenue in switching declined 9%. Routing devices revenue went up by 7%.

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Toyota reported a 77% drop in earnings in the first quarter of 2011, with a large loss in the Japanese operations. The strong yen trading at 81 yen to the dollar is a significant factor. And for the first time Toyota's CFO Satoshi Ozawa said "we have reached the limits of profitable Japan based production at 80 yen to the dollar." Japanese operatios lost $2.4 billion. Honda reported a 38% drop in earnings for the 1st quarter.

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Raj Rajaratnam was convicted on 14 counts for insider trading violations. Prosecutors successfully used wiretap evidence for the first time in an insider trading case.

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Takeda Pharmaceutical is negotiating the acquisition of Swiss drugmaker Nycomed for about $14 billion. Takeda has cash reserves of $10.8 billion and will be using this to fund the acquisition, as well as loans from banks. The strong yen has made acquisitions easier for Japanese companies. Takeda's Prevacid ulcer treatment and the Actos diabetes treatment have both expired. A generic launch of Actos is expected in August 2011. Takeda bought the U.S. unit of Millenium Pharmaceutical in 2008 for $8.9 billion for a significant presence in the oncology field. Takeda projects a drop in net profit by April 2013 by 35%, and sales by 11%, for the fiscal year 2013. Takeda's president says it will make investments in China of about 20-30 billon yen and target a ten fold increase in sales in China to 30 billion yen by 2015.