Today's Headlines

Bloomberg:

- Treasury Secretary Timothy Geithner said the “vast majority” of U.S. banks have more capital than needed, stoking a rally in stocks as investors await results of stress tests on the balance sheets of the biggest lenders. “Currently, the vast majority of banks have more capital than they need to be considered well capitalized by their regulators,” Geithner said in testimony to a congressional oversight panel on the government’s financial-rescue program. Geithner also said there are signs of “thawing” in credit markets and some indication that confidence is beginning to return. His remarks reflect an improvement in earnings in several lenders’ results for the first quarter, and a reduction in benchmark lending rates this month. The Treasury chief also said in comments released today that the government has sufficient funds remaining in the $700 billion Troubled Asset Relief Program to aid U.S. banks. The comments reinforced indications the administration doesn’t currently intend to ask Congress for more money. Geithner also said there are signs of “thawing” in credit markets and some indication that confidence is beginning to return. His remarks reflect an improvement in earnings in several lenders’ results for the first quarter, and a reduction in benchmark lending rates this month. The Treasury chief also said in comments released today that the government has sufficient funds remaining in the $700 billion Troubled Asset Relief Program to aid U.S. banks. The comments reinforced indications the administration doesn’t currently intend to ask Congress for more money.

- Delta Air Lines Inc.(DAL) and United Airlines parent UAL Corp.(UAUA) rose in U.S. trading after posting first-quarter losses that beat analysts’ estimates as fuel prices fell. Delta, the world’s largest carrier, said it sees “signs of stabilization” in demand, based on recent bookings, echoing comments by American Airlines last week that declines in travel may have hit bottom. Jet fuel prices averaged 52 percent less last quarter than a year earlier. “Stabilization is the first step toward improvement, and it will be enough for investors to feel better” about the rest of 2009, said Matthew Jacob, an analyst at Majestic Research LLC in New York. “It’s certainly encouraging.”

- Jim O’Neill, chief economist at Goldman Sachs(GS), reiterated in an interview with Bloomberg TV that his firm sees the US economy growing about 1% in the third quarter of 2009.

- DuPont Co.(DD), the third-biggest U.S. chemical maker, said demand will improve from first-quarter lows because most customers have used up inventories and are increasing purchases. The shares gained in New York trading. March sales were higher than in the preceding two months, and industrial demand will rise through the year, resulting in a “moderate” decline in full-year sales volumes, Chief Financial Officer Jeff Keefer said.

- Technology stocks in the S&P 500 are off to the best start to a year since 1998 as investors buy companies with the most cash during the worst credit crisis since the Great Depression. The Information Technology Index of 75 software and computer makers in the S&P 500 rallied 9.7% this year, the steepest gain since 1998 and the most among 10 industries. The last time the gauge began a year faster, it went on to climb another 42%, spurring a 27% advance for the S&P 500. Technology companies in the S&P 500 on average have the most cash and least borrowings relative to total assets among 10 industries, according to Bloomberg data. Eighteen of them are debt free, including Apple Inc.(AAPL), Google(GOOG) and Qualcomm(QCOM), twice the number in all other industries combined.

- Piracy attacks worldwide almost doubled in the first quarter, led by a surge in incidents around Somalia, a group that monitors sea hijackings said. There were 102 attacks in the first three months, compared with 53 a year ago, the International Maritime Bureau said in a statement on its Web site today. The Gulf of Aden and eastern coast of Somalia accounted for 61 of the seizures or attempted hijackings worldwide, from six last year, the group said.

- Caterpillar Inc.(CAT), the bulldozer manufacturer President Barack Obama used to help push his $787 billion stimulus plan, called the program disappointing and less effective than measures approved by China. “The infrastructure portion of the stimulus package was disappointing in that it was less aggressive than other countries and missed an opportunity to correct past underinvestment in U.S. infrastructure,” Caterpillar said in economic commentary with today’s first-quarter earnings report. Chief Executive Officer Jim Owens, 63, is a member of the president’s Economic Recovery Advisory Board.

- New York Times Co.(NYT) posted a wider first-quarter loss after advertising revenue dropped 27 percent and said the rate of decline in ad sales will be similar in the second quarter. The shares slumped. The net loss expanded to $74.5 million, or 52 cents a share, from $335,000 a year earlier, the newspaper publisher said today in a statement. Sales fell 19 percent to $609 million, trailing the $634.3 million average of four analysts’ estimates compiled by Bloomberg.

- Assets owned by hedge funds including borrowings may have fallen by 75 percent to a decade- low, with less competition paving the way for better returns, said Blaine Tomlinson, chairman of Financial Risk Management Ltd. The total book size of assets owned by hedge funds may have declined to $2 trillion, from $8 trillion, he said at the GaimAsia 2009 hedge fund conference in Hong Kong today, reducing the industry to a level last seen a decade ago. Tomlinson founded Financial Risk Management, a London-based fund of funds manager overseeing $10 billion, in 1991. “This is pretty important because it means that there’s far less competition for alpha opportunities,” which refers to the premium that an investment earns over a certain benchmark, said Tomlinson.

- Shipments form the California ports of Los Angeles and Long Beach, which together handle about 40% of US container traffic, grew on a month-to-month basis in February and March, indicating a decline in exports may be bottoming out. “March improved meaningfully from February, after February improved from January,” Thomas Wadewitz and Alexander Johnson, analysts at JPMorgan wrote in a report. Outbound traffic from the two ports, when calculated on a two-year basis to account for the holidays, showed an increase in March of 1.6%, whereas February’s decline was 10% and January’s 17.1%, JPMorgan said. Inbound shipments, reflecting US imports, showed March improved from February.

Wall Street Journal:

- Broadcom Corp.(BRCM) Monday night was readying a roughly $800 million unsolicited cash offer for Emulex Corp.(ELX), according to a person familiar with the matter, in a sign that dealmaking continues unabated in the technology sector.

- Nearly 60% of China's semiconductor manufacturing capacity went unused in the first quarter, according to market researcher iSuppli Corp., which said it was the highest amount since it began tracking the market in 2000. Capacity utilization fell to 43%, marking a huge drop over the past several years from a high of 92% in the second quarter of 2004.

- President Barack Obama left open the possibility of legally pursuing the Bush administration officials who formulated the policies that led to "enhanced interrogation techniques" -- which critics have called torture.

CNBC:

- Price Is Right: Home Buyers Are Testing the Market Again.

- US junk bonds are posting their best start to a year since 1991 as hopes that the worst of a global financial crisis may be over entice investors back into riskier bonds. Boosted by a 7.1 percent gain in April to date, junk bonds have posted a 12.5 percent year-to-date total return, by far the best performance of any major category of U.S. bonds, according to Merrill Lynch data.

Barron’s:
- Nintendo(NTDOY) is cheap, especially for a company whose profits could jump 40% this year. Waning Japanese demand needs to be put in perspective.

NY Times:

- The Treasury Department’s most ambitious plans to rescue troubled banks — partnerships between the government and private investors, backed by the Federal Reserve — are inherently vulnerable to fraud and should not be started without stronger safeguards, a top government investigator warned in a report to be released Tuesday. The report also warned that the Treasury’s $700 billion Troubled Asset Relief Program has evolved into a $3 trillion effort of “unprecedented scope, scale and complexity” and comes with too little oversight and too little information about what companies are doing with the taxpayer money they are getting. “The American people have a right to know how their tax dollars are being used,” wrote Neil M. Barofsky, the special inspector general assigned to monitor the bailout program, in his second report to Congress.

MarketWatch:
- Coach Inc.(COH) on Tuesday said third-quarter profit fell 29%, hurt by costs related to job cutting and store closings and consumers paring back on spending. However, results were better than Wall Street had expected after the company noted improvement in North American comparable sales and traffic from the holiday quarter, and the decline in the region handily exceeded analysts' estimates.

- Jack Bauer can’t stop ‘The Goldman Conspiracy’ 10 reasons why Wall Street has absolute power over America’s democracy.

Washington Post:

- As Congress returns to begin an intense debate over reshaping the nation's $2.2 trillion health-care system, prominent left-leaning organizations and liberal House members are issuing a warning to their Democratic allies: Don't cave on us. The early skirmishing -- essentially amounting to friendly fire -- is perhaps the clearest indication yet of the uphill battle President Obama faces in delivering on his promise to make affordable, high-quality care available to every American. Disputes over whether to create a new government-sponsored insurance program to compete with private companies shine a light on the intraparty fissures that may prove more problematic than any partisan brawl. More than 70 House Democrats recently warned party leaders that they will not support a broad health reform bill that does not offer consumers a government-sponsored policy, and two unions withdrew from a high-profile health coalition because it would not endorse a public plan.

Miami Herald:

- A top House Republican will unveil legislation Tuesday that could open the door to the first oil and gas drilling off Florida's coast in decades. Rep. Dean Cannon, the Orlando Republican who is slated to become House leader in 2010, will ask the House Policy Council on Tuesday to pass a bill that lifts Florida's ban on oil drilling off state waters. If lawmakers agree to pass the bill, it would be a complete reversal in state policy since the state imposed a virtual ban on drilling nearly 30 years ago. But after years of resisting oil and gas drilling off Florida shores, the state's fiscal straits have made it politically practical for Cannon to pursue the change. The measure, which drew howls of protest from environmentalists, would replace the ban with a plan to allow the governor and Florida Cabinet to charge $1 million per application to explore state-controlled waters that stretch between 3 and 10 miles offshore.

Washington Times:

- On the day the new Congress convened this year, Sen. Dianne Feinstein introduced legislation to route $25 billion in taxpayer money to a government agency that had just awarded her husband's real estate firm a lucrative contract to sell foreclosed properties at compensation rates higher than the industry norms. Mrs. Feinstein's intervention on behalf of the Federal Deposit Insurance Corp. was unusual: the California Democrat isn't a member of the Senate Committee on Banking, Housing and Urban Affairs with jurisdiction over FDIC; and the agency is supposed to operate from money it raises from bank-paid insurance payments - not direct federal dollars.

Politico:

- Sen. John McCain (R-Ariz.) is calling on the Obama administration to apologize to veterans over a recently released Department of Homeland Security report warning that “right-wing extremists” will attempt to “radicalize returning veterans.” “The last people on Earth we need to worry about are our veterans,” McCain said during an interview Monday night with Fox News’ Greta Van Susteren. “It’s insulting.” “Timothy McVeigh didn't learn to make that huge bomb while he was in the military. He learned it afterwards,” McCain added. “So to point out one veteran who committed an act of atrocity I think is outrageous.”

- Connecticut Sen. Joe Lieberman has been a good Democratic soldier since Barack Obama covered his back during the kick-him-out-of-the-caucus imbroglio earlier this year. But the hawkish independent, who questioned Obama's experience level from the podium of the RNC last summer, is taking issue with the administration's release of the torture memos, telling Fox host Greta Van Susteren it was "a bad idea" that helps America's enemies.

USAToday:

- The plastic bag industry has an Earth Day surprise: less plastic. Under pressure from consumers, environmental advocates and retailers, the companies that make more than 80% of plastic bags used by the nation's big retailers on Tuesday will announce plans to make the plastic bags from 40% recycled content by 2015.

- A government watchdog has launched "almost 20" criminal investigations related to the $700 billion financial bailout program, according to a report to Congress to be released Tuesday. Neil Barofsky, the special inspector general for the rescue program, says in the report that the probes involve possible public corruption; corporate, stock and tax fraud; insider trading; and mortgage fraud. Barofsky provided no information on who is being investigated or why, saying details will not be released "until public action is taken."

Reuters:
- Honda Motor Co President Takeo Fukui said on Tuesday the U.S. market has shown signs of having bottomed out since the start of April.

- Citigroup Inc (C) Chief Executive Vikram Pandit said he expects the No. 3 U.S. bank to rebound from its current woes and pledged that it would repay "every dollar" it owes to the U.S. government.

- TD Ameritrade Holding Corp (AMTD) reported better-than-expected quarterly revenue driven by near-record trading volumes in March, lifting its shares, but low interest rates continued to pinch earnings.

- The Treasury Department is considering giving banks and investors billions of dollars in fresh incentives to modify troubled mortgages and save homeowners from foreclosure, sources familiar with official deliberations said. Under one scenario, investors in second liens would receive a cash payment if they agree to ease the terms of troubled loans and accept a smaller return on their mortgage investment, the sources said.

TimesOnline:

- Investors withdrew a near-record $104 billion from the hedge fund industry during the first quarter, according to research published today, as doubts persist about the beleaguered sector's ability to perform. A full $85 billion of the redemptions, the second highest on record, came from fund of fund investments, after the Bernard Madoff ponzi scandal blew a hole in investors' confidence in the approach. Redemptions in the first quarter were the second highest on record, according to HFR, second only to the four quarter last year, when more than $152 billion was pulled out of the sector worldwide. After peaking at about $2 trillion, hedge funds currently manage around $1.33 trillion of assets, HFR said. About $525 billion of this is invested in fund of funds, according to HFR.

Maeil Business:

- South Korea and the US may jointly develop and invest in a “smart” power grid to improve energy efficiency, citing a government official. Both countries will sign a preliminary agreement in June when US and South Korea hold a summit.