U.S. stocks are lower in early afternoon trading on Friday, with the S&P 500 (SNPINDEX:^GSPC) and the Dow Jones Industrial Average (DJINDICES:^DJI) (DJINDICES: $INDU), down 0.36% and 0.20%, respectively, at 12:25 p.m. ET.

Earlier in the week, I argued in this column that the rebound the stock market has staged off its Feb. 11 low does not make investors better off over the long term. Now, recent fund flows data suggest investors don't have enormous faith in the rally. According to Bank of America Merrill Lynch, net outlfows from stocks rose to $7.3 billion in the week to April 20 -- the largest outflows in nine weeks. U.S. stocks suffered outflows of $4.2 billion.

Valeant CEO Mike Pearson could be out soon. Source: Valeant Pharmaceuticals.

Has Valeant Pharmaceuticals found a new daddy?
In yesterday's column, I looked at the question of how much Valeant Pharmaceuticals' stock is worth now. Today, investors believe it is worth 6% more than it was yesterday, following today's report in The Wall Street Journal that it's on the verge of hiring Perrigo Company plc's Joseph Papa as its next CEO.

That's more good news for one of Valeant's largest shareholders, hedge fund manager Bill Ackman; the Journal reported yesterday that the holdings in his publicly traded vehicle have risen by 12% in April, following a disastrous first quarter.

More Mayo, please!
A week ago, I highlighted outspoken bank analyst Mike Mayo of CLSA, saying, "he's the only activist I know that speaks like an activist investor." Speaks and acts, it turns out.

The two universal banks that are not JPMorgan Chase & Co., Citigroup Inc and Bank of America Corp are holding their annual meetings next week, on Tuesday and Wednesday, respectively. Mayo doesn't intend to let that opportunity pass him by, telling Bloomberg Radio:

All three of those banks [B of A, Citi, and Comerica] have failed to create value for every year for the last eight years. So our question for the board of directors is, "If you're not getting it done, what is your plan B?" ...

"You have some banks like JPMorgan and Wells Fargo with very good returns," Mayo said. "Citigroup has poor returns. That's why our team's going to the annual meeting on Tuesday to say, "Some of your peers are getting it done, it's time for you to get it done."

Mayo recognized Citi is a much stronger institution than it was prior to the crisis, but he pointed out that it still isn't earning its cost of capital.

More onerous capital requirements, introduced in the wake of the financial crisis, have strengthened bank balance sheets and reduced the risk of failure, but lower leverage has also dramatically reduced banks' return on equity.

Citigroup CEO Michael Corbat has done an excellent job of slimming the bank down and improving the quality of management controls, but Mayo is correct that the ultimate test is whether or not the bank can earn an economic return on behalf of its shareholders. If it cannot achieve this within 18 months, say, it needs to consider more radical action, up to and including a breakup.